Protect Healthcare Revenue Before CMS Audits Cost You
Did you know providers lose between 1% and 11% of their net revenue every year due to underpayments?
Long before you receive a CMS audit finding, you might already be leaking revenue without realizing it.
Payment delays of 30–120 days strain your operational budgets.1 Staff members spend over ten hours a week managing denials instead of supporting patient care. Even patient experience has become a financial signal—just a 1-point improvement in your PEP score is linked to roughly $45 million in additional retained revenue per hospital.2
These problems aren't just bad luck. They are symptoms of a gap between what happened during care delivery and what was documented, coded, billed, or reported.
CMS audits exist to reconcile that gap. But instead of viewing them as a threat, you can use the audit scope as a roadmap to strengthen operations and prevent lost revenue. Here is how to understand what’s actually in scope and use it to stop the bleeding.
What is Actually "In Scope"? (It’s More Than You Think)
Defining audit scope often creates tension—too broad wastes resources, but too narrow leaves you exposed. To get it right, you need to look at these specific areas:
1. Claims Submissions
Everything begins with claims. Auditors look closely at how services were coded, whether documentation supports those codes, and whether the care delivered aligns with Medicare and Medicaid requirements.
- For Providers: Focus on medical necessity, level-of-care justification, and the completeness of clinical notes.
- For Payers: Focus on the accuracy and reliability of the claims data that flows upstream for payments.
2. Risk Adjustment Reporting
The core question here is simple: Do the diagnoses submitted to CMS reflect what is documented in the medical record? When they don’t, you face recoupments and create downstream strain on the providers whose documentation underpins those submissions.
3. Encounter Data and Data Integrity
Encounter data is your structural record of care. CMS reviews how reliably encounters are captured and whether submissions follow required formats. Gaps here affect risk scores and quality ratings, making this one of the most quietly consequential parts of your audit readiness.
4. Program Integrity
Once CMS validates what happened, they examine how you protect the system. This includes testing for fraud, waste, and abuse risks and assessing your internal controls. Proactive oversight is key—you should be identifying and fixing issues long before they appear in an audit sample.
5. Compliance Program Effectiveness (CPE)
For health plans, this is where governance takes center stage. CMS evaluates if compliance is integrated into daily activities. They want to see leadership engagement, training, and documentation proving that risk mitigation is a routine part of your business.
6. Coverage, Appeals, & Grievances
Auditors look outward to how members experience your system. Are you making coverage decisions in line with regulations? Are you resolving grievances on time? Delays or opaque processes here are often red flags for broader compliance gaps.
The C-Suite Cheat Sheet: 6 Things Auditors Check First
If time is tight, start here:
- Encounter Data: Is it complete and accurate?
- Risk-Adjustment: Is the documentation bulletproof?
- Prior Authorizations: Are denials handled consistently and on time?
- Overpayments: Are they identified and repaid on time?
- Medical Necessity: Is the rationale documented clearly?
- Patient Experience: How are your member measures trending?
3 Habits to Survive Scrutiny
To move from "surviving" to "thriving," adopt these three core habits:
1. Map Your "Audit Universe"
Your audit universe isn't just one thing. It is the intersection of:
- Regulatory Requirements
- Contract Terms
- Documentation Trails
- Systems in Scope
- Data Flows
2. Strengthen Processes, Not Just Checklists
Audits evaluate not only what was done, but how it was governed, monitored, and corrected.
3. Build Documentation Discipline
Whether it’s a medical record or a policy decision log, your documentation must be clear, consistent, and retrievable.
Don't Wait for the Letter
Right-sizing your scope isn’t just an audit task. It’s a blueprint for financial resilience. When documentation is clear and oversight is embedded, audits stop being disruptive fire drills and start confirming what you already know: that you are operating with integrity.
Don't wait for the audit letter to arrive. Start mapping your audit universe today. Which of the scope areas above is your biggest blind spot right now?
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