A medical audit is conducted within a healthcare organization to review its processes and performance. While an internal billing audit is usually done by a designated practice staff person or internal compliance officer, an external audit may be conducted by a third party with expertise in the field. The key aspects assessed in a medical audit are documentation compliance and medical billing and coding practices. To ensure proper reimbursement, you need to use the right diagnosis and procedure codes to report your services and submit claims to meet payer guidelines and federal and state regulations. Even if you have a reliable medical billing company managing your revenue cycle, conducting internal and external audits on a regular basis is crucial to identify inaccuracies issues so that they can be corrected before they cause problems. In fact, experienced medical billing outsourcing companies often provide clinical records and documentation audits as part of their services.

Purpose of Medical Billing Audits

A medical coding compliance audit examines medical records to determine coding accuracy, policies, and procedures. A billing audit is much more extensive as it covers all processes in the medical billing cycle – from patient eligibility verification, the capture of patient demographic data, the medical coding, claims submission, payment posting, accounts receivable and denial management practices. A medical billing audit evaluates medical billing records to identify areas requiring improvement or special attention.

Medical billing audits can uncover many issues:

  • Errors in provider documentation
  • Wrong or inappropriate codes, use of deleted codes, and frequency of such errors
  • Undercoding, overcoding, unbundling and modifier use concerns
  • Problems in payer reimbursement
  • Areas of non-compliance to payer rules
  • Fraudulent billing practices, whether intended or unintended
  • Errors in claim scrubber software utilized by the medical practice

A medical billing audit can protect your practice against fraudulent billing and claims submission which can lead to heavy Medicare penalties. It also identifies and addresses areas of risk that may attract scrutiny by a Recovery Audit Contractor (RAC).

Steps in a Medical Billing Audit

Knowing how the medical billing audit process works is important so that your office can be prepared for it. Keep in mind that there is no “one size fits all” when it comes to reviewing a practice’s medical billing and coding. However, there are four basic steps involved in the billing audit process:

  • Determine the Scope of the Audit: There are various options such as a random audit, a comprehensive audit and a hybrid audit. In a random audit, both large and small claims are selected at random based on their dollar amounts. A comprehensive audit covers a close inspection of audited claims with a focus on claiming refunds. The hybrid audit blends both the random and comprehensive audit approaches by evaluating samples of all types of claims to detect any gaps. When you determine the scope of the audit and the number of claims to review, you also need ensure that you have the resources and support (internal/ external) to implement the process successfully.
  • Identify a Time Period to Pull Samples to Audit: The number of claims in a sample should be based on the number physicians in your practice. You also need to set the appropriate time to pull the samples to audit – such as a week, a month, a quarter, or an entire financial year.
  • Pinpoint Areas of Concern: The next step is examining billing reports to identify any areas of risk or concerning trends. Reports are checked against past performances month-to-month or year-to-year. CPT code usage by providers and billing staff are analyzed to see if they are appropriately coding client encounters and if their coding patterns differ among themselves and from a general industry average. The medical billing audit uses a benchmarking process to accomplish these tasks. Examining billing reports will determine if patient encounters are coded correctly and billing practices are in order, and how CPT codes are being reimbursed. Use a spreadsheet software to track data and organize the findings in a report.
  • Take Corrective Action: Once the audit identifies irregularities, the practice can take corrective action. This includes developing strategies to improve billing processes and procedures, provide additional staff training, and better processes for revenue cycle management while implementing quality assurance protocols.

Pay Attention to These Points

  • identify existing and potential problems
  • Scrutinize detected problems and take corrective steps
  • Track and monitor data and trends through audits and present findings in a report
  • Revise policies and procedures to prevent issues identified from recurring

Conducting a comprehensive review of clinical documentation for completeness, accuracy and coding compliance on a consistent basis is the best way to find and address any irregularities. Partnering with an experienced medical billing outsourcing company will ensure a focused strategic approach to not only revenue cycle management but also billing and coding audits. To choose the right medical billing company, make sure you consider their experience as well as whether they offer services at competitive rates.