Corporate Compliance

How to audit the laboratory department

Healthcare Auditing Weekly, October 9, 2006

Labs are a high-risk area for noncompliance. To help verify your laboratory department's compliance with coding rules, payer requirements, and information flow for lab services, here are 10 tips for conducting a successful lab audit:

  • Step 1 Learn about the lab billing process. Identify when the lab generates charges and understand the lab's charge-capture procedures

  • Step 2 Gather resources. Use reference materials -- such as Medicare carrier manuals -- to conduct a lab billing review for services billed to Medicare

  • Step 3 Develop a flow chart. This will help depict each step of the billling process

  • Step 4 Consider how charge-capture procedures differ for outpatient and inpatient testing and by department

  • Step 5 Determine how the lab generates charges

  • Step 6 Analyze the different systems within the lab

  • Step 7 Review the chargemaster

  • Step 8 Select a sample

  • Step 9 Test the claims

  • Step 10 Verify the date of service, type of lab service, CPT and HCPCS Level II codes, modifiers, ICD-9 codes, documentation, and copayment and deductible charges that have been paid

    Source: Hospital Auditing and Monitoring: Sample Programs for Key Risk Areas

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