Undercoding Is Not an Audit-Proof Strategy in Medical Documentation

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Overcoding is a common term used when discussing fraud and abuse in reporting procedures and services not supported by the actual work performed. Alternatively, undercoding—or failing to report the full extent of services or procedures provided—is an equally unsound practice and a compliance risk. In the world of quality reporting, undercoding can have damaging effects on a medical practice, because proper coding speaks directly to the illness or injury of a patient and the method of treatment. Medical coding is used to document or report the quality of patient care, provide accurate communication using the national classification system and report data that are used for a variety of research studies on topics, such as diseases, drugs, procedures or trends in healthcare.

Undercoding is not a good defensive strategy to avoid denials or audits, and it may result in the loss of revenue. This type of coding practice can actually create more problems, because there is no single remedy to prevent insurance companies from reviewing claims. Insurance companies do not deny claims because the codes billed reimburse higher than other codes. Payers are looking for codes to match the documentation on the patient’s record. The key to avoid denials is to ensure proper documentation; the patient’s medical record should be detailed and complete to reflect the work for each date of service. Documentation not only includes symptoms, diagnosis, care, treatment and medication, but also includes problems and risks to health, as well as safety information.

The goal of payers is to reimburse for claims that meet the requirements at the proper level of service. Patterns of undercoding may be viewed as irregular billing and can expose your practice to review for fraud. CMS defines fraud as making false statements or representations of material facts to obtain some benefit or payment for which no entitlement would otherwise exist. These acts may be committed either for the person’s own benefit or for the benefit of another party. In other words, fraud includes obtaining something of value through misrepresentation or concealment of material facts. Deliberate undercoding is “making a false statement” as it relates to services provided and is ultimately a misrepresentation of the facts. Another important aspect is that undercoding has the potential to establish false utilization patterns, which may flag a physician as an outlier, making him or her a target for payer investigation and/or audits.

Patterns of undercoding may be viewed as irregular billing & can expose your practice to review for fraud. … Another important aspect is that undercoding has the potential to establish false utilization patterns.

Keep in mind that undercoding may make a provider an outlier just as easily as overcoding. Make sure your coding and billing staff are trained adequately and that your emergency medical record system helps capture services rendered, because this can help avoid undercoding without exposing yourself to heightened risk of audit.

In the current regulatory environment, it is likely for hospitals to undergo a federal audit. There are a number of compliance activities hospitals can undertake to protect and survive a federal audit. The takeaway points that rheumatology practices should embrace in day-to-day practice are:

Clinical documentation improvement—When a provider submits a claim for reimbursement, the provider is stating that the medical documentation in the patient’s record supports the claim billed. Therefore, providers should verify that the documentation on file supports the claim when questions or doubts arise. Practices must come to terms with the fact that the coding is only as good as the documentation. Thus, the practice staff must ensure documentation is accurate, complete and stored appropriately.

Increased federal audits have created an environment of fear; providers and coders are often overly cautious about incorrectly coding, which opens the door to undercoding to avoid inadvertent overpayments. This fear is understandable, but practices must focus on coding and billing out every claim correctly the first time. Providers must ensure that services and procedures rendered to patients are coded accurately and the documentation supports the claim.

Be proactive—Do not wait for a federal auditor to knock on your door before assessing and fixing the organization’s risk areas. Weaknesses should be identified and improved upon continually. Practices should consider the following questions when assessing risk: 1) Is there a high turnover rate of billers and coders in the practice? 2) When was the last compliance training related to coding and billing conducted? 3) Have we provided regular compliance training to the providers concerning medical documentation?

Educate, educate, educate—Compliance education should be a priority for every physician practice. Practice administrators and physician managers should provide regular education for their physicians and coding and billing personnel on the importance of medical documentation and the submission of accurate claims to payers.

If you aren’t sure if you are undercoding or for questions about coding and compliance, contact the ACR certified coding and auditing staff at [email protected] to learn how they can help with audit reviews and training for you and your staff.