Effective Auditing Practices for Billing and Coding

Introduction

Ensuring that your practice’s billing and coding are completed both promptly and accurately is essential for operational success. Early identification of issues—ideally before or shortly after they occur—allows for timely correction and ongoing improvement. Establishing a comprehensive and consistent auditing program not only helps in identifying and resolving problems but also contributes to increased efficiency and profitability in your practice.

Establishing a Formal Auditing Program

While many practices perform audits only in response to specific issues, such as the addition of a new partner, a merger, or a potential sale, it is advisable to implement a formal auditing program with regular schedules. Routine audits provide a structured approach to monitoring billing and coding, ensuring ongoing compliance and readiness to address disputes with payors. Maintaining thorough audit records simplifies the process of justifying your actions to payors, such as when contesting an improperly denied claim or defending against a repayment request.

Conducting a Baseline Audit

The Office of Inspector General (OIG) recommends starting with a baseline audit, which involves a review of claims submitted during the previous three months. This audit should assess every step in the claims process, from patient intake and documentation to the timely submission of claims. Employ a random sampling method that includes charts from all physicians and providers, as well as charts handled by each coder. It is also important to select a few charts for every payor with whom your practice has routine dealings. This comprehensive approach ensures that potential problems across the entire billing and coding workflow are identified.

Scheduling Ongoing Audits

Following the baseline audit, audits should be performed on a regular basis. According to OIG compliance program guidance, annual audits are the minimum recommendation; however, conducting audits quarterly or monthly is preferable, particularly for larger practices or those with identified systemic issues. If serious problems are uncovered during the baseline audit, monthly reviews are especially beneficial. This frequency allows you to monitor the effectiveness of corrective measures and make timely adjustments based on the audit results.

Choosing the Type of Audit: Prospective vs. Retrospective

You must decide whether to conduct prospective audits—reviewing claims before submission—or retrospective audits, which examine claims after payment or denial. Prospective audits offer the advantage of detecting errors before claims are processed, though they may delay accounts receivable. On the other hand, retrospective audits require immediate correction of any identified issues. Both approaches have merits, and the choice depends on the practice’s workflow and priorities.

The Value of Independent Audits

Both the Centers for Medicare & Medicaid Services (CMS) and the OIG recommend that health care providers periodically engage independent parties to audit their coding practices. Many organizations welcome this external feedback as it provides valuable insights into the quality of their coding programs and identifies areas for improvement.