Medicare is the single largest purchaser of personal health in the US, accounting for roughly 24% spending in the Medicare sector. Therefore, providers’ stakes with it are high, and they cannot afford mistakes in claims going to Medicare.
That’s because underpayments and negative margins are constant issues with this payer. 2022 data revealed that Medicare underpayments totaled $99.2 billion, as it reimbursed 82 cents per dollar spent for patients.
These payment gaps are due in part to providers’ downcoding, so if they wish to be paid fairly, their documentation must be error-free. Otherwise, claim denials and low payments will impact their revenue.
One aspect that can prevent document-related problems and eventual unfair payments is a Medicare billing audit. It ensures record accuracy at the provider’s end and pinpoints downcoding, which eventually leads to underpayments.
This article explains how Medicare billing audit services improve your revenue and claim acceptance rate. Keep reading for detailed insight.
| Downcoding: When a provider or coder uses a billing code that describes a simpler or cheaper service than the one provided, it’s called downcoding. |
| Underpayment: If a provider gets paid less than they should for a fair service (because of errors or payer policies), it’s called underpayment. |
What are Medicare Billing Audits?
A Medicare billing audit is a systematic and in-depth review of a medical practice’s records and claims. This audit is done to confirm that the money Medicare pays out is being used exactly as the law requires and that the provider’s staff isn’t leaving out important details.
These checks detect and prevent improper payments, including overpayments and underpayments. Beyond record accuracy, Medicare audits assess the entire cycle’s integrity so the provider and payer don’t lose anything unfairly.
For instance, if a practice’s billing team keeps downcoding a service, the revenue loss piles up and impacts its financial health. And if the same team upcodes a service and the payer notices it, it’ll put the practice in a bad light. The result can be the payer requiring an external audit done on the practice, which will further affect its reputation and, eventually, revenue.
Therefore, practices seek credible medical billing audit services to ensure payer-specific rules from time to time. That effort maintains a provider’s credibility and brings in justified funds.
Consequences of Neglecting Medicare Billing Audits
Ideally, every medical practice should acquire Medicare billing audit services once a year. The result will be no repeated mistakes in claims and revenue regularity. However, most don’t invest in these audits and face the following consequences at some point:
| Info Crumbs: A missing -25 modifier indicates that a provider is incorrectly trying to bill for two separate services that Medicare considers a single bundled service. If Medicare finds it out, the claim will be rejected, or if the payment is already reimbursed, the provider might have to send it back. |
The Top Red Flags a Medicare Billing Audit Catches
A red flag in healthcare billing is a certain billing or documentation pattern that causes your claims to look different in Medicare’s data analysis systems.
Since these systems are constantly searching for billing behavior that looks different or incoherent, they instantly tag such claims. And if your practice triggers a red flag, that means increased financial danger.
You might face immediate claim denials, or Medicare will ask for a costly and time-consuming government audit. That said, here are the main issues medical billing audit services highlight for timely fixes:
High Utilization Rates
If your practice consistently bills a specific (often high-reimbursing) CPT code (like a Level 5 office visit or surgical procedures) more frequently than other providers in your region or the national average, it shows up during audits. It’s considered a volume problem and stands out because Medicare’s computers see you as an outlier.
They assume you are billing aggressively or improperly for services that may not always be medically necessary. All this can make you a prime target for a full review that scrutinizes the justification for every procedure you perform. They might use your peer group data to target your high-volume claims for review.
Frequent Use of Specific Modifiers
If a practice’s billing team repeatedly uses certain modifiers on the same day as a procedure, it can raise eyebrows. This pattern often suggests unbundling, which means that a provider is trying to get paid for two services even if Medicare’s rules consider them as one payment.
Overuse of these modifiers is targeted during reviews because it is a direct sign of seeking inflated reimbursement. If misuse is confirmed, the audit can result in massive recoupment of years’ worth of payments. Therefore, providers ask their hired Medicare billing audit services to rule out this doubt to avoid unnecessary legalities and penalties.
Inconsistent Physician Documentation
The quality and level of detail in clinical notes vary between different providers. These notes can be vague, incomplete, or repetitive. If that shows up during audits, it weakens your negotiation power.
Even if the code you use is technically correct, the medical record is your only legal defense in an audit. And if the documentation is vague or inconsistent, the auditor cannot confirm the service or the level of complexity you billed for. This failure to adequately support your claims immediately results in the payment being denied and unfairly cleared.
| Info Crumbs: Unbundling is the illegal practice of billing two or more services as separate medical procedural codes that are supposed to be paid for together as a single service. |
Benefits of Medicare Billing Audit Services for a Practice
Professional Medicare billing audit services shift your practice from a reactive position to a proactive defense. They function as a high-level compliance system by identifying process gaps that can cause financial penalties and lost revenue.
The following few benefits make investing in Medicare billing audit services worth it for any practice that wants a healthy revenue cycle:
Maximized Revenue
An audit reviews your claims to find undercoding, where the code used was for a less complex service than the provider documented and delivered. For example, a doctor may have completed a Level 4 visit, but the coder only billed a Level 3 (these levels differ in terms of complexity and time spent). Luckily, an audit finds this recurring error and quantifies the lost revenue to get you a fair reimbursement.
Reduced Claim Denials & Rejections
A high claim denial rate indicates repeated data errors, and eventually, Medicare may refuse to pay for a service. Therefore, an audit investigates the common reasons for your practice’s denials and highlights what must be fixed.
For instance, an audit may reveal that 80% of your denials are because of a single, incorrect modifier. If something like this surfaces, you can deploy targeted measures to lower your denial rate and free up your billing staff from time-consuming rework.
Quantifiable Compliance Confidence
A Medicare billing audit gives your practice a formal error rate based on a statistically valid sample of your claims. All this provides you with quantifiable confidence since now you know how compliant you are and where your risks lie.
This aspect is crucial for legal defense because it proves that your organization is serious about regulatory adherence and has a documented plan to correct issues.
How Does BilNow Run a Medicare Billing Audit?
One of a medical practice’s main concerns is getting an audit notice. They worry about money they might have to pay back, the time wasted on denials, and the constant stress of not knowing if billing is compliant.
But the BilNow Medicare billing audit process is meant to eliminate that anxiety. We audit to strengthen your credibility and stop revenue leaks.
Here is how our calculated process tackles your financial pain points:
1. Pre-Audit Preparation
A generic review is not a BilNow thing because we pinpoint your greatest risks. Are you worried about that new high-volume service? Are you just seeking a compliance baseline? Or are your balance sheets showing way less money than what should have entered your account? We first define the precise scope of an audit to ensure maximum value and focus on the claims most likely to be flagged by Medicare.
2. Gather and Check Documentation and Records
Our experts gather all the necessary files, including patient charts, billing ledgers, and claim histories, among others. Next, BilNow auditors match your submitted claim dollar-for-dollar against the provider’s notes. If the documentation is vague or relies on copy-paste, we find it. This check makes sure that the work you performed is fully and legally supported in the chart.
3. Review Code Assignments
Our goal is to get you reimbursed for the complexity you delivered. Therefore, we carefully verify your ICD-10 (diagnosis) and CPT (procedure) codes to confirm you haven’t undercoded or overcoded.
4. Billing and Compliance Check
Next, we trace your billing pathway: from how the charge was entered to how a denial was processed. This step often reveals hidden system failures, like a faulty check on patient eligibility or an outdated compliance setting. Such errors quietly drain your cash flow month after month.
5. Medical Billing and Coding Audit Summary
BilNow gives you an easy-to-read report that is focused on action. It details our findings on specific areas where your revenue is leaking or where your risks are highest. That information helps you understand what needs immediate fixes.
6. Billing Compliance and Training
Any audit is useless without a long-term fix, which is why we train your staff and clinicians to explain the results. That updated training helps them know how to document for an accurate level of care and mitigate future errors.
7. Post-Audit Follow-Up
Our Medicare billing audit services show a lasting impact because we follow up to check how the changes we implemented are working. Then, we can even establish a monthly audit plan to keep your billing clean and provide continuous financial protection against payer rules.
Conclusion
Getting money from healthcare giants is no joke because of the ever-evolving rules and errors you might not even know. That’s why you need professional Medicare billing audit services to get your claims and documents thoroughly scrutinized. If your homework is complete, a payer cannot unfairly hold your well-deserved payments.
BilNow wants you to be paid what you’re worth, and that’s why our audit services are so hands-on. We check things from every aspect to get you a 99% first-pass claim acceptance and up to 25% revenue increase within three months. Our end-to-end medical billing, coding, and audit services make money matters safer for medical practices.
FAQs
How often should my practice get a professional Medicare audit?
Your practice should get a professional Medicare audit at least once per year. This proactive approach catches errors and ensures you are compliant with yearly Medicare policy changes.
What are we losing if our documentation isn’t perfect?
That means you are losing money and legal defense. Imperfect notes cause underpayments, denials, and recoupment.
If an audit finds we owe money back to Medicare, what happens next?
If your internal audit finds you owe money (an overpayment), you have 60 days to report and return the funds to Medicare voluntarily. This refund often prevents major penalties and saves your reputation with the payer.
