Revenue leakage discussions often center on overcoding, but undercoding is equally problematic. While it may not carry the legal and/or regulatory ramifications of overcoding, it nonetheless deprives organizations of critical cashflow at a time when expenses are rising faster than revenues – making it financially dangerous for healthcare providers.
Undercoding happens when patient encounters are not coded in a way that fully reflects the scope of services and/or procedures that were performed during the visit. There are several reasons why it might happen, such as incomplete documentation, failure to consider multiple codes or modifiers when several services are involved in one visit. It can also happen following updates to the ICD-10 code set, or due to a lack of current coder education or coding oversight.
For many healthcare organizations, undercoding is part of an intentionally conservative approach to coding as a way to avoid the negative repercussions of overcoding. But undercoding just exacerbates the financial pressure provider organizations are under. It’s leaving money on the table, which no hospital, health system, or physician group can afford to do.
A ‘Pernicious’ Problem
According to one recent study, undercoding – which could be considered fraud under the letter of the law – occurs in anywhere from 33% to 45% of outpatient visits, with some sources asserting that it leads to individual physician practices sacrificing as much as $100,000 annually. In Florida, which was the study’s focus, findings suggested that nearly 9% (2.6 million) of the state’s 29.34 million projected primary care visits are undercoded each year, leading to nearly $114 million in lost revenue.
“While any sort of coding issue is problematic, perhaps the most pernicious is undercoding,” the researchers noted.
Regardless of the cause, the dangers of undercoding are real and potentially long-term. It can not only result in significant revenue loss, but it can also skew the claims data Medicare and other payers use to calculate future payments – potentially reducing reimbursements – and to track trends among patient populations. It also increases the number of improperly paid claims, impacting calculated error rates.
Avoiding the Dangers of Undercoding
The best strategy for preventing undercoding is to undertake regular audits of coding workflows to ensure claims are accurate and reflect the complete scope of a patient encounter. The insights gleaned from these audits can be used to pinpoint problem areas and design targeted interventions to educate coders and physicians. It can also form the basis of a targeted documentation or coding quality improvement program to ensure undercoding does not become an entrenched aspect of the organization’s billing compliance strategy.
A robust audit program to put a permanent stop to coding-related revenue leakage can be optimized and accelerated by leveraging the latest in automation and artificial intelligence (AI) technologies, particularly when deployed as part of a single platform that eliminates manual processes and streamlines tasks such as auditing, rebuttal, follow-up audits, and reporting. AI- and automation-enabled workflows should include risk-based and retrospective audits for professional, inpatient, and outpatient charges, as well as the ability to identify new coders and physicians who may need additional guidance.
Ultimately, the goal is to accurately capture all aspects of a patient visit, test, or procedure to ensure the highest appropriate reimbursement. Putting the systems in place to continuously monitor for and address instances of undercoding and other problematic coding practices can go a long way toward plugging preventable leaks in the revenue cycle.
