5 Audit Risks Hiding in Plain Sight

Uncover blind spots for hospitals and discover how Healthicity’s Audit Manager+ can help

Hospital documentation and coding audits can be complex, costly, and disruptive. When issues like improper coding or insufficient documentation are uncovered during an external audit, the hospital can face financial penalties and reputational harm. Even worse, the distraction of an audit can compromise patient care.

Unfortunately, many hospitals operate without specialized audit tools. Instead, they rely on spreadsheets, email threads, and even blind hope to avoid the negative impact of an audit. This approach makes it all too easy for audit risks to hide in plain sight.

In this post, we’ll uncover five common audit risks hospitals face without a dedicated tool like Audit Manager+. We’ll explain why they matter and detail how a modern solution can turn audit risks into opportunities for better compliance.

Audit Risk #1: Incomplete Documentation

Documentation is the foundation of clinical care and compliance. Yet in many hospitals, medical records are still inconsistent from provider to provider, and critical information often goes unrecorded due to time pressures or miscommunication. When documentation is incomplete or doesn’t support the billed services, it becomes an easy target for auditors and lost revenue.

Why It Matters:
Incomplete documentation is one of the leading causes of claim denials and repayment demands. It also increases the likelihood of being flagged for further auditing and can expose hospitals to accusations of fraud, even when errors are unintentional.

What to Watch For:

• Clinical notes that fail to support the billed CPT^® or ICD-10 codes

• Missing signatures or time stamps on encounter records

• Discrepancies between narrative documentation and submitted claims

How Audit Manager+ Helps:
Audit Manager+ from Healthicity offers structured documentation review tools, smart prompts, and checklists that ensure everything needed for compliance is in place. By using standardized templates and workflows, hospitals can eliminate guesswork and ensure providers are documenting to the highest standards and that medical records can withstand audits.

Risk #2: Coding Errors

Accurate coding is essential for proper reimbursement and compliance. However, when audits rely on manual checks, it’s difficult to identify patterns in errors. Whether it’s undercoding, overcoding, or simply selecting the wrong code, these issues create ripple effects across the revenue cycle.

Why It Matters:
Coding inaccuracies can result in denied claims, delayed payments, and even federal investigations under the False Claims Act. Repeated errors also draw unwanted attention from payers and can trigger prepayment reviews, significantly slowing down revenue flow.

What to Watch For:

• Frequent rejections due to incorrect or unsupported codes

• Wide variability in coding among similar providers or departments

• Lack of ongoing coder or provider education based on audit results

How Audit Manager+ Helps:
With automated audit logic, built-in rulesets, and coder performance dashboards, Audit Manager+ gives you a clear view of where errors are happening and why. It also supports focused audits by provider, specialty, or claim type. That means your team can make real-time corrections and prevent compliance issues before they escalate.

Risk #3: Industry & Regulatory Require Agile Auditing Organization

Healthcare regulations evolve rapidly, from updates in Evaluation and Management (E/M) guidelines to new payer rules and documentation standards. Relying on outdated audit protocols or static spreadsheets makes it nearly impossible to ensure ongoing compliance. After all, staying current is difficult when your audit process isn't built for change.

Why It Matters:
Failure to comply with updated regulations can lead to noncompliant billing and rejected claims. In some more egregious cases, a lack of compliance can even legal action. More importantly, hospitals that can’t show proactive adherence to regulatory changes risk reputational damage and reduced payer trust.

What to Watch For:

• Auditors using out-of-date rulesets or audit criteria

• Compliance teams spending hours researching recent AMA, CMS, and specialty society changes

• Inconsistent audit results due to differences between auditors

How Audit Manager+ Helps:

Healthicity’s Audit Manager+ is purpose-built for agility, enabling your organization to adapt quickly as regulations change. The platform automatically incorporates the latest CMS and regulatory updates into its audit logic, so your team is always working with current, compliant criteria. Customizable workflows and flexible tools make it easy to tailor audits by payer, specialty, or specific organizational needs—without waiting on IT.

To reduce inconsistencies between auditors, Audit Manager+ provides standardized checklists, audit templates, and guided workflows that ensure every audit follows the same structured process. This consistency not only improves the reliability of audit outcomes but also builds trust in your internal review process. Auditors are empowered to focus on the nuances of each case while the system enforces uniform methodology across the board.

With Audit Manager+, your entire organization gains the confidence that audits are accurate, timely, and aligned with the latest standards, reducing risk and reinforcing a culture of proactive compliance.

Risk #4: Weak Internal Controls Open the Door to Errors and Fraud

When audit activities are spread across departments and managed through siloed tools, no one has a full view of where the risks lie. Without visibility and accountability, minor errors can snowball, and potential fraud can go unnoticed for months or years.

Why It Matters:
Internal audit gaps can result in overpayments, compliance violations, and, in some cases, exposure to legal risk. Payers expect hospitals to demonstrate control over their processes. If you can’t prove you’re managing risk effectively, you may be seen as part of the problem.

What to Watch For:

• Inconsistent follow-up on audit findings or recommendations

• Lack of escalation pathways for repeated compliance issues

• No audit trail or history of remediation efforts

How Audit Manager+ Helps:
Audit Manager+ centralizes the entire audit lifecycle—from identifying findings to tracking corrective actions—ensuring nothing falls through the cracks. Interactive dashboards provide real-time visibility into trends, audit progress, and accountability, enabling leadership and compliance teams to spot and address recurring issues early. The system automatically logs all remediation efforts, creating a clear audit trail that demonstrates follow-up and compliance, and supports continuous improvement.

Risk #5: Vendor Risks Stay Hidden Without Oversight

Third-party partners are part of your compliance responsibility.

Hospitals increasingly rely on external vendors for services such as coding, billing, and IT. However, without an auditing mechanism in place for those vendors, it’s difficult to know whether their processes meet compliance standards. After all, third-party vendors ARE part of your compliance responsibility. Shrugging your shoulders and saying, “Well, they should have handled it…” is not a viable defense in the face of an audit.

Why It Matters:
Any compliance failure by a third-party vendor reflects on your organization. From mishandled PHI to billing errors to security gaps, you are ultimately responsible for what your partners do on your behalf.

What to Watch For:

• No regular audits or performance reviews of vendor services

• Incomplete documentation or audit logs from third-party contractors

• Inability to demonstrate oversight to regulators

How Audit Manager+ Helps:
With vendor-specific audit workflows, Audit Manager+ makes it easy to evaluate and track compliance across all third-party partners. The platform stores vendor performance data, contract obligations, and audit histories in one place, supporting a culture of accountability across your extended team. Having someone watching your back so you can focus on the needs of your hospital, patients, and staff not only reduces worry, but it also reduces this hidden risk.

Strengthen Your Hospital’s Audit Program with Audit Manager+

Don’t wait for an audit to find your weak spots. Take control now.

Audit readiness isn’t just about passing inspections—it’s about building a healthcare organization that runs smarter, safer, and more compliantly. When you use outdated or manual methods, you’re exposing your hospital to avoidable risks. With Healthicity Audit Manager+, you get a purpose-built platform designed for modern healthcare audit challenges.

To see Audit Manager+ in action, watch this on-demand demo.

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