Is CMS / HHS really checking for undercoding?

Yes. They are!

The 2018 Medicare Fee-for-Service Supplemental Improper Payment Data identifies undercoding in their audit findings.

CMS reported 1.93 billion dollars in underpayments in 2018.

1.93 billion dollars equates to about $4,800 per active MD in the United States per year who typically bill E/M codes. There are 620,520 active MD’s per the AMA Physician Masterfile (December 2019). 36% are in specialties as anesthesiology, pathology, psychiatry, and radiology using other CPT^(R)/ HCPCS codes.

CMS reported that Office Visit E/M codes 99213, 99212, Initial Hospital E/M code 99222, and Emergency services E/M code 99283 are among the top 8 codes being reported as undercoded / underpaid.

Click to access 2018MedicareFFSSuplementalImproperPaymentData.pdf

What about commercial payers?

You can google to see the number of lawsuits and filings against commercial payers for underpayment. The American Bar Association has a “healthy” pool of newsletters focused on health law and payment disputes. Many of these disputes against commercial payers are about underpayment, not overpayment.

Many RCM consultants will tell you that it’s good business policy to track payments from your payers. If your underpayments from your commercial payers is significant, having a base of proper coding can strengthen your case for dispute and/or negotiations. Your coding pattern is collected and trended by all of your payers – whether Medicare or commercial payers. They know your coding pattern, do you?

What is your percentage of undercoding?

What is the impact of undercoding on your practice’s revenue?

Are you describing your practice’s risk burden properly, so you can best serve your patients?

Internal Audits-Undercoding is a good strategy, right ?

Overcoding is an obvious audit finding. Most internal and external audits are focused on overcoding as a high risk topic. The risks are typically listed as submitting a “False Claim,” potentially being flagged as an audit candidate, being charged for overpayments, and being an “outlier.”

Due to these often touted compliance concerns, many practices choose a strategy of undercoding.

Is undercoding a good strategy to stay  “under the radar”?

Noviatas, a CMS Medicare contractor responsible for providers in AR, CO, DC, DE, MD, LA, MS, NJ, NM, OK, PA, TX, Indian Health & Veteran Affairs sees undercoding as “aberrant.”

CERT is a measure of improper payments. The goal of CMS and Novitas is to pay claims that meet Medicare’s requirements and pay them at the proper level of service. When there is an underpayment due to under coding, we did not pay the claim correctly and it is counted as an improper payment error. You are reimbursed for the higher level of service. Under coding misrepresents the true level of care provided to Medicare beneficiaries.

Under coding errors can statistically impact calculated error rates in the tens of millions of dollars. These statistics are used to calculate future Medicare payments and track trends in healthcare delivery. Patterns of under coding may be viewed as aberrant and open your practice up to audits and reviews. In addition, under coding impacts your practice revenue. You are not being appropriately paid for the level of service you provide to your patients. Correcting under coded claims can mean costly appeals.

Auditors at Healthcare Compliance Network (HCN) an healthcare compliance and RCM firm provides this perspective.

The Dangers of Undercoding

… the golden rule of coding is, and always will be, to code to the highest specificity. The payers don’t want you to lowball – they want the most accurate code which reflects the service performed. Without that, they cannot effectively rate policies, understand the risk burden, accurately set premiums, etc.

An undercoding error is still an error, and it will be graded as such in the event of an audit. That’s important because an unacceptable error rate will keep you on the radar, even if it’s due to undercoding.

Plus, it’s worth reiterating the adage that too much of anything is bad. Audits are often triggered by aberrant billing distribution patterns by CPT code. If you submit an abnormal number of claims with lower-level codes it is, in effect, no better than generating an abnormal volume of high-level codes. It implies that something is not right because you are outside the norm.

What is your percentage of undercoding?

What is the impact of undercoding on your practice’s revenue?

Are you describing your practice’s risk burden properly, so you can best serve your patients?

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?

Image credit: graphicstock

Internal Audits

Why is an internal audit plan essential for healthcare practices?

An article by the AMA “13 reasons your practice should have a medical record audit” quotes Deborah J. Grider as saying that an audit “is a preventive measure if done at least once a year.”

What does an audit prevent?

One key risk is governmental investigational auditors.

On CMS’ Recovery Audit Program webpage, it states: “CMS often receives referrals of potential improper payments from the MACs, UPICs, and Federal investigative agencies (e.g., OIG, DOJ).”

As a sample, here are the Approved Recovery Audit Topics required of all Medicare health care insurers (MAC) related to evaluation and management services.

In the 2018 AMA article Avoid these missteps to slash your medical coding audit risk, the author writes:

The OIG also warns against billing for services:

• You did not actually render.
• Were not medically necessary.
• Were performed by an improperly supervised or unqualified employee.
• Were performed by an employee who has been excluded from participation in the federal health care programs.
• That were of such low quality that they are virtually worthless.
• That were already included in the global fee, such as billing for an E/M service the day after surgery.

What about private insurers?

As of 2019, Blue Cross states: “Blue Cross follows the Centers for Medicare & Medicaid Services (CMS) 1995/1997 and CPT E/M selection guides for these services.” Most private insurers follow the policies and guidelines published by CMS and the AMA.

An internal audit plan is essential to ensure that your practice stays healthy.

There are many firms that offer compliance services. Compliance is often the topic of conferences, webinars, in-services, and articles. As a result, many practices have a compliance plan.

The operational questions are:

When was the last time you reviewed your compliance plan?

What topics in the compliance plan are not being followed?

What is the goal of your auditing efforts?

“Day-to-day operations in a medical practice involve significant amounts of clinical documentation and medical claims information. Ensuring accuracy of that information via regular audits — to ensure all processes and transactions are functioning appropriately — is an imperative for both risk mitigation and revenue cycle management.”

Veronica Bradley CPC, CPMA, Insight Article, MGMA, March 2, 2020

The Value and Purpose of Medical Coding Audits

Beyond identifying accidental or unknown “fraudulent” billing, there are other benefits to conducting an audit of your billing procedures.

Audit for education

As Veronica states and we’ve observed, encounter/chart reviews (“audits”) often provide a base for education – for providers, coders, billers, and practice managers. Proper coding for billing purposes has many potential points of failure. These “pain” points impact both compliance risk and revenue. These failure points can include: 

• Insufficient clinical or procedural documentation
• Improper use of CPT and ICD-10-CM codes
• Lack of modifiers
• Unbundling
• Missed billing opportunities

Audit to improve your reimbursements

The article also lists audit topics that impact your practice’s revenue stream.

Audit topics that impact your practice’s financial health can include:

• Inefficient payer reimbursement
• Payer rules that limit, delay, or reject your billing
• Payer downcoding
• Errors in claims scrubbing
• Trends in denials

Audit to reduce risk of payer audits

Performing your own documentation, coding, and risk audits will also provide you a view of the possible areas of risk if you were visited by a Recovery Audit Contractor (RAC) or any type of payer audit.

Resources from the OIG

For more compliance resources, here is a list from the Office of the Inspector General (OIG).

Click to access ListofComplianceResourcesHandoutBR508r1.pdf

OIG Compliance Resources

If you need audit software or audit services, contact us at swiftaudit.com

We will be happy to help you with your compliance and revenue improvement needs.