Revenue Cycle Audits: What You Need to Know

Mar 10, 2023
Article Background

Recent studies report that 86% of claim denials are avoidable. Are you seeing a high number of claim denials or billing and coding errors? If so, it may be time for an audit of your revenue cycle.

According to the Change Healthcare 2020 Revenue Cycle Denials Index, 86% of claim denials are potentially avoidable. With denials being a significant source of revenue loss, it’s important for provider organizations to reduce their incidence by determining where in the revenue cycle these avoidable problems are occurring and why. One way to do that is to conduct a thorough audit of your revenue cycle processes. Healthcare organizations that submit claims to a government program such as Medicare are subject to a Medicare Recovery Audit Contractor (RAC) audit to ensure compliance with documentation and billing regulations and requirements. An internal audit will highlights problems in your revenue cycle so you can correct them before a governmental authority points them out.

What's the Difference Between an Internal and External Audit?

As the names suggest, an internal audit is a review of your systems and processes via an internal staff member. Conversely, an external audit performs the same function but is conducted by a third party. Typically, an external audit is more objective than an internal audit. Furthermore, external audits are often more thorough and may discover problems an internal auditor might overlook or not recognize. Both types of audits can help you prepare for a regulatory audit, which may be done by a governing body or CMS authorities. Regularly scheduled audits, whether internal or external, should be part of your organization’s operations.

What's the Purpose of an Audit?

A medical facility’s revenue cycle needs to operate efficiently to ensure financial viability. An audit will examine all operations to determine inefficiencies in processes, redundancies, and common types of coding and billing errors. It will determine if there is sufficient staffing as well as whether further education and training for staff are needed. An audit can point out problems in electronic health records and improve communication between coding and clinical documentation improvement (CDI) staff. An audit also can discover and reduce fraud and improper payments and ensure compliance with HIPAA regulations and contracts. Overall, an audit should help healthcare teams improve services, reduce claim denials, and lower costs.

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How Can I Prepare for and Conduct an Audit?

You’ll first want to decide on the scope of the audit. Will it be a comprehensive audit of all your processes and procedures, or will you pinpoint certain records for review? You’ll also need to decide the number of records you’ll audit or the time period you’d like to investigate further. Are there particular areas or individuals you want to focus on?

Next, you’ll want to decide who will conduct the audit. Choose a qualified member of your staff who understands all aspects of your organization’s operations. Health information managers are good choices for this task, as they understand clinical documentation and billing and know which records to pull for the audit.

Once you have concluded the audit and determined which areas are problematic, you’ll need to take action to correct the problems. Depending on your findings, you might need to hire more staff, provide training, or make your processes more streamlined and efficient.

For assistance with auditing your revenue cycle, consider partnering with a trusted, experienced RCM organization like TruBridge. We will work with you to analyze your coding, billing, and EHR management policies and procedures to help you identify areas for improvement and truly optimize your operations.