Insurance Claim Audits Help Physicians Ensure Billing, Reimbursement Accuracy by Whitney K. Schiffer, CPA

Posted on October 11, 2023 by Whitney Schiffer

Just as annual checkups help patients identify health issues before they become bigger problems, insurance claim audits can help medical practices detect potential revenue cycle problems before they result in significant financial losses.

Declining commercial insurance rates and reimbursements have become persistent problems for physicians in private practice, who also face increasingly complex and costly administrative challenges throughout every step of the revenue cycle. The medical coding and billing process, in particular, is laden with so many potential landmines that claim denials are becoming increasingly common, especially among private, physician-owned practices with limited support staff. Not only must medical practices keep up to date with ever-changing billing and reimbursement codes, but they must also gain a keen understanding of all the information different insurers look at when reviewing claims. However, without testing and auditing claims, physicians have no way of knowing whether underpaid insurance reimbursements are due to human error on their end of the billing process or if the problem is due to the action or inaction of the insurer.

The first step in a professional audit of a medical practice’s insurance billings and reimbursements is to scrub and test the data to ensure its accuracy. This includes confirming patients’ names, insurers, dates of service, total charge amounts, patient payments and insurance payments. It also requires practices to ensure the accuracy of the medical diagnostic and treatment codes they use to bill patients’ insurers and compare them against their chargemasters and the agreed-upon reimbursement rates for the contracted period.

Rather than testing the practice’s entire universe of claims, auditors may pull samples by dates, procedure codes and insurers. The process involves a careful and often lengthy review of all documentation related to those claims, including patients’ clinical records, medical treatment codes applied, insurance contracts and patient copayments, to first identify any billing errors from actual underpaid reimbursements.

For example, insurance companies may deny specific claims or request supplemental information before issuing reimbursements. The claims may contain the wrong medical diagnoses and treatment codes, or the practice may have failed to get pre-authorization for a patient’s medically necessary care. These practice errors must be separated from all other instances when insurance reimbursements were less than the agreed-upon rate and projected out to all the claims outside the sample.

Once the underpaid claims are identified, auditors can review the executed reimbursement agreement between the practice and the insurance company to calculate the expected amount the practice should have received based on the services it provides under that contract. Any reimbursements the practice receives that are less than the contracted amount must be researched further to identify and document the rationale behind such underpayments or claim denials. When neither exists, the practice may have legal grounds for a breach of contract.

Because insurance reimbursements are the standard method of payment for many physicians and healthcare facilities, they must work with CPAs and accounting professionals to develop appropriate strategies for reducing claim denials and identifying insurance underpayments before they have a significant impact on physicians’ bottom lines and their ability to continue in private practice.

About the Author: Whitney K. Schiffer, CPA, is a director of Assurance and Advisory Services with Berkowitz Pollack Brant, where she works with hospitals, health care providers, HMOs, third-party administrators and real estate businesses. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at