Under Coding Is No Better than Overcoding

Question: I’m in need of written documentation to verify that “under coding” is a compliance risk, much like overcoding. Where can I find this?

Answer: The Centers for Medicare & Medicaid Services (CMS), through its Medicare Learning Network, offers a  Fact Sheet detailing “Medicare Fraud and Abuse: Prevention, Detection, and Reporting.” Nothing in the document specifically talks about “down coding” or “under coding,” but if you read between the lines, you’ll recognize under coding as a compliance risk.

For example, consider the CMS definition of fraud:

In general, fraud is defined as making false statements or representations of material facts to obtain some benefit or payment for which no entitlement would otherwise exist. These acts may be committed either for the person’s own benefit or for the benefit of some other party. In other words, fraud includes the obtaining of something of value through misrepresentation or concealment of material facts.

Deliberate under coding is, in reality, “making a false statement” about the services provided, and is ultimately a “misrepresentation” of the facts. The fact sheet gives an example of fraud as “knowingly billing for services that were not furnished,” which would apply if services are purposefully under coded.

Under coding also fits within the definition of “abuse,” as defined by CMS as “misusing codes on a claim.”

Under the False Claims Act, a physician may be held liable for “submit[ing] claims to Medicare for medical services he or she knows were not provided.” Within this context, you could argue that under coding represents “deliberate ignorance or reckless disregard of the truth related to the claim.”

There’s also the Criminal Health Care Fraud statute, which makes it a crime “to obtain (by means of false or fraudulent pretenses, representations, or promises) any of the money or property owned by, or under the custody or control of, any health care benefit program.” Again, under coding services may be perceived as “false or fraudulent representations” of the services provided.

Consider also the Anti-kickback statute: Coding services at lower than actual levels might be interpreted as an inducement to patients (who could benefit by having a lower co-pay, etc.). That would be another violation of federal law.

In other words, there are a variety of ways that under coding might potentially be considered a violation of fraud and abuse rules. Under coding isn’t playing it safe, it’s a misrepresentation of services. Coding should be based on documentation (and underlying medical necessity). Anything less is potentially problematic.

Another important aspect to keep in mind is that under coding establishes false utilization patterns, which in turn may flag a physician as an outlier, making him or her a target for payer investigation and/or audits.


John Verhovshek

John Verhovshek

John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.
John Verhovshek

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About Has 392 Posts

John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.

13 Responses to “Under Coding Is No Better than Overcoding”

  1. Tom Grant says:

    Here is another quote directly from the CMS FCA itself: “The False Claims Act also imposes liability on an individual who may knowingly submit a false record in order to obtain payment from the government”. That is where the teeth are. Even if the payment is lower than the actual services provided, it is still false. Any false record that is submitted to get payment would be considered fraudulent.


  2. Jeffrey Restuccio, CPC, CPC-H says:

    The name of the author should be included. What is their background?

    I’ve researched this before–and, as someone who has audited well over 10,000 records I get asked this question a lot.

    For one, there should be a legal opinion or review here. Has anyone, anywhere been tried or accused of deliberately undercoding in the last ten years? I have not heard of anyone and even most healthcare lawyers are at a loss to find a single case–ask them.

    Also, this is clearly one of the grey areas. As an auditor, I find that out of a 100 doctors, about 10 % will overcode and 10% undercode consistently–at least that many. I have seen this statistic multiple times. Most doctors I audited as undercoding remarked “they did not want to code higher and go to jail because of assumptions and ‘reading between the lines.'”

    I don’t disagree with the article but if a provider feels that a condition is self-limited and straightforward MDM and a 99212 and I audit it as 99213, then this is not fraudulently reporting a claim. It is a difference of medical opinion concerning MDM.

    On the other hand, if they consistently downcode 50% of the visits and document higher Hx, Exam and MDM, then I agree that could be a problem based on the information above.

    That, of course is my opinion.

    It would be great to have an official comment by anyone in Medicare, the OIG, a lawyer, or any insurance company on this topic.

    Jeffrey Restuccio, CPC, CPC-H

  3. Francine Rampe CCS, CPC, CPC-H says:

    Please see page 10 of the 2014 CCI General Correct Coding Polices.

    Revision Date: 1/1/2014
    Physicians must avoid downcoding. If a HCPCS/CPT code exists that describes the services performed, the physician must report this code rather than report a less comprehensive code with other codes describing the services not included in the less comprehensive code. For example if a physician performs a unilateral partial mastectomy with axillary lymphadenectomy, the provider should report CPT code 19302 (Mastectomy, partial…; with axillary lymphadenectomy). A physician should not report CPT code 19301 (Mastectomy, partial…) plus CPT code 38745 (Axillary lymphadenectomy; complete).
    Physicians must avoid upcoding. A HCPCS/CPT code may be reported only if all services described by that code have been performed. For example, if a physician performs a superficial axillary lymphadenectomy (CPT code 38740), the physician should not report CPT code 38745 (Axillary lymphadenectomy; complete).

  4. Jim Emch RN CIRCC says:

    I agree with the article, but like Jeff states in his remarks about the 10% I agree. My thought process has always been and will continue to be a conservitive approach to coding. That being said I code to what the Doctor said they did, in reality this can open up certain opportunities to add certain codes or not to add. I could site many examples here, the point is this choice not to add a grey area code rule in these instances could be construed as under coding. I see it as having conservitive approach. This being said one can and should ask for an addendem if you feel something was ommitted from a dictation but you will not always get that. This is typical in many detailed cases which I have coded I will error on the conservitive side everytime. I code cases/ review them/audit them and feel that the bottom line is this; If I cannot defend my choice of codes with sufficient documentation I do not add those codes. I do not feel this is intending to decieve anyone but I feel this is safe practice, if revenue is being lost it should be addressed as to why. Was it lack of documentation or coder error. One can fix the process from that point. Jim Emch RN, CIRCC.

  5. Sherron Simpson says:

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    Medical Insurance Billing and Coding; strong skills in ICD-9-CM and ICD-10-CM
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    Family Care & Urgent Medical Clinic
    Vancouver, WA 98661 160 hours completed
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    Senior Associate-Fourth-KeyOpened and closed stores. Performed coding for stock shipments to various stores in region. Processed weekly plans, schedules, and payroll. Assisted head manager whenever needed.

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    Irving, TX-Assistant Manager: Open and closed stores. Trained associates in professional sales attitude and proper customer service skills. Dressed the sales and display windows daily. Performed daily scheduling tasks and also trained associates on receiving stock and placing stock on sales floor. Prepared preliminary payroll and forwarded to Regional Office. Assisted associates during high pressure events.
    Read daily e-mails and tagged sister stores regarding urgent changes.

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    Associate Degree in Applied Science in Medical Insurance Billing & Coding
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  6. Sherron Simpson says:

    Currently interested in employment in Medical/Dental
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  7. Sherron Simpson says:

    I am currently inquiring for a position for Accounts Medical/Dental Insurance Billing and Coding entry level.

  8. Tom Grant says:

    The concern over undercoding as a penalizing possibility, obfuscates the greater problem of why a provider would want to do that in the first place. For some, undercoding is being used as a means of “flying under the audit radar”, a clear representation of the providers lack of confidence in diagnosing and treating. Undercoding will downgrade the patients represented health status to the insurer and their benefits administrators, potentially denying the patient the full extent of their policy benefits and may even lead to a denial of more vital services due to a reduced severity rating as portrayed by the undercoded injury/disease/or therapy. Should a patient become aware of intentional downcoding by the provider (and they are getting more savvy via the internet about their conditions and therapies), they will likely have a good legal claim of medical malpractice against the provider and those who knowingly supported them.

    If undercoding is about a patients finances, providers should never assume guardianship for the patients finances. Experience has shown that patients must make their own financial decisions and they do not need the provider to do that for them via undercoding. Undercoding may also reflect a providers effort at circumventing accountability for skill, or lack thereof in being the avowed provider each has taken the oath to become.

    I know it’s altruistic, but undercoders, intentional or unintentional, need to reach up for a higher plane of accountability for developing skill, without having to be forced to comply due to the threat of “legal” consequences of the CMS FCA.

  9. Tamie Smith says:

    Hello, Kind of off the topic but does anyone out there have any advice on assigning modifiers to physican charges for colonoscopy ? Having trouble with modifiers on multiple procedures done at once? 59 and 51

  10. Gabe Ferreira says:

    Hi Tammie,

    59 is used for procedures that are not normally reported together but were done during the same session.

    51 would be used for multiple procedures that are related to each other.

    33 would be used if it was preventative.

  11. Dr Brian Duby, DC says:

    I took an Oregon Continuing Ed class on proper documentation and coding last fall through Chiro Code. The biggest factor as I understood it was the patients subjective complaint. If the patient does not subjectively say I have tight low back and the doctor palpated and finds taut and tender fibers with subluxation, adjusts it and bills for an additional region, say 98941 instead of 98940 and then is audited, billing for the region that had no subjective complaint is considered fraud under an audit. This is why I don’t take Medicare. Its great to know everything that’s been done, but DC’s and MD’s don’t get paid an hour for 45 minutes work like in psychiatry so they can take complete notes. This is why many MD’s now hire transcribers to be present during a patient visit even though they don’t get reimbursed for the transcription, they are more efficient and can see more patients and have greater billable time because they aren’t wasting time taking notes

  12. Tom Grant says:

    Dr Duby, I see your point, but the difficulty will still find an answer in the details. If the DC provider found that the secondary finding (of low back in your example) was contributory to the chief complaint and documented it as being influential, it would still be an allowable service. For example, if a patient comes into a medical office complaining of fatigue and the MD does a thorough exam and finds a heart condition as part of the chief complaint and treats it, he is not liable for treating the heart condition because the patient’ didn’t tell him it was his heart. The spine has extensive connective tissue that influences all portions of the spine and often the extremities as well. It’s a matter of documenting the findings and relating them back to the chief complaint in order to include treatment of these secondary findings as a means of correcting the problem area.
    While coding misperceptions cause angst among the provider bases and the fraud stories abound (though I think they are few compared to the number of licensed physicians), good practice protocol will still allow for all pertinent services to be covered per the policy benefits. I hope this helps.

  13. DR JULES says:

    I work as a contractor for a private surgical practice. Insurance companies have red flagged my employer due to a lawsuit for unpaid claims my employer won in an $76M arbitration settlement. Now the insurer rejects all claims as insufficient documentation. Mind you before the lawsuit they were paying claims as documented. Now, my employer has modified requirements for “documentation” as a 5 page single spaced narrative clinic visit. Any minor procedure that can be charted as a 1/2 page note is now a 2 page highly detailed narrative.
    I am suspicious of the insurance company forcing my employer to overreact and I am in danger of undercoding. The typical patient visit lasts 15 minutes, I document interval history, brief ROS and focused Physical Exam, and brief OP note, all on one page, and I charge 99213. Now with this extensive 5 page narrative detailed history, detailed Physical, and a detailed Op note, the suspicion is turned towards me for failing to properly code.

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