Good Auditing Practices Maximize Earnings, Reduce Liability

FEBRUARY 04, 2010
Bradley Schmidt
Whatever the reasons for performing an audit—ensuring compliance or practice efficiency—consultants Jeffrey Peterson and Linda Van Horn, speaking on business management at the American Academy of Pain Management's 26th annual meeting, recommend that you perform them multiple times per year, using both in-house staff and outside experts.

Often in their encounters, Peterson and Van Horn will find that practices will have compliance plans in place that don’t include strong audit practices, which they feel is greatly self-defeating.

In order to keep yourself out of trouble, the two offer these suggestions:

How often should I perform an audit?
As a general rule of thumb, a practice should perform a comprehensive coding audit every six months and mini-audit once per quarter. For these types of audits, it is recommended that you use the services of certified coding and billing specialists. This will ensure that the audit is being performed by someone with the most up-to-date knowledge of billing and coding regulations.

Going with a specialist is also an easy way to get disinterested results, which is not always a guarantee when someone related to your practice is performing the audit.

When it comes to billing and collections, the audit should be a daily routine in order to ensure that your practice has captured all charges. Your billing system should be able to provide you with this information, so if it can’t, replace it. However, they also recommend having a person double check to ensure that the billing system is not producing errors.

Peterson and Van Horn recommend a comprehensive billing audit be performed once per month, and suggest that you farm that one out, maybe not each and every time, but certainly every once in a while to ensure disinterested findings.

What to do when an auditor shows up
While audits are good for enhancing internal efficiencies, they are most effective for ensuring readiness for external audits, or better, preventing them from happening in the first place.

In the event that the government or an insurance company shows up at your door with a request for documents, Peterson and Van Horn say your first call should be to your lawyer who will inform you of all your rights within the situation. Your second call should be to the outside party/parties that handle your audits as they will be able to produce the necessary documents in rapid fashion. Other than that, it is recommended that you speak to no one else because depending on the nature of the conversation and their response, that person could then be pulled into the situation with negative consequences.

Van Horn strongly recommends fighting refund requests because payment without protestation is an admission of guilt, which then opens the door for extrapolation. To illustrate this she offers the story of an unnamed doctor who, rather than go through the hassle of a refund fight with his insurance company, wrote them a check for $25,000 and washed his hands of the matter. But because this amounted to an admission of guilt, the insurance company extended the audit back three years and demanded a refund of $250,000. So before you pay anything as part of an audit, be aware of the consequences.

How much do audits cost?
For whatever reason, Peterson and Van Horn got a bit political when it came to this question and basically refused to answer it. Perhaps there are too many variables to consider—from practice type and size, to the extensiveness and type of audit—but they would only give a ballpark estimate.

Peterson: I’ll say that it will cost more than $5 and less than $1 million. But I can tell you the costs of not performing the audit are even greater.

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