How to Chart Out the Medical Audit Process

Posted on 23 Aug, 2018 |comments_icon 0|By Elizabeth Debeasi

Medicare determined that a practice had been billing X-rays globally for years, when it should have only billed X-rays with a modifier 26 for the professional interpretation of the service, as the practice didn’t own the X-ray equipment. The fallout of this oversight included an enormous debt owed to Medicare and suspension of the practice’s Medicare billing privileges.

What If… If Only: The Oversight Could Have Been Avoided

Monthly, quarterly, biannually, or annually—routine audits are an essential safeguard to your bottom line.

As a critical component in any compliance plan—and vital to each part of the revenue cycle—learning how to conduct self-audits is invaluable. This knowledge will equip you to identify and evaluate coding inaccuracies inconsistent with chart documentation, as well as to identify areas of weakness to target in training and improvement programs.

Auditing know-how will also prepare you if you need to conduct an audit at the request of a payer or attorney, or you want to use an outsourced (external) audit as a baseline to perform regular reviews.

Choose Between Two Basic Auditing Methods:

  1. A prospective audit helps you identify and correct problems before sending the claim to the payer. In a prospective audit, you review the documentation along with the codes that would have been billed to the payer.

This method allows for areas of inconsistency to be identified before the claim reaches the payer. Prospective audits will likely delay the billing process but remain the best method for auditing internally.

  1. A retrospective audit is a post-payment audit. Here you would review documentation, claim forms, and sometimes explanation of benefits (EOBs) after they were submitted. This audit does not delay billing, and the entire process can be completed quickly because the payment process was already completed prior to the audit.

There is no right or wrong method. Each practice must determine which works best for the environment, taking cash flow into consideration. It’s important to note, though, that errors or inconsistencies identified in a retrospective audit must be resolved through corrected claims, refunds to the payer and/or patient, or self-disclosure.

Nail Down the Audit Approach

Deciding between a focused audit or a random audit will help you to determine your approach.

  • A focused audit is one that centers on a particular service item, provider, or diagnosis, etc. For instance, you may need to audit a single provider because he is trending in higher than normal reimbursement, or he may be selecting codes outside of the normal curve. Or perhaps your practice, like so many, struggle with modifier 25 errors, and you want to assess this one issue.
  • A random audit, on the other hand, refers to a comprehensive review in which a sample of charts is arbitrarily selected and assessed to indicate compliance problems reflected in “all” the charts. Generally, the sample will come from a certain range of dates. This type of audit helps pinpoint areas to focus improvement and education, as well as where to focus future audits.

Audit Steps That Bring Results

Now that you know the different types and approaches to auditing, let’s discuss the steps you take to complete an audit.

Step #1

Step one of the audit process involves the audit scope. You need to know what will, and what will not, be included in the audit. There may be a specific service that needs auditing, like new office visits, consultations, inpatient visits, or certain diagnosis codes.

The scope should also target the date range that will be included. The range may include a quarter, a year, or another time frame that has been determined. The payer may also be taken into consideration. There could be a need to review charts that have been billed to Medicare, Medicaid, Aetna, or another specific payer.

Step #2

Identifying the sample is the second step of the audit process. In step two, you will determine the sample size. The standard sample size is usually between 10 to 15 cases per provider. OIG recommends a range of five to ten charts should be audited per provider for annual audits. However, trends can be better identified with a sample size of at least 10 cases.

If you are auditing both surgical and E/M charts, a sample of 10 from each would be ideal. You can select every fifth or sixth chart from a patient list until you reach the appropriate sample size. Pulling from the scope, you will include what will be audited within that sample size. In most cases, a patient list or report is generated to allow the auditor to select their cases to audit. Once again, this can be a focused or random selection of cases.

Step #3

Step three of the audit process will be determining the resources and audit tools that will be used during the audit. The resources you need will depend on the type of audit that is being performed, and the services that are under audit. Having access to resources like the ones discussed further on in the book will make or break your audit success.

Step #4

Step four of the auditing process involves locating the documentation needed to conduct the audit. Once the sample size and charts being audited have been identified, you will need to collect documentation. Electronic medical records are a great source of documentation, as most practices have migrated from paper charts. There are still some practices that use a combination of paper and electronic records, and occasionally you will find a practice that uses only paper charts.

Make sure that you collect the documentation that pertains to the date of service for the chart that is under review. You may not only have a note, but also forms, images, and other miscellaneous items; to successfully conduct the review, all pertinent documentation is needed.

Step #5

Step five of the audit process is conducting the audit. Utilizing the tools and resources at your disposal, perform the audit. Be sure to audit both the coding and the documentation. Pay attention to the guidelines in the CPT®, ICD-10-CM, and HCPCS Level II manuals, in addition to ensuring documentation compliance.

Step #6

Once the audit is complete, analyze your findings and compile them in a concise yet detailed audit report. Note any trends and errors in documentation and include follow-up actions to correct the identified problems.

Audit reports should contain:

  1. Key findings
  2. Rationale behind the findings
  3. Recommendations for correction and education

You should always allow coders and physicians the opportunity to review the results of their coding audits, as well as the chance to openly discuss the findings. Avoid writing overly negative feedback that will provoke defensive reactions and hinder the unified effort to achieve improvements.

The audit won’t benefit your practice if subsequent efforts aren’t made to correct the identified problems. Be sure to follow through with all recommendations, suggestions for future reviews, and tips on educating physicians and staff.

Example: Always notate when a physician is not documenting a thorough history or chief complaint. Explain to the physician why capturing these elements is important for the patient, the practice, and for reimbursement purposes. Finally, ensure you suggest these as target areas for future audits.

Strategy: If you can show improvement from one quarter to the next, that’s a good sign of your organization’s commitment to compliance. Addressing issues upfront will minimize the likelihood that you will have to pay money back to Medicare or another payer when audited.

Learn More

Hone your auditing know-how and ensure that your practice doesn’t fall into poor coding, billing, and documentation traps with Master Auditing Basics 2018.


Elizabeth Debeasi
Marketing Writer/ Editor

Elizabeth works on an array of projects at TCI, researching and writing about modern reimbursement challenges. Since joining TCI in 2017, she has also covered the nuts and bolts of cybersecurity, compliance with federal laws, and how to tap into the advantages of Telehealth services.

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