What is Upcoding and Downcoding in Medical Billing?

What is Upcoding and Downcoding in Medical Billing?

For various reasons, Upcoding and downcoding are issues that are concerning to medical professionals and patients alike. For those who are not familiar, let us explain What is Upcoding and Downcoding in Medical Billing? Medicare and Medicaid have developed specific codes for providers to use in billing the government for patient services. When these codes are altered in such a way as to claim a larger share of reimbursement than is ace, they are considered fraud reportable under the False Claims Act. Medical fraud has been increasing at alarming rates in the recent past. Upcoding and downcoding are the two most common types of medical billing fraud. Upcoding involves overbilling a patient, while downcoding is the reverse of upcoding which entails under-billing patients. Upcoding disadvantages patients as they are forced to pay for services they never received. Unscrupulous health officials defraud patients by overbilling them. Downcoding, on the other hand, disadvantages healthcare providers as patients pay less than they should for services offered. It is disheartening that these fraudulent activities are inside jobs malicious healthcare personnel does at the expense of patients and healthcare facility executives. Fighting upcoding and downcoding are challenging, as they are hard to detect, especially if they are well executed from the beginning. Most patients do not understand the CPT Codes assigned to their diagnosis and treatment. As a result, most complaints are unaddressed, considering upcoding and downcoding are inside jobs.

Billing Codes

Healthcare professionals report medical procedures they conduct on patients as per the Current Procedural Terminology code (CPT) set by the American Medical Association (AMA) to facilitate billing. CPT codes are numerical codes that denote diagnoses conducted on patients. The CPT codes help the accountants to calculate the hospital bill you should pay.

When your hospital sends a bill to your payer, that CPT code corresponds to the procedure, and different procedures and services have higher or lower costs. While the code doesn’t directly translate to the payment, the hospital payment should be accurate as long as the bill contains the correct code.

What Is Upcoding?

As a piece of the claims-filing process, each service rendered is coded with current procedural terminology codes or CPT codes. A CPT tells the payer what specific service was performed. During treatment, each service is recorded on the patient’s chart, which is then used to document the services that require payment. Upcoding is when the CPT code listed on the claim is for a service or procedure that is at a higher level than the one performed and listed on the patient chart. This can be deliberate – which is fraudulent and illegal – or by mistake, but either way, it needs to be corrected. The main risk of upcoding is an audit that reveals your practice has received more money than it was supposed to according to the actual services performed. Earlier this year, the Government Accountability Office reported that the federal government was overbilled by $14.1 billion in 2013 to Medicare Advantage practices. Thus, the government has a vested interest in eliminating overbilling and upcoding.

Examples of Upcoding

The following examples illustrate upcoding in healthcare facilities:

  1. Reporting you conducted an Ultrasound complete exam (CPT code 76700), yet you conducted an Ultrasound abdomen limited exam (CPT Code 76705).
  2. Quoting a patient who has chronic bronchitis, yet the patient has acute bronchitis.

How to Prevent upcoding?

Establish internal procedures

Make it a point to implement set standards when it comes to reviewing bills before your practice submits them to insurers. Review bills thoroughly and compare them against medical records to catch any errors before they hit the mail.

Make smart hiring decisions and train extensively

Because there is so much on the line when it comes to billing and coding errors, it is important that you take the time to hire trustworthy, detail-oriented professionals to fill administrative positions. Furthermore, make training them a priority and focus some of that training on the problems

Hire a compliance professional

It may, too, benefit you to hire someone who has a background in coding and fraud prevention to take on the task of reviewing bills before sending them. That way, this person is more likely to spot potential red flags that insurers may notice upon receipt of the bills.

What Is Downcoding?

Downcoding is the opposite of upcoding. If you perform a service but record the CPT for a lower-level service, that is downcoding. Downcoding also leaves you vulnerable to an audit, which is never good. But, it can also cost a practice thousands of dollars a year in lost revenue because you’re not getting the higher rate of pay that you would if you had recorded the service properly. According to the National Correct Coding Initiative (NCCI): “Physicians must avoid downcoding. If an HCPCS/CPT code exists that describes the services performed, the physician must report this code rather than report a less comprehensive code with other codes describing the services not included in the less comprehensive code.”

Examples of Downcoding

The following examples illustrate downcoding in healthcare facilities:

  1. Reporting a different CPT code after a unilateral partial mastectomy with axillary lymphadenectomy ( CPT Code 19302) is conducted.
  2. Reporting diabetes with no complications, yet various procedures were conducted on the patient.

How to Prevent Downcoding?

Conduct Coding Audits

One of the best ways to detect and prevent downcoding is to conduct coding audits for downcoding (as well as for upcoding). One must make sure to share audit findings. This will allow the auditor to come up with certain suggestions for accurate coding. Another benefit of coding audits is that you can provide subsequent education about downcoding and upcoding to the providers in your practice. Coding audits help prevent downcoding errors so that you can submit claims with zero downcoding errors.

Complete and Accurate Documentation

It is vital to provide complete and accurate documents to avoid downcoding. Proper documentation helps in proving the necessity of services performed while submitting claims for reimbursement.  Make sure to include necessary documents associated with the patient’s past, family, and social histories, lab test results, X-ray reports, or other diagnostic services, referrals, and consultation reports.

Use Billing Software but Consult Experts too

While billing software plays an important role in increasing the coding, billing, and submission processes they may not always suggest accurate codes. Various codes have more than one or two conditions for accurate coding. Therefore, it is advisable to consult a professional for accurate coding.

Insurance Verification

One may think that insurance verification is not connected with downcoding in any way. But on the contrary, insurance verification plays a major role in eliminating downcoding from your medical billing and coding process. Verifying a patient’s insurance claim helps you to identify the CPT/HCPCS codes that are approved and accepted by the insurance carrier for various insurance plans. With thorough insurance verification, you’ll be able to code accurately to avoid downcoding and prevent claim denials and/or fraud, if any.

Get Familiar with Fee Schedule

Sometimes, Explanation of Benefits (EOB) may include explanations such as ‘level of service/procedure has been adjusted’ to clarify the adjustments that were made in the payment based on the codes mentioned in the claim. This is where the fee schedule comes in. If your coder and/or biller have made any error while coding the procedures/services then you can detect downcoding by comparing the fee schedule with the amount mentioned on the EOB. The Centre for Medicare and Medicaid Services (CMS) defines the fee schedule as “a complete listing of fees used by Medicare to pay doctors or other providers/suppliers.  This comprehensive listing of fee maximums is used to reimburse a physician and/or other providers on a fee-for-service basis.  CMS develops fee schedules for physicians, ambulance services, clinical laboratory services, and durable medical equipment, prosthetics, orthotics, and supplies.”

Consequences of Upcoding and Downcoding

Medical fraud perpetrators are prone to various legal ramifications when caught. Some of the consequences include

  • Loss of public confidence and loyalty
  • Reputational damage associated with lawsuits
  • Lawsuits for defrauding patients
  • Loss of revenue to healthcare facilities related to downcoding
  • Risk of non-compliance due to financial inconsistencies during audits

How to Report Medical Fraud

You are highly encouraged to report medical fraud if you suspect inconsistencies in your medical bills. Medicare and Medicaid beneficiaries are the major victims of medical fraud.   Upcoding and downcoding can hurt a practice. Avoiding them should be a practice’s main priority when it comes to billing. Contract with a medical billing company to handle your coding and billing so you can eliminate coding errors before they create compliance problems. This eliminates the risk of your staff committing errors, puts coding in the hands of trained professionals, and saves money. By outsourcing to a professional medical biller, you can avoid mistakes that are caused by inexperienced medical billers and coders. Having a team of qualified medical billers and coders who can expertly keep track of the thousands of medical codes, diagnoses, and outpatient procedures can help you reduce claim denials. This also ensures that your staff will no longer need to spend time on these billing concerns. You and your staff can then use this freed-up time to focus on patient care.   Get a free no-sting attached billing services quote from ZEE Medical Billing for your practice.

Get in Touch

More from the category