HI545 Unit 5 Billing Risk Assessment Example

Where Each Bad Claim Is Born: A Unit 5 Billing Risk Assessment That Ranks Eleven Risks by the Station That Creates Them

[Student Name]

Purdue University Global

HI545: Health Care Compliance

Unit 5 Billing Risk Assessment

[Instructor Name]

[Date]

Esterline Health, the practice and every score are composite; the guidance and sources cited are real.

Introduction

Most billing risk lists are organized by department: coding risks, front desk risks, billing office risks. That arrangement tells a compliance officer who to call, but not where a bad claim is created. A visit miscoded because a template inserted a false time statement looks like a coding error at the billing office, yet it was born in the examination room. This assessment of the pulmonology and sleep medicine practice that Esterline Health acquired follows a claim through seven stations and assigns each risk to the station that produces it. The federal guidance for physician practices names coding and billing, the medical necessity of services, documentation and improper inducements as the main risk areas for groups of this kind (Office of Inspector General [OIG], 2000), and each of those areas appears below at a specific station.

The Seven Stations

1. Scheduling: the visit type and provider are chosen.

2. Registration: demographics, insurance and payer order are recorded.

3. Authorization and orders: prior authorizations and orders for tests and rehabilitation are obtained.

4. Encounter documentation: the clinician documents the visit, test or session.

5. Charge capture and coding: charges and codes are assigned.

6. Claim edit and submission: claims pass a scrubber and go to the payer.

7. Payment posting and follow-up: payments, denials and credit balances are handled.

Scoring Method

Each risk was scored on three scales from 1 to 5. Likelihood is how often the error is expected in a year at current volume. Impact combines dollars and regulatory exposure, with 5 reserved for errors that could create liability under the federal fraud and abuse laws. Detection is scored in reverse: 1 means the error is caught before the claim leaves, and 5 means it would surface only in an outside audit or a whistleblower complaint. The three scores are multiplied for a priority number from 1 to 125. Borrowing the detection scale from failure mode and effect analysis, a method adapted for health care by the Veterans Health Administration (DeRosier et al., 2002), keeps attention on the errors that hide longest. Scores came from interviews with the practice manager, two billers and the coding audit manager, and from the first quarter's audit sample.

Risks by Station

Station 1, scheduling. R1: patients previously seen by Esterline's own pulmonologists are booked as new patients with an acquired physician, although both groups now bill as one practice and the same specialty. Likelihood 4, impact 3, detection 4, priority 48. Station 2, registration. R2: the Medicare secondary payer questions are skipped for returning patients, so Medicare is billed first when an employer plan should pay. Likelihood 3, impact 2, detection 3, priority 18. Station 3, authorization and orders. R3: pulmonary rehabilitation sessions continue after the individualized treatment plan has lapsed without a physician's review and signature. Likelihood 3, impact 4, detection 4, priority 48. R4: sleep studies proceed on a verbal order never signed. Likelihood 2, impact 3, detection 3, priority 18. Station 4, encounter documentation. R5: an office visit template records the time the chart was opened as the total time spent, supporting time-based levels the visit did not involve. Likelihood 4, impact 5, detection 5, priority 100. R6: nurse practitioner visits in the sleep clinic are billed under a physician's number as incident-to services when the physician was not present in the suite or the problem was new. Likelihood 3, impact 5, detection 5, priority 75. R7: copied-forward text from earlier notes inflates the documented review of systems and history. Likelihood 4, impact 3, detection 4, priority 48. Station 5, charge capture and coding. R8: spirometry interpretations are charged before a signed interpretation exists. Likelihood 3, impact 2, detection 3, priority 18. R9: modifier 25 is appended to every office visit that shares a date with a test, whether or not a separately identifiable service was documented. Likelihood 3, impact 3, detection 4, priority 36. Station 6, claim edit and submission. R10: billers override scrubber edits for paired codes without a documented reason. Likelihood 3, impact 3, detection 3, priority 27. Station 7, payment posting. R11: credit balances from duplicate or excess payments sit unreviewed past sixty days, although an identified overpayment must be returned within that period (42 U.S.C. § 1320a-7k, 2024). Likelihood 3, impact 4, detection 3, priority 36. Five of the eleven risks, and the two with the highest priority, are born at encounter documentation or earlier, far upstream of the billing office where they would usually be looked for.

Ranking by Station

Grouping the priority numbers by station shows where controls belong. Encounter documentation totals 223 across three risks, almost as much as the other six stations together, which reach 249. Authorization and orders contributes 66, scheduling 48, charge capture and coding 54, payment posting 36, claim edit 27 and registration 18. The billing office, where most practices place their controls, sees errors from every station but creates only R10 and R11.

Controls Recommended

1. Encounter documentation: remove the automatic time field from the office visit template, so time must be entered by the clinician; add incident-to rules to the scheduling system so that a nurse practitioner visit for a new problem is billed under the nurse practitioner's own number; limit copy-forward in the history sections. These address R5, R6 and R7.

2. Authorization and orders: a rehabilitation worklist that blocks scheduling of a session when the treatment plan review date has passed, and a weekly unsigned-order report for the sleep laboratory. These address R3 and R4.

3. Scheduling: merge patient histories from both pulmonology groups before booking rules decide new or established. This addresses R1.

4. Charge capture and coding: interpretation charges held until the report is signed; modifier 25 reviewed in the quarterly audit sample. These address R8 and R9.

5. Claim edit and payment posting: override reasons required in the scrubber; a weekly credit balance report reviewed by the billing manager. These address R10 and R11.

6. Registration: a hard stop on the secondary payer questions at each visit for Medicare patients. This addresses R2.

Discussion

The ranking changes the order of work. A compliance officer reading the department list would likely start with the billing office, which is where denials and edits appear. The station view sends the first effort to the template and the incident-to rules, because those errors are both likely and invisible to the edits that follow them. It also changes who owns the fix. The billing manager cannot remove a template field; the clinical informatics team and the practice's medical director can. The general compliance guidance asks organizations to assess risk and then direct auditing toward the highest risks (OIG, 2023). The quarterly audit sample in Unit 4 already tests office visit levels; this assessment adds time statements and incident-to billing to what the reviewers look for.

Limits

Scores rest on interviews and one quarter of audit results, so the likelihood scale is a judgment. Detection scores will improve as controls go in, and the assessment should be repeated after two quarters to show whether the priority numbers fall.

References

DeRosier, J., Stalhandske, E., Bagian, J. P., & Nudell, T. (2002). Using health care failure mode and effect analysis: The VA National Center for Patient Safety's prospective risk analysis system. The Joint Commission Journal on Quality Improvement, 28(5), 248-267. https://doi.org/10.1016/S1070-3241(02)28025-6

Office of Inspector General. (2000). OIG compliance program for individual and small group physician practices (65 Fed. Reg. 59434). U.S. Department of Health and Human Services.

Office of Inspector General. (2023). General compliance program guidance. U.S. Department of Health and Human Services.

42 U.S.C. § 1320a-7k (2024). https://www.law.cornell.edu/uscode/text/42/1320a-7k