Preparing for audits is a year-round priority for healthcare organizations. The ever-evolving regulatory landscape requires health plans to adopt a proactive approach that integrates compliance monitoring, staff education, risk management, and transparent communication with auditors. Achieving audit readiness is essential to streamline processes, minimize risks, and maintain compliance during audits.

In this blog, I’ll outline key steps to help your organization prepare effectively for audits:

• Master audit requirements to stay compliant with federal, state, and local regulations.
• Establish and maintain comprehensive, accurate documentation practices.
• Ensure continuous training for staff on current guidelines and regulatory updates.
• Strengthen internal controls through clear policies, regular audits, and proactive monitoring.

By following these actionable best practices, healthcare organizations can foster a culture of compliance and improve overall operational efficiency.

1. Master Audit Requirements

A crucial element of becoming audit-ready is a comprehensive understanding of applicable regulations. This ensures healthcare organizations remain compliant while reducing the risk of audit findings.

How to Prepare:

• Research Relevant Regulations: Familiarize staff with federal, state, and local laws, including:
  • Health Insurance Portability and Accountability Act (HIPAA) and Health Insurance Portability and Accountability Act, and Health Information Technology for Economic and Clinical Health Act (HITECH)
  • CMS Guidelines (including Medicare, Medicaid, and the Affordable Care Act)
  • State-specific Healthcare Laws
• Define Key Audit Areas: Identify critical audit focus areas, including:
  • Patient eligibility and demographics
  • Medical records and treatment documentation
  • Billing codes, claims submissions, and reimbursement procedures
  • Utilization Management
  • Compliance with regulatory requirements

Proactively educating your team on these requirements minimizes confusion and lays a strong groundwork for audit preparedness.

2. Establish Robust Documentation Practices

Transparent and accessible documentation is critical during audits. Accurate records demonstrate compliance and help organizations respond quickly to auditor requests.

How to Prepare:

• Comprehensive Record Maintenance:
  • o Utilization Management (UM) and Case Management (CM) records are vital for demonstrating that appropriate care was delivered in a cost-effective and clinically sound manner. These records help determine whether healthcare services were medically necessary, provided in the right setting, and consistent with approved care plans.
• Audit-Relevant Components of UM/CM Records
  • Authorization and Pre-Certification Records
    • Ensure that prior authorizations for procedures and specialty referrals are documented.
    • Confirm that insurance approvals are obtained and properly filed.
  • Care Coordination Notes
    • Document case management interactions with patients, providers, and payers.
    • Include follow-up and discharge planning notes when applicable.
  • Medical Necessity Reviews
    • Validate that services are supported by utilization review decisions and criteria, such as InterQual standards.
    • Ensure timely peer reviews and second-level assessments are documented.
  • Discharge Summaries
    • Include discharge planning details, such as follow-up appointments, prescribed medications, and care instructions.
    • Ensure that summaries are comprehensive and signed by authorized providers.
  • Continuity of Care Documentation
    • Ensure continuity of care is documented, including transition plans from acute care to post-acute or long-term care facilities.
    • Document all care coordination activities to demonstrate the patient’s care pathway.

3. Ensure Continuous Training for Staff

Continuous training is essential to ensure that all staff members are knowledgeable about the latest regulatory requirements and industry guidelines. This minimizes audit risks and improves operational efficiency.

How to Prepare:

• Provide Ongoing Education:
  • Regularly train staff on billing compliance, data security, and documentation best practices.
  • Update training programs to reflect changes in federal, state, and industry guidelines.
• Simulate Audit Scenarios:
  • Conduct mock audits to identify knowledge gaps and prepare staff for real-life audit situations.
• Review Critical Records:
  • Ensure that billing records, claims processing, and denial documentation are accurate and compliant.
  • Validate staff credentials to confirm licenses and certifications are current and unrestricted.

4. Strengthen Internal Controls

Internal controls are essential for identifying potential risks and addressing noncompliance proactively. A robust framework ensures health plans are consistently prepared.

How to Prepare:

• Develop Clear Policies and Procedures: Policies and procedures should guide daily activities and provide a framework for employees to use as a guide to ensure optimum performance of their duties. Integration ensures that compliance becomes a routine part of staff behavior and organizational processes. To achieve this, organizations must ensure internal departments’ written policies and procedures are developed and revised, as needed, in alignment with contractual and regulatory requirements. High-risk areas include claims processing and payment, enrollment, coding, and utilization management. However, it is vital that each department, whether operational or administrative, ensures it continuously reviews its internal policies and procedures and revises them as needed to ensure compliance with the most recent and current regulatory requirements.
• Implement Regular Internal Audits: Conducting internal reviews with employees responsible for performing functions to ensure they are aware of current regulatory requirements and can speak knowledgeably to the internal processes can prove a great asset in audit preparedness. During an audit, organizations are required to conduct a validation of their systems or specific case samples. Each department must have well-trained, knowledgeable employees who can answer questions regarding the system, as well as individual case files, such as for utilization management or claims processing and payment. Performing internal audits allows employees and management to not only prepare for presentation to an auditor, but moreover, allows them to identify areas of noncompliance or areas for which further training might be beneficial prior to an audit.
• Monitor and Evaluate Key Metrics: Track and address noncompliance with Service Level Agreements and regulatory requirements, monitor patient/provider complaint/appeal/grievance outcomes, and other compliance trends to detect unusual activity.

Partnering for Success in Audit Preparedness

Ensuring organizational policies and procedural operations are regularly reviewed, comply with contractual and regulatory requirements, and staff are well-trained on them is critical for operational success and risk management. By integrating these best practices into the organization’s framework, healthcare payers and TPAs can foster a culture of accountability, maintain legal and ethical standards, and improve overall efficiency and service quality.

HealthAxis is a trusted partner for healthcare administration, offering advanced solutions that empower health plans to streamline operations, reduce risks, and achieve compliance with confidence. With expertise in technology and business process optimization, we help organizations navigate complex regulatory landscapes while enhancing operational efficiency.

Connect with our experts to learn more about how we can support your audit preparedness and compliance goals.

Author:

Brandon Tucker

Compliance Regulatory Auditor

HealthAxis