MD audits in hospitals: process, triggers, and preparation

What is an MD audit in a hospital?

During an MD audit, the Medical Review Board (MD) examines the billing of inpatient cases on behalf of the health insurance fund. The legal basis is provided by §§ 275 et seq. SGB V; the specific procedure is governed by the Audit Procedure Agreement (PrüfvV) between the associations of health insurance funds and the hospital association. Specifically, it checks whether the billed compensation corresponds to the services provided. This includes questions such as:

• Do the coding and the DRG match?
• Was the inpatient stay necessary?
• And was the length of stay appropriate?

The billing audit itself can be conducted in writing or on-site. The Medical Review Board and the hospital agree on the type of audit; if no agreement is reached, the Medical Review Board decides on an on-site audit.

Typical triggers: When hospitals are audited by the MD

Health insurance providers almost always initiate an MD audit based on a specific reason. In practice, three triggers dominate:

• Coding audit: Do the ICD and OPS codes align with the German Coding Guidelines and the documentation? And does the coding result in the correct DRG reimbursement?
• Primary incorrect admission: Was the inpatient stay medically necessary, or could the case have been treated on an outpatient basis?
• Secondary incorrect admission and length of stay: Does the stay exceed the maximum length of stay for the billed DRG? If so, the Medical Review Board (MD) checks whether the duration of the stay is justified by hospital-specific circumstances.

Since July 30, 2026, an expanded audit access under Section 17c KHGhas also been in effect: If the Medical Review Board discovers irregularities during the audit that go beyond the specific subject of the review, these must be included in the report. Consequently, an audit can expand to include additional cases and issues as it progresses.

Step by step: The MD audit process

The audit procedure conducted by the Medical Review Board follows a fixed framework established by the audit procedure agreement and the assessment guidelines for inpatient billing audits (DRG and PEPP):

1. Audit notification: The health insurance provider must notify the hospital of the audit no later than four months after receiving the invoice and billing data, specifying the exact subject of the audit.
2. Case dialogue: Either the health insurance fund or the hospital can initiate a case dialogue; the other party must accept or reject it within two weeks. In principle, the case dialogue is concluded two months after the audit initiation period expires, though a mutual extension is possible.
3. Commissioning the Medical Review Board: Following a case dialogue, the health insurance fund commissions the Medical Review Board within twelve weeks of initiating the audit; without a case dialogue, the commission must occur within the four-month period. The Medical Review Board notifies the hospital of the audit initiation within two weeks.
4. Request for documentation: The requested documentation must be submitted within eight weeks. Anything not submitted by the deadline will generally be disregarded in the further proceedings.
5. Expert opinion and decision: The Medical Review Board prepares the expert opinion, and the health insurance fund makes its final decision within nine months of the Medical Review Board's audit notification.
6. Discussion: Before filing a lawsuit, a discussion procedure must be conducted, which lasts twelve weeks and can be extended.

For medical controlling, this means: as soon as the audit notification is received, all procedural deadlines must be documented and monitored, from the start of the audit to the discussion. The eight-week preclusive period for documentation is the most critical point, as any failure to meet it cannot be rectified.

Statements and objections: Defending revenue correctly

If the health insurance fund reduces payment based on the audit results, the phase begins in which the hospital can defend its revenue. The hospital must contest the fund's decision within six weeks; if it misses this deadline, the invoice is considered discussed and further objections are excluded. The invoice correction must be made within four weeks after the decision remains uncontested or an agreement has been reached.

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The outcome of an objection depends primarily on how well it is substantiated – a blanket objection is generally insufficient. Instead, you must address the substance of the complaint and respond to every point with evidence from the patient's medical record.

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Therefore, every objection should include these four points:

• Understand the reason for the audit: What is the auditor's objection based on, and what criteria are being used for the review?
• Cite supporting evidence: Every argument must refer to a specific point in the case documentation that supports the coding or the necessity of inpatient treatment.
• Check for consistency: Documentation, coding, and billing are treated as a single, cohesive case. Any contradictions within the file are resolved before submission.
• Reference relevant sources: For length-of-stay issues, the appeal must include the MBEG justification; for coding issues, it must reference the German Coding Guidelines.

How medical controlling can properly prepare for audit cases

Good preparation begins long before the audit notice arrives. In a hospital, two roles carry the primary burden: Medical controlling manages deadlines, the appeals process, and discussions, all the way through to social court proceedings. Medical coders prepare disputed cases, draft statements, and upload documents on time to the provider portal as required by the electronic agreement under § 17c of the Hospital Financing Act (KHG).

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Four measures to reduce audit risk:

• Concurrent coding: Coding while the case is still active allows you to identify documentation gaps early enough for the medical staff to address them.
• Document every coding decision with a reference: Documentation is the foundation for every subsequent statement and appeal.
• Effective deadline management: Audit notifications as well as deadlines for documentation and appeals are handled through a documented procedure with clear responsibilities.
• Internal audits: Spot checks and training for medical staff improve billing quality before audit rates make it visible.

MD audit rates from 2027: Why good preparation pays off

With the GKV Contribution Rate Stabilization Act, which the Bundestag passed on July 10, 2026, the framework for MD audits is changing fundamentally. From that point on, the rule is: the worse the audit results, the more invoices the health insurance fund is permitted to audit. An overview of the new tiered system:

Billing quality is thus becoming a key business performance indicator. If a hospital, for example, slips from the 5% tier to the 40% tier, the insurance fund may audit up to eight times as many cases per quarter as before.

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Recare MD Management: How Recare supports your medical controlling

Recare MD Management actively supports your medical controlling department in the preparation of statements and appeals. The solution helps to understand the content of the audit request, finds the relevant evidence in the case file, and checks it for consistency. Furthermore, it prepares the appeal, including the MBEG justification, on time and with source references.

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The prepared drafts are then reviewed, supplemented, and submitted by your team; the legal responsibility remains with the hospital. Recare MD Management does not replace the MD portal of the electronic agreement, but rather prepares content that your team then submits.

Recare Coding: Concurrent coding support

takes it a step further by Recare Coding : The solution generates concurrent coding suggestions for ICD, OPS, and additional fees and logs every coding decision in an audit-proof manner. A licensed grouper determines the DRG and case value before invoicing. In addition, the solution flags potential MD points of attack, such as secondary misallocation. Every coding suggestion remains a draft until approved; the professional decision lies with the coding team.

Bottom line: Evidence and deadlines determine revenue

The revenue for a case is decided long before the audit notice. Those who code concurrently, document every coding decision with supporting evidence, and stay on top of procedural deadlines can refute objections using the patient file instead of writing off revenue. Starting in 2027, good preparation will pay off twice over, as the audit burden for hospitals with poor billing quality will increase significantly from that point on.

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This is exactly where the Recare solutions come in: Recare Coding supports your team during the ongoing case with evidence-based suggestions before an objection even occurs. Once a case is audited, Recare MD Management prepares statements and appeals based on the case file. Control remains with your team at all times.