Written by Kathy Cramer, CEO of Professional Practice Resources

While physicians may worry about being audited because they’re overreaching when it comes to coding, recent data reveal that hospitalists face the opposite problem: They consistently undercode their work.

To get an idea of the scope of undercoding, you need look no further than the Centers for Medicare & Medicaid Services (CMS). In the late 1990s, the CMS established the comprehensive error rate testing (CERT) program, which audits more than 100,000 claims each year to determine how many Medicare payments were incorrect.

You’ve no doubt seen the results of this program in news stories that highlight how much money Medicare is overpaying physicians and hospitals. But the program also tracks underpayments, and CERT analyses consistently find that many E&M services are undercoded. Not surprisingly, codes that hospitalists use are on that list.

According to the latest CERT findings, for example, inpatient follow-up consults (CPT 99261) are undercoded 17% of the time. And as a group, subsequent care inpatient codes (99231-99233) make the list of the top 20 claims that are consistently undercoded.

While national studies estimate that physicians lose up to 9% of the revenue they should receive because of undercoding, one hospitalist practice that we worked with was taking a 20% hit in reimbursement for subsequent care days because the physicians rarely used the highest level of coding. The group instead opted for 99232 in almost every case, regardless of the patient's condition. After reviewing their documentation practices and showing the physicians their CPT productivity reports each month, the doctors began coding more accurately.

Why do doctors undercode? While it may seem counterintuitive that physicians would bill Medicare for a penny less than what they’re owed, there are some basic explanations. For one, many physicians lack a true understanding of E&M coding, a system that even the CMS allows can be subjective.

Some physicians try to be conservative with their coding to avoid scrutiny by insurers and auditors. They may think that downcoding or using the same level code for all visits is playing it safe.

One physician we worked with went so far as to use subsequent visit codes rather than the critical care codes he was entitled to. Why? He said that he wasn’t sure how to properly document critical care services, even thought he was actually doing a good job documenting not only the time he was spending, but other key factors like the patient’s medical condition and his own decision-making.

Other physicians, particularly those working in larger institutions, may be using an electronic medical record system. While this technology can be a huge time-saver, these systems often suggest CPT codes without taking into account factors that would warrant using a higher code.

One EMR system we reviewed, for instance, used an outdated diagnosis system, leading to downcoding visits. Another system didn’t include the physician's remarks or notes, which also resulted in significant downcoding.

What can you do to make sure you are correctly coding your visits? Here are some suggestions that have worked for our clients:

1. Analyze your coding patterns. A good start is to make sure that your billing company provides you with a CPT productivity listing each month that shows how many of each CPT codes are being billed.

Understand that insurers want you to bill the appropriate level of care and that any one code that is used exclusively will raise a red flag. You should be reporting fewer highest level and lowest level codes, using middle level codes most often. For subsequent care visits, for instance, use the mid-level code of 99232 at least half of the time, and then use either 99231 and 99233 for the other half of patient visits.

Some insurers give physicians quarterly or yearly reports showing how their coding patterns compare with their peers and norms. If your statistics are significantly different, you need to figure out why.

2. Don’t blindly trust codes suggested by a computer. Be wary of EMR systems that promise to take care of all the coding for you, because many of your patients can’t be neatly categorized by a computer program. If the system uses a template, for example, review it for completeness and accuracy. And make sure the system includes the contents of any freeform notes that you provide when it chooses a code.

The software’s ICD-9 listings need to be updated each year, and all conditions that apply to the visit should be noted. If you can’t review codes that the system is choosing each time, at least review a sampling each month. Make sure the system properly documents any consults, notes any referring physicians and generates a report.

3. Invest in a coding audit. Make sure that any audit includes subsequent education for all the physicians in the practice. Discuss audit findings and make sure physicians are aware of any coding irregularities. This corrective action will more than pay for itself with better documentation, fewer demands from insurers for refunds and maximized collections.