Are you undercoding? Here’s how to find out
Everyone always talks about the dangers of overcoding (e.g., audits, denials, recoupments, and fines), but did you know that undercoding and underbilling can be equally as detrimental to your medical practice and its revenue cycle management compliance?
What is undercoding?
Undercoding occurs when the medical codes you submit to a health plan don’t reflect the full extent of treatment the patient receives. This happens for a variety of reasons. For example, medical coders and billers may accidentally fail to abstract every code from the medical record or they don’t report the most specific code. In some cases, physician documentation is the problem. In other words, the physician provides a particular level of service but doesn’t capture that complexity through their documentation. When a medical coder assigns a code, they choose one that doesn’t ultimately reflect the services rendered. The result? Lack of revenue integrity.
What are the dangers of undercoding?
With undercoding, not only do you lose revenue and establish false utilization patterns that could flag you as an outlier to payers, but your medical practice might also face potential violations of fraud and abuse rules. (Think: Misusing codes on a claim and/or misrepresenting the truth). In addition, you could be at risk of violating the Anti-kickback statute because under-coding services could be viewed as a way to induce patients who might benefit by having a lower copayment.
How do medical practices know whether undercoding is a problem?
Most physicians don’t intentionally undercode or underbill. In most cases, it’s a mistake, and it can often happen with evaluation and management (E/M) services, care coordination, preventive services, wound care coding, and more. However, even when it happens unintentionally, ignorance is no defense. Ask these five questions to determine whether undercoding might be a problem at your medical practice:
1. Does our utilization data indicate a potential problem?
The only way you’ll know this is by looking at your data. For example, you can purchase various benchmarking tools to help you identify how you compare with your peers. You can also look at specialty-specific Medicare Part B utilization data and comparative billing reports to identify potential vulnerabilities.
2. When was the last time you performed a medical coding audit?
If it has been a while, chances are likely that you’re under-coding without even realizing it. A smart move is to perform an internal audit or partner with an external consultant (or both) at least quarterly to get a sense of how you’re doing and what revenue you may be leaving on the table with the overarching goal of promoting revenue integrity.
3. How often does your medical practice provide staff training?
This includes annual training for medical coders and billers on new, revised, and deleted medical codes as well as updated coding guidelines and the importance of reading all medical record documentation and double-checking codes prior to claim submission. It also includes regular compliance training for physicians and other providers regarding medical record documentation. If you don’t invest in this type of training, you could be at risk for both undercoding as well as overcoding.
4. Is your medical practice able to recruit and retain highly qualified individuals for medical billing and coding?
If the answer is ‘no,’ your medical practice could be at risk for all sorts of compliance vulnerabilities, including undercoding. When there’s a high turnover rate, and it’s difficult to recruit new staff, working with a medical billing outsource company may be your best option to ensure compliance and business continuity.
5. How fearful are you and your staff of payer audits?
Increased federal audits continue to create an environment of fear in which physicians, medical coders, and medical billers are often overly cautious about incorrect coding. Even though this fear is understandable, medical practices cannot operate out of a place of fear. Instead, they must focus on coding and billing each claim correctly to ensure revenue integrity.
How do medical practices know whether underpayments are an issue, too?
In addition to undercoding, medical practices may also struggle with underpayments, meaning codes and claims are accurate, but it’s the payers that don’t pay them correctly. The one commonality between undercoded claims and underpaid claims is this: Lost revenue for your medical practice.
To combat underpaid claims, be sure to obtain a fee schedule from each payer. Then monitor claims as they’re paid. Did each payer pay the correct amount, or did they underpay the claim? It’s a tedious process, but well worth the effort. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
