What Is Upcoding in Medical Billing?
Jan 9, 2023

What Is Upcoding in Medical Billing?

Medical billing takes data from your office visits and turns it into revenue for your practice. It is a core component of your practice's administrative functions. But medical billing is not always straightforward. If your physicians are paid based on the diagnosis and procedure codes they bill, they have an incentive to upcode. So what is upcoding?   

Here is what your practice needs to know about upcoding in medical billing. 

What Is Upcoding? 

Upcoding occurs when physicians, practices, or other healthcare entities submit codes for more severe illnesses and injuries than were diagnosed. Upcoding can also include submitting claims for more expensive services and procedures than those performed. By increasing the apparent severity and intensity of office visits, upcoding results in higher payments.   Upcoding can occur with any payer, but it is particularly likely under two circumstances:

  1. When payers provide reimbursement based on the number and type of services performed, also called fee-for-service. This payment approach, which is used in traditional Medicare, encourages the upcoding of procedures.
  2. When payers give extra payments to physicians and practices who care for sicker populations through risk adjustment or other means. This payment approach, which is used in Medicare Advantage, encourages the upcoding of diagnoses.

Why Does Upcoding Matter?

The Centers for Medicare and Medicaid Services (CMS) considers upcoding an abuse of the Medicare program. If your physicians or practice consistently engage in upcoding, you could be fined and removed from the Medicare program.  

CMS recovers overpayments due to upcoding through the Recovery Audit Program (RAC). In 2019, the RAC program returned $51 million in overpayments to outpatient practices and physicians. RAC audits can be time-consuming, costing your practice money.   

Because it costs the Medicare program significant money, upcoding is a frequent concern of CMS and legislators. For example, a recent U.S. Department of Health and Human Services Inspector General audit found significant upcoding of Medicare-covered hospital stays. CMS dedicates substantial resources to identifying and stopping upcoding, so your practice could lose significant time and money if your physicians engage in it. 

What Are Some Examples of Upcoding?

Upcoding can be subtle. Adjusting diagnosis codes or procedure codes to increase severity may not be easy to detect. Here are a few common upcoding tricks your practice should avoid: 

  • Adding Current Procedure Terminology (CPT) codes to claims for services that were not performed. 
  • Coding an established patient office visit as a new patient visit to receive higher reimbursement.
  • Adding modifiers to evaluation and management (E&M) codes to claim more services than were performed or to claim medically unnecessary services.
  • Adding extra International Classification of Diseases (ICD) diagnoses to claims or increasing the severity of diagnoses beyond what was identified during the office visit. 

Each of these inappropriate upcoding practices yields extra payment. Upcoding CPT codes generally increase fee-for-service reimbursement for an office visit, while upcoding diagnoses increase risk-based payments. Diagnosis upcoding is particularly prevalent in the Medicare Advantage program. 

How Your Practice Can Prevent Upcoding 

Upcoding is a risk for your practice. Preventing and detecting upcoding can save you from painful audits and possible loss of your Medicare patients.   

Your EHR is an essential tool for detecting upcoding before you submit claims. Your medical billing team can implement quality checks for issues like miscoding follow-up visits as first visits or adding inappropriate modifiers to codes. With a NextGen EHR, you can also build a library of common claims to help you automatically check for errors. Plus, tools like TempDev's E&M Coding Habits NextGen EPM Report can help track your physicians' use of E&M codes. This report lets you spot potential upcoding problems by comparing E&M coding habits across physicians.   

Your medical billing specialists are also an essential resource for preventing upcoding. They can help you identify common upcoding problems and correct them before your claims are submitted to Medicare.   

EHR training can help your providers develop good coding habits and avoid unintentional upcoding. A well-trained workforce can enter diagnoses and procedures during the office visit, eliminating errors due to poor recollection or illegible notes. Training can also help your providers understand the importance of complete and accurate coding. 

How TempDev Can Help With Medical Billing

TempDev can help you improve your medical billing practices. If you are concerned about upcoding, our consultants can identify risks and help you develop processes to minimize them. TempDev also offers customized training to help your providers develop good coding habits. And our customizable reports, like the E&M Coding Habits NextGen EPM Report, can help you identify coding issues and target training for physicians who need it.  

TempDev's developers can work with your medical billing specialists to customize your NextGen system to identify and correct common billing errors. Through TempBill, TempDev also offers staff augmentation and outsourcing for your medical billing needs.  

Call us at 888.TEMP.DEV or contact us here for more information about how to prevent upcoding.

Related articles:

When Does the Revenue Cycle Begin in a Healthcare Facility? Read article
What Functions Impact Your Medical Practice Revenue Cycle the Most?   Read article
What Does Coordination of Benefits (COB) Stand for in Medical Billing? Read article
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