Medical Coding Compliance Audits

Stay Compliant  & Optimize Your Reimbursements

Accurate coding by Physicians is critical to getting paid for the services provided and for avoiding external audits by Medicare and other Payers. The easiest and probably best way is to audit a select sample of charts. RevenueXL provides medical coding compliance and coding audit compliance and regulatory services to physicians which enables them to make corrections before their coding is challenged by the payers. Our coding audit services are designed to help you maintain compliance with different industry standards. Our coding audit services also enable the providers to fully code the encounters which may otherwise have been down coded.

How is Coding Audit done?

We utilize current AMA and industry coding guidelines, Correct Coding Initiative edits, CMS/Medicare LMRP's and all recognized specialty specific coding conventions and practices. Our medical coding audit services also includes a case-by-case analysis of our findings. Our medical coding accuracy evaluations are designed to be part of a continuous quality improvement program. It gives the providers and surgical coders the feedback they need to more accurately code the patient-care services.


Affordable Coding Compliance Audit (Free Trial)

Frequently Asked Questions - Medical Coding Audit Services


  1. What is coding audit?

  2. Why are coding audits important for any medical practice?

  3. What are the benefits of coding audit?

  4. What are the various steps in coding audit process?

  5. What are the different types of coding audit?

  6. What best practices should govern the coding audit process?


What is Coding Audit?

A Coding Audit is an internal or external review of a medical office’s coding practices conducted by reviewing patient medical records. Medical record audits target and evaluates procedural and diagnosis code selection as determined by physician documentation for completeness and accuracy.

Scope of Coding Audits

A coding auditor looks at several factors in medical office claims, including:

  • Assess the proper use of CPT codes
  • Determine the correct places of service
  • Look for missing and/or incorrect use of modifiers
  • Detect incorrect diagnoses (i.e., does not indicate medical necessity)
  • Identifying coding and documentation accuracy, trends, and deficiencies (if any)
  • Verify if supporting documentation is adequate to describe the care provided to the patient
  • Identify any bundling or cluster issues (CCI edits and LMRP)
  • Determine if services are reasonable and necessary

Results from the audit are discussed in terms of coding accuracy. Consistent accuracy rates of 95% or higher for physicians are recommended by the HHS Office of the Inspector General (OIG).


Why are Coding Audits Important?

Conducting at least one annual coding audit is a requirement for compliance, according to the OIG. Moreover, the Centers for Medicare & Medicaid Services (CMS) and the OIG encourage all providers to regularly have their coding reviewed by an independent party proficient in their clinical specialty.

Regular coding audits provide many benefits that improve the way your practice operates.

  • Ensure that your coding practices follow acceptable, up-to-date standards
  • Compare your coding practice to those of your peers
  • Identify areas of lost revenue (i.e., under-coding to avoid possible denials)
  • Identify areas of compliance concerns

Regardless of the audit’s type or scope, remember that continuous improvement is the ultimate goal. The audit process provides an opportunity for your practice to identify and prevent compliance and payment issues with national payers and provide staff improvement opportunities.


External Benefits of Coding Audits

1. Maintain compliance

With new guidelines being released continuously, staying compliant is challenging. Coding audits identify new laws, regulations, payer rules, and other issues that affect your specialties. The audit helps you apply new codes and changes correctly from the beginning.

Additionally, the OIG requires at least an annual audit to maintain compliance. An annual audit is sufficient to satisfy this requirement. Conducting audits on a quarterly or a monthly basis helps avoid lapses in compliance early.

2. Reduce rejections and denials

The result of periodic coding audits is more accurately coded claims with fewer rejections and denials. Claims may be rejected and denied for inaccuracies, insufficient documentation, and many other reasons. Frequent coding audits provide a way to identify and correct issues so that more cases can be paid on time and in full.

3. Prevent fines and investigations

If coding problems persist and payers find many irregularities whether or not there is an associated pattern, your practice can be flagged for investigation. The investigation looks for potential fraud by the practice. These investigations are stressful and costly. If fines are levied, serious financial consequences may ensue. Regular coding audits educate and improve your practice and ensure that your practice will not be flagged for fraud, waste, or abuse.


Internal Benefits of Coding Audits

1. Code to the right level

Coding must be accurate, precise, and to the appropriate level. The coding audit identifies coding practices that affect your reimbursement, such as under-coding services. Coding at the right level means that are you are paid correctly and not settling for less than you are owed. Your practice deserves to receive the correct reimbursement from national payers.

2. Create opportunities to educate your staff

Perhaps the most important benefit of regular coding audits is having the opportunity to educate your staff. Your staff is the key to your success. A coding audit should feature a case-by-case analysis of findings. Medical coding accuracy evaluations should be included in a continuous quality improvement program. Frequent audits provide the feedback you need to identify education opportunities and devise a plan to implement them.

3. Maximize reimbursement

Fewer mistakes by undertrained or overworked coders result in more claims getting paid. Rejections and denials slow you down and cost you money. Improving the quality of your coding through regular coding audits keeps your office running efficiently.

These benefits ensure that you use your staff’s time efficiently, and cash flow is maximized. Regular coding audits reduce overpayments and underpayments, lower the rate of rejections and denials, keep your practice compliant, encourage your staff to focus on quality coding, and ultimately maximize your profit.


Coding Audit Process

1. Recognize that an auditor is a partner

External audits can be an excellent option for a small, busy practice. Auditors that sit outside of the practice are also outside of the scope of any conflict of interest. An outside source provides a unique insight and spots coding issues without concern about the impact on revenue. Internal auditors might miss something easily recognized by an external party. Recommendations from an outside, authoritative source carry more weight than those given by an internal source. Deciding to partner with a trusted source to conduct a coding audit can be difficult; however, an external partner’s experience, knowledge, and insight cannot be replicated in-house.

2. Identify an auditor

Once you decide to use an external source for your coding audit, the first step is to contact a company experienced in conducting external coding audits for your type of practice. Coding auditors specialize in a unique discipline that is different from coding. Many are also skilled in subspecialties most acutely in need of precise coding to optimize their collections. Beyond merely being certified coders, auditors also stay abreast of ever-changing regulations and new, updated codes.

3. Establish the scope of an audit

The scope of your audit is the determination of what cases are reviewed. The scope should be large enough to provide an accurate picture but not too large to require excessive time or money. Discuss the scope with your auditor to determine what works best for your needs.

4. Look for irregularities

Potentially fraudulent billing patterns are a hot topic for governing agencies cracking down on fraud, waste, and abuse. Advanced algorithms developed by CMS and other national payers detect coding and billing discrepancies in advance and deny the claim electronically. Below are some things a coding auditor looks for to help claims pass through these filters:

  • Codes match the “Reason for Visit.”
  • Secondary codes support the primary code.
  • Out of date codes should not be used.
  • Improper medical necessity determinations should be corrected.
  • Application of codes adheres to the most recent guidelines.

5. Unrelated codes

Look for codes that are unrelated to the diagnosis or procedure. When a procedure is coded and is unrelated to the diagnosis, this raises a red flag for payers. For example, reporting a chronic condition even though it is unrelated to the current reason for a visit may trigger an alarm. Too many claims of this type result in an investigation by a governing agency (like a RAC). This agency assumes that your practice is attempting to commit fraud.

6. Outliers

“Outliers” are coding patterns that are out of line with standard trends. Outliers are detected by comparing your coding practices to your peers and looking at trends that fall outside the norm. For example, consistently under-coding procedures can result in fewer external inquiries, but you miss thousands of dollars in legitimate reimbursement. Having a physician or a coder under-coding is an outlier that can be detected and corrected through regular auditing.

An audit helps identify outliers and improper coding patterns. Then, an auditor assists you in drilling down to the problem area. Identifying the problem is the first step in solving it.

7. Make a continuous improvement plan based on results

Remember, the purpose of conducting an external coding audit is to improve your practice. Open, honest communication is essential through the audit process. Sharing audit findings is no exception.

A good auditor meets with you one on one after the audit to discuss the findings. This session includes discussing review methodologies and methods for calculating error rates, numbers and rates of issues, trends, and more. This discussion provides an excellent opportunity to learn. The auditor identifies the root cause of some of your coding discrepancies. The auditor works with you to find ways to help you code more accurately, sometimes even setting goals or benchmarks for the next audit.

The findings of an audit invariably provide you with educational opportunities. Depending on the situation, educational opportunities include training on a particular code group, certification options, or new coding assistant software training. Even your best coders need refresher training to stay sharp. Regardless of the areas of improvements identified in a particular audit, implementing the changes make your practice run more efficiently.


Types of Coding Audit

1. Post-bill (Retrospective)

A post-bill or retrospective audit looks back at submitted claims coded during the current audit (usually within the last quarter). Retrospective audits are advantageous because they give a detailed picture of your practice’s long-term coding trends by comparing the current audit results to previous audits.

2. Pre-bill (Prospective)

Sometimes called a “concurrent” audit, a prospective audit looks at claims that are coded but not yet billed. One major advantage of prospective auditing is that you can get a picture of the state of your office’s current coding practices before an improper claim is submitted.

Ultimately, the objective of the audit influences the type of audit you conduct.

3. Internal vs.External

Coding audits are an annual requirement. You can choose to conduct them internally, using your staff to evaluate one another, or you can conduct them externally by using someone outside of your company to conduct the audit for you. All auditors must, at a minimum, be trained in correct coding practices and medical auditing.

Internal audits use employees within your organization as auditors. This method can lead to an incomplete picture that is limited by the auditor's knowledge and expertise. Internal auditors may be overextended with other duties. Sometimes, finding an unbiased auditor is challenging. It proves to be difficult to find someone who is not involved with the case and can provide the objectivity required for such an important task.

On the other hand, an external auditor delivers a more objective view toward case evaluation. By not being involved in the day-to-day operations, and the outside auditor is free of bias and conflicts of interest that may compromise a staff member’s objectivity. Additionally, dedicated medical auditors possess a unique skill set. A coding auditor is a certified coder who is trained in auditing techniques and follows legislative changes. Auditors stay up to date on commercial and government payers’ regulations and new AHA Coding Clinic updates. The level of experience and knowledge an external auditor offers is sometimes difficult to find in-house.


Best Practices for Coding Audits

1. Baseline first!

The “baseline” is the starting point for your coding audit plan. This initial evaluation assesses the coding compliance and accuracy of each provider in your practice. This baseline audit reviews varied samples of different E/M services, along with office, surgical, or specialty procedures. The baseline provides an overall picture of the current state of your coding practices. From there, you can observe how your practice improves over time with regular auditing.

From the OIG Compliance Program for Individual and Small Group Physician Practices:

“A baseline audit examines the claim development and submission process, from patient intake through claim submission and payment, and identifies elements within this process that may contribute to non-compliance or that may need to be the focus for improving execution. This audit will establish a consistent methodology for selecting and examining records, and this methodology will then serve as a basis for future audits.”

2. Limiting the volume

In general, a coding audit looks at 10 to 15 cases per physician in your practice. The cases should be a mixture of each E/M service chosen (New patient, Established patient, Consultation, etc.). You can include more cases in the audit. A larger sample size determines trends and outliers more accurately.

Each provider in your practice should have a similar number of cases audited. Make sure that enough cases are reviewed to provide statistically sound results. Up to 10% of the case volume provides a statistically valid sample size. If you are getting several denials or rejections, consider increasing this number. When more cases are reviewed per audit, the amount of time needed increases. However, the audit provides a more detailed picture.

3. Determine your frequency

The frequency of coding audits depends on many factors. If the audit finds that your practice is high-performing (95% accuracy or better consistently), then an annual audit is sufficient as a minimum. However, in situations where your practice needs improvement, more frequent audits are beneficial.

A quarterly audit provides ongoing feedback throughout the year. Quarterly audits uncover issues that may affect your practice seasonally. Do you get more denials during your busiest months? Does flu season affect your coding accuracy?

Monthly audits may be an even better option. Audits with this frequency provide a level of consistent coder support that is otherwise unmatched. Monthly audits catch mistakes and bad coding habits and prevent them from becoming repetitive and developing into more serious issues. Additionally, a monthly audit provides more opportunities to learn. The increased frequency allows for more one-on-one, real-time feedback. You have more opportunities to apply for the new American Hospital Association (AHA) Coding Clinic updates as they come out.

While required annually, quarterly audits are recommended at a minimum. Monthly audits, if possible, are the best option for consistent improvement. The continuous feedback provided by more frequent audits helps stop serious coding issues.

4. Selecting cases

The number of cases depends on many factors. When meeting the common standard of 10 to 15 cases per physician or coder, make sure that the cases are selected randomly. For example, you can choose every tenth case from each physician since the last audit until you reach the target number. In some instances, you may want an auditor to review a specific case. Perhaps you had a hard time coding it and want to double-check your work before submitting it. Or, perhaps, new codes are required, and you want to be sure you have applied them correctly. Mention that case to the auditor. That case can be included in the audit and discussed along with other findings.

5. Timeframe

Audits should only look at cases that are new since the last audit. Focusing on new cases allows the auditors to see that previous recommendations are being applied correctly and consistently. If you are only auditing annually, select from recent cases, ideally no more than four months old.

6. Percentage of denials

Denied claims should be included in the scope of the audit. These cases are critical for your staff’s education and the overall improvement of your practice. Often, the audit includes a higher percentage of denials than the overall number in the timeframe. This helps the auditors understand why cases are getting denied. After all, the coding audit is designed in part to help reduce future denials. Looking more closely at denied claims than approved claims makes sense.

7. Follow up to ensure improvement

Always share your coding audit results and the specific areas of focus with your staff. Develop a plan for your physicians and coders to follow, including quality benchmarks, educational opportunities, and rewards for excellence. Compare the results of past audits to monitor ongoing progress. Follow up periodically to ensure your staff members are being supported with the proper instruction and training.

Ongoing education is critical for coders and providers to stay current and compliant. Providing ongoing training after the follow-up of a coding audit helps your staff improve the claim denial rate. An auditor identifies specific areas where education is needed to improve the overall quality of your coding. You can also reap the benefits. The profitability of your practice increases when you lower your case rework. Look for ways the whole staff can benefit.



Our practice, IMS, was not sure if coding audits were needed for the practice. RevenueXL offered us our first month free so that we could ease into their coding audit service. Today, we are so glad that we gave them a chance! Their staff is knowledgeable and professional- something that makes our coding education easier because they truly understand the coding compliance business. I am impressed with RevenueXL's speed, comprehensiveness and educational aspect. They have helped me code more accurately.  They offer outstanding customer service and support, and there is no other company we would trust in completing our monthly coding audits. 


Dr Josh Brown
IMS Practice Management Group