A new focus on coding quality audits

Feb. 1, 2017
One of the unsung benefits of ICD-10 is that the new coding standard has brought increased organizational awareness to the subject of coding quality audits. In my consulting work with hospitals and health systems across the United States, I field more questions on this topic than ever before.

Healthcare organizations always have performed internal coding quality audits, but prior to ICD-10 implementation, the number and frequency of audits depended on staff resources, available budget, and sufficient time to conduct audits in the face of competing priorities. Facilities were less likely to spend dollars on external coding validations because the health information management (HIM) staff had years of experience in ICD-9 coding and working with ICD-9 coded data to identify potential problem areas.

What is driving today’s increased interest in coding quality audits? Most obviously, the newness and specificity of ICD-10. As coding professionals continue to gain experience with the new codes, the Centers for Medicare and Medicaid Services (CMS) recently released a significant batch of new ICD-10 codes for 2017 as a result of the end of the code freeze on Oct. 1, 2016. This date also marked the end of the physician grace period, which was instituted by CMS to help physician practices transition to ICD-10 without fear of increased claim denials due to inaccurate codes. Physicians now must make certain that the ICD-10 codes submitted on claims reflect the clinical documentation and are accurate.

Coding audits that validate diagnosis-related group (DRG) shifts and/or identify illogical DRGs also have become more critical to achieving revenue cycle success under ICD-10. Proactive auditing can pinpoint inaccuracies prebill, before there is any impact on reimbursement. When audits uncover coder knowledge deficits, HIM and revenue cycle departments can institute further education to ensure better performance moving forward.

Finally, hospitals and health systems understand that accurate and complete coding has a direct impact on the validity of quality outcomes data and patient risk stratification, which determines quality rankings, public report cards, and increasingly, performance under value-based payment. Coding quality audits can help healthcare organizations verify that all patient conditions governed by coding and reporting guidelines are thoroughly documented and accurately coded.

Here is a sampling of the questions most frequently asked about coding quality audits:

How often should our organization audit coding?

I recommend prebill auditing to review records of critical cases (e.g., DRGs that have potential for coding error, mortalities, PSIs/HACs, or DRGs with a single complication/comorbid condition (CCs/MCCs). Prebill audits should be conducted every day to identify potential errors that could negatively impact reimbursement and maintain the health of your organization’s revenue cycle. Retrospective reviews also should be performed, such as a monthly or quarterly review of a record sampling for each coder. Beyond this, healthcare facilities also should be prepared to perform ad hoc audits when a DRG shift or a trend is identified to either validate the shift or identify the problem.

If we are doing regular, thorough coding audits at our facility, do we need to have an audit done by an outside company?

External audits are vital. An independent, outside viewpoint often can bring a fresh perspective when it comes to detecting problems that may have been overlooked. It’s not uncommon for external auditors to identify situations where the incorrect principal diagnosis has been selected or an incorrect principal procedure code has been assigned. Both of these impact MS-DRG assignment, yet sometimes these scenarios are not evident to internal audit staff.

In addition to regularly scheduled internal audits, at least one external audit should be completed each year. Organizations do yearly audits of their financial books—since coded data impacts reimbursement, it is vital for organizations to give external coding audits the same importance as their financial audits.

Who should be involved in our coding quality audits?

Coding quality audits should involve a multidisciplinary team that consists of coding professionals, clinical documentation improvement (CDI) professionals, physician advisors, and representatives from the patient quality and safety teams. Each of these members can provide vital input into the accuracy of the clinical documentation that drives the coding of each case under review.

What criteria should we use to select an external auditing firm?

Look for a company with experience in coding across the continuum of care (inpatient, outpatient, professional). It should have both knowledge and experience in clinical documentation improvement in order to identify opportunities for an organization to improve their documentation practices in support of accurate coding. The company also should have expertise in reimbursement and risk adjustment and be familiar with the functionality of different EHR systems.

What is an acceptable code accuracy rate?

It’s not only important to measure coding accuracy, but also reimbursement accuracy. Reimbursement accuracy (e.g., DRG accuracy) should be 95% or greater. Coding accuracy should hover around 95%+ as well.

What trends do you see in the auditing of coding?

There is growing attention being paid to the accuracy of professional fee coding now that the ICD-10 physician grace period has ended. Increasingly, external auditors are being asked for estimates of unlisted codes used in professional services claims and for plans to remediate this situation. In addition, CDI managers are asking for assistance in auditing the performance of CDI professionals, with a focus on several key questions: Are CDI specialists missing query opportunities? Are they assigning accurate DRGs? While not coding per se, CDI performance is integral to generating a thorough and accurate coded record.

Should your facility conduct more frequent coding quality audits under ICD-10 than it did with ICD-9? Absolutely, and for the obvious reasons described here. If your facility doesn’t have a coding quality audit plan in place, develop one and share it with key stakeholders. Be transparent and communicate audit findings, whether good, bad, or ugly. Coding quality is not just the responsibility of coding professionals; it’s the responsibility of your entire organization.

Case example

Validating DRGs

A patient returned to the hospital several days after a traumatic fall that caused several rib fractures. Complaining of breathing difficulty and shortness of breath, the patient’s pulse oxygen was 89% on room air. A chest X-ray revealed that a pneumothorax had developed since the fall. A chest tube was placed, the pneumothorax resolved, and the patient was discharged several days later. The DRG assigned to the case was MS-DRG 950 Aftercare without CC/MCC (complication and comorbidity).

At face value, however, this was not an aftercare situation. A deep dive into the case revealed that the coder had assigned the code for traumatic pneumothorax with a seventh character of “D,” which indicates a subsequent encounter for the pneumothorax. This code was incorrect because it actually was the initial encounter for this condition. Instead, the seventh character of “A,” indicating initial encounter of care, should have been assigned. Once the seventh character was changed, the correct DRG was calculated—MS-DRG 200, Pneumothorax with CC. The corrected code resulted in a DRG weight increase of 0.4654, which translated into increased reimbursement for the facility.

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