How Medical Billing Audit Helps Small Practices?
The transition to ICD-10 forced many healthcare organizations to take a long, hard look at their claim processing practices. While that transition is in the past, the importance of auditing in healthcare organizations has not reduced.
Every practice should have a strong understanding not only of the nature of billing audits but also what kinds best fit their individual needs. If you don’t have a firm grasp on the billing practices, weaknesses, and opportunities for growth in your practice, it is time for a refresher to understand what goes into medical billing auditing in healthcare organizations.
A-Z of Billing Audits
- What is a Billing Audit?
- Scope of Billing Audits
- Benefits of Billing Audits
- Billing Audit Process
- Internal Billing Audits vs. External Billing Audits
- Nuances of Internal Billing Audits
- Best Practices of Internal Billing Audits
- Tips for Small Practices
What is a Billing Audit?
Medical Billing Audit is an organized process that examines and evaluates the effectiveness and reliability of clinical documentation. This process thoroughly checks all health records maintained by the practice and reviews medical billing data submitted to the payers to ensure that the practice identifies, monitors, and rectifies inappropriate billing practices. As aspects of billing affect the bottom line, so highlighting potential compliance issues is essential.
Conducting a billing audit requires many data sources. When going through a billing audit, the practice may be asked to provide clinical records, which may include medical records, x-rays, and lab reports; financial records such as charge sheets, remittance advice, and accounts receivable ledger; and policy-related documentation as required by providers or the government.
Audits can be conducted either before claims are sent out to the payers (prospective) or after the fact (retrospective). Some practices follow the rule of conducting new provider audits prospectively, and current provider audits retrospectively.
Scope of Billing Audits
Billing Audits are much more comprehensive than Coding Audits and cover all the areas of the medical billing life cycle starting from insurance verification processes, ICD and CPT Coding, claim submission process, payment posting process, follow up processes and denial management processes.
Billing Audits - Exclusions
Billing audits are specific and do not include the level or scope of care, medical necessity, pricing structure, or items or services delivered by providers
These issues can be reviewed in other ways. Providers and payers address these matters with other mechanisms that are completed by qualified personnel.
Benefits of Billing Audits
Billing audits might seem like a luxury, especially in a busy practice, but performing audits is actually beneficial. Those benefits cover coding, clinical practice, as well as administration.
1. Coding Benefits
Billing audits are helpful to the coding staff as it provides a way to identify and correct problem spots before the government or insurance payers challenge inappropriate coding. Having someone to rely on to identify inaccuracies and provide instructions on ways to correct issues, builds confidence among the coding staff, and ensures that they use up-to-date procedure codes. Those conducting the audit can identify areas where staff education and training are needed to make sure that proper coding protocol is always followed. With efficient medical coding, the practice is spared a visit from government investigational auditors like RACs or ZPICs.
2. Administrative Benefits
The administrative staff benefits from medical billing audits by confirming that claims are true and accurate and are correctly submitted. Audits set the standard for the office staff and spare them unnecessary frustration by creating a positive, stable work environment and culture of compliance that attracts and retains talented personnel. Under-coding, code overuse, improper unbundling habits are replaced with appropriate billing for commonly documented procedures. When policies and procedures are set in place and followed correctly, the chance of a visit from an external auditor decreases significantly.
Through medical billing audits, the practice is protected against fraudulent billing activity and claims. When an internal check and balance system is in place, practices can easily verify compliance with ICD-10-CM and EHR Meaningful Use readiness. Incorrect payments are reduced or eliminated. The audit may identify reimbursement deficiencies and reveal ways in which the practice varies from the national average due to inappropriate coding. Thus, areas for increased reimbursement may be revealed and, in turn, boost revenue. Additionally, the practice benefits when files are processed efficiently, improper payments are reduced, and claim payment is optimized.
An improved relationship with payers is another perk on a medical billing audit. Payers appreciate when claims are submitted accurately. An audit will reveal any outliers that allow the practice to identify any problems before the claims software of a large payer identifies a problem and requests an external audit.
3. Clinical Benefits
Medical billing audits contribute positively to improved patient care. By tracking and monitoring services and procedures and educating physicians on providing patients with positive medical experiences, the focus of the entire practice shifts to the quality of care provided. When patients have a better experience, the result is a smoother revenue cycle and better patient outcomes.
Overall, conducting billing audits helps a practice understand risk and serves as a starting point for working toward smooth workflows and the best-functioning practice possible.
Billing Audit Process
As far as processes are concerned, medical billing audits will cover:
- Determining the scope of the audit and resources needed to complete it efficiently and effectively. This audit may include understanding clinical staff involved, payer mixes, and composition of billing and coding staff
- Assessing the scene of the audit to determine problematic trends or areas of increased risk. An audit also involves checking the frequency of provider services and analyzing CPT code usage by billing staff and providers.
- Taking corrective action by using audit results as strategic information to improve revenue cycle management and care outcomes. This includes setting achievable targets for improvement, addressing internal issues that have been identified, and pressuring payers to improve any areas in which they’ve been found lacking.
- Learning and repeating the process so that future audits are simpler and easier to carry out.
Internal Billing Audits vs. External Billing Audits
Sometimes the question of medical billing audits isn’t one of type, but of who’s conducting it. That’s where the internal vs. external audit question pops up.
Advantages of Internal Billing Audits
Internal audits are precisely what they sound like — an audit performed by an internal, organizational team. Larger organizations might have a dedicated internal audit group, giving them the key benefit of performing audits on an ongoing basis. Frequent auditing provides the organization with information that allows for continuous improvement in processes and accuracy.
Advantages of External Billing Audits
External audits can be an excellent option for a small, busy practice. They provide insight that eliminates conflicts of interest and spots upcoding without regard for its impact on revenue, something that internal auditors with even the best of intentions might miss. There’s also the added benefit of recommendations carrying more weight when they come from an external source. External audits, though, aren’t a clean substitution for internal. Even organizations that conduct ongoing internal audits should have an independent, external audit performed annually.
Overall, small practices might find it useful to lean on one of the many companies that specialize in external audits, especially if they don’t have the resources to conduct consistent periodic internal reviews.
The Nuances of the Internal Billing Audit
The internal audit is almost as much art as it is science. If you do decide to perform internal audits, remember a couple of things.
1. Prioritize accuracy
It’s your job to make sure that your charges are accurate. Make sure your coders are proactive and monitor their work before submission to payers. The AMA suggests designating someone to spearhead any internal audit initiatives.
2. Focus on Reports
Monthly reports can be powerful audit tools in spotting reimbursement trends as early as possible. Reports can include:
- Reimbursement by CPT code
- Encounters vs. Appointments
- Growth in net collection percentages
- Days in AR
Days in AR, in particular, should be compared to the prior month and averaged over quarters, half years, and years. These can also be benchmarked against previous years and the Medical Group Management Association’s national data. If your revenue cycle software doesn’t offer the capabilities you need, it’s time to talk to your vendor or consider a change.
Internal Billing Audits – Best Practices
Establishing best practices for your audit processes helps ensure that your practice gets the most out of the time invested in your audit efforts. Here are a few suggestions.
1. Keep an eye on the big picture
- Perform quarterly audits and designate a qualified person to head up audit initiatives
- Prioritize opportunities for physician training
- Invest in pre-submission monitoring
- Stay proactive, especially in terms of following payer guidelines
- Maintain open communication between coders and providers
2. Focus on billing reports
- Monitor days in AR and data from monthly reports to catch trends as early as possible.
- Consider tracking growth in net collection percentage
- Reach out to your practice management software team to help facilitate reporting
- Consider a system that allows for the tracking of revenue cycle for each patient from appointment to complete payment
- Focus on the areas with the greatest potential return
- Match patient encounters to appointments
- Run reports on CPT reimbursement and compare to individual payer contracts to identify underpayments
3. Monitor Benchmarks
- Review the frequency of physician services over a one- to six-month period and compare to peers (often through an E&M frequency report) to avoid RAC audits
- Check to make sure nothing is written off at 100%--being given away for free
- Establish a process for dealing with claims that are denied or paid incorrectly.
- Larger groups should consider creating a policy that addresses providers who consistently demonstrate poor coding practices
Speaking of avoiding RAC audits, few steps can ensure that you don’t get caught up in one yourself.
- Be proactive with your internal audits and consider bringing in outside consultants as support
- Keep an eye on evaluation and management (E/M)
- Focus on details like principal diagnosis and medication reports as well as high-dollar charges
If you do face a RAC audit, call in the help of an outside billing and coding specialist. In the future, learn to view your internal audits as an investment.
Tips for Small Practices
Small practices will have their own concerns in conducting audits. So here are a few tips to make sure you’re getting the most out of yours.
Designate a qualified team and implement a system of accountability
Create controls that catch and prevent mistakes
Establish benchmarks for improvement
Consider hiring a third-party service
As billing becomes more complex, a deliberate, strategic approach to billing and coding audits will be necessary for every medical practice. Managers of small practices should assemble their healthcare audit arsenal today and partner with skilled professionals dedicated to getting great ROI on their audit investment.
We’d love to be a part of your medical billing audit services team. Contact Us today.