Health Information Management

Audit, analyze claims with nine steps

HIM-HIPAA Insider, March 15, 2005

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Performing a claims audit will help you identify and analyze the reasons for denials and present opportunities to improve the claims-submission process. Use the following nine steps to analyze data easily and effectively and ensure that you pay claims accurately and on time:

  1. Determine the criteria for defining errors. Streamline claims audits by deciding at the outset how you will define errors, says Erika Ange, an associate director for Navigant Consulting, Inc., in Washington, DC. This may help you avoid disagreements later concerning interpretation of ambiguous billing, coding, and documentation rules. "Make sure everyone agrees on the criteria for defining errors," she says.

  2. Choose a sampling method. Decide whether to audit prospectively or retrospectively, says Brian Kozik, director of compliance and audit services for the North Shore Medical Center in Salem, MA. Both audit types have their advantages and disadvantages.

    Prospective audits-those conducted prior to billing-allow you to identify and fix coding and documentation errors before submission. Through retrospective audits-those conducted after billing-you can determine whether your fiscal intermediary (FI) or carrier paid the claim accurately and analyze the reasons for any denials.

    Also determine whether to use a random sample or a statistical sample. In either case, document your method, Kozik says.

  3. Identify the time period to sample. Any time period, including one weekend, one month, or an entire fiscal year will suffice, as long as you agree on one and stick to it for the audit, Kozik says.

  4. Choose the number of claims to review. Kozik leans toward selecting random samples. For most hospital departments, 25 claims will give you a clear picture of accuracy.

    For physician practice audits, 10 claims are usually enough. In either case, include a mix of payers in the sample, with more emphasis on Medicare and Medicaid, as the federal government is the payer shining the strongest light on fraud.

    A statistical sample is also an option, especially if your audit department has sophisticated software, he says.

    "As long as your sample is representative of the entire population, you can draw conclusions based on a small sample size that can be extrapolated across the entire population," says Kozik.

  5. Identify the necessary data sources. Obtain claims forms after you have selected your sample and gather the corresponding medical records. Ange suggests separating records into the following components:
    • Clinical (e.g., medical record, documentation such as consultation, x-rays, and lab reports)
    • Financial (e.g., documentation of receipt of payment such as charge sheets from the front office, remittance advice, and accounts receivable ledgers)
    • Policy-related (e.g., documentation related to such areas as provider-specific policies, government policies, CMS memos, and bulletins)

  6. Review documentation and assess findings. Determine the accuracy of the billing and documentation for each record according to appropriate policies and procedures. Not surprisingly, documentation errors are the most common problems found when reviewing claims, says Kozik.

    Sometimes the documentation is present but inadequate, Ange says. Other times, coding errors exist, such as undercoding and overcoding. "You should also watch for policy-related errors, such as procedures not matching organizational policies," she says.

    To review documentation, choose a claim (e.g., radiology patient) and a line item from the claim (e.g., magnetic resonance imaging [MRI]).

    Look for the MRI order in the medical record and determine whether it contains accurate data and whether the physician signed and dated the order. "You can't stress the importance of accurate, complete documentation enough," Kozik says.

  7. Perform a 'reverse' audit. For this method, examine a high-risk area, such as the laboratory or radiology department. The traditional audit involves choosing a claim from the UB-92 claim form and working backward through the medical record to verify that tests for which your facility billed were ordered and included a diagnosis.

    For the reverse process, select a list of patients. Obtain the patients' medical records, including the physician documentation, and follow the documentation to the UB-92 claim form to make sure that what the physician ordered was billed and coded accurately.

  8. Quantify findings. Use a spreadsheet or database with the attributes that you want to verify labeled across the top (e.g., your designated control number, account number, admit date, and date of service). To protect privacy, don't use patient names- only medical record numbers.

  9. Calculate payment errors. If you uncover a potential problem, determine whether it actually exists, says Kozik. Is it an ongoing, fundamental problem with your process or just a one-time error? If it's ongoing, get to the root of the problem, correct it, and determine whether the correction worked.

    "It is important to act on problems you find," Ange says. "Take a step back to understand the problem. For example, if you are missing documentation, try to locate it."

    Once you correct the problem, determine its magnitude, says Kozik. For example, did it occur for one month, one year, or several years? If the problem you discovered affected billing, notify your local FI or carrier about the problem, including how you discovered and corrected it, and then take the necessary steps to initiate a payback.

This excerpt is adapted from Briefings on Coding Compliance Strategies.



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