Internal Audits – Financial Impact

In our last post, we reviewed the importance of an internal audit plan. Now let’s look at how that might impact your financials.

Evaluation and Management (E/M) services have been a high priority audit topic for all payers for a long time. In 1995, we released E&M Coder as an audit and education tool. In 2010, E/M services accounted for almost 30% of all Part B payments, equating to $32.3 billion. [We can give at least $100 to everyone in the USA every year for E/M services paid just by Medicare.]

In a study by the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) in 2010, they found $6.7 billion of inappropriately paid claims, representing 21% paid for E/M services that year.

Of the total $32.3 billion paid for E/M services in 2010, 42% of claims were incorrectly coded. They were either higher (upcoded) or lower (downcoded) than they should have been. 19% of claims had insufficient documentation for the E/M services billed.

Though this Study is over 10 years old, what if

• 42% of your billing was improperly coded?
  • 21% over coded – what is your risk?
  • 21% under coded – what revenue opportunity was lost?

What if

• 20% of your billing was improperly coded?
  • 10% over coded – what is your risk?
  • 10% under coded – what revenue opportunity was lost?

How much would these error rates cost your practice?

In the December 2020 MGMA Survey, those who reported their denials were due to documentation / coding issues noted the following as the top reason for their denials:

https://www.mgma.com/data/data-stories/finding-hidden-treasure-by-uncovering-and-fixing

Coding issues (including wrong modifier and improper bundling of CPT® codes) — 23%

Medical necessity requirements — 14%

Missing information/documentation — 11%

Do you know what your top reasons for denials or underpayment are?

How confident are you with your provider’s 2021 E/M coding?

If you use internal staff to code and/or audit, when was the last time you had an external review done?

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