Staying Compliant by Auditing Medical Billing

Basics of Healthcare Audits

In the healthcare space, audits play a crucial role in measuring compliance and patient satisfaction. There are two main types of healthcare audits that providers face, internal audits and external audits. External audits can be broken down further into government and commercial insurance audits. From there, government audits can be broken down even further into Medicare, Recovery Audits, and Medicaid audits. Internal audits take place entirely inside the healthcare facility. Internal audits highlight the areas that are at risk of being audited from a compliance standpoint. In this article, let’s see how healthcare organizations stay compliant by auditing medical billing.

Major Reason for Payer Audits

Payers will request an audit or documents if they found discrepancies in your billing. A major reason for the initiation of a payer audit is a medical necessity. The surgeon may feel that his or her treatment recommendations are medically necessary. But if they are not documented properly, it’s an issue. On the other hand, payers use algorithms to monitor evaluation and management (E/M) levels and the use of time in the choice of E/M level. If you use certain codes or modifiers more than your peers, you will stand out, resulting in a request for records. Many times, physicians might use the same level of service repeatedly. From the payer’s perspective, that means the physician isn’t paying attention to individual patient circumstances. If you almost always bill a level 4, you may trigger an audit.

Need for Internal Audits and Compliance Plan

The Centers for Medicare & Medicaid Services (CMS) needs to ensure that physicians are serious about compliance and take action to correct billing errors. Your practice should have a compliance plan in place and internal audits would help to identify areas of vulnerability. With internal audits, you can identify any billing problem before the payer does. If you are billing the government payers like Medicare and Medicaid, they want to know that you have a plan for submitting accurate claims, training people, policing yourself, and striving to do better. The compliance plan should outline quality-assurance procedures and also mention the consequences of disciplinary action and remedial education plan.

A good compliance plan should include staff-training policies and requirements, the name of the go-to person in charge of compliance, and a Q&A log of coding questions that arise from physicians and staff in the practice. This blog serves as your single point of truth for answers from credible sources that can be cited. Each time your team learns something from a reputable coding resource or gets an answer from a payer, it should be written in this log, which becomes a reference document for all staff, physicians, and new hires.

Internal Training

To avoid external payer audit requests, your staff must be well-versed and updated with medical specialty-wise and payer-specific coding guidelines. In addition to reading coding publications and attending webinars throughout the year, you should send billing staff to coding and reimbursement workshops each year. As part of their preparation, attendees should have all physicians and staff write up questions they would like to have answered so those attending the workshop can bring back answers. Coding and documentation training for physicians, midlevel professionals, billing staff, and coders is essential. Arrange for it at least annually. And assign a dedicated staff to attend webinars and read coding publications and Medicare transmittals.

Involvement of an Attorney

If an internal audit is part of routine quality assurance, as outlined in your compliance plan, you can conduct it without involving an attorney. Most providers involve attorneys once they get an audit request from a third-party auditor. However, if while conducting the internal audit you identify a pattern or become fairly convinced that there is an issue, pick up the phone and call an attorney to make your findings privileged. Under the work product doctrine, an attorney can protect you by contacting the insurance company on your behalf. This is the best way to handle more significant issues.

Request for an External Audit

If you get a request for records or an audit, don’t ignore it. Act quickly. If you don’t, you could end up in prepayment review, be excluded from a clinical network, or be subject to state and federal fraud statutes or state insurance laws. Contact your attorney before you reach out to the payer or auditor. It’s relatively inexpensive to set up an audit under attorney-client privilege, so do it. Don’t wait until it’s a prepayment audit or huge refund request before calling, because at that point, it might be too late for optimal legal advice.

Medical Billers and Coders (MBC) is a leading medical billing company providing complete revenue cycle services. In this article, we discussed how healthcare organizations stay compliant by auditing medical billing. As a medical billing company, we ensure that all submitted claims are compliant with payer-specific guidelines and policies. To know more about our medical billing and coding services, email us at: or call us at: 888-357-3226.