Internal Coding Audit Best Practices
Now that we are six months into the new ICD-10 classification system, it’s important to determine whether coders have incorporated all their pre-ICD-10 education and are applying it appropriately. One critical way to provide assurances regarding coding accuracy and compliance is to perform regular, ongoing internal auditing. Additional benefits include reducing payer denials, improving clinical documentation, enhancing data integrity and increasing communication across the organization. Some things to consider:
Determine What Types of Records to Be Audited.
- Check your casemix – what are your top 10 DRGs? What are your top 10 procedures performed in the facility for inpatient and for outpatient services? What are your high volume/high risk diagnoses and procedures?
- Check your facility’s PEPPER (Program for Evaluating Payment Patterns Electronic Report) report – The report provides provider-specific Medicare statistics for target areas that are often associated with improper payments due to billing, DRG and/or admission necessity concerns.
- Check current Office of Inspector General (OIG) reports and annual work plan to target some of the areas of OIG focus.
- Include a random sample of records as well; sometimes the results can be telling.
- Include types of accounts for which deficiencies were found on prior external audits or payer denials.
Determine Volume of Records and Frequency to Be Audited.
- Sample size should be statistically valid for best results and is usually based on a percentage of volume, generally 10% of the case volume.
- Be sure to include a representative sample of each coder in the audit.
- Frequency of auditing should be determined by individual facility based on overall volume (higher volume may require more frequent reviews), previously identified problem areas, and other audits conducted within the facility outside of Health Information Management (HIM) department.
- Generally, quarterly reviews are recommended with at least one of them being an external audit in order to validate internal audit findings/process.
- Whether an audit is retrospective or concurrent is dependent on individual hospital resources for holding up the bill while auditing concurrently versus re-billing if variances found.
- Establish a method for tabulating variances; consider weighing critical discrepancies (e.g. DRG impact) heavier than noncritical discrepancies (e.g. minor secondary diagnosis with no impact).
- Calculate coder specific and hospital accuracy rates.
- Establish an acceptable accuracy rate; traditionally 95% has been the standard.
- Identify root causes of coding discrepancies and the strengths and weaknesses of individual coders.
- Utilize and base audit review and findings on official coding guidance with consideration of payer requirements.
- Allow for coder feedback.
Corrective Action and Follow-up.
- Create a comprehensive final report outlining specific variations with recommendations for improvement and suggestions for education, quality control and documentation.
- Review findings with all pertinent staff and departments including coders, clinical documentation improvement department, compliance officer and revenue cycle staff.
- Formulate a corrective action plan for improving any identified areas of concern.
- Provide education and training for any identified areas needing improvement both individually and department wide.
- Identify any problematic areas which may warrant intensified review.
- Re-bill as appropriate for findings that have affected reimbursement.
- Use audit results to promote and enhance physician documentation initiatives.
Create Ongoing Compliance Plan for Auditing
- Establish and standardize a plan for auditing and coding compliance.
- Formulate a clear outline of the process incorporating all factors noted above.