External audits – evaluating work on a test basis in order to express an opinion of an organization or system in question – and/or reviews can take various forms. Three common forms are an accounting audit, a coding audit and an operational audit.
To ascertain the validity and reliability of an organization’s financial position, accounting audits are undertaken. When comprehensively performed, audits of this nature include an assessment of an organization’s internal controls. These types of audits are performed by qualified CPAs (independent contractors to the organization) who typically use the United States Generally Accepted Accounting Standards (GAAS) of The American Institute of Certified Public Accountants.
Routine coding audits are imperative to ensure your facility isn’t inadvertently committing fraud or abuse. Coding is a difficult job. Not all physicians dictate alike. Not all scheduled procedures end up proceeding as planned. A “simple" procedure may turn into something more complicated once the patient is on the table (and vice versa). Coders must ensure that, regardless of how the procedure was scheduled or what the physician dictates in the procedures performed section of his or her operative report/procedure note, the codes that are reported to the insurance companies are fully supported by the narrative summary alone.
No matter how well-versed a coder is, mistakes will occur. Differences of opinion are not unusual among qualified coders. Therefore, coding audits should be undertaken in the spirit of providing ongoing training and education – rather than being punitive in nature. However, if problem areas identified in coding audits are not addressed in such a way that improving trends are noted in subsequent reviews, the facility must act to protect the integrity of their claims submission.
Operations audits are conducted by external consultants and typically include the following scope of services:
• Off-site review of financials and key indicators to create a list of areas to be reviewed in-depth
• On-site review of items earmarked in off-site review
• Interviews with leadership and staff to assist with comprehensive identification of perceived areas in need of improvement
• Operational and procedural overview of clinical and business office operations
• Contractual provisions and reimbursement practices
• Revenue/expense analysis
• Written summary of findings identifying potential costs savings and opportunities to improve profitability; enhance productivity; increase market share; and elevate patient, physician and employee satisfaction
• Action plan items that can be implemented by facility personnel or external field experts
Operations audits are conducted for a variety of reasons. For example, an operations audit may:
• Assess the true costs of doing business
• Assist with decisions related to potential outsourcing of key functions
• Determine if money is being left on the table
• Provide a comparison of your ASC in relation to similar organizations
• Identify current practices, policies and procedures against industry benchmarks
• Identify where an organization excels and where it requires assistance
Our healthcare system will continue to present us with many challenges, but we no longer have the option of not knowing what we don’t know. We live in the information age. There’s tons of information out there – so much so that it can be overwhelming. It’s our responsibility to stay abreast of the regulations and ensure our facilities are compliant. Ensure your annual budget includes an allowance for periodic external audits. After all, when it comes to compliance, ignorance is not bliss.
During Kim Woodruff’s tenure with Pinnacle III, her role has evolved from vice president of business office operations to her current role as vice president of corporate finance and compliance. As an administrator and financial services officer in ambulatory and inpatient settings for the past 25 years, Woodruff has experienced firsthand the evolution of healthcare administration, revenue cycle management and regulatory compliance.
1 http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW- 111publ148.pdf
2 http://www.ussc.gov/Guidelines/2011_guidelines/Manual_ HTML/8b2_1.htm
* Please note: This scenario is fictional in nature. The character, incident and dialogue are drawn from the author’s imagination and are not to be construed as real. Any resemblance to actual events of persons, living or dead, is entirely coincidental.