Explore the Impacts of Upcoding and Downcoding on Revenue Cycle Management

Accurate medical documentation is needed to record findings and observations about a patient’s health history, including their past and present illnesses, treatments, and outcomes. The medical record is instrumental in delivering consistent, high-quality care. Medical services suffer when physicians report a less comprehensive record than is required. Quality of care can slip, and practices may struggle to receive compensation for services performed by the physician.

Effective communication and continuity of care is easier to deliver when the medical record is maintained. Common issues like upcoding and downcoding in medical billing severely impact the integrity of the medical system and can have far-reaching repercussions for the practice.

Keep reading to learn more about downcoding and upcoding in medical billing and how you can uphold efficient medical coding procedures in your practice or hospital.

What Is Upcoding in Medical Billing?

Upcoding is a fraudulent medical billing practice in which a bill sent for a medical service is more expensive than it should be based on the offered service. For example, it’s healthcare fraud when a medical professional reports and bills a patient for a diagnosis of chronic bronchitis when the patient actually has acute bronchitis. The physician must report services supported by medical necessity and valid documentation.

Engaging in upcoding is not always intentional. Regardless, it is a compliance risk that may lead to sudden audits, charges of fraudulent billing, and claim denials. At a high level, rampant upcoding can lead to increased healthcare costs for the public, because the federal government and private payers distribute healthcare costs across the general population.

The Consequences of Upcoding and How It Happens

Every office visit or medical service a physician offers has a Current Procedural Terminology (CPT) code set by the American Medical Association (AMA). These codes describe the services rendered, and when a practice sends a bill to the payer, the physician must report this code accurately. Different services have different codes and costs, and when the CPT code doesn’t correspond to the medical service, medical billing and the system are affected.

Upcoding can happen easily, either maliciously or by mistake. All it takes is for sedation to be confused for more complex anesthesia or for a procedure carried out by a nurse to be billed as though a doctor performed it.

The most egregious impact upcoding has on the healthcare industry is increasing medical costs. Government budgets and taxes reflect the dollars needed for healthcare, and when insurance companies overpay for procedures, they increase the costs of premiums to offset their loss. Billed Medicare must be accurate to prevent financial harm to patients.

Is your medical billing process inefficient? Horizon Healthcare RCM offers in-depth medical necessity reviews to ensure your policies and procedures are up to date.

What Is Downcoding in Medical Billing?

Downcoding is the total opposite of upcoding in medical billing. When a practice downcodes, they code at a level lower than the medical service supported by medical necessity. This form of undercoding is often the result of incomplete or inaccurate documentation.

Like upcoding, downcoding is fraudulent and affects your compliance. According to the Medicare National Correct Coding Initiative (NCCI), if a Healthcare Common Procedure Coding System (HCPCS) or CPT code exists to describe the medical services delivered, the physician must not report a less comprehensive code or codes that describe the services not included in the less comprehensive code.

Medical professionals must report medical services at the level of the services performed or risk non-compliance.

Further Consequences of Downcoding and How To Avoid Them

The services you claim will be reimbursed at a lower rate. You negatively impact your revenue stream, and multiple instances of downcoding can result in long-term financial hardship. Medical professionals who undercode may also potentially harm patience by under-documenting a diagnosis.

Proactive, in-house coding audits are a reliable way to detect and address upcoding and downcoding. With more structured and optimized documentation, coding, and billing process, you avoid further inconsistencies and ensure that all compliance guidelines are met and maintained. Your policies and education should support detailed and accurate documentation to prevent future coding errors.

How Medical Coding Evaluation and Management Prevent Errors in Service

The Evaluation and Management (E/M) standards and guidelines were established by Congress in 1995 and revised in 1997. They’re the standard for determining patient conditions and, when followed, allow medical professionals to document and bill for services without issues. Medical practices that follow E/M standards have an advantage when revising or reinforcing their health systems. With a measured approach, upcoding and downcoding can be minimized and eliminated.

A legible and comprehensive record details clear plans for care and documentation for patient assessment, clinical impression, and diagnosis. Physicians report the correct code, and the rationale for ordering certain medical services is clearly outlined or easily inferred. The more detailed the medical record, the less likely it is for undercoding or upcoding in medical billing to occur.

Complete and reliable documentation is the heart of your medical billing strategy. A well-structured medical record helps medical professionals provide:

Accurate and timely claims review and payment
Appropriate quality of care assessments
Actionable research and data
Sound communication between physicians and other healthcare professionals

Fortify Your Medical Billing Process With Horizon Healthcare RCM

Medical coding is essential. Your coding specialists should create and implement an accurate, secure, and efficient process that helps you maintain a healthy cash flow and prevent issues like upcoding and downcoding. Messy medical records harm your practice by increasing the chances of rejected claims and putting you at risk for non-compliance.

Horizon Healthcare RCM understands the medical industry and how challenging it can be to address coding errors when you’re busy providing a quality patient experience. We lend a hand with our outsourced coding services from qualified specialists. Our team has a penchant for improving our clients’ flexibility and updating their coding techniques.

Ready to take your patient care to the next level? Reach out today.

Explore the Impacts of Upcoding and Downcoding on Revenue Cycle Management

What Is Upcoding in Medical Billing?

The Consequences of Upcoding and How It Happens

What Is Downcoding in Medical Billing?

Further Consequences of Downcoding and How To Avoid Them

How Medical Coding Evaluation and Management Prevent Errors in Service

Fortify Your Medical Billing Process With Horizon Healthcare RCM

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