{"id":15669,"date":"2022-08-12T07:39:13","date_gmt":"2022-08-12T07:39:13","guid":{"rendered":"https:\/\/www.medicalbillersandcoders.com\/blog\/?p=15669"},"modified":"2026-05-11T14:48:40","modified_gmt":"2026-05-11T14:48:40","slug":"guidelines-to-avoid-external-payer-audit","status":"publish","type":"post","link":"https:\/\/www.medicalbillersandcoders.com\/blog\/guidelines-to-avoid-external-payer-audit\/","title":{"rendered":"Guidelines to Avoid External Payer Audit"},"content":{"rendered":"

Understanding External Payer Audits<\/strong><\/h2>\n

An external payer audit is an examination of a healthcare practice\u2019s finances or processes conducted at the will of payers. These payers are either the government or a commercial insurance company looking to ensure correct payments were provided to the practices for past cases.<\/p>\n

Government audits can be broken down even further into Medicare, Recovery Audits, and Medicaid audits. Whenever the payer has concerns about medical coding and medical billing, they may initiate an external audit process. In this blog, we discussed about basic guidelines to avoid external payer audits.<\/p>\n

Reasons for Initiating Payer Audits<\/strong><\/h2>\n

There are a number of reasons why any payer might initiate an external audit, the most common reason is a medical necessity. The providers may feel that his or her treatment recommendations are medically necessary. But if they are not documented properly, it\u2019s an issue. The provider may explain all the reasons why the treatment was medically necessary, but the payer would want documents that would support them.<\/p>\n

Another reason that would initiate external payer audits is using certain procedure codes and modifiers more often than your peers. It might happen with small practices or with solo providers, where providers themselves do the coding and use a specific set of procedure codes and modifiers without proper understanding of them.<\/p>\n

Many physicians use the same level of service repeatedly. From the payer\u2019s perspective, that means the physician isn\u2019t paying attention to individual patient circumstances. If you almost always bill a level 4, you may trigger an audit. If your coding is accurate and the documentation supports level 4, that\u2019s good.<\/p>\n

But you should still be prepared to be audited because of this pattern, especially if you are using time as a component of selecting an E\/M code, in which case a payer may ask you to share your appointment schedules to verify that the volume of longer visits is possible within clinic hours.<\/p>\n

Guidelines to Avoid External Payer Audit<\/strong><\/h2>\n