Downcoding – Definition, Impact and Prevention Tips

by | Last updated Dec 28, 2022 | Published on Feb 19, 2016 | Blog, Healthcare News

Downcoding
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The Comprehensive Error Rate Testing (CERT) program is conducted under the direction of the Centers for Medicare and Medicaid Services (CMS) to measure improper payment in the Medicare Fee-For-Service program, which helps in ensuring that your medical coding is accurate. The latest CERT report revealed an increase in error rates up to 12.7 percent in 2014, much higher than the error rates in previous years. However, CMS emphasizes that errors are not the same as fraud, but these are a measurement of payments that didn’t meet the requirements of Medicare. Apart from the missing or sufficient documentation, incorrect coding and medically unnecessary services, Medicare auditors found coding errors where providers shortened themselves by downcoding. Downcoding is a very serious mistake that has the same effect as upcoding and can have a significant impact on your revenue.

Downcoding and its Impact

Downcoding refers to coding at a lower level than the level or service supported by medical documentation or medical necessity. This is also known as undercoding and usually results from insufficient documentation. Its impact is given as follows.

  • Undercoding is damaging to your practice from a compliance perspective. According to the National Correct Coding Initiative (NCCI) General Correct Coding Policies, if there exists an HCPCS/CPT code for describing services performed, physicians must report that code instead of using a less comprehensive code along with other codes that describe the services not included in the less comprehensive code. In other words, it is required to report services exactly to the level of the service provided and as supported by medical necessity. Anything less would be non-compliant.
  • The services that you claimed are reimbursed in lower rates. You won’t receive any explanation for lower reimbursement. To detect downcoding errors, you must be familiar with the fee schedule and compare that to the amount mentioned on the EOB form.

Tips to Prevent Downcoding

  • Thorough Insurance Verification – With thorough insurance verification, you can understand the claim processing of each insurance company better and also all the codes they accept. This will help you to make sure whether you are coding the claims correctly and providing all supporting documentation.
  • Improve Your Documentation – As mentioned earlier, downcoding typically occurs from not providing sufficient details of the services performed. Office visit notes alone are often not sufficient to clearly define the complexity of a patient’s medical history and the physician’s medical decision-making. As per the Supplementary Appendices for Medicare Fee-for-Service (FFS) 2015 Improper Payment Report released by the U.S. Department of Health & Human Services (HHS), established office visits top the list of 20 types of services with downcoding errors. You need to consider all the evidence while coding for established patient visits including the patient’s past, family, and social histories, lab test results, X-ray reports or other diagnostic services relevant to the service and any orders for these services, referrals, and consultation reports. This information should be submitted along with the claim to substantiate the service level.
  • Coding Audits – Conduct coding audits for downcoding, share audit findings, incorporate the auditor’s recommendations and give subsequent education to the providers in your practice. This would prevent you from submitting claims with downcoding errors.
  • Do Not Trust Your Billing Software Blindly – Instead of trusting the codes that your medical billing software suggests, consider obtaining help from experienced and certified coders. You can use electronic billing to speed up the medical coding and submission process. However, you should also take advice from experts to ensure accuracy.

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    Loralee joined MOS’ Revenue Cycle Management Division in October 2021. She has over five years of experience in medical coding and Health Information Management practices.