Accurate medical billing is essential for the integrity and financial stability of healthcare practices. However, errors such as upcoding and downcoding can lead to significant legal and financial consequences. In this blog, we’ll explore the differences between these two practices, their implications, and how healthcare providers can prevent such errors.
What is Upcoding in Medical Billing?
Upcoding refers to using a billing code that represents a higher service than what is provided to the patient. For example, if a patient is diagnosed with a UTI (urinary tract infection) but is charged for a more complex treatment needed for a kidney infection, there would be a higher reimbursement from insurance companies. Upcoding is a fraudulent practice that leads to the generation of higher revenue.
Examples of Upcoding
Despite upcoding being a clear fraud, it is not always meant to be such. Unintentional errors while billing or mistaking some services for others (for example, basic sedation for more complex anesthesia) can lead to upcoding.
Where it is intentional, it could happen when doctors charge for a longer patient visit rather than the actual time. Using Evaluation and Management codes (E&M) to modify visit times or charge for a more complex procedure are examples of upcoding.
Bigger hospitals may also indulge in such practices by charging for a more severe diagnosis than what it was. The Office of Inspector General (US Department of Health and Human Services) conducted a study that found that the number of hospital stays at the highest severity level increased by almost 20% from 2014 to 2019.
In 2022, a Californian doctor was sentenced to prison for eight years due to his involvement in a $12 million Medicare fraud scheme, in which he falsely diagnosed patients, gave them unnecessary treatments, and upcoded their bills. Along with imprisonment, he was obliged to pay 4.5$ million as a settlement.
In 2022, Providence Health and Service Washington reached a settlement of $22.7 million to resolve the allegations that they upcoded bills to charge for unnecessary neurosurgery procedures.
What is Downcoding in Medical Billing?
Downcoding is the clear opposite of upcoding, where the bills are charged for a lower amount than what is due. This leads to lesser revenue due to lower reimbursements. Lesser revenue might lead to an eventual decrease in the quality of healthcare provided.
According to recent research published in the National Library of Medicine, focusing on Florida alone, 2.6 million visits (8.9%) out of 29.34 million primary care visits are downcoded, which can lead to a loss of $114 million in revenue.
Because the bills are inaccurate, the American Medical Association (AMA) considers downcoding a fraudulent activity, and a form of abuse. But the question arises: why would medical practices indulge in something that brings them more harm than benefit?
Examples of Downcoding
The biggest reason why downcoding occurs is because of insufficient medical documents. When there are no relevant details required to allocate a service or treatment, medical billers might downcode.
A very common example is the downcoding of diabetes to be without complications, even if there is a need for external caution. Another example is the downcoding of a complete colonoscopy to a sigmoidoscopy (examination of just the lower colon).
However, downcoding can be intentional too. In healthcare organizations that cater to low-income individuals (like Medicare), downcoding is expected to facilitate reasonable payments for those who cannot afford healthcare.
To escape audits or reduce denial of claims by insurance companies, medical practitioners might resort to lower-level codes to avoid being monitored by regulatory bodies.
How To Prevent Upcoding and Downcoding Errors?
To maintain compliance and ensure accurate billing, many healthcare providers rely on outsourced medical billing companies that specialize in minimizing errors. These services, as part of comprehensive revenue cycle management services, help optimize the entire billing process by preventing issues like upcoding and downcoding. Let’s explore some best practices and solutions to effectively address these challenges.
Conducting Internal Audits
One of the significant factors contributing to upcoding and downcoding is inaccurate documentation. Acquiring complete and accurate medical records of each patient is essential, as is conducting internal audits regularly. Implementing a robust EHR system can help efficiently organize all the information and prevent billing errors.
According to CRICO Strategies (medical liability insurance provider), duplicate patient records lead to $1.7 billion worth of malpractice costs each year. To counter this, regular checks are important.
Investing in the training of staff
CPT codes are an integral part of the core Medical Billing process, therefore, medical coders must receive adequate training to use them effectively. They should be well-trained to use the applicable billing software without a glitch.
Staying updated
Ensuring that your coding practices align with the rules and regulations of governmental authorities will help you avoid any legal upset. There is a need to stay updated with the latest regulations to ensure compliance at all times. Additionally, the information regarding changes in regulations must always be acquired from official sources like the American Medical Association.
Monitoring Claims
Even after the bill has been generated, the claim should be monitored to prevent upcoding or downcoding errors. If such an error occurs, communication with the payer should be established immediately.
Bottom Line
Both upcoding and downcoding are illegal practices that can severely hurt the integrity of one’s medical practice. Thus, it is essential to conduct thorough checks with great vigilance to ensure that the medical bills accurately represent the procedures or treatments performed.
As the editor of the blog, She curate insightful content that sparks curiosity and fosters learning. With a passion for storytelling and a keen eye for detail, she strive to bring diverse perspectives and engaging narratives to readers, ensuring every piece informs, inspires, and enriches.
