Have you gotten “the letter”? You know the one. It's a health plan notice identifying you as a coding outlier and accusing you of reporting a greater than average number of high-intensity evaluation and management (E/M) codes.

If you aren’t sure how to defend your coding and documentation patterns, we can help. We believe that the best defense is a strong offense in the form of a coding and documentation compliance plan.

Not clear-cut

Coding is more an art of interpretation than an exact science. Nowhere is this truer than with E/M services. In 2000, the Journal of Family Practice published a study in which four faculty physicians, six resident physicians and six professional coders audited 1,069 charts.¹ The results indicated that professional coders agreed with the codes assigned by the physicians far more often than did the physician or resident auditors. Further, when auditors disagreed with a code selection, the documentation justified a higher level of service four times more often than it suggested a lower level of service.

Another recent study involving a review of E/M codes assigned to 125 visits by pediatricians found that 44 percent of the visits were undercoded and 1 percent were overcoded.² Before correction of the undercoding and overcoding, the code distribution showed a bell curve with the predominance of claims at the midlevel (99213). After correction based on the proportion of error found by the independent review, a more equal distribution of midlevel (99213) and upper level (99214) codes was demonstrated.

In a third study, 600 family physicians were sent surveys asking them to assign codes for six different clinical scenarios.³ The 205 physician responses agreed with expert CPT E/M code assignment in 52 percent of the scenarios for established patient visits. Undercoding was the most common error, identified in 33 percent of the cases. Again, the bell curve showed a more equal distribution of codes 99213 and 99214 after correct coding was applied.

Yet another study found that family physicians undercode their services at least as often as they overcode (22 percent undercoded, and 20 percent overcoded).⁴

These studies indicate that coding of E/M services is not a clear-cut process. Physicians have difficulty choosing correct codes for these services based on the guidelines available, and even trained coders often disagree.

A skewed bell curve?

Let's put the value of the bell curve in the proper perspective. The statistics of physician code usage reflected in a bell curve can be useful for evaluating an individual's coding patterns. However, when a physician's code usage is outside the bell curve, we should not assume that this represents fraudulent coding. As noted above, undercoding is at least equal to overcoding by family physicians. This may cause a physician who is coding properly to appear to have suspect coding practices.

Other data need to be reviewed when a physician's coding patterns seem aberrant. If possible, generate a report from your system reflecting the diagnosis codes that have been billed for all high-level E/M codes. If these diagnoses are for chronic conditions, injuries and severe acute conditions, it is likely the services are medically necessary and, if well documented, are coded correctly. However, if a portion of your high-level office visits are linked to diagnosis codes that you would not usually expect to require a high level of service, these records should be reviewed for medical necessity and documentation.

Medical necessity is the overriding factor in determining whether a service is a covered benefit. Sure, you can get a complete history and perform a complete physical exam on every patient, but is it medically necessary? Payers and the Office of the Inspector General (OIG) would say no if the level of service provided was more than that necessary to evaluate and manage the condition(s) that prompted the visit.

This is the focus of at least one payer's physician profiling exercises. When a physician has a higher cost per patient per year than his or her peers, the payer may be prompted to compare the physician's CPT code usage, average hospital days and ancillary services ordered against the diagnoses reported for these services in an attempt to evaluate whether the level of service provided appears appropriate. If your utilization of services appears inappropriate to the payer, you likely will be contacted to discuss why your patients require higher levels of service than those of your peers. If you find yourself in this situation, you must be prepared to explain the variance and provide some documentation to demonstrate the necessity of your service levels.

For AAFP policy on “Physician Profiling,” see https://www.aafp.org/about/policies/all/physician-profiling.html.

Begin your defense now

When a payer uses profiling data to look for overcoding and missing documentation, your best defense will be having a compliance plan that includes coding education and routine chart reviews. (See “Action Plan for Coding Compliance.”) At the least, your compliance plan should include an annual review of any chart templates used and any risk areas identified since the last review. You might also consider an annual review of the OIG work plan (http://www.oig.hhs.gov/publications/workplan.html) to identify areas that government payers will be reviewing.

Although there is no fixed formula for how many medical records you should review, a basic guide is five or more medical records per federal payer (e.g., Medicare and Medicaid, Tricare, Indian Health Services) or five to 10 medical records per physician, according to the OIG. It would be prudent to consider a separate review of charts for patients covered under private health plans. (FPM has previously published a chart audit tool that is available at https://www.aafp.org/fpm/20000400/chartreviewform.pdf.)

Different family medicine practices will require different compliance plans, especially in the area of routine chart reviews. A practice with multiple primary care physicians can likely take advantage of peer review as described in “Using Peer Review for Self-Audits of Medical Record Documentation,” FPM, April 2000, page 28. Others may choose to have a coder review a selected number of charts per physician each month either before or after billing, or both. (If you don’t think you can afford a trained coder for chart auditing, see “The Value of a Coding Education,” FPM, March 2005, page 20.)

Smaller practices may find it more effective to use external audit sources such as a coding consultant or the American Medical Association's CPT Information Services (http://www.ama-assn.org/). Some small practices involve the nurse, medical assistant and billing staff in a joint review process, and meet monthly to review selected charts and discuss any areas that could be improved. Several companies offer electronic audit tools as well. However it works for your practice, have a compliance plan and keep records that show you are following it. (The OIG provides information on compliance plans for small practices at http://oig.hhs.gov/authorities/docs/physician.pdf.)

As part of your compliance plan, you should hold on to coding and billing educational materials, as well as records of educational seminars, meetings or classes attended by staff. Records should be kept (in either electronic or paper format) of all billing instructions from payers. If one of your staff members phones a payer and receives advice on how the payer wants a service coded and billed, get it in writing. If the person you are speaking with cannot provide this, send a letter to the physician representative or claims manager asking for verification of the information. Print or copy to disk any payer guidance received through e-mail or from Web sources. Keep records of what actions were taken when coding and billing errors were detected (refunds, counseling on correct coding, etc.) Many practices already do these things, but having an accessible record of your actions is crucial to defending your coding practices.

Respond quickly

If you receive “the letter” indicating that your CPT coding or cost per patient is not in line with your peers, don’t panic and don’t ignore it. Your first step should be responding to the payer. You’ll need to request more information on how and against whom your provision of services varies. (See the sample letter.) If this information was included in the payer letter, you’ll want to explain why your practice varies from that of your peers. Although this is a disruption to your practice, the time spent on your reply could prevent much more costly and time-consuming defensive activities later. For example, if your practice varies from the specified peer group because you treat a large number of HIV/AIDS patients or have a pain management clinic in your practice, this may be all that is necessary to remove you from scrutiny.

Above all else, do not ignore any correspondence from a payer indicating that your coding or provision of services is aberrant. The conflict is unlikely to go away without either a change in the way you code or provide services, or an agreeable discussion with the payer. It is not in your best interest for the payer to accelerate the level of inquiry into your practice.