Coding Consistency and Risk Management
Under-coding and up-coding both mean misrepresentation of work. They have both legal and financial consequences. Contrary to some perceptions, undercoding too may trigger an audit in addition to hurting financial performance.
How under-coding may trigger an audit?
Undercoding is a symptom of practice management irregularities. If your coding is significantly different than others in your state and specialty, your practice will stand out and flag a possible misunderstanding of coding regulations, resulting in both downcoding and upcoding. Penalties for submitting a false claim can be fines up to triple the amount claimed but not less than $5,000 for each claim filed. Criminal penalties may also be considered if the case shows willful misrepresentation.
How much under-coding hurts the financial performance?
Undercoding eliminates 3%-15% of a practice revenue. For instance, a difference between two codes may be as low as $26 (e.g., 99212 for $29 and 99213 for $55). However, $26x2x48x3 = $7,488, when done twice a week for 48 weeks across three doctors in a three-physician practice. (The difference between 99212 and 99213 represents the complexity of a medical exam. 99213 is used when the physician examines at least six elements of at least one system and makes medical decisions. 99212 is used when less than six elements are reviewed and no medical decision is made).
How to discover up-coding and under-coding?
Typically, a practice coding frequency follows the 80-20 rule for the middle-range services, while low-level and high-level services would make up the remaining 20%.
Comparing your coding frequency with national norms (after adjusting for practice size, demographics, and medical specialty) can discover a coding problem. For instance, if your frequency is lower than national norms or if you code many more low-level services than the norm but very few high-level codes, you may be under-coding.
What to do if you suspect wrong coding?
The best way to deal with the potential for upcoding or undercoding is to periodically perform a randomized internal audit of patient charts. Such an audit is one of many services provided by Affinity Billing.
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