Annual Audit Elements - DoctorsManagement Annual Audit Elements - DoctorsManagement

Annual Audit Elements

“What Should Be Reviewed”

by Sean Weiss, Partner & VP of Compliance

Six months into 2019 and the question is, how far along is your audit of high, medium and low-risk services? If you are like most practices or health systems, something always gets in the way and causes audits to take a back seat. However, if you have truly created a culture of compliance, regardless of what has happened nothing should get in the way of doing your diligence and working towards ensuring you have as many protections as can be in place.

The question is: what should you be auditing? The problem most practice and auditing departments have is that they are like sheep following a leader off the cliff. Now, I get it, that is a bit of a harsh statement, but the reality is you get your auditing goals each year from things you read in an industry newsletter or from a friend that works at another health system who is auditing a specific group of services. No two practices are alike and as a result, no two audit plans should be alike. Your audits should be based on several things:

  1. The Annual OIG Work Plan, OIG Advisory Opinions or OIG Fraud Alerts;
  2. If you participate with Medicare or Medicaid, any and all Program Alerts, National Coverage Determinations (NCD), or Local Coverage Determinations (LCD) for the services you actually perform;
  3. If you participate with commercial payors (BCBS, UHC, CIGNA, Aetna, Humana, etc.), you should be pulling the services you bill most to these payors and audit against their internal medical policies or LCDs;
  4. Audit your high-dollar as well as high-volume services.

I always tell clients or the groups I have the privilege of speaking for that the best practice when it comes to auditing is to run your provider productivity reports out of your Practice Management System (PMS) and identify your top 10 to top 20 services and pull a sample for each of them. The question that I typically get asked is what type of sample should we pull? Should it be statistically valid? A statistically valid sample is the last type of audit you should pull since those are typically used to extrapolate damages and/or for use in Self Disclosure Protocols (SDPs). Always get direction from counsel before proceeding with drawing a statistically valid sample. There are several types of audit samples/methodologies to choose from (Probability, Convenience, Random Number, Educational, etc.), you just have to determine the best fit for your purpose. Will you perform the audit prospective or retrospective? Again, the choice here is yours but there are pros and cons to each so make sure you get clear direction from counsel.

Why does everyone choose 99214??? This is a question I struggle with because, while this code poses a risk to organizations, there are other CPT® codes such as 99213 that I believe pose more of a risk to providers. For example, most providers believe that an established patient with 1 chronic well controlled issue (HTN, DMII, etc.) and a statement to continue with current medications constitutes a 99213. IT DOESN’T!!! I do not care how great your History and Exam are documented, neither the medical decision-making nor the “Medical Necessity” are there to support it. I cannot tell you how many times I have had a physician say to me, “Sean, I do some fours and fives and I also do some twos, so, I just bill the code in the middle and that way I am off the radar!” First, that is dumbest thing you could ever say. Second, that could not be a more egregious act of fraud because you are in my humble opinion acting with reckless disregard of the truth and with deliberate ignorance. Both are litmus tests for prosecutors debating on whether to bring a civil/criminal compliant under the Federal Health Care Fraud Statute or The False Claims Act.

We live in a day and age where Whistleblower cases are running at a fever pitch and audits are being handed out like Metforman at a nursing home. In 2018 the DOJ recovered $2.9 Billion and of that amount, $2.5 Billion was tied to health care fraud. Of the $2.5 Billion, $2.1 Billion of the recoveries was directly tied to Whistleblowers; so take this stuff seriously and perform audits that are relevant to the services you provide within your practice or organization based on specialty and focus your attentions to not only the highest RVU services but to those of the highest volume.

Below, I have provided an Audit Elements Guide (click here to download a pdf version) that you can use within your practice/organization to aid in determining the What, When, Where and How of the audits that should be conducted and how to do it in a way that demonstrates a “Good-Faith” effort to governmental agencies/investigators whose singular focus is on recoupment and/or indictment.

You will notice on the Audit Elements Guide provided, I only selected 5 areas of focus, but they are significant because of past audit outcomes and indictments sought by prosecutors:

  1. Evaluation and Management Services – Again, focus on all levels – new and established;
  2. Modifiers – Focus on those applicable to your practice/organization;
  3. Incident-To and Split Billing Services – This is an area that continues to provide the biggest headaches;
  4. 99211 for Coumadin Clinics – There are very specific guidelines that must be followed for these services, consult with your MAC and/or commercial payor guidelines;
  5. “Medical Necessity” – Remember, that this is the overarching criterion used in addition to the individual elements of the CPT® codes(s).


2019 Audit Elements Description of Review Remedies Passing Error Rate % Performed By
1.      E&M Coding and Documentation


a)      Prospective Baseline Review for new providers

–         25 office encounters (15 new patient encounters, and 10 established patient encounters



b)      Annual Prospective Review for all providers

–         25 office encounters

–         25 hospital encounters, and





c)      Accuracy of Diagnosis Coding (ICD-10CM)

All chart reviews are performed prospectively unless otherwise identified.


E/M chart reviews will be performed using the 1995 E/M documentation guidelines except for those specialties and subspecialties utilizing the 1997 E/M documentation guidelines.


For those providers performing in-office procedure there should be a sampling of these when they are billed in conjunction to an E/M and have a modifier applied.


For those providers performing these categories of EM Service(s). For any providers not performing these services they will select additional new and established patient encounters.


Diagnosis codes must be assigned to the highest level of specificity


If greater than a 5% error rate refer to the Coding and Audit Escalation Policy.



<5% error rate


2.      99211 Medical Necessity

a)      In the medical group setting (Incident-To)

b)      When billed in the Coumadin Clinic.

–         20 per year per provider


Incident-To Services must be performed in the physician office setting (refer to Incident-To Guidelines Policy). In the In-Patient setting refer to Split/Shared Services policy.


* There should an extensive review of Incident-To and split/shared services beginning Q2 CY 2019 and completed Q4 CY 2019. Groups where issues are detected should refer to their specific Corrective Action Plan (CAP) for how to proceed in CY 2019. There will be a review of these services as part of your annual audit elements in CY 2019.


Coumadin Clinic guidelines- All services provided in this setting must meet the established guidelines for billing a 99211. There must vitals documented, questions regarding bruising, bleeding or any other abnormal signs or symptoms the patient has identified. There must be education and/or counseling provided and documented by the nurse.

If greater than a 5% error rate refer to the Coding and Audit Escalation Policy.



<5% error rate



3.      Modifiers -25 &/or -59

a)      5 per year per provider

4.      Modifier-22


* 15 per provider if these modifiers are applicable…

When the Modifier 25 is used on an E/M service in conjunction to a minor procedure the E/M service is considered bundled into the procedure unless the provider is able to demonstrate a “significant, separately identifiable service” outside of the patient’s reason for having the procedure. (i.e. a patient presenting for an arthrocentesis of the right knee but also complains of neck pain with numbness and tingling down the arms which prompts the provider to order a CT or MRI)


The modifier 59 should only be used in the absence of a more applicable modifier. Overutilization of this modifier could create a “Red Flag” in a payor’s system prompting an audit of the provider.


Auditors should be evaluating the new “X” modifiers to ensure they are being properly applied to services where a Modifier 59 would be appropriate.


Modifier 22 is used to identify Unusual Circumstances or those where a greater than normal period of time was required to complete a procedure than what is normally required. Documentation should clearly indicate the surgeon’s difficulty with performance of the procedure or those circumstances that lead to the procedure taking longer than normal to complete. These would include but are not limited to: excessive blood loss >than 700cc, extensive lysis of adhesions, obese patient, etc.

If greater than a 5% error rate refer to the Coding and Audit Escalation Policy.



<5% error rate



5.      Medical Necessity of Patients with Frequent Visits

a)      More than 6 visits in 3 months



Patients who are seen on a basis more frequent than what would be considered generally accepted standards of medical practice may require you to flag their claims in the system to ensure a more focused review to ensure there is no excessive billing for patient services.


Certain specialties will require patients to present for visits more frequently in certain situations than others. Discretion must be used when reviewing these encounters.


If greater than a 5% error rate refer to the Coding and Audit Escalation Policy.



<5% error rate



Remember at the end of the day, this is your Audit Elements Guide and something that needs to be specific to your practice/organization to ensure you are not leaving any stone unturned. Taking the time to do things right and to be as precise as possible will make all the difference during an investigation.

What to do next…

  1. If you need help with an audit appeal or regulatory compliance concern, contact us at (800) 635-4040 or via email at
  2. Read more about our: Total Compliance Solution

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