A medical claims audit can prove to be the most valuable tool in your clinic’s compliance arsenal. When properly conducted, an audit can boost your claims accuracy and help your medical billing unfold more efficiently. Whether you choose to conduct your review internally or hire an external auditor, it’s important to understand how to audit medical claims.
The key to ensuring that your audit proceeds smoothly is to first streamline your claims process with a proven clearinghouse such as Apex EDI. Below is a look at the claims auditing process and the role that medical claims software can play in a successful audit.
What are some key reasons to schedule a medical claims audit?
“If you treat billing, coding, and compliance audits like routine annual physicals or yearly flu shots, you’re shortchanging your practice or facility. While regular checkups are important to your health and that of your business, audits go beyond general maintenance. They could uncover coding and billing improvement areas, compliance pitfalls, or even deserved revenue that you’re not capturing.”Leesa Israel, Head of Publishing, Editorial & Technology, American Academy of Professional Coders (AAPC)
Before diving into the key steps of a medical claims audit, it’s helpful to understand the benefits of scheduling a formal review of your claims and appeals. Here are some key reasons why you should periodically audit your medical claims:
- Assess compliance with the latest industry standards and regulations
- Ensure staff are applying the proper codes for health services
- Highlight errors that could increase your organization’s risk for liability
- Boost documentation and reporting accuracy
- Prepare for required industry compliance audits
What are the key steps in a medical claims audit?
For many people, the word “audit” may sound a bit intimidating. In reality, a medical claims audit is just a careful review of a sample of your claims to screen for errors. If you choose to hire an external agency to audit your claims, the agency you select will outline the various audit steps and let you know what they will require in terms of documentation. If you’re conducting an internal audit and are not sure where to start, the following eight steps will provide a helpful framework for your audit.
Step One: Assemble your claims review team
“As you embark on an internal billing audit, the American Medical Association says you should designate a person on your team to spearhead the initiative, someone well-versed in coding and billing and documentation requirements.”Shelly K. Schwartz, Physicians Practice
If you plan to audit your claims internally, you will need to designate at least one member of your team to oversee the audit. Depending on the number of claims you decide to review, you may need multiple people on your audit team.
If you don’t have any in-house employees with sufficient expertise to lead an internal audit, it’s wise to seek the services of an external auditing team. If you decide to hire an external auditor, you can simply follow their initial instructions and then skip to Step Six below.
Step Two: Pull a sample of your medical claims
Once you know who will be leading your audit, it’s time to choose a time period to audit and pull a sample of your existing claims. For example, you may decide to audit a sample of claims from a particular week, month, or quarter. The number of claims included in a sample typically depends on the number of providers in a practice.
Veronica Bradley, Senior Industry Advisor with Medical Group Management Association (MGMA), suggests that physician practices pull 10-20 claims per physician while hospital departments may require a larger sample of 25 to 30 claims. If you hire an external agency to audit your claims, they will often review your physician data and dictate the terms of the sample they will review.
Step Three: Carefully review each claim for accuracy
Now that a sample of your claims has been pulled, your auditors will begin the review process. Of all the steps in the audit process, this one requires the most time, particularly if your sample size is large. This step begins by collecting all pertinent documentation for a claim, such as clinical records and financial information such as payment receipts.
With all relevant documentation at hand, it’s time to begin reviewing the claim to determine whether it contains accurate data and orders that are signed and dated by the physician. Then screen for coding errors such as undercoding or overcoding. Finally, carefully review the claim to ensure that current policies and standards are being followed.
Step Four: Make a list of mistakes and discrepancies
As you move forward with your audit, you will likely discover some medical billing mistakes that can greatly impact your revenue. It’s important to keep a log of every error and discrepancy you find so that you make the proper adjustments to your claims procedures. While every practice is different, here are some common mistakes that can inflate your number of denied claims:
- Inaccurate identifying information, including address errors and incorrect birthdates
- Failure to request or follow up on required pre-authorization
- Discrepancies between diagnostic codes and treatment codes
- The listed policy information for the patient is out of date
- Delivery of services that were not deemed medically necessary
Step Five: Organize audit findings in a report
If you choose to carry out an internal audit, your lead auditor should clearly document all findings in a professional report. While there is no rigid set of criteria for audit reporting, there are some key sections that should be included in your document. At a minimum, your report should cover the following:
- An executive summary, which provides a high-level overview of your audit results
- The scope of the audit, including the sample size and time period for the audit
- A summary of findings, including notable strengths and weaknesses
- Corrective actions or recommendations to reduce errors and oversights
Step Six: Review your audit findings with staff
Once you have the audit report in your hands, it’s time to review the findings with your team. While it’s a good idea to include your entire team in the review process, you may want to carve out extra time to spend with your employees who work most closely with your claims. As you review your audit report, make sure to discuss the following three points:
- Provide concrete examples of common recurring errors
- Explain the consequences of errors in clear language
- Encourage feedback and staff engagement during your review
Step Seven: Map out a plan to address deficiencies
The best, most detailed audit results in the world will be worthless if you don’t map out a plan to address common errors and weak spots. The plan you develop should reflect your audit results and the nature of your deficiencies. For instance, if your audit reveals that all multiple physicians in your practice are using outdated codes, it may be time to update your training and schedule an in-service on coding and guideline changes.
Step Eight: Schedule your next claims audit
“Audits can be performed monthly, quarterly, twice a year, or once a year… Processes that have a history of frequent deficiencies or non-conformities, should be audited on a more frequent basis, such as quarterly or twice a year.”The Registrar Company
Claims inaccuracies do not occur in a vacuum. While an audit can correct existing discrepancies and help reduce your number of claims-related mistakes, a single audit will not magically make your medical practice immune to future problems.
If your initial audit yields a large number of discrepancies, you may need to audit your claims on a quarterly basis until errors are minimized. Otherwise, you should plan to audit your claims at least once annually. Regardless of how well you fared, it’s wise to schedule your next audit upon completion of your current one.
Understanding how to audit medical claims can streamline your organization’s audit process, whether you’re conducting it in house or hiring an external agency.
What is the key to a smooth medical claims audit?
The single best way to pave the way for a smooth audit is to hire Apex EDI to help simplify your medical claims process. Turning to a clearinghouse to improve claims processing is a strategy that is gaining traction among small to mid-size practices seeking to maximize their resources. Here are just a few of the many benefits of hiring a clearinghouse such as Apex EDI:
- Accurate reporting: Experienced staff and robust software combine to make sure your audit reports are clear and accurate.
- Reduced stress: Using efficient software allows you to experience peace of mind knowing you are reducing claims errors.
- More time for patient care: Our software saves you time and hassle, enabling you and your staff to devote more time to patient care.
- An organized claims trail: Apex EDI allows you to access claims data quickly without sorting through a sea of paperwork.
- Improved audit results: Our medical claims software can help ensure compliance with the latest industry standards and regulations.
I couldn’t be happier with the level of service that I have received; from the first day I felt I was in very capable hands. I look forward to the day I can pass on a referral for your company.Bridget Walker, Dallas Chiropractic
Schedule a demo to discover why clinics and healthcare organizations across America choose Apex EDI to help improve their medical claims processing. We look forward to helping you make your next claims audit a successful one!