CLOSER LOOK Conducting annual in-house audits is the best way to stay on top of claims denial trends.

Are you leaving money on the table? One of the best ways to find out is to conduct regular internal billing audits. Among other things, an audit checks that you're appropriately submitting your coded claims per payer, state and local guidelines. They help catch minor reimbursement issues before they become big problems. They also help identify any weak spots in your coding and billing practices that can trigger denials. Here are a few tips to make sure your next internal billing audit goes smoothly.

Set a goal

If you don't have an in-house auditing policy in place, start there. Your policy should advise your staff how they can assess coding quality performance with a consistent audit method. Typically, we recommend that these audits be held annually, though you may want to perform them more frequently if you notice a problem with your revenue cycle. As part of the process, you also want to set a goal for the audit. Do you want it to be an annual benchmark to indicate your overall coding accuracy, or do you want to hold audits whenever you see an uptick in denials? Once you set your goal, you can better tailor the rest of the audit to finding and implementing a solution for any billing issues.

Choose the type of review

There are 2 different styles of claims audits: random or focused. The former will be a general sample of your practice, whereas the latter is a sample from a pre-defined challenged area, like claims from a specific physician, specialty or payer.

For example, you may want to hold annual internal audits to get a benchmark of your overall coding accuracy. For this, you'd conduct a random audit, choosing a selection of claims at random from different physicians, payers and specialties. But after conducting this random audit, let's say you see that there are consistent issues with your total joint claims. You can then hold a focused audit where you take a sampling of only total joint claims and check those against your current payer policies and contracts. Once you find the problem in that focused audit, you can then adopt corrective measures.

Understand the scope of the audit

Consider whether you need a retrospective or prospective audit for claims submission. In a retrospective audit, you review accounts and reports after you've submitted the claims and received reimbursement from the insurance carrier. In a prospective audit, you review the accounts before submitting the claims.

When most people think of audits, they think of retrospective ones. But prospective audits can be helpful if your coders have trouble submitting claims from a particular physician or service. These prospective reviews help make sure that the claims you file have the required documentation, are appropriately coded and comply with payer rules.

As far as how many claims to audit, we suggest using the Office of Inspector General's recommendation. The OIG recommends 3 methods for drawing random samples for your audit. Those methods include paid claims, claims by payer or claims including the top denials by payers. Paid claims are the largest group and contain all those where the payer has reimbursed you for the procedure. Claims by payer means selecting a random sample of claims from a specific payer to audit. Finally, you can audit a sample of all claims containing 1 of your top 10 denials from your payers. The OIG recommends choosing at least 5 medical records per payer, or 5 to 10 medical records per physician to audit.

Assign an auditor

Assign a single individual to be in charge of the audit. This person can be one of your top coders or your billing manager. She should know the codes for various procedures and be able to check that payers are reimbursing claims in accordance with your contract terms. This person should also compare how frequently you're performing certain services over a specific time period to the latest industry benchmark data.

Analyze the claims

When it's time to start checking the claims against the physician documentation and payer contracts, it's a good idea to create a checklist. This checklist should include confirming that the correct codes were used, that the physician documentation was correct and specific enough for ICD-10 codes, and that the claims are compliant with the payer's policies, including its agreement for the specific definition of medical necessity.

This last point is especially important, since various payers may differ in their understanding of the necessity of the service. Every claim should have information in it that appropriately states the medical necessity of the service. This is one area where a lot of providers make mistakes, so make sure your auditor is looking at this closely.

Record and understand your audit's results

If your auditor finds errors on your end, make sure she records the problems so you can implement solutions to prevent similar issues in the future. If the payer inaccurately processed claims, for example, the auditor should set those aside and contact the payer to discuss the issue. Your auditor should document the audit's results via reports, graphs, spreadsheets and charts, which will better help you identify any recurring problems or trends. These reports should include the date when the auditor spotted any discrepancies in claims, and whether these were rebilled or refunded, if appropriate.

Refining your revenue cycle
Although the process can be taxing, regular audits improve cash flow. They show you where there is leakage in revenue and help identify ways to curb it, whether the issue is a lack of efficient documentation, coding errors, problems in your billing department or issues with a payer's reimbursements. Once you finish the audit and identify the errors, make sure that you implement solutions and regularly check up on these coding or billing trends to continue to improve your revenue cycle. OSM