Types of Medical Audits

Your billing department files claims daily,  yet the check always arrives a few days late. Some claims return with a denial. Others are paid in full and generate questions months later. Where is the problem: the clinical note, the code, the billing process?  Thus, learning about Types of Medical Audits can lead you to that answer without reading and reading and reading through mountains of information. Each of these audits focused on a different aspect of your practice: your clinical documentation, reimbursement, data security, etc. This article explains what the auditor will be reviewing,  where you can look for a logical starting point and the value of what the audit yields.  And it shows how Practolytics can help your billing and clinical team actually turn audit outcomes into action.

Types of medical audits

Medical audits involve looking at records, claims or workflows against a set of standards.  Various kinds of medical audits ask various questions:  Appropriate care provided?  Document support code?  Payment accurate?  Patient records protected?

The eight categories below are real groupings of the broadest categories rather than an official classification. Internal/external refers to who is doing the review; prospective/retrospective refers to whether or not the review takes place before or after billing.

What Is a Medical Audit and Why Does It Matter?

An audit is a determined investigation of what occurred versus what should have occurred.  The medical audit services can identify unsubstantiated charges,  billing for services that were not rendered, and trends in documentation deficiencies.

CMS put the value of FY2025 Medicare fee-for service improper payments at $28.83 billion, or 6.55% of payments.2 Improper is not necessarily fraudulent.  Lack of evidence may hinder reviewer to ascertain if a payment was appropriate.3

FY2025 Medicare FFS improper payments by error category

The bar chart indicates that inadequate documentation was responsible for 53.0% of estimated erroneous payments.  Combining no documentation leaves documentation-related categories to 65.0%.  They are shares of erroneous payment dollars, not shares of claims denied.

And for physicians this is a practical consideration: reviewing the chosen code can overlook deficiencies in the orders, signatures, and record documentation.

8 Types of Medical Audits Every Practice Should Know

1. Clinical quality audit

A measure compares a process or outcome to a pre agreed standard of care.  For example, a practice can examine if their diabetic patients had appropriate follow-up care.  Trained clinical reviewers must be able to review the data and help determine areas of practice improvement.

2. Documentation audit

Checks to see if notes, signatures,  instructions and supporting documents are complete and matching.  Shows you why the service you performed may not yet have the documentation your payer is asking for.

3. Coding audit

Compares ICD-10-CM diagnosis codes to CPT or HCPCS service codes with the record.  Finds unsupported level,  inappropriate modifiers, outdated codes and services not supported by the record.

4. Medical billing audit

Follows charges by claims, payments, adjustments, and patient responsibility. Duplicate charges,  payments posted to the wrong account, awkward write-offs all occur here. An accepted claim does not imply that reimbursement was correct.

5. Medical necessity audit

Ensures documentation indicates the record backs the reason treatment is covered based on the coverage policy in question.  Correct documentation codes will not suffice in obtaining coverage. Review documented symptoms, orders,  and test results as well as payer contract points.

6. Regulatory compliance audit

Reviews adherence to relevant requirements and company policies,  such as billing controls and follow-up on denials of overpayments. OIG authorizes auditing and monitoring to be integrated into physician compliance programs.

7. HIPAA privacy and security audit

 Considers protected health information safeguards,  such as access controls, policies, and business associate agreements.  Risk analysis is the cornerstone of security management, although HHS guidance; reviewing billing accuracy is not.

8. Revenue cycle audit

Tracking: From registration to ultimate payment Looks at the path to final payment: from eligibility errors,  through authorization, coding, denials, and until the account is past due.  Opt this if “multiple handoffs” look to be the underlying cause of collections delays.

How to Choose the Right Medical Audit for Your Practice

Start with the problem. Unsupported visit levels suggest a coding and documentation review. Repeated underpayments suggest a billing review. Problems across registration, claims, and collections justify a broader revenue cycle review.

Compare Healthcare audit companies by specialty experience, reviewer qualifications, sample design, and follow-up support. Medical Audit firms for hospitals need facility expertise; a Medical auditor for a medical practice needs experience with your professional services.

Ask whether Independent healthcare audit services include reviewers separate from those who created the claims. The Best medical audit company for physicians should explain findings using actual records and applicable rules.

Practolytics lists billing, coding, documentation, HIPAA, and operational compliance reviews, alongside staff training and action plans. That combination can suit a practice needing help correcting workflows after the review. Ask for a scope tied to your recurring problem. 

Types of Medical Audits at a Glance

Track errors divided by records reviewed, findings by category, and repeat errors after training. A targeted sample identifies specific risks; it should not automatically be treated as the error rate for your entire practice.

Common coding errors and how to solve them

Unsubstantiated E/M levels:  refer to the specific evaluation and management guidelines for applicable rules. For office visits validate medical decision-making or qualifying time instead of selecting from note length. 

Modifiers unbundling/erroneous modifier: check current National Correct Coding Initiative edits,  documentation. Do not append a 59 unless it is justified and needed. 

Incorrect or old diagnosis codes: use codes that are valid for the date of service and for as much specificity as the record substantiates. Missing documentation:  clarify with the clinician as appropriate. Never “make up” details or backdate notes to obtain reimbursement!

Conclusion

Good audit begins with a specific question about your practice.  For payment issues,  identify where the breakdown occurs.  For coding issues, compare and contrast the diagnosis and procedure codes to the documentation. For documentation issues,  correct the process that results in missing information. Practolytics offers associated audit reports and follow-up activities that make good sense to physicians who would like the findings translated into staff education and process change.  Begin with an specific audit and reach a set of conclusions that can be effectively compared in a future audit. An audit produces value when its results are incorporated into an improvement in behavior.

FAQs

1. How does Practolytics approach medical audits?

Practolytics offers customized reviews,  practical reports, staff training, and continued assistance.  Also, its frequently asked questions clarify that discrepancies in medical records provide a focus for physician education.  Verify the sample, review directions and follow-up products prior to engagement.

2. Can a small practice afford an external medical audit?

A limited review may fit its budget. Medical Audit Cost, Medical Audit Services Pricing, and Healthcare audit fees depend on scope, complexity, and follow-up. Request an itemized quote; compare Medical billing audit cost and the cost of an external medical audit on equivalent deliverables.

3. Which audit should a small practice start with?

Frequently a tight coding and documentation review of common services is appropriate.  Leave your pattern of denial and risk-awareness content to guide your starting point.  Don‘t buy a wide review prior to identifying the problem.

4. What documents are reviewed in a medical billing audit?

Usually,  it involves clinical notes, orders, coding documentation,  charging information, claims submitted, remittance advice, payment postings, adjustments,  receivable accounts.  Otherwise, patient‘s coverage policies,  authorization, and payer contract may apply.

5. What do Medicare auditors like RAC, MAC, and UPIC do?

Prepayment reviews are conducted by the Recovery Audit Contractors on past payments for instances of overpayment.  While Medicare Administrative Contractors are the ones who actually process the claims,  they might also look at certain records and educate providers on the process. Unified Program Integrity Contractors will investigate signs of abuse and fraud. They are not one and the same.

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