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Medical Coding Audit Services

Samoya Skeete
Samoya M. Skeete
Certified Coder and Healthcare Auditor
Medical Coding Audit Team Lead

Chris Anderson
Chris Anderson
Chief Compliance Officer
Medical Coding Audit Team Lead

The medical coding process is notoriously complex. Worse, it can lead to massive amounts of liability if it is done wrong, even if it was just in error. You could even be accused of committing healthcare fraud.

The best way to make sure that your medical coding procedures are upright and producing results that are accurate is to audit them. The medical coding auditing professionals at Fortis Medical Billing can help.

Medical Coding is Important and Must Be Accurate

Medical coding is the process of taking a particular medical service and describing it in a shorthand, standardized code, such as the Current Procedural Terminology (CPT) or the Healthcare Common Procedure Coding System (HCPCS). This act of translation, though, can be tricky. Not all medical procedures or other services fit neatly into a code, some particular code designations overlap with others, and there are plenty of ways to manipulate the codes to game the system and fraudulently secure more money – a practice that amounts to the crime of healthcare fraud.

While this translation from medical service provided to a bunch of numbers and letters can be difficult, it is also essential in America’s healthcare system: Without it, payers would struggle to understand what medical services their policyholder received and that they are now paying for. The medical coding system makes the payment process much more efficient than it would be without it.

This makes it vitally important for the codes that are submitted to payers and health insurers to accurately reflect what medical services were provided. If the codes are wrong, then the amount charged will be incorrect. If the amount is too high, then the payer will have the right to recoup the overcharge and take other corrective actions. This is the case even if the overcharge was an isolated mistake and was unintentional. If the amount charged is too low, then the healthcare provider will not make the money that they are entitled to receive for their services.

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The Costs of Inaccuracies Can Be Massive

The severity of either of these outcomes is substantial, though lost revenue at least will not expose your healthcare company to liability and potentially even to criminal investigation.

Even losing revenue through inaccurate coding, however, can be devastating if it happens a lot. This is often the result of poor training for the company’s medical coders, who then develop a habit of coding a medical service incorrectly as something that is less expensive. That practice can consistently deprive the company of lots of money every day.

Furthermore, all incorrect medical coding – even inaccuracies that result in less money being charged – can make it appear to payers that the healthcare provider is performing the coded service at a strangely high rate. Given that so many healthcare services are provided every day, large insurance companies and programs rely heavily on data mining and algorithms to detect signs of healthcare fraud. One of the things that these programs look for is a type of procedure that is being done at suspiciously high levels. Healthcare providers that, through inaccurate medical coding, bill certain medical codes at rates much higher than other, similar healthcare companies can raise suspicions and potentially trigger an audit, which could lead to further suspicions on the insurer’s part as it discovers the inaccuracies. Just because the wrong code led to a lower bill, it was still a wrong code that was used – a sign that the coding process lacks vigilance.

However, making errors in medical coding and overcharging payers is much more serious. While it can produce short-term windfalls for the healthcare provider, the contracts that the company has with the insurer gives the insurer numerous rights to recoup its losses and take other actions. Importantly, those clawback provisions often give the insurer the right to pursue all prior payments, including those paid well in the past. In some cases, the insurer may even be allowed to audit a selection of the medical bills that you sent, find the percentage of overcharges in it, and then extrapolate that amount to the rest of your bills under the presumption that a similar percentage of overcharges would be found in them.

Even though the insurer would only be recovering the amount that it had been overcharged, coming up with that amount, which can be massive, can be extremely difficult in the tight time limits that must be met. Worse, the money obtained through those overcharges is rarely on hand, and was used for other needs of the business.

But these financial penalties are not the only thing that insurers can do. They can also conduct inconvenient and costly audits, demand prior authorization for payment – which can essentially cripple the payment process, slowing things down to a crawl – or take a host of other actions against your company, up to and including program exclusion. If the insurance company excludes your practice from its coverage, you could lose a significant number of your patients.

In the worst case scenarios, the medical coding errors can be forwarded to law enforcement for a civil or potentially even a criminal investigation.

Auditing Your Medical Coding Can Detect and Prevent Inaccuracies

The best way to detect medical coding inaccuracies is to audit them. By isolating a sampling of bills and the codes that are used on them and comparing them to patient charts and other documentation that shows what services were actually provided, you can see how accurate the codes are.

Ideally, the audit would uncover nothing – the medical coding accurately reflects the services provided and the correct amounts were being billed. Even if this is the outcome of the audit, company stakeholders benefit from the peace of mind that comes with knowing that they are not unknowingly exposed to substantial liability.

If problems are detected, though, they need to be analyzed immediately so that an appropriate corrective action can be taken.

This is where the real work begins.

Root cause analysis can be simple in some cases and difficult in others. It can also appear to be simple when it is actually difficult. For example, an audit can discover that a particular medical coding professional has been consistently miscoding a particular medical procedure. A good root cause analysis would dig further, though, and could discover, for example, that the training materials are correct, but that the medical coder was told by a supervisor to use the code that they did, erroneously thinking that it was the right one. By digging to the actual root cause, auditors can then perform a targeted investigation to see if any other aspects of the coding and billing process have been affected by the supervisor’s bad advice. It can also correct the actual root of the problem that the audit discovered – in this case, retraining the supervisor.

Once the root cause has been isolated, though, the job is not complete. In fact, this is where it is extremely important to have experienced auditors on hand: Settling on a corrective action that is both effective and financially efficient is something that requires years of experience and numerous prior audits in the healthcare industry. The company needs to make sure that the coding inaccuracies stop, while also preserving its resources for other causes.

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What to Expect During a Medical Coding Audit

Conducting a medical coding audit at your healthcare company is a straightforward task, but also one that requires some important decisions to be made by the company’s stakeholders. Depending on those decisions, the process of the audit can change.

Generally, though, medical coding audits go through the following steps.

Determine the Scope of the Audit

The first stage requires the most input from the healthcare company and its stakeholders. Broad audits are far more likely to uncover signs of inaccurate coding and how prevalent they are in the company’s bills to insurers. However, they are also far more costly to perform, simply from the scale of the material that will be reviewed.

Deciding what is appropriate and needed, as well as what the company has the means for, can be a very sensitive decision to make. While the auditors can guide the company’s stakeholders toward the best decision for their needs through a series of questions about the circumstances at hand, it will end up being the company’s decision to make in the end.

Gather Materials

Once the scope of the audit is decided, the next step will be to gather the materials that will be reviewed. This can include:

  • The bills that were sent to payers
  • Patient charts
  • Internal billing and coding policies
  • Other information, like testimony from healthcare professionals or medical coders

This needs to be very thorough, as documentation that is not gathered will not be reviewed. If materials show the signs of inaccurate coding, but then the audit does not gather them, the results of the audit would falsely state that there are no problems. Those undiscovered inaccuracies will continue to accumulate and threaten the company.

Corroborate the Codes with Other Information

Once everything within the scope of the audit is collected, it is then used to corroborate or back up the medical codes that were used on the bills that were sent.

This requires extensive experience in both medical coding as well as in the fields in which the medical practitioners at the company work. Medical coding auditors need to be very familiar with the options provided by the applicable medical coding system, as well as what kinds of medical services and procedures are being translated into it. They also need to see when insurers may challenge the use of a particular medical code in a given factual circumstance – arguing that the code was not medically necessary for the situation.

If Errors are Found, Conduct a Root Cause Analysis

Hopefully, the other sources of information corroborate the use of the medical codes on the bills. The audit can then close and a clean bill of health be issued.

However, if errors are found, then a root cause analysis should begin. This will determine what happened that led to those errors in the coding process. This can be anything from poor or outdated employee training to negligence to deliberate, fraudulent conduct.

Fashion and Implement Corrective Measures

Finally, once the root cause of the problems has been determined, the company can take corrective actions to ensure an end to them. Obviously, the precise nature of the corrective measures will depend on the cause that they are meant to counter. However, they will always need to strike a balance between ensuring future accuracy and cost to the company.

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Several Frequently Asked Questions About Fortis Medical Billing and Medical Coding Audits

What Medical Coding Issues Can Lead to Healthcare Fraud Claims?

The medical coding process is a common place for fraudsters to practice because there are so many different ways that the system can be manipulated in order to increase the provider’s profits. Just a few of the most common are:

  • Upcoding, where a particular medical service is provided, but the service is coded as a similar but more expensive one
  • Unbundling, where medical services that are typically coded as a group and at a discount are instead broken apart and coded individually (for example, closing the incision is generally bundled with the surgical procedure that created it, but can be coded as the additional medical procedure of closing a wound)
  • Unnecessary medical care, where the code used is not an appropriate or medically acceptable response to the symptoms presented or the patient’s needs

Avoiding these coding issues, or even the perception of them, is a crucial goal of all healthcare companies and the coding auditors that they hire.

Are External Audits Better Than Internal Ones?

It depends on the company’s needs and circumstances. However, external auditors provide a level of independence that cannot be matched by employees within the company, who may have interests that make them biased in ways that skew the results of the audit. Additionally, many healthcare providers do not have the resources to dedicate to assembling an internal team that has enough experience to conduct the audit in a reliable way.

Finally, and perhaps most importantly, external auditors will have conducted similar audits before for other healthcare companies. They will have seen medical coding setups that have worked in the past for these other companies, as well as those that have not worked well. That breadth of experience can lead to guidance or ideas that you would not have considered, and this can be of great benefit to the company’s future.

What Sets Fortis Medical Billing Apart from Other Auditing Teams?

One of the biggest differences between Fortis Medical Billing and many of its competitors is how broadly experienced our auditing professionals are. Many of them only came to Fortis after long and successful careers spent within the federal government investigating allegations of healthcare fraud. We know what to look for when we audit medical coding data because we have done it in the past.

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Fortis Medical Billing: Professional Coding Auditors

Auditing your medical coding practices and results should be a regular occurrence. Inaccuracies can expose even the most lucrative healthcare companies to crippling amounts of legal liability, not to mention the bad publicity that it can generate.

The medical coding auditors at Fortis Medical Billing have some of the most experienced healthcare investigators and medical coding auditors in the field. Many of them are former federal investigators who worked in the law enforcement agencies tasked with detecting, investigating, and prosecuting healthcare fraud, such as the Office of Inspector General, Federal Bureau of Investigation, and the Department of Justice, as well as the Centers for Medicare and Medicaid Services (CMS)

Contact them online to get started on a medical coding audit at your healthcare company, or call their office at (866) 808-4160.

Coding Audit Services