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Fall 2006

Compliance Auditing: How Many Records Should You Review?Abby Pendleton
Wachler & Associates, P.C.

As part of our desire to keep both clients and readers up to date, the Communiqué has been printing compliance information since its inception. In the Compliance Corner, we will now formally keep you abreast of the various compliance issues and/or pick out a topic that would be of interest to most of our readers.

Since the publication of the OIG Compliance Guidance for Individual and Small Group Physician Practices (hereinafter the “OIG Guidance”) in 2000, many anesthesia practices have had some experience with compliance auditing. The first of the seven compliance program elements recommended by the OIG is conducting internal monitoring and auditing through the performance of periodic audits. What does this entail for an anesthesia practice? Although physicians may not be legally required to conduct internal audits and the fact remains that the OIG Guidance is only a set of recommendations, many experts recommend that physician practices should strive to conduct internal auditing at least on an annual basis. Conducting annual audits should prove beneficial in assisting the practice in identifying issues that should be addressed or corrected thereby reducing ongoing risks to the practice. By performing an audit on at least an annual basis, the practice should avoid messy situations such as identifying a significant problem or issue that may have been occurring for a significant time period resulting in potential large overpayments received by the practice. Such circumstances can raise significant questions for the practice related to payback and disclosure obligations.

A common question facing anesthesia practices when deciding to conduct an internal audit (either by internal staff or hiring an outside consulting group) is “how many records should we review?” While there is no exact right or wrong number, it is reasonable for the practice to limit the record review to a manageable and practical number for several reasons including costs. In the OIG Guidance, the OIG suggests that an appropriate sample size may be five (5) to ten (10) records per physician in the practice. In many situations, a group’s decision to audit between 5 and 10 records per physician would be reasonable. Some outside consultants that have an economic interest in reviewing many records, may suggest too large of a sample size. The practice must keep this in mind when hiring and coordinating an audit with outside help. Outside consultants can and do provide valuable assistance and expertise for many practices, however, the practice should maintain control of the process and not simply allow the consultants to direct and select the sample size. Given that the auditors will typically identify problem areas, it is also important for the practice to conduct the internal audit under the attorney/client privilege. This process is not complicated and involves the practice’s attorney directing the auditors to perform the audit under the attorney/client privilege.

In addition to the cost issues, if the goal of the audit is early identification of issues or patterns, a large volume of records is typically not necessary. In fact, many auditors will begin to identify issues/patterns in the first 10 to 20 records. For example, in auditing anesthesia records, it usually does not take many records to identify whether the physicians are fully documenting medical direction requirements or whether anesthesia time is being rounded. In the anesthesia setting, many auditors suggest a review of a full day of cases in order to perform a concurrency review in connection with the audit. The practice will have to make a determination as to whether an independent check of concurrency is necessary.

Accordingly, while there may not be one “magic” number for compliance auditing, your practice should take a reasonable approach by selecting enough records to accomplish the goal of the audit, which in many routine compliance audit situations is to identify areas needing attention. For many practices, selecting a minimum of 5 records per physician will accomplish this goal. Of course, once issues are identified, the practice should perform specific focused follow-up audits to oversee that corrective action measures that were put into place (e.g., educating providers or establishing new policies) are working.