The value and purpose of medical coding audits

Day-to-day operations in a medical practice involve significant amounts of clinical documentation and medical claims information. Ensuring accuracy of that information via regular audits — to ensure all processes and transactions are functioning appropriately — is an imperative for both risk mitigation and revenue cycle management.

Audits also serve a variety of purposes such as education. It is helpful for a medical practice to understand the complexity of medical coding and billing which is why educating staff and providers is vital. Another service of an audit is to review quality of coding to ensure accuracy is met. Areas of strengths and weaknesses can be identified and can help the practice set up a quality assurance process. The QA process can also help onboard new coding staff and providers. Lastly, an audit is a must to protect the medical practice in maintaining compliance.

Audit goals

Medical coding audits should include a select sample of patient encounters as coded and billed. To design an audit, identify strategic initiatives, such as performance measures, validation of coded claims, prevalence of diseases, and treatments and adherence to policies and procedures to ensure compliance.

An audit may be performed by using an internal auditor — a staff member or individual who specializes in auditing of medical record documentation. If such expertise is unavailable, an external auditor can be hired.

There are many goals in an audit:

• Identify errors in provider documentation
• Identify inefficiencies in payer reimbursement
• Determine usage of incorrect medical codes, such as use of deleted or modified codes
• Uncover areas of payer rules if medical practice billed inappropriately
• Identify fraudulent billing practices, whether intentional or unintentional
• Identify errors in claim scrubbers or claims software deficiencies utilized by the medical practice
• Determine undercoding, overcoding, unbundling and lack of modifier usage
• Address areas of risk that may prevent a visit from a Recovery Audit Contractor (RAC)

Steps for performing a medical coding audit

The process of performing an audit involves many steps that should be determined during the planning process.

1. Identify the type of audit. Define areas of contention in which the medical practice feels there may be higher volumes of errors or based on RAC reports defined by CMS.
2. Select the sample size and whether the audit will be prospective — before billing, which can identify provider documentation gaps or coding submission — retrospective (after billing, which can determine correct payer reimbursement and/or denials).
3. Set a time period to pull samples to audit, such as one week, one month, one quarter or an entire fiscal year.
4. Select the number of claims to review. For hospital departments, 25 to 30 claims might be ideal; for physician practices, 10 to 20 claims per physician is a good place to start.
5. Assess accuracy of provider documentation to ensure practice adheres to policies and procedures. For example, the practice requires an order in all medical records of patients who require MRIs. Is the provider documenting the order per policies and procedures?
6. Track data by use of spreadsheet or an electronic application which can convert to a readable report.
7. Present the findings to the medical practice. Educate staff and providers on identified areas of opportunity for improvement, and then update policies and procedures accordingly. Follow up after a determined amount of time and ensure quality assurance is in place.

Ultimately, the goal for the practice is to use the data to help improve quality of care for patients. Information obtained from an audit can be used as a tool to improve the practice’s overall performance.

Audit findings are intended to enrich quality of patient care by ensuring clinical documentation accuracy and can help improve safety measures and identify financial gaps. In the end, a successful audit will help the healthcare organization standardize outstanding business practices.

Learn more

If you’re ready for some spring cleaning of your documentation, MGMA Chart Audit Services might be right for you. Our coding experts can assist your practice in providing education to optimize your understanding of medical coding. This includes a thorough review of charts for completeness, accuracy and compliance for CPT, ICD-10-CM, HCPCS and modifier usage. Results from the audit are then paired with the best advice for improvement based on the findings. 

Click here to find our audit needs assessment to help you determine if a chart audit is right for your practice.