billing-compliance-auditor

# Billing Compliance Auditor

## Overview

Internal billing audits are a core component of an effective compliance program as recommended by HHS OIG. This skill provides methodology for conducting chart audits, identifying coding errors, and implementing corrective actions to ensure compliant billing practices.

## Why Audit

```
OIG COMPLIANCE PROGRAM GUIDANCE:
"Auditing and monitoring... should be ongoing to evaluate whether 
the compliance program elements have been implemented effectively 
and are working as designed."

RISKS OF NOT AUDITING:
- False Claims Act liability
- Overpayment/refund obligations (60-day rule)
- Exclusion from federal programs
- Civil monetary penalties
- Reputational damage
```

## Audit Program Structure

```
┌─────────────────────────────────────────────────────────────────┐
│                    AUDIT PROGRAM COMPONENTS                     │
├─────────────────────────────────────────────────────────────────┤
│                                                                 │
│  PROSPECTIVE         CONCURRENT         RETROSPECTIVE          │
│  ─────────────       ──────────         ─────────────          │
│  Pre-billing         Real-time          Post-payment           │
│  review              edits              audits                  │
│                                                                 │
│  Catch errors        Prevent claim      Identify patterns      │
│  before billing      submission         and systemic issues    │
│                      errors                                     │
│                                                                 │
└─────────────────────────────────────────────────────────────────┘
```

## Audit Types

### 1. E/M Leveling Audit

**Focus:** Evaluation & Management code selection accuracy

| Code Range | Service Type | Key Documentation Elements |
|------------|--------------|---------------------------|
| 99202-99215 | Office/Outpatient | MDM or Time |
| 99221-99223 | Initial Hospital | MDM or Time |
| 99231-99233 | Subsequent Hospital | MDM or Time |
| 99281-99285 | Emergency Dept | MDM |
| 99241-99245 | Consultations | MDM or Time |

**2021+ E/M Guidelines (MDM-Based):**

| Level | Problems Addressed | Data Reviewed/Ordered | Risk |
|-------|-------------------|----------------------|------|
| **Low (99212/99202)** | 1-2 self-limited | Minimal or none | Minimal |
| **Moderate (99213/99203)** | 1+ chronic (stable) OR 2+ self-limited | Limited | Low |
| **Moderate-High (99214/99204)** | 1+ chronic (worsening) OR 2+ chronic (stable) | Moderate | Moderate |
| **High (99215/99205)** | 1+ chronic (severe) OR acute threat to life | Extensive | High |

**Time-Based Selection:**
| New Patient | Established | Total Time |
|-------------|-------------|------------|
| 99202 | — | 15-29 min |
| 99203 | 99212 | 30-44 min |
| 99204 | 99213 | 45-59 min |
| 99205 | 99214 | 60-74 min |
| — | 99215 | 75+ min |

### 2. Modifier Audit

**Focus:** Appropriate use of modifiers

| Modifier | Use | Audit Focus |
|----------|-----|-------------|
| **25** | Significant, separately identifiable E/M | Is the E/M truly separate from procedure? |
| **59** | Distinct procedural service | Is there documentation of separate site/session? |
| **76** | Repeat procedure, same physician | Was procedure actually repeated? |
| **77** | Repeat procedure, different physician | Documentation of different provider? |
| **TC** | Technical component only | Facility billing for professional? |
| **26** | Professional component only | Professional billing for technical? |
| **GT/95** | Telehealth | Was service actually rendered via telehealth? |

**High-Risk Modifier Combinations:**
- 25 + procedure on same day
- 59/XE/XS/XP/XU on same-day services
- Multiple units of same procedure

### 3. Medical Necessity Audit

**Focus:** Does diagnosis support the service?

```
MEDICAL NECESSITY TEST:
1. Is the diagnosis documented in the record?
2. Does the diagnosis justify the service ordered?
3. Is the service reasonable for the condition?
4. Does documentation support the severity/need?
```

**Common Medical Necessity Issues:**

| Issue | Example | Risk |
|-------|---------|------|
| Diagnosis mismatch | Billing diabetes for routine lipid panel | Denial, refund |
| Screening vs. diagnostic | Wrong diagnosis for preventive service | Incorrect patient cost |
| Insufficient documentation | Ordering MRI without clinical rationale | Denial, audit flag |
| Frequency issues | Monthly labs without documented need | Overpayment |

### 4. Documentation Audit

**Focus:** Does the chart support the code?

**Documentation Requirements:**

| Element | Required For | Check |
|---------|--------------|-------|
| Chief complaint | All E/M | □ Present |
| HPI elements | E/M | □ Adequate for level |
| Exam findings | E/M | □ Documented |
| Assessment | All services | □ Present, specific |
| Plan | All services | □ Documented |
| Medical necessity | Procedures, tests | □ Rationale stated |
| Time (if used) | Time-based billing | □ Total time documented |
| Signatures | All entries | □ Legible, dated |
| Amendments | If applicable | □ Proper format |

## Audit Methodology

### Sample Selection

**Sample Size Guidelines:**

| Volume | Minimum Sample | Frequency |
|--------|---------------|-----------|
| <500 claims/month | 10-15 charts | Monthly |
| 500-2000 claims/month | 20-30 charts | Monthly |
| >2000 claims/month | 30-50 charts | Monthly |

**Selection Methods:**

| Method | Use When |
|--------|----------|
| **Random** | Routine monitoring |
| **Targeted** | Known risk area (e.g., high-level E/M) |
| **Provider-specific** | New provider, identified issues |
| **Payer-specific** | Payer audit prep, denial patterns |
| **Service-specific** | New service line, high-risk procedures |

### Audit Scoring

**Per-Chart Scoring:**

```
CHART AUDIT SCORECARD
─────────────────────
Chart #: {number}
DOS: {date}
Provider: {name}
Billed Code: {code}
Auditor: {name}
Audit Date: {date}

CODING ASSESSMENT:
┌──────────────────────┬─────────┬──────────┬───────────┐
│ Element              │ Correct │ Error    │ Notes     │
├──────────────────────┼─────────┼──────────┼───────────┤
│ E/M Level            │ □       │ □ Over/Under │         │
│ Diagnosis Coding     │ □       │ □        │           │
│ Procedure Coding     │ □       │ □        │           │
│ Modifier Use         │ □       │ □        │           │
│ Medical Necessity    │ □       │ □        │           │
│ Documentation        │ □       │ □        │           │
└──────────────────────┴─────────┴──────────┴───────────┘

AUDITOR RECOMMENDATION:
□ No change
□ Upcode to: {code}
□ Downcode to: {code}
□ Add modifier: {modifier}
□ Remove modifier: {modifier}
□ Change diagnosis to: {code}
□ Cannot bill - insufficient documentation

FINANCIAL IMPACT: ${amount}
```

### Error Classification

| Error Type | Definition | Action |
|------------|------------|--------|
| **Overcoding** | Billed higher than documentation supports | Refund if paid, corrective training |
| **Undercoding** | Billed lower than documentation supports | Provider education, rebill if timely |
| **Unbundling** | Separately billing bundled services | Refund, corrective training |
| **Upcoding** | Intentional overbilling | Compliance investigation |
| **Documentation gap** | Missing elements to support code | Documentation training |
| **Medical necessity** | Service not justified by diagnosis | Refund, ordering process review |

### Error Rate Calculation

```
ERROR RATE = (Charts with Errors / Total Charts Audited) × 100

BENCHMARKS:
- <5% error rate: Acceptable
- 5-10% error rate: Needs improvement
- >10% error rate: Immediate corrective action required

FINANCIAL ERROR RATE:
= (Total $ Impact of Errors / Total $ Audited) × 100
```

## Audit Workflow

### Step 1: Plan the Audit

```
AUDIT PLAN
──────────
Audit Period: {date range}
Audit Type: {E/M / Modifier / Medical Necessity / Comprehensive}
Sample Size: {number}
Selection Method: {random / targeted / provider-specific}
Focus Areas: {specific concerns}
Auditor(s): {names}
Timeline: {start - complete dates}
```

### Step 2: Pull Sample

```
SAMPLE SELECTION CRITERIA:
□ DOS range: {start} to {end}
□ Provider(s): {all / specific}
□ Code range: {if targeted}
□ Payer(s): {all / specific}
□ Exclusions: {if any}

DOCUMENT:
- How sample was selected
- Why this method chosen
- Claims included (list)
```

### Step 3: Conduct Review

For each chart:

```
1. REVIEW DOCUMENTATION
   - Read clinical notes
   - Review orders, results
   - Check for required elements

2. DETERMINE SUPPORTED LEVEL
   - Apply E/M guidelines (MDM or time)
   - Verify modifier appropriateness
   - Confirm medical necessity

3. COMPARE TO BILLED
   - Match supported vs. billed
   - Identify discrepancies
   - Calculate financial impact

4. DOCUMENT FINDINGS
   - Complete audit scorecard
   - Note specific deficiencies
   - Recommend corrective action
```

### Step 4: Analyze Results

```
AUDIT SUMMARY REPORT
────────────────────
Audit Period: {dates}
Charts Reviewed: {number}
Auditor: {name}

RESULTS:
┌────────────────────┬────────┬────────────┐
│ Category           │ Count  │ Percentage │
├────────────────────┼────────┼────────────┤
│ Correct as billed  │        │            │
│ Overcoded          │        │            │
│ Undercoded         │        │            │
│ Documentation issue│        │            │
│ Medical necessity  │        │            │
│ Modifier error     │        │            │
└────────────────────┴────────┴────────────┘

OVERALL ERROR RATE: {x}%
FINANCIAL IMPACT: ${amount}

TOP ISSUES IDENTIFIED:
1. {issue}
2. {issue}
3. {issue}

RECOMMENDATIONS:
1. {recommendation}
2. {recommendation}
```

### Step 5: Corrective Action

| Finding | Action Required | Timeline |
|---------|-----------------|----------|
| Overpayment identified | Refund per 60-day rule | 60 days from identification |
| Underpayment identified | Rebill if within timely filing | Per payer rules |
| Provider education needed | Training session | Within 30 days |
| Process gap | Update workflow/policy | Within 30 days |
| Systemic issue | Expanded audit + remediation | Immediately |

### Step 6: Document and Report

```
REQUIRED DOCUMENTATION:
□ Audit plan
□ Sample selection methodology
□ Individual chart scorecards
□ Summary report
□ Corrective action plan
□ Follow-up audit results (if applicable)

REPORTING:
□ Report to compliance officer/committee
□ Track trends over time
□ Benchmark against prior periods
□ Document corrective actions taken
```

## Overpayment Handling

### 60-Day Rule (42 CFR § 401.305)

```
WHEN OVERPAYMENT IDENTIFIED:
1. IDENTIFY: When you have (or should have) actual knowledge
2. QUANTIFY: Determine the amount
3. REPORT: Notify payer
4. RETURN: Refund the overpayment

TIMELINE: Must report and return within 60 days of identification

FAILURE TO COMPLY = potential False Claims Act liability
```

### Overpayment Workflow

```
OVERPAYMENT IDENTIFIED
        │
        ▼
┌───────────────────┐
│ Document finding  │
│ Date identified   │
│ Amount            │
│ Root cause        │
└─────────┬─────────┘
          │
          ▼
┌───────────────────┐
│ Quantify impact   │
│ Same error in     │
│ other claims?     │
└─────────┬─────────┘
          │
          ▼
┌───────────────────┐
│ Voluntary refund  │
│ to payer within   │
│ 60 days           │
└─────────┬─────────┘
          │
          ▼
┌───────────────────┐
│ Corrective action │
│ to prevent        │
│ recurrence        │
└───────────────────┘
```

## High-Risk Areas to Monitor

### OIG Work Plan Focus Areas

| Area | Why It's Targeted |
|------|-------------------|
| E/M billing patterns | Upcoding concerns |
| Modifier 25 use | Inappropriate unbundling |
| Place of service errors | Facility vs. non-facility rates |
| Telehealth billing | Post-COVID compliance |
| Incident-to billing | Supervision requirements |
| Split/shared visits | Documentation of qualifying provider |
| Chronic care management | Time documentation |
| AWV vs. problem visit | Billing both inappropriately |

### Red Flags

| Pattern | Concern |
|---------|---------|
| High % of level 4-5 E/M | Potential upcoding |
| Modifier 25 on most procedures | Potential unbundling |
| Same diagnosis on all claims | Lack of specificity |
| Identical documentation | Copy/paste, template abuse |
| Missing signatures | Authentication issues |
| Late entries | Potential backdating |

## Audit Schedule

| Audit Type | Frequency | Sample |
|------------|-----------|--------|
| E/M leveling | Monthly | 20-30 charts |
| New provider | First 30 days | 10-15 charts |
| Modifier use | Quarterly | Targeted |
| Medical necessity | Quarterly | Targeted |
| High-risk codes | Quarterly | Targeted |
| Comprehensive | Annually | 50+ charts |
| Post-issue | As needed | Expanded |

## Resources

### references/
- **em-guidelines-2021.md** — Current E/M documentation guidelines
- **modifier-reference.md** — Complete modifier guide with examples
- **audit-scorecard-template.md** — Fillable audit scorecard
- **oig-risk-areas.md** — Current OIG Work Plan focus areas

### scripts/
- **error-rate-calculator.py** — Calculates audit metrics
- **sample-selector.py** — Random sample selection tool

### assets/
- **audit-report-template.docx** — Audit summary report template
- **corrective-action-plan.docx** — CAP template