Case Study: Coding audits under ICD-10

Jan. 6, 2017
Debi Primeau, MA, RHIA, FAHIMA, President, Primeau Consulting Group

The healthcare industry is just over a year past the introduction of ICD-10, which grew the index of medical diagnosis codes more than five-fold, from 13,000 codes under ICD-9 to more than 68,000 codes today. Approximately 5,500 new ICD-10 codes also were added on Oct. 1, 2016, for fiscal year 2017, accompanied by the end of a one-year grace period that granted providers flexibility on coding specificity during the first year of ICD-10. All in all, the past year has seen a significant amount of change for the nation’s health information management and clinical coding teams.

While ICD-10’s impact on claims denials and revenue cycle has been relatively quiet to date, coding professionals have faced challenges adapting to the granularity of the new system. Physician practices and medical groups have worked hard to familiarize themselves with the new coding index while simultaneously preparing for MACRA’s new Quality Payment Program to kick off in early 2017. Through the ICD-10 journey, many healthcare organizations are turning to third-party auditors to help them benchmark their performance thus far in the new coding environment.

Torrance Memorial Medical Center: A coding audit case study

Torrance Memorial Medical Center is one provider organization interested in monitoring their coding performance under ICD-10 using the help of an unbiased outside party. The California-based hospital recently engaged Primeau Consulting Group to conduct a coding audit in the hopes of verifying internal audit findings and proactively identifying any problem areas that may exist at this stage in ICD-10.

The engagement between Torrance and Primeau, initiated by Torrance Memorial’s Director of HIM and Clinical Documentation and Coding Improvement, Melany Merryman, BA, MSL, RHIA, CRCR, was the hospital’s first outside coding audit under ICD-10. Merryman, who has had an internal auditor in place for several years, had one other outside audit done under ICD-9 about a year ago.

“We felt we were doing well, but wanted to validate that and the accuracy of our coders,” Merryman explains. “Because ICD-10 was new, we thought it would be good to have a fresh perspective and an objective view from outside eyes to see if there was anything we were missing and to confirm how we’re doing.” Staffing changes over the past six months and analysis of a pending work-from-home arrangement also factored into the hospital’s decision to seek an external audit.

The audit process

Primeau and Torrance Memorial Coding Manager Wilfredo Lazarte started the audit process by looking at 10 inpatient coders and five outpatient coders, including the emergency department and surgery and observation. Twenty records from the months of June and July were randomly selected for each coder in the audit, for a total of 300 records. Those records were reviewed by Primeau, who placed records into four categories of recommendations:

  1. Variance: Applies to anything that impacts DRG classification, and therefore revenue, including changes to primary or secondary diagnosis or procedure; impacts overall quality scores.
  2. Educational : Applies to missed, over-coded, or under-coded claims issues; has no payment impact but is reportable so could still impact quality scores.
  3. Query: Claims that need additional information.
  4. No change needed: Everything appears to be coded correctly.

Final findings were given to Lazarte who, in turn, shared findings with each original coder for review and rebuttal. Each case was very specific and handled on a one-on-one basis per coder. General audit findings were shared with the entire group.

Turnaround time from record submission to reviewing results ran approximately two weeks. Primeau reviewed final comments with Merryman and Lazarte, who in turn worked with coders internally to address findings and implement follow-up steps recommended by Primeau.

Identifying trends

The American Health Information Management Association (AHIMA) placed best practice coding quality standards at around 95%1 using ICD-9. Torrance Memorial was validated with a coding audit accuracy rating that fell well within industry standards.

As Merryman reports, “We were very pleased to net an overall accuracy rate of 96%. We looked at 300 records and saw 100% accuracy in ER, 96.7% accuracy in observation, and 95% accuracy for inpatient. We also looked for physician documentation querying opportunities and only had five out of 300. We felt this was a great reflection on our clinical documentation improvement (CDI) team and physician education efforts during the ICD-10 implementation phase. Results showed that we’re coding at an exceptionally high level but also offered education recommendations and a game plan to take back to specific coders.”

Trends uncovered in the audit indicated some potential for coders to miss secondary diagnosis codes, an act that may not impact reimbursement, but does impact illness severity and treatment.

“For some coders,” adds Merryman, “we had cases where there were unspecified and specified codes used at the same time. I think sometimes the coders start with one, but end up with another and neglect to go back and change initial documentation. This is more of an oversight than an error, but it highlights the importance of ensuring that there is opportunity to go back and recheck claims. There also were some very specific changes with ICD-10 that did show up, such as incorrect external cause codes. There is opportunity for improvement and education, even if it didn’t change the DRG.”

Lazarte reports that communication with Primeau during the review process “went very smoothly. [Primeau representatives] offered great explanations that were not at all contentious or entered into as being punitive. It can be tough being called out, or challenged on things, but they were very accommodating. There was great communication between the teams.”

Takeaways and next steps

The coding audit by Primeau culminated in a follow-up meeting to discuss where opportunities are and what Torrance’s next steps might be moving forward.

One of Primeau’s recommendations, and Torrance Memorial’s primary and immediate objective moving forward, includes reinforced targeted training with coders. “The experience gave us a great roadmap,” Merryman reports. “We’ll definitely take a more granular approach to assign training modules to individual coders in order to address specific areas needing reinforcement.” The team also discussed the potential benefits of Computer Assisted Coding (CAC) to help identify overlooked coding issues. While Torrance is not presently using CAC, they have plans to do so.

Torrance plans to continue the trend of seeking outside audits to augment internal efforts on a routine and ongoing basis. According to Merryman, “We’re thinking we’ll use this as a baseline and go back and do another one during the first quarter of 2017 in order to review records that may be affected by October’s most recent changes. That gives staff the opportunity to get education in place, put it in practice, and then reevaluate. We’re hoping to do these audits on a bi-annual basis to keep tabs and stay on target. We’re budgeting for an audit again for January and then six months later. We’ll be interested to see differences in scores.”

Coding audit best practices

On the heels of the ICD-10 transition and with additional workflow changes slated for HIM professionals on the brink of a major shift to value-based care, it is imperative that medical professionals take a proactive approach to streamlining coding initiatives. There are many coding changes to keep up with, and a lack of knowledge on guidelines for new releases and updates can hinder coding progress.

Primeau encourages HIM professionals to take every opportunity to identify common denial areas, with particular attention on unspecified codes and missing secondary codes. Work proactively to catch coding complications while the patient is in-house rather than post-discharge. A robust CDI program can help HIM departments catch more errors in-house. Implement an HIM strategy that provisions for on-going audits and a coding education game plan that acts on those audit results. Ensure that audits are done more frequently on those with below-target benchmarks.

Merryman encourages fellow healthcare organizations to obtain third-party audits as part of a comprehensive coding management strategy. “Sometimes we think it’s too expensive, but when you look at dollars involved and rebilling, you can justify bringing in an outside firm. It’s just a matter of finding the right one. Trade shows like AHIMA are a great way to connect with options. Don’t assume pricing. We talked to other firms and noticed quite a difference in pricing. Reputation counts, too.”

Beyond ROI, Merryman also cites the capability to bolster internal confidence intervals as a big benefit to outside engagement. “You can tell the C-suite you’re doing great, but an outside source definitely validates what you’re saying and doing. The job is never over—we can always be better, but now we no longer have to guess. We have a good benchmark start, which improves credibility.”



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