Revenue Cycle

Q: What is a good way to go about auditing accuracy of CPT codes and their modifiers and what was actually billed and paid by various payers, especially Medicare?

Patient Financial Services Weekly Advisor, August 13, 2004

A: A solid and effective claims-auditing process is essential to ensuring accurate reimbursement is being received from each payer. Here are some key steps:

1. Develop a provider manual for all your major payers. The manual should be divided according to your major payers with an information summary sheet completed for each one. The data should be collected by the administrator, billing manager, or someone who has solid knowledge of the reimbursement guidelines. The following information should be included on the summary sheets:

  • Payer name and address and effective date of contract
  • Key contact name(s) and telephone number(s)
  • Type of payer (e.g., PPO, HMO, point of service etc.)
  • Type of reimbursement agreement (e.g., fee for service (FFS), discounted FFS, etc.)
  • General market information about major employer groups
  • A section for notes and common problems and denials
  • The contract
  • The negotiated fee schedule for every CPT code performed and billed
  • Multiple procedure/service payment policy
  • The claims appeals processes

    2. Develop a fee matrix (grid, spreadsheet) with all the CPT codes and fees broken down by payer. This matrix should be placed in the front of your payer manual and updated often to reflect the most current data. It should be given to anyone responsible for posting payments and should be reconciled with the Explanation of Benefit (EOB) forms to check for any discrepancies in actual reimbursements and the contracted allowances. Also set up separate fee schedules for each payer to include the allowables for each CPT code on your system. This way the allowables will be tracked automatically when payments are posted.

    3. Run monthly collection reports. The report should list each third-party payer and each claim that has not been paid, as well as the age of each claim. It will help you detect chronic nonpayment by the payer that may warrant an appeal or further action. The billing staff should set up a nonpayment log by payer. The master log should include the

  • the health plan name
  • reason for denial
  • dates of appeals
  • contact names
  • outcome of efforts

    4. Review the EOBs. The administrator or her designee should be responsible for randomly reviewing the EOBs for any discrepancies in posting payments v. the contracted amounts. Although the process is labor intensive, revenue can be lost if EOBs are not consistently reviewed.

    5. Audit charts. The administrator or his/her designee should randomly audit charts on a quarterly basis, pulling 10-20 charts per provider. The charts should be audited by date of service reviewing the documentation for the particular date of surgery, the charge for the same date of surgery, the date that the claim was submitted for payment, the date it was paid, the CPT codes used, the modifiers used, etc. A master log should be developed for any inconsistencies and should be presented at staff meetings for review.

    6. Hold regular staff meetings and educational classes. Be proactive in sending your staff to reputable seminars and coding classes. The cost for staff education is an investment for your practice or facility.

    This question was answered by Barbara Watson, CMM, administrator at Lexington Urological Associates, PA, Lexington, SC.

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