Why medical auditing is important

Medical auditing done by or for the provider organization is important because it keeps coding and billing mistakes from getting out of hand. Audits not only find wrong coding, but they also stop wrong coding from happening again. When a company makes claims mistakes over and over, the mistakes add up and make the company look bad to the government.

Medical auditing solves the problem of ignorance because it finds places where rules aren't being followed. Ignorance is a liability. To understand why it's up to the provider organization to find improper coding and billing practices, think about:

1. A common pattern of mistakes that leads to higher reimbursements looks like fraud and may be impossible to tell apart from fraud.

2. For the payer, a pattern of errors that leads to higher payments to the provider is the same as fraud.

The laws about healthcare fraud, especially the False Claims Act (FCA), make it hard to know what people are trying to do when they overcode and overbill all the time. Under the FCA, it is not necessary to have had the intention to cheat to be prosecuted and punished.

When you send a claim to Medicare or Medicaid, you are at the same time certifying that you are entitled to the payment coded on the claim. The OIG explains the FCA's purpose by saying, "If you knew or should have known that the claim you submitted was false, then trying to get paid is a violation."

Should have known is the key phrase to remember. The OIG says again and again, "It is against the law to send Medicare or Medicaid claims for payment that you know or should know are false." This means that you are legally responsible for upcoding, double-billing, unbundling, failing to prove medical necessity, and any other mistake that would lead to a false claim that you are owed money you don't have.

Why is auditing medical records so important? If someone breaks the FCA, they can be fined up to three times the amount of money the program lost. Also, according to the regulations for 2022, they can be fined up to $23,607 for each claim they submit that breaks the law. Some agencies could give even harsher fines.