What is Downcoding in Medical Billing

In the health care industry claim denials and fraud are quite common due to thousands of insured patients visiting health care providers to avails best medical services. Various terms are associated with fraud while filing claims for reimbursement. One such term is downcoding.

In medical billing, downcoding refers to the process of reducing or lowering the value of the claim by eliminating or not mentioning the codes that don’t provide sufficient evidence to perform medical services.

Practicing downcoding may lead to legal action as it is indicative of fraud.

Measures to Prevent Downcoding

• Complete and Accurate Documentation – It is vital to provide complete and accurate documents to avoid downcoding. Proper documentation helps in proving the necessity of services performed while submitting claims for reimbursement.  Make sure to include necessary documents associated with the patient’s past, family, and social histories, lab test results, X-ray reports, or other diagnostic services, referrals, and consultation reports.
• Conduct Coding Audits – One of the best ways to detect and prevent downcoding is to conduct coding audits for downcoding (as well as for upcoding). One must make sure to share audit findings. This will allow the auditor to come up with certain suggestions for accurate coding. Another benefit of coding audits is that you can provide subsequent education about downcoding and upcoding to the providers in your practice. Coding audits help prevent downcoding errors so that you can submit claims with zero downcoding errors.
• Use Billing Software but Consult Experts too – While billing software plays an important role in increasing the coding, billing, and submission processes they may not always suggest accurate codes. Various codes have more than one or two conditions for accurate coding. Therefore, it is advisable to consult a professional for accurate coding.
• Get Familiar with Fee Schedule – Sometimes, Explanation of Benefits (EOB) may include explanations such as ‘level of service/procedure has been adjusted’ to clarify the adjustments that were made in the payment based on the codes mentioned in the claim. This is where the fee schedule comes in. If your coder and/or biller have made any error while coding the procedures/services then you can detect downcoding by comparing the fee schedule with the amount mentioned on the EOB. The Centre for Medicare and Medicaid Services (CMS) defines the fee schedule as “a complete listing of fees used by Medicare to pay doctors or other providers/suppliers.  This comprehensive listing of fee maximums is used to reimburse a physician and/or other providers on a fee-for-service basis.  CMS develops fee schedules for physicians, ambulance services, clinical laboratory services, and durable medical equipment, prosthetics, orthotics, and supplies.”
• Insurance Verification – One may think that insurance verification is not connected with downcoding in any way. But on the contrary, insurance verification plays a major role in eliminating downcoding from your medical billing and coding process. Verifying a patient’s insurance claim helps you to identify the CPT/HCPCS codes that are approved and accepted by the insurance carrier for various insurance plans. With thorough insurance verification, you’ll be able to code accurately to avoid downcoding and prevent claim denials and/or fraud, if any.