Case Studies

How Coding Verification Audits Can Improve Outcomes

Friday, September 16, 2016

Excelas is a big proponent of performing proactive internal audits of processes and procedures to ensure compliance with corporate or regulatory standards.  But sometimes, it’s not until an external audit returns unexpected results that an inward examination begins.  

Such was the case when Excelas was approached by a hospital client to help them understand the results of two recently completed coding audits.  The client was troubled by a substantial number of instances where external auditors found that codes for the facility’s hospitalists should be downcoded from an original level 3 to a level 1 due to documentation deficiencies.

These findings concerned our client on two fronts.  First, E/M codes dictate the level of reimbursement the hospital receives from Medicare, Medicaid, or private insurers.  Depending on the circumstances, a level 1 reimbursement may be only 1/3 the amount of a level 3 reimbursement.  Having claims downcoded from level 3 to level 1 has a significant financial impact.  Second, if poor documentation was the cause of the downcoding decision, this may be an indication of a more widespread problem that requires the facility’s attention.  Because this can also pose a risk in areas other than E/M audits, it was critical for our client to determine what the issues were so that they could put measures in place to manage their risk exposure and achieve better outcomes in the future.
The first step for our client was to seek Excelas’ help to either confirm that the findings of the original audits were accurate or to dispute the audit findings based upon a more thorough review of the medical records.  The client provided a list of patients whose records had been audited, along with the original E/M codes assigned by the facility.  The verification audit performed by Excelas focused exclusively on a random sample of patients whose billing codes were changed from level 3 to level 1 in the external coding audit.

Using the electronic medical record and an encoder, a thorough review of the clinical documentation was conducted.  Particular attention was given to initial physician assessments and related documentation in order to determine the accurate code assignments.   The verification audit then compared the original code assignment to the Excelas findings, and finally to the findings of the outside auditors.  

Our results confirmed the external auditors’ findings, that in most cases E/M codes should be downcoded from a level 3 to a level 1.  While this may not have been the result that the client hoped for, it did provide them with the information they needed to move forward.  

Audit Findings and Actionable Information  
Whether completed in response to an external audit or simply done as a proactive measure, a coding verification audit can also provide an evaluation of the facility’s coding and documentation practices compared to industry best practices.  Such a comparison can reveal specific areas in which coding procedures or documentation can be improved to reduce the client’s risk as well as to support their code assignment.       

For example, a level 3 E/M code for a hospitalist must be supported by a level 3 hospital progress note (among other criteria), which must include 2 of the following 3 elements: 

  • A detailed history, which in turn must include a chief complaint; an extended History of Present Illness (HPI) that includes 4 HPI elements; two to nine Review of Symptoms (ROS) elements; and at least one element of Past, Family or Social History (PFSH).  
  • A detailed exam, which in turn must include at least 12 data points from a review of organ systems.
  • High complexity medical decision-making, which in turn must include two of the following elements:  four problem points; four data points; and/or high risk.

Knowing when and why to choose one code over another, or knowing what is or is not in the record that impacts the coding decision, can help facilities develop improvement plans.  Armed with this information, the hospital coding department will know where they can begin making improvements or providing retraining, so that future audits will produce better results.

Need help evaluating your coding or documentation practices?  Contact Excelas today to see how we can help you improve your outcomes! 
DISCLAIMER: The preceding case study is a true story. Excelas, LLC values the integrity of our client relationships. To protect them from uninvited or unwarranted attention, contact, exposure or scrutiny, we do not disclose the names, or any other identifying information, of the corporate entities, facilities or defense firms with whom we do business.
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