Best Practices for Coding Audits: Recommendations, Best Practices, and Common Pitfalls

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In coding, like most every other area of life, there is not one solution for every organization’s potential problems. Coding is an ever-expanding area of focus for most every healthcare organization, and nearly every health system and the facility has or is making substantial investments in coding staffs and making these departments more robust. There are hurdles and copious challenges for those managing such programs as they continue to change, but they can be overcome, of course. One of the most important factors to consider when leading such programs are coding audits.

Are they necessary? If so, how often? What is involved? How do you take action on the outcomes? How can you traverse the pitfalls? All good questions, but daunting to answer nonetheless. Or are they?

Coding audits, also known as coding reviews, have been recommended by the Office of the Inspector General (OIG) and the Center for Medicare and Medicaid Services (CMS). These organizations recommend that healthcare organizations have their coding reviewed independently on a regular basis to obtain an unbiased independent evaluation of the provider’s coding and to ensure accuracy and compliance with current rules, guidelines, and regulations, of course. Only an independent review can identify errors and mistake-driven processes regarding coding. These reviews, or audits, ensure codes are up-to-date and appropriate changes are incorporated into the provider’s coding protocols. Additionally, the organization whose name is on the claim is responsible for any mistakes or errors on the claim.

Outsourcing coding audits: What to look for in a partner
In the event that you outsource your health system’s coding audit, we recommend several things that should not be overlooked, including: ensuring that results are quantifiable and actionable; the ability to audit by coder, by error type or by physician; and to perform “slice and dice” data analysis to unearth trends within your team’s coding, and to identify opportunities for correction and education for the improvement of the overall process.

What to do with the data: Best practices
When it’s time to take action after the audit, MRA recommends a few best practices. This includes tying the education of the coder and the physician responsible for claims to the results they generate, then monitoring their progress for success. Should a coder or a physician responsible for coding fall below a certain threshold, you may wish to consider a more frequent follow-up schedule or more regularly scheduled audits of these specific individuals to ensure their compliance and operational standards for the best practices you’ve set for the organization.

It’s also important to note that conducting coding audits is more than simply checking arbitrary boxes on an organizational checklist. These are important practices and mean staying in compliance with federal regulations to ensure the organization is billing appropriately for the services rendered. Audits help the organization gain a granular view of all coding practices within the organization and how to best capture efficiencies and revenue.

Finally, ensure opportunities for documentation.

Establishing a sample size
When establishing a sample size, there are many things to consider. For example, for coding audits that MRA conducts on behalf of our clients, we recommend selecting between 20 and 25 charts per coder for facility/technical reviews; and selecting between 20 and 25 charts per provider when reviewing professional fee (“ProFee”) encounters. Ten or fewer charts audited is too small of a sample size and any error herein can overly influence the accuracy of the audit.

The OIG provides further compliance insight regarding sample size, including requirements for statistical significance that every healthcare organization should be familiar with. Regarding case selection methodology, MRA recommends considering the following:
• Track and trend payer audits to identify where payers will focus – this can act as a crystal ball for future denials.

• Employ the OIG work list/work plan as appropriate.

• Make use of denial data to influence case selection.

• Implement an audit pattern where the first quarter audit is random while the next quarter is targeted and alternate from there.

• Random sample audits give a better understanding of how your coding team is performing holistically and provide direction on where to focus targeted reviews.

• The targeted cases should be chosen once there is a known issue; for example, a certain DRG may be receiving higher denial rates or have a lower accuracy rate during the random sample audit. This should send up a red flag and require further review.

As you know, coding accurately reports what happened during the provider-patient encounter and requires a level of detail by both the coder and the provider. All codes reflect the content of the doctors’ documentation. Coding audits identify areas and processes that can be improved, which is especially important for accurate coding and maximized reimbursement.

The importance of regular coding audits
Healthcare organizations should always perform internal coding quality audits especially – now in the post-ICD-10 environment. However, 3rd party reviews provide a crucial second set of eyes. These 3rd party coding audits can validate internal findings or unearth other areas for improvement. As such, coding and documentation audits are critical to achieving revenue cycle improvements. When organizations build ongoing audit programs that are tied to physician and coder education, they will inevitably see lower denial rates and increased reimbursement.

Every health system should develop a coding quality audit plan, communicate audit findings, and educate coders and providers based on these findings. Finally, they should use audit findings to refine best practices and ensure accurate coding. Coding quality, after all, is everyone’s responsibility, no matter their role in the care spectrum.

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