Upcoding or downcoding
Upcoding and downcoding are two terms that are frequently encountered in the world of therapy billing and can have significant impacts both on a therapist’s revenue and their professional standing.
Summary
- Upcoding occurs when a therapist bills for a higher-level service than what was actually provided, which can lead to legal and ethical consequences. Downcoding happens when an insurer reduces reimbursement by assigning a lower-level CPT code than the service rendered.
- Upcoding can result in audits, fines, and exclusion from insurance panels, while downcoding leads to financial strain on therapists and reduced reimbursements for their services.
- Therapists can minimize risks by maintaining accurate documentation, staying informed about CPT coding policies, obtaining pre-authorizations, and conducting regular audits of billing practices. Enrolling in an insurance billing course for therapists can help providers enhance their knowledge.
- If an insurer downcodes a claim, therapists can appeal by submitting detailed documentation, communicating with the insurance provider, and clarifying coding discrepancies to secure appropriate reimbursement. An EHR like TheraPlatform may help therapists keep accurate records for reimbursement.
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Upcoding refers to the practice of billing for a higher level service than the service that was actually provided. For example, this might entail a therapist billing for a 60-minute session when only a 30-minute session was actually provided.
Downcoding occurs when insurers reduce the reimbursement by assigning a lower-level CPT code than the service provided.
When it comes to running a successful therapy practice, accurate insurance billing is essential. This ensures that practice receives reimbursement accurately and adheres to legal and ethical standards.
Let’s delve deeper into the concepts of upcoding and downcoding. We’ll explore the implications of these actions and offer strategies for preventing and responding to them.
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What is an example of upcoding?
Upcoding can happen in various ways within therapy practices. Here are some examples:
- Billing for extended sessions when only a standard session occurred: A common example of this is billing a CPT code that reflects a longer amount of time than the actual session.
- Providing a 30-minute therapy session, but using CPT code 90837, which reflects a 60-minute session.
- Using a CPT code for a higher-complexity service than delivered: This can involve billing for a more complex service than what was completed.
- A speech therapist completes an evaluation in which only the client’s articulation was assessed.
- The CPT Code: 92522 Evaluation of Speech Sound Production should be used.
- Upcoding would occur if the therapist bills the 92523 CPT Code: Evaluation of Speech Sound Production with Evaluation of Language Comprehension and Expression.
Substantial risks are involved with upcoding:
- Legal consequences, fines, and potential exclusion from insurance panels: Upcoding is a form of fraud. It can lead to severe legal repercussions, including audits, fines, and exclusions from participation in government healthcare programs such as Medicaid and Medicare.
- Ethical implications: Participation in upcoding is a violation of the ethical standards set by professional organizations. It also has serious consequences to a therapist’s professional credibility, impacting the level of trust between therapists, insurance providers, and clients.
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Downcoding in therapy
Downcoding also results in unique, significant challenges for therapists. Downcoding is the process of an insurer modifying the submitted codes to lower-level ones, which results in reduced reimbursement.
An example of downcoding is:
- An insurer changes a submitted code such as 90837 (a 60-minute session) to 90834 (a 45-minute session).
The impacts of downcoding can be substantial, including:
- Reduced reimbursement for therapists: Therapists receive less money for services they provide than the amount they should be reimbursed.
- Financial strain on practices: Over time, consistent downcoding can result in significant financial hardship for therapists and practices.
What causes downcoding?
Several factors can contribute to this error:
- Insufficient documentation: A therapist’s documentation that lacks adequate justification for the level of service billed may result in insurers downcoding.
- Payer-specific coding policies: Some insurance companies have certain internal policies that can lead to downcoding. This can happen even if the code submitted is accurate.
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Preventing upcoding and downcoding
Therapists can take proactive measures to significantly reduce the risk of both upcoding and downcoding.
- Accurate documentation: Thorough, clear documentation is essential for accurate billing. Therapists should complete detailed notes that clearly reflect and justify that the level of service is essential. Be sure to include specific details about the skilled clinical interventions used, the client’s diagnosis, and the time spent on each component of the session.
- Stay informed: Remain updated about CPT code definitions and payer-specific policies. CPT codes are subject to change. Insurance companies frequently update their policies. Therefore, it’s essential to stay informed by utilizing resources such as the American Medical Association (AMA) and individual payer websites.
- Pre-authorization: Ensure services align with what the insurance has approved before providing a service by requesting pre-authorization from the insurance company before providing services. This can help ensure that the service you intend to provide is covered and accurately billed.
- Regular audits: Conduct periodic reviews of billing practices to ensure accuracy by identifying and correcting potential coding errors before they lead to a billing issue.
Responding to downcoding
Despite taking preventative measures, it’s possible that downcoding will still occur.
If you find that an insurer has downcoded a claim you submitted, you can take action.
- Appeal process: If you believe downcoding was applied in error, most insurance companies offer an appeal process. Therapists can submit a formal appeal that includes supporting documentation. This may include detailed treatment notes and a clear rationale for why a higher code is appropriate. The appeal process may be lengthy, but can result in a more favorable reimbursement if successful.
- Clarify with payers: Communicate directly with insurance companies to understand and address discrepancies. Through this, you can gain a clear understanding of why the downcoding occurred. Some insurers can provide additional guidance or suggest ways that downcoding can be avoided in the future.
The importance of accurate coding cannot be overstated. It is the cornerstone of ethical and effective insurance billing for therapists. Therapists have an ethical responsibility when it comes to billing practices. That includes upholding ethical billing practices while advocating for their services’ value.
Accurate coding also protects therapists from audits and ensures fair compensation. Claims should reflect the true nature of the services provided.
Therapists should prioritize accurate documentation, remain informed about coding practices, and engage in regular audits in order to navigate the complexities of insurance billing with confidence. Not only do therapists have a legal obligation to uphold these stands, but it is also their ethical responsibility to pursue fair compensation for the services they provide.
How EHR and practice management software can save you time with insurance billing for therapists
EHRs with integrated billing software and clearing houses, such as TheraPlatform, offer therapists significant advantages in creating an efficient insurance billing process. The key is minimizing the amount of time dedicated to developing, sending, and tracking medical claims through features such as automation and batching.
What are automation and batching?
- Automation refers to setting up software to perform tasks with limited human interaction.
- Batching or performing administrative tasks in blocks of time at once allows you to perform a task from a single entry point with less clicking.
Which billing and medical claim tasks can be automated and batched through billing software?
- Invoices: Create multiple invoices for multiple clients with a click or two of a button or set up auto-invoice creation, and the software will automatically create invoices for you at the preferred time. You can even have the system automatically send invoices to your clients.
- Credit card processing: Charge multiple clients with a click of a button or set up auto credit card billing, and the billing software will automatically charge the card (easier than swiping!)
- Email payment reminders: Never manually send another reminder email for payment again, or skip this altogether by enabling auto credit card charges.
- Automated claim creation and submission: Batch multiple claims with one button click or turn auto claim creation and submission on.
- Live claim validation: The system reviews each claim to catch any human errors before submission, saving you time and reducing rejected claims.
- Automated payment posting: Streamline posting procedures for paid medical claims with ERA. When insurance offers ERA, all their payments will post automatically on TheraPlatform's EHR.
- Tracking: Track payment and profits, including aging invoices, overdue invoices, transactions, billed services, service providers.
Utilizing billing software integrated with an EHR and practice management software can make storing and sharing billing and insurance easy and save providers time when it comes to insurance billing for therapists.
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More resources
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References
Burks, K., Shields, J., Evans, J., Plumley, J., Gerlach, J., & Flesher, S. (2022). A systematic review of outpatient billing practices. SAGE Open Medicine, 10, 20503121221099021. DOI: https://journals.sagepub.com/doi/full/10.1177/20503121221099021
Coustasse, A. (2021). Upcoding Medicare: is healthcare fraud and abuse increasing?. Perspectives in health information management, 18(4). https://pmc.ncbi.nlm.nih.gov/articles/PMC8649706
Joiner, K. A., Lin, J., & Pantano, J. (2024). Upcoding in medicare: where does it matter most?. Health Economics Review, 14(1), 1. DOI: https://link.springer.com/article/10.1186/s13561-023-00465-4
