Your Guide to Medical Practice Acquisition Due Diligence Audits

Your Guide to Medical Practice Acquisition Due Diligence Audits

Imagine buying a used car without knowledge of the car’s mileage, previous accidents, or additional vehicle history. Or, picture purchasing a home without learning about prior renovations or when (or if) the major appliances were repaired or replaced. The same can be said for medical practice acquisitions.

Health systems would not blindly purchase a medical practice without first doing their due diligence. Before completing the purchase, the health system needs to review the practice’s finances, physicians, coding and billing, compliance, properties, and potential liabilities or other issues. And that’s where due diligence audits come in.

Why Due Diligence Audits for Medical Practice Acquisitions Are Necessary

It is important to validate the reported RVUs (relative value units) and ensure they are supported before purchasing the practice. This is accomplished by performing a medical practice acquisition due diligence audit.

The due diligence audit reviews all the CPT codes reported to confirm they match the documentation and services provided. Each CPT code has a RVU value, so if the CPT code is not supported, the practice’s revenue appears higher than what is supported.

Many due diligence audits are used to negotiate the purchase value of the practice and physician salaries, and identify if there are any risks. Additionally, the medical practice acquisition due diligence audit ensures coding compliance and documentation requirements are in effect.

The Difference Between Due Diligence Audits and Compliance Audits

Due diligence is an audit completed before a practice is acquired, performed on an as-needed basis. The due diligence audit focuses on identifying risk and validating compliance of coding and billing for purchasing reasons.

A regular compliance audit is coder/provider-driven for coding compliance and educational purposes. This type of audit focuses on coding compliance and documentation requirements and provides an educational component to the coder/provider. Compliance audits are performed on a monthly, quarterly, or yearly basis.

Sample Checklist of Due Diligence Audit

YES consultants look at the codes reported to confirm they are appropriate compared to the documentation in the record and that they follow coding guidelines. Medical practice acquisition due diligence audits may include many steps, but here is a sample checklist of what is reviewed during the process:

• E&M, CPT & Modifier validation
• ICD-10-CM validation
• RVU validation
• Documentation compliance
• Identify education opportunities for Physician and Non-Physician practitioner

YES’ medical practice acquisition due diligence audits are unlike any other in the HIM industry. At the close of the due diligence audit, YES consultants provide an Executive Summary and Accuracy Report that cover all areas audited. These reports are customized by clinic/practice, provider, clinic, or coder. Additionally, our team follows up with an exit conference to review the reports and answer any questions the client may have.

Recommendations for Next Steps

Are you in the middle of a medical practice acquisition and need a due diligence audit? Selecting the right due diligence audit vendor is essential to the process. Our qualified auditors are experts in the industry who’ve conducted due diligence audits for clients with acquisitions of all sizes. Contact our team today for more information.