RCM Audit & Revenue Leakage Assessment
Find the Leakage. Fix the Process. Accelerate the Revenue. Before you outsource anything — or change anything — understand exactly where your revenue cycle is losing money.
Audit before outsource: We don’t believe every practice should immediately replace its existing billing operation. First, understand the problem. Then determine the right solution. Request your free audit →
An Independent View of Your Revenue Cycle
Our RCM audit gives healthcare practice leaders a structured, independent view of revenue-cycle performance — not a sales pitch dressed up as an assessment. We look at the full path a dollar takes through your practice, from the moment a patient is scheduled to the moment a claim is paid, and identify exactly where that path is leaking revenue.
What the Audit Covers
- Eligibility and verification
- Authorization processes
- Charge capture
- Coding accuracy
- Documentation
- Claim submission and clean-claim performance
- Denials and appeals
- Payment posting and underpayments
- Insurance AR and patient AR
- Aging trends and payer performance
- Revenue-cycle KPIs
Your Deliverable: The Revenue Cycle Health Report
At the end of the engagement, you receive a management-level report — not a stack of raw data. Every finding is structured the same way, so your team can act on it immediately:
Leakage
The specific point where revenue is being lost.
Root Cause
Why it’s happening — the upstream process behind the symptom.
Financial Impact
The dollar amount tied to each finding, not a generic estimate.
Corrective Action & Priority
The specific fix, ranked by what to address first.
From Audit to Action
The audit is the front door, not the destination. Findings feed directly into our Revenue Cycle Optimization work, and — where it makes sense — into ongoing End-to-End RCM management. Where you already have an in-house or outsourced billing operation, the audit tells you plainly whether it’s the process or the people that needs to change.
Want the same audit framed as a practice scorecard with 12-month trends, AR ranking and a SWOT? See our Practice Revenue Cycle Audit. Want the leakage framework itself explained in depth? See our Revenue Leakage Audit guide.
How the Audit Works, Step by Step
An audit is only as good as its method. This is the sequence a structured RCM audit follows, and what you should expect to see at each point.
- Scope and confidentiality. Confirm specialties, providers, locations, the practice management (PM) and EHR systems, the clearinghouse and the payer mix. A HIPAA Business Associate Agreement is the normal precondition before any protected health information is shared.
- Data intake. Collect the exports listed in the checklist below. Claim-level and remittance-level detail is preferred over summary reports, because summaries hide the patterns an audit is looking for.
- Reconcile and validate. Tie charges, payments and adjustments back to the totals in the practice's own financial reports. Gaps such as missing months, unposted remittances or duplicate lines are flagged before analysis starts, since unreliable data produces confident but wrong conclusions.
- Compute KPIs and trends. Metrics are calculated by month, payer, provider, location and CPT family, so a single weak payer or provider is not hidden inside a healthy-looking average.
- Sample and trace. A sample of encounters and claims is traced end to end: schedule, eligibility response, clinical note, charge, claim, 835 remittance, posted payment. Every break in that chain is a candidate leak.
- Root-cause analysis. Findings are grouped by the upstream process that caused them, not by symptom. For example, a cluster of CO-16 denials may trace back to subscriber ID capture at registration, not to the billing team.
- Quantify and prioritize. Each finding gets a dollar value (lost, delayed or underpaid) and is ranked using the criteria described later on this page.
- Walkthrough and agreement. Findings are reviewed with practice leadership and the billing team so that workflow details the data cannot show are confirmed before the corrective-action sequence is agreed.
Data Request Checklist
Most of this can be exported from a PM system or clearinghouse without new software. If an item is unavailable, the report should state which conclusions are limited as a result.
| Data item | Typical source | What it is used for |
|---|---|---|
| Charge detail by date of service, CPT/HCPCS, modifiers, units, rendering provider and location | PM system | Charge lag, charge-capture reconciliation, coding pattern analysis |
| Payment, adjustment and write-off detail with adjustment reason codes | PM system | Net collection rate, write-off review, contractual validation |
| 835 electronic remittance files or remittance detail with CARC and RARC codes | Clearinghouse or payer portals | Denial and underpayment analysis |
| 837 claim files plus 999 and 277CA acknowledgment reports | Clearinghouse | Rejection rate, clean claim rate, front-end edit gaps |
| AR aging by payer and by patient responsibility, as of the audit date and three prior month-ends | PM system | Aging trend, days in AR, share of AR over 90 days |
| Appointment schedule and encounter list | PM or EHR | Encounter-to-charge reconciliation |
| Eligibility (270/271) response history and authorization log | Clearinghouse, PM system, payer portals | Front-end verification and authorization failure analysis |
| Contracted fee schedules for the top payers | Practice or payer contract files | Underpayment detection |
| Written workflows, staff roles and payer-specific rules | Practice | Process leakage and ownership gaps |
What Is Tested at Each Stage
The audit does not stop at totals. Each stage of the revenue cycle has specific tests, and each test has a failure pattern that is visible in the data.
| Stage | What is tested | Failure pattern in the data | Typical corrective action |
|---|---|---|---|
| Eligibility and benefits | Was a 270/271 inquiry run before the visit, and was the response acted on? | CO-27, CO-22 and CO-109 denials; patient balances that surprise the patient | Verify at scheduling and again shortly before the visit; capture secondary coverage and coordination of benefits |
| Authorization | Does the practice know which CPT codes need authorization for each payer, and do approved units match billed units? | CO-197 denials clustered by payer and procedure | Payer-by-CPT authorization matrix owned by a named person |
| Charge capture | Does every completed encounter have a charge? Are procedures, injections and supplies billed? | Encounters with no charge, high charge lag, open encounters | Daily encounter-to-charge reconciliation; charge lag report |
| Coding | Does the code set match the documentation? Is the E/M level distribution consistent with peers? Are modifiers such as 25 and 59 used correctly? | CO-4, CO-11 and CO-97 denials; skewed E/M levels | Provider education; pre-bill coding edits |
| Claim submission | What share of claims are rejected before adjudication, and how fast are rejections worked? | CO-16 and CO-18 denials; rejections aging in the clearinghouse queue | Scrubber rules tuned to payer edits; daily rejection worklist |
| Denials and appeals | Are denials categorized by root cause, and are appeals filed inside payer deadlines? | CO-29 write-offs; low appeal rate on CO-50 and CO-252 denials | Denial categorization; appeal templates and deadline tracking |
| Payment posting | Are remittances posted accurately and promptly, with adjustments coded to the right reason? | Unposted ERAs; denials posted as contractual adjustments | ERA auto-posting with exception queue; adjustment code policy |
| Underpayments | Does the allowed amount on the 835 match the contracted rate? | Repeating variance on the same CPT and payer | Fee-schedule loaded into a variance check; payer dispute |
| Insurance AR follow-up | Is there a follow-up cadence (276/277 status checks or payer portal) with an owner for every aging bucket? | Claims over 60 days with no recorded activity | Prioritized worklists by dollars and age |
| Patient AR | Are patient balances estimated and collected at the point of service? What is the statement cycle? | Rising self-pay aging; PR-1, PR-2 and PR-3 balances unbilled for weeks | Point-of-service collection scripts; statement and text/email cadence |
KPI Definitions and Commonly Cited Targets
The audit reports each metric with an explicit formula so that results can be repeated and compared over time. Targets below are commonly cited industry reference points and vary by payer mix and specialty. They are not guarantees and not performance claims.
| KPI | Formula | Commonly cited reference (varies) |
|---|---|---|
| Clean claim rate | Claims accepted without edits or rejections / claims submitted | 95% or higher |
| First-pass resolution rate | Claims paid correctly on first submission / claims submitted | Roughly 90% or higher |
| Denial rate | Denied claims (count or dollars) / claims submitted (count or dollars) | Commonly under 5%, though many practices report higher |
| Net collection rate | Payments / (charges minus contractual adjustments) | 95% or higher |
| Gross collection rate | Payments / total charges | Varies widely with fee schedule markup; use only against a peer group |
| Days in AR | Total AR / (charges for the period / days in the period) | Commonly 30 to 40 days |
| AR over 90 days | AR aged 91+ days / total AR | Commonly under 15 to 20 percent |
| Charge lag | Average days from date of service to charge entry | Within a few days of the encounter |
| Appeal overturn rate | Appeals won / appeals filed | No single standard; compare by payer and denial type |
A Worked Example (Illustrative)
Illustrative only. The figures below are hypothetical and are not a client result. They show how an audit turns a collection percentage into specific, ranked findings.
Assume a hypothetical practice with $2,000,000 in charges over twelve months, $800,000 in contractual adjustments and $1,080,000 in payments. Allowed amount is $1,200,000, so the net collection rate is $1,080,000 / $1,200,000 = 90%. Against a 95% reference point, the gap is about 5% of $1,200,000, or roughly $60,000. The audit's job is to explain that gap.
| Finding | Evidence in the data | Root cause | Illustrative annual impact | Priority |
|---|---|---|---|---|
| CO-197 denials on one payer | Denials clustered on a few procedure codes for one payer | No authorization check at scheduling | $22,000 | High |
| CO-29 timely-filing write-offs | Write-offs coded CO-29 after rejected claims aged out | Clearinghouse rejections not worked daily | $14,000 | High |
| Encounters with no charge | Schedule shows completed visits with no charge entered | Encounter forms not returned to billing | $11,000 | Medium |
| Consistent underpayment on one E/M code | Allowed amount on the 835 is below the contracted rate | Payer loaded an outdated fee schedule; no variance check | $9,000 | Medium |
| Small-balance write-offs without approval trail | Adjustments with no documented approver | No write-off policy threshold | $4,000 | Low |
The five hypothetical findings sum to the $60,000 gap. In a real audit some of the gap is usually timing or unexplained, and the report says so rather than forcing every dollar into a category.
How Findings Are Prioritized
A long list of findings is not a plan. Each finding is ranked on four factors, and the report shows the reasoning:
- Dollars at stake: the value recovered or protected, based on actual claims.
- Time sensitivity: recoverable revenue with a closing window comes first. Timely filing limits commonly run from 90 days to one year depending on the payer, and appeal deadlines also vary by payer and contract.
- Recurrence: a leak that repeats every month outranks a one-time event of the same size.
- Effort and ownership: a fix that one named person can make this week ranks ahead of one that needs a system change.
The practical order is: close recovery windows first, then fix high-dollar recurring causes, then pick up low-effort fixes, then plan structural changes. The table below shows how a healthy result differs from a warning pattern.
| Signal | Healthy pattern | Warning pattern |
|---|---|---|
| Denials by category | Spread thin, mostly non-preventable or payer-driven | Concentrated in a few preventable categories such as authorization or demographics |
| AR aging shape | Most dollars in the 0 to 30 and 31 to 60 buckets | Growing share in 91 to 120 and 120+ buckets |
| Write-offs | Mostly contractual and validated against fee schedules | Timely-filing and unexplained adjustments rising |
| Charge lag | Stable and short | Variable, with open encounters at month-end |
| Payer variance | Allowed amounts track contract | Repeating shortfall on the same CPT and payer |
| Patient AR | Balances collected at or near the visit | Large self-pay balances aging past 90 days |
How to Prepare, and What Happens After
Preparation takes little effort and speeds up the audit considerably:
- Identify one person who can export reports from the PM system and one who can describe front-desk and billing workflows.
- Gather payer contracts or fee schedules for your top payers, if you have them.
- Write down known problems: a payer that always pays late, a service that always gets denied. These direct the trace sampling.
- Decide who needs to attend the walkthrough: practice administrator, billing lead and a clinical representative.
After the report, there are three honest outcomes. Some practices need only process changes their own team can make. Some need focused optimization work on specific areas such as denial prevention or AR follow-up. Some benefit from managed RCM services. The report is written so you can act on it with or without us, and the same KPI definitions can be re-run later to confirm the fixes worked.
Frequently Asked Questions
Is the RCM audit really free?
Yes. We use it to scope any follow-on engagement accurately, and you keep the Revenue Cycle Health Report regardless of what you decide to do next.
Do you require us to switch billing companies?
No. Audit before outsource is core to how we work — some practices need a process fix, not a new vendor. The report tells you which one you actually need.
How is this different from a generic billing review?
Every finding is tied to a root cause, a dollar figure and a priority — not a list of observations. It’s built to be acted on, not filed away.
What data do you need, and how is patient information protected?
The checklist above lists the exports. Sharing protected health information requires a HIPAA Business Associate Agreement, and exports should be limited to the minimum necessary fields. Many analyses can be done with claim-level data that omits clinical detail.
Do you review charts and coding, or only financial data?
Both, on a sample basis. Financial data shows where the pattern is; a sample of encounters traced from note to charge to claim shows why. The sample is agreed in advance and drawn across payers, providers and CPT families.
Can you find underpayments without our payer contracts?
Partly. Without contracts, variance can still be found by comparing allowed amounts for the same CPT and payer over time, and by using a published fee schedule as a rough reference. Contract rates are needed to state an underpayment with confidence.
Are the benchmark targets on this page guarantees?
No. They are commonly cited industry reference points. Real targets depend on payer mix, specialty, patient population and contract terms, and the report explains which reference is appropriate for your practice.
Can you audit a practice whose billing is already outsourced?
Yes. The audit looks at the outputs: claims, remittances, aging and write-offs. Your practice owns that data and can request it from the current vendor. The findings show whether the cause is process, staffing, payer behavior or the vendor's workflow.
How much of my staff's time does the audit take?
Mostly data exports at the start and a walkthrough conversation at the end, plus short questions about workflows along the way. The exact time depends on how easily your systems export the required reports.
Find Your Revenue Leakage
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