The State of Medical Coding & Auditing Industry Survey ... · ORGANIZATION TYPE YES Academic...

The State of Medical Coding & Auditing Industry Survey Report

2018

WWW.HEALTHICITY.COM | [email protected] | 877.777.3001 | PG 2

IntroductionPeriodic audits are crucial to assess the effectiveness of your compliance protocols, educational

efforts, and corrective actions. For example, a Standards and Procedures audit will help

you understand whether office policies and day-to-day processes are compliant. A claims

submissions audit will help you to understand whether physicians and staff are submitting

claims in accordance with federal rules and payer policies. Creating and implementing plans

to prevent non-compliant activities from reoccurring will mitigate the potential of large

overpayment disclosures and refunds and of possible penalties and sanctions.

An internal audit program is one of the key elements of an effective compliance program

outlined by the HHS OIG. Yet, only 87% of respondents indicated that their organization

conducts formal documentation and coding audits of their medical providers. This suggests

that 13% of organizations are non-compliant.

Does your compliance program require formal documentation/coding audits of your medical providers?

ORGANIZATION TYPE YES

Academic Medical Center 100%

Billing/Coding Company 61%

Hospital 86%

Long-Term Care Facility 70%

Medical Practice 70%

Payer/Insurance Company 77%

Percent of medical group practices that require formal documentation/coding audits of your medical providers

MEDICAL PRACTICES BY SIZE YES

1 - 25 Providers 60%



101 - 200 Providers 100%

201 and Above 93%

Formal Billing & Coding Compliance Programs

© 2018 HEALTHICITY | PG 3

Table of Contents

AUDITING - To audit or not to audit

FEEDBACK - The state of compliance programs nationwide

TECHNOLOGY & OUTSOURCING - How compliance programs are being managed

QUALITY - Insights into auditing and incident reporting

19

28

34

38


1. Does your organization conduct formal documentation/coding audits of your medical providers?

AuditingAn internal audit program focused on assessing, correcting and maintaining controls to promote

compliance, with applicable rules and regulations, is among the key elements of a sound

billing compliance program as outlined by the Department of Health and Human Services and

the Office of Inspector General (HSS-OIG). Industry-wide, approximately 87% of healthcare

organizations with billing compliance programs indicated they conduct formal documentation &

coding audits of their medical providers.

87% 13%YES NO

0 50 100

Please specify the number of providers audited during a typical audit:

YES NO

ORGANIZATION SIZE NUMBER OF PROVIDERS

1 - 50 Employees 11

51 - 200 Employees 24

201 - 400 Employees 16

401 - 1,000 Employees 23

1,000 + Employees 36



Auditing Continued

Industry Insight

Implementing a formal coding compliance program, either through committee or compliance officer, establishes accountability for compliance oversight. Trends among high performance organizations:

• Compliance and audit functions are independent of the operations areas they evaluate, allowing for proper lines of reporting authority, and access to achieve independence and governance.

• The compliance committee or designated compliance officer occupies senior leadership level with the authority to undertake and comply with the associated responsibilities of the role.

• Enacted minimum qualifications and process to select and appoint compliance committee members, or a compliance officer.

• Do not allow operational areas subject to auditing and monitoring activities to inappropriately influence functional administration and resource allocation for the compliance committee members or compliance officer.

Compliance is scalable. If you’re a small practice without a formal plan, consider investing in periodic audits to ensure accuracy of claims submissions. Benjamin Franklin’s advice holds true today, “An ounce of prevention is worth a pound of cure.”




Hospital 92%

Long-Term Care Facility 25%



ORGANIZATION SIZE YES

1 - 50 Employees 65%

51 - 200 Employees 85%

201 - 400 Employees 93%

401 - 1,000 Employees 95%

1,000 + Employees 100%

Does your organization conduct formal documentation/coding audits of your medical providers?

Does your organization conduct formal documentation/coding audits of your medical providers?

Smaller organizations are less likely to conduct formal audits than larger organizations. Lack of resources, cost of compliance, and a belief that being smaller made you less likely to be scrutinized by regulatory agencies or payers were the most common reasons cited for not conducting reviews.



Sampling Size

3. For each formal audit, how many dates of service/encounters does your organization require to be audited for each medical provider?

Sample size can be driven by many factors. Compliance guidance published by OIG recommends auditing a minimum sample size of 10 patient encounters. 79% of our respondents meet or exceed guidance. Our experience reveals that small frequent audits reduce error and increase accuracy of claims submissions.

50%

21%

15%

10%

4%

10 - 15

LESS THAN 10

16-20

25+

21-25

2. Please select the primary reason your organization conducts formal documentation/ coding audits.

50%

49%

1%

REQUIRED BY OUR INTERNAL COMPLIANCE PROGRAM

FEAR OF BEING AUDITED BY CMS, RAC OR OTHER

TO ENSURE WE ARE BILLING ACCURATELY TO AVOID PENALTIES


Pro Tip

A small sample size is revealing for organizations with a strong compliance culture. In organizations with a strong culture, frequent small sample checks provide reassurance that your coding compliance plan is effective.

However, larger, statistically valid samples are useful for organizations interested in developing a stronger compliance culture and for discovering where gaps exist.

Compliance is scalable. Choose a sampling method and size that matches the needs of your organization. Like Stephen Covey once said, “beginning with the end in mind” will guide you to the method that will provide the most useful data.

Despite advances in technology and data analytic tools, most organizations still prefer to rely on arbitrary random sampling methods for their compliance audits. Survey results revealed that 75% of organizations continue to rely solely on random sampling methods for chart selection. However, the use of more sophisticated sampling methods is growing with 25% of organizations indicating they have adopted the use of data analytics to assist in determining chart selections.

Use of a statistically valid sample selection helps ensure confidence and accuracy in your audit results. The so-called “snap shot sample” is frequently used to identify documentation weakness and/or gaps. Practices using snap shot samples will have the most success by auditing frequently, consistently, and objectively. Remember that compliance is scalable. Data analytics can assist in determining how to best select your sample. It’s perfectly okay to be fluid and employ as many methods as needed.

Selection Methodology

5. Audit sample selection by methodology type:

73%

32%

25%

9%

RANDOM SAMPLING OF RECORDS

FOCUSED REVIEW OF SPECIFIC CODES (E.G. HIGH LEVEL EM)

ANALYZE PROVIDERS’ CODE UTILIZATION PATTERNS

USE THE OIG RAT-STAT SOFTWARE PROGRAM



7. Which method of scoring does your organization use?

PERCENTAGE BASED ON # OF CASES

MIX OF CASES AND NET RVUS

WEIGHTED NET RVUS OTHER

75%

10%

9%

4%

2%

Prospective vs. Retrospective Reviews

6. Does your organization conduct formal audits prospectively or retrospectively? (Prospective is prior to the claim being billed, retrospectively is auditing the claim after it has been submitted for billing.)

18%46%36%

PROSPECTIVELYRETROSPECTIVELY COMBINATION OF RETROSPECTIVELY AND PROSPECTIVELY

0 50 100

Despite the requirements to submit a corrected claim and any overpayment, 36% of coding/documentation audits are conducted retrospectively (reviews on charts where the claims have already been submitted to the payer). The “inability to complete an audit and ensure the claim is not held up for timely filing requirements” was cited as the biggest consideration for not conducting prospective reviews.


OTHER

Scoring

CPT/HCPCS AND ICD-10-CM

ONLY ICD-10-CM

COMBINATION OF CODES PLUS OTHER DOCUMENT ELEMENTS

ONLY CPT®/HCPC

8. Which does your audit score include:

59%

29%

8%

3%


Frequency

4. How frequently are formal documentation/coding audits conducted on an individual medical provider?

4% 3% 14%

20

%

25% 3

4%

ANNUALLY MONTHLY AS NEEDED EVERY 2 - 3 YEARSQUARTERLY


Frequency

How frequently are formal documentation/coding audits conducted on an individual medical provider by organization type?

How frequently are formal documentation/coding audits conducted on an individual medical provider by organization size?

ORGANIZATION TYPE ANNUAL MONTHLY/QUARTERLY

Academic Medical Center 32% 29%

Billing/Coding Company 19% 51%

Hospital 36% 50%

Medical Practice 43% 43%

ORGANIZATION BY SIZE ANNUALLY QUARTERLY MONTHLY AS NEEDED

1 - 25 Providers 42% 34% 14% 10%

26 - 50 Providers 50% 22% 14% 14%

51 - 100 Providers 33% 21% 29% 17%

101 - 400 Providers 52% 24% 17% 7%

400 + Providers 53% 17% 7% 23%

According to the Department of Health and Human Services and Office of Inspector General (HHS-OIG), medical claims should be reviewed regularly for compliance with applicable coding, billing, and documentation requirements. While no specific standard has been mandated, HHS-OIG recommends an internal formal review occur at least annually. Survey results suggests providers are implementing more stringent standards in order to monitor compliance with 50% of organizations choosing to conduct formal audits at least quarterly or monthly.

Of the various provider organization types, hospitals and billing companies audit with the most frequency. Survey results showed that 50% of hospitals and 51% of billing companies conduct formal audits of their providers at least once per quarter.


Does your organization have a defined pass rate threshold that is used for passing or failing a provider on their audit?

Pass Rate Threshold

9. Does your organization have a defined pass rate threshold that is used for passing or failing a provider on their audit (meaning your providers must obtain X% accuracy on an audit in order to pass the audit)?

27% said No

7% said Other26%

21% YES: 90% or greater

YES: 80-89%

YES: 70-79%

YES: 95% or greater

17%

2%

ORGANIZATION TYPE NO YES: 70-79% YES: 80-89% YES: 90+ YES: 95+

Billing/Coding Company 18% 1% 20% 22% 39%

Hospital 21% 3% 15% 26% 35%

Medical Practice 38% 3% 25% 18% 16%

Payer/Insurance Company 47% 3% 10% 10% 30%

Pass rate thresholds define the acceptable accuracy rate by which a provider passes or fails their audit. While pass rates help set a standard for performance by which organizations can measure and use to monitor compliance, only 66% of organizations conducting formal audits utilize pass rates.

For those organizations utilizing pass rates, a score of 95% or higher accuracy was the most common threshold used. The two most common methods for calculating accuracy rates were using the number of cases scored correct versus incorrect or alternatively calculating the net dollar difference between the original claim and the audited claim. 90% of organizations have adopted scoring based on the number of correct cases.





Hospital 99%



Pro Tip

Providers’ most common complaints about audit reports:• Providers like to see if they improved or got worse, but reported that their audit results typically do not

show trending information from prior audits.• Audit reports don’t provide enough meaningful feedback and/or recommendations.• Audit reports format/structure are too busy, takes too long to find the pertinent information.

Feedback

10. Do audits include a written report of results and findings?

83% of organizations use audit reports to capture the results of each audit conducted. Analyzing

and reporting on audit findings for each practitioner within the organization is a critical step in

effectively monitoring coding and billing compliance. At the completion of every audit, generate

reports to review coding patterns, utilization, deficiencies, and areas needing improvement. Audit

results should be reported in an organized format that allows the viewer to easily draw conclusions.

12%

83%

5%

YES

I DON’T KNOW

NO



Feedback Continued

11. How often are audit results communicated back to the providers?

77%

5%

2%1%

16%

100% OF THE TIME

75% OF THE TIME

LESS THAN 50% OF THE TIME

50% OF THE TIME

I DON’T KNOW

Pro Tip

The auditor-to-provider staffing ratio needs to be sufficient to enable the auditor to carry out the audit requirements specified within the organization’s audit/compliance program. The recommended auditor-to-provider ratio is no more than 100 providers per auditor (annually). This ratio may vary depending on the scope and frequency outlined within the organization’s audit/compliance program requirements.



12. What is the reason for not communicating audit results 100% of the time?

45%

37%

21%

13%

8%

WOULD LIKE TO BUT PROVIDERS ARE TOO BUSY

PROVIDERS ARE NOT INTERESTED IN THEIR RESULTS

WOULD LIKE TO BUT DON’T HAVE ENOUGH TIME OR STAFF

NOT REQUIRED

OTHER

FeedbackFeedback Continued

13. How are audit results typically communicated back to the providers?

38%

35%

14%

13%

COMBINATION DEPENDING ON SCORE

IN PERSON (ONE-ON-ONE)

EMAIL

IN PERSON(GROUP MEETING)

0 50 100



14. Does your organization require provider education prior to a re-audit?

Re-Audit

18%82%YES NO

ORGANIZATION TYPE IN PERSON (ONE-ON-ONE)

EMAIL IN PERSON (GROUP)

COMBINATION (DEPENDING ON SCORE)

Academic Medical Center 33% 10% 10% 47%

Billing/Coding Company 10% 24% 15% 51%

Consulting Company 48% 12% 12% 28%

Hospital 37% 13% 16% 34%

Medical Practice 47% 12% 11% 30%

Payer/Insurance Company 24% 13% 8% 55%

35% of the time audit results are communicated back to providers in person and 38% of the time auditors choose a combination approach (in-person, email, group meeting) tailored specifically around the audit results. What happens next? Turns out that 18% of organizations are not currently following best practices and do not require provider education prior to a re-audit. One of the largest reasons post-audit education doesn’t happen, or results are not communicated back to the providers at all, is due to being short-staffed. Yet, only 26% of organizations outsource auditing help in addition to their internal staff. It seems that organizations could really benefit from third-party help.


15. Does your organization require a re-audit when a provider scores below your threshold?

Does your organization require a re-audit when a provider scores below your threshold? (By Organization Type)

Re-Audit

31% 23% 14% 13% 11% 9%

YES - RE-AUDIT WITHIN 90 DAYS

NO



YES - RE-AUDIT 90 DAYS OR LATER

NOT APPLICABLE - WE DON’T USE PASS RATE THRESHOLDS

ORGANIZATION TYPE YES, WITHIN 30 DAYS

YES, WITHIN 60 DAYS

YES, WITHIN 90 DAYS

YES, 90 DAYS OR LATER

NO

Academic Medical Center 48% 19% 20% 10% 3%

Billing/Coding Company 47% 23% 19% 0% 11%

Consulting Company 23% 18% 9% 27% 23%

Hospital 38% 17% 19% 11% 15%

Medical Practice 38% 18% 18% 9% 17%

Payer/Insurance Company 30% 4% 37% 26% 3%


Many organizations have evaluated various ways in which to encourage physician engagement around documentation and coding compliance. Methods such as tying compensation in the form of bonuses or other monetary rewards have been adopted by the industry. According to the survey results, 25% of organizations reported tying compensation to audit results.

Linking Compensation & Performance

ORGANIZATION TYPE YES NO

Academic Medical Center 39% 61%


Hospital 31% 69%


Payer/Insurance Company 42% 58%

16. Does your organization tie any of your providers’ compensation to the results of their audits (e.g. financial bonuses or penalities are contingent on audit results/scores)?

YES NO

74%

25%


Technology & Outsourcing

17. Does your organization use any type of audit software to assist with conducting your audits?

18. Does your organization utilize Computer Assisted Coding (CAC) Software?

64% 51%36% 49%

NO YES

Whether it’s harnessing the power of technology or outsourcing expert auditors, we all get

by with a little help from our friends. 64% of organizations surveyed use audit software to

streamline their audit process. Research shows that audit software can increase efficiency by up

to 40%, allowing individuals and teams to do more in less time.

Best practices suggest that all healthcare organizations can benefit by outsourcing expert

auditors, yet a whopping 48% of organizations never use third-party auditors for coding/

documentation audits. 26% use external auditors regularly in addition to their own internal staff.

Additionally, 20% of respondents suggest they outsource as a way to fill in their knowledge gaps,

and 6% exclusively use external auditors.


Technology & Outsourcing Continued

19. Does your organization use third-party auditors for coding/documentation audits?

Point of View:

Organizations who utilize third-party vendors to assist with coding/documentation audits discussed the benefits.

• Frees up internal resources to be reallocated to other activities, such as post-audit training. • Organizations reported experiencing less resistance from providers and greater acceptance

of audit findings when seen as coming from an independent source.• Increased ability to fill knowledge gaps where vendors may have access to a larger pool of

specialty specific expertise.• Allows for better cost control by limiting fixed costs expenses and enabling an organization

to staff up or down during audit projects.

NEVER - ALL AUDIT WORK IS DONE INTERNALLY

MIX - WE USE EXTERNAL AUDITORS REGULARLY IN ADDITION TO OUR OWN INTERNAL STAFF

OCCASSIONALLY - ONLY WHEN NEEDED TO FILL A SPECIFIC KNOWLEDGE GAP

ALWAYS - WE ONLY USE EXTERNAL AUDITORS


48% 26% 20% 6%


ALWAYS - WE ONLY USE EXTERNAL AUDITORS

ORGANIZATION TYPE ALWAYS MIX - INTERNAL AND EXTERNAL NEVER OCCASIONALLY (TO FILL

A KNOWLEDGE GAP)

Academic Medical Center 0% 27% 46% 27%

Billing/Coding Company 4% 19% 60% 17%

Hospital 6% 30% 38% 26%

Medical Practice 7% 23% 51% 19%

Payer/Insurance Company 7% 31% 40% 22%

Quality and Accuracy 24%

Certification of Auditors 16%

Reputation 13%

Price 11%

Security of PHI 11%

Detail of Reports 10%

Turnaround Time 9%

Use of US-Only Resources 3%

Location 2%

Use of Offshore Resources 1%

Does your organization use third-party auditors for coding/documentation audits? (By Organization Type)


20. What is the most important criteria when considering using a third-party auditor?

The top 3 items of importance are quality and accuracy, certification of auditors, and reputation of auditing organization. Certification and reputation are evidence of quality and accuracy. Together these criteria account for 53% of the responses.



21. Does your company allow the use of offshore resources to conduct medical coding or audit related services?

ORGANIZATION TYPE YES NOAcademic Medical Center 28% 72%


Hospital 12% 88%



82%

13%

5%

NO: COMPANY POLICY DOES NOT ALLOW OFFSHORING

YES: WE HAVE IN THE PAST OR CURRENTLY USE OFFSHORE RESOURCES

YES: BUT WE HAVE NEVER USED OFFSHORE RESOURCES


QualityAn expert auditor–credentialed with advanced training and experience under their

belt–protects and often increases revenue for healthcare organizations. So, when it

comes to accuracy, effecting change, and protecting your bottom line, you want auditors

you can trust. Our data shows that 91% of organizations care about credentials and

require auditors to have a current coding certification from a reputable certifying body.

69% of organizations use an internal quality assurance process. Additionally, 70% of

organizations regularly screen auditors to ensure they’re not on the OIG or CMS exclusion

databases, which means about 30% of organizations are at risk.

22. How does your organization ensure quality?

69

%

2

4%

8%

WE DO NOT HAVE A FORMAL PROCESS

WE USE AN EXTERNAL QA PROCESS

WE USE AN INTERNAL QA PROCESS

Industry Insight

Industry best practice suggests using qualified third-party vendors to validate internal findings and the quality and accuracy of internal auditors at least once per year. External validation can help mitigate the risk of subjective influences that can often occur within organizations.



Industry Insight

The Office of Inspector General has given guidance regarding healthcare providers employing or contracting with individuals who have been excluded from participating in federal healthcare programs. The excluded individual rule prohibits any direct or indirect involvement by an excluded individual in providing services billed to Medicare. This not only includes physicians and nursing staff, but extends to administrative and support stuff, such as a coder and auditor.

Industry standard is to conduct a pre-employment background check of the exclusion list to confirm an applicant is not on the exclusion list for unethical or illegal dealings with Medicare and Medicaid. However, this is not enough. There is a legal doctrine called ‘negligent retention.’ The Affordable Care Act Section 6501 can hold an employer liable for negligent retaining of an excluded individual. The OIG may impose Civil Monetary Penalties of up to $10,000 for each item or service furnished by the excluded person for which federal program payment is sought, as well as an assessment of up to three times the amount claimed.

If a healthcare employer is only conducting pre-employment OIG background checks, then they are exposing the company to possible risk of continuing to bill CMS for existing employee items or services in its claims to CMS. Considering the sizable liabilities tacked on for employing just one excluded individual, it’s easy to see why an effective compliance policy incorporates regular searches of the OIG exclusion list. Best practice is to check the exclusion list monthly as that is how frequently the OIG updates the list.

http://exclusions.oig.hhs.gov

23. Does your organization require auditors to have a current coding certification from a reputable certifying body (e.g. AAPC or AHIMA)?

Quality Continued

91%

9%

YES

NO

ORGANIZATION TYPE YES NOAcademic Medical Center 100% 0%


Consulting Company 96% 4%

Hospital 94% 6%



http://exclusions.oig.hhs.gov


Quality Continued

24. Does your organization require auditors to have an audit-specific certification (e.g. CPMA)?

25. Does your organization regularly screen your auditors to ensure they are not on the OIG or CMS exclusion databases?

45% 55%

30%70%

YES

YES

NO

NO

This is neither optional or scalable. Only 70% of organizations regularly screen their auditors against the HHS-OIG’s List of Excluded Individuals and Entities, and the General Services Administration’s (GSA’s) list of Parties Debarred from federal programs.


Thank You We hope you found our second annual report to be an informative, insightful, and, with any luck, fun read. Whether you identified areas for improvement or areas where you already excel (or a bit of both), know that just by being informed you’re staying ahead of the curve.

A special thanks to those of you who participated in the survey and made this report possible. Because of your participation we’ve had the opportunity to share so much important knowledge with so many. We’re already excited to get started on next year’s report.

CreditsIn order to bring you this report, Healthicity teamed up with AAPC to survey over 1,000 coding, auditing, compliance, and healthcare executives. All data was collected during the final quarter of 2017. A special thanks goes out to Healthicity’s subject matter experts, without whom this wouldn’t be possible. They are: CJ Wolf, Charla Prillaman, Marcie Swenson, Stephani Scott and Daniel Schwebach.

© 2017 HEALTHICITY 26

To learn more about Healthicity Services and Solutions,

please visit healthicity.com or call 877.777.3001© Healthicity 2018

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