Practice Management

Steps to Avoid Overcoding and Undercoding

Consider these tips to avoid audits and maximize reimbursement

A paper showing dates of service and billing codes

Accurately coding claims is critical to avoid audits and ensure your practice receives the maximum compensation from payers. Overcoding occurs when reporting Current Procedural Terminology and Healthcare Common Procedure Coding System codes results in a higher payment than warranted for services provided. Whether intentional or unintentional, overcoding is considered fraud and can trigger an audit. Overcoding generally occurs in two ways:

  • Unbundling—billing separately for multiple components of a procedure that should be billed as a single charge
  • Upcoding—using a code for a higher level of service than what was performed or coding for a service not covered by a payer by substituting a code for one that is covered

Undercoding occurs when codes fail to capture all work performed. This is often due to oversight, but some practices intentionally undercode to avoid an audit. This is not recommended because it results in substantial lost revenue and creates skewed claims data that ultimately lower reimbursement rates.

Raemarie Jimenez, vice president of certifications and member development at the American Academy of Professional Coders, offers the following tips to avoid overcoding and undercoding.

Hire professionals

In one facility audit with more than 300 providers, Jimenez found that physicians coded correctly only 30% of the time. She urges practices to hire certified coders. “When practices say they can’t afford to hire a coder,” she says, “I tell them they can’t afford not to.” If hiring a full-time coder isn’t feasible, consider billing/coding contractors.

Use the right tools

Look-up tools and software for electronic codes can identify components of a procedure that should be bundled. They can also identify when modifier codes should be used to provide extra information about procedures performed. This can help maximize reimbursement.

Keep up-to-date

Failing to stay current with updated coding guidelines and policies is a major pitfall. During audits of some practices, “they’re pulling out code books that are three to four years old,” Jimenez says. “That’s problematic.”

Use caution with EHRs

EHRs frequently have integrated computer-assisted coding modules based on documentation. But physicians often inappropriately cut and paste data and services performed from previous patient visits. “It inflates the work that is actually being done,” Jimenez says, and results in overcoding.”


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