18 Dec Upcoding: Don’t Do It
Upcoding Is Serious Fraud
In the healthcare industry, it’s imperative that medical billing is accurate. Why? Because it guarantees that patients, providers, and insurers are all properly compensated. But a practice known as upcoding is attracting attention because it undermines this equity-based system.
Exactly what is upcoding? It’s when a code is intentionally assigned for a more expensive or more serious service or procedure than what was provided. This fraudulent practice forces insurers and patients to overpay, and it can trigger serious legal and financial consequences for healthcare providers. Under the False Claims Act the concept of intent can mean the person assigning the code had “actual knowledge” or “deliberate ignorance” or “reckless disregard” of the falsity of the information submitted; this means the intent requirement is not as difficult to prove.
The Upcoding Problem
Upcoding occurs when a healthcare provider intentionally selects a billing code that corresponds to a more complex, more expensive, or higher level of service than what was rendered. In medical billing, every service, procedure, and diagnosis is assigned a specific Current Procedural Terminology (CPT) code or Healthcare Common Procedure Coding System (HCPCS) code. These codes are used to determine reimbursement rates from insurance companies or government programs like Medicare.
Each code corresponds to a specific level of care, with higher codes typically representing more complex procedures or longer, more intensive visits. For example, if a physician sees a patient for a routine office visit—but bills for an extensive consultation requiring more time and resources—that would be classified as upcoding.
How Does Upcoding Work?
Here are the ways upcoding can take shape:
A provider could overbill for routine services, such as billing for a comprehensive exam when they only performed a basic check-up.
A provider could misrepresent how complex the service was, such as reporting simple procedure like removing a splinter from a finger as a much more complex intervention (like surgery), leading to a higher reimbursement.
A provider could require extra tests or procedures by adding unnecessary procedures or diagnostic tests to the bill, even if they weren’t required, to jack up the payment.
A provider could execute a procedure known as “leveling up visits” by coding a simple office visit (a low-level code) as a more detailed and costly visit (a higher-level code), even though the provider delivered services that weren’t more involved.
Upcoding Entails Very Serious Legal and Ethical Issues
Authorities don’t merely view upcoding as an administrative mistake. It’s considered fraud under U.S. law, specifically under the False Claims Act. If upcoding is suspected, it can lead to investigations by agencies like the Department of Justice (DOJ) or the Office of Inspector General (OIG) for Health and Human Services (HHS). If you’re found guilty of upcoding, you can face hefty fines, penalties, and even criminal charges.
Upcoding also violates the medical profession’s ethical standards. According to the Hippocratic Oath, healthcare providers are bound by ethical principles to act in their patients’ best interest. Not only does intentional overbilling violate the trust among doctors, insurers, and patients—it can result in serious financial damage for those of us who rely on insurance coverage to help pay for out medical care.
What Are the Consequences of Upcoding?
When upcoding occurs, all parties involved suffer.
If you’re a healthcare provider found guilty of upcoding, you can face serious fines and penalties, which can financially devastate small practices or independent practitioners. In some cases, violators may face criminal charges, so they will be in peril of losing their license, suffering reputational damage, and possibly even facing a prison sentence.
Upcoding damages insurers because it triggers improper reimbursements, which directly hurts insurance companies financially. Inflated claims also drive up healthcare costs for everyone—and policyholders are hit by higher premiums.
When patients are overcharged for their care, they’re socked by unexpected out-of-pocket expenses—a financial burden on patients who may already be struggling to afford healthcare costs.
Our healthcare system is hurt because now it must deal with correcting inflated claims, pulling badly needed resources away from legitimate, necessary care. Fraud also undermines public confidence in the healthcare system, erodes trust in providers, and increases healthcare costs overall.
How Do You Detect Upcoding?
How do insurance companies identify potentially fraudulent claims?
Insurers often perform routine audits of billing records to identify any discrepancies between the services provided and the codes used for billing. These audits may include reviewing medical records, which can help determine whether the level of care provided justifies the billed code.
Insurers use sophisticated data analytics tools to identify patterns of overbilling. A provider consistently bills for services at the top end of the reimbursement scale? That may trigger a red flag for further investigation.
Insurers can identify outliers who may be overbilling via peer comparisons by contrasting a provider’s billing patterns to those of their peers in the same geographic area or specialty.
Employees, patients, or even other providers can act as whistleblowers by reporting suspected upcoding to authorities.
How Do You Prevent Upcoding?
If you’re a healthcare provider, you must follow strict billing practices to avoid upcoding,
You must record proper documentation by accurately documenting all procedures and services, detailing exactly what was done during each visit or procedure.
To avoid errors, your coders should have comprehensive training on the correct use of CPT and HCPCS codes.
As a provider, you should periodically have external audits to ascertain that your billing practices comply with regulations.
If you’re a provider, you have an ethical responsibility to prioritize patient care over financial gain. Consequently, you must guarantee your billing practices reflect the actual services you provided.
How to Shield Your Practice from Upcoding
How can you safeguard your organization against the scandal of upcoding? As a national leader in medical billing and collections, Medusind can provide compliant coding and billing services to your practice which can help reduce the risk of upcoding because of our superior coding expertise, advanced technology, proactive audits, staff training, and compliance management.
By outsourcing to Medusind, your practice (and facility) can benefit from better financial accuracy and improve your overall billing efficiency. Consider contacting us so that we can demonstrate to you how your practice can take steps now to secure your long-term success and sustainability.
