Things to Know about Medical Billing Auditing!

Today everyone in healthcare does medical billing and coding auditing. It’s necessary to survive in the highly competitive industry and stay compliant. Healthcare organizations process tons of documents, and the cost of mistakes is immense.

In fact, nearly 50% of Medicare claims have errors. Although Medicare pays most of the received claims without review, there is a slight chance to get rejected. Apart from insurance payments, the poor medical billing audit process can affect bottom lines and revenue cycle management. You can also be penalized for compliance issues, such as incorrect payments or missing records.

Hence, to avoid such troubles, you should know how to prepare for a medical billing audit. In our article, we will explain the preparatory steps and give a concise healthcare billing audit checklist. After reading it through, you will be ready to implement more effective auditing in your healthcare organization.

What Is Medical Bill Auditing?


An internal medical coding and billing audit is a process that examines and evaluates the effectiveness and reliability of clinical documentation and the overall medical billing process. This process thoroughly checks health records maintained by the practice and reviews medical billing data submitted to the payors to help ensure that the practice identifies, monitors and corrects inappropriate billing practices.

When going through a coding and billing audit, the auditor collects clinical records, which may include medical records, x-rays, and lab reports; financial records such as entered charges, explanation of benefits (EOBs), and accounts receivable ledger; and policy-related documentation as required by providers or the government.

Audits can be conducted either before claims are sent out to the payors (prospective) or after the fact (retrospective). Some practices follow the rule of conducting new provider audits prospectively, and current provider audits retrospectively.

How Your Practice Can Benefit From a Medical Billing Audit?


Conducting regular medical billing audits are beneficial for your practice – no matter what the motivation may be. Doing so can increase the profitability of your practice. Although billing audits are initially compliance measures to check that you’re managing an efficient and compliant operation, they can also be methods to find inefficiencies that are costing you money.

For instance, conducting a medical billing audit on medical record documentation can find services or items provided to a patient that weren’t recorded as charges. Or, perhaps your coding and billing audit discovers that your management services warrants a higher level of CPT code for the visit or the frequent use of incorrect codes. Improving medical record documentation can lead to increased payments for the services provided, so that there’s greater profit potential for your practice.

A medical billing audit can also protect your medical practice against fraudulent claims and compliance issues. If you’re providing services through Medicare, this is increasingly important. Medicare payments are dependent on accurate submittals. If you’re not documenting and submitting the correct quality measures, you could be subject to penalties that will cost your practice money. Medical billing audits can not only find you ways to increase profits, but avoid expansive fees for mistakes with Medicare reporting.

Medical audits provide a mechanism to:

  • Review quality of care provided to patients;
  • Educate providers on documentation guidelines;
  • Determine if organizational policies are current and effective;
  • Optimize revenue cycle management;
  • Ensure appropriate revenue is captured; and
  • Defend against federal and payer audits, malpractice litigation, and health plan denials.

The Importance of Medical Auditing


Medical auditing performed by the provider organization, or on its behalf, is crucial because it keeps coding and billing errors in check. Audits not only identify incorrect coding, but also prevent incorrect coding from being repeated. Habitual claim errors impose a cumulative effect on an organization and, worse, invite federal reproach.

By uncovering areas of noncompliance, medical auditing resolves ignorance, and ignorance is a liability. To understand why the provider organization is responsible for detecting inappropriate coding and billing practices, consider:

  • A pervasive error pattern resulting in higher reimbursement looks like fraud and may be indiscernible from fraud.
  • A pervasive error pattern resulting in higher reimbursement for the provider has the same effect as fraud on the payer.

Each and every revenue cycle activity must be audited properly to avoid any inefficiencies or malpractices. Wenour can assist you in conducting external audits as per your medical specialty. As a medical billing company, we provide all revenue cycle services including external audit. To know more about our medical billing audit services, contact us at 908-357-1313.

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