Successful documentation tips that withstand an audit

By Cynthia Stewart, CPC, CPMA, COC, CPC-I, August 1, 2021

Academy coding staff address important coding topics each month in Derm Coding Consult. Read more Derm Coding Consult articles.

The core purpose of documenting the services and procedures that dermatologists and non-physician clinicians (NPC) provide is to optimize clinical care and provide an informative record that may be utilized in the continuation of care. However, private and government payers may use the information captured in the medical record in unintended ways. Dermatologists and NPCs must ensure that their documentation for an encounter both supports the medical necessity of the visit and concisely identifies the services or procedures provided.

Appropriate documentation must capture sufficient details necessary to accurately reflect the care provided, uphold the diagnoses and procedure codes reported, and meet the payer’s medical necessity requirements for the provided services. The volume of documentation is not a justification to determine the level of service reported, nor will it necessarily illustrate increased complexity of procedures provided. In both cases, documentation of evaluation and management (E/M) or procedures and surgeries should be concise in conveying the necessary details and additional information to express special circumstances relevant to the encounter or service.

Best practices for documentation

The Centers for Medicare and Medicaid Services (CMS) specifically requires that all documentation be maintained in the patient’s medical record and made available to the contractor upon request. Additionally, to ensure an accurate record of the encounter, CMS asserts that services should be documented during the visit or as soon as reasonable after the encounter. These records are legal documents that both support the clinical findings and substantiate the services and items billed on all submitted claims. Incomplete or illegible records found during a payer audit will result in recoupment of previously reimbursed services.

While there are general principles of medical record documentation that apply to all types of medical and surgical services, some services, such as E/M services, vary in the nature and amount of work required from the dermatologist or NPC providing these services. In addition to making sure the medical record is complete and legible, documentation of the encounter should include:

• The reason or purpose for the visit.

• A medically appropriate history, physical examination findings, and, when applicable, diagnostic test results.

• The clinical impression, diagnosis, or assessment.

  • Include signs and symptoms present or associated with the condition being managed as these may be needed to establish medical necessity of the services rendered during the encounter.

• The plan of care selected, as well as the treatment options discussed but not elected.

• Other health conditions present that may complicate the patient’s management or treatment options selected.

• The patient’s progress, response to and changes in treatment, and revision of diagnosis, when applicable.

Supporting medical necessity

CMS’s payment polices are defined by National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs) and its associated Local Coverage Articles (LCAs). In essence, NCDs and LCDs include information that describes covered and non-covered services, items, procedures, or technology, as well as circumstances when such services, items, procedures, or technology meet the reasonable and necessary criteria needed for claims payment. Reviewing and incorporating the utilization and limitations guidelines (found at the end of an LCD) can help improve your medical record documentation to ensure it reflects the medical necessity requirements based on the payer’s payment policy.

LCAs contain the coding and billing guidance to be used with its associated LCD as well as documentation requirements. LCAs also provide a list of CPT codes and their corresponding ICD-10-CM that support medical necessity of those services or procedures. The LCAs are essential to dermatologists and NPCs as an educational tool to assist them in capturing the necessary information in the medical record needed to successfully navigate a payer audit. For succinct and accurate medical record documentation, dermatology health care providers must review the LCD/LCA coverage criteria which, at a minimum, include the following:

• Discussion of the conditions/entities affected by the policy

• List of the ICD-10-CM diagnosis codes covered under the policy

• Description of what constitutes medical necessity

• Description of what can cause claim-payment denial

Coverage information is usually found on the first page of the LCD under “Coverage Guidance.” For example, a typical benign skin lesion removal (excluding actinic keratosis and Mohs) LCD includes the following information:

• This policy applies to the treatment of seborrheic keratoses (SKs), skin tags, milia, molluscum contagiosum, sebaceous (epidermoid) cysts, moles (nevi), acquired hyperkeratosis (keratoderma), and viral warts (excluding condyloma acuminatum).

• Reasons for coverage which state the lesion is considered medically necessary and not cosmetic, if one or more of the following conditions are present and clearly documented in the medical record. For example:

  • Lesion has one or more of these characteristics: bleeding, intense itching, pain

  • Physical evidence of inflammation (e.g., purulence, oozing, edema, erythema)

  • Obstructs an orifice or clinically restricts vision

  • Is in an anatomical region subject to recurrent physical trauma and there is documentation that such trauma has, in fact, occurred

  • Wart removals will be covered under all the above circumstances and for:

    • periocular warts associated with chronic recurrent conjunctivitis; and

    • when there is evidence of spread from one body area to another, particularly in an immunocompromised patient

• Reasons for non-coverage: skin lesions that do not pose a threat to health or function are considered cosmetic

Medical record documentation

Documentation in the medical record is critical for coding accuracy, and when done correctly, ensures that every pertinent aspect of the patient’s condition and care is captured. Incorporating some of the language from the LCD coverage guideline to demonstrate medical necessity may mean the difference between claim payment and claim denial due to lack of medical necessity.

When medically appropriate, including the following terms in your medical record documentation will help document medical necessity and make it obvious to an auditor why the treatment of benign lesions is warranted:

• Bleeding

• Intense itching

• Pain

• Physical evidence of inflammation (e.g., purulence, oozing, edema, erythema)

• Obstructs an orifice or clinically restricts vision

• Anatomical region subject to recurrent physical trauma with documentation that such trauma has in fact occurred

• Uncertainty of clinical diagnosis, particularly where malignancy is a realistic consideration based on appearance of the lesion (e.g., non-response to conventional treatment, or change in appearance)

Think in ink!

It is important that dermatologists and NPCs “think in ink.” Choosing the appropriate level of E/M service must include documentation of:

• conditions present at the encounter that may not be managed but impact treatment options, plan of care, or increase the complexity of the care provided.

• discussion with the patient regarding treatment options, including those not selected.

Often this information is missing in the medical record and can result in down-coding of the E/M service during a medical record audit.

Improving your documentation to stand up to a payer audit does not need to be exhaustive. Begin by becoming familiar with payers’ payment policies regarding medical necessity for the services provided within the practice. Incorporating these details in the documentation of the encounter will greatly aid in reducing or preventing unfavorable audit results.

Get more coding tips at staging.aad.org/dcc.

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