Self-auditing: Use nurse, staff expertise

Editor's note: The following is an excerpt from FierceHealthFinance's new eBook, Best Practices For Surviving Audits And Denials. Download the eBook here to read more.

Nothing can bring you peace but yourself. So said Ralph Waldo Emerson, the great champion of self-reliance. When it comes to surviving audits, the maxim also holds true for providers: In pursuit of self-reliance, you can scrutinize your own records before you're audited by someone else.

Many audits and attempts to recoup payments are linked to patterns, such as errors. For instance, a nurse or coder translates a physician's bad handwriting into an inappropriate procedure or the payer or their contractor uploads claims data for billing purposes that contain glitches. Should these errors go undetected, they can be systematically repeated, leading to a snowball of claims rejections.

"An innocent mistake can be blown into something much more than that, and it really reinforces the need for compliance programs," said Anna Grizzle, a partner with the Bass, Berry and Sims law firm in Nashville, Tenn., which represents hospital systems.

Grizzle noted that these kinds of errors can lead to hospital executives' worst nightmare--a False Claims Act investigation from the U.S. Department of Health & Human Services' Office of the Inspector General (OIG).

Providers agree self-auditing is a worthwhile practice, assuming, of course, that providers have the personnel to handle them. As a matter of fact, the OIG recommends it as a best practice. The quality of the self-audit can be limited though, depending on the size and budget of provider resources.

A best practice for conducting self-audits is tapping into existing resources of nurse auditors or coders. As front-line staffers, nurse auditors interface with commercial payers, recovery auditors (better known as RAC) and Medicare administrative contractors (MAC) regularly and have extensive coding experience, which helps them spot potential audit triggers in claims. For instance, nurse auditors can lead the "pre-scrubbing" process, the cleaning up of claims before submitting for payments.

Nurse auditors, by training, are skilled in reviewing recently submitted claims and detecting overcharges, another audit trigger. With thorough review, providers therefore can avoid potential False Claim Act suits by making consistent payments within a 60-day window, according to Grizzle. Not to mention, nurse auditors can identify potential underpayments to the provider, cashing in on money otherwise left on the table.

Organizations that are short-staffed can still prevent audits by focusing on education. Spectrum Health, a hospital system in Grand Rapids, Mich., engaged in self-auditing in the months leading up to its first RAC audits in 2008 and 2009, using the data RAC posted on its website.

"We're in the unfortunate position where I'm a one-man shop," said Joni Baker, Spectrum's external audit coordinator. She's the only fully dedicated audits employee for a seven-hospital system.

Given current resources, she helps educate Spectrum's medical staff on issues that can lead to audits, such as patients who are admitted patients but could have been treated as outpatients or mistakes that result from poor handwriting.

Similarly, Bob McCorkle, former chief administrative officer of Premier Medical Group in Clarksville, Tenn., said the medical group had "intense" educational sessions with its physicians to encourage coding that was not only audit-proof but wasn't leaving revenue on the table.

"We monitored monthly (claims) data and matched the percentage of codes to Medicare trends and then did an additional audit for each doctor," he said. It turned out many physicians were billing visits at a higher CPT code than auditors thought they should, but every instance of that was justified by the documentation, according to McCorkle.

As an alternative to on-site education, Grizzle noted that Web-based training can usually bring about the best results for the smallest cost.

For more tips, check out FierceHealthFinance's free eBook, Best Practices for Surviving Audits and Denials.

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