Receiving an insurance audit notice can be a daunting experience for healthcare private practice owners. An audit brings the potential for intense scrutiny of your billing practices, documentation, and overall compliance with insurance requirements. However, with the right preparation and understanding of the process, you can navigate this challenge smoothly and ensure your practice remains in good standing, with minimal disruption to your practice. 

In this article, we'll explore essential steps and best practices to help you handle an insurance audit notice effectively, safeguarding your practice against potential risks and disruptions.

Process of an insurance audit for private practice 

If you received notice of an insurance audit, it’s normal to feel anxious for the process ahead. However, gathering an understanding of what’s to come can help you feel more at ease, and confident about how to prepare. 

Here’s an overview of the insurance audit process: 

• Notification: Your private practice will be notified about the audit, usually specifying the records and claims to be reviewed.
• Record Submission: As the practice owner, you must provide the requested documentation, which may include patient charts, billing records, and appointment schedules.
• On-Site or Off-Site Audit: The audit can be conducted on-site at the practice or off-site at the payer’s location.
• Review and Findings: The auditor reviews the documentation and identifies any discrepancies or areas of non-compliance.
• Report and Resolution: A report is generated detailing the findings. You may need to repay overpayments, correct billing processes, or take corrective actions based on the audit results.

What insurance payers will focus on during an audit

No matter how much of a tight ship you run, it’s nerve-wracking for an external party to go through the ins and outs of your business. The auditor will likely focus on the 4 below categories: 

• Coding Accuracy: Ensuring the correct use of ICD-10, CPT, and HCPCS codes.
• Medical Necessity: Verifying that the services provided were medically necessary and appropriately documented.
• Billing Consistency: Checking for consistent and accurate billing practices across different patients and services.
• Patient Documentation: Ensuring that patient records are complete, accurate, and justify the services billed.
  

The impact of an audit for your healthcare private practice

Medical billing is complex, and mistakes can happen to even the most seasoned providers. Ideally, the auditor will find few to no errors, verifying your current processes. However in the case that there have been frequent errors over time, there can be repercussions as follows: 

• Financial: Potential recovery of overpayments or financial penalties if discrepancies are found. These are typically referred to as “clawbacks” from the payer, and can be staggering in their amount. Payers can also audit several years back and clawback payouts from years prior. You’ll be able to appeal the clawback, but encountering a clawback can be a stressful situation. 
• Operational: You may be required to make changes in billing practices, staff training, or process improvements.
• Reputation: Ensuring compliance can enhance your practice’s reputation with payers and patients.

While the financial implications are generally the most feared and focused upon, it is important to adapt suggested operational changes and uphold a positive reputation. 

10 steps to take if your private practice is being audited by an insurance payer

After receiving an insurance audit notice, private practice owners can follow these 10 best practices to ensure a smooth process and minimize potential issues:

1. Prepare thoroughly for the audit

Make the best of a challenging situation by ensuring you’re as organized as possible and able to retrieve records with ease. 

• Gather Documentation: Collect all relevant documentation, including patient records, billing records, treatment plans, and any correspondence with the payer.
• Organize Records: Organize records in a systematic manner, making it easy to retrieve specific documents quickly.

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2. Understand the scope of payer’s audit

An insurance audit does not open up all parts of your business to the auditor. Instead, gather a full understanding of the audit so that you are prepared with the information you need. 

• Clarify the Audit: Confirm the scope of the audit with the payer. Understand which claims, time periods, and specific issues are being audited.
• Know Your Rights: Be aware of your rights and obligations during the audit. Familiarize yourself with the payer’s audit process and policies.

3. Designate a point of contact

Having a designated liaison can streamline communication and prevent confusion. 

• Assign Responsibility: Designate a knowledgeable staff member or compliance officer to be the primary point of contact for the audit.
• Coordinate Communication: Ensure that all communication with the auditor goes through this designated contact to maintain consistency and control over the information shared.

4. Maintain open communication with the auditor

It is probably your first time going through the audit process. Be cooperative and ask questions as needed. 

• Be Transparent: Communicate openly and honestly with the auditor. Provide the requested information promptly and accurately.
• Seek Clarification: If any part of the audit process or requests are unclear, ask for clarification to ensure you fully understand what is being asked.

5. Review and validate your information

Providing inaccurate information has potential to greatly drag out the auditing process. Dedicate time and effort to properly gathering and submitting the correct information requested. 

• Double-Check Data: Review all documentation and information before submitting it to the auditor to ensure it is accurate and complete.
• Highlight Key Information: Clearly highlight key information that supports the claims and services provided, making it easier for the auditor to find relevant details.

6. Cooperate and be professional

While this can be a stressful and time-consuming process, it can be made more difficult if met with the wrong attitude. 

• Stay Calm and Professional: Approach the audit with a calm and professional demeanor. Cooperate fully with the auditor and be responsive to their requests.
• Provide Assistance: Offer to provide additional context or information if needed. Demonstrating a willingness to assist can help facilitate a smoother audit process.

7. Document the audit process

Documentation throughout the audit process will increase clarity, demonstrate your cooperation, and provide reliable notes if your audit liaison were to be called away unexpectedly. 

• Keep Records: Maintain detailed records of all communications and interactions with the auditor, including emails, phone calls, and in-person meetings.
• Audit Trail: Document what information was provided, when it was provided, and any responses or feedback from the auditor.

8. Address findings promptly

Help the audit move along swiftly by placing all audit requirements at hte top of to do lists.

• Review Audit Report: Carefully review the auditor’s report and findings once the audit is complete.
• Respond Quickly: Address any identified issues or discrepancies promptly. Provide any additional information or corrections required by the auditor.
• Implement Corrections: Take corrective actions to resolve any issues identified during the audit and to prevent similar issues in the future.

9. Learn and improve your practices

Wondering what is worse than being audited? Being audited again. Be willing to accept errors when they have been made, and make changes to prohibit them from happening again. 

• Identify Weaknesses: Use the audit as an opportunity to identify areas of weakness or non-compliance in your practice’s billing and documentation processes.
• Implement Changes: Implement changes and improvements based on the audit findings to enhance your practice’s compliance and reduce the risk of future audits.

10. Seek Professional Assistance

You don’t need to do this on your own, one of the best things you can do is get professional input. This becomes increasingly important if the insurance payer is reclaiming reimbursements that they have already paid to you – commonly referred to as a clawback. 

• Consult Experts: If the audit is complex or if you encounter significant issues, consider consulting with a healthcare attorney or a professional with expertise in insurance audits and compliance.
• Get Support: Professional assistance can help you navigate the audit process more effectively and ensure that your practice is adequately protected. 
  

No matter the business, industry, or person, audits are universally unliked. Insurance audits can make you unsure, even when you’re confident in all of your business transactions. The best defense against audits in private practice is to ensure you respect policies and regulations, as well as leverage secure tools. Using a HIPAA-compliant EHR and practice management platform, such as Healthie, can provide a robust security buffer for your business. Additionally, leveraging secure technology can inspire feelings of safety for patients using your services, enhancing your patient-provider relationships.