Practice Management Alert

Tip: Experience trumps titles when choosing an internal auditor

The key to a successful internal audit is preparation - which means you can't just decide to perform an audit when a few spare hours pop up in your schedule. Instead, ensure a fruitful internal audit by taking these preparatory measures.
 
Before you begin, "drawing out the plan of the audit is very important," says Curtis Udell, CPAR, CPC, CMPA, senior advisor with Health Care Advisors Inc. in Annandale, Va. Your practice's compliance plan should outline specific audit procedures, and you should take time to document each step of the process, he says.

For a smooth audit process, use these four preaudit steps as a guide:

1. Choose an audit approach. Basic audit types are retrospective (examining paid claims) and prospective (examining new claims before you file them). Performing a retrospective audit is usually more informative because you have a wealth of historical data (such as documentation, charged codes, and received payments) to draw on, as opposed to a prospective audit, in which you can only analyze the documentation and codes before you charge them, Udell says.

Try this: A prospective audit is "hit or miss" in identifying patterns of errors that you can work to correct, Udell says. Your compliance plan should, however, try to incorporate a "two-tier audit process that is both retrospective (probably 70 percent) and prospective (30 percent)," he says. Performing a mixture of both types of audits will allow you to analyze the most current data and catch mistakes before claims drop, but also allow long-term analysis of larger trends.

Set limits: Retrospective audits "allow you to analyze more data so you can see patterns of coding [and billing] errors and have stronger, more convincing results to point toward an action plan," Udell says. But don't try to cast your auditing net over too much at once, he says. You should define specific objectives, code sets and time frames so you don't over-commit time and resources.

Important: When you find over-coding in a retrospective audit, you will need to disclose that fact to your payers and will probably need to refund payments.
 
2. Collect benchmarking data - and use it. Identify the codes you should focus on by charting the frequency data you have for each code against your specialty's average (called benchmarking data). Charting out the bell-shaped curve for code utilization is a good way to visually inform your staff where your billing stands (whether you're over- or under-utilizing certain codes) and why you're going to focus on auditing and correcting certain areas, Udell says.

Success story: One practice Udell works with analyzed benchmark curves for E/M coding and found it was over-reporting level-three visits by 40 percent. When Udell focused on this area [...]