Key Differences Between Medical Billing Audits and Medical Coding Audits: What Healthcare Organizations Need to Know

In the world of healthcare administration, achieving financial stability while ensuring accurate patient records is important for medical practice administrators, owners, and IT managers. Among the various processes vital to this goal, medical billing audits and medical coding audits play important roles in the financial health of healthcare organizations in the United States. While these two types of audits may seem similar, recognizing their differences is crucial for effective management and operational efficiency.

Understanding Medical Coding Audits

Medical coding audits focus on the accuracy of the codes applied to services provided to patients. These audits regularly assess coding practices to ensure that claims sent to payors are accurate and comply with applicable regulations. The main goals of medical coding audits include:

• Identification of Errors: Coding audits reveal inconsistencies between patient records and submitted billing. Frequent audits can identify common issues such as incorrect codes, wrong modifiers, or missing documentation.
• Compliance Maintenance: Inaccurate coding can lead to non-compliance, resulting in audits from payors, fines, or damage to reputation. Correct coding is essential for avoiding legal and ethical issues within healthcare organizations.
• Education and Training: Continuous coding audits highlight areas where training is needed for coding staff and create opportunities for improvement. According to April Smith, CCS from JTS Health Partners, many healthcare providers may not be aware of their coding inaccuracies until they conduct regular audits.

Understanding Medical Billing Audits

Medical billing audits cover a broader range of activities. While coding is a key part, billing audits assess the entire billing cycle, which includes claims submission, verification, follow-up processes, and payment collections. The primary objectives of medical billing audits are:

• Holistic Approach: The audit looks at the accuracy of codes, financial transactions, payment postings, and necessary adjustments to address discrepancies.
• Revenue Cycle Management: Billing audits help ensure that claims are submitted on time and payments are received effectively. Managing the billing cycle helps practices optimize reimbursements and reduce revenue loss.
• Risk Mitigation: Medical billing audits aim to lower the risk of fraud and overbilling. By ensuring compliance with payor rules and guidelines, these audits help reduce the likelihood of legal issues related to compliance.

Key Differences in Scope and Focus

The main difference between medical billing audits and medical coding audits lies in their specific focus areas. Medical coding audits primarily examine the accuracy of coding practices, while medical billing audits take a wider view of the entire billing process.

• Focus on Coding vs. Billing Cycle: Medical coding audits ensure codes are accurately applied, while medical billing audits assess the billing process comprehensively, ensuring all aspects, from coding to reimbursement, are accurate.
• Compliance vs. Revenue Optimization: Coding audits prioritize compliance with coding guidelines and regulations to prevent claims denials. On the other hand, billing audits focus more on optimizing revenue through efficient billing processes.

Frequency and Methods of Auditing

• Types of Audits: Coding audits may be classified as internal or external, pre-bill or post-bill, and periodic or continuous. Ongoing coding audits are particularly effective for detecting and correcting errors in real time. Medical billing audits follow a similar classification but emphasize the entire revenue cycle.
• Techniques and Processes: In coding audits, auditors gather relevant medical records, lab reports, and financial documents, comparing these with the submitted codes to identify discrepancies. Billing audits involve examining the overall billing process, verifying data from initial claims filed through to payments received and any adjustments made.

The Financial Impact of Inaccuracies

Inaccurate coding and billing can significantly impact the financial situation of healthcare organizations. Incorrectly coded claims can lead to payor denials and decreased reimbursements, creating strain on the financial health of a practice. Regular audits become even more critical for busy practices where coding occurs alongside patient care tasks.

A report from JTS Health Partners notes that organizations engaging in regular audits often find the cost is justified by the increased revenue and better operational efficiency. Regular coding audits reveal hidden challenges and assist practices in maintaining compliance while optimizing financial outcomes.

Roles of Technology and Artificial Intelligence

The rise of advanced technology and artificial intelligence (AI) enhances the auditing processes in healthcare organizations. The adoption of AI can help streamline operations and improve accuracy in both auditing processes.

Streamlining Audits with Technology

Modern coding audit software can improve the auditing process by effectively gathering data and identifying common patterns of discrepancies. This technology reduces the administrative burden and allows for thorough evaluations of coding and billing practices.

Enhancing Workflow Automations

Using AI tools can assist medical coders by analyzing large amounts of data, pinpointing areas where errors happen frequently, and recommending corrective actions. Although AI is a useful tool for error detection, it remains vital to have human oversight. Human coders are responsible for verifying AI-generated results to ensure accuracy in addressing identified errors.

Healthcare organizations can also employ AI-driven analytics services to target specific Diagnosis Related Groups (DRGs) and examine coding issues that affect revenue. By incorporating these tools, organizations can enhance their coding and billing practices, leading to greater operational efficiency.

The Importance of Continual Audits

Continual auditing is essential for maintaining accurate coding and billing within healthcare organizations. This ongoing process allows for the regular monitoring of coding practices and documentation accuracy, facilitating timely corrections.

As April Smith, CCS, points out, continual medical coding audits are a proactive measure for healthcare providers. They help identify issues, ensure compliance, and prompt training sessions that can boost future accuracy.

Furthermore, continual audits provide organizations with the information needed to tailor staff training effectively, focusing on specific areas prone to inaccuracies. By promoting an environment of continuous improvement, healthcare organizations can better align their operations with coding guidelines.

Benefits of Engaging External Audit Services

For several healthcare practices, hiring external audit services can be a smart investment. Companies like JTS Health Partners offer expert auditing services that help improve coding practices and education programs, helping organizations remain compliant while optimizing revenue.

The financial advantages of using external auditors are significant. Addressing coding and billing inaccuracies through professional audits can lessen the risk of denied claims, stabilize revenue flow, and improve overall operational efficiency.

The Path Ahead for Healthcare Organizations

Understanding the differences between medical billing and coding is necessary for today’s healthcare environment. Medical practice administrators, owners, and IT managers should prioritize a culture of compliance and responsibility regarding coding and billing practices.

Regular audits should become a fundamental aspect of effective healthcare administration, helping organizations safeguard against financial pressures while maintaining a high standard of patient care. By integrating technological advancements, continual audits, and the expertise of external services, organizations can construct a solid foundation for future success and sustainability in a competitive healthcare sector.

Healthcare leaders need to stay committed to accurate coding and billing through auditing processes. Given the complexities of the field, making informed choices about effective auditing strategies will enhance revenue health and promote compliance within the healthcare industry of the United States.