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For every process and procedure, there is one omnipresent question: Do you want it to be done fast or done right? This also applies to submitting healthcare claims and the subsequent medical billing audit processes. An effective RCM is seeing claims go out as soon as possible to keep the revenue stream flowing. Any delays in the claim filings or submissions can adversely affect a healthcare organization’s revenue or cash flow. However, timely submissions must not come at the expense of accuracy – as the accuracy of claims must remain around 95-98 percent. Any number less than that might trigger retrospective audits in medical billing or something worse, a fraud investigation.
That being said – what can a healthcare practitioner do to meet the ever-increasing compliance demands? Let’s first discuss the varying:

Types of Medical Billing Audit

Health insurers often review payments made to physicians through audits, and one important type of audit is the retrospective audit in medical billing. These audits are initiated for various reasons, such as:

  • Addressing high service volume
  • Resolving coding issues

Notably, these audits may go back several years. If you receive notice about a retrospective audit from a health insurance company, do not ignore it. Remember, you can contest the retrospective audit in medical billing by providing supporting documentation.
Audits play a key role – but which type is best?
Billing compliance leaders increasingly turn to internal audits for meeting the demands for accurate and timely claim submissions. The growth of electronic healthcare records and technology allows organizations to conduct more audits. However, the debate often centers on determining the most effective type of audit to meet growing compliance requirements:

  • Prospective audits
  • Retrospective audits in medical billing

1. Prospective Audits

Prospective audits come into play before sending claims. These focus on reviewing specific, targeted cases chosen based on Office of Inspector General guidelines or high-risk areas noted in past external audits. The primary goal of a prospective audit is to find and correct any billing or coding errors before submitting the claim.
In contrast, let’s explore the equally important aspect of retrospective audits:

2. Retrospective Audits in Medical Billing

Moving on to retrospective audits in medical billing plays an essential role post-claim submission. The focus is on examining claims that have already undergone adjudication, marked as paid, denied, or pending. The main objective of a retrospective audit in medical billing is to thoroughly examine the internal claims process. By analyzing adjudication results, it aims to uncover any underlying problems or high-risk areas.
Retrospective audits become key in understanding the entire billing history comprehensively. By looking back at past claims, healthcare professionals can gain insights into the areas for improvement. This process is like peeling back layers to reveal hidden inefficiencies, helping refine and optimize the billing system.
Moreover, retrospective audits in medical billing act as a practical measure to address historical inaccuracies and enhance the overall efficiency of medical billing practices. They serve as a tool for finding errors and understanding trends and patterns in billing, ultimately contributing to a more robust and accurate billing process.
Note: Each type of audit has its supporters.

Understanding Retrospective Audits in Medical Billing:

1. Review of Payments

When a health insurer reviews the payments it provides to a physician’s office, known as a retrospective audit, the physician is informed if the insurer believes it made an overpayment for a medical procedure. Getting notification of a retrospective audit in medical billing doesn’t necessarily imply any wrongdoing on your office’s part, but it’s essential to be vigilant upon receiving such notice. If the health insurer determines it overpaid based on its medical payment policies, it might request reimbursement or propose automatic deductions from future payments to your medical office.

2. Reasons for an Audit

Health insurers undertake retrospective audits for various reasons. An increased service volume in your health practice may trigger an audit. Alternatively, suppose the insurer notices repetitive use of the same Current Procedural Terminology (CPT) code for evaluation and management or occurrence of common denial codes. In that case, they may consider it inaccurate or inappropriate for the procedure your office is performing. The likelihood of undergoing an audit rises when there is a pattern of using the same CPT code for different patients.
Moreover, a high utilization of CPT modifiers could also prompt an audit of your practice. Additionally, health insurers may conduct a random audit of your medical office or investigate nonconformity with guidelines.

3. Tax Relief and Health Care Act

Tax Relief and Health Care Act solidifies the permanence of the Recovery Audit Contractor Program. This program involves four RACs, each assigned to identify overpayments and underpayments in one of the four regions of the United States. For healthcare professionals seeking information about the current focus of audits in their state, the American Medical Association serves as a valuable resource. This ensures clarity and awareness regarding the ongoing efforts of the RAC program.

4. Responding to an Audit

If you receive a notification about a retrospective medical billing audit, you must promptly inform your medical billing providers. This ensures a collective approach to address the audit efficiently. If the audit is related to a high service volume, you can provide support for your medical billing practices by highlighting the following:

  • Size
  • Specialty
  • A patient-case mix of your practice

In cases where your practice handles complex situations, having thorough documentation to justify additional procedures becomes equally important.
Establishing a strict billing protocol is another key step to validating health claims during an audit. Staff may change over time, but following clear procedures allows for continuity even with personnel changes. This ensures that others can easily follow established protocols, maintaining consistency in medical billing practices.
Remember, contesting an audit is your right. You can safeguard your practice by hiring an attorney specializing in medical billing audits. Their expertise can protect your practice’s interests.


The effectiveness of the claims process relies not solely on prospective or retrospective audits but on a mix of both. Combining these audit types allows you to capitalize on their advantages, lessen disadvantages, and create a strong strategy for achieving clean claims and timely filing. Initiating retrospective audits in medical billing addresses the limitation of statistical significance inside the prospective audits. Insights gained from prospective audits guide a complete retrospective audit, targeting specific areas of concern. This ensures a focused review of claims more likely to have errors. The combination of prospective and retrospective audits forms a revenue integrity program centered on process improvement and corrective action, a complete approach for sustained success in the healthcare industry.



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