Getting to the Bottom of Overbilling and Upcoding in Healthcare

Accurate billing is critical to success as a healthcare enterprise – not just when it comes to getting reimbursed but also when making sure your clients are treated fairly. Avoiding overcharging and upcoding is important to maintain a good relationship with your clients.

Overcharging is when a medical office bills you for a more expensive service or medicine than you actually need. Similarly, upcoding refers to billing insurance or Medicaid for inflated reimbursements, by submitting an incorrect billing code.

Both of these can have serious consequences, not just for your reputation but potentially for civil and legal repercussions. However, many businesses fall into these traps not through intentional fraud, but through careless filing and record-keeping. This is how to avoid falling prey to overcharging and upcoding.

Overbilling in Healthcare

Statistics vary on the extent of overbilling, but it’s clear that there is a serious problem with patients getting sent bills with numbers far inflated over what they were expecting to pay.

Often this is a simple miscommunication – an insurance agency not filing the proper paperwork or an office not being set up to work with the right agency. But just as often, it’s the result of a dispute between two parties that winds up falling back on the patient. And what might seem like a minor dispute to the parties involved can be highly stressful for the person who gets the bill.

Many times, this is an innocent mistake that can be resolved quickly. Human error is the most common cause, but sometimes this becomes a bigger issue when it’s a pattern. If an office repeatedly finds itself overbilling customers, it may be a sign of negligence on the part of the bookkeeper or a serious flaw in the records software.

The bigger problem is when overcharging is found to be a product of fraud. A medical office trying to get extra reimbursements can be a civil affair as the patient is likely to sue, and that can permanently damage an office’s reputation.

Upcoding in Healthcare

Upcoding is a form of overcharging, and one that the patient almost never knows about. This is where the government gets the bill, as the office bills Medicare for the most expensive type of office visit, no matter the context.

This is especially common for repeat patients – ProPublica found that 1,825 health professionals admitted to billing Medicare for this uniform sum at least 90 percent of the time in 2015. This may go under the radar for most businesses, as Medicare rarely has the resources to investigate, but an office that gets caught upcoding can face the consequences from the government.

Overbilling vs. Upcoding: How Are They Different?

Overbilling is an overarching category where healthcare companies try to get an increased sum for their services. While overbilling can be put on the patient or a larger service, upcoding specifically refers to seeking reimbursement from insurance companies or Medicare. While any case of overbilling can wind up in court, upcoding can lead to an audit.

There are two main kinds of upcoding – upcoding and unbundling. Upcoding refers to filing incorrect reimbursement codes with the government while unbundling refers to using multiple codes for individual parts of the procedure to charge multiple times.

By contrast, the most common types of overbilling include billing for unnecessary services, over-diagnosing patients to keep them coming back, and billing for “phantom services” that were never actually performed.

What Can Institutions Do About These Issues?

Avoiding overbilling and upcoding errors is key to providing a quality experience for patients and a strong continuum of care. These issues can be avoided by several common-sense measures, including instituting anti-fraud training in the office.

The office should have internal procedures to detect and eliminate fraud and errors. This should ideally be carried out by a third party in the office who can focus on these issues. Additionally, learning about AAPC certification requirements and knowing how to satisfy them will ensure you’re up to date on the latest standards.

This organization has helped many offices avoid costly pitfalls. It’s always easier to correct mistakes before they’re filed, and a compliance professional with AAPC training is a great asset to have in your office.

Avoiding Costly Errors

Is your office well-versed in the perils of upcoding and overbilling? These common issues hamper many top offices. Not only can they be costly, but they can interrupt patient care. Make sure your office is up to the latest standards.

Understanding what to look for and the difference between these mistakes can be critical to avoiding them. Once you have someone who understands what to look for, it’ll be easier to ensure a smooth billing process.