by Cathy Brownfield, RHIA, CCS, and Donna M. Didier, MEd, RHIA, CCS
Getting a full return on an external audit requires that HIM directors commit to the process from start to finish—preparing, managing, and following up.
Is your coding good, bad, or great? Not knowing for certain creates risk and stress. Audits offer visibility into departmental operations and coding processes. Consequently the term “audit,” which generally brings forth feelings of fear and dread, can also deliver security and peace of mind. This is especially true in clinical coding.
In fact, coding audits have become so valuable that providers are advised to conduct external audits at least once a year.1 External audits can objectively analyze operations, detect holes in the system, and uncover deficiencies that an internal audit program may miss. This outside review helps strengthen future internal audits by discovering how and why internal audits may have overlooked findings.2
However, external audits require significant time, effort, and money. HIM can make the most of them and achieve a clear return on investment by following through in three key steps: preparing for the audit, managing the audit, and implementing the recommendations.
1. Preparing for the Audit
The first step in preparing for an external coding audit is identifying clear, concise goals. These goals should be specific to the organization and designed to address current needs. Once audit goals are clearly defined and documented, HIM directors can secure executive support, prepare coders, and identify cases.
Set Clear Goals
Clear goals will help ensure audit feedback is on target with the organization’s objectives. Setting goals will give HIM directors meaningful recommendations instead of binders full of unnecessary reports. Some HIM directors will have a specific goal or organizational challenge that drives the audit. Others may have predefined areas for the audit based on internal quarterly review findings, staffing changes, or upcoming initiatives such as RAC.
Amy Phillips, RHIA, is the HIM director at All Children’s Hospital in St. Petersburg, FL. She was new to her position when she decided to contract with an outside agency to conduct a coding audit. She had a clear goal—to obtain a solid baseline of coding quality.
Phillips needed an auditing partner with pediatric coding experience and a thorough understanding of present on admission (POA) coding for pediatrics (a topic that is not well-addressed in current POA guidelines). Specialty consultants were able to bring a fresh perspective to POA reporting and increase consistency among the staff.
For example, auditors and coders worked together to explore coding options for retinopathy of prematurity, a common condition in premature infants. ROP is screened for at birth; however, it does not arise until several weeks of age. Should such conditions associated with extreme prematurity be considered POA or hospital-acquired? Did All Children’s need additional ways to report such conditions that are very likely to occur in certain populations?
For Jeff McGraw, RHIT, director of HIM at Bothwell Regional Health Center in Sedalia, MO, a shortage of experienced and credentialed coders was the impetus for conducting semi-annual audits with an outside firm. Located in rural Missouri, BRHC struggled for several years to recruit and retain experienced coders. McGraw finally decided to partner with a local community college to hire newly trained students as clinical coders within his organization. “Because our coders have limited experience, we need to continually validate their accuracy and recommend specific education for each,” McGraw explains.
Each BRHC coder is expected to obtain a 95 percent accuracy rate based on external auditor findings. If individual accuracy falls below this threshold, a corrective action plan is put in place. For McGraw, external coding audits have become an important part of solving a local coder shortage.
Secure Executive Support
As with many HIM projects, strong executive support is an important ingredient for success. Typically the organization’s chief financial officer or vice president of revenue cycle will serve as an executive sponsor, because better quality coding directly affects case mix. In addition, CFOs are advocates for any associated educational remedies or corrective actions that may result from an external audit.
At BRHC, securing executive buy-in was an important first step, McGraw says. Furthermore, since the department’s semi-annual audits have resulted in case mix improvements, the CFO continues to be highly supportive of the entire cycle—both audit and education.
Tips to Reduce Coder Anxiety
- Communicate goals early in the process
- Position the audit as an educational benefit
- Let results drive education for each coder
- Use findings as a tool for improvement
- Remind coders that no one is perfect
- Set individual performance goals, include in employee evaluation
- Establish an appeals process
HIM directors must work to ensure coders maintain a positive perspective throughout the audit. Negative perceptions and fear can easily set in among the coding team when they imagine an external auditor pointing over their shoulders and scrutinizing their accuracy. Negativity leads to defensiveness, internal sabotage, and disregard for audit findings.
HIM directors can set the stage to help keep attitudes positive. Time spent early in the process can reduce the anxiety a coder might feel once the audit is complete and findings are presented.
Phillips recommends that external coding audits be positioned as an educational benefit for coders and a tool to boost their confidence. McGraw adds that audits have helped him target continuing education investments for each coder and set individual performance goals, which have become part of annual employee evaluations.
HIM directors can also emphasize team building and overall improvement, not specific coder deficiencies or punishment. A few simple analogies may help coders remain positive, engaged, and part of the team. HIM directors can liken external auditors to personal trainers for coding improvement or compare them to physicians visiting each coder and providing prescriptions for professional health.
Finally, directors should establish a process for coders to dispute auditor recommendations and submit appeals. This will be the primary method for coders to appeal recommendations.
Using audit goals, internal audit results, or coder feedback can help determine the types of charts for review. Case mix index data alongside high-risk DRGs can also be used to direct audit activities and pinpoint areas for further investigation (e.g., sepsis, CHF, high-paying DRG pairs). Finally, the old adage to focus on problem-prone, high-risk, and high-volume areas is still good advice. Auditors should review visits that took place within the last full quarter so negative trends can be identified, errors corrected, and claims resubmitted if possible.
Once the case type is identified, HIM directors should consider selecting a combination of random and focused cases. Random samples with adequate sample size validate current performance across the board and expose unknown problems.
Focused selections are necessary for deeper understanding of patterns of errors in high-risk areas, such as Office of Inspector General targets or other specific compliance concerns. HIM managers typically perform case selection, and a staff member with little or no direct involvement in coding is assigned to pull charts.
Directors and managers should obtain a representative sample of 2 percent of the required productivity standards per patient type coded by the coder for the time frame selected for the review.3 If the audit has a broad focus (e.g., beyond individual coder rates), a larger, more statistically valid sample size is recommended.
Once goals have been established, executive support obtained, coders prepared, and cases pulled, it is time to move into step 2—managing the audit.
2. Managing the Audit
Strong management of the actual audit is critical to meeting goals and keeping coders positive. Most external coding audits are conducted on-site, within the HIM department. It is common to have two or three auditors on-site for up to one week per hospital or several weeks for an enterprise-wide project. Auditors conduct an exit interview on the final day, and a final report should be provided to the HIM director within 14 days.
As electronic record systems increase, remote or off-site audits are becoming more common. Some HIM departments have even used their outsourced release-of-information personnel and technology to scan records for remote audits. The ability to conduct an external coding audit off-site is an advantage for space-constrained organizations.
The list of items to prepare for and manage during the actual audit is significant. The checklist includes:
- Auditor access to hospital information systems
- Work space for on-site auditors
- Coding summary reports
- Administrative support for the auditing team
- Scheduled time for two exit interviews (both executive and coding)
Having an established auditor checklist and making sure all items are complete before auditors arrive will save valuable time for everyone involved.
Communicate and Coordinate
Healthy communication between auditors and HIM management throughout the week and through the exit interview is another way to make the most of an audit investment. Daily check-ins with auditors are productive, if the size of the audit and the time constraints of the HIM director or coding manager allow. During this time auditors discuss specific areas of concern or cases that may have surfaced throughout the day. These informal updates provide auditors and management with important insights into the organization’s coding practices and pave the way for a more meaningful exit interview and final report.
In the case of remote audits, error reports can be sent back at the end of each day with a summary or conference call to highlight any significant findings. For specialty audits, such as that conducted at All Children’s Hospital, specific detail that drilled down to the coder level proved extremely helpful both on a daily basis and as part of the exit interview.
Finally, coordination with internal coding auditors can add value and increase trust. Internal and external auditors have different strengths that combine to increase the overall effectiveness of the audit process.4 Both parties will play a vital role in reviewing results and ensuring recommendations are implemented.
Sample Impact Analysis Report
Auditors should present findings in a final report that includes overall findings, including five to 10 financial impact analysis points for each issue. An example based on undercoding of sepsis includes the potential lost revenue.
Commonly undercoded. Patient presents with UTI and other complications. Physician documented urosepsis, but coder did not ask for clarification.
Other symptoms of sepsis were found (e.g., tachycardia, leukocytosis or severe leukopenia, temperature greater than 100.4 or less than 96.8).
Reviewed ___ cases.
___% were miscoded.
Potential revenue loss of $___.
Educate coders on other symptoms of sepsis and when it is relevant to query for clarification.
Educate physicians on how to document sepsis.
3. Reviewing and Implementing Recommendations
Taking prescribed medication and following the doctor’s orders are often the most important steps in returning to health. Similarly, HIM directors get the most value from their audit investments by reviewing and fully implementing auditor recommendations. Findings and final recommendations are usually presented in two steps: exit interviews and final reports.
Exit Interviews—Time to Reflect
The final day of an on-site audit is typically set aside for exit interviews. These should be conducted at two levels: executive and coding. For both groups, findings and results should be kept professional and educational. Auditors should not make a stand just to prove they are right; instead they should present recommendations for improvement and suggestions for better quality and compliance. To this end, they should use case examples as a way to emphasize areas for improvement, not single out individual coders or physicians.
The executive interview should include the HIM director, coding managers, revenue cycle director, compliance officer, and the executive sponsor. A member of the medical staff—ideally the chief medical officer or medical staff director—should also attend, as findings may include recommendations for clinical documentation improvement initiatives essential to increasing the quality of coding.
Additionally, representatives from any key stakeholder departments identified through the audit should be invited to the executive session. For example, if when comparing claims to the final codes, auditors identify duplication in submitted codes (e.g., duplicate HIM codes and chargemaster codes), a representative from patient financial services or chargemaster maintenance should be invited to discuss these details and quickly remedy problems.
In the exit interview with coders, auditors share findings with detail. This is the most important time for auditors to maintain an educational—not adversarial—posture with coders. At BRHC, McGraw emphasizes the need for professionalism at this juncture. “Our auditors did a great job at working with coders on the back end to improve,” he says. “Coders were receptive and didn’t get defensive, which made the whole process more valuable to our organization.”
HIM directors should position the session as educational feedback, not finger-pointing or criticism. They should avoid heavy-handed responses, which can lead to even more harmful results than simple miscoding. Any particularly thorny issue can be discussed separately with the appropriate administrative and executive staff.
Most auditors will present a preliminary finding sheet for each case and review only major trends and significant findings. Auditors may use specific case examples as a way to describe coding irregularities, such as those found between two coders or in comparison to correct coding guidelines. Coders may rebut and return the finding sheets with their own comments following the exit interview in accordance with the department’s established audit appeal process. Finally, HIM directors may request that the exit interview include an educational component if time permits.
Final Report—A Dashboard for Corrective Action
HIM directors should receive a final report of auditor findings within two weeks following the exit interviews. The report should include targeted recommendations. Findings should address initial goals for the audit, and at a minimum the report should include:
- A spreadsheet including details from each case listing code, DRG/APC/HCC/etc., auditor, rationale for changed codes, accuracy ratings, and dollar differences
- Overall findings and trends of the audit, including five to 10 financial impact analysis points for each (see “Sample Impact Analysis Report” on page 37)
- Recommendations for education and remediation based on audit goals
- Response to coder rebuttals or appeals
- Time for conference call to review final report
- Open-door policy to communicate with auditors on specific cases and questions related to items discussed in the audit (possibly for a limited time)
Effectively Implementing Recommendations
Once the audit is complete and the recommendations received, HIM departments are at risk of stopping with the final report. The external audit accomplishes very little unless recommendations are taken seriously and effort is undertaken to fix the problems that are identified.
A proper response to the sepsis example shown in the sample impact analysis report would be for the HIM director and coding manager to meet with coders and physicians together and discuss the report, implement recommendations, and conduct education. Phillips says that by following this type of active engagement between coders and medical staff, the All Children’s coders gained a better understanding of issues from a clinical perspective and physicians became clearer about coder needs.
In other cases, organizations may find peer-to-peer education is more effective with physicians. Some HIM directors may choose to take a passive approach, whereby the physician query process is used to drive more detailed documentation.
Following a reasonable duration of coder and physician education, HIM directors and coding managers should once again track the cases involved by reviewing a representative sample or tracking all cases for a specified time period. Reliable metrics of coding performance—versus irrelevant criteria such as the facility’s overall case mix index—must be in place. Using the sepsis example, an executive summary could be prepared to reiterate the long-term impact of the external coding audit including DRG ratio of UTI to sepsis before the audit, percent of cases now coded to sepsis DRG, and financial impact.
Such measurement and continual monitoring will ultimately demonstrate the audit’s effectiveness and the organization’s diligence in improving processes. If coding can show improvement from one quarter to the next or demonstrate impact on a specific diagnosis over time, the organization can be relatively confident it is getting the most from its external audits.
- Wilson, Donna, and Rose Dunn, technical editor. Benchmarking to Improve Coding Accuracy and Productivity. Chicago, IL: AHIMA, 2009.
- Abarca, Dennis. “Making the Most of Internal Audits.” 1999. QCI International. Available online at www.qualitydigest.com.
- Wilson and Dunn. Benchmarking to Improve Coding Accuracy and Productivity.
- Wood, David A. “Increasing Value through Internal and External Auditor Coordination.” 2004. IIA Research Foundation. Available online at www.theiia.org.
Cathy Brownfield (firstname.lastname@example.org) is director of coding operations and Donna M. Didier is director of audit services at Healthport.
Brownfield, Cathy; Didier, Donna M..
"Making the Most of External Coding Audits: From Preparation to Recommendations "
Journal of AHIMA