Issue: November 2012
November 01, 2012
13 min read

Documentation and awareness are key in coding compliance and avoiding audits

Issue: November 2012
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With increased scrutiny in several areas of coding compliance and more attention being paid to proper coding of total joint replacement, audits among orthopedic surgeons may become more commonplace. Avoiding an audit is often not possible, but surgeons can take several steps to prepare for this process should it happen.

According to the CMS, Medicare-Fee-for-Service (FFS) processes more than 1.2 billion claims per year. In 2012 alone, CMS contractors, including Medicare FFS Recovery Auditors, Medicare Administrative Contractors (MACs) and the Comprehensive Error Rate Testing (CERT) program, conducted more than 1.5 million medical reviews for all claims types. CMS also implemented new programs this year, including the Recovery Audit Prepayment Review demonstration, which will allow MACs to review claims before they are paid to ensure compliance with Medicare payment rules.

Specific to orthopedists, as part of President Obama’s goal to reduce the Medicare FFS improper payment rate by half and reduce overall payment errors by $50 billion, Medicare initiated several auditing projects. Through these projects, Recovery Audit Contractors (RACs), CERTs and MACs have found high paid-claim error rates associated with joint replacement surgery among both hospital and professional claims, according to a Medicare Learning Network Matters article.

“Increased scrutiny is coming from both the state and federal agencies, and it is likely to get worse,” Ranjan Sachdev, MD, MBA, CHC, a practicing orthopedic surgeon in Easton, Pa., who is certified in health care compliance, told Orthopedics Today.

According to Sachdev, a surge in audits could be attributed to strengthening of the False Claims Act provisions and the Health Insurance Portability and Accountability Act provisions. In addition, “there are significant penalties for not refunding overpayments,” Sachdev said. “Previously if the government sent you more money than what was owed, you had no obligation to return it until they asked you for it. Ethically, you were required to do so but there were no penalties. Now, there is a time limit. You have to refund it within 60 days of discovery. Failure to do so results in significant penalties”

Ranjan Sachdev, MD, MBA, CHC, noted that an increase in audits could be attributed to strengthening of the False Claims Act and HIPPA provisions.

Ranjan Sachdev, MD, MBA, CHC, noted that an increase in audits could be attributed to strengthening of the False Claims Act and HIPPA provisions.

Image: Mike Prime

CMS is also focusing more on appropriate documentation of services provided; appropriate billing for non-physician providers, including physician’s assistants and nurse practitioners; disclosure of ownership of MRI; documentation of improvement in physical therapy for practices that own a physical therapy practice; documentation of site of service; and appropriate use of certain billing modifiers, including 24, 25 and 59, according to Sachdev.

Prepare for an audit

According to health care attorney David M. Glaser, JD, audits cannot be avoided, but surgeons can take several steps in their practices to ensure they will fare well during an audit.

David M. Glaser

David M. Glaser

“The bottom line is, you have to be prepared for [an audit],” he told Orthopedics Today. “You do not lose sleep over it; you just have to be ready for it.”

First, make sure someone in your practice is reviewing your documentation to ensure it supports the code being billed, Glaser said. He also suggested evaluating whether your coding distribution is typical.

“You can look at how your coding compares to national norms,” he said. “It does not have to mirror national norms, but if it varies, you want to know why and make sure there is a good reason that it varies.”

Surgeons also need to be intelligent and educated coders, according to William R. Beach, MD, of Tuckahoe Orthopedics in Virginia and second vice president of the Arthroscopy Association of North America. Not only should they be sending their coders to coding courses, but also “you have to educate yourself, because there is no substitution for the physician knowing how to do correct coding,” Beach said.


In addition to education, surgeons could benefit from developing a rapport with their local contractor, according to Donald Romano, JD, counsel at Foley and Lardner, LLP, and former division director at CMS from 2005 to 2008.

“As new technologies and new services are coming forward and the payment rules are not well developed at that point in time, or if there is just any general uncertainty about how to bill for a particular procedure, the best thing orthopedists can do is develop a good working relationship with their local contractor,” he told Orthopedics Today. “The physician can work with the contractor and find out what the contractor’s rules are ... They certainly do not want to be in the position where they are doing something against the contractor’s wishes unwittingly.”

Sachdev said practices need to implement a compliance plan or update their existing compliance plan if one exists.

“Errors will happen. What is expected from practices is that they show a culture of compliance, that they are trying to promote compliance,” he said. “If they can show that, they are likely to get more lenient treatment from the auditors. Contrary to what most people think, most of the auditors are not out to get you. They want to make sure that the laws are followed and that you have good intent.”

He warned against selecting a preprinted, “off-the-shelf” compliance plan and not implementing it. According to Sachdev, this shows a disregard for the law.

“It is best for each practice to analyze its own specific risks and to devise a compliance plan to minimize these risks,” he said.

The Office of the Inspector General lists seven elements as necessary for an effective compliance program. Practices should:

  • conduct internal monitoring and auditing;
  • implement compliance and practice standards;
  • designate a compliance officer or contact;
  • conduct appropriate training and education;
  • respond appropriately to detected offenses and develop corrective action;
  • develop open lines of communication; and
  • enforce disciplinary standards through well-publicized guidelines.

“Compliance plans do not have to be complex or complicated, but they have to show that the practices are making a good faith effort — billing properly, documenting properly and maintaining good quality,” Sachdev said.

Beach also suggested performing an internal review of the practice’s billing and coding. At his practice, a compliance committee performs quarterly reviews of 10 random charts from each physician to ensure they are coding correctly.

William R. Beach

William R. Beach

Surgeons can also purchase coding insurance that can protect them in the case that a partner refuses to become compliant with coding and billing.

“Our group has an indemnification agreement, so essentially if you choose that path, then you are responsible for your own penalty,” Beach told Orthopedics Today.

EMRs: Risks and benefits

Electronic medical records (EMRs) can often be a double-edged sword in coding compliance, according to Glaser. On the one hand, EMRs can prompt physicians to note what is done during a visit. However, the use of EMR templates, when physicians are using a previous visit’s record and repopulating the fields for the current visit, can sometimes get physicians into trouble. According to Glaser, oftentimes, physicians are carrying information forward from one visit to the next because they are not editing out information from a previous visit.

“If you are editing an electronic note, you have to look through it and make sure information is carried forward properly,” Glaser said. “If you are not going to do that yourself, have a nurse, a nurse practitioner or a physician’s assistant look at the note and make sure it makes sense. You need someone to edit these things.”

David M. Teuscher, MD, of the Beaumont Bone and Joint Institute in Texas and the American Academy of Orthopaedics Surgeons (AAOS) Board of Councilors immediate past-chairman, also warned against having more than one patient record open simultaneously, which can make errors likely.


“You may have to even include a paper trail to make sure that you have input data correctly,” Teuscher told Orthopedics Today. “I certainly think there is a possibility that EMRs can perpetrate errors and actually make things not safer, but less safe.”

David M. Teuscher

David M. Teuscher

However, Teuscher added that EMRs can be helpful to the physician in appropriately billing for a service at the correct level. “It is essentially a real-time audit at the time that you are actually providing the billing,” he said.

He added it is important to synchronize the EMR with your practice and get over the learning curve, but once adopted, EMRs should help to streamline the documentation and billing process.

Sachdev suggested using specialty-specific EMRs because they are geared toward the workflow of the particular specialty. In addition, when implementing the EMR, Sachdev suggested working with the EMR provider and implementation team to tailor the EMR toward minimizing the practice’s specific risks — for example, setting a reminder for something a physician typically forgets to do when completing notes.

“EMRs are nothing but essentially a documentation tool. Like any tool, they can be helpful if used properly,” Sachdev said. “They do not replace a physician’s brain or a physician’s efforts — they are just a tool to help them.”

Many physicians’ offices now use electronic data interface vendors to electronically submit codes to Medicare, according to Thomas J. Grogan Jr., MD, of Los Angeles and chairman of the AAOS Practice Management Committee. Some of these vendors offer programs that examine submitted claims and pinpoint coding irregularities.

“For example, if you code something as a level 4 on the way out, you submit that claim to the insurer, and the insurer decides it is a level 2 and sends it back, your electronic data interface should be able to spot that discrepancy, allowing you to appeal the down coding or at least make sure your documentation is up to speed,” Grogan told Orthopedics Today.

In the case of an audit, documentation and preparation are essential. Sachdev suggests sitting with compliance consultants and practice attorneys before the audit to assess the risk and ensure all documentation is ready.

“Sometimes, there may be documentation missing, but the service was actually done and the doctor forgot to document it,” Sachdev said. “Maybe supporting documentation in other parts of the chart can be used to convince the auditor that the work was actually done.”

Teuscher said to prepare the charts that the auditors request, and “obviously, you would not want to change that documentation, but you would maybe want to make a notation where you found that you had deficiencies.”

According to Glaser, surgeons should keep an exact copy of the documentation sent to the auditor and number the pages of the documentation to easily refer to information throughout the record. Similarly, if surgeons are sending the information on a disc, they should keep an exact copy of the disc for their own records.

Grogan stressed that the physician be involved in the entire audit process.

“It is not something you can delegate to your office manager or physician assistant,” he said. “You have to be willing and able to answer questions, you have to be available to answer questions, and you have to be forthright into how you made that determination.”

Rarely, auditors will visit the office unannounced. “If someone shows up in your office, that is a different ballgame,” Glaser said. “You should get a lawyer on the phone right away.”

He stressed that surgeons train staff members to know that if they are ever contacted by a government agent, they are not obligated to speak with them. “It is potentially an obstruction of justice to tell [staff members] they cannot talk, but it is good for them to know they do not have to talk,” Glaser said.


Staff should also know that they have the legal right to inform their employer if they are contacted by a government agent. According to Glaser, although the agent may request the staff member not disclose the contact, there is no law preventing staff from disclosing any part of the discussion.

According to Sachdev, surgeons and their staff should answer questions truthfully, but they should not volunteer information.

“They should not give any information that was not asked for by the auditor,” he said. “Their answers should be accurate, to the point, and they do not need to go into explanations.”

Glaser also reminded surgeons that their malpractice insurance may have a rider that will cover some legal fees in the case of an audit.

“It will not cover the amount recouped in the audit, but it might cover attorney fees,” he said.

“If you have an ongoing quality process review looking at the chart before you sign off on it, if you are making sure that you are hitting all the required data fields and the bullet points, then you would probably have a low stress level at an audit,” Teuscher said. “It is never going to be no stress, but the whole point is, you need to self-audit.”

If a surgeon wants to appeal the results of a Medicare audit, they have 120 days to file for reconsideration and request a hearing with a qualified independent contractor (QIC). If they fail during the reconsideration, then they have another 60 days to go before the QIC and then on to the administrative law judge. “You do not legally need to have a lawyer represent you — you can do it yourself,” Glaser said. “But if it is a substantial amount of money [potentially being recouped], it can be helpful to have a lawyer there.”

CMS has published a pamphlet detailing the appeals process, available at

Be aware of criteria for payment

Romano reminded surgeons that they need to pay attention to guidelines for the criteria necessary to justify a particular procedure.

“There are specific guidelines put out either at the national level to a national coverage determination or by the specific contractor,” he said. “The physicians need to pay close attention because otherwise it is an easy way to deny a claim.”


In the area of total joint replacement, CMS has published an article in Medicare Learning Network Matters that provides suggestions for the documentation of medical necessity to avoid denial for these services.

Sachdev added: “I am constantly amazed at how little attention is paid to compliance and audit risks that the practices face. Somehow physicians think that they are not the ones who will be audited, and they do not do anything proactively to promote compliance until the time they get an audit. ... Simply saying, ‘I did not know the requirements,’ is not an excuse and is considered deliberate ignorance by the authorities. The sad part is the compliance plans are so easy to set up and provide a road map to follow. You need to set it up, and there has to be a commitment to the compliance plan.”

Some physicians have expressed concern that the criteria for receiving payment are not clear. For example, Teuscher told of his own personal situation where he had nationally reputable coders ensure him that he coded properly, but the audit contractor still denied coverage.

“At some point in time, you want to say, do I want to deal with this or do I just go ahead and pay the money and then they leave me alone?” he said. “The question is, ‘Where is the accountability?’ There is little accountability as RACs and as intermediaries. I think it is something CMS needs to start looking at, or they need to admit that they are actually encouraging this behavior.” – by Tina DiMarcantonio


For more information:

William R. Beach, MD, can be reached at Tuckahoe Orthopedics, P.O. Box 71690, Richmond, VA 23255; email:

David M. Glaser, JD, can be reached at Fredrikson & Byron, P.A., 200 South Sixth St., Suite 4000, Minneapolis, MN 55402; email:

Thomas J. Grogan Jr., MD, can be reached at 11704 Wilshire Blvd., Suite 11710, Los Angeles, CA 90025; email:

Donald Romano, JD, can be reached at Foley and Lardner, LLP, 3000 K Street, N.W., Suite 600, Washington, DC 20007; email:

Ranjan Sachdev, MD, MBA, CHC, can be reached at Sachdev Orthopaedics, 3729 East-Nazareth Hwy., Suite 203, Easton, PA 18045; email:

David M. Teuscher, MD, can be reached at Beaumont Bone & Joint Institute 3650 Laurel Ave., Beaumont, TX 77707; email:

Disclosures: Sachdev is a founder of Exscribe Inc., an orthopedic electronic medical record company with a focus on compliance. Beach, Grogan, Teuscher, Romano and Glaser have no relevant financial disclosures.


Will the CMS Recovery Audit Prepayment Reviews help to improve program integrity?


Yes, but they are a short-term fix

The CMS Recovery Audit Prepayment Reviews, which were implemented in August, will help to improve program integrity. Cost savings will probably be demonstrated, hopefully leading to less fraud and improper payments.

B. Sonny Bal

B. Sonny Bal

At some point, the program will inevitably seek more funding for expansion, and another layer of entrenched bureaucracy will take birth, with an infinite parasitic life fed off borrowed dollars. As I commented on this issue previously in Orthopedics Today, we can address the symptom or treat the disease. Given unfettered access to care, patients oblivious to the costs of medical intervention, perverse physician incentives to increase the volume of care, advancements in technology and a government firmly in the back pockets of medical industry titans, it is no surprise that we get more health care, for more dollars spent, without measurable improvement in quality metrics.

Absent major structural reforms in the system, efforts such as audits to load providers with yet another layer of compliance bureaucracy will have marginal impact at an incremental increase in costs, decreased provider satisfaction, and long-term system decline as honest providers exit the profession.

Those who seek an end-run around regulatory burden will always figure out a strategy to game the system. Therefore, although the prepayment reviews are a good short-term band-aid, they hardly address the festering wound that they seek to cover up.

B. Sonny Bal, MD, JD, MBA, is associate professor of orthopedic surgery and chief of the hip and knee division at the University of Missouri Health System School of Medicine in Columbia, Mo.
Disclosure: Bal has no relevant financial disclosures.


CMS to perform audits prior to payment for orthopedic procedures. Orthopedics Today. 2012; 32 (1):34.


No, they add little value

The most recent iteration of the Recovery Audit Contractors (RAC) are the Prepayment Reviews. As with the other “documentation”-based RAC audits, they add little value to a system already overburdened by paperwork and pointless bureaucracy, in my view.

David A. Wong

David A. Wong

True fraud and abuse is an area that should have some attention from the CMS. However, the issues of “appropriate” care and proper coding are both controversial topics. Therefore, legitimate differences of opinion can frequently exist that would conflict with the prepayment review criteria. In clinical care, for example, the RAC criteria for spinal stenosis/spondylolisthesis requires 3 months of conservative care for approval of a surgical intervention. First, where did the 3-month number come from? And second, a specific time frame ignores the clinical situation of progressive neurologic deficit or critical stenosis. Similarly, different Medicare third-party intermediaries have suggested alternate coding for some procedures, especially new technology.

Our office staffs now have the additional burden of providing office notes on the hospital chart to substantiate the preoperative surgical indications required in the RAC prepayment reviews. The hospitals require additional staff to ensure that detailed documentation is present in the hospital chart.

Concern about the RAC audits is not limited to physicians and hospitals. Eleven senators and members of Congress have sent a letter to Mr. Gene Dodaro, comptroller general of the United States, requesting that he “determine whether the contractors” audit criteria and methodologies are valid, clear and consistent.’

David A. Wong, MD, MSc, FRCS(C), is past president of the North American Spine Society (NASS), co-chairman of the NASS Patient Safety Committee and Value Committee.
Disclosure: Wong is the director of the Advanced Center for Spinal Microsurgery at Presbyterian St. Luke’s Medical Center in Denver.