Undercoding: Is flying under the radar worth it?
By Kathy Mills Chang

Few practitioners want to draw undue attention to themselves from insurers. So, some engage in a practice they consider “flying under the radar” — undercoding. But, as military pilots can attest, flying under the radar can be dangerous.

Undercoding is defined as providing a service to a patient and deliberately coding it less than the parameters required for that service.

To illustrate: When treating three or more spinal regions, some chiropractors use code 98940, Chiropractic Manipulative Treatment (CMT), which indicates treatment of one to two areas, rather than higher codes that reflect the actual level of service provided, such as CMT 98941 or 98942. This is an example of undercoding.

You might think that insurers would be more likely to pay your bill submitted for lower codes and fees. Not true. Insurers have no incentive to allow or disallow a procedure based on the level of service reported. What they look for is documentation and matching records. They deny claims that cannot be justified.

Insurers know when you undercode. It’s not hard for them. They develop a profile on each reimbursed phys-ician. The profile shows coding tendencies, patterns and longevity of treatment patterns. When a profile shows a higher usage of one code — for example, 98940 or 98942, insurers assume that miscoding has occurred, because they know that statistically it is not reasonable for a practice to have a lopsided need among a given group of patients.

Undercoding serves as a red flag to insurers, signaling:

• Discriminatory discounts. Many would argue that a physician has the right to provide more service than they charge for. In many cases this is true. However, this habit often places a practice at risk for noncompliance because the discounted service is not delivered in a uniform manner.

For example: One of the most common undercoding practices is to charge a cash patient only for an adjustment and write off (or fail to report) other services, such as modalities. Insurance patients, however, are charged for all services. This is discriminatory billing.

• Medicare fraud and abuse. While undercoding for cash patients is never appropriate, in the case of Medicare, it may be seen as inducement, which may then be considered fraud or abuse or both.

Medicare considers inducement as “offering any free service to a patient to encourage providing a service that would be covered by Medicare.”

Specifically, the statute says that inducement occurs when a provider knows or should know that remuneration offered to Medicare or Medicaid beneficiaries is likely to influence the beneficiary to order or receive items or services from the provider.

The “should know” standard is met if a provider acts with deliberate ignorance or reckless disregard. Medicare does not require proof of specific intent. The Office of Inspector General (OIG) considers providing free goods or services to existing customers who have an ongoing relationship with a provider likely to influence future purchases of covered services by those customers.

Aside from calling unwanted attention to your billings, undercoding does other disservices:

• Shortchanging. In routine audits, the largest number of undercoding errors are in Evaluation and Management (E&M) services. This undercoding shortchanges physicians, because E&M undercoding reduces the amount of money they can collect for services rendered.

• Distorted value of chiropractic. Undercoding also has a negative effect on the profession as a whole. When doctors do not code properly — or deliberately reduce the number or value of codes — the insurance industry does not get an accurate picture of the full scope of services rendered to patients because provider profiles are built from treatment patterns, number of visits per diagnosis and other statistical data from billings.

For example: When doctors consistently underreport services to a particular carrier, their data sets a benchmark for all members of the profession for a standard of care. This distorted value of chiropractic is not a message that we want to send to the carriers.

Continuing to undercode and paint a false picture to the carriers devalues the level of service provided by all members of the profession.

• Perceived value of services. In addition to distorting the value of services to insurance carriers, undercoding also affects the patient’s perceived value and benefit of services recommended by the doctor.

Suggestion: Instead of undercoding to accommodate a patient in financial need, develop and offer a variety of payment plans to your patients so that they can receive all of the care that you recommend.

THE SOLUTION:
PROPER DOCUMENTATION

The cause for much of the undercoding that audits discover is a lack of understanding of documentation requirements — the only representation of what occurred in the visit with your patient.

Essentially, documentation for the daily treatment record must show:

• The reason for the encounter, relevant history, physical examination findings and prior diagnostic test results;
• The physician’s assessment, clinical impression or diagnosis;
• The physician’s plan for care; and
• The date and legible identity of the observer.

Codes submitted to a carrier must match the documentation.
When your documentation is reviewed and compared to codes used to charge the patient, apples must equal apples. Everything must match.

The Centers for Medicare and Medicaid Services (CMS) has estimated that 68 percent of Medicare claims are denied because of poor documentation. When doctors submit documentation to appeal denials, sometimes the denials are reversed — but claims are paid at a lower level because the documentation submitted does not support the code used.
Before you circle a code for the day’s service, make sure that the daily treatment notes reflect all of the services you provided.

A solid understanding of requirements produces good coding results. A good documentation orientation source is the Medicare guidelines on its Web site, www.cms.hhs.gov/medlearn. Search under “master1.pdf.”
Undercoding affects everyone. It devalues the service to the patient, it places a physician’s practice at a compliance risk and it skews treatment data that affects the entire profession. Don’t engage in this dangerous practice! Learn the specifics of proper coding and do everyone a service by reporting properly. That is truly a win-win situation!

Kathy Mills Chang is a senior coach with Breakthrough Coaching (www.mybreakthrough.com). She can be reached for comments or questions at info@mybreakthrough.com.