coding & reimbursement
Auditing Medical Records
It is a good idea to do this periodically. Here's how.

By Suzanne L. Corcoran, COE

Investigations for inaccurate and inappropriate claim filing have increased dramatically in recent years. Federal agencies have more funding than ever to pursue improper claims. In the fall of 2002, the Office of Inspector General (OIG) published, Compliance Program Guidance for Individual and Small Group Physician Practices. It strongly recommends periodic reviews of your billing practices. What can you do?

Q: Who should perform audits for us? Audits can be performed by an independent party or by your staff. Internal auditors may include physicians, billing or technical staff, a compliance officer or a committee. These individuals should have an understanding of ophthalmology documentation and coding requirements. Many practices use a combined approach – frequent internal audits and periodic, external audits.

Q: How big should the audit be, and how do we select charts? There is no "cookbook" describing the audit process. The OIG guidance recommends a random sample of five to10 charts per physician. A comprehensive baseline audit is recommended as a starting point. A comprehensive review assesses a small sample of everything.

Random samples can be selected by "blindly" choosing charts from your file cabinet. You may choose a specific schedule and randomly choose records. The OIG uses a random number generator software program to select a sample.

You may also base your selection on utilization statistics and focus on your most-frequently performed services. This is especially true if you know that you exceed Medicare's expected numbers. It is also prudent to review your least-often performed services.

Charts selected for audit may also be reviewed prospectively before posting and billing, or retrospectively after claims have been filed. Both types of audits identify improper billing and reimbursement and assist with the initiation of remedies to prevent future errors. A prospective review catches problems before claims are submitted, although it may delay cash flow. A retrospective audit may require refunds of overpayments when errors are identified.

Q: What types of findings should we expect? Internal audits should follow the same protocol as an outside-payer audit and achieve the following objectives: verify the credentials of the provider; validate medical necessity of the service; certify correct coding of the service, both procedure and diagnosis coding; assess the quality of the documentation, and confirm compliance with statutes and regulations.

Findings can be separated into subjective and objective categories. Subjective findings include legibility, chart organization, completeness of registration forms and signatures. Objective findings include overbilling, underbilling, modifier errors, diagnosis code errors, date errors, frequency of service problems and necessity of services.

Examples of underbilling include selecting a level of service lower than the documentation supports, or missed charges. Overbilling occurs when the level of service selected is not supported by the documentation and a lower-level code should be selected. A duplicate claim that has been paid is considered overbilling, as are services that should be bundled but have been separated. Claims for noncovered services, or those when medical necessity cannot be supported would also be considered overbilling.

Q: What do we do with the results of the audit? Review subjective findings and address these issues with the appropriate people. Objective findings can be organized two ways – the frequency of the issue, and the financial impact of the issue. For example, in a sample of 100 records, 75 errors were noted (frequency) which changed the reimbursement in our sample by -4% (financial impact). For obvious reasons, these results are not commonly shared with the entire staff.

Problems identified in the review should be addressed. This may include refiling claims, making refunds, changes to internal policies and training. Then, a repeat review follows. The repeat review may focus on problems identified in the prior review, or a compliance plan may dictate an audit protocol for ongoing reviews.

Suzanne Corcoran is executive vice president of Corcoran Consulting Group. You can reach her at (800) 399-6565 or at scorcoran@corcoranccg.com