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Revenue Loss, Fraud Charges Result from Poor Coding


The risks inherent in inaccurate coding are two-fold: On the financial side, it often means that medical practices are not properly reimbursed. Of greater importance, however, is the growing danger of poor coding resulting in fraud charges.

It’s no secret that the medical landscape is constantly evolving, on both the clinical side of the ledger as well as administrative. More specifically, continuous changes in the medical billing and coding area, including HIPAA changes, have created an incredible demand for people trained in coding. The problem, according to Bill Gilbert, vice president of AdvantEdge Healthcare Solutions, a provider of medical billing and practice management services in Warren, N.J., is that coding often gets overlooked.

“The majority of office-based practices that we’ve seen are not using certified coders,” Gilbert says. “They have staff doing it, and in some cases, the physicians do the coding.” And in a medical practice of any size, “I don’t think it makes much sense for physicians to be the coding experts.”

Poor Coding Risks Revenue Loss, Fraud Claims

Gilbert explains that once a physician-patient encounter is complete, the manner in which it has to be coded can vary depending on the patient’s insurance company. “That’s one of many administrative headaches in the healthcare world,” he says.

Some payers also require coding modifiers, while others don’t want to see modifiers on certain types of claims. Bottom line: To keep on top of it all coders need constant training. “At a minimum, the coding staff has to be going to training on a regular basis, whether webinars or classroom, they need to subscribe to the appropriate publications for their specialties, and make sure that they’re current on all these kinds of things,” Gilbert says.

The risks inherent in inaccurate coding are two-fold. On the financial end, it often means that medical practices are not properly reimbursed. For example, in situations where supplies or variations in the level of procedure are concerned, an encounter may be coded as a level 2, when in fact it was a level 3. In such a case, physicians may be billing for less than the amount of actual work performed.

Of even greater importance, however, is the compliance risk that comes from inaccurate coding. Reversing the earlier example, say a physician has coded an encounter as a level 3 when it was actually a level 2, Gilbert explains. “Now they’re getting reimbursed at a higher level than they should have, rather than a lower level, but in fact both are violations,” he says.

Billing errors such as these fall under the same statutes as fraud. “If that practice were to be audited, those kinds of things are going to come to light and it’s going to be very expensive for the practice,” Gilbert says. “They’re going to have to go back and adjust all of those things, including making appropriate refunds.” Practices that have been through these kinds of painful audits never want to experience them again, he notes.

Coding Audits Are Key

Most physicians aren’t equipped or trained or have the knowledge to inspect their current operation and know whether the coding is being doing properly, Gilbert says. Instead, he recommends that a practice have a formal compliance plan in place.

“At some point, the government is going to require a formal compliance plan from all practices,” Gilbert says. “There have been recommendations from CMS for at least 10 years, if not more, that practices should have a compliance plan. It’s currently recommended, but not required.”

As part of that compliance plan, Gilbert says there should be coding audits done on a regular basis, at least annually. Medical practices should bring in a coding expert who can review a sample of charts. “The way the coding audit works is the auditor pulls a sample of charts and codes them from the physician’s documentation, and then compares the records to what was actually coded,” he says. “A practice is performing well if there is a match 95 percent of the time. It will never be 100 percent because there’s always a few gray areas, but if it’s below 90 percent or so, that certainly raises flags.” He believes that in many practices coding audits would result in much lower percentages.

Physicians Must Be Involved

Coding is done based on documentation and the old expression goes: If you don’t document it, it didn’t happen. Even with the best coders on staff, if physicians are not documenting procedures and examinations properly, problems will occur.

“The other part of a good coding program is an ongoing feedback loop between the coders and the physicians, with the coders saying I wasn’t completely clear what you meant here … couldn’t tell if this was a level 2 or 3 … and therefore I had to code it as a level 2 when it should have been a level 3,” Gilbert explains. “So the communication between the coder and the physician is critical.” If physicians aren’t getting that kind of feedback, that should be a flag that there’s probably need for some improvement in their coding procedures.

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