By Cinda Cannon,  January 01, 2013

In an era of heavy regulation it’s more important than ever for medical practices to have a compliance program in place and controls set for their coding and billing staff. A compliance program needs to demonstrate a commitment to preventing erroneous claims while monitoring adherence to applicable statutes, regulations, and requirements involving government health care programs.

Whether your practice has a full-time billing staff or outsources this function, billing remains the backbone of the revenue cycle in any practice. For the appropriate amount of funds to be deposited into your practice’s bank account, providers and billing staff should follow these guidelines:

1. Properly code the charge.
2. Submit the charges to the appropriate third-party payer.
3. Collect the co-pays before rendering services.
4. Manage accounts receivable.
5. Follow up on denials and adjustments.
6. Mail patient bills and statements.
7. Keep abreast of changes in the rules of coding and billing.

It’s the seventh guideline that proves especially difficult and, for many, frustrating. [pagebreak]

It’s important to understand that billing mistakes and inconsistencies will be costly and create problems for the practice. Overbilling invites the scrutiny of third-party payers and the government. Underbilling leaves hard-earned dollars on the table. Missing changes in coding rules and regulations will result in payment denials, slower cash flow, and/or loss of revenue.

Potential problems

Most physician groups provide some level of training to their billing staff, but rules are complex and staff knowledge can quickly become outdated due to frequent changes in the rules. Continuous follow-up and training are critical. Keep in mind, the upcoming switch from ICD-9 to the new ICD-10-CM will be a challenge for all. This means that all physicians and staff will have to educate themselves about these changes far enough in advance to update the codes in their computer systems and charge slips.

In addition, consider your internal processes and look for opportunities to improve. Ask yourself: Does my practice maintain the infamous “bottom drawer” or “black hole?” This is a place where the billing staff keeps the denials and adjustments that are too difficult to deal with today. Too many physicians leave money on the table because the billing staff doesn’t have the time to appeal those denials or they just accept what was received as payment in full. Other questions to ask: Has everything been billed that can be billed? Have the appropriate modifiers been used and placed properly? Are you under-coding for fear of being accused of overbilling? Each of these situations represents a permanent loss of revenue. [pagebreak]

Revenue loss is only part of the overall problem. By allowing lax billing processes to take place, your practice may be creating an unfavorable or aberrant profile with third-party payers and even the government. This may lead to investigations that can result in significant fines or even threats of criminal prosecution. Sanctions for improper billing range from civil monetary penalties to criminal prosecution. There is also the possibility of exclusion from Medicare. Is it worth the risk?

Keep in mind that a pattern of incorrect billing in certain circumstances can be interpreted as fraud. The cost of defending a physician group against these charges can be significant. So what can one do to put controls in place?

Initiate a comprehensive compliance program that commits to providing ongoing training, monitoring, and follow-up. This will minimize billing mistakes, reduce denials, maximize revenues, and satisfy the government’s expectation that billing practices are proper and legal. If the government initiates an investigation of the practice, a well-documented compliance program minimizes the chances of proving any intentional wrongdoing on your behalf. [pagebreak]

Staff solutions

Many practices create a staff position of Coding Compliance Manager. This will vary depending on the individual needs of the practice and its size. In smaller settings, like a solo practice, the Coding Compliance Manager may be the office manager. In a group setting the coding compliance “department” may consist of one individual who has multiple responsibilities or an entirely separate department with multiple employees. The Coding Compliance Manager should be responsible for monitoring and conducting audits as well as identifying risk areas. Other responsibilities should include conducting educational and training programs, reporting coding issues, monitoring changes in federal and state guidelines, and ensuring that coding staff and vendors understand the practice coding compliance guidelines. This individual will likely have an extensive coding background. An understanding of federal and state regulations is also important. Other desirable skills and knowledge sets include:

• Familiarity with fraud and abuse regulations;
• Charge-master or charge-creation experience;
• Claims and billing experience and an understanding of the relationship between coding and billing;
• Familiarity with the local Medicare contractor; and
• communication, management, and human-relations skills. [pagebreak]

This individual will be your main coding expert. When hiring for this position, consider an individual who has a thorough understanding of coding systems. It is preferable that this individual have course work in medical terminology, anatomy and physiology, pathology, and reimbursement systems.

In a department with multiple employees you need to set levels of supervision, determine who has authorization to do what, and spell out job-specific functions. For example, you may have a lead person for your accounts receivable section who oversees other employees who work on collection of money due to your practice, review the billing statements for accuracy, and handle any over-the-phone payments and/or credits. If refunds are being generated here, set dollar limits and require approval over a specific figure. When handling follow-ups, you need a lead person (supervisor) who can help direct employees with appeals. At a certain appeal level, make sure a supervisor is reviewing the response before it is submitted to ensure that everything has been handled appropriately before you run out of options to appeal. [pagebreak]

Internal audits

Invest in your employees. One way to reduce errors in coding and billing is to provide adequate and appropriate training sessions for your staff and yourselves. These sessions should be periodic and mandatory. This can be one of the responsibilities of your Coding Compliance Manager. One way to obtain topics is to track and trend the issues that are requiring the most follow-up. If there is a consistent issue with a particular modifier, or with modifier use in general, make this one of the topics. Test your staff to assure that they understand the correct use of the CPT and HCPCS modifiers.

Check on the quality of the processes as well as the functions in your office. These include charge entry, payment posting, and review and appeals. One of the key actions that should be taken to demonstrate a commitment to compliance is the implementation of a system to audit and monitor daily practices. The auditing process will entail a regular review of the practice’s claim development and submission process. Begin at the point where a service for a patient is initiated and follow through to the submission of the claim for payment. The monitoring process should include the development of a process for employees to report suspected situations of fraud or abuse to the physician owners. (More help developing a self-audit plan is available in the AAD’s Coding and Documentation in Dermatology manual; visit www.aad.org/member-tools-and-benefits/practice-management-resources/coding-and-reimbursement/2013-coding-manual to learn more.) [pagebreak]

The audit process should be used to establish a baseline in initiating a compliance plan. Periodically assess the effectiveness of the organization’s practices. Plan to monitor the work of new and long-term employees and respond to complaints.

Information audits are mostly test-type audits. These can assist you with determining what specific level of knowledge your new and long-term employees currently have. A simple test, for instance, can reveal that an employee doesn’t understand the global period and how procedures need to be billed during the follow-up period of treatment, whether 10 or 90 days. Discovering this type of deficiency in your staff’s knowledge can help to get current denied claims paid and avoid future claim denials.

Practice-wide commitment

One of the keys to success is to have a commitment to compliance. Having effective communication concerning compliance within a practice and with the key physician is vital. Communications must be able to flow between the compliance manager, physicians, and support personnel within the organization. The compliance program will be meaningless if the lines of communication from the compliance manager to the individuals employed by, or otherwise involved with, the organization are ineffective. [pagebreak]

Also, there must be a commitment to compliance for all employees found to be non-compliant. An internal investigation should be performed and disciplinary measures taken if warranted. Documentation of these incidences and the resolution of same need to be maintained by the practice.

In summary, the operation of an effective compliance plan for your coding and billing staff will vary from one physician’s practice to another. There is no single form, or size, of a compliance plan that will fit every situation. For a compliance plan to be effective you will need to tailor one to fit your organization’s needs. Keep in mind that a good, well-thought-out compliance plan will need to be involved in every step of the process, from the patient encounter to the submission of the claim for payment to follow-through to the submission. And remember: Don’t develop a compliance plan and then leave it on the shelf, gathering dust. A program on paper will not protect your practice from fraud and abuse risk and liability. [pagebreak]