What’s the Difference between Internal and Payer Medical Coding Audits? - dummies

What’s the Difference between Internal and Payer Medical Coding Audits?

Several different kinds of medical billing and coding audits exist, both internal and those done by payers, but all refer to an independent review conducted by a different person with coding background. Their purpose is to verify the accuracy of your work. Providers conduct audits because, although they don’t like to leave money on the table, they don’t want to be paid more than they deserve.

Most large companies have an internal auditing department, whose auditors randomly select charts to evaluate. Other providers, usually smaller ones, send quarterly audits to an outside consulting firm. The auditors look for under-coding, over-coding, and incorrect coding. Often, if an error is found during an audit, the result is to submit a corrected claim, possibly with a copy of the medical record and a letter explaining the reason for the request.

Other audits are payer audits. Most payer contracts contain a clause that allows the payer to request medical records, invoices, and other supporting documentation for claims paid within the past year (or, in some instances, farther back).

Medicare is a payer that can just show up and request to see records on site. Payer audits are performed to verify that claims submitted for reimbursement have the necessary supporting documentation, such as invoices, procedure notes, or test results.

Currently a bit of publicity has surrounded the Medicare RAC audits, which are being conducted by Medicare’s Recovery Audit Contractors. The RAC audits are a result of the 2003 Medicare Modernization Act. As a result of this legislation, CMS and RAC auditors recouped more than $980 million from providers in the three initial states of Florida, New York, and California.

The objective of the RAC audit differs from a traditional Medicare audit in several ways. First, the RAC auditors are essentially functioning as bounty hunters and are paid a commission equal to 10 percent of the amount recouped. The audits focus on CMS payment criteria, such as medical necessity relative to procedures. The RAC auditors also examine compliance with Medicare’s payment criteria, documentation, and billing requirements.