Most practices find out their billing has a problem the same way: a consultant mentions that their clean claim rate looks low, a new biller joins and can’t believe the state of the AR, or a payer audit surfaces coding patterns that suggest systematic errors.
A self-audit takes 2–3 hours and gives you the same information. It won’t catch everything a forensic audit would — but it will show you the systematic errors that are costing you money every month, and it will tell you whether your billing operation is performing at benchmark or significantly below it.
The 5-Point Billing Audit Framework
Audit Point 1: Clean Claim Rate (Last 90 Days)
Pull your claim submission report for the last 90 days. Calculate: claims paid on first submission ÷ total claims submitted. This is your first-pass resolution rate — the single most important indicator of billing health.
| First-Pass Rate | What It Means | Action Required |
|---|---|---|
| 96%+ | Best-in-class — systematic errors minimal | Maintain and monitor |
| 92–95% | Good — some systematic errors present | Identify top denial codes, fix root causes |
| 86–91% | Below benchmark — systematic problems | Denial root cause analysis required immediately |
| Under 86% | Significant revenue leakage | Full workflow audit — likely multiple systematic errors |
Audit Point 2: AR Aging Distribution
Pull your AR aging report. Calculate what percentage of your total outstanding AR falls into each bucket:
| AR Bucket | Healthy % | Problem Threshold |
|---|---|---|
| 0–30 days | 60–70% of AR | Under 50% suggests slow claim submission |
| 31–60 days | 15–20% of AR | Over 25% suggests denial follow-up lag |
| 61–90 days | 8–12% of AR | Over 15% suggests systematic denial problems |
| 90+ days | Under 10% of AR | Over 20% — significant AR at write-off risk |
The 90+ day bucket is the one that tells you the most. AR sitting over 90 days is at risk of timely filing write-off, patient balance confusion, and payer audit. If this bucket exceeds 15% of your total AR, you have an active AR problem — not a historical one.
Audit Point 3: Denial Rate by Payer (Last 90 Days)
Most practices know their overall denial rate. Few track it by payer. Pull your denial report and sort by payer. Look for any payer with a denial rate more than double your average.
A payer-specific spike almost always has a specific cause: a credentialing issue (the provider isn’t enrolled in that plan’s network), a modifier requirement that differs from your standard billing template, a prior auth requirement you didn’t know existed, or a claim edit rule change that you haven’t applied yet.
A denial rate of 18% with United while Blue Cross runs at 4% is not a general billing problem. It’s a United problem — specific, identifiable, and fixable.
Audit Point 4: Days in AR (Calculated)
Formula: (Total AR outstanding ÷ Average daily charges) = Days in AR
Average daily charges = (Total charges in last 90 days ÷ 90)
| Days in AR | Benchmark |
|---|---|
| Under 30 days | Best-in-class |
| 30–40 days | Healthy — within industry benchmark |
| 40–50 days | Below benchmark — AR follow-up gaps likely |
| Over 50 days | Significant problem — systematic AR management issues |
Audit Point 5: The Top 5 Denial Codes — Last 90 Days
Pull your denial reason code report for the last 90 days. List your top 5 by volume. Then ask: are these the same top 5 from the prior 90 days?
If yes — your billing operation is not fixing root causes. Denial patterns should evolve as errors are identified and corrected. Stable denial patterns mean stable errors. Each one represents a monthly revenue cost that hasn’t been addressed.
Each repeated denial code has a specific fix. CO-4 (modifier issues) requires a CPT/modifier audit against your specialty’s correct billing rules. CO-15 (prior auth) requires an auth tracking workflow overhaul. CO-50 (medical necessity) requires documentation improvement in clinical notes. None of these are complicated. All of them require someone with the time and knowledge to implement the fix.
What a Billing Audit Typically Reveals
Based on the accounts Dr. Billerz has audited on intake:
The average practice coming to us with a stated “billing problem” has a first-pass resolution rate of 84–88% — 8–12 points below benchmark. That gap, on a practice collecting $80,000/month, represents $6,400–$9,600/month in claims requiring rework instead of paying first-pass. Annualized: $76,800–$115,200.
The average AR aging shows 18–24% of AR over 90 days — roughly double the healthy benchmark. On $200,000 in total outstanding AR, that’s $36,000–$48,000 sitting in the high-risk bucket.
The top 3 denial codes account for 68–74% of all denials — meaning three fixes address nearly three-quarters of the denial problem.
How Dr. Billerz Runs the Intake Audit
Every new Dr. Billerz engagement starts with a 90-day AR and denial review before the biller submits a single new claim. The intake audit identifies:
The top denial codes and their root causes. The AR aging distribution and which buckets need immediate attention. Any claims approaching timely filing windows. Payer-specific issues that need a targeted fix before new claims are submitted with the same errors.
The 4-week free pilot includes this audit at no cost — you get the findings and the plan before you pay anything.
Frequently Asked Questions
How often should a medical practice do a billing audit?
A self-audit using the 5-point framework above should be done monthly. A deeper third-party audit — reviewing coding accuracy, documentation completeness, and compliance exposure — should be done annually or whenever a new billing arrangement starts.
What does a medical billing audit cost?
A self-audit using your existing reports costs nothing. A third-party billing audit from a consultant typically costs $2,500–$10,000 depending on practice size and scope. Dr. Billerz provides a 90-day AR and denial audit as part of every free pilot engagement at no cost.
What should I do if my billing audit shows problems?
Start with the denial root cause analysis — fix the top 3 denial codes first. Address the 90+ day AR bucket before timely filing windows close. Then implement the pre-submission prevention workflow to stop new denials from accumulating. See our systematic denial reduction guide for the step-by-step approach.
Want a free audit of your last 90 days? Start the free pilot — the intake audit is included at no cost.
Related Resources
The 7 billing KPIs you should track monthly | How to reduce medical billing denials | What 90-day AR actually costs your practice