March 27, 2026
Nursing home audit success depends on proactive habits. Providers who regularly review their own documentation, stay informed about Medicare policies and audit trends and make sure each patient encounter is clearly documented and individualized are on the right track.
And the devil’s in the details. The smallest of gaps, or easy fixes, can trigger audits, according to clinical leaders presenting the Post-Acute and Long-Term Care Medical Association (PALTC) conference taking place in Anaheim, Calif., this week. Mission rationale for treatment decisions, unclear chief complaints or mismatched diagnosis codes can all result in a denied claim, they said.
Proactive habits become more important than ever when automation and AI are added, both of which are rapidly transforming health care billing and auditing of nursing homes, starting with an increase in scrutiny. Providers and payers both use AI tools to increase efficiency – payers use AI to analyze massive volumes of claims data, according to Jamie Smith, clinician development specialist at Eventus WholeHealth.
“Automation is expanding. Payers have these computer software programs reviewing huge amounts of claims and data. They’re looking to see if you copy today’s note from the last several notes, they’re looking for descriptor terms,” said Smith. “AI is wonderful, but it’s not perfect, so we have to make sure we review it for accuracy, make sure it really reflects the clinical picture.”
AI systems look for patterns such as copied notes, overuse of high-level billing codes and vague documentation. If AI flags a claim, it’s brought to human auditors which can then lead to external audits, they said.
“Now is the time, more than ever, to go ahead and explicitly state what you’re thinking,” said Smith. “Computers are looking for this stuff, and when they find it, they hand it over to a human. And that’s where the external audits begin.”
Smith discussed how to prepare for audits along with Michelle Martin, director of documentation integrity for Eventus, at the PALTC conference.
Easy catches and pitfalls
Overall, data patterns drive audit selections in today’s tech-driven world. In addition to coding and cloned notes, reviews are triggered by high-frequency visits and inconsistencies between coding and documentation as well.
Clinical leaders especially called out note cloning as a major red flag for auditors, since it suggests a lack of individualized care and can be interpreted as misrepresentation. Irrelevant information in notes was another potential pitfall with audits.
“Truth is, auditors don’t like to count the words. They don’t like note bloat. You’ve also heard it referred to as note stuffing,” said Smith. “That’s where you talk about all this irrelevant information, and they’re having to weed through it to try to figure out why in the world that this doctor or nurse practitioner is seeing this patient again. They want to see your thought process and the evolution of care, because clinical clarity is everything.”
And so, providers need to be more explicit and precise in their documentation, Martin said, clearly stating clinical reasoning and severity – don’t assume such things are implied. Strong documentation is a provider’s primary defense.
“If it’s clear, if it’s concise, you can defend that. Get that armor on and defend it,” said Martin.
Align CPT codes, ICD diagnoses and thorough documentation to defend work and reduce audit risk, they said, while also ensuring appropriate reimbursement.
The audit cycle and players
Martin and Smith walked members through the different entities that conduct audits as well, which in themselves are just reviews of documentation and coding to confirm that billed services are supported by the medical record.
Many operators know about the Medicare Administrative Contractors (MACs), but there’s also Comprehensive Error Rate Testing (CERT) contractors, Recovery Audit Contractors (RACs), and Unified Program Integrity Contractors (UPICs). SNN reviewed these roles in a story late last year.
The auditor typically looks at four criteria: monitoring, evaluating, assessing and treating, and the audit process follows a lifecycle. A trigger leads to a documentation request, followed by a review, determination and then possibly a recoupment of payments.
But operators have the right to appeal decisions and a significant percentage of audit findings are overturned when challenged with strong documentation.
“If you’ve gone through that documentation and you don’t agree with the auditor’s findings, you’re going to want to appeal. Don’t just pay back the money. That is what they’re looking for,” said Martin.
Appealing is an important step to take, they said, since simply repaying claims could signal ongoing issues and trigger additional reviews.
“Fifty to 60% of audit findings are reversed. You can challenge your UPIC and RAC auditors as long as you have solid documentation,” said Smith. “I know it’s hard, because as providers, we work so hard. We stay up until midnight sometimes trying to get these notes in. The last thing we want is to pay back money that we worked so hard for.”
Some entities are focused on identifying improper payments while others hone in on detecting fraud, but all aim to ensure that documentation aligns with billing, they said.
And audits usually occur primarily for these two reasons: ensuring quality or ensuring payment accuracy. Coding alone isn’t enough, Martin and Smith said – supporting documentation is needed to avoid claim denials, which can happen even if care was appropriate.