Chart Auditing & DRG Review

Regular chart audits aren't optional for facilities that want to stay ahead of payer audits, RAC reviews, and OIG investigations. Demonstrating a proactive internal audit program is your strongest defense against allegations of billing fraud or abuse. Visit our billing glossary for definitions of key compliance terms.

Go Medical Billing's audit methodology follows OIG compliance guidance and CMS documentation standards. Our billing and coding team applies these findings to prevent future errors at the point of claim submission.

Evaluation and Management codes (99202-99215 for office visits, 99221-99223 for initial hospital care) are the most frequently billed codes in medicine and the most commonly miscoded. The 2021 E/M documentation guidelines eliminated the requirement to count bullet points for history and exam, shifting the level selection to either medical decision making (MDM) complexity or total time spent.

Despite these simplified rules, E/M coding errors remain the number one finding in chart audits. The most common patterns we identify:

Undercoding established patients. Physicians who were trained under the old guidelines often default to level 3 (99213) out of habit, even when their documentation clearly supports level 4 (99214). The difference is approximately $40 to $70 per visit depending on the payer. For a physician seeing 20 patients per day, even a 20% undercoding rate on E/M levels costs $60,000 to $100,000 per year in lost revenue.

Documentation that doesn't support the level billed. A provider bills 99215 but the note documents only moderate complexity MDM. The documentation needs to support the code, and an audit that identifies this pattern before a payer audit catches it protects you from recoupment demands and potential fraud allegations.

Time-based coding without time documentation. Under the current guidelines, providers can select E/M level based on total time instead of MDM. But the time must be documented in the note. A statement like "I spent 45 minutes on this encounter" in the progress note supports time-based billing. Without it, the code must be justified by MDM alone.

Split/shared visit rules. When a physician and an advanced practice provider (NP or PA) both see the same patient on the same-day, the billing provider and the E/M level depend on who performed the substantive portion. CMS defines this as more than half of the total time. Many practices bill these incorrectly, creating compliance exposure.

For hospitals billing on the UB-04, DRG (Diagnosis Related Group) assignment directly determines inpatient reimbursement. A single missed complication or comorbidity (CC/MCC) can shift a DRG assignment and reduce payment by thousands of dollars per case. Conversely, assigning a higher-weighted DRG without clinical documentation support creates compliance risk.

Our DRG validation process independently reviews the clinical record and compares our coding against the hospital's assigned DRG. We identify cases where:

CC/MCC capture is incomplete. Conditions like acute kidney injury, malnutrition, severe sepsis, or respiratory failure are documented in physician notes but not captured as secondary diagnoses by the coding team. Each missed CC/MCC can change the DRG and reduce payment by $2,000 to $8,000 per case.

Principal diagnosis selection is suboptimal. When multiple conditions are treated during an admission, the principal diagnosis (the condition chiefly responsible for the admission) determines the DRG family. Selecting the correct principal diagnosis within coding guidelines can legitimately result in a higher-weighted DRG.

Procedure coding affects surgical DRGs. Missing or incorrectly sequenced ICD-10-PCS procedure codes can cause a case to group to a medical DRG instead of a surgical DRG, significantly reducing reimbursement.

For a 200-bed hospital, our DRG validation program typically identifies $500,000 to $1.5 million in annual revenue opportunities from documentation and coding improvements — all within compliance guidelines.

Go Medical Billing follows a structured audit methodology aligned with OIG compliance program guidance for individual and small group physician practices.

Sample selection. We use stratified random sampling to select records that represent your practice's true coding distribution. For baseline audits, we typically review 30 to 50 records per provider. For ongoing monitoring, 10 to 20 records per provider per quarter is sufficient to maintain statistical confidence.

Record review. Certified coders independently review each record, assigning codes based solely on the clinical documentation. These codes are compared against what was actually billed. Discrepancies are categorized as overcoding, undercoding, unbundling errors, modifier misuse, or documentation insufficiency.

Error rate calculation. We calculate both financial and coding accuracy error rates. A coding accuracy rate above 95% is considered acceptable by most compliance standards. Below 90% triggers a recommendation for focused education and re-audit within 90 days.

Education and feedback. Audit findings are presented to providers with specific examples from their own records. We don't just tell a provider they're undercoding — we show them the exact note, explain what the documentation supports, and demonstrate how to document more completely for future encounters. This provider-specific feedback is far more effective than generic coding webinars.

Corrective action. For overcoded claims identified in the audit, we recommend whether voluntary refunds to payers are appropriate. Proactive self-disclosure is significantly better than waiting for a payer audit to identify the same issues. For undercoded claims within timely filing windows, we can refile at the correct level to recover the lost revenue.