The Dreaded Audit

Question: What can auditors do to liven up a party?

Answer: Not show up.

While there are plenty of mediocre auditor jokes, it is even less amusing to become the subject of a payer audit. Unfortunately though, for medical billing and coding professionals this can almost be considered an inherent occupational risk. The good news is that by keeping flawless records and taking proactive measures, the inconvenience brought by an audit can be minimal if not all together avoided.

First, two important proactive measures the medical billing and coding professional can take is to always double check submissions and ask for clarification if anything is unclear. Of course, the onus of the audit will not fall directly onto the billing and coding professional; it will rather fall on the person or agency which has received payments, in most cases a health care facility or individual provider.

Many health care providers conduct regular internal billing audits, which can detect and correct instances of both under- as well as over-billing. It is very possible that revenue lost through the opportunity cost of an external audit may be less than that lost simply by under billing or forgetting to bill for medical procedures. A recent study revealed 44 percent of claims were under-coded, compared with one percent that was over-coded. Either way, it is always a good idea for health care providers to conduct internal audits of the work submitted by their medical billing and coding professionals.

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If the medical service provider is well organized, he/she/it will undoubtedly have access to daily, weekly, monthly, quarterly, and yearly statistics on billing revenue that is coming in, and should also be able to detect unexpected discrepancies created by billing and coding mistakes. Looking at statistics should also involve a comparison with other medical providers who provide a similar service, and an investigation into observable discrepancies. Finally, medical service providers should also pay particular attention to areas in their specializations where billing and coding can become more subjective – that might raise concerns for payers – and work to make these stand out less.

Still, no matter how many internal audits a health care entity conducts there is always the risk of triggering an insurance company’s red flag. A 2000 study in the Journal of Family Practice presented the situation of over 1,000 medical charts which were reviewed by six coders and 10 physicians, resulting in many disagreements over what the proper codings should have been. Indeed, medical coding and billing is sometimes more of an art than a science. Some of the best defensive maneuvers medical providers can take to prepare for an outside audit are:

  • Document coding education and chart reviews, and have these be on at least an annual basis
  • If there are any billing and coding discrepancies, make sure an investigation and plan for resolution is documented
  • Develop, implement, and document acceptable billing and coding standards

If after taking every precaution an audit still takes place, the medical provider is advised to:

  • Consider obtaining professional legal assistance, and at least designate an experienced medical billing and coding professional to manage the audit
  • Make sure to meet all deadlines
  • Get the specifics of what, how many, and why. Why is the audit taking place? What is the purpose of the audit? How many claims are involved?

Ironically, another possible way to avoid an outside audit is if you are already involved in one. An outside payer will often defer an audit if another is already ongoing.