Why We Need Code Auditing

Why we need code auditing
By David Rullo, MD from Memag.com

Computerized code-auditing tools have generated confusion and controversy among physicians. Here, an industry expert sorts fact from fiction.

In today's costly and complex health care environment, physicians are discovering that delivering efficient and effective care requires more than clinical expertise. Like never before, the medical community plays a significant role in controlling overall costs—not just by evaluating the necessity of certain tests or procedures, but also by ensuring that individual medical practices comply with established billing standards.

Reimbursement issues invariably generate debate among physicians (see, They call it claims processing, I call it fraud against doctors, Dec. 20, 1999)—and create some confusion as well. As the Chief Medical Officer for McKessonHBOC's code-auditing and compliance products, I have heard the concerns my fellow physicians have voiced when it comes to submitting claims. I have also seen firsthand how improper billing creates reimbursement inequities among physicians and ultimately increases the cost of health care. Allowing improper billing to go unchecked would affect the livelihoods of all physicians, but it would have the most dramatic impact on the majority of physicians who are billing properly.

Several years ago, I began reviewing claims with practicing physicians who were somewhat skeptical about the need for such analysis. The vast majority of my colleagues were shocked by some of the improprieties they observed. For example, an orthopedic surgeon was disturbed to discover that he received less than $2,000 for the same knee arthroscopy for which another surgeon billed $8,000 on an actual claim. The physician who billed the greater fee submitted five CPT codes instead of the two that were appropriate for the procedure. As I continued to work, I found that any practicing physician who reviewed claims for a health insurer witnessed the need for better billing.

The need for proper billing and reimbursement is well-established and has been carefully documented by federal agencies. Even before automated code-auditing products appeared on the market 10 years ago, HCFA and other payers recognized the importance of proper code edits and implemented them manually or in their claims-processing systems. A report by the General Accounting Office estimated that HCFA spent $640 million in 1994 (1.8 percent of all expenditures for Medicare Part B) on improper coding—above and beyond the CPT coding edits already in use. To help address this issue, HCFA in 1996 instructed its contractors to implement more than 80,000 code edits.

There are specific and well-defined reasons for automated code auditing, and the benefits are both global to health care and specific to individual physicians. Without proper checks and balances, health insurance premiums would skyrocket. The increased costs that payers would experience because of improper billing would inevitably be passed along to health care purchasers. My experience at McKessonHBOC has shown that only a small minority of physicians are responsible for the majority of the costs associated with improper billing. But it's this minority that ultimately threatens the reimbursement rates for the rest. If payers make global cuts in their fee schedules to offset their increased costs, the majority of physicians who are billing properly will be the ones most profoundly affected.

CPT codes are at the heart of claims reimbursement systems. All health insurers across the country use the AMA CPT manual, a set of standardized codes and instructions, in an attempt to ensure consistent methods of reimbursement. But the existence of a CPT code for each and every component of a service does not mean that all of those codes should be reported separately.

Code-auditing products were developed to automate the process of claims review in order to ensure consistent and accurate reimbursement. My chief area of interest and activity is in support of two such automated software products, ClaimCheck and CodeReview. These products are used by the majority of payers in the United States in an effort to help standardize and streamline the process of billing and reimbursement.

Use of automated systems by a health insurance organization helps assure consistent reimbursement when physicians perform the same type of service. For example, a hysterectomy should be billed as just that, with one CPT code. But a surgeon may also "unbundle" the codes and bill for a hysterectomy as well as its various standard components: abdominal exploration, removal of ovaries, lysis of abdominal adhesions, and so on. Without automated code-auditing tools, the physician who billed for all these additional procedures could earn dramatically more than the one who billed appropriately.

Another subject that causes confusion among physicians is the role of automated software in claims review vs the payment policies of individual health insurance organizations. Each payer makes the ultimate decisions about its own reimbursement policies. Code-auditing tools allow for customization and modification; health insurers can then modify a system's edits as they deem appropriate. Moreover, code auditing is just one of many steps in processing claims and determining reimbursement.

The edits within the knowledge base of our code-auditing products are flexible, but their core clinical integrity is still of paramount importance to us. Hundreds of board-certified, practicing physicians, representing all major medical specialties, participate in our Clinical Consultant Network. We work with these doctors to create and review our code edits on a continual basis, ensuring they are appropriate and in accord with modern practice patterns. Our goal is to maintain credible systems that allow payers to facilitate consistent and accurate billing and reimbursement.

Regrettably, the problem of billing impropriety is more common than some might believe, and we are all well-served by creating and maintaining health care reimbursement standards that are defensible and equitable. Although no system is 100 percent foolproof, code-auditing tools make a critical contribution to controlling inappropriate billing and ultimately help stabilize increases in the costs of health care.

The author is Chief Medical Officer, Clinical Auditing and Compliance Division, Payor Solutions Group, McKessonHBOC, Alpharetta, GA.