How to Develop a Recipe for a Medical Audit Tool

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Due to increased scrutiny by federal auditors (contractors) over the past two decades, wound/ulcer management professionals have been encouraged to conduct internal audits to ensure compliance with documentation and coding/billing requirements for outpatient wound care services. However, wound/ulcer management professionals often report that they are uncertain of how to begin an audit and/or or uncertain of the steps involved in creating an auditing tool. Consequently, this author conducted an interview with Michael Crouch, CHT, CPC, CPMA, a certified medical coder/auditor and independent consultant to wound care programs nationwide, to walk us through the steps of designing an internal audit tool.

Because hyperbaric oxygen therapy (HBOT) services have been the subject of frequent past and present audits, we will use this treatment modality provided in a hospital owned outpatient wound/ulcer management provider-based department (PBD) and supervised by a physician/qualified healthcare professional (QHP) as our example audit topic.

Q:    

Michael, thanks for agreeing to share your expertise with Today's Wound Clinic readers. Will you help our readers better understand how audit topics are selected and why HBOT serves as a good case example?

A:    

Great question, Kathleen, and thank you for inviting me to contribute to your highly regarded reimbursement column! While regulatory scrutiny may be a driving force for defining internal audit topics, more often it is the result of denied services and potential impact to the bottom line. Undoubtedly, concerns for liability and meeting compliance standards play an important and necessary role and should not be overlooked. Auditing a high-dollar service, such as HBOT, is an effective way to safeguard the financial health of both PBDs and physicians/QHPs who provide HBOT in their offices.

Q:    

Who should perform the audit and who needs to be notified before the endeavor is initiated?

A:    

Ideally, a trained medical auditor/coder should conduct the review; however, such personnel are often unavailable, especially given the current pandemic conditions. Under such circumstances, nurse managers are typically given the audit responsibilities, primarily because of their understanding of medical terminology, anatomy, and payers’ coverage requirements. Department managers may also be given the responsibility, depending upon their knowledge base. In fact, audit assignments are often a collaborative effort. For example, the nurse manager conducts the documentation review and the PBD manager conducts the financial review. Physician practices generally require the office manager to coordinate and participate in audit duties. Additionally, it is vital that the hospital compliance/risk management departments are aware of any planned internal audit activities for hospital-wide reporting purposes and to avoid any duplication of auditing efforts. Physician practices usually have a health care attorney or legal representative who should be aware of any internal audits before they commence.

Q:    

What other items should be considered before beginning the audit process?

A:    

Once the audit topic has been selected, the following elements must be identified before the audit can move forward. They include:

•    Determine the audit method: Will the review be prospective (prior to billing) or retrospective (after payment has been received)? There are pros and cons for both, but keep in mind that a retrospective audit allows auditors to look at collections and determine if payments were accurate. Conversely, a prospective audit allows a “clean” bill to be sent to the payer with the belief that any payments received are justified.

•    Determine the audit criteria: Medicare Administrative Contractors (MACs) have audit tools or checklists that can be used for audit criteria selection. For example, First Coast Service Options has a basic checklist for HBOT documentation that can easily be incorporated into an audit tool.

•    Consider what tools and resources will be required: An efficient and user-friendly data collection tool is important when conducting audits. It should capture the reason (medical necessity) for the patient encounter and validate that documentation supports all billed charges. Auditors sometimes choose audit software to review records, but keep in mind that software does not have the capability to evaluate medical necessity. This is a process that requires the auditor to possess analytical skills. Identifying and understanding payer requirements for particular services, such as HBOT, will help determine which resources are needed. National Coverage Determinations (NCDs), Local Coverage Determinations (LCDs) and Local Coding/Billing Articles (LCAs) can serve as primary information sources, and are located in the Medicare Coverage Database. For accuracy and support of audit findings, the auditor should also refer to current evaluation and management (E/M) documentation guidelines, ICD-10-CM, CPT^® and HCPCS Level II code sets, the Outpatient Prospective Payment System (OPPS) fee schedule (Addendum B), and the Medicare Physician Fee Schedule (MPFS).

•    Determine the sample size and frequency: Auditing too few records might misrepresent results, while auditing too many can become impractical in terms of time and labor. Periodicity should be determined by audit results. For instance, if chart reviews achieve a 90% accuracy rate, annual audits should keep the organization compliant. If accuracy drops between 75% and 90%, increase to quarterly audits. For accuracy rates below 75%, increase to monthly audits. Accuracy rates below 60% should receive an automatic prospective audit focused on specific areas of concern identified in the audit. PBDs should review a minimum of 10–20 accounts and physician/QHP practices should review 5–10 accounts per provider.

•    Define the audit timeframe: If conducting retrospective audits, avoid auditing a date of service (DOS) that is too recent for any payments/denials to be posted. Consider auditing records that have a DOS at least 3 months or greater but be cautious not to audit too far out (> 1 year) as the time to resolve any discrepancies and settle the account may have passed. If conducting a prospective audit, time and resources become more of a factor because hospitals and medical practices may not want to hold processing a claim while it waits to be audited.

Q:    

Will you provide our readers with a “recipe” for developing an audit tool using a specific HBOT indication as an example?

A:    

Sure. Like any recipe, decide first what you want to “cook” (indication). There are 15 Medicare-approved HBOT indications; some of them have very exacting documentation criteria for ICD-10 diagnosis code assignment. For our example recipe, we selected one of the most common HBOT indications: Diabetic Wounds of the Lower Extremities (DWLE).

Next, don your “apron” and begin “preheating the oven” (establish your audit method, tool criteria, sample size and timeframe). During this time, you can also begin “gathering the ingredients”: documentation for DOS to be audited (including previous care), diagnostic test results (e.g., A1c), charge sheets, claim(s), payment/denial information, etc. Next, assemble the appropriate “cooking utensils” (HBOT coverage resources such as NCD 20.29 and retired LCDs/LCAs). NOTE: Even though none of the MACs currently have an “active” policy for HBOT, it is important to review their retired policies and billing/coding articles in order to better understand the coverage criteria used in the past.

Now, demonstrate your culinary expertise by assembling your “dish” (audit tool) for the case example:

1.    Determine the basic structure to be used for your audit tool. Some auditors use very sophisticated software programs, while others rely on commonly used word processing programs, spreadsheets, or even notebook paper. Your “ingredients” will depend upon your degree of experience and comfort level with data collection tools. Remember, it does not need to be complicated; keep it simple. The model used for this case example will apply only to a PBD and attending physician/QHP, not the office setting.

2.    Divide the tool into 5 sections:
a.    Patient identifier (Medical Record or Financial Class Number), Insurance information (both primary and secondary), DOS, and the attending physician/QHP. Be conscious of HIPAA regulations. [Refer to section A of audit tool example]
b.    Documentation review to include specific documentation requirements (as spelled out by the NCD/LCD/LCA) for each indication, with the goal of quickly identifying whether the service was justified (i.e., medical necessity). [Refer to section B of audit tool example]
c.    Charge Entry review to include codes submitted, quantities, missing charges, orders, and signatures. This is an important piece as hospital billers often add or remove charges without confirming that it is an accurate reflection of what transpired during the patient encounter. Remember, procedural code selection for HBOT is unique in that the facility billing code (G0277) does not match the professional billing code (99183). In addition, the facility code is billed in 30-minute increments; thus, an average treatment has a charge of 4 units. The professional code is charged “per session” and as such should only have a unit of 1. A check of these quantities should be included in the audit tool criteria. [Refer to section C of audit tool example]
d.    Claim review to include charges submitted, quantities, modifiers, National Correct Coding Initiative (NCCI) edits, evaluation and management (E/M) services (if applicable), and diagnosis codes. When checking for accurate diagnosis codes, if the examiner is not a trained coder, then he/she must resort to confirming that one or more of the assigned diagnosis codes matches codes listed in any relevant coding/billing articles (or NCD 20.29). [Refer to section D of audit tool example]
e.    Collection review should include payment information from the primary and secondary insurance companies as well as any amounts collected from the patient. There should also be a calculation of the collection percentage as this can be an indicator of a partial payment and/or if the hospital is charging too much or too little. It is common to find outdated chargemasters and charges that do not reflect payment changes that may have occurred during the calendar year. It is also not unusual to find a charge for a particular service to be less than the national payment rate from Medicare. [Refer to section E of audit tool example]

3.    Build a series of queries that have either simple “yes/no” answers or very brief answers. If using a spreadsheet, consider drop down menus to keep answers consistent. The goal is to capture documentation compliance that is quantifiable. For example, documentation met 8 of the 9 required elements.

4.    Create a report that summarizes the results. The report should be easily understood and include any trends noted (both positive and negative) with a constructive tone, to avoid defensive reactions that could interfere with improvement efforts for any remedial actions needed.

5.    When the oven timer rings, your “dish” is ready for consumption. You must now “set the table” by establishing a date, time, and forum for communicating the audit results to all relevant parties. Reviewing the results with the physicians/QHPs and wound care staff is a key element to making meaningful changes in compliance. Let them know what they did wrong, but also what they did right with absolutely no finger pointing during the education process. Remember that people are busy, and their attention span is short, so provide a summary first and emphasize the most important points before the team loses interest.

6.    “Cleanup after dinner” includes the development of a corrective action plan to address any identified areas of concern. Allow everyone to join in developing an action plan and include compliance, risk management and coding/billing personnel to ensure that no steps are missed. It may be necessary to also update policies and procedures and follow up to ensure that the action plan is working. Now, sit back, relax, and enjoy the fruits of your labor, at least until it is time to conduct your next audit!

Q:    

Michael, thank you once again. Any last comments?

A:    

It has been my pleasure, Kathleen. The importance of performing audits cannot be overstated. Audits can protect organizations from fraudulent billing activity, identify inappropriate and/or inaccurate coding (diagnosis and procedural), identify opportunities for additional reimbursement, and more. The single most important lesson I have learned as an auditor is: when creating an audit tool, don’t waste too much time recreating the process. There are countless audit templates, articles, and detailed information available for your readers. However, if circumstances do not allow them the opportunity to conduct audits, advise them to consider using an outside auditing consultant. Also, for additional background information on the audit process, the “Business Tools” section of my website has a posted article that might prove helpful.

Kathleen D. Schaum is a founding member of the Today’s Wound Clinic editorial advisory board and oversees a consulting business. She can be reached for consultation and questions by emailing kathleendschaum@bellsouth.net.

Michael J. Crouch, CHT, CPC, CPMA, is the CEO of C+ Consulting, LLC, in Cibolo, TX.

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