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Top Strategies for Improving Your Medical Coding Audits


The one thing that never changes in healthcare is… change. In a world that’s constantly advancing, change is inevitable in the medical environment at every turn. Pandemics happen. Medical codes are added. Hospital policies change.  Industry payment models change.  Regulatory requirements change.  All of this comes at a great burden to health systems whose profit margins are shrinking and are therefore trying to do more with less.  Yet, change persists, and health systems are forced to keep up.

Specifically, the revenue cycle is filled with complexities and constant change – particularly in the complicated world of medical coding. With tens of thousands of medical codes and ever-evolving rules and guidelines, it’s a field with a lot of room for error. Yet, getting it right is of critical importance for healthcare systems of all sizes. Over-coding comes with the potential for massive financial penalties and regulatory concerns, but at the same time, under-coding can mean millions of dollars in lost revenue. It’s a delicate balance that requires ongoing education, training, process improvement, and yes – auditing. Auditing provides much-needed insight into your organization’s coding patterns and trends that can be truly eye-opening.

The Value of Medical Coding Audits

While auditing is a term everyone dreads, it’s a valuable and necessary process that serves numerous key functions for revenue cycle teams within all health systems, regardless of size. Conducting routine audits not only helps ensure improved compliance and accurate reimbursement, ensuring your coded data is accurate has many downstream impacts – from managed care contract negotiations to quality scorecards and comparison studies such as Leapfrog, Healthgrades, Physician Quality Reporting System (PQRS).  Finally, conducting routine coding audits supports clinical documentation improvement (CDI) efforts by helping identify frequent errors and opportunities for improvement. As trends and issues are identified, those opportunities can provide actionable coder feedback and drive targeted training programs – all leading to better long-term accuracy and compliance.

Coding Audit Best Practices Checklist

While no one looks forward to an audit, an effective program that follows best practices will help organizations reap the rewards – a better bottom line, peace of mind that your efforts are compliant, and the ability to identify opportunities for focused training and ongoing performance improvement.

If you’re not sure if your organization’s coding audit program is where it needs to be, here are some best practices to consider when evaluating your strategy.

  • Sample Sensibly. As with most expenses, the cost of a coding audit is dependent on how many encounters are audited. Keeping your sample size to a manageable percentage, yet large enough to help identify trends and areas of opportunity is critical. The industry norm is to audit approximately 2 percent of inpatient encounters or 1.25 percent of outpatient and/or professional encounters. The goal is to increase coding performance to a minimum of 95% and to ensure the strictest compliance to regulatory guidelines.  From there, be sure to select the appropriate sampling methodology. The three options are random, stratified random, and focused. While random is truly just that, a stratified random audit can help ensure departments and coders are proportionately represented – which will help ensure the information you’re getting allows you to review specific coders, DRGs, providers, and/or ICD/CPT codes. On the other hand, a focused review is helpful to evaluate previous areas of opportunity, or to evaluate performance in a certain specialty area. Finally, using a technology-enabled approach can improve the effectiveness of the focused audit by using sophisticated, rules-based algorithms designed to find those encounters that are more likely to have coding or document errors.
  • Time it Right. Coding audits can be performed as needed by the organization but doing so on a regular cadence provides numerous benefits. The first is the Medicare 60-day re-billing rule, which requires organizations to repay Medicare overpayments within 60 days of identification. Conducting regular audits also helps organizations better initiate “just-in-time” training that can help rectify reoccurring problems before their financial impact is compounded. Finally, coding audits can either be performed immediately after coding (pre-billing / concurrently) or after the bill has dropped (retrospectively). While both methods can help identify problems, doing the auditing before billing can reduce denial volumes, as well as lower the incidence of re-billing, which is more likely to trigger external audits that can be time-consuming and costly.
  • Call in the Experts. Finally, organizations must wrestle the question of whether to audit using your internal teams or to call in the experts with an outsourced partner. While both can be effective, the pros of using an external resource really stack up. Using internal teams can cause a backlog in regular workflows, which can have a negative effect on the revenue cycle and employee morale. Secondly, having a third-party firm can help improve compliance, while also providing an objective perspective. Lastly, an outsourced partner is likely to have more scalability and the technology platforms needed to help streamline and improve the efficiency and accuracy of the audit process. In most cases, working with an expert outside resource will identify enough instances of under-coding to provide increased revenue that will easily offset any associated expenses.

If you need help evaluating or implementing your medical coding audit strategy to ensure it’s aligned with best practices, GeBBS Healthcare Solutions can help.  With more than 2,000 exceptional medical coding and auditing experts and a wealth of vast experience supporting organizations with their audit strategy, the GeBBS Healthcare Solutions team is here to help.  To learn more visit gebbs.com  or click here to Request for consultation.

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