Health Information Management

Planning can maximize benefits of internal coding audits

JustCoding News: Inpatient, April 11, 2012

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If you're going to spend time and resources to conduct a coding audit, you certainly want to ensure effective and informative results.

Define the purpose and scope of audits

"You need to go into the audit with a clear understanding of the reason and purpose of the audit," says Joe Rivet, CCS-P, CPC, CEMC, CPMA, CICA, CHRC, CHPC, CHC. Rivet is the corporate compliance and privacy officer at Wayne State University Physician Group in Detroit.

Consistency is key, says Julie Daube, BS, RHIT, CCS, CCS-P, coding quality review and education manager at Care Communications, Inc., in Chicago. Too often, hospitals are inconsistent with respect to the volume of records audited per coder, she says.

"You want to be able to compare apples to apples in order to trend quality and provide educational opportunities," says Daube. "If you find that the coder has shown improvement in an area that was originally focused on, then instead of changing the quantity, you need to change the focus to continue to identify areas of risk."

Volume should be consistently based on the average number of discharges at the facility. Approximately 20–30 records per coder per quarter is typical, says Daube.

Senior leadership buy-in is essential

In addition to defining the purpose, obtaining buy-in from senior leadership is a crucial part of creating an effective audit. This is especially important when audits reveal unfavorable findings related to physician documentation, says Rivet. Chief medical officers must be on board to ensure that all physicians—even those who bring in the most business for the hospital—are held to the same standards with respect to sanctions, he says.

Without this buy-in, coding auditors and compliance professionals may fight an uphill battle, says Rivet. "You could have all the appropriate head-nodding and lip service but when a live issue comes up and they start to crumble or fall back on what was clearly defined and agreed to, then you need to evaluate yourself as a professional individual within that group," he says.

Obtaining buy-in also involves helping senior leadership establish realistic expectations for audits, says Daube. A coding audit won't necessarily reveal a clear reason why the case-mix index has decreased significantly, for example. "Sometimes hospitals will perform this audit thinking they're going to find an issue with the coding, then we do an audit, and everything is fine. There are other factors that can impact the case mix, such as a drop in the medical or surgical volumes," she says. Hospitals also might conduct coding audits incorrectly, assuming that they will discover a plethora of clinical documentation improvement (CDI) opportunities, and this might not be the case either because of the patient population or the severity of illness, says Daube.

Don't let dollars drive an audit

Too many audits are based purely on financial performance, says Rivet. Hospitals should not perform coding audits solely to increase revenue in a particular area—this could raise a red flag for auditors and might not even yield anticipated results. CFOs often incorrectly assume that incorrect coding causes decreased revenue, but the decrease could be due to other factors, including a lower volume of cases, he says.

"Your auditing and monitoring should really be risk-based—not driven by financial performance or a check-off box method" says Rivet.

Also, don't strive to perform a certain number of audits annually to reach a quota, he says. "That really doesn't do any good because the selection and process is just to meet a number rather than focusing on key risks that you have as an organization," he says.

Timing is an important consideration

The frequency of coding audits—whether annual, quarterly, monthly, or some other frequency—should be based on associated risk, says Rivet.

Conducting random audits at random intervals is not helpful. "You're not helping to reduce overall risk. You leave yourself pretty vulnerable by not looking at and evaluating the true risks," he says.

Risks don't always remain the same

Auditing the same areas each year is not beneficial to hospitals, says Rivet. "Risks are a moving target," he says. "They may not carry over year to year, quarter to quarter, or month to month. Many of them will but it's important to keep monitoring both internal and external activity."

External sources should include the following:

  • Recovery Auditor activity in your region. Network with other colleagues in your geographic area, says Rivet. If a nearby hospital has experienced a particular Recovery Auditor review, other local hospitals should be assessing that issue immediately, he says.
  • Medicare Administrative Contractor or fiscal intermediary notifications. Even if a notification doesn't pertain to your specific region, evaluating your own comfort level with that area of risk is helpful, says Rivet. Ask when the most recent audit of this issue occurred, who performed it, and what the results were.
  • The Medicare Quarterly Provider Compliance Newsletter.

Some facilities already know the internal issues on which they'd like to focus their audits, says Daube. Most of her clients also incorporate Recovery Audit targets when deciding what to audit. "This is pretty much every DRG now anyway," she says. Many clients also base audits on their Program for Evaluating Payment Patterns Electronic Reports.

Remember that just because a Recovery Auditor may investigate a particular issue at a hospital doesn't imply that an internal audit is necessary, says Rivet. The hospital might have identified the errors and implemented a corrective action plan after the date of service being audited during the look-back period, he says.

Hospitals have increasingly requested internal coding audits to prepare for ICD-10, says Daube. She has also noticed industrywide trends toward combining a coding audit with a more formal documentation assessment. Care Communication's clients often request granular assessments that highlight the need for individual physician education related to specific codes, she says.

For example, a coding audit may reveal that coding is correct based on documentation. However, a more thorough documentation assessment could reveal a physician documentation challenge or missed query opportunities (e.g., no documentation of the type of sepsis despite the existence of blood work that identifies it).

"We gather this information anyway when we're looking in the record, but it's just good for the client when we can report coding deficiencies along with any documentation deficiencies so if there are any parallels, they can kill two birds with one stone and address it all at once," says Daube.

Formally report the documentation assessment and follow up on education opportunities, says Daube. This helps prepare for ICD-10 because the ability to identify physicians who don't document laterality of certain procedures might be helpful, for example.

Ensure thorough post-audit follow-up

If hospitals don't intend to follow through with audit results and take corrective action when necessary, the audit will be essentially useless and even potentially damaging to the organization, says Rivet.

When concluding an audit, consider noting the scope, objective, number of records audited, detailed findings, the applicable rule to which coding or documentation findings apply, and the action plan based on that rule.

Senior leaders need to know general audit findings, how they might affect the hospital, and whether the findings can potentially become more serious over time, says Rivet. Conversely, physicians should see actual medical records to which audit reports apply. Coders and CDI specialists should receive more detailed findings, he says.

CDI specialists may be best suited to provide audit feedback to physicians because they have already established a rapport, says Daube.

Editor’s note: This article was originally published in the April issue of Briefings on Coding Compliance Strategies. E-mail questions to Senior Managing Editor Andrea Kraynak, CPC, at

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