Practice Strategies

Replacing Downcoding with Correct Coding

Worried about being accused of inappropriate—or even fraudulent—coding, many physicians try to avoid calling attention to themselves by billing payers for less than their services are worth. But, by frequently erring on the side of caution when selecting codes, not only are you forgoing potential income, but you could also expose yourself and your practice to accusations of inaccurate coding. While the growing complexity of coding systems and frequent changes to the rules make coding challenging, your practice cannot afford to overlook the importance of implementing proper coding procedures.

Appearing to charge too little for your services can raise almost as many red flags among regulators and payers as overcharging. Often referred to as “downcoding,” applying codes that are lower than those typically used by peers for the same types and levels of care can lead to suspicions that a practice’s physicians have a poor grasp of standard coding procedures; it may even result in accusations of filing false claims.

To monitor coding and ensure it is done correctly, most medical practices rely upon certified coders. Some practices have data entry personnel and certified coders on staff, while others prefer to outsource coding to a firm that specializes in medical billing. But, because physicians are ultimately held responsible for any coding errors, you should take care to apply the correct codes from the outset and to supervise the coding processes of billing staff. Before hiring a third-party provider to handle coding, you should check that certified coders will be performing any work done on your behalf.

You may also want to bring in a professional auditor familiar with your specialty to analyze how your practice’s services are being coded. The auditor can alert you to any aberrant coding patterns, and he or she may be able to offer valuable advice on how to maximize reimbursements by avoiding downcoding.

You can also use practice management software programs to generate coding productivity and utilization reports. This data can then be compared to national benchmarks and examined for any unusual patterns. You should be able to explain any significant deviations from the norm and provide a justification for each coding choice on the basis of medical necessity.

Even if your coding profile indicates your practice is coding at higher levels than its peers, do not assume this means you should start downcoding. Factors specific to your practice, such as the average age of your patients, could lead to an atypical coding pattern. Also, many of your peers may be undercharging for procedures that you have been coding more accurately.

Thorough and precise documentation of each patient visit provides a useful safeguard against charges of “upcoding,” while reducing the temptation to downcode. During each visit, you should take extensive written notes, tape-record verbal notes for subsequent transcription, or have an assistant on hand to help with documentation. Write clearly and choose your terminology carefully to avoid misunderstandings that could lead to coding mistakes or charges of inaccurate coding. Good records are essential not just for billing purposes, but also to ensure the provision of quality patient care.

Familiarizing yourself with coding procedures and keeping up-to-date on the frequent changes to coding systems are necessary when running a practice. If you have doubts about whether you are coding correctly, consider attending a course that will teach you how to apply the various codes swiftly and accurately. Having solid knowledge of coding will enable you to make confident coding decisions—and build a profitable practice.

For more information about our services to the healthcare industry, contact:
Maxine Lawyer, CPA, Partner - Dallas/Fort Worth at 972.448.6905 or
Philip Fox, CPA, Partner - Houston at 713.297.6914.

The articles in this newsletter are general in nature and are not a substitute for accounting, legal, or other professional services. We assume no liability for the reader's reliance on this information. Before implementing any of the ideas contained in this publication, consult a professional advisor to determine whether they apply to your unique circumstances.
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