Blog Details

medical coding

The Issue of Overcoding and Undercoding

Reading Time: 3 minutes

Medical coding is necessary for physicians to get reimbursed for services rendered. To get paid their contracted rate by insurance companies, physicians have to code procedures accurately to reflect the services rendered.  But the job of coding medical claims is complicated. 

There are thousands of codes and compliance rules and you have to be able to stay abreast of all of the changes that happen constantly. Make a mistake and you run the risk of being denied, not receiving the maximum reimbursement, or worse, being audited – and no one wants that. Two of the most common mistakes that get made during the coding process are overcoding and undercoding. 

What is Overcoding?

Overcoding happens when claims report higher-level CPT or HCPCS codes than what is supported by medical necessity, medical facts, or the provider’s documentation resulting in a higher reimbursement than is warranted for services rendered. There are generally two ways that overcoding happens:

  1. Upcoding – using a code for a higher level of service than what was provided or coding for a service not covered by the payer by using a code for a service that is covered
  2. Unbundling – some services are put together under one code, but if you submit a claim with a separate code for multiple components that should be billed as one charge, that is overcoding

The consequences of overcoding are serious; In fact, prosecuting medical fraud has become one of the top priorities for the U.S. Department of Justice as medical fraud is estimated to cost patients and taxpayers between $70 and $234 billion every year.

What is Undercoding?

Undercoding is when codes for services fail to capture all of the work performed during the provider-patient encounter. This can happen for several reasons, oversight, insufficient documentation, or it is done intentionally hoping to avoid an audit.  Whatever the reason the practice loses. Not only do they lose revenue, but undercoding can also skew data on claims resulting in lower reimbursement rates from payers. 

Like overcoding, undercoding can be seen as a violation of federal law in a variety of ways. Under any one of these acts or statutes, the False Claims Act, the Criminal Health Care Fraud statute, or the Anti-kickback statute, a physician could be found in violation as undercoding can still be seen as obtaining money by making false or fraudulent statements. Or in the case of the Anti-kickback statute, undercoding can be interpreted as an inducement to patients who could benefit by paying lower out-of-pocket costs for services.

medical coding - overcoding and undercoding

What Can You Do?

Most of the time, these mistakes are completely unintentional. However, they are a risk nonetheless, and eliminating as many incidences as possible helps to ensure you are in compliance and not a target for an audit. The following are ways in which you can identify and eliminate undercoding or overcoding issues:

  • Internal audit of your coding, billing, and documentation practices
  • Hire an external auditor to verify your findings
  • Provide continuing education for your coding and billing staff 
  • Update coding manuals yearly
  • Ensure your documentation is clear and concise and specific to each patient visit
  • Develop a simple practice-level cheat sheet that can provide guidance to your staff 

Getting Help

Having a certified billing expert on staff can be expensive and the cost to keep them up to date on guidelines and codes can be cost-prohibitive. Not to mention what happens if they go on vacation, only work part-time, or worse, leave?

Outsourcing your medical billing to the right revenue cycle management company can help eliminate incorrect medical coding as well as save you time and money by providing a team of AAPC certified coders to review claims, documentation and keep your staff educated on changes and compliance issues.

This is where Billed Right can help! Since 2006 we have been partnering with physicians to help streamline their workflow, continually educate them on ongoing code changes, increase their income and decrease the time their staff spends on medical billing, denials, and account receivable collections. 

To learn more on how to become a partner with Billed Right, contact us today!

Have Questions?
Call Now for Assistance