Developing Effective Coding Compliance Programs Through Risk Assessment and Focused Attention on High-Risk Areas

Healthcare compliance has become very important for providers because federal investigations on wrong billing practices have increased. Common compliance risks include:

• Upcoding: Charging for more expensive services than what was actually done.
• Unbundling: Charging separately for parts of a service that should be billed together.
• Fraud and Abuse: Illegal or unethical billing, claims, or reporting actions.

These activities can lead to serious punishments like fines, removal from federal healthcare programs, or even criminal charges. Because of this, the Department of Justice (DOJ) updated its “Evaluation of Corporate Compliance Programs” rules in 2020. The new focus is on checking compliance programs continuously, not just when problems happen. Prosecutors now look at how well a program works over time, including when resolving issues.

The guidance points out several important things for good compliance programs:

• Leaders at all levels must support a culture of compliance.
• There must be enough trained coding and billing staff.
• Audits should focus on areas with the highest risks.
• Clear ways to communicate and report issues are needed.
• The program should keep changing to handle new risks.

The Role of Risk Assessment in Coding Compliance Programs

The first step in any compliance program is a detailed risk assessment. This means looking at the healthcare provider’s work to find weak spots in coding and billing that might cause mistakes or bad behavior. Important steps are:

• Reviewing Coding Processes: Checking how coding decisions are made, who does coding and billing, and if they have the right training.
• Finding High-Risk Areas: Some medical specialties and procedures are more likely to have wrong coding. For example, complex surgeries, tests, and evaluation & management (E/M) services need careful checking.
• Checking Volume and Patterns: Data analysis can show strange billing trends like sudden spikes or claims that get rejected.
• Keeping Up with Rules: The compliance team should stay updated with changes in federal laws like the Anti-Kickback Statute, Stark Law, and Medicare rules.

Knowing where the biggest risks are lets healthcare providers focus their efforts on monitoring and training the areas most likely to have problems.

Jonathan Farr, senior vice president at EFFY, says coding compliance programs need to be active and handled by qualified staff. Finding risks early helps stop errors that could cause serious legal trouble.

Focused Auditing and Monitoring of High-Risk Functions

After finding risks, audits and monitoring are key tools to keep compliance on track. Audits check if coding follows billing rules and federal laws. Monitoring makes sure everything stays compliant over time.

The DOJ 2020 updates stress focusing on high-risk activities found through risk assessments instead of spreading resources too thin on low-risk areas. This focused way makes compliance checks more efficient and effective.

Machelle Dunavant Shields, who studied the DOJ guidance, points out that compliance workers need enough resources and access to important data. They must be able to look at billing information, test internal controls, and spot problems quickly.

Good audit steps include:

• Testing a sample of claims for accuracy.
• Comparing medical records with billing codes.
• Watching for unusual billing patterns.
• Having feedback systems to fix errors.

Research shows self-auditing is important to find problems before government investigations start. Charles Cortez of EFFY notes that admitting issues early, along with root-cause analysis and fixing actions, improves compliance and lowers penalties.

Leadership’s Role and Organizational Culture

The DOJ guidance says compliance is not just something to set up and forget about. Leadership support is needed to build a culture where following laws and rules is part of daily work.

Middle and senior management must clearly support compliance efforts. This includes:

• Providing enough budget for training and compliance tools.
• Encouraging open and confidential reporting.
• Holding employees accountable for any compliance breaks.
• Including compliance in job reviews and goals.

When leaders show they care about compliance, employees are more likely to follow policies and stay involved.

Employee Training and Policy Management

Training is key to reduce mistakes in billing and coding. Since rules change often, training should be:

• Regular: Sessions held continuously to keep staff updated.
• Risk-based: Focused more on high-risk areas and complex rules.
• Effective: Included tests to make sure people understand.
• Accessible: Offered in ways that fit different schedules and learning styles.

Policies and rules should be updated regularly when risks or laws change. Making policies easy to find and understand helps everyone follow them.

Technology and Automation in Compliance: Enhancing Accuracy and Efficiency

Artificial Intelligence (AI) and automation are playing a bigger role in coding compliance. Healthcare creates huge amounts of billing and clinical data, which are hard to check by hand.

Automation tools can quickly analyze large data sets to find strange billing, wrong coding, or signs of fraud and errors. Pedro Oliveira of EFFY supports AI tools that help compliance teams by:

• Speeding up data review by comparing claims and medical records automatically.
• Ranking cases by risk for human review using machine learning.
• Supporting ongoing self-audits instead of only occasional checks.
• Helping voluntary reporting by creating reports that explain problems and fixes.

Simbo AI, a company that works with phone automation and answering services using AI, offers technology that can connect with hospital systems to improve work flow and compliance records. Their AI can reduce administrative tasks on staff, allowing them to focus more on developing and running compliance programs.

Using AI in coding compliance helps medical practices:

• Lower errors caused by humans in coding and billing.
• Make audits faster and better.
• Fix problems quickly to avoid penalties.
• Keep records ready for government checks and voluntary disclosures.

Managing Third-Party Risks and Mergers & Acquisitions

The DOJ’s updated guidance stresses the need to manage risks from third-party partnerships. Healthcare groups often use outside vendors for billing, coding, and IT services. Without proper checks, these partners can cause compliance problems.

Compliance programs should include:

• Checking carefully before hiring third parties.
• Setting clear rules about compliance in contracts.
• Ongoing monitoring of what third parties do.
• Bringing new entities’ compliance plans together after mergers or acquisitions.

Because healthcare companies are merging more, making sure compliance is combined well during these changes is important to avoid violations.

Documentation and Reporting for Transparent Oversight

Good documentation helps healthcare providers respond well to audits and supports voluntary reporting if problems happen. Organizations should:

• Keep updated and easy-to-search policies and rules.
• Track who attends training and how well it works.
• Offer confidential reporting channels that protect against retaliation.
• Keep records of audit results, fixes made, and any disciplinary actions.

Reporting issues quickly lets organizations fix problems before government action, lowering penalties and showing responsibility.

Putting It All Together: Practical Steps for Healthcare Providers

For medical practice managers, owners, and IT staff, creating a good coding compliance program means:

• Doing a thorough risk assessment to find high-risk functions.
• Making audit and monitoring plans that focus on those risky areas.
• Investing in ongoing, risk-focused employee training.
• Getting strong leadership support with enough resources and a compliance-friendly culture.
• Setting up confidential reporting systems to encourage early problem reporting.
• Changing compliance efforts as new laws and risks appear.
• Using automation and AI tools to check data, find problems, and help with compliance work.
• Managing risks from third parties, both when hiring vendors and after mergers.
• Documenting all compliance work for transparency and audit readiness.

Building and keeping an effective coding compliance program is a complicated but needed task for healthcare providers in the U.S. By focusing on risk assessment and putting resources into high-risk areas, practices can lower compliance problems, protect their finances, and gain trust from patients and regulators. Using automation and AI more also helps compliance programs work better and run more smoothly over time.