By Ritesh Ramesh, CEO, MDaudit
Twitter: @MDaudit
Overcoding may net higher reimbursements for healthcare organizations, however the ramifications of getting caught far outweigh the revenue boost – and the likelihood of that happening are high as Centers for Medicare and Medicaid Services (CMS) continues its quest to ferret out fraud and abuse and recoup improper reimbursements. This year alone, the USC Schaeffer Center for Health Policy and Economics predicts those improper reimbursements will include overpayments to Medicare Advantage (MA) plans of $75 billion, a figure that is likely to rise as millions of beneficiaries move from traditional fee-for-service Medicare to MA.
Whether intentional or accidental, overcoding can result in significant fines in addition to repayment of the original claim. Not to mention the reputational damage that a fraud finding can inflict – something that can take years to overcome.
Overpayments can negatively impact patient acquisition and experience, thereby deflating growth. Plus, having to repeatedly restate financial results to the public domain due to uncertain compliance risks is a nightmare for most health system leaders.
Thus, with CMS ratcheting up its focus on overpayments and healthcare organizations still operating on razor-thin margins, it’s imperative for provider organizations to be vigilant with their compliance and education programs to stay off the losing end of a CMS or other third-party audit.
Danger Zones
Some areas are scrutinized by payers more than others, knowledge that can form the foundation of an effective offensive strategy to prevent overcoding.
At the office-visit level, compliance teams should pay attention to evaluation and management (E&M) coding and justification of different levels to maximize reimbursement. In hospital billing, bundling is a major driver of compliance issues, followed by billing and coding errors. In 2022, overcoded charges reclaimed 21% of the revenue recovered from undercoded claims.
Compliance teams should be efficient in managing external payer requests to retain at-risk revenues, with close attention paid to the below areas for overcoding, medical necessity, clinical documentation, and bundling-related issues. Getting paid on time for these high-value services can significantly impact an organization’s profitability and financial health. Pay particular attention to these focus areas:
Outpatient Billing
- Surgeries that involve multiple services performed by the same surgeon must be billed together and cannot be separately billed by different physicians
- Surgeries: orthopedic, spine, neurosurgery
- Specialty drugs and clinical justification for units administered for treatment
- Hospital observation care services
- Implants/medical devices
- Laboratory: chemistry, general classification, hematology, immunology, bacterial
Inpatient Billing
- Short stay inpatient
- Rehabilitation facilities
- DRGs that drive higher healthcare costs
- Sepsis
- Cardiology
- Digestive system
- Kidney
Finally, compliance teams should have a consistent playbook for auditing these claims, appealing denials to payers, and educating providers on mistakes.
Enhanced Coding Compliance
As tempting as it may be, undercoding claims is not the answer to overcoding to avoiding an audit or potential federal penalties. It actually makes the problem worse by depriving organizations of critical income at a time when expenses are rising faster than revenues. The better strategy is to accurately capture all aspects of a patient encounter the first time.
Coding changes occur frequently, so education is critical to any overcoding prevention strategy. Assign someone to update internal coding manuals frequently and communicate specific changes and links when appropriate – even making update reviews part of an ongoing coder education program. Frequent coder audits should also be conducted to ensure compliance with coding procedures and policies while reducing errors that can delay revenue. Innovative and robust auditing workflows are also necessary to ensure claims are accurate and reflect the particulars of the patient encounter.
Further, while undercoding may mean missing out on vital and appropriate revenue, overcoding is a more significant problem. One that puts organizations at risk for audits that can stretch back years and jeopardize significant revenue, not to mention reputational risk and patient loyalty.
To avoid these repercussions, healthcare organizations can benefit from a single-platform approach to compliant coding workflows that eliminates manual processes and streamlines tasks such as auditing, rebuttal, follow-up audits, and reporting. Workflows should include risk-based and retrospective audits for professional, inpatient, and outpatient charges, as well as the ability to identify new coders who may need additional guidance. The platform should enable dialog between coders and auditors while providing full visibility into coder workloads and auditing tasks and be capable of full reporting of end-to-end activities and outcomes.
A Proactive Strategy
Eliminating fraud, waste, and abuse is a top CMS and commercial payer priority and overcoding is a primary target. As such, healthcare organizations need to implement a proactive, tech-enabled strategy to ensure coding compliance and reduce the risk of external audits.
The right approach will also reduce delays, accelerating the revenue cycle and ensuring providers are reimbursed at the highest appropriate levels.