Why Avoiding Costly Coding Mistakes Is More Critical Than Ever

In May 2022, a California doctor was sentenced to nearly eight years in prison for his involvement in a $12 million Medicare fraud scheme. His crime: performing unnecessary vein ablation procedures on patients, and using incorrect billing codes to receive larger reimbursements. He received $4.5 million in reimbursements from Medicare over a three-year period.

Compared to this example, most instances of “upcoding” and “overcoding” are not as malevolent or expensive. But even an innocent mistake can cause well-intentioned hospitals and health systems to attract attention from federal auditors, and result in stiff penalties for physicians and those who input the wrong billing codes.

Proper medical coding is crucial to accurately reflect the complexity and intensity of any services rendered. Physicians must stay updated on current coding guidelines and ensure that the codes selected reflect the true nature of the patient encounter. This is especially true in a healthcare industry ravaged by layoffs, where every line item is scrutinized and every budget is tight. 

As hospitals and health systems merge, consolidate, and find other ways to reduce operating expenses, having a dedicated team of coders offers critical oversight. They’re often the last line of defense between logging the correct code and a mistake that costs a provider millions of dollars.

Here are 12 best practices for avoiding a costly coding mistake:

1. Code accurately: Physicians should avoid both upcoding (billing for a higher level of service than performed) and downcoding (billing for a lower level of service). Coding should accurately reflect the medical necessity and complexity of each visit. 
2. Accurate Documentation: Complete and accurate medical documentation is essential for justifying the services provided. Clear, detailed, and comprehensive records support appropriate coding and billing, ensuring that services are reimbursed at the appropriate level.
3. Modifier Utilization: Correct use of modifiers can clarify specific circumstances that may affect reimbursement. For example, modifiers can indicate if a service was provided on the same day as a procedure, if a service was discontinued, or if multiple procedures were performed.
4. Medical Necessity: Demonstrating medical necessity is crucial to secure reimbursement. Physicians should clearly document the reasons why a particular service was necessary for the patient’s condition, linking the diagnosis to the treatment provided.
5. Utilization Reviews: Regularly reviewing utilization patterns can help identify opportunities to improve efficiency without compromising patient care. This can involve analyzing patterns of referrals, tests, and treatments to ensure they align with evidence-based guidelines.
6. Negotiate with Payers: Effective negotiation with insurance payers can lead to more favorable reimbursement rates. Physicians should emphasize their value in terms of patient outcomes, quality of care, and cost-effectiveness.
7. Value-Based Care Initiatives: Participating in value-based care models and accountable care organizations can lead to increased reimbursement based on improved patient outcomes and cost savings.
8. Minimize Denials and Appeals: Preventing denials through proper documentation and coding reduces the need for appeals, saving time and resources. When appealing denials, ensure that the appeal includes all necessary information and supporting documentation.
9. Patient Collections: Efficient patient billing and collections processes can improve cash flow. Clear communication about patient financial responsibilities and available payment options can lead to fewer outstanding balances.
10. Continuous Education: Staying informed about changes in healthcare regulations, coding guidelines, and reimbursement policies is essential to adapt to evolving requirements and opportunities.
11. Utilize Technology: Electronic health records (EHR) systems and practice management software can streamline billing processes, improve accuracy, and reduce administrative burdens.
12. Audit Readiness: Maintain records and documentation in a way that ensures readiness for audits. Compliance with regulations and guidelines is crucial to avoid penalties and loss of reimbursement.

When both human and financial resources disappear, in-house coders might face an increasing number of responsibilities that strain their ability to perform the basic, money-saving essentials of their job. It might be wise to outsource to an organization that focuses only on medical coding. These remote teams come with less overhead costs and lack the burden of having to acclimate to other aspects of a hospital’s functions. They can focus their professional development on staying current with coding and coding alone.

Outsourcing is often standard practice for independent physicians, who sometimes do procedures in a health care system but can’t use that system’s coders. Simply outsourcing all their coding becomes the more efficient choice.

Whether outsourcing or in-sourcing, staying current with the rules and regulations of coding is essential to a hospital or health system’s financial health. Physicians and their staff must regularly update their coding knowledge to stay in line with the latest guidelines. This prevents errors and helps accurately represent services provided. 

Although time and money are in short supply for nearly all healthcare professionals in 2023, taking resources away from coding can easily cost more money than it saves.

About Hilton M Hudson

Hilton M Hudson, MD, FACS, is a board-certified cardiothoracic surgeon and the Chief of Cardiothoracic Surgery at Franciscan’s Michigan City and Olympia Fields health systems. He is also the CEO of HPC International (HPC), the leading educational purchased services supplier for healthcare, corporations and academic institutions.

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