Is your practice constantly faced with the problem of undercoding? Undercoding in healthcare is defined as the process of medical coding wherein the codes used are not reflective of the full extent of treatment that the patient received. It is often the result of failing to abstract every code from the medical record or to select the highest specificity of codes. Like over-coding, it can lead to rejected or denied claims, not to mention decreased revenue. But undercoding can also lead to other, more serious problems, which is why it is crucial to avoid this mistake.
The Problem with Undercoding in Healthcare
Despite resulting in lower revenues for practices, undercoding is still considered fraudulent and can lead to investigations or audits. Some coders think that undercoding is “playing it safe” when you’re unsure, but really it isn’t. It can be seen as inducement, or the practice of offering a free service to patients in order to encourage them to avail of a service that is covered by the insurance provider. This can lead to legal action on the grounds of fraud and abuse.
Undercoding in healthcare should never be done on purpose as it is unethical if not illegal. When not done on purpose however it can still be problematic. This could be indicative of negligence, haphazard or lazy coding, and can lead to chronic undercoding, financial losses and improper patient care.
Upcoding vs Undercoding in Healthcare
Aspect | Undercoding | Upcoding |
What it is | Using codes that do not fully reflect the treatment or services provided | Using codes that reflect a higher level of service than actually provided |
Impact on reimbursement | Lower revenue than deserved | Higher reimbursement |
Intent / Risk | Often accidental (fear of audits) but can still be considered fraudulent or at least unethical | Even if accidental, it’s widely treated as healthcare fraud with strong legal risks (fines, penalties, exclusion from programs) |
Why it happens | Incomplete documentation, lack of coder knowledge, or trying to avoid scrutinized high-level codes | Intentional to inflate revenue, or errors in choosing complex codes without supporting documentation |
Effect on patient care and practice | Undercoding can distort quality metrics, reduce practice revenue, and mislead future care planning | Upcoding can increase costs for payers/patients, lead to audits, and damage provider reputation |
How to Avoid Undercoding in Healthcare and Protect Your Practice
Given the many problems that can arise from undercoding, it’s best to avoid it as much as possible. Here are some of the ways you can do that:
- Make sure your staff are properly trained. They should not only understand and use the proper codes but also not succumb to undercoding out of fear of claim rejection.
- Provide uniform coding for all patients. There should be a uniform code for both fully insured patients and those who choose to pay in cash. Any discrepancy in codes for the same procedures between these two types of patients can be deemed discriminatory billing.
- Always stay updated on the latest codes to be used. Ideally, coding manuals should be updated yearly.
- Don’t get too familiar with a particular set of codes. Overusing the same set of codes can lead to undercoding, and all the problems that go with it.
- Be diligent in reading medical reports and double-checking codes. It may take a little more time, but double-checking is well worth it. It will save you from bigger, more costly problems in the future.
- Get the assistance of a professional medical billing company, such as Park Medical Billing, which offers specialized support including physical therapy billing service to help reduce coding errors and protect your revenue. With Park Medical Billing you can be assured that billing errors will be minimized if not completely eliminated. We employ the latest and most trusted methods and technology to ensure that your billing goes as smoothly as possible, each and every time.
Maximize your billing and enhance revenue by avoiding pitfalls like undercoding. Get professional support from Park Medical Billing, a leading medical billing company in NJ. Get in touch with us today by calling 1-201-585-7306.
