How to avoid coding pitfalls for ambulatory services billing

Ambulatory services documentation offers compliance challenges as complex as inpatient services documentation that providers need to be aware of to avoid potential compliance risks while documenting for billing. Ellis Knight, M.D., Senior Vice President/Chief Medical Officer, of the Coker Group, focused on ambulatory coding in an HCCA webinar titled “Clinical Documentation for Compliant Coding—It’s No Longer Just an Inpatient Issue.”

Clinical documentation improvement

Knight noted that coders “speak” a different language than clinicians and therefore clinical documentation improvement (CDI) has been mainly a translational process. Specifically in relation to medical diagnoses, translating what a clinician may write down in the clinical note versus how the coder interprets the clinical note for billing purposes. Historically the focus has been on inpatient documentation, especially documentation to justify diagnostic related group (DRG) assignment and capture of major complications and co-morbidities (MCCs) and complications and co-morbidities (CCs). As a result, the “problem” is that reimbursement occurs with parties arriving at the same diagnosis with different billing codes.

Ambulatory documentation

As such, ambulatory documentation is equally as complex as the inpatient documentation arena, involving thousands of codes. A major complicating factor is that time-frame and volume of patient encounters makes ambulatory CDI a much different work process than inpatient CDI. Knight noted that among the many compliance risks associated with ambulatory CDI, documentation must support: (1) medical necessity of services rendered (CPT codes); (2) specific services and level of care provided to the patient (CPT and HCPCS codes); (3) diagnoses (ICD-10); (4) severity of illness and clinical complexity (HCCs); and (5) quality of care rendered (HEDIS).

For medical necessity, the clinical documentation must justify the ordering of tests, performance of procedures, referrals to specialists or consultants, prescribing of medications and other activities which payers must cover. It must document services and level of services performed, as errors leave practitioners at risk for overbilling the carrier which could result in treble damages under the False Claims Act. Moreover, Knight stressed that it is not enough to just document. HCCs must be documented on an annual basis and addressed, i.e., monitored, evaluated, assessed or treated, in order to be captured. In regards to quality of care, the clinical documentation must include provision of certain quality of care measures, e.g., immunizations, tobacco use, smoking cessation counseling, BMI measurement, obesity counseling, preventive care (colonoscopy, mammography).

Florida hospital improperly billed Medicare almost $300,000 over two years

For over two years, University of Florida Health Jacksonville did not comply with Medicare billing requirements, due to inadequate billing controls. The noncompliance resulted in overpayments of at least $273,000, according to an audit by the HHS Office of the Inspector General (OIG).


The 695-bed not-for-profit hospital submitted 11,134 inpatient claims during the audit period (January 2013 through September 2014). Medicare paid the hospital $167 million on those claims. The OIG audit evaluated 1,305 inpatient claims that were potentially at risk for billing errors. From those claims, the OIG selected a random sample of 154 paid claims, totaling $1,964,826. Although the OIG determined that the hospital complied with billing requirements for the majority of the claims (133), the audit revealed that the hospital failed to comply with Medicare billing requirements for 21 claims, resulting in a net overpayment of $63,881 for the audit period. Based upon the sample, the OIG extrapolated that the hospital improperly received overpayments of at least $273,346 between January 2013 and September 2014.


For 19 of the 154 claims, the hospital billed incorrect diagnosis-related group (DRG) codes. For example, in one case, the hospital submitted a claim with a secondary diagnosis code 599.0 (urinary tract infection), despite the fact that the patient’s medical record indicated the patient had no signs or symptoms of a urinary tract infection. In other words, the hospital had no basis to assign code 599.0. The hospital attributed the billing mistakes to human error. The noncompliance related to the DRG codes accounted for the vast majority of the errors and led to net overpayments of $47,165.

When a patient is discharged from an acute care hospital and readmitted to the same hospital on the same day for symptoms related to the prior stay, the hospital is required to combine the original and subsequent stay into a single claim. The OIG determined that for 2 of the 154 audited claims, the hospital incorrectly billed Medicare for related discharges and readmissions that occurred on the same day. The hospital attributed the improper billing to human error.


The OIG recommended that the hospital:

  • refund the estimated $273,346 in overpayments to the Medicare program;
  • identify and return similar overpayments; and
  • strengthen billing and coding controls to ensure future compliance.



The hospital objected to the findings regarding 11 of 21 inpatient claims. Additionally, although the hospital acknowledged that human error contributed to the 10 other errors, there was “no evidence to support systemic coding or billing concerns.” The hospital also challenged the OIG’s authority to extrapolate a payment error rate.



Highlight on California: The Golden State failed to verify aliens’ Medicaid eligibility

California obtained $9.9 million in improper Medicaid reimbursement over a five-year period by failing to correctly identify all nonreimbursable claims for nonemergency services provided to qualified aliens, the OIG determined as part of an audit. The OIG discovered that the overpayments resulted from errors in the system used by the state to verify alien qualification for Medicaid. The OIG recommended that the state refund the overpayments and take steps to correct the verification system.

Medicaid Restrictions

Federal health care benefits are typically only allowable when they are provided to certain classes of persons: U.S. citizens, U.S. nationals, or qualified aliens. A further limitation exists for qualified aliens. Generally, qualified aliens are not permitted to receive federal benefits until five years after entering the U.S. with qualified alien status. However, before the five-year period runs, qualified aliens may receive services necessary to treat an emergency medical condition and, if a state elects to allow them, services provided to certain lawfully residing children and pregnant women.


States are obligated to maintain systems to determine whether qualified aliens have met the required five-year waiting period. The HHS Office of Inspector General (OIG) conducted a review of California’s verification system, to determine whether the California Department of Health Care Services correctly identified all nonreimbursable claims for nonemergency services provided to qualified aliens.

California System

To meet its federal requirements, California created the quarterly alien claiming adjustment report adjustment report in its Medicaid Management Information System (MMIS). The adjustment report was designed to identify services provided to qualified aliens who had not satisfied the waiting period requirement.


The OIG audit included quarters ending June 2010, September 2010, June 2011, June 2012, June 2013, and June 2014. During that time, the California agency identified $215.9 million as nonemergency services provided to qualified aliens for which the state did not claim Federal Medicaid reimbursement. However, the OIG determined that the state agency did not identify all the necessary claims for its adjustment reports. Specifically, the OIG identified errors when claims were approved for payment in one quarter and paid in a later quarter. As a result of those errors, the state agency claimed $9,872,618 in unallowable federal Medicaid reimbursement.


The OIG recommended that the state agency: (1) refund the $9,872,618 to the federal government; (2) identify and refund any subsequent overpayments; and (3) ensure, in the future, that the MMIS correctly identifies all nonreimbursable claims for nonemergency services provided to qualified aliens. The state agency partially agreed with the first recommendation, noting its belief that the refund amount was overstated. The state agency agreed with the second and third recommendations.