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Everything you need to know about medical coding and billing audits


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.

Scope of Medical Billing Audit

Medical billing audits have a more comprehensive approach than coding audits. Medical billing audits cover all the areas of the medical billing life cycle starting from insurance verification processes, ICD-10-CM and CPT coding, claim submission, payment posting, follow-up, and denial management processes.

Advantages of Medical Billing Audit

Coding compliance: Billing audits provide a way to identify and correct problem spots before the government or insurance payors challenge inappropriate coding. You can rely on billing audits for identifying inaccuracies, providing instructions on ways to correct issues, building confidence among the coding staff, and ensuring to use of up-to-date procedure and diagnosis codes. Those conducting the audit can identify areas where staff education and training are needed to make sure that proper coding protocol is followed.

Administrative Benefits: The administrative staff benefits from medical billing audits by confirming that claims are true and accurate and are correctly submitted. Audits set the standard for the office staff and spare them unnecessary frustration by creating a positive, stable work environment and culture of compliance that attracts and retains talented personnel. Under- and over-coding, code overuse, and improper unbundling habits are replaced with appropriate billing for services and procedures. When policies and procedures are set in place and followed correctly, the chance of a visit from an external auditor decreases significantly.

Ensure compliance: Through medical claims audits, the practice can help protected itself against fraudulent billing activity and claims. The audit may identify reimbursement deficiencies and reveal ways in which the practice varies from the national average due to inappropriate coding. Areas for increased reimbursement may be revealed and, in turn, boost revenue. Additionally, the practice benefits when files are processed efficiently, improper payments are reduced and claim payment is optimized.

Renee Dowling is a compliance auditor for Sansum Clinic, LLC, in Santa Barbara, California.

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