Accurate medical coding is the foundation of a practice’s financial performance. It is the key to maximizing reimbursements, ensuring compliance, and streamlining the revenue cycle management process.

Since accurate coding plays such an essential role in healthcare information management and revenue cycle management, the question is how medical organizations ensure that they have the policies and procedures in place required to achieve quality medical coding. The answer is medical coding audits.

Medical coding audits are important to every healthcare practice because they reveal incorrect coding practices and ensure that all processes are functioning properly. They are also vital in helping organizations maintain compliance with different industry standards.

Ultimately, medical coding audits form the backbone of a robust medical coding system. However, while medical coding audits can do wonders for the success of a healthcare organization, the vast amounts of data received from the audits can sometimes become overwhelming. Most organizations will conduct audits and generate reports based on their findings but will be unable to fully tap into the potential of the data they collect.

Healthcare organizations leverage these audits into actionable insights to make their practice more successful. This article goes through the best practices to follow when conducting a medical coding audit.

Establish Goals, Standards, and KPIs

The first step is to establish a goal for your audit. This way, the auditors will know what to look for when evaluating the coding accuracy of the different departments in the healthcare organization.

The goal of an audit should be to identify errors in a provider’s documentation and inefficiencies in their coding system, then determine the appropriate codes that should be used to replace the incorrect ones. The audit also helps determine any under coding, over coding, unbundling, and lack of modifier usage.

A well-rounded audit program will also establish a standard of accuracy within the practice’s coding processes that align with the organization’s strategic goals. A 95% coding accuracy is considered the golden standard.

Additionally, as a part of the audit, the auditor needs to pinpoint the key performance indicators that they can use to measure the overall success of each department’s medical coding system. Four key measurement criteria used to judge the quality of the coded clinical data of a practice are:

  • Accuracy;
  • Timeliness;
  • Comprehensiveness;
  • Consistency.

Determine the Sample Size

An organization cannot review all of its coding encounters. This is why it is important to perform targeted audits on a select sample of accounts that accurately represent the overall organization’s coding accuracy. The sample selected must be large enough to be statistically valid. Reviewing around 25-30% of claims per each hospital department and 10-20% of all claims per healthcare provider for physician practices is an ideal sample size, to begin with.

Identify the Type of Audit

Once you’ve decided on the size of the sample, you need to decide on the sampling methodology. Before you can conduct a medical coding audit, you will have to determine whether you are going to be performing a random or focused audit. A random audit will involve, as the name suggests, a random selection of encounters.

On the other hand, a focused audit involves a review of targeted procedures. These procedures are performed after identifying areas of contention where there had been a high volume of errors in the past.

Determine the Frequency of Audits

It is crucial to decide how often your practice conducts medical coding audits based on several factors. If your practice usually encounters a high volume of cases, then it might warrant frequent audits, or if there are any specific areas where you expect a lot of errors, a more focused and recurrent auditing approach may be taken. Preferably, audits should be conducted as frequently as possible so that patterns of errors can be detected and subsequent training can be provided to the coding team.

Additionally, if an under coding error that can provide higher reimbursement to the provider once corrected is discovered, according to the Medicare billing rule, the provider only has sixty days to re-bill for higher reimbursement. Infrequent audits could lead to the late discovery of such under coding errors and the loss of additional revenue.

Use Credible References

An auditor has to determine whether a procedure has been coded and billed for appropriately. To do this, the auditor gathers resources that can be used to find errors in coding and ways to maximize reimbursement. Resources such as coding manuals, AMA guidelines, Medicare, LCD, CMS, or other carrier reimbursement policies can help auditors in this aspect.

Additionally, all coding guidelines don’t correlate with commercial insurance contracts. Thus, your auditor needs to have in-depth knowledge and experience with coding policies and guidelines. This is why hiring an external third party to conduct your medical coding audits is an extremely effective way of ensuring compliance.

Appoint an External Auditor

Employing a third-party auditing service with expertise within the field and awarded coding certifications can provide organizations with an unbiased, objective perspective. Additionally, they also help identify any potential bottlenecks in your medical coding system. Experts have the experience and the resources needed to conduct the audit faster and more cost-effectively.

Reporting Your Findings

After the medical coding audit is complete, the auditor must summarize his findings in a report that the organization can use to rectify their errors. The report should document any over coding, under coding, unbundling, and lack of modifier usage.

A spreadsheet illustrating a comparison between the auditor’s choice of codes and the original code selected will help the coder understand where they went wrong and how to avoid those mistakes in the future.

A final summary report of all the audit findings will be created and communicated to the coders and other relevant team members in a meeting, to help eradicate any discrepancies. The auditor later follows up after some time to ensure policies and procedures are being followed appropriately.

See Also: What Does A Medical Billing And Coding’s Specialist Do?

Bottom Line

While many healthcare providers feel intimidated by the prospect of a medical coding audit, given the intricate nature of the rules of medical coding, it can be extremely beneficial for a practice’s success. The Center for Medicare and Medicaid Services and the Office of the Inspector General, both recommend that organizations regularly have their medical coding reviewed to gain an unbiased evaluation and identify recurrent errors that can be fixed to provide targeted training to their team.

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