Coding Audit Tool: Function and Importance in Medical Facilities

Coding Audit Tool: Function and Importance in Medical Facilities

Internal coding audits are necessary in any medical setting. By completing regular internal audits, you can identify any potential issues and correct them. This will help you maintain your billing compliance and increase your organization’s financial health by protecting your revenue. 

While auditing is a proactive step, completing the internal audit process can be time-consuming. Collecting and reviewing the data is only half of the battle. Looking for trends or errors requires having the right tools in place to highlight any problem areas.

A medical coding audit tool can streamline this process. Whether you are doing a high-level analysis or a complete audit, you can bolster your internal processes and allow you to take necessary actions before you run into problems.

Risks in Coding Practices

Whether you are underbilling, overbilling, or submitting incorrect codes, the risks of code errors are huge. You face financial ramifications as well as external audits from Medicare or other payers into your coding practices.

Unfortunately, the reasons for errors stem from several root causes. Only an audit can help you determine the underlying reasons for the errors. From there, the onus is on you to determine the corrective action.

Goals of an Internal Audit

Part of your internal audit should include identifying your strategic initiatives. Do you have weaknesses in lost charges or poor documentation? Do your coders lack the training to submit the proper codes or do you face a lot of payer denials?

Based on your strategic initiatives, your audit process may have several different goals. These may include:

  • Determining incorrect medical codes used
  • Identifying intentional or unintentional fraudulent billing practices
  • Determining any undercoding, overcoding, or unbundling that may be occurring
  • Identifying any risks that may trigger a visit from a Recovery Audit Contractor (RAC)
  • Uncovering inefficiencies in payer reimbursement
  • Identifying issues in provider documentation

Based on your initiatives, you can design your audit to include the right sample of records. This should be based on either the highest volume of records where errors are occurring or where you face the most risk.

Once you have determined the corrective action, you should conduct regular follow-up audits. These will help you determine the success or additional measures that need to be taken.

Importance of a Coding Audit Tool

With an internal audit, you often face limitations in resources. Your sample may represent a snapshot and not give you continuous monitoring of any issues that you identify. You also need to have the right professional with the right expertise to complete such an audit. 

You also need to rely heavily on that person’s ability to mine through a lot of data and identify trends or errors. If you are trying to address multiple strategic initiatives, you risk that you may not receive the information in a timely manner. Compilation of the data, reviewing the data, and determining the corrective action are all dependent on feedback from the auditor.

The focus of your audit should be the results, not the process to get there. Too much time spent on your internal auditing continues to leave the door open for financial penalties or revenue risks due to coding issues.

Instead, a coding audit tool can provide continuous monitoring and present you with real-time results. You can receive insights and compare performance metrics against your peer metrics.

This allows you to spend more time on the process improvement needed to complete any corrective actions rather than focus on compiling and reviewing the data. 

Functions of a Coding Audit Tool

You want your coding audit tool to provide robust analysis and dig deeper into your data than a human auditor would be able to complete. Without the time or volume constraints, you can cover more ground and complete a more thorough review.

The functionality of your coding audit tool should enable you to eliminate the manual tasks. The right audit tool features will improve the productivity of your audit team.

Creating and Scheduling Audits

Based on the criteria you determine, you should create and schedule audits. Whether you create audits in bulk or automate the scheduling of future audits based on the results, your audit creation should involve minimal effort. 

Analysis of Charges

Based on a review of all charges, you want to identify where you face the most risk. For example, these risks could come from new providers or new coders.


You want to identify patterns or anomalies that could point to a potential issue. These can help you target areas for corrective action or where additional education may be needed.

Analytics and Dashboards

Your audit data is only as good as it is digestible. Easy-to-review information through analytics or dashboards can alert you to issues. You need to have a good understanding of the financial impact of inaccurate coding.


You want to generate the necessary reports to share with different departments internally. These can drive your corrective actions, as well as provide trends so that you can see if your measures are effective. Reporting allows you to emphasize to staff the identified issues and the resulting impact.

Your reports should be both timely and customizable, allowing your organization to respond quickly to the results of your audit.

The Right Medical Coding Audit Tool for Your Medical Facility

Regular audits are about more than identifying problems. They can also help you improve your clinical documentation, enhance your data integrity, and target areas of focus for your coding initiatives.

Whether you need a hospital coding audit tool or physician coding audit tool, you want a solution that supports your audit efforts. A tool with built-in analytics can help you can prioritize your corrective action plans.