Key Terminology in Audits

Medicaid Toolkit

Medicaid audits can involve unfamiliar terms related to coding, documentation, claims, and payment. This list explains key terms used throughout the Medicaid Audit Toolkit. Because requirements vary by state and Medicaid managed care plan, consult the policies that apply to your services when preparing for or responding to an audit.

Current Procedural Terminology (CPT®)

A standardized five-digit code used by health care professionals to document and bill for medical, surgical, and diagnostic services. The CPT code set is owned by the American Medical Association (AMA).

Examples:

92523: Comprehensive Speech & Language Evaluation
92631: Hearing Aid Selection Services (first 30 minutes)

Denied Claim

A claim that is not paid. This could be because of missing information, ineligible coverage, etc.

Discharge Summary

The final clinical document written by the clinician when a client concludes their treatment. Requirements for the content of the discharge summary are dependent upon state-specific Medicaid rules. Generally, the discharge summary includes patient information and initial reason for referral, overview of treatment provided, frequency and duration of treatment, progress (improvement or decline), functional outcomes (including any residual deficits), reason for discharge, and discharge recommendations (home care plan, referrals to other specialists, etc.). Some payers require a documented plan for discharge in evaluations and progress reports.

External Audit

Any evaluation of provider documentation conducted by an outside party. It is an umbrella term that includes both second-party audits (conducted by clients, customers, payers, or suppliers) and third-party audits (conducted by independent, unbiased certifying bodies like the Office of the Inspector General at the Department of Health and Human Services or Department of Justice).

Understanding the difference between these audit types is critical for operations, compliance, and risk management.

Healthcare Common Procedure Coding System (HCPCS) Level II

Standardized alphanumeric codes used by insurance companies to process claims for certain medical services, procedures, drugs, and equipment. Hearing aids and speech-generating devices fall under this category.

Examples:

V5257: Digital monaural behind-the-ear hearing device
E2510: Speech-generating device, synthesized speech, permitting multiple methods of message formulation and multiple methods of device access

Internal Audit

A review of current practices and documentation to ensure compliance within a clinician’s organization or setting.

International Classification of Diseases, 10th Revision (ICD-10

The set of diagnosis codes used by health care professionals, hospitals, and payer sources. It is a standardized medical coding system created by the World Health Organization (WHO).

Examples:

H90.3: Sensorineural hearing loss, bilateral
F80.2: Mixed receptive-expressive language disorder

Managed Care Organization (MCO)

Organization that some Medicaid state agencies contract with to provide care for Medicaid members while managing cost, utilization, and quality. (Not every state has MCOs.) These organizations take responsibility for Medicaid members’ care in exchange for a set monthly payment per month per Medicaid beneficiary. Medicaid monitors various metrics from each of these programs to ensure oversight, positive patient experience, and appropriate care for patients.

Because MCOs have their own policies separate from those dictated by Medicaid, providers should refer to resources and manuals provided by each MCO to ensure accurate billing and documentation.

Note: Many states have different terminology for MCOs. Examples include:

Massachusetts: Accountable Care Organizations (ACOs)
Arkansas: Provider-Led Arkansas Shared Savings Entities (PASSEs)

Medicaid Fee Schedule

The amount of money Medicaid will pay a provider or facility for billing a specific CPT or HCPCS code.

Medical Necessity

Medical services and supplies that are essential for the prevention, diagnosis, or treatment of a condition. To qualify for services, treatments must meet accepted standards of medical practice and are not primarily for the convenience of the patient or provider.

Plan of Care (POC)

The individualized treatment plan documenting goals, frequency, duration, and service type. In some Medicaid programs, it must be signed or approved by the ordering provider. A plan of care will look different in different settings.

Prior Authorization (PA)

Advance approval from Medicaid to obtain or begin a specific procedure, device, or treatment based on clinical documentation from a provider. Even if an approval is received, it does not mean a claim will be paid. This can be for a variety of reasons, including but not limited to mismatched coding on the authorization versus the claim, untimely filing, typographical mistakes, exceeded scope of authorization, incomplete delivery of services, or other reasons. Prior authorization also does not prevent an audit.

Recoupment of Payment

Payment that must be paid back by a practice or clinician to the designated payer source from which funds were disbursed.

Example: Medicaid managed care, which may not recognize a speech-language pathology clinical fellow as a qualified provider, might demand recoupment of funds after discovering a clinical fellow was providing services when the supervising provider’s NPI was billed instead.

State Medicaid Provider Manual/Handbook