Notes for practice owners
Medical billing audit: a payment audit, not a compliance audit
A medical billing audit reviews your claims and payments to find errors. There are two kinds. A compliance audit checks that you didn't bill more than the record supports. A payment audit checks that insurers paid you what your contracts say, and it's the one that finds money. Most practices have only ever had the first.
Here's what the second kind turns up. At a Miami orthopedic practice with its own billing team, our team checked every payment line. $107,394 of $565,779 in insurance revenue had been paid short or denied the first time. That's 19%. Nobody had done anything wrong. Nobody had been asked to check.
Which kind of audit do you need?
| Compliance (coding) audit | Payment audit | |
|---|---|---|
| The question | Did we bill more than the record supports? | Did insurers pay what they owe us? |
| What it reads | Visit notes and the codes billed | Every payment line, your contracts and fee schedules, every denial |
| What it protects | You, in a payer or government audit | Your revenue |
| What it usually finds | Coding fixes and training needs | Underpayments, administrative denials and downcoding you can still recover |
Both are worth doing. But if the goal is money, ask for the second by name. A "billing audit" quote that only samples 30 charts for coding accuracy won't find a single short payment.
What a payment audit should check
- Every paid line against your contract rate. Not a sample. Short payments close to a zero balance exactly like correct ones, so they never show up as a problem. See why underpaid claims look paid.
- Rate changes. Contracts that move on January 1, or that pay a percentage of Medicare, are where last year's rate keeps getting paid. The check is in new contract rates on January 1.
- Denials by reason, not just by count. Administrative denials (eligibility, authorization on file, timely filing with proof, visits wrongly bundled into a surgery) are often reversible. Each insurer has its own window, so the audit should list deadlines. See the Florida appeal deadlines table.
- Downcoding. Visits billed at one level and paid at a lower one. Several insurers now review level 4 and 5 visits automatically. See downcoding in medical billing.
- Payment cuts for multiple procedures. When two procedures happen in the same session, the second pays less, by rules that differ by insurer. Under one Florida insurer's current table, a second shoulder scope pays 10.5% of its fee. The audit should confirm each cut was applied correctly. See multiple procedure payment reduction.
- Rule changes. Our team counted 84 changes to the payment rules for orthopedic claims at five large insurers between November 2024 and October 2026. Each one can turn a correct claim into a short one.
What a payment audit finds
At the Miami practice above, the $107,394 broke down like this:
| What we found | Amount |
|---|---|
| Denials recovered on a first pass | $56,961 |
| Denials still recoverable | $25,316 |
| Paid below contract | $13,614 |
| Paid below Medicare-based rates | $11,503 |
Almost a quarter of it sat on claims that showed as paid. The full story is in the case study.
How to choose a medical billing audit company
Five questions separate a payment audit from a coding review with a different label:
- Do you check every payment, or a sample of charts? Every payment line is the answer you want.
- Do you compare against our actual contracts and fee schedules? Not national averages.
- Which problems do you look for? Underpayments, administrative denials and downcoding, all three.
- Do you file the appeals, or hand us a list? A list your team has no time to work recovers nothing.
- How do you protect patient data? Expect a business associate agreement before any data moves.
More on picking a partner is in denial recovery companies: how to choose one.
What it takes to start
Three things: your electronic payment files from the insurers (your billing system or clearinghouse can export them), your contracts or fee schedules, and a signed business associate agreement. On our side it's hands-off for your team. About an hour of your time.
Florida law also helps here. For Florida-regulated plans, you have 12 months after an insurer pays a claim to dispute an underpayment, under section 627.6131, Florida Statutes. More in Florida's 12-month underpayment rule.
Questions people ask
What is a medical billing audit?
A medical billing audit is a review of your claims and payments to find errors. A compliance audit checks that you didn't bill more than the record supports. A payment audit checks that insurers paid you what your contracts and fee schedules say.
Is a billing audit the same as a coding audit?
No. A coding audit is usually a compliance check on your documentation and codes. A payment audit looks the other way, at what insurers paid, and finds underpayments, administrative denials and downcoding.
What does a payment audit usually find?
At one Miami orthopedic practice our team reviewed, $107,394 of $565,779 in insurance revenue, about 19%, was paid short or denied the first time. Results vary by specialty, payer mix and contracts.
How often should a practice audit its payments?
Check new payments every month, and do a full look-back once a year and after any contract change, especially in February after January 1 rate updates.
Does a billing audit mean my biller did something wrong?
Usually not. Billing teams are measured on claims sent and denials worked. Checking every paid line against the contract is a separate job that often isn't in their scope.