Practice Management Alert

First determine if a prospective or retrospective audit is best.

Medical offices that don't conduct regular internal chart audits are asking for trouble, because internal audits internal audits are a key tool in helping you improve your billing accuracy and increase your overall profitability.  Further, internal audits can reduce billing mistakes that may result in a payer audit.

Internal chart audits provide practices with a snapshot of documentation, coding and billing accuracy. They allow you to identify areas where practice inefficiencies may be delaying payment or allowing for missed charges. Chart audits also help you keep your practice in line with CMS and private payer documentation and coding guidelines.

Another plus: Regular auditing shows you how your practice would fare against an outside audit. Internal audits will uncover your areas of deficiency and then your practice can actively correct the errors and discrepancies.

Consequences: Without regular auditing, you could be making regular billing mistakes over and over again. And if an outside auditor finds those problems, the practice might have to refund thousands of dollars and face further penalties and fines.

Internal chart audits are serious business. But how can you decide:

• Which type of audit is right for your practice?
• How often you should conduct audits?
• Which billing practices you should focus on during an audit?

Read on for answers to the above questions from a panel of internal chart audit experts.

Get to Know the Audit Types

Basically, there are two types of internal chart audits:

• In a prospective audit, the practice examines new claims before it files them.
• In a retrospective audit, the practice examines paid claims.

Which works best? It all depends on the practice.  

Pros: A prospective audit is more of a billing validation check and is the safest from an auditing perspective, as problems can be identified and corrected before the claim is sent.

Cons: But while prospective audits may be the safest route, the method is not without its potential pitfalls. It is advantageous to do prospective chart auditing because this allows for correction of errors and capture of missed charges prior to the billing of the claim. However, this type of chart audit can delay billing.

On the other hand, the retrospective chart audit does not delay billing, and the audit process can proceed more quickly because the entire payment process is completed before the beginning of the audit.

Best bet: Each practice must determine for itself what types of audits their staff can reasonably complete, and what effects on cash flow the practice can handle.

Set a Twice-a-Year Auditing Goal

The frequency of your audits will depend on the size and type of your practice. However, the more often you can audit, the cleaner your claims will be, so experts recommend frequent audits.

Larger offices may have resources to conduct audits on a continual basis with different areas of focus throughout the year. Smaller offices may have the resources to conduct monthly or quarterly audits.

In a nutshell: At the bare minimum, you should conduct an internal chart audit on each physician at least twice a year. And if you identify a billing or coding problem, that interval should become more frequent. 

And when deciding on audit frequency, consider the amount of resources the practice can devote to the audit while simultaneously conducting day-to-day office business.

Focus Audit on Commonly Billed Services

Your internal chart audit should deal chiefly with procedures and services that your office provides every day, experts say.

Example: Multi-disciplinary medical offices often have a set schedule, in which they audit different services at different times of the year.

Most offices should concentrate on their evaluation and management code levels during an audit, because E/M leveling is always looked at carefully by many payers. However, if your office does more procedures or lab services, you should concentrate your audit efforts there.

Try this: When a medical office is setting up its own internal audits system consult the Work Plan from the Office of the Inspector General (OIG).

This provides information on those services that have been identified as potential areas of fraud or abuse.