The Value of Medical Coding Audits

The coding process is often overlooked but is vital to an institution’s financial success via reimbursement and compliance. Medical coding is burdened with the risk of compliance penalties stemming from improper coding due to either the code chosen or a lack of provider documentation to support the code. In the past few years, regulators have increased their focus on the accuracy of medical billing leading to denials of large volumes of claims. Red flags ranging from billing data that indicates questionable billing practices to services with high national error rates can trigger a Medicare investigation. These investigations can result in large fines and challenging times for the organization.

Regular audits from a coding partner can ensure compliance, maximize revenue, and lessen the worry about any potential payer audits in the future.


The Basics

Medical coding is the transformation of healthcare diagnoses, procedures, medical services, and equipment into universal medical alphanumeric codes. Medical coding professionals review the diagnoses and procedure codes provided by the physician’s notes and/or ancillary testing results. Once reviewed, the medical coders make sure these codes are applied correctly during the medical billing process, which can include abstracting information from documentation, assigning appropriate codes, and creating claims so that insurance carriers pay the healthcare provider the correct amount.  

Medical codes translate documentation into standardized codes that tell the payers the following:

  • Patient Diagnosis
  • Medical Necessity for treatment, services, or supplies the patient received
  • Treatments, services, and supplies provided to the patient
  • Any unusual circumstances or medical condition that affected those treatments and services



Daily operations in a medical practice, hospital, and/or health system can involve a significant amount of clinical documentation and medical information. The accuracy of this information is vital to the health of an organization for risk mitigation and revenue cycle management. Coding audits enable staff and organizations to ensure accuracy is achieved and compliance is maintained.   

Coding audits serve to help medical practices and health systems understand the complexity of medical coding and billing. Another service of an audit is to review the quality of coding. The quality review ensures that accuracy is met and highlights strengths and weaknesses in the quality assurance process. Lastly, an audit promotes the health system’s commitment to maintaining compliance.  



There are many goals in an audit:

  • Determine under coding, over coding, unbundling, and lack of modifier usage
  • Identify errors or gaps in provider documentation
  • Determine the usage of incorrect medical codes, such as the use of deleted or modified codes (while rare, as most facilities use encoders, there can still be mistakes)
  • Uncover areas of payer rules if medical practice billed inappropriately
  • Identify fraudulent billing practices that are specific to the coding process, whether intentional or unintentional
  • Identify errors in claim scrubbers or claims software deficiencies specific to coding guidelines
  • Address areas of risk that may prevent a visit from a Recovery Audit Contractor (RAC)



The frequency of conducting a medical coding audit depends on several factors, including the organization’s size, staff turnover rate, and regulatory updates. It is recommended that external coding audits occur at least once a year. However, many healthcare providers require monthly or quarterly external coding audits to ensure consistent quality from coders.  

Monthly external coding audits support:

  • Greater consistency
  • Coder development & training
  • Coder accuracy enhancement
  • Compliance
  • Clinical documentation improvement
  • Maximized revenue

By conducting monthly (or quarterly) coding audits, healthcare organizations catch errors that they can recapture and rectify the mistakes resulting in increased revenue/compliant revenue. Medical coders are encouraged to stay up to date on the latest regulatory requirements and help them avoid common errors. The results of routine audits are also used as a tool in onboarding new coders. By educating based on established best practices, new coders can quickly get up to speed and produce accurate coding.

Annual audits offer backdated information for 12 months, but organizations may need to update their processes more often. By completing coding audits more than once a year, organizations can make necessary adjustments sooner rather than later, whether monthly or quarterly. The sooner inaccuracies and lost revenue are discovered, the greater the return on the audit investment.  



iMedX’s coding review program is custom-designed to identify persistent coding error patterns specific to healthcare organizations or provider/physician practices. Inpatient and outpatient coding experts are on hand to partner with the organization’s coding team to eliminate coding errors, provide education to address problem areas, and take proactive action.

  • Monitoring pre-bill coding
  • Feedback on all code changes and supporting documentation
  • Comprehensive analysis of coding trends by the department and/or coder
  • In-service coder education to enhance coding skills
  • One-on-one coder training

Coding Audits are vital to every healthcare organization’s success. It’s all about preventing, reducing, and eliminating errors – and our clients will testify not only to iMedX’s ability to keep numbers on target but also to their confidence in our compliance record. That trust begins with iMedX’s internal coding auditing process, which achieves a 95% to 98% accuracy rate independently verified by those hospitals and providers that have further audited our work. Our internal quality assurance focus also ensures our clients are provided the highest level of accuracy. When all is said and done, your bottom line is the bottom line.


Better coding audits

Contact us now to learn how ongoing coding audits can support your organization

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