Purpose of Coding Compliance Audits
Coding compliance audits verify that diagnosis and procedure codes accurately reflect documented clinical evidence and comply with Official Coding Guidelines, payer policies, and federal regulations. These audits protect organizations from compliance risk while supporting accurate reimbursement.
Types of Audits
- Prospective audits: conducted before claim submission to catch errors early
- Retrospective audits: conducted after billing to identify patterns and trends
- Focused audits: target a specific DRG, provider, procedure, or high-risk area identified through data analysis
- Random audits: sample a cross-section of records to establish a baseline accuracy rate
Standard Audit Methodology
- Define the audit scope and select a statistically valid sample size
- Compare coded data against source documentation in the health record
- Score findings against a standardized audit tool that captures code accuracy, sequencing, and specificity
- Calculate accuracy rates and identify discrepancy patterns
- Report findings to coding staff and management with education recommendations
- Track corrective action and re-audit to confirm improvement
Risk Areas Frequently Targeted
High-risk areas commonly audited include DRGs with high reimbursement variance, evaluation and management (E/M) level assignment, modifier usage, present on admission (POA) indicators, and medical necessity for high-cost procedures. The OIG work plan is a valuable resource for identifying current federal audit priorities.
Internal vs. External Audits
Internal audits are conducted by an organization's own coding or compliance staff, while external audits may be performed by contracted auditors, Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), or the OIG. Understanding the differences in scope and authority between these entities is essential exam content.
Corrective Action and Education
Audit findings should drive targeted education rather than punitive action alone. A strong compliance culture treats audits as a continuous improvement tool, using trend data to refine coding guidelines, update query templates, and adjust CDI focus areas.
Exam Tip
Know the difference between a compliance audit and a quality review, and be prepared to calculate simple accuracy rates (correct codes divided by total codes reviewed) from a sample data set.