Quantifying CDM Audit Results
Quantifying CDM Audit Results
Experienced Revenue Cycle personnel have learned a lot from a sales-driven marketplace where “return on investment” projections are never really proven. In today’s environment, it’s important to be careful about setting appropriate expectations. Knowledgeable Revenue Cycle and CDM staff realize that:
- Charge Master issues may (or may not) have reimbursement implications.
- Many CDM software or manual audit findings have multi-layered operational implications that may not result in an easily-quantified amount.
- Certain charge data impact estimates are highly beneficial for assessing software investments, consulting benefits, and for future benchmarking of internal file management efforts.
- However, it’s important to be sure the projections are accurate.
The tips below provide a straightforward method for quantifying CDM audit findings and avoiding embarrassing overstatements. Our strategy works for hospitals auditing files internally using their CDM software, or based on an outside consulting engagement. Our approach is presented in five basic steps:
Develop a Plan
Charge Master Audit impact analysis” may sound straightforward, but can be fraught with misunderstanding, misinterpretation, and misdirection. Correct quantification requires a proactive action plan. Here are several important considerations:
- Define the quantification goals, objectives, and scope
- Define what you are going to analyze, how you are going to go about it, and who will be involved.
- Confirm how the quantification analysis fits in with your processes of verifying CDM issues, implementing corrections, and researching outstanding issues.
- Confirm the level and scope of quantifications desired by hospital leadership, and identify the reporting or disclosure protocol your organization follows.
- General forecasting techniques may be sufficient in many circumstances.
- Specific and detailed reporting may be necessary in other circumstances.
- Identify a timeframe for your analysis.
- If finishing a CDM Review or targeted audit, identify the date of the data that was assessed.
- Typically, a version of the hospital CDM is exported and considered ‘frozen’ for auditing data integrity.
- Once file updates and corrections have been implemented, the team will need to identify the desired date to pull current CDM data for the quantification work.
- Determine the most meaningful period of Revenue & Utilization (R&U)
- Ensure the R&U period is sufficient for:
- Evaluation of historical charge utilization
- Projection of utilization based on trends
- Consider that R&U crossing a calendar year or quarter will reflect multiple periods of coding, regulatory and reimbursement data
- Determine whether R&U of zero for your selected period will cause the issue to be removed from your quantification study.
- Refine the list of charges for quantification.
- Whether working on quantification following a brief audit or in-depth CDM Review, ensure that findings have been verified by the applicable departments or parties.
- Categorize the audit issues with simple and understandable short labels.
- H&A CDM Reviews include note categories such as INVALID CPT/HCPCS, CPT/HCPCS ERROR, REVENUE CODE ERROR, MULTIPLIER ERROR etc.
- These help our customers with prioritizing issues and delegating tasks.)
- If your audit didn’t include such categories, this is a beneficial field to add to your itemized issues list.
- Prioritize the issue types (note categories) in order of importance to your quantification. For example:
- A1 – INVALID CPT/HCPCS, CPT/HCPCS ERROR, MULTIPLIER/DIVISOR ERRORS
- A2 – REVENUE CODE ERRORS, MODIFIER ERRORS
- A3 – OPPS ISSUE
- B1 – DATA ERRORS
- B2 – CONFIRM COVERAGE
- C1 – CLARIFY CHARGE DESCRIPTION
- C2 – VERIFY USAGE
- Based on categories and priorities, extract charge items that are important for the quantification assessment.
- Import all applicable CDM sections and specific charges for quantification.
- At this point, freeze the analysis file and document the date of the exported data.
- Develop a reimbursement reference tool for the quantification.
- Confirm patient types.
- Determine payers of interest.
- Identify the reimbursement methodology for each major payer.
- Narrow down your impact analysis list.
- Determine whether quantification should be 100% of findings or a select sampling.
- Determine which charge items were most likely corrected by billers prior to claims processing.
- A biller claim correction log or a meeting with billers may be needed.
- Consider status, pricing, or payment indicators associated with each charge item being analyzed.
- Determine whether packaged services and items are of interest.
- Confirm whether packaged (OPPS SI N), as well as conditionally packaged items assigned SI Q1, Q2, Q3 need to be considered in the context of how they were billed.
- Determine whether your analysis should include non-covered or non-reportable codes (OPPS SI E1, E2, B, and M).
- Confirm the services and associated payment systems that your hospital is licensed to offer. Then correlate that to CDM codes’ associated payment indicators (DME, Partial Hospitalization, etc.).
- Identify services in your analysis that are reimbursed based on Medicare fee schedule (PT, OT, ST, Laboratory, Professional Fees, Prosthetics/Orthotics, etc.) and confirm which of those are bundled under OPPS and not paid separately.
- Determine which services are paid by other prospective methods and identify the associated payment methods.
- Confirm whether there are special considerations for pricing such as:
- Markup methods for supplies, drugs, implants, etc.
- Tests that must be priced at cost by state or other regulation
- Hospital-specific markup formulas
- Device markups
- Define other payment or pricing considerations that may be important for the quantification analysis.
- Identify data needed for your assessment, and confirm how it will be accessed.
- Internal data may be available from multiple Hospital Information System applications.
- External data (such as coding, regulatory and payment references) will be available through Charge Master software tools, consulting deliverables, or reference sources.
- Determine whether masterfile data from applications or systems other than the “Charge Master” file are needed. (Pharmacy, Laboratory system, Radiology system, Order Entry, Materials Management, etc.)
- Some H.I.S. vendors may have differing file structures and naming conventions so modify your quantification plan to represent data field names and file names as needed.
- Identify the Charge Master data elements of value to your assessment. Examples include:
- Charge number
- Charge descriptions (billing description as well as technical descriptions are valuable, if available)
- CPT/HCPCS code fields
- Modifier fields
- Multiplier or Divisor
- Revenue Code
- Identify CPT or HCPCS Level II code descriptions for the associated codes (from CDM software or other coding resources).
- Document the planned quarter and year for the reimbursement data to be used. Identify sources for the applicable payer mix and reimbursement methodologies (from CDM software or other reimbursement references). Since some payment rates change quarterly, decide whether quantification needs to be: 1) a general forecast based on one specific rate, or 2) actual, based on the date of service. Reimbursement data includes information such as:
- OPPS Status Indicator
- OPPS Wage-Adjusted rate and Coinsurance
- Fee Schedules
- Sole Community Multiplier (or other adjustment factors)
- Other prospective rates
- Access revenue & utilization data for the pre-determined period.
- Recommendation for OPPS Hospitals: Start the analysis with Medicare Outpatient Utilization. Next, expand to other applicable payers
- Determine data source(s) for account-specific information.
- Data sources of interest may include: detailed charges, claims data pre and post editing, medical record data, remittance advice/EOBs, etc.
- Identify internal logs or date-stamped reports showing when CDM corrections were implemented.
Quantification of CDM audits requires thorough understanding of intricate operational and system details as well as high-level organizational issues. Various individuals in your organization will be able to provide insight for certain aspects your quantification process. This section lists common participants for an impact analysis project.
- Peers who will be pivotal to your assessment tasks include:
- Ancillary and clinical department representatives
- Staff that design and manage claims edits
- IS staff/applications specialists
- Finance and reimbursement staff
- Administrative leaders who typically provide direction and high-level input include:
- Revenue Cycle
- Create worksheets listing the charges of concern for over or under payment.
- This worksheet listing does not include charges that have been confirmed as: corrected by billing edits, corrected by billers, denied or returned and corrected through payer edits, or charges that have no reimbursement implications because of the error)
- Merge your worksheet data (listed in earlier step above) with reference fields that demonstrate errors and corrections.
- Department Name and Number
- Charge Item number
- Charge description
- CPT/HCPCS Code (erroneous and correct code fields)
- Modifier (erroneous and correct code fields)
- Multiplier/Divisor (erroneous and correct code fields)
- Revenue Code(erroneous and correct code fields)
- Payer-specific utilization for the usage period selected
- Other data fields deemed important to your assessment
- Add worksheet columns showing payment amounts for the erroneous data and correct data.
- For coding errors: obtain erroneous and corrected payment rates.
- Consider that reimbursement rates may change quarterly for CMS and other payers)
- For multiplier/divisor errors: calculate erroneous and appropriate units and multiply times the payment rates.
- Confirm functionality of multiplier or divisor to understand how it may impact your analytical approach
- Add calculated fields to show the variance between correct and incorrect payments.
- Calculate variance times the payer-specific outpatient utilization (quantity) for the period of the assessment.
- Even though this approach reflects estimated payments, it will allow a general quantification that can be refined later to the account-specific level)
- Create separate worksheet for Revenue Coding Errors.
- Include fields for erroneous and corrected codes.
- Only include within this report the Revenue Coding errors that may have caused incorrect payments.
- Create other worksheets for other critical audit issue errors following the approach listed above.
Additional Reports to consider
- Create separate worksheets of patient account numbers impacted by payment errors. (This is best performed after the team has determined the desired action plan and timeline for rebilling, disclosure, etc.)
- Obtain remittance information (when available) for specific CDM errors on each account.
Presenting to hospital leadership can be daunting for some CDM Coordinators, and requires good presentation skills and effective preparation.
- Prior to your presentation:
- Review findings with your superior.
- Identify other staff impacted by the CDM audit results and ask for guidance on whether findings are collaborative or should stay confidential.
- Confirm whether any of the invited attendees for planned debrief sessions have political or personal concerns about the impact analysis.
- Confirm the appropriate attendees for the presentation. Participants may include:
- Administrative Representatives
- Select department directors
- Support department representatives (Coding, Billing, IS, etc.)
- Legal Counsel (Some Compliance Officers prefer legal counsel to stay involved for projects that were performed under privilege.)
- Briefly summarize the quantification (and original audit’s) audits’ scope, timeframe, and context. (It is beneficial to provide documentation of this information rather than solely relying on a verbal recap) The summary should include:
- The type of audit performed and who performed it
- The timeline of the audit and the date-span the data analyzed
- The quantification study’s assumptions (Payer information, reimbursement methods, internal operations and process flow, etc.)
- The implications of CDM Audit findings:
- Clarify what the ‘impact’ data means to the hospital’s revenue and compliance mandates.
- Explain that an error in the CDM file does not always represent an erroneously billed service. Errors may have been corrected in multiple areas. (This is where a flow chart of charge data for your organization is beneficial)
- Explain how your analysis addresses different payment scenarios. Payer reimbursement may, or may not, have been affected with errors.
- Outline the processes and systems that need to be improved.
- Recommend personnel that may need to take increased ownership or receive education.
- Identify support or resources needed for improved oversight controls, and monitoring.
- Be prepared to provide the status of data corrections that were uncovered in the audit. Most executives want to know not only “how bad is it?”, but also “how quickly can this be resolved?”.
- Recap CDM audit results from the perspective of compliance, operations, and finance. It is important to outline the risks and benefits from multiple perspectives.
- Display results in an understandable format. Remember that hospital executives may not be as interested in the minute details as they may be in the bigger picture.
- Provide summarized totals for 1) opportunities for future reimbursement improvements, 2) overpayment risks, and 3) audit findings that have neither reimbursement nor risk impact, but are considered important.
- Provide a concise Executive Summary Report of your quantification study.
- Identify all issues that require administrative decisions, support or delegation.
- Determine whether follow up assessment or further quantification is needed.
- Work with the meeting attendees (or a smaller task force) to determine the follow up action. Facilitate this process by creating an action plan with sequenced steps, priorities, owners and timelines.
- After the quantification project is complete, ask for input from executive leadership on their impression of the quantification work that was done.
- Consultants would send a quick exit interview survey.
- However, you may want to just have a quick conversation.
Summary After performing your first quantitative analysis, your organization will have a tested and logical approach for understanding the impact of CDM audits. This project will demonstrate your CDM or Revenue Cycle team’s strategic and analytical skills and their ability to credibly report CDM audit results.
Reference and Related Posts:
10 Steps for Failsafe Charge Data Management – Holliday & Associates
Holliday & Associates Charge Management Software Solutions
ChargeAssist HFMA Peer Review Renewal Press Release
ChargeAssist Charge Master Public Portal Press Release
Holliday & Associates offers ChargeAssist®; an HFMA Peer Reviewed® Charge Master auditing and resource tool for easily auditing, collaborating, and maintaining Charge Master files. We also provide Charge Management Team and Charge Master Coordinator Educational Programs as well as customized CDM Reviews by a team of credentialed clinical, coding and technical auditors.
Visit Holliday & Associates web page for details on software functions and consulting services here: https://www.chargeassist.com/chargeassist/
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