Medical Billing Audit

Medical Billing Audit Planning

Does your practice have a formal plan for conducting medical billing audits, and who is responsible for carrying out these audits? Some practices prefer to manage audits internally, believing this approach makes the most sense. Internal audits can help control costs—an important consideration as practices strive to remain competitive, especially in an environment where healthcare systems are consolidating into larger and more powerful organizations.

What’s In an Audit?

A medical billing audit typically focuses on two key areas: billing documentation and coding. If a bill is undercoded, the practice loses revenue. When such errors occur repeatedly, even minor mistakes can add up to significant financial losses. On the other hand, overcoded bills generate more revenue than they should, but if detected, the excess funds must be returned to the payer. If overcoding is discovered by the Office of Inspector General (OIG), Medicare will demand repayment, and the practice may face fines or be placed under OIG pre-payment review. Additionally, mistakes such as transposed CPT codes or inaccurate patient information can result in denied claims. The audit process is designed to uncover and correct these kinds of errors.

Internal Audits

While internal audits may appear to be less expensive, they require objective and dedicated resources. With a focused internal audit team, reviews can be conducted periodically or even on an ongoing basis, which allows the practice to continuously refine its processes for greater accuracy. However, even dedicated internal auditors need oversight. Therefore, every practice should arrange for an independent, external audit on a monthly, quarterly, or yearly schedule.

Advantages of External Audits

Medical practices, regardless of their size, are often busy environments where finding time for thorough medical billing audits can be challenging. External audits offer an impartial perspective and can also provide education, consultation, comprehensive reports, and actionable recommendations for improvement.

Choosing the Right Audit Approach

Deciding whether to perform internal audits or engage an external audit firm for your medical billing audits is an important consideration. An objective audit helps ensure your practice receives accurate information about its billing practices. Incorporating objective audits into your compliance program is crucial for maximizing medical billing accuracy and managing your practice’s exposure to OIG audits.