What Are Coding Auditors Looking For?

With the Centers for Medicare & Medicaid Services (CMS) and private payers working to recover potential overpayments, coding and billing audits are a legitimate concern for many medical practices. This overview covers how practices get flagged, which billing areas draw scrutiny, and how to respond to an audit.1. Payers Sharpen Their Focus on OverpaymentsCMS has pledged to hire more medical coders to uncover coding and billing errors, focusing mainly on Medicare Advantage plans, which now serve about 55% of Medicare enrollees. Practices outside these plans are not off the hook, since commercial insurers and Medicare contractors continue to review claims. Kaiser Permanente affiliates agreed in January 2026 to repay $556 million over allegations of invalid diagnosis codes for Medicare Advantage patients.2. How Practices Get Flagged for ReviewAudits can be random or follow a complaint from a patient or staff member, and a whistleblower set off the Kaiser case. More often, payers use software to spot practices billing above their specialty’s benchmark, such as more level 4 and 5 visits or more modifier 25 use than is typical. Even careful physicians can make inadvertent errors, and for family physicians, many challenges stem from complex payer policies and review processes rather than simple coding mistakes.3. Familiar Targets for AuditorsEvaluation and management (E/M) services make up 40% of Medicare’s allowed charges and remain a frequent point of contention over the right level. Modifier 25, which allows payment for two E/M services on the same day, requires documentation that truly supports its use. Incident-to billing lets nurse practitioner or PA care be reimbursed at the physician’s rate, a 15% difference, but its rules are strict, including an established patient, an existing course of treatment, and no change to the plan or medication. A physician merely discussing a new patient with the PA does not qualify the visit. Regularly billing higher-level codes such as 99214 or 99215 can push a practice past the national norm for its specialty and put it on the radar for review. Telehealth notes should support both the service and the telehealth requirements, which are still changing. A code existing for a service does not mean it will be paid.4. Lowering Your Audit RiskAn annual internal audit that compares coding patterns across physicians is a good start, and an outside reviewer is worth considering. Payer newsletters and specialty society resources help practices keep up with rule changes, while CMS and Medical Group Management Association benchmark data show how E/M billing compares with peers in the same specialty. The Office of Inspector General work plans, reviewed each year, show where scrutiny is headed, and closer communication between physicians and coders also helps.5. What to Do if You Receive an Audit NoticeEven a small request for charts deserves serious attention, since findings from a small sample are often used to draw conclusions about a much larger patient population. Contact a healthcare attorney and inform the practice manager and compliance officer. Do not amend existing records; instead, provide all supporting documentation, such as lab results or notes from other providers.Bottom LinePayers are sharpening their focus on overpayments, particularly in Medicare Advantage, and several familiar billing areas commonly draw auditors’ attention. Codes should reflect the care actually delivered, neither lowered out of fear of scrutiny nor inflated because a diagnosis sounds complex. Undercoding has its own cost, since it understates patient complexity and forgoes payment for care provided.This article is based on a recent Medscape article titled " Watch Out! A Coding and Billing Audit May Be Coming Your Way” and was created using several editorial tools, including AI, as part of the process. Human editors reviewed this content before publication.