Undercoding and Overcoding: Are You Hurting Your Practice Revenue?

When it comes to insurance coding, hitting your target, is the key to successful reimbursement. However, many practices are undercoding or overcoding skewing the reimbursement opportunity.

Undercoding occurs when the medical billing code does not adequately reflect the full extent of the services performed by the physician. Undercoding means potential revenue is left on the table because you didn’t accurately code the procedure performed and missed out on reimbursement.

In contrast, overcoding of CPT codes is the reporting of a higher code than what accurately reflects the work performed by the physician. Overcoding has a higher potential compliance risk, because payers will reimburse you at a higher level than what you should get. It can result in accusations of fraud, along with stiff legal penalties.

Simply put, undercoding is hurting your practice’s revenue potential and overcoding is putting your practice at risk.

Why do practices under code?

There are a number of reasons your practice may be undercoding. It may stem from an office assistant’s inability to read the doctor’s notes accurately. Perhaps it is done intentionally to help out patients who cannot afford the fee for the more expensive procedure. In many cases, providers purposely undercode out of fear. Providers want to avoid denials and audits at all costs. They might think by Undercoding that they are flying under the radar and their coding practices won’t be flagged. But that is simply not true.

Undercoding is an unwise course of action that can backfire.

For example, a practitioner who consistently undercodes might be more likely for an audit if their services are below industry average. Insurance companies do not deny claims because codes reimburse higher than other codes.They are simply looking for codes to match the documentation on the patient’s record. The way to avoid denials is to ensure proper documentation.

You could be putting your practice as risk. If you are undercoding patient visits and your patient needs more extensive treatment later, you could be questioned—even sued for malpractice—for not documenting accurate details of the treatments initially.

It is also important to note, that the rise in high deductible health plans is creating a higher percentage of patient-owed responsibility in your revenue mix. That means the days of helping patients by not billing them have to end - your practice can no longer afford to give away free services.

Why do practices overcode?

There are two ways that providers overcode either through upcoding of unbundling of services.

Upcoding occurs when a provider codes for a more serious, and more expensive, procedure then was actually performed. Unbundling is the breaking out of a group of procedures that are considered “all inclusive” into separate charges. If your practice is knowingly upcoding or unbundling stop! You are breaking the law.

If you are billing and coding accurately, you earned every penny of that reimbursement. It may add more details to gather and follow up than you want or need in your busy practice, but you owe it to yourself to defend your earnings.

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