Coding Audit Readiness: How to Prepare Before the Auditors Arrive

The Office of Inspector General publishes its annual Work Plan, Recovery Audit Contractors post their active issue lists, and Medicare Administrative Contractors announce their probe reviews. The specific coding and documentation patterns that attract external scrutiny are, in most cases, public knowledge.

Practices that conduct regular internal coding audits — using audit targets informed by the same public guidance that drives external scrutiny — find and correct compliance issues before they become audit findings. The practice that discovers a documentation pattern issue in an internal audit has options; the practice that discovers the same issue in a RAC demand letter does not.

Building an Internal Audit Program

A basic internal audit program reviews a statistically meaningful sample of claims across the provider types and service categories most relevant to the practice — typically 10 to 20 records per provider per quarter for E/M services, and targeted samples for high-risk procedure types.

Each audited record is reviewed against the documentation requirements for the code billed: does the note support the level of medical decision making or time basis? Are diagnoses coded to the appropriate specificity? Are all required elements present? The audit findings are summarized at the provider level, creating the data needed for targeted education.

Evaluating E/M Documentation Under 2021 Guidelines

The 2021 E/M documentation guideline changes — which moved office and outpatient E/M level selection to either medical decision making or total time, eliminating the history and exam component counts — are now several years old, but variation in documentation practices persists. Internal audits should assess whether providers have adapted their documentation patterns to the current guidelines.

Common findings under the current guidelines include: reliance on history elements that no longer drive level selection, inadequate documentation of medical decision making complexity when the note supports a higher level, and inconsistent time documentation for encounters where time is the selected basis.

Responding to Audit Findings

An audit finding is an educational and operational opportunity. Provider-level audit results, delivered with specific examples and concrete guidance on documentation improvement, produce better outcomes than generic feedback. Providers who understand exactly what documentation element was missing — and what the corrected note should contain — can make targeted changes.

Track audit findings over time to measure improvement and to identify patterns that might indicate a systemic issue requiring a practice-wide intervention. An audit program that only produces findings without tracking improvement is less valuable than one that demonstrates a trend toward higher documentation quality and coding accuracy.