Medical Coding Audit: What Reviewers Actually Look For

Re-coding claims may seem like the natural first step in audit preparation. But passing an automated edit is not the same as demonstrating that the billed service is supported.

Welcome! I’m Dr. Dreama Sloan-Kelly, MD, CCS, CPC, a physician executive. Over two decades of work at the intersection of clinical documentation, coding, and revenue integrity, one lesson has stayed with me: a claim that survives a payer edit is not the same as a claim that survives a review.

Where coding audit findings actually come from

Audit selection rarely begins with a single claim. Claims analytics, utilization patterns, coding anomalies, and payer-specific triggers all feed into how a practice gets selected for review. Once a review begins, however, the reviewer’s central question is consistent: does the record support what was billed?

External reviewers and internal auditors both work from the same materials. They read the clinical note, the claim, and the coding logic together, and they look for gaps that automated edits cannot catch: a note that is missing, incomplete, or ambiguous. A claim can pass the NCCI edit and still fail the review, because the edit engine and the reviewer are answering different questions.

Passing automated edits is a starting point, not a defense. What establishes a defensible claim is documentation that is complete enough to be reviewed, and documentation that supports the medical necessity of the service billed. Both accurate coding and sufficient documentation are necessary; neither is enough on its own.

What reviewers actually look for

Documentation that supports the service billed

Documentation completeness and medical necessity are two different tests, and reviewers apply both.

Documentation completeness asks whether the note is present, legible, attributable, and internally consistent: what was done, when, by whom, and what the record shows. Medical necessity asks a further question: was the service reasonable and appropriate for the patient’s condition, and does the record demonstrate it? A note can be complete and still not establish medical necessity, and a service can be medically necessary while the note fails to prove it. CMS guidance on complying with medical record documentation requirements spells this out: medical records are used to support coverage, coding, and billing, and the documentation needs to be sufficient to support the services reported.

A common scenario: a practice receives an audit request and discovers the note exists, but it does not identify the performing provider clearly. The service was furnished; the record does not prove it. That gap can prompt a finding.

Code selection that follows the documentation

Reviewers compare the CPT or HCPCS code to what the note actually describes. They check specificity, laterality, units, and whether the code’s own definition matches the service documented. When the code and the note disagree, the code loses.

The code should follow the documentation, not lead it. When coding is used to compensate for a thin record, the audit finds it.

Modifier use that fits the circumstance

Modifiers are among the most frequently reviewed claim elements, and among the most frequently misused. Reviewers ask two questions: does the documentation support the modifier, and does a more specific modifier apply instead?

CMS guidance on proper use of modifiers 59, XE, XS, XP, and XU makes the point directly: these are tools for reporting distinct services in appropriate circumstances, not general-purpose overrides. Passing an edit does not establish medical necessity.

Where practices can get caught off guard: treating a clean edit report as evidence that the claim is audit-proof. The edit engine and the reviewer answer different questions, and only one of them has the chart in front of them.

Diagnosis specificity that matches the date of service

Diagnosis codes must be specific enough for the date of service and consistent with the documented condition. Reviewers check whether the diagnosis supports the service billed, and whether the record supports the diagnosis.

Claim completeness and consistency

Date of service, place of service, units, provider identifiers, and diagnosis pointers all get checked against the documentation. Mismatches between fields are among the simplest findings to make, and among the easiest to prevent.

How to prepare before the request arrives

Preparation is not only a code review or only a documentation review. It is a check that the claim, code selection, documentation completeness, and medical-necessity support align.

• Sample your own records first. Pull a representative sample of claims and review the claim, code selection, and supporting notes together. Look for the gaps listed above.
• Check the note-to-claim link. Confirm each claim can be traced to a note that identifies the performing provider, is complete, and supports the service and its medical necessity.
• Review modifier patterns. Check that modifier use, including modifiers 25 and 59, fits the applicable coding rules and is supported by the documentation.
• Fix documentation gaps at the source. A claim-level correction fixes the claim. A documentation-habit fix prevents the next audit finding.
• Build a repeatable internal audit. Define what gets reviewed, how often, who reviews it, and what happens when a finding appears.

The takeaway

Audit selection may begin anywhere: with claims analytics, utilization patterns, or coding anomalies. But what holds up under review is the pairing of accurate coding with documentation that is complete and demonstrates medical necessity. A practice that prepares its records on that standard before an audit request arrives is ahead of the review, not behind it.

Closing rule: Passing the edit is not passing the review. The record wins the audit, not the code.

For help strengthening your practice’s coding and documentation review process, schedule a consultation with Dr. Sloan-Kelly Consulting.

Sources

• CMS: Complying with Medical Record Documentation Requirements (MLN909160)
• CMS: Proper Use of Modifiers 59, XE, XS, XP, and XU (MLN1783722)
• CMS: Medicare NCCI FAQ Library

Dr. Dreama Sloan-Kelly, MD, CCS, CPC / CEO/President, Dr. Sloan-Kelly Consulting LLC