Prepare for Payer Audits and Avoid Compliance Issues

by | Aug 25, 2016 | Medical Coding News, Resources | 0 comments

Healthcare providers face different types of medical record audits and with the changing focus and increasing expectations of payers, advanced preparation is crucial for success. Audits can be conducted to verify general compliance or they can be prompted by actual charges or by indications of noncompliance.

Service providers face three different types of audits today – Medicare audits, Medicaid audits, and private payer audits. These audits focus on health care facilities that provide high volumes of certain high cost services, large volumes of evaluation and management services, or consistently refer patients for certain types of testing. The goal is to examine out of the ordinary medical billing or coding practices and evaluate compliance with payer rules and regulations. Documentation will be examined to ensure that the services provided were reasonable and necessary to diagnosis or treat a patient’s medical condition. Understanding payer contracts is crucial as different payers have different definitions of what constitutes “medical necessity”.

The main issues that compliance audits look for are:

  • Overcoding or undercoding
  • Unbundling issues
  • Misuse of modifiers or medical necessity
  • Misuse of Advanced Beneficiary Notification
  • Violations of basic documentation rules
  • Conducting a special test without an order in the record
  • Performance of special tests without interpretation and report
  • Billing for Evaluation and Management services without proper documentation

Revenue Cycle Intelligence recently reported that the Office of the Inspector General (OIG) audit revealed that a New York-based hospital overbilled Medicare by over $14.2 million between 2011 and 2012 as it did not have appropriate medical billing measures to prevent and identify improper payments reported. OIG found that about 43 percent of the hospital’s Medicare claims were improperly billed to Medicare. The audit report stated that the errors occurred mainly because the hospital did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors.

Maintaining full compliance with Medicare and private payer billing requirements is possible with professional pre-audit services. With such support, providers can maintain audit readiness with a compliance plan. For instance, detailed medical chart review is necessary for Healthcare Effectiveness Data and Information Set (HEDIS) compliance. Professional services are available to help physicians and insurance companies determine if the quality of care measures, as defined by the National Committee for Quality Assurance (NCQA) NCQA for the annual HEDIS audit have been met.

Pre-audit services are also available for Risk Adjustment Data Validation (RADV). Risk Adjustment Data Validation is used by the Centers for Medicare and Medicaid (CMS) to verify the accuracy of the HCCs (Hierarchical Condition Categories) that are submitted by Medicare Advantage (MA) health plans for payment. RADV audits involve sample document selection, review of medical records pertaining to the MA plan, medical record review, and payment error calculation in cases where the diagnosis and claims data do not match up.

The advantage of opting for pre-audit services are that they help providers ensure that their documentation supports the claims submitted for payment and proves the integrity of their services. Experts in the medical billing companies providing these services will assure clean record keeping by verifying if:

  • the exam notes support the diagnosis
  • all the medical records are signed
  • documentation is available for all visits billed
  • medical record supports orders for special tests
  • all referrals are documented in the records

With professional support, there is no need to panic if you are notified of an audit. By identifying irregular claims and anomalous billing patterns, pre-audit services will uncover potential fraudulent and/or abusive practices and help physicians’ practices ensure compliance and avoid penalties or litigation.