Why Upcoders Aren’t Always Evil Fraudsters

The complexity of the medical coding system can lead to accidental upcoding and downcoding.. Image © Peter Dazeley/Photographer's Choice Collection/Getty Images

Upcoding is a type of medical billing fraud. Instead of submitting a billing code that accurately represents the service provided, the doctor, hospital, lab, or X-ray facility submits a billing code for a related, but higher-paying, health care service. Because of the upcoded bill, the provider gets paid more than he or she should.

There are plenty of unethical health care providers out there who are fraudulently bilking the health care system through upcoding.

However, I believe that there are also plenty of decent folks that are inadvertent upcoders.

Why is this? The medical billing code system is ridiculously complex, very easy to screw up, and constantly changing.

The Complexity of Medical Billing Codes

The Centers for Medicare & Medicaid Services released this 89 page guide to instruct physicians how to use the dozen or so CPT codes that are most frequently used for billing office visits. The AMA’s guidebook to CPT coding, CPT 2014 Professional Edition, is 976 pages. Those 976 pages aren’t an instruction manual; they’re just descriptions of CPT codes and guidelines for applying them. The manual assumes users are already fluent in the language of CPT coding.

CPT codes are just the tip of the iceberg. There are also ICD9 and ICD10 codes to describe patients’ diagnoses. HCPCS codes are used for Medicare patients and based on CPT codes. DSM codes are used to describe psychiatric diagnoses; ICF codes are used to describe functional abilities and disability.

DRGs are used to describe the diagnoses and treatments rendered to hospitalized patients. Each of these code sets comes with its own book or series of books like the CPT book listed above.

Adding to the complexity, most of these code sets are updated yearly. Existing codes are tweaked based on new research, new technology, or changing usage patterns.

New codes are added as new diseases emerge and new procedures and treatments are developed. Using last year’s book or software? You’re out-of-date and could be making coding errors.

Unintended Effects of Coding Complexity

All of this complexity can be overwhelming to health care providers. In order to apply the codes correctly, you need specific coding education. In fact, there are professional coders, and even the coding profession is sub-divided into various specialties based on inpatient vs outpatient, or coding for physician offices vs specialty outpatient facilities.

While some physicians still do their own coding, many have thrown in the towel and have resorted to hiring a professional coder as part of the office staff or contracting their coding out. After all, do you expect your physicians to be experts in everything? Do you really want your heart surgeon to spend even more time in school becoming an expert in coding? Do you want him to then have to go to multiple seminars every year to keep abreast of each of the yearly updated code sets?

Or would you rather that he focus on being a really good at patient care?

That leads to a conundrum for the provider. If he does the coding himself, he runs a substantial risk that he’ll occasionally code something incorrectly.  He can then be accused of billing fraud.

If he hires someone else to do the coding, he’s still held responsible for the codes that person submits on his behalf. The buck stops with him; he’s just as responsible for billing fraud as the coder who actually coded the bill is. So, if he hires a coder or out-sources the coding for his practice, does he then have to hire an auditor to do periodic audits of the coding contractor’s work to ensure things are being coded appropriately? If he doesn’t, he might still be committing billing fraud unintentionally by submitting the codes provided by the hired coder. After all, he doesn’t have the coding expertise to ensure that each and every code is exactly correct; that’s why he hired a coder in the first place.

What It All Means

We all have to function within this complex system. We patients must get our care within the system. We health care providers must provide the best patient care we can while trying not to run afoul of some ridiculously complex, nit-picky, esoteric rule that will result in an accusation of fraud. Most of us, patients and providers alike, manage to muddle through, get our needs met, and meet the needs of our patients despite the obstacles created by the health care system itself.

Occasionally, a provider screws up, makes an honest mistake, and even repeats the same mistake over and over again through a misunderstanding of a coding rule. Technically, this is upcoding and is fraud. Technically, the provider doing it is breaking the law. Part of the responsibility inherent in the profession is being aware of all of the laws that pertain to the profession and following them. But is this provider an evil fraudster, purposely bilking the system of millions? I’m not so sure.

I do believe there are plenty of evil fraudsters out there. For example, employees and management of this hospice were knowingly committing fraud when they altered patient records to make patients appear sicker than they were.

What does this mean to you and I? It means, as a patient, you need to read each and every explanation of benefits and compare that information with the services you actually received. If you see a conflict, contact your provider to get clarification. Don’t automatically assume fraud. Keep an open mind that this could be an honest billing error, intent to defraud, or a misunderstanding of the codes on your part. If you see a pattern or the provider’s explanation doesn’t make sense, then suspect that you and your insurance company might be the victims of upcoding or other billing fraud.

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