How to Do a Medical Billing Audit? Steps, Checklist, and Tips

How to Do a Medical Billing Audit

A billing audit is one of the few revenue-cycle tasks that pays back quickly. It helps you catch coding and documentation gaps before a payer does, spot underpayments you would have missed, and reduce the chances of painful takebacks. If you have seen rising denials, sudden payment reductions, or random recoupments, a structured internal audit is often the fastest way to find the real cause and fix it.

This guide breaks down exactly how to run a medical billing audit step by step, without turning it into an overwhelming compliance project.

What a medical billing audit actually means?

A medical billing audit is a structured review of claims and medical records to confirm three things: the documentation supports the service, the coding is accurate, and the payer rules were followed. The goal is not only compliance. A good audit also finds revenue opportunities like underpayments, incorrect bundling, and preventable denials.

If you are unsure which type of audit you are preparing for, start with types of medical billing audits because the workflow changes depending on whether it is prepayment, post-payment, internal, or contractor-driven.

Step 1: Choose the audit goal first

Audits fail when the scope is vague. Pick one primary goal so your team knows what to look for. The most common provider goals are reducing denials, preventing recoupments, validating E/M levels, reviewing modifier usage, or finding underpayments.

If your practice is dealing with payer takebacks right now, treat this as a risk audit and connect it to your internal recoupment workflow. That is where most revenue losses hide.

Step 2: Pull billing data before pulling charts

Do not start by opening random records. Start with billing and payment data so your chart sample is intelligent.

Pull a simple report for the last 60 to 90 days that includes:

• Top CPT codes by volume
• Top CPT codes by revenue
• Claims with frequent modifiers
• Claims with high charge lines
• Denials by category and payer
• Adjustments, reversals, and takebacks

This is where you will usually find patterns. If your reports show frequent “missing info” denials, your audit should also reference most common denial codes in medical billing so you can map payer language to real operational fixes.

Step 3: Pick a sample that finds real problems

Random sampling alone is rarely enough. Most practices do better with a blended approach: choose a risk-based sample and add a smaller random sample to catch hidden workflow issues.

A practical starting point is 25 to 40 encounters per focus area. If you discover a repeat issue, expand the sample until you understand whether it is an isolated error or a system problem.

Step 4: Use a single audit checklist so reviews stay consistent

A billing audit should be repeatable. That only happens when reviewers use the same checklist.

At minimum, each audited claim should confirm:

• Signed note and correct date of service
• Clear assessment and plan that supports the service
• Procedure documentation when applicable
• Orders, referrals, and results when required
• Authorization proof when required
• Time documentation when time-based billing applies

If your team struggles with denial follow-up, pair this step with your workflow from handle denials in medical billing so the audit does not become a separate process that no one sustains.

Step 5: Audit documentation before you audit coding

Many providers chase coding errors when the real problem is documentation. Review the note first and ask a simple question: would an outside reviewer understand what was done and why it was necessary?

Weak documentation commonly shows up as:

• Missing medical necessity language
• Templates that do not capture required elements
• Lack of clinical detail to support higher E/M levels
• Missing signatures or incomplete orders

This is also where specialty patterns show up. For example, documentation gaps plus incorrect bundling can lead to denials tied to unbundling in medical billing.

Step 6: Audit coding line by line against the note

Now compare what the chart supports to what was billed. Verify:

• CPT or HCPCS matches the service performed
• ICD-10 supports medical necessity and aligns with the note
• Modifiers are supported by documentation
• Units match what was delivered
• Place of service and rendering provider are correct

This is where many practices uncover frequent “almost correct” billing, such as missing modifiers, mismatched diagnosis linkage, or unit errors that are small per claim but huge across a month.

Step 7: Validate payer rules and common denial drivers

Coding can look fine and still fail when payer rules are not met. This is especially true for authorization requirements, frequency rules, and coverage policies.

As you audit, cross-check whether the claim lines you review are also associated with recurring denial categories like:

• Eligibility or coverage
• Prior authorization
• Medical necessity
• Coordination of benefits

If COB is a repeat issue in your A/R, it’s worth reviewing your insurance verification and payer sequencing steps. Many COB denials look like a payer issue, but the real cause is often missing or outdated primary insurance information.

Step 8: Compare expected payment to actual payment

A billing audit is not only about overpayments. You should also look for underpayments.

For each audited claim, compare:

• Allowed amount vs your contracted expectation
• Correct application of patient responsibility
• Unexpected bundling or reductions
• Denied line items that should have paid
• Incorrect secondary processing when applicable

If your practice uses multiple billing tools, your audit should also check whether system settings are causing payment posting errors or missing edits. Even with top medical billing software, small configuration gaps can lead to underpayments that go unnoticed.

Step 9: Categorize findings by root cause, not just by mistake

This is the step that actually reduces repeat errors. Do not only write “wrong code.” Record why it happened.

Most audit findings fall into a small set of root causes:

• Documentation habits
• Coding knowledge gaps
• Template and workflow problems
• Authorization and referral breakdowns
• Provider enrollment mismatches
• Charge capture or interface errors

If you’re seeing rejections tied to provider setup, like enrollment status, credentialing, or taxonomy mismatches, it’s worth understanding the difference between provider enrollment and credentialing, because these issues often cause avoidable claim delays and payment problems.

Step 10: Fix findings and re-audit quickly

An audit that does not lead to action becomes busywork. Build a correction plan your team can actually execute. That usually includes targeted provider education, coder feedback, template updates, claim edits, and workflow fixes.

Then re-audit the same area in 30 to 60 days. This is how practices reduce recurring denials instead of repeatedly reacting to them.

How OneMed Billing Can Help With Medical Billing Audits

If your team already has a full plate, running audits consistently is hard. Charts don’t get pulled on time, findings don’t get tracked, and the same denial patterns keep coming back month after month. That’s where OneMed Billing can step in with comprehensive medical billing audit services that help you find what’s leaking revenue, what’s creating risk, and what needs to change so it doesn’t repeat.

We support your audit process end to end, starting with identifying high-risk areas based on your payer mix, top CPT codes, denial trends, and payment variance. Then we review documentation and coding for accuracy, flag gaps that could trigger denials or takebacks, and identify underpayments that are often missed when claims are marked “paid.” Most importantly, we turn findings into a clear action plan, including education points, workflow fixes, and billing corrections your team can implement without disrupting day-to-day operations.

Conclusion

A medical billing audit does not need to be complicated. Start with a clear goal, pull billing data first, sample intelligently, audit documentation before coding, validate payer rules, and tie every finding to an action plan. When audits become routine, recoupments feel less random, denials drop, and revenue becomes more predictable.