5 Reasons Why Coding and Documentation Audits are More Important Than Ever

By AGS Health

November 21, 2022

Auditing is a crucial component of governance and quality control. When ICD-10  (International Classification of Disease, 10th version) was implemented, numerous healthcare organizations adopted new electronic health record (EHR) technology. It provided record-keeping in considerable detail, outlining more than 71,000 procedure codes compared to just over 3,800 in ICD-9. The eleventh revision contains around 17,000 unique codes, and more than 120,000 codable terms – adding to the complexity of coding. Healthcare providers would do well to implement technologies powered by artificial intelligence (AI) and natural language processing (NLP) to make the most of this complex coding system. Leveraging technology can result in fewer billing and data errors.

The Growing Need for Audits

Clinical documentation improvement (CDI) is implemented and enhanced with the help of findings from medical coding audits. Auditing CDI teams can optimize diagnosis-related groups (DRGs). The Centers for Medicare and Medicaid Services (CMS) Recovery Audit Contractor (RAC) program, which has recovered millions in incorrect payments in Medicare and other insurance schemes, has illustrated the need for effective CDI.

Following are five reasons why audits are more important than ever.

  1. Enhanced Data Quality: Reliable data is a cornerstone of healthcare. The right compliance auditing program significantly improves data quality, informs stakeholders, provides a rigorous feedback loop, and supports any potential follow-up with physicians, coders, or payers. Audits enable better reporting and research, making it easier for healthcare organizations to secure funds or grants.

  2. Higher Operational Efficiency: Manual medical coding and billing is a significant challenge for providers everywhere. Each manual transaction costs $4.40 more than each automated transaction, according to the 2018 CAQH Index Report. The report also shared that automating claims-related dealings can save healthcare providers around $11.1 billion annually. However, the industry has made modest progress to shift from manual to fully-automated processes. Automated auditing can spot mistakes and highlight the root causes for inconsistent coding and documentation. If this is perceived as enhancing rather than replacing their current work, it may boost employee morale and productivity.

  3. Improved Patient Safety: According to an article in the International Journal for Quality in Health Care, internal auditing decreased patient-related adverse events by 4.8%. Real-time auditing can improve patient safety by quickly identifying errors and providing feedback to medical staff. Since auditing identifies the areas where gaps exist, changes in clinical policy and practice can be implemented with confidence.

  4. Improved HIM-Physician Relations: Accurately conducted audits by health information management (HIM) personnel weed out documentation errors caused by all parties involved, including physicians. With the proper procedures in place, these two key parties involved in patient care can better understand how one another's work processes affect them. Physicians who submit incomplete or incorrect documentation can collaborate with HIM staff to learn more about the best procedures. Greater transparency and consistent feedback guarantee higher-quality work.

  5. Enhanced Accuracy of Reimbursements: Hospitals and care facilities have long been plagued by underpayments and overpayments. According to a CMS report, RACs identified and collected $162 million in overpayments during FY 2019 alone. Correct auditing procedures guarantee that complications and comorbidities (CCs) and their significant variants (MCCs) are adequately documented. The seriousness of any illness is, of course, decided by the presence or absence of CCs and MCCs, which determines payment for hospital services. In other words, proper auditing identifies these flaws in billing procedures and guarantees that both organizations and patients receive the compensation they are entitled to.

5 Reasons Why Coding and Documentation Audits are More Important Than Ever

Syracuse Hospital Halves DNFC, Saves $1 Million

While completing their coding and CDI-related work, Auburn Community Hospital (ACH), a not-for-profit acute care facility in Syracuse, New York, encountered issues with their encoder software. They had a seven-day discharge not final coded (DNFC) and a case mix index (CMI) of 1.2024.

In addition to assigning specific ICD-10 procedure codes and increasing coder productivity, ACH needed to eliminate coding backlogs. The facility required specialized worklists and an intelligent platform to track lost documents and identify CDI opportunities. Additionally, their DNFC and CMI required immediate improvement.

At AGS Health, we believe healthcare organizations need to implement the proper NLP-based auditing application. These applications automate manual processes on a single collaborative platform, enforce intelligent worklist prioritization, generate evidence-based queries, and more.

ACH used AGS’s NLP-based technologies and the organization experienced:

  • 4.59% increase in CMI by improvement of the complication/major complication (CC/MCC) capture rate, resulting in optimized DRGs
  • 50% decrease in DNFC days from the initial 7 days to 3.5 days, leading to greater cash-on-hand
  • Over 40% improvement in coder efficiency by the provision of automated code suggestions to coders
  • Elimination of all IT support through our cloud-based technology

AGS assisted ACH in streamlining its revenue cycle, which had a $1 million bottom-line impact after a year.

Achieving New Heights with AI and NLP

Healthcare organizations must implement stringent auditing procedures that enhance staff productivity and organizational visibility. Despite the growing popularity of AI-based NLP auditing tools, only businesses that select the best vendor will see a significant return on investment (ROI). AGS can help your company enhance patient outcomes and modernize your healthcare procedures in the future.

Favicon Image

AGS Health


AGS Health is more than a revenue cycle management company—we’re a strategic partner for growth. Our distinctive methodology blends award-winning services with intelligent automation and high-touch customer support to deliver peak end-to-end revenue cycle performance and an empowering patient financial experience.

We employ a team of 12,000 highly trained and college-educated RCM experts who directly support more than 150 customers spanning a variety of care settings and specialties, including nearly 50% of the 20 most prominent U.S. hospitals and 40% of the nation’s 10 largest health systems. Our thoughtfully crafted RCM solutions deliver measurable revenue growth and retention, enabling customers to achieve the revenue to realize their vision.

Related resources

connect with us

Let’s transform your revenue cycle today

When you create a high-performance revenue cycle, you’re finally free to invest your full resources into what matters most: the care of your patients.

Job Title