Medical Coding Audits and Suggestions for Billing Companies

One of the most important elements of medical revenue cycle management is adhering to accurate coding and billing processes. This includes relevant documentation of medical records, precise application of billing codes, and correctly identifying the payment responsibilities of insurers for medical services rendered.

A key process to ensure correct billing and coding, to avoid rejection of improper claims, financial penalties, and overall revenue loss is ‘Monitoring and Auditing of medical claims’. These claim audits strengthen and improve the overall coding and billing process by ensuring there are no errors.

Common Errors in Coding and Billing-

Common problem areas which pose a substantial threat to physicians and practices:

  • Failure to attach the right codes to various diagnoses
  • Not documenting the medical record properly
  • Wrongly coding an office visit as a referral, and not a consultation
  • Unbundling i.e. billing each component of a multiple-component service as a single service
  • Manipulating billing by adding items and services
  • Submitting unreasonable claims for equipment and medical supplies
  • Up-coding the level of service provided to enjoy better financial increments

What is Medical Coding Auditing and why do perform one?

The goals of a medical coding audit are to improve the financial health of your practice. These audits evaluate procedural and diagnosis code selection as determined by physician documentation. If any area of weakness is revealed through an audit, one can identify opportunities for training in your health care organization. Audits are the best way to improve your clinical documentation and to determine areas that require improvements and corrections.

Reasons to perform medical coding audits:

  • To reveal if there is any inappropriate coding, insufficient documentation or revenue loss
  • A proactive step to identify and correct problem areas before any insurance or government payer challenges it for inappropriate coding.
  • To resolve issues of under-coding, code overuse, bad unbundling etc and to bill appropriately for documented procedures only.
  • To stop the use of outdated or incorrect codes for procedures
  • To verify ICD-10-CM and electronic health record (EHR) readiness
  • To identify reimbursement deficiencies and suggest opportunities for appropriate reimbursement
  • Overall, to protect against fraudulent claims and billing activity

How a medical coding audit process is conducted?

A medical coding audit involves a comprehensive review of medical and hospital records, documents, medical claims, billing histories, provider contracts and fee schedules to thoroughly investigate billing and coding process.

The Auditor documents and presents all the findings of the audit at the end. These audit results must be leveraged by the medical practitioners to develop corrective action plans to improve his/her overall coding and billing practices.

Claims audits are usually conducted annually with a follow-up audit.

Challenges in Auditing:

  • Complex Data Analysis: With an enormous number of medical claims in a year, it’s important to choose sample claims with the highest probability for an error. This task of selecting a sample to conduct an audit can be tedious and complex.
  • Thorough Review of Medical Record Documentation: Any mismatch of medical records documentation and selection of appropriate codes are termed as false claims and might even be investigated under the False Claims Act. So, the medical records should be complete and legible. An auditor should study and investigate medical records documentation rigorously for not missing any loophole that could direct any irregularities in coding and billing.
  • Manual Documentation: There are many healthcare providers who still follow a manual documentation system that is long, cumbersome and time consuming and thus have a high probability of any error.
  • Remote Departments and Functions: Many healthcare companies function in isolation, so auditing a medical coding and billing practice can be a tedious process.
  • Lack of advanced systems for spotting fraud/abuse: Most of the healthcare practices lack foolproof methodologies for a detailed analysis of medical claims. They often do not use the right tools that alert healthcare providers to irregularities and help eliminate billing errors before and after the claims are paid.

How Coding Audits and Suggestions can help –

Coding Audits help healthcare providers to implement best practices and ultimately strengthens their coding and billing practices. Implementing suggestions of an audit helps to:

  • Ensure that a healthcare provider’s operations consistently remain within its acceptable risk threshold.
  • Enable healthcare providers to identify a well-integrated training program on claims audit, focused on coding and billing
  • Enhance document and data management
  • Design and implement appropriate corrective action and preventive action processes, in accordance with the audit findings
  • Strengthen strategic decision-making through powerful reporting and analytics that provide valuable business insights.