American College of Physicians: Internal Medicine — Doctors for Adults ®

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How to steer clear of a Medicare billing audit

Tips to help avoid coding and billing practices that can put you on the wrong side of the law

From the September 1999 ACP-ASIM Observer, copyright 1999 by the American College of Physicians-American Society of Internal Medicine.

By Bryan Walpert

Larry Lehrner, FACP, knows all too well what it feels like to get hit with a Medicare audit. A few years back, a Medicare carrier visited the office of the Las Vegas nephrologist to scrutinize dozens of charts for referrals that the carrier said the group had incorrectly billed as consultations.

The carrier alleged that some of the group's physicians were misusing the words "consultation," which refers to patients who are eventually sent back to the original physician, and "referral," which indicates that a physician has transferred all or part of a patient's care to another physician. To defend his group's coding practices, Dr. Lehrner sent the carrier reams of documentation, including letters the group had sent to the physicians who had requested consultations.

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After lengthy discussions and chart reviews, the carrier was convinced that there wasn't a problem and dropped the matter. "We went round and round. Finally, they backed off," said Dr. Lehrner, the College's Transitional Governor for the Nevada Chapter. "It was a nightmare."

With the government's renewed emphasis on stamping out fraud and abuse, physicians everywhere are wary of drawing attention to their billing and coding practices. They worry that an honest billing mistake may lead to an audit from their Medicare carrier, fines, and, even worse, scrutiny from the Office of Inspector General (OIG), the federal office charged with enforcing health care fraud and abuse laws.

While it's true that the government has stepped up its investigations into fraud and abuse, experts say that most billing problems are ironed out between physicians and their local Medicare carriers before they ever reach a critical stage. And of those cases that do reach the attention of the OIG, only a fraction involves physicians. (See "New fraud statistics from OIG help separate fact from fiction,")

As physicians like Dr. Lehrner are quick to point out, however, even a small-scale audit by your local Medicare carrier is usually a painful process that you are better off avoiding.

So what can you do to make sure that your bills comply with Medicare regulations, or better position yourself in case you are audited? Here are some tips from Medicare compliance experts:

Get the codes right. Make sure that your CPT codes (those that indicate services rendered) match the services rendered, and that your ICD-9-CM codes (those that indicate diagnosis) support any ancillary services you've ordered.

A common error is to bill all office visits at the same level. Experts say that nothing raises a red flag among auditors more than a physician who overuses one particular level of service. Even physicians who intentionally undercode their visits to avoid scrutiny may attract the attention of auditors, who expect to see a variety of different codes.

To avoid coding errors, many consultants contend that only the physician should write down the appropriate code, in part because the physician is ultimately liable for any errors. Such a strategy also avoids making your staff guess codes based on sparse notes or past practice. "Generally speaking, when the doctor delegates coding to other people, you're going to have more mistakes in the system," said Neil B. Caesar, JD, president of the Health Law Center in Greenville, S.C.

Write everything down. A few words on a scratch pad won't cut it anymore. You must be able to prove the scope of the medical history covered, the extent of the physical exam and the complexity of your medical decision-making. In other words, you should be prepared to prove to an auditor that the encounter you coded at level 4 really was a level 4.

In your progress notes, discuss assessments, diagnoses and plans for care. If you asked for a family history, for example, say so in the notes. "Document the negatives," said Alice G. Gosfield, JD, a health care lawyer in Philadelphia. "If you looked at some system and it was normal, write it down. For example: 'Heart rhythm and rate regular.' "

HCFA's evaluation and management (E/M) documentation guidelines define exactly how much documentation you must provide for each visit. Because the much-hated guidelines are so burdensome to use, some practices use template encounter forms that list various systems or procedures. Experts caution, however, that simply checking off all the items on a template (or running your pen from the top of the form to the bottom to indicate that you covered all areas) may be as risky as not documenting at all. The government may assume that you simply check off such items routinely and conclude that your forms do not reflect specific encounters.

If you decide to use a checklist, it's critical to add handwritten notes. "As long as the physician is actually handwriting something at each of the locations on the template where they're documenting the service, that's fine," Ms. Gosfield said. "You don't have to write full sentences."

"I write a thousand things more than I know are medically needed in my chart," explained Dr. Lehrner, the Las Vegas nephrologist. "Anyone who has any sense now is spending time and effort making sure there's enough black on the white page to impress the reviewers."

Demonstrate medical necessity. In addition to recording your encounters, carefully document the reasons for all ancillary services, including what you ordered and the diagnosis that prompted you to order them.

Don't assume that your reasoning for ordering a particular test or service will be clear. "A lot of physicians think the reason a test is ordered can be inferred from the progress note," said William A. Sarraille, JD, a partner with the Washington law firm Arent Fox. "The reality is that the people doing the auditing have different backgrounds than physicians. What they will infer and what the doctor infers are different things. Go the extra step and make it explicit."

Also remember to include the results of all tests in the patient's record. When an auditor asks for information, Ms. Gosfield said, send him everything. "Don't say, 'We just sent the progress notes, we didn't include the lab slips,' " she explained.

Audit your practice regularly. A baseline audit—done internally or with the help of a consultant—can help uncover documentation problems. Mr. Caesar recommended sampling 20 to 50 charts per physician and having an outside reviewer interview key people at your practice.

Mr. Sarraille, for example, likes to examine practices from a patient's perspective, from reception to checkout. He notes how charge sheets are transferred from the physician to billing staff and whether staff members code visits based purely on information in the record or whether they go back to the physician with questions. "You can learn an awful lot about the vulnerabilities in a practice very quickly by doing that exercise just once," Mr. Sarraille said.

Another strategy is to conduct regular smaller audits. Mr. Sarraille suggested, for example, that each physician in a practice audit three of his partners' charts each month. Physicians could take turns so that someone new reviews each doctor's charts every month. "By making the sample small, you make this a manageable task," Mr. Sarraille said. "By doing it frequently, you keep issues in front of people on a constant basis. That's what really assures improvement."

Create a compliance program.Consultants say it's a good idea to have an official compliance program that outlines policies and procedures in writing. Not only does it help make sure that you'll follow through on training, audits and other steps, it also shows a goodwill effort that the OIG may take into account in the event of an audit.

Though the OIG has yet to come out with a model compliance program for physician offices, there are a number of models to follow. A publication from AHIMA, "Health Information Management Compliance: A Model Program for Healthcare Organizations," suggests that compliance programs should include written policies that outline coding procedures (for example, the steps a coder should take when reviewing a health record), a compliance officer responsible for monitoring the plan and a formal system for filing complaints from patients and staff. (For more on this and other publications, go to AHIMA's Web site at www.ahima.org.)

In addition, ACP-ASIM recently released a publication to help internists steer clear of compliance trouble. "What Internists Need to Know: Compliance Requirements of Federal Health Programs," published by the College's Center for A Competitive Advantage, provides tips for complying with federal requirements on submitting claims, as well as self-referral and anti-kickback statutes. The publication also tells internists what programs federal investigators are targeting. (See "To avoid an audit, try these College publications," this page, for more College guides.)

Maintain good patient relations. "The single best thing physicians can do to protect themselves from liability, assuming they are moderately competent at the technical dimension of the craft, is to stay on good terms with their patients," said M. Gregg Bloche, JD, professor of law at Georgetown University and co-director of a joint program in law and public health with Johns Hopkins School of Medicine. Patients are more likely to complain to Medicare if they're upset with their doctors, he noted.

HCFA requires physicians to educate patients about what services Medicare does not cover. If you are unsure whether Medicare will cover a specific service, have patients sign an advanced beneficiary notice (ABN) form. The form states that the patient understands that Medicare may not cover the service and that he or she will pay for the service if Medicare does not. HCFA does not generally allow physicians to bill patients for uncovered services if an ABN form has not been signed.

General internist Yul D. Ejnes, FACP, takes a more proactive stance. Besides explaining to Medicare patients what the program won't cover, he also publishes a practice newsletter that explains Medicare's position on specific areas of healthcare, such as HCFA's decision to cover cholesterol testing only for patients who have been diagnosed with high cholesterol.

"My point is to explain to the patients that this is Medicare's policy, that we're not miscoding or doing anything that's not medically sound, that their insurance does not cover certain things," said Dr. Ejnes, who is the College's Transitional Governor for the Rhode Island Chapter.

"We will not write any diagnosis down just to get it covered," Dr. Ejnes tells patients. "We state quite frankly that we're not going to commit fraud to get tests covered."

Bryan Walpert is a freelance writer in Denver.


To avoid an audit, try these College publications

The College's Center for A Competitive Advantage (CCA) offers a number of guides to help physicians comply with HCFA coding and documentation requirements.

"Medicare Medical Review: Safeguards and Advice for Internists and Their Staff" (product No. 410701180) discusses Medicare's random pre-payment reviews of evaluation and management service claims, as well as the post-payment medical review process. It defines the rights of physicians who are audited and offers advice on establishing safeguards to help stay clear of the government's watchful eye. The guide is free for members and costs $25 for nonmembers.

The CCA has also recently updated two laminated reference sheets. "E/M Service Codes: Selecting Appropriate Levels of Service" (product No. 410100280) lists the type of history, exam and decision making required for each E/M code. "1999 Commonly Used ICD-9 Codes" (product No. 410100380) lists the codes that are most commonly used by internists in alphabetical order within disease categories. College members can receive one of each sheet free.

College members can download electronic copies of CCA guides from ACP-ASIM Online. You can also order any of these products by calling ACP-ASIM Customer Service at 800-523-1546, ext. 2600, or 215-351-2600 (9 a.m. to 5 p.m., EST).

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