Healthcare Audit Checklist: Everything You Need for an Internal Audit

Navigating a healthcare audit can be a high-stakes process for hospital finance teams. Audits are far more than just submitting paperwork and sitting back. Teams must follow changing regulations and verify the accuracy of their records. They must work to ensure the hospital doesn’t experience major losses from audit results. It’s a huge undertaking for any healthcare finance professional, requiring precise organization.

It helps to take a step back once yearly (or more often!) and conduct an internal audit for quality control. That way, your organization is completely prepared when audited. We've created a healthcare audit checklist to help streamline audit preparation and execution. For best results, go in order and don’t skip any steps! Every tiny action builds up to a state-of-the-art audit response process.

Part 1: Pre-Audit Preparation

Designate a Lead Auditor Point of Contact

This individual will act as the liaison between your organization and the auditing entity. It's their job to ensure a smooth flow of communication. This role requires a deep understanding of your organization. They must understand operations, healthcare billing and compliance protocols.

Assemble a Healthcare Audit Response Team

An effective audit response team should include representatives from various departments. Include finance, compliance, IT and clinical operations. Each member brings expertise in their respective area so that all aspects of the audit are covered. Leveraging EHR solutions and other software tools can promote cross-departmental collaboration. If you already have this team in place, analyze its effectiveness and the ability of its members to contribute to the audit process.

Assign Roles and Responsibilities

Clearly define each team member’s responsibilities during the audit process. For example, assign one person to oversee the review of medical records and another to manage billing and coding compliance. This approach ensures accountability and makes sure tasks are not overlooked. Again, if the team already exists, analyze staff performance and make sure everyone is in a role suited to their strengths.

Review and Prepare EHR Policies and Procedures

Before the audit, review your policies and procedures for electronic health records (EHR) using EHR software. Ensure these guidelines align with regulatory standards. All staff must be trained on proper documentation practices. Comprehensive solutions, like myesMD, can streamline this process.

Part 2: Documentation Review

Verify Patient Records

Documentation is the most time-consuming step of any audit. It’s time-consuming, but essential. It helps to audit your own organization to get ahead of it. Verify all patient records are accurate, up-to-date and properly stored in your EHR software. Cross-reference IDs, service dates and other information with claims documentation. Verify insurance was active on service dates as well. Missing or incomplete patient records can become a problem. They can lead to compliance issues, poor audit results and financial penalties.

Ensure Medical Records Are Complete

Medical records must provide a comprehensive overview of patient care. This includes treatment plans, prescriptions and follow-up actions. Records should show all medical history, including substance abuse, and allergies. All involved departments must document all patient encounters legibly and in detail. Incomplete medical records can result in compliance issues and impact patient care continuity.

Review Provider Information

Ensure all provider information is current and documented in your EHR solution. This must include credentials and licensure. Auditors will scrutinize this data to ensure compliance with healthcare regulations.

Validate Medical Coding and Billing

This is perhaps the most important step of the documentation review. Many audits hinge on correct medical coding and subsequent billing. The final diagnosis and treatment plan should include everything needed to prove the case was coded correctly. This means summary reports, lab reports, imaging, and any other relevant documentation Select a series of often miscoded claims and conduct your own internal audit to see how the team is performing. Tools like myesMD can simplify this process by automating parts of the validation process.

Part 3: Compliance Review

Privacy and Security

Per HIPAA regulations, your organization is responsible for patient data privacy. Review your organization’s security measures to protect patient records and sensitive information. EHR solutions with robust security features can enhance compliance. They automatically keep you on track with the latest regulations.

Revenue Cycle Management

Examine your revenue cycle management processes to identify inefficiencies or compliance risks. Ensure the correct payment is collected per treatment and billing practices are up to par with CMS guidelines. 

Continuity of Care Protocols

Auditors will assess whether your organization’s continuity of care protocols are adequate. Audit some of your most error-prone claims. Ensure that patient handoffs and follow-up care are well-documented and consistent with industry standards. This is an extension of the patient medical record review conducted in Part 2.

Part 4: Financial Analysis

Audit Reimbursement Claims

Reimbursement claims are a common focus during audits. Again, verify that claims are consistently supported by complete and accurate medical records and billing documentation. Double-check the amounts billed and reimbursed by the payer and seek out any discrepancies.

Review Financial Statements

Ensure that all revenue, expenses, and other financial data are accurate and align with your hospital’s operations. This includes the hospital’s cash flow statement, income statement and balance sheets. These documents should paint an accurate picture of the hospital’s financial performance. Any discrepancies may point to potential fraud, human error or irregularity. 

Part 5: Operational Review

Assess Training and Staff Competency

Everything starts with people. Review training records and ensure all employees understand their roles. They must be trained in maintaining compliance and accurate documentation. Staff should have the training and credentials to provide high-quality care. This includes licenses, background checks, certifications, one-off training and other professional qualifications.

Review Internal Controls

Internal controls help safeguard your organization’s financial and operational integrity. Look into segregation of duties, inventory management, access controls and quality assurance standards. Evaluate these controls to identify any gaps or weaknesses and implement solutions to address them with your team. 

Part 6: Risk Management

Identify and Mitigate Risks

Risk management is a vital component of audit preparation. Identify potential risks and develop strategies to mitigate them. These might include gaps in documentation or weaknesses in healthcare billing processes. Risks may appear in operations, legal or financial teams. They may also manifest as risks to a hospital's reputation.

Part 7: Post-Audit Actions

Review Audit Findings

We’ve reviewed everything from hospital compliance to documentation completion up to this point. Now that you have this data use the internal audit process to identify areas for improvement. Identify deficiencies or areas of concern. Prioritize them for resolution as a quality improvement initiative.

Develop Quality Improvement Initiatives

Work with your response team to implement quality improvement initiatives. This will enhance operational efficiency and reduce lost reimbursement for future audits. These plans should include specific actions and timelines. Designate responsible parties for tracking a path to resolution.

Schedule Regular Internal Audits

To maintain compliance and operational efficiency, schedule regular internal audits. These proactive audits help identify and address issues before they become significant problems. They’re time-consuming but always worth it. Even if you can conduct just one of the steps mentioned above, prioritize it for an improved audit response in the future. 

Follow this comprehensive healthcare audit checklist. By doing so, hospital finance teams can confidently navigate the actual audit process. Leverage advanced solutions like myesMD and robust EHR software. This streamlines the audit process and enhances overall operational efficiency. Thorough preparation and continuous improvement help hospitals handle any audit challenges.

‍Learn more about how Office Ally’s Audit & Denial Tracker can simplify and optimize your audit management.