Why We Should Conduct Medical Billing Audit?

medical billing audit
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Medical billing auditing is a systematic process that checks and assesses the effectiveness and dependability of clinical documentation as well as the whole medical billing process. This method extensively examines all of the practice’s health records and reviews medical billing data supplied to payers to ensure that the practice finds, monitors, and corrects incorrect billing practices.

During a billing audit, the practice may be required to provide clinical records such as 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.

Some practices follow the guideline of performing prospective new provider audits and retrospective current provider audits.

The Benefits of Medical Billing Audit

Coding compliance:

Billing audits allow you to detect and solve problems before the government or insurance companies challenge incorrect coding. Billing audits can help you detect mistakes, provide recommendations on how to remedy problems, boost coding staff confidence, and ensure the use of up-to-date procedure codes. Those conducting the audit can highlight areas where staff education and training are required to ensure that proper coding methodology is followed at all times.

Administrative Advantages:

Medical billing audits aid administrative employees by checking that claims are valid and accurate, and that they are submitted correctly. Audits establish the norm for office staff and prevent unneeded frustration by fostering a good, stable work environment and a compliance culture that attracts and maintains bright employees. Under-coding, abuse of codes, and incorrect unbundling practices are substituted with appropriate pricing for regularly recorded operations. When policies and processes are established and followed appropriately, the likelihood of an external auditor visiting drops dramatically.

Ensure compliance:

Medical claims audits protect the practice from false billing and claims. The audit may disclose reimbursement shortfalls and ways in which the practice differs from the national norm due to incorrect coding. As a result, areas for enhanced reimbursement may be revealed, thereby increasing revenue. Additionally, when files are processed efficiently, inappropriate payments are decreased, and claim payment is improved, the practice benefits.

Improved relation with insurance companies:

Another advantage of a medical claims audit is that it improves relationships with payers. An audit will expose any outliers, allowing the practice to uncover problems before a large payer notices them and asks an external audit.

Better patient care:

Medical claims audits help to better patient care. The focus of the entire practice turns to the quality of care offered by recording and monitoring services and procedures and training clinicians on offering positive medical experiences to patients. When patients have a better experience, the healthcare revenue cycle runs more smoothly and the patient outcomes improve.

External audits are required

Medical billing audits can be undertaken by internal or external auditors, which are referred to as internal and external audits, respectively. Internal audits are just what they sound like: audits conducted by a team of internal, billing, and coding personnel. Larger organizations may have a specialized internal audit group, which allows them to execute audits on an ongoing basis. Frequent auditing provides the organization with knowledge that enables for continuous process and accuracy improvement.

External audits can be a good choice for a small, busy business. They provide insight that removes conflicts of interest and identifies upcoding without regard for its impact on revenue, which internal auditors with the best of intentions may overlook. There’s also the added benefit of recommendations bearing greater weight when they originate from a third party.

External audits, on the other hand, are not a direct replacement for internal audits. Even organizations that conduct ongoing internal audits should have an impartial, external audit completed on an annual basis. Overall, small practices may find it beneficial to utilize one of the many companies that specialize in external audits, especially if they lack the capacity to conduct continuous periodic internal assessments.

Advantages of Internal Billing Audits

Internal audits are precisely what they sound like — an audit performed by an internal, organizational team. Larger organizations might have a dedicated internal audit group, giving them the key benefit of performing audits on an ongoing basis. Frequent auditing provides the organization with information that allows for continuous improvement in processes and accuracy.

Advantages of External Billing Audits

For a small, busy firm, external audits can be a good choice. They provide insight that removes conflicts of interest and identifies upcoding without regard for its impact on revenue, which even the best-intentioned internal auditors may overlook. There is also the advantage of recommendations bearing greater weight when they originate from a third party. External audits, on the other hand, are not a perfect substitute for internal audits. Even organizations that conduct ongoing internal audits should have an external audit completed on an annual basis.

Tips For Conducting Thorough Medical Billing Audits

Internal and external audits are both necessary for ensuring the accuracy and compliance of your medical billing systems. They must, however, be carried out thoroughly if they are to be useful. Medical billing audits guarantee that concerns are identified ahead of time, avoiding surprises. Medical billing audits also detect concerns like fraud early on, before they become a severe problem.

Create a Team

This group will effectively function as a task force, gathering reports, assessing them, and producing its findings. The smaller the team, the easier it will be to complete the audit without disturbing present activities. Furthermore, smaller teams are less likely to cause problems with corrupted data or contradicting information.

Create an Accountability System

Instead, an accountability system instructs employees and managers on what they are and are not liable for. It essentially simplifies their job. During an audit, it should be extremely apparent which position is responsible for which categories of work, and this position should be engaged whenever problems with that work are discovered. Too often, audit findings are not transmitted to the appropriate personnel, resulting in the same errors repeating repeatedly.

Create the Proper Controls

An audit isn’t simply meant to uncover problems; it’s also meant to prevent them from happening again. When errors are discovered during an audit, an assessment must be performed, and improvements must be addressed. Once suggestions have been made, a follow-up should be arranged to check that the new controls have been implemented and that the issues identified have been properly remedied. As audits continue, these controls should ideally be fine-tuned and modified rather than adding new rules on a regular basis, which can result in an unwieldy and difficult-to-follow rule set.

Establish Improvement Goals

Audits, in addition to finding errors, identify methods to optimize and streamline present operations. Setting actionable standards for improvement is one of the simplest methods to enhance your medical billing processes.

Accuracy, collections, and even write-off billing can all be used as performance indicators. And keep in mind that no system is completely free of human error.

Hiring a Medical Auditing Service from a Third Party

A third-party external audit is crucial for detecting concerns such as internal theft and fraud. Because they specialize in the auditing process, they can often give a more thorough audit – particularly in new areas of compliance and regulation.

Scope of Medical Billing Audit

Medical billing audit take a broader strategy than coding audits. Medical billing audit address all aspects of the medical billing life cycle, including insurance verification, ICD and CPT coding, claim submission, payment posting, follow-up processes, and denial management.


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