Five steps to conduct an internal medical coding audit in your office
It’s an unfortunate reality: Many of today’s medical practices struggle with increased volumes of claim denials. There are many reasons why denials continue to skyrocket. Complicated payer requirements, personnel shortages that tempt staff to ‘cut corners’ when it comes to compliance, and lack of insight into medical coding and other denial trends are just a few of them.
While there are no easy answers to prevent claim denials, one of the most effective ways to promote proactive compliance is to conduct an internal medical coding audit in your office. Forty-seven percent of medical practices already do this. Among the medical practices conducting audits internally, a quarter (26%) say they do it monthly while 34% do it quarterly, and 32% do it annually. Regardless of the frequency, auditing your medical claims is paramount. Conducting period internal medical coding audits is also one of the Office of Inspector General’s (OIG) seven basic components of a voluntary compliance program for physician practices. The purpose of audits in healthcare is threefold: Ensure data integrity, promote quality patient care and safety, and enhance business performance (even improving cashflow in some cases).
Purpose of audits in healthcare
An internal medical coding audit provides immediate feedback on what you are doing correctly and what you can improve. It enables you to intervene quickly and it prevents staff from submitting inaccurate claims to payers. It all goes back to the idea that knowledge is power. The more you know, the cleaner your claims. And the cleaner your claims, the fewer your denials. The good news? Your certified medical coder can help conduct the audit.
Consider these five steps to conduct a medical coding audit that gives you the information you need to promote medical coding compliance and revenue integrity:
1. Identify the focus of your internal medical coding audit. If this is the first time you’ve ever audited your medical claims, begin with a baseline audit. A random internal retrospective audit (i.e., auditing claims after payers have processed them) might be a good place to start because it can help you pinpoint areas of vulnerability that you might have otherwise not known. From there, you can narrow your focus and shift to prospective audits (i.e., auditing claims before payers have processed them).
For example, do you frequently see a lot of denials with time-based billing? What about level four or five evaluation and management (E/M) services? Hierarchical condition category (HCC) capture rates or quality measures to enhance value-based contracts? Or perhaps you want to focus on high-volume errors such as those that the OIG has included in its Work Plan. Another idea is to focus on accounts for which deficiencies were found during a previous external medical coding audit. Narrowing the scope of the internal medical coding audit helps ensure your time is well spent on strategic priorities, and it often yields the biggest return on investment.
2. Select the sample size. Ten to twenty claims per physician is usually a good place to start, although a larger sample will help determine trends and outliers more accurately. Also, keep in mind that 10% of the case volume is generally considered statistically significant for an internal medical coding audit.
3. Assess clinical documentation and medical coding accuracy. A medical billing audit template may help. For example, the template may include critical questions, such as: Does medical coding adhere to official coding guidelines? Does clinical documentation comply with payer requirements? Do documentation and medical coding satisfy all internal policies and procedures? Be sure to identify root causes of any errors or omissions as you review claims using a medical coding audit tool template.
4. Share audit findings. Review each medical coding audit sheet. Then educate physicians and other staff on areas of opportunity for improvement as well as areas of success. Provide additional education on how to assign a medical code, if necessary, and update policies and procedures accordingly. Some medical practices may want to create a comprehensive final report outlining various recommendations for improvement and a corrective action plan. It’s also helpful to quantify the financial impact of the internal medical coding audit in terms of either revenue lost due to undercoding or revenue saved due to avoidance of denials and/or post-payment recoupments.
5. Perform a follow-up medical coding audit. To ensure revenue integrity, follow up with an additional medical coding audit after everyone receives education and has an opportunity to practice what they learn. Medical practices may also want to partner with an external auditor to validate internal medical coding audit findings. An external auditor can provide an unbiased, independent evaluation of your documentation and medical coding. The good news? There’s usually no interruption to your workflow, and you also benefit from having a different perspective and additional expertise.
Conclusion
As you look ahead, consider drafting a medical coding audit policy that includes the five-step process discussed above. A medical coding audit policy helps promote consistency over time and reminds staff of the purpose of audits in healthcare. Ultimately, an internal medical coding audit ensures clinical documentation integrity, improves patient care and safety, identifies financial gaps and vulnerabilities, and helps medical practices standardize business practice to enhance overall performance. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
