Top 10 Claims Audit Best Practices

The Need for Increased Payment Accuracy

With U.S. healthcare claims processing and payment error rates ranging from 7-10% and administrative costs to reconcile those errors exceeding $7 billion, there’s plenty of room for improvement and a significant savings opportunity for those organizations looking to improve their claims audit process.

Estimated Cost of Healthcare Claims Processing Errors

Top 10 Claims Audit Best Practices

# 1: Leverage technology to automate audit processes and reporting

Payers can increase the efficiency and effectiveness of their audit units by leveraging technology to streamline and automate manual and repetitive tasks, pre-screen claims for potential issues, standardize audit tracking, and facilitate reporting. This streamlining and automation will free up resources to audit more claims, perform more analysis, and mitigate errors.

# 2: Identify and address problem areas

Audit units should identify the problem areas that create processing and payment errors based on prior audit findings, known system issues and limitations, random audit results, appeals/disputes, and overpayment recoveries. Leveraging technology (#1) allows these problem areas to be flagged so that filters/reports can be run to more efficiently review potential issues and identify errors.

# 3: Utilize an audit tool for reviewing claims and tracking findings

Audit processes based on spreadsheets and paper reports limit the capability and potential of an audit unit. Auditors need a database application (audit tool) to more easily review claims, track findings, quantify results, and run reports. Spreadsheets and paper reports are not sufficient and are inherently manual. An effective audit tool should have dynamic and configurable audit flags, filters, and reports to allow auditors to efficiently perform a wide variety of audits (focused, high dollar, random sample, etc.), review problems areas, identify errors, and measure results.

# 4: Standardize audit tracking

Standardize the tracking of audit results and errors to facilitate reporting and root cause analysis. It is important not only to have standard error codes and error types, but also to track the correct amount that should have been paid in order to determine payment accuracy. At the same time, custom auditor comments should provide additional detail on assigned errors and needed follow up.

# 5: Automate the identification and assignment of errors

Where possible, automate the identification and assignment of errors, especially on routine audits that are repetitive, have clear error criteria, and don’t require a high level of auditor expertise. Free up auditors’ time to research more complex issues that require their deeper expertise and follow up on errors to make sure they are corrected and mitigated going forward.

# 6: Enable a dynamic audit process

The claims adjudication process is dynamic and ever-changing due to regulatory, contractual, benefit plan, industry, and system changes; therefore, audit processes and criteria must be dynamic and ever-changing too. Oftentimes, audit criteria is established and remains unchanged for years at a time. A static approach to auditing limits the benefits that can be realized from the audit function.

# 7: Institute real-time and multi-faceted reporting

When a database application (#3) is used to track audit results, findings only need to be entered once and manual steps are not needed to quantify results. Therefore, audit results are immediately available for reporting and follow up, with no delays or manual steps required between the completion of audits and the ability to report on them. Additionally, audit reporting should be comprehensive and include overall audit results, error detail, examiner performance, auditor performance, processing/payment accuracy trends, most frequent/costly errors, and most problematic vendors/providers.

# 8: Create an infrastructure of accountability

Use audit results and reporting to create benchmarks for examiners, set department goals, hold examiners and departments/units responsible for their performance, and drive improvements in processing and payment accuracy.

# 9: Perform root cause analysis and continuous quality improvement

Analyze audit results to determine the root causes of issues. Also analyze appeals/grievance and recovery data to see what is slipping through prepayment audit processes. Create feedback loops and work groups involving the audit unit, claims, IT, medical management, network management, and other departments to review audit findings, analyze the root causes of errors, and identify solutions to mitigate errors going forward.

# 10: Auditor continuing education and training

Auditors should receive periodic training and updates on regulatory guidelines, issues, and changes in addition to compliance, reimbursement methodologies, DOFR, benefit plans, and other areas in which they need to maintain expertise. The audit unit should subscribe to regulatory and industry updates from CMS, coding and compliance vendors, and healthcare finance/HIM/compliance industry groups to stay up to date on the most current and pressing issues.

Don’t Lose Sight of your Claims Payment Accuracy

If you are interested in making your current claims audit processes more robust, reducing errors and saving overpayment and rework costs, ask about how the Claims Audit Tool™ application can be a turnkey solution for your organization. For more information, call 888-454-0202, option 5 or email

About HCIM

Since 2000, HealthCare Information Management, Inc. (HCIM) has delivered expert consulting services and robotic automation tools for small to mid-sized healthcare payer and managed care organizations. Our concierge consulting services include everything from core claims system procurement to go live, including configuration, migration, upgrades, reporting, benefits and fee schedules, user training, and project resourcing. We also offer strategic consulting in the areas of value based payments, population health, medical management, medical loss analysis and recovery, care management, provider contract modeling, data analytics, and business process reengineering/analysis.