For many years, coding audits have been commonly-employed to make their revenue cycles more efficient. Now, they’re becoming mission-critical.
In a new, peer-reviewed article out this month in the Journal of the American Health Information Management Association (JAHIMA), UASI’s manager of HIM consulting Kathy DeVault and corporate educator Natalie Sartori showed how coding audits are evolving.
Download the PDF article here.
Why Do Coding Audit Processes Need to Evolve?
The industry’s shift toward value-based reimbursement models — which reward efficiency and positive outcomes over volume — has forced some re-thinking:
“Coding professionals have spent hours educating and preparing for these new methodologies for compensation…Facilities need to review audit plans with a critical eye to ensure that the scope is assessing coding accuracy and critical quality indicators for all encounter types that impact reimbursement and quality reporting.”
Instead of just helping to ensure compliant and accurate billing, coding audits can now protect organizations from broad penalties. And that means that they’re now essential to healthcare organizations’ financial success.
A Coding Audit Retrospective
Traditionally and most commonly, inpatient coding audits have been performed after discharge, on a “post-bill” basis. They’ve focused on quality: reviewing all the codes reported during an encounter and identifying codes that need to be added, deleted, or revised.
Retrospective audits are still important. But, as DeVault and Sartori wrote:
“While there is nothing new about the concept of coding audits, there is now a greater variety of them, which requires different skill sets to successfully manage risk assessment.
Healthcare organizations no longer operate with large margins for error. Care must be rendered efficiently, effectively, recorded accurately and reported in a timely, accurate manner.
Accordingly, hospitals and provider organizations need to identify developing errors and inefficiencies (and to correct them) sooner.
How Are Coding Audits Evolving?
Inpatient coding audits are now becoming more regular. Auditing and correcting coding prior to billing alleviates potential risk to organizations associated with incorrect and inaccurate claims submission. Concurrent audits can improve efficiency on the business side, too, by identifying missed reimbursement opportunities and providing means for the coding staff’s performance improvement prior to billing:
“Auditors need to be skilled in assigning ICD-10-CM/PCS and CPT procedural coding, as well as communicating with coding staff regarding audit findings.”
Coding Audits Should Be Multi-Faceted
DeVault and Sartori noted that inpatient and outpatient coding requirements differ in key ways, so audits of inpatient and outpatient charts should be structured to account for those differences.
Inpatient coding audits, for example, should include reviews of secondary diagnoses pertaining to severity of illness and risk of mortality (SOI/ROM) and should affirm accurate diagnostic related group (DRG) capture.
Outpatient coding audits, on the other hand, focus on Evaluation and Management (E&M) code assignment, and the accuracy of coder-assigned diagnosis and procedure codes.
Data analysis tools are now robust enough, too, to easily allow an HIM director to monitor his or her coding department’s efficiency down to the individual coder level. Doing so can help hospitals to identify opportunities for education, performance improvement and team optimization.
Effective New Methodologies for Coding Audits
Coding audits can use random or focused sampling. Each method has its strengths and drawbacks, DeVault and Sartori observed.
Whereas random sampling represents “an unbiased selection of cases for an individual coder,” and can be used to discover new or previously unknown problems, it also assigns an equal risk rating to all the sampled charts.
We know, however, that under value-based models patient encounters do not present equal financial risks.
Focused samples account for that, because they can be used to monitor highest-risk / highest-reward encounters for reimbursement-reducing errors (i.e., DRG mismatches, or previously identified coding issues that the hospital is monitoring for performance improvement).
DeVault and Sartori advocated for a blended approach.
“Depending on the frequency and types of audits being performed, a combination of the two methods may be the ideal choice.”
Hospitals that conduct regular coding audits should use random sampling to identify new and systematic errors. Thereafter, focused sampling should be used to monitor and improve specific coding issues, perhaps down to departmental or individual employee levels.
And coding audits, they stated, must be frequent:
“At a minimum, audits should be performed quarterly with a transition plan to achieve monthly coding audits.”
Healthcare organizations can no longer afford uncertainty; annual audits are too risky. With monthly coding audits, revenue-affecting issues can be identified (and fixed) earlier.
Monthly audits give more performance feedback to provider’s coders — it’s more cost-efficient to correct a month’s worth of an individual’s errors (and prevent 11 more months’ worth of them) than to allow a full year of errors to proceed unchecked and unaddressed.
Conduct Both Internal and External Audits
Internally-conducted coding audits cannot take place in silos, noted DeVault and Sartori. To make them effective, organizations must foster interdisciplinary approaches, which yield the broadest gains.
External coding audits, on the other hand, should be occasionally mixed in, for two reasons.
First, external coding audits provide objective, critical feedback on an organization’s internal audit processes. Second, they expose an organization to new thinking, which in turn inspires innovation and new solutions.
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