Section 5: Common Coding Errors and Audit Triggers

5.5.1 The “Why”: From Getting Paid to KEEPING the Payment

Thus far, our focus has been primarily offensive: mastering the skills needed to build a successful case and secure an approval. In this critical section, we pivot to defense. It is not enough to simply get a claim approved and paid. You must ensure that the claim is clean, compliant, and defensible. Why? Because payer reimbursement is not a final transaction; it is a conditional payment. Every claim you submit can be reviewed, questioned, and, if found to be non-compliant, taken back through a process known as a post-payment audit and recoupment.

A payer audit is a time-consuming, resource-intensive, and often stressful event for any healthcare provider. It can involve dozens of chart requests, detailed scrutiny of every line item on a claim, and can result in demands for repayment of hundreds of thousands, or even millions, of dollars. More seriously, a pattern of improper billing, even if unintentional, can escalate to an investigation for fraud, waste, and abuse (FWA), which carries severe civil and even criminal penalties. Therefore, your role as a CPAP professional extends beyond clinical advocacy to being a frontline guardian of your organization’s compliance and financial integrity.

This section is your playbook for prevention. We will move beyond simple denials and explore the most common coding and documentation errors that actively trigger payer audits. These are the “red flags” that cause a claim to be pulled from the automated processing queue and be subjected to human review. Understanding these triggers allows you to “audit-proof” your claims before they are ever submitted. You will learn to spot the subtle inconsistencies, the documentation gaps, and the coding mismatches that an auditor is trained to find.

By mastering this material, you add another layer of immense value to your role. You are not just facilitating revenue; you are protecting it. You become the internal expert who can proactively identify and mitigate risk, educate providers and billing staff on best practices, and ensure that every claim rests on an unshakeable foundation of compliant documentation and accurate coding. This is not about being a pessimist; it’s about being a professional who understands the entire lifecycle of a claim—from creation to final, undisputed payment.

5.5.2 ICD-10 Errors: Building a Case on a Cracked Foundation

The ICD-10 code is the foundation upon which medical necessity is built. If that foundation is weak, the entire claim is at risk of collapse. While a vague code might slip through an automated system and get paid initially, it is one of the easiest things for an auditor to identify in a post-payment review. An auditor’s first step is often to compare the billed diagnosis code to the clinical reality documented in the provider’s notes. A mismatch is a simple and objective reason to recoup payment.

Audit Trigger #1: The Habitual Use of “Unspecified” Codes

This is, by far, the most common and easily identified ICD-10 red flag. While unspecified codes have a role when a definitive diagnosis has not yet been established, their consistent use for patients with established, chronic conditions signals lazy or incomplete documentation. It tells an auditor that the provider may not have the detailed clinical evidence required to support the prescribed therapy.

The Auditor’s “Hall of Shame”: Unspecified Codes That Invite Scrutiny

Unspecified Code (The Red Flag)	Disease	Why It’s an Audit Trigger	What the Auditor Expects to See Instead
I50.9	Heart Failure, unspecified	This code is clinically useless for justifying advanced therapies. It doesn’t distinguish between systolic (HFrEF) and diastolic (HFpEF) heart failure, which have vastly different treatment algorithms. Billing Entresto (indicated for HFrEF) with this code is a massive red flag.	I50.22 (Chronic systolic heart failure) or I50.32 (Chronic diastolic heart failure), supported by an echocardiogram report documenting the ejection fraction.
M06.9	Rheumatoid Arthritis, unspecified	This code fails to mention the key prognostic factor in RA: serostatus. Policies for biologics often have different criteria for seropositive vs. seronegative disease. This code suggests the provider may not have the necessary lab work to justify the drug.	M05.7A (Seropositive RA, multiple sites) or M06.0A (Seronegative RA, multiple sites), supported by RF and/or anti-CCP lab results.
L40.9	Psoriasis, unspecified	Biologics are reserved for moderate-to-severe disease. This code could represent a single, small patch of psoriasis. An auditor sees this code for a $15,000 Skyrizi claim and immediately suspects a lack of medical necessity.	L40.0 (Psoriasis vulgaris), supported by documentation of BSA >10% or involvement of critical areas (face, hands, genitals) to establish severity.
N18.9	Chronic Kidney Disease, unspecified	Drug dosing and treatment options for CKD are critically dependent on the stage of the disease. This code provides no information about severity. Billing for a drug like Kerendia without specifying the stage is a guarantee for review.	N18.3- (Stage 3), N18.4 (Stage 4), etc., supported by a documented eGFR or creatinine clearance in the chart.

Audit Trigger #2: Laterality and Logic Mismatches

These are simple, “careless” errors that are nonetheless powerful triggers because they show a lack of attention to detail. Auditors love these because they are easy to prove.

• The Wrong Side: A patient receives an injection of Synvisc-One for osteoarthritis. The CPT code is for a knee injection. The J-code is for the Synvisc-One. The ICD-10 code billed is M17.12 – Unilateral primary osteoarthritis, left knee. However, the provider’s note clearly states, “Patient presents for scheduled injection in the right knee.” This contradiction means the claim is not supported by the medical record, and the payment will be recouped.
• Anatomically Impossible Combinations: An auditor sees a claim for a female patient that includes the diagnosis code N40.1 – Benign prostatic hyperplasia with LUTS. Since this is a male-only condition, the claim is flagged as an obvious error. This can happen due to template misclicks or data entry errors but is a major red flag for sloppy operations.
• Contradictory 7th Characters: A patient is receiving routine physical therapy for a healing ankle fracture. The claim is submitted with the code S82.61XA – …initial encounter for closed fracture. An auditor knows that “initial encounter” is for active treatment of the injury itself. Routine follow-up care requires the “D” for “subsequent encounter.” This signals a misunderstanding of coding principles and can trigger a wider review of all that provider’s claims.

5.5.3 CPT Service Errors: The Perils of Upcoding and Unbundling

Errors in CPT coding are a primary focus of payer audits, particularly those from CMS (Medicare). These errors often involve billing for a higher level of service than is documented (upcoding) or billing separately for services that should be included in a single, comprehensive code (unbundling). These mistakes can lead to significant financial recoupments.

Audit Trigger #3: Evaluation & Management (E/M) Upcoding

Billing for a higher level E/M service than is supported by the documentation is one of the most classic forms of improper billing. Auditors are expertly trained to deconstruct a provider’s note and score the Medical Decision Making (MDM). If the note supports a Level 3 (Low Complexity) visit but the claim was billed as a Level 4 (Moderate Complexity), the payer will recoup the difference in payment and may flag the provider for future review.

Audit Trigger #4: Improper Unbundling of Services

Unbundling occurs when multiple CPT codes are billed for services that should be covered by a single, more comprehensive code. This is often done to increase reimbursement but is a major compliance violation.

• Hydration with Infusion: As discussed previously, billing 96360 (Hydration) and 96365 (Drug Infusion) for the same encounter when the fluids were only the vehicle for the drug is a classic example of unbundling. The hydration service is considered bundled into the drug administration service.
• Misuse of Modifier 25: This is a huge audit trigger. Modifier 25 is used to indicate that a “significant, separately identifiable E/M service” was performed on the same day as another procedure (like an infusion).
  • Incorrect Use: A patient comes in for their scheduled Remicade infusion. The provider does a quick check of their vitals and asks how they are feeling before clearing them for the infusion. The clinic bills for the infusion (96365) and an E/M visit (e.g., 99213) with a -25 modifier. An auditor will deny the E/M code, stating that a brief, routine assessment is bundled into the infusion service and is not a “separately identifiable” service.
  • Correct Use: The same patient comes for their infusion but also complains of new, severe knee pain. The provider performs a full exam of the knee, diagnoses a septic joint, and arranges for an immediate hospital admission. In this case, the provider performed a significant E/M service that went far beyond the routine pre-infusion check. Billing for both the infusion and the 99214-25 would be appropriate because the documentation clearly supports two distinct services.

5.5.4 HCPCS Drug Errors: Where Small Math Mistakes Lead to Big Recoupments

Because specialty drugs are so expensive, errors in billing the HCPCS J-code are the fastest way to accumulate massive overpayment liabilities. Payers use sophisticated data mining to flag J-code claims that are statistical outliers, making this a high-risk area for any practice.

Audit Trigger #5: Incorrect J-Code Unit Calculation

This is the number one cause of J-code denials and audits. It stems from a misunderstanding between the drug dose administered and the HCPCS billing unit. As the CPAP, you should be the expert who can spot-check these calculations for high-cost drugs.

Masterclass Table: The Most Common High-Cost J-Code Errors

Drug & J-Code	HCPCS Unit	Common Error	Financial Impact
Nivolumab (Opdivo) J9299	1 mg	A patient receives a 240 mg infusion. The biller enters “1” unit, thinking “1 infusion.”	The practice is paid for 1 mg of Opdivo instead of 240 mg. This is a catastrophic underpayment, potentially over $5,000 lost on a single claim.
Infliximab (Remicade) J1745	10 mg	A patient receives 500 mg. The biller calculates 500/10 = 50 units. However, Remicade comes in 100 mg vials. The clinic uses 5 full vials. The biller bills for 5 units, thinking “5 vials.”	The practice is paid for 50 mg of Remicade instead of 500 mg. This is a massive underpayment.
Leuprolide Acetate (Lupron Depot) J1950	7.5 mg	A patient receives the 22.5 mg injection. The biller knows the dose is 22.5 mg and incorrectly bills for 22.5 units, not realizing the HCPCS unit is 7.5 mg.	The practice is overpaid by a factor of 7.5. (22.5 units instead of the correct 3 units). An auditor will find this, and the practice will have to pay back the overpayment for every Lupron claim they billed this way.
Botulinum Toxin Type A (Botox) J0585	1 unit	Botox comes in 100-unit and 200-unit vials. The biller bills for “1” or “2” units, thinking “1 or 2 vials.”	This is another catastrophic underpayment. If 100 units were administered for migraine, the claim should be for 100 units of J0585. Billing for “1 unit” means the reimbursement doesn’t even cover the cost of the syringe.

Audit Trigger #6: Improper Wastage Billing (-JW Modifier)

Billing for discarded drug is a privilege, not a right, and it is intensely scrutinized by payers. Any error here is a major red flag.

• Wastage from a Multi-Dose Vial: The -JW modifier is only for use with single-dose vials. If a multi-dose vial is opened and not all of it is used, the remainder cannot be billed as wastage because it is intended to be saved for future use. Billing wastage from a multi-dose vial is considered fraud.
• No Documentation of Wastage: The amount of drug wasted must be documented in the medical record. An auditor will compare the billed wastage on the claim line with the nursing notes. If the nurse documents “20 mg of Keytruda discarded” and the claim shows 20 units of J9271-JW, the claim is supported. If there is no mention of wastage in the EMR, the payment for the -JW line will be recouped.
• Mathematical Errors: The wastage calculation must be perfect. If 200 mg of a drug was available in the vials, and 175 mg was administered, the wastage is 25 mg. Billing for 20 mg or 30 mg of wastage shows a sloppy process and will trigger a review.