Using Correct CPT Codes To Avoid Healthcare Audits

Healthcare audits are common. Most healthcare providers know someone who has been audited or they themselves have been audited. Audits often reveal issues or concerns with regards to a provider’s billing, coding or documentation. If the payer determines that a problem exists, then the payer will usually request a refund of the overpayment which was caused by the alleged error. An overpayment determination can trigger legal action by the payer to recoup the money or, depending on the contractual arrangement between the provider and the payer, the payer may legally offset the amount that the payer believes is owed against future claims submissions.

Coding issues are perhaps the most common reasons for overpayment determinations following an audit. Using the wrong codes or using a higher level code than the service actually performed will often trigger an audit and it will usually serve as a basis for payer action to recover the overpayment. If the coding error is prevalent throughout the majority of the patient records, a payer may try to extrapolate its findings from a sample to the entire universe of claims that the provider submitted during a specific time period. In order to avoid this situation, providers should understand that there are coding errors that are all too common and which providers should always avoid. The following are some of the common coding problems:

Evaluation and Management.

Providers often bill a higher level of e/m services then their documentation can support. In these situations, the payer can either deny the service outright or down code it to the appropriate level. In either situation, the payer will request a return of the overpayment. Providers should ensure that their documentation can support the specific e/m code.


Randomly using a modifier shows the payer that the provider does not fully understand when a modifier should be used. Inappropriate use of a modifier can trigger an audit because this mistake is easily revealed in the payer’s systems. Incorrect use of a modifier can allow a claim that would otherwise not be paid under a payer’s internal edits, to be improperly paid. When the payer finally uncovers the situation, the payer will almost certainly want to recoup that overpayment.

Using the wrong CPT code.

There is no reasonable explanation for using the wrong procedure code. All providers should have a CPT code book in their office and all providers should be trained in the use of the CPT codes that pertain to their particular practice or expertise. Many payer policies provide guidance for code usage, especially when there is a tendency to use codes in order to get paid for a procedure that the code does not describe.

Diagnosis Codes.

Even when the correct CPT code is used, a provider must also make sure that the correct diagnosis code is used to tell the payer why a particular service was performed and billed. With ICD-10 in place, providers must be even more vigilant with respect to using the correct diagnosis code to support the services and avoid the healthcare audit trigger. If there are multiple services because of multiple diagnoses, then the diagnosis code must point to the correct CPT code.

Cluster Billing.

Some providers believe that by coding one or two middle level codes exclusively will keep them “under the radar” because they are avoiding reimbursement for a higher level service. The theory is that over time, the middle codes will average out over an extended period of time. The problem is that using a middle level code when a lower or higher code should be used is improper. Payers do not care whether the services average out over time. Payers want to see that the correct code is used, even if it is the highest level. Of course, when any level of service is billed, the documentation must support the medical necessity of the service.

Healthcare providers can easily correct their coding problems. The first thing that the provider must do is recognize that they may be doing something wrong. Too many providers believe that since they have not been audited, then they must be coding correctly. However, this theory often fails when the provider receives that first audit letter. Providers should instead take a proactive approach and have a coding and compliance expert review the medical records along with the claims submissions to make sure that the correct codes are used and those codes are properly supported by the medical record documentation.

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