Medical Billing

Physicians, medical billers and medical coders have an established history with and significant awareness of upcoming and overpayments. However, unless they’re operating within a fraudulent billing scheme, they’re avoiding the practice of upcoding altogether.


Upcoding is a false-hearted medical billing audit in which a medical bill forwarded for a health service is more expensive than it should have been based on the health care service that was provided by the physician. A upcoded bill can be forwarded to third-party payers including; private health insurance company, Medicaid, Medicare, or the patient.

Upcoding is arguably the most common red flag in both audit selections and audit results, making it a serious violation for health care providers who value payment integrity. There is so much attention; required to avoid upcoding, that may lead to greeting up coding’s dangerous sibling: “Down coding.”

Upcoding and down coding are two opposite sides of one very expensive coin. Upcoding involves billing and reporting a higher-level medical service or a more expensive diagnosis than what is reflected in the patient’s health service plan. These higher service levels are not supported by medical necessity, facts, or even provider documentation.

Medicare pays for health care services with Evaluation and Management (E/M) codes, which depends heavily upon medical necessity being confirmed for each level of service reported. Upcoding has proven to be a problem in Evaluation and Management audits because the reporting of high levels of service equals more money in the provider’s pocket.

For example, diabetes is often coded. Many health care providers default to diabetes without complications. However, correct coding requires that the health care providers document the type and method of control.

Down Coding:

Down coding, on the contrary, is often utilized as a means of preventing red flags or notion of fraud. This procedure is counter-intuitive, as down coding is often just as hazardous as upcoding, though for different reasons. Down coding occurs because of inadequate documentation and reports that fail to assign levels of services to the highest levels of specificity. This is usually practised as a protective approach against claim denials, Evaluation and Management audits, and non-compliance designations. Many payers analyze the regularity in which some E/M codes are reported, and use this frequency data to classify outliers or health care providers who bill excessive amounts of high-level E/M services. Down coding can tilt this data, and blanket providers beneath the misconception of compliance. Hence, this is only a misconception, as reporting data below (rather than above). The national average can also indicate complexity in medical billing practices, resulting in an audit. Down coding may not be financially harmful to third-party payers, but it does lead to the misallocation of funds.

It is the foremost duty of physicians and their medical technician’s staff that they should be extremely cautious in verifying and validating documentation across the full spectrum to make sure there are no occurrences of upcoding and down coding.