09 Sep Are you Under-Coding at Your Practice or Surgery Center?
Under-coding is defined as providing a patient service and purposefully coding it less than the parameters required for the particular service. Under-coding is a significant problem for the physician’s practice. It usually results from lack of knowledge and fear of violating billing rules and laws. If the medical billing specialist does not properly understand medical billing, he/she will have to guess at the billing codes and resort to use of basic codes that are not very specific. Using the same codes over and over again can trigger an audit regarding illegal practice of excessive billing code use.
There is a reason for the many different billing codes. For the general practitioner, different codes represent diagnosis and procedures. While many patients are seen for chronic ailments, such as diabetes or high blood pressure, others come in for a physical or check-up.
When a medical billing specialist is not familiar with the various billing codes, he/she may be under-coding by using a single code for the visits. While it may appear that under-coding is a safer option than over-coding, they are both equally problematic. Either coding practice could be a reason for an audit from an insurance company. Under-coding sticks out like a sore thumb when an audit is performed.
Avoid Financial Problems
Another issue with under-coding is that it can result in financial problems for the healthcare facility. Physicians should receive the money they ear, so the medical biller is responsible for correct coding of the claim so that revenue is generated and the physician is compensated for his service and supplies. While it may be noble to charge less for the purpose of avoiding mistakes, it is only going to negatively affect the practice in the long run.
Experts estimate that a one-physician practice loses as much as $100,000 every year due to under-coding. This is money that could be used to employ medical billing professionals, new equipment, and an electronic medical records system. While many physicians feel that insurers are more likely to pay the bill when it is submitted with lower fees, this is not always the case. Insurers do not have any incentive to disallow or allow a procedure or service based on the level reported. Instead, they look for documentation to support the service and deny the claim if it cannot be justified.
One way an insurer recognizes under-coding is by developing a profile on each reimbursed physician. This profile indicates “coding tendencies,” which are patterns and longevity of treatment patterns. If the profile shows a high use of one code, such as 98942, the insurer assumes that miscoding has occurred. This is because it is known that it is not reasonable for a practice to have a code that occurs so commonly in a given group of patients.
Red Flags related to Under-Coding
- Discriminatory discounts – The physician may feel he has the right to provide more service than what he/she charges. However, this habit puts the physician at risk for noncompliance because the discounted service is not provided in a structured manner. Discriminatory billing occurs when a physician charges a cash paying patient for only the office visit and “writes off” or fails to report other services. In the meantime, insurance patients are charged for all services.
- Medicare fraud and abuse – In the case of the Medicare patient, under-coding is seen as inducement, which is considered fraud, abuse, or both. Medicare only recognizes inducement as offering a free service to encourage the patient to receive another service that is covered by Medicare. The statute specifies that inducement occurs when a provider knows that remuneration offered to Medicare beneficiaries is going to influence the patient to receive services or items from the provider.
- Shortchanging – The largest number of under-coding errors occur in Evaluation and Management (E & M) services during routine audits. This type of under-coding shortchanges the physician because E & M under-coding lessens the monies that can be collected for services given.
- Devalued level of service – When an office under-codes, it paints a false picture to the insurance carriers and will devalue the level of service.
- Perceived value of services – Under-coding also affects the patient’s perceived value and benefit of services suggested by the physician. Instead of under-coding to meet the patient’s need, the physician should offer a variety of payment plans so the patient will have options.
Documentation for the Treatment Record
- Reason for encounter
- Relevant history
- Physical examination findings
- Prior diagnostic test results
- Physician’s assessment and clinical impression
- Plan of care
- Codes submitted to a carrier, which match documentation