The Importance of a Medical Coding Audit

Healthcare information management and quality of care are greatly improved when medical coding is accurate and up-to-date. Internal and external auditors audit health care organizations’ policies and methods for producing high-quality medical coding.

For example, regular auditing procedures can uncover outdated codes or even fraudulent invoices. These audits serve as a quality assurance tool to ensure correct reimbursement and regulatory compliance. 

To assist your medical coding company in achieving more accuracy and accountability, we’ve put together this guide on the significance of medical coding audits and how they might do so.

Why Conduct Medical Coding Audit?

OIG and CMS advise that all providers have their coding regularly reviewed by an independent party with experience in the relevant clinical specialty. 

Coding regulatory modifications (new/modified codes, recent/modified coding edits and bundling rules, etc.) will be integrated into the provider’s coding protocols as a result of this independent review.

Staff changes in any coding profession can impact coding because specialized coding talents differ from person to person. It would be best if you prevented errors from getting “institutionalized” to keep improving quality.

An individual physician and their group practice will be held accountable for any billing errors on a claim submitted to federal or state agencies. On a percentage-based contingency basis, CMS has ‘RAC’ (Recovery Audit Contractors) organizations verify the integrity of claims.

Having an independent code evaluation in the event of such audits helps prevent and decrease the risk of legal and financial exposure. Plus, a third-party assessment can be used as a teaching tool for healthcare providers and billing personnel.

In addition, these reviews can help identify possibilities to improve reimbursement. It’s not just the results of these reviews that determine whether or not a product is accurate or compliant. Undervaluation of services might occur from coding errors or misconceptions regarding certain CPTS. Over time, missing charges can add up and hurt your practice’s finances.

Payments will never exceed the invoiced amount, whether from a government agency or an individual payer. To solve this issue, audit reports highlight missed charges and devalued services.

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Accuracy in medical coding is not only reliant on medical coders, who can only use the documentation they are provided. Because of incomplete or unintelligible paperwork, medical coding will be incorrect.

To appropriately document the provider-patient encounter, coding is necessary. The doctors’ medical records must be reflected in the codes. Medical records, such as notes and reports written by doctors and other medical professionals, serve as a secondary source of information.

Benefits of Medical Coding Audits

The following are five reasons why audits are more critical than ever:

  • Enhanced Data Quality: Reliable data is an essential part of healthcare. Stakeholders that are well-informed and engaged in the process are critical to the success of any compliance auditing program. As a result, healthcare organizations will have an easier time obtaining funding and grants because their data and research will improve.
  • Improved Operational Efficiency: Medical professionals all across the world face a significant issue when it comes to manual code and billing. Manual transactions cost $4.40 more than automated transactions, according to the CAQH Index Report for 2018.
    Even though healthcare providers could save $11.1 billion a year by automating claims-related transactions, according to the same study, the sector has made limited progress toward that goal.
    It is possible to uncover the core causes of differences in coding and documentation using automated auditing. If this is viewed as enhancing rather than replacing the job of employees, it has the potential to boost morale and increase output. 
  • Improved Patient Safety: Internal auditing has been shown to reduce patient-related adverse events by 4.8 percent, in line with a study published in the International Journal for Quality in Health Care. Real-time auditing can improve patient safety by quickly identifying mistakes and providing immediate feedback to the medical team. As a result of auditing, it is possible to implement new policies and practices confidently.
  • Improved HIM-Physician Relations: Audits conducted by health information management (HIM) employees will help to improve HIM-Physician relations by removing documentation errors caused by all parties involved. These two key stakeholders in patient care have a greater awareness of how their work processes affect each other when correct practices are in place. To improve their documentation skills, physicians who regularly make mistakes might work with HIM professionals. Improved quality can be achieved through regular feedback and greater openness.
  • Enhanced Accuracy of Reimbursements: Hospitals and care facilities have been plagued by underpayments and overpayments for a long time. In the 2016 fiscal year, RACs recovered $214.09 million in claims, according to a CMS report filed to Congress. Complications and comorbidities (CCs) and their principal variants will be properly documented if adequate auditing techniques are used (MCCs). The existence or absence of CCs and MCCs, which govern payment for hospital care, determine the seriousness of any sickness. Auditing can identify billing errors and guarantee that both organizations and patients receive the compensation they are owed.

How Frequently Should A Medical Coding Audit Be Conducted?

An organization’s size, staff turnover, and regulatory revisions all influence how often medical coding audits are performed. Every year, it is suggested to conduct an external coding audit. Many healthcare providers, however, require regular external audits to guarantee that coders are providing consistent quality.

External code audits are a key component of:

  • Compliance
  • Increased profit
  • Increased reliability
  • Training and education for coders
  • The improvement of coders’ accuracy
  • Improvement of medical records documentation

Healthcare organizations that undertake coding audits monthly or quarterly can discover problems they may correct, resulting in higher income or compliance revenue. Coders in the medical field are urged to keep abreast of the most recent regulatory requirements to avoid making typical coding mistakes. 

Thanks to their information, routine audits can serve as a tool for training new coders. New coders can quickly become proficient and write high-quality code by following well-established best practices in their training.


It is possible to get an objective third-party evaluation of the organization’s medical coding policy and practices through an outside auditing firm. An impartial medical coding audit is a good start if you want to improve compliance and prevent lost reimbursement.

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