Create an Atmosphere of Compliance

With the right tools and the right attitude, your practice can stand up to claims payment scrutiny.

On June 25, 2014, the Centers for Medicare & Medicaid Services (CMS) reported that its Fraud Prevention System identified or prevented $210 million in improper Medicare payments during its second year of operation (2013). CMS also announced that it expects to expand its use of the Fraud Prevention System beyond the initial focus of identifying potential fraud into areas of waste and abuse.

What Are Your Intentions?
The only difference between fraud and abuse is intent. Many good physicians find themselves in trouble with the government simply because they weren’t aware of updates to the government’s rules and regulations, or they trusted someone else to handle claims without auditing their progress. A physician found guilty of fraud may be placed on a very expensive corporate integrity agreement (CIA) to avoid sentencing or losing his or her license to practice medicine. A CIA is very daunting and time-consuming, and lasts a minimum of three years.
If you are in a situation where your medical organization or private practice has received a CIA, don’t view it as a punishment, but as an opportunity to improve operations. The long-term goal of any CIA is to address challenges that have occurred in the past and to create a culture of compliance in the organization — something you should be doing anyway.
You can do this by creating a compliance program that is clear and concise. Everyone involved should be able to identify the process steps, obligations, deadlines, and time frames. Then, implement your compliance plan using a team approach. When expectations are clear and everyone’s on board, you’re certain to succeed.

Create a Safety Net
A compliance program will not stop the government from knocking on your door, but it will serve as a safety net in the event someone in the practice falls prey to fraud. There’s a lot more to compliance than creating a manual and putting it on a shelf, however.
An effective compliance program requires ongoing oversight by a designated compliance officer or committee. It’s imperative to document communication between the providers, administration, compliance officer/compliance committee, owners, billing team, etc., on a regular basis.
The Office of Inspector General (OIG) recommends examining three months of claims/services submitted following compliance program implementation to establish a benchmark against which to measure future compliance.

Tip: To make quick work of benchmarking, check out AAPC Client Services’ E/M Utilization Benchmarking Tool

Following the initial period, periodic audits are recommended (at least annually) to ensure the compliance program is being followed.
Determine What Needs Auditing
There are two kinds of audits a medical practice should conduct: a standards and procedures audit, and a claims submissions audit. A claims submission audit can be done either prospectively (prior to claims being sent out) or retrospectively (after the claims have been sent out).
A standards and procedures audit enables you to determine whether office policies and day-to-day processes are in compliance; whereas, a claims submissions audit can determine whether physicians and staff are submitting claims in accordance with federal rules and payer policies. For the purposes of this article, we’ll focus on the latter.

Plan Your Claims Submissions Audit
In conducting a claims submissions audit, you first have to decide:

  • Whether you will perform a retrospective or prospective audit
  • What type and size of sample you will use:
  • Random
  • Controlled
  • Select payers
  • All payers
  • What audit tools you will use
  • The risks you should be monitoring

Tip: AAPC Client Services also offers complete medical audit services. Whether you need a simple 20-record chart audit, or a comprehensive evaluation of your revenue cycle, AAPC Client Services can help.

It doesn’t matter if you do prospective or retrospective auditing, the result will be the same. You’ll know if you’ve performed the claim submissions audit appropriately, if:

  • Documentation is complete and accurate
  • Claims are accurately coded and reflect all services provided
  • Services or items provided are reasonable and necessary
  • Claims are submitted with necessary National Provider Identifier (NPI) information
  • Claims are submitted with all correct insurance and demographic information
  • Incentives for providing unnecessary services exist

The only difference to consider is that if you decide to conduct a retrospective audit, you may end up doing a take-back to payers.

Sample Size and Type
The other aspects of your audit (sample size, audit tools, and risks) are subject to your practice and other logistics. In general, the OIG recommends auditing five or more medical records per federal payer or five to 10 random medical records per physician, or 10 percent of the payer’s/physician’s case volume.
A random sample of claims from a payer or physician is usually audited first. Include in the audit a review of your most commonly used diagnosis, procedure, and supply codes and modifiers. If necessary, you might follow the audit up with a focused audit of just claims that report codes identified as high risk for fraud or abuse.

Audit Tools
Using a claims analyst checklist will help you identify the appropriateness of coding, documentation, and completeness of claims. The checklist should help you answer these important questions:

  • Was the service actually performed and was it documented appropriately?
  • Are correct physician and practice identification numbers listed on claims?
  • Is documentation appropriately signed and dated?
  • Is there a procedure code that would more accurately reflect the service performed?
  • Does documentation support the code(s) reported?

The Only Tool You’ll Ever Need
If you’re looking to automate much of this manual labor, the multi-purpose tool you should consider is AAPC’s newly-launched compliance solution software, 7Atlis. Built off of the OIG’s seven fundamental elements of an effective compliance program, 7Atlis provides practice administrators and compliance officers with the necessary resources to conduct an audit:

  • Built-in checklists
  • Risk analysis based on audit results
  • Documented communication

7Atlis also enables you to:

  • Conveniently house all of a physician practice or healthcare organization’s current policies and procedures, contracts, forms, fee schedules, etc.;
  • Store a comprehensive library of policies and procedures and forms that clients can pull out and tailor fit to the needs of their medical organization; and
  • Use built-in training courses with post-course quizzes and automatic grading, to be kept in each employee’s file.

AAPC has received several testimonials from clients already using this innovative new compliance tool, saying it has become their new best friend! Log on to to request a free webinar demo of 7Atlis, or call AAPC at (800) 626-2633.
Ultimately, you’re looking for a 95 percent accuracy rating. When you’ve completed your audit, it’s time to act on your findings. In our next installment, we’ll discuss how to train your staff on these new policies and procedures.

Michelle Ann Richards, CPC, CPCO, CPMA, CPPM, has 20 years of practice management experience and holds a Bachelor of Science in Health Care Administration. She has been an auditing and compliance consultant for AAPC since 2008 and was promoted earlier this year to compliance manager, AAPC Compliance Division. Richards teaches the CPPM boot camp and is a member of the Elyria, Ohio, local chapter. You can reach her at

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