Coding audits: Why and how to do them

Accurate medical coding is critical to a hospital’s and the patient’s financial experience. But, according to Modern Healthcare, up to 80% of all medical bills contain an error. Hospitals can reduce these mistakes with an effective auditing and compliance system.

According to LaSha Cofer, MSHSM, RHIA, senior product manager with Optum Provider Market Solutions, medical codes can affect your organization in multiple ways. Regularly auditing accounts to ensure accuracy can lead to a variety of improvements.

With a shift in the industry toward artificial intelligence, especially autonomous coding, and the increase in outsourcing medical coding tasks, there is an even greater need to establish a robust auditing and compliance program. “Correct coding has a significant impact. If accounts are coded incorrectly, hospitals aren’t reimbursed properly,” Cofer says. “Lower payments can impact hospital quality scores and the patient’s financial responsibility.”

Cofer, an AHIMA-approved revenue cycle trainer, recommends conducting audits at least once a year to monitor your coding effectively. If you have enough resources, consider monthly — or daily — audits. Here, she shares additional insights into how you can create a successful auditing and compliance program.

Cofer says that when designing an auditing and compliance program, you have a couple of choices to make.

Internal vs. external audit: As a first step, decide who will be responsible for conducting audits. With internal audits, your hospital staff reviews the codes in each account. In an external audit, a third-party organization examines each account. Either method can produce an accurate coding review. However, an external audit may be faster because the third party’s only responsibility is to assess codes.

Prospective vs. retrospective audit: Deciding when you’ll audit your accounts is essential. Reviewing them before you send them to billing (prospectively) gives you the chance to correct any coding mistakes. With a retrospective review, you conduct an audit after your accounts are coded, billed and submitted to the payer. Keep in mind that relying on retrospective auditing could increase your number of denied claims and delayed payments.

An effective audit is a well-designed audit, Cofer says.

“You need a plan if you want your auditing to be successful,” she says. “Don’t just conduct random audits. Instead, be strategic and identify the types of accounts you should be auditing.” The Optum solution provides the ability to review accounts prebill and correct errors further upstream in the coding and billing process. This not only decreases the risk of denials but also offers real-time feedback to coders. The ultimate goal is to modify behaviors quickly and produce accurate coding.

Several resources exist to help you pinpoint the accounts you should review. To create the most thorough auditing and compliance program, Cofer suggests reviewing these tools:

PEPPER reports: Program for Evaluating Payment Patterns Electronic Reports deliver Medicare data statistics specific to your institution. While these reports don’t highlight specific payment errors, they can tell you which of your services are most likely to be reimbursed incorrectly. This information can be a reliable guide for your auditing efforts.

Quality measures: Every facility has its own priorities, such as reducing hospital-acquired infections. Be sure your auditing program concentrates on the quality measures that matter most to your institution.

Office of the Inspector General (OIG) Work Plan: The OIG frequently publishes its projects and areas of focus, including audits and evaluations. Cofer says consulting the Work Plan helps you proactively address codes or future claims that the Centers for Medicare & Medicaid Services (CMS) may flag for closer scrutiny.

Recovery Audit Contractor audit results: These audits, conducted by CMS, use proprietary software to identify underpayments and overpayments. These audits search your claims for duplicate payments, fiscal intermediary mistakes, coding errors or medical necessity problems. You can use the results of these reviews to identify areas where you can improve your coding.

Once you’ve identified your coding errors and areas for improvement, create a report to help you make necessary changes. An ad hoc report tailored to your institution’s priorities can be helpful.

“With ad hoc reporting, you use tools such as Business Intelligence Analytics to build your own report,” Cofer says. “It’s a way to get down into the details — down to the level of each code. You can export the data and really slice and dice it.”

She says you can also use these reports as an educational opportunity for your coders.

“With audits, you now have a treasure trove of data. This is where the magic happens because you can take that data, pinpoint what your coders are struggling with, and develop an education plan,” she says. “You can show your coders where the weaknesses are and where you need to focus.”

A successful education plan can include computer-based training modules and webinars. Training on the best ways to use technologies, such as computer-assisted coding, can also ensure your coders use all available tools correctly.

Optum offers its Audit and Compliance Manager solution, which is a module within the Enterprise Computer Assisted Coding application, to streamline your audit and compliance efforts. This automated software application scans your claims in advance and identifies those at risk for incorrect coding. Pinpointing claims at high risk for denial helps you better target your future auditing efforts.

Cofer says this tool also educates and empowers coders to improve their skills.

“If there’s an error when coding is complete, our solution flashes a little box to alert the coder that the claim is flagged for audit,” she says. “But it always explains why. Now the coder has the knowledge to go back and double-check their work to avoid the same errors again.”

A future version of the Optum solution will allow coders to self-correct inaccuracies before submitting a claim, effectively avoiding an audit.

Ultimately, Cofer says that successful auditing requires constant attention.

“As an industry, we need to rethink how we’re using our existing resources,” she says. “And the best approach for an effective audit is to be sure we’re examining accounts in the timeliest fashion.”