Healthcare providers are dropping major insurers – and home health
Healthcare Leaders Are Increasingly Concerned About Upcoding. Medical Coding Outsourcing Companies Could Be Your Best Answer.
The risks around upcoding have incentivized many healthcare providers to consider medical coding outsourcing companies, and a recent survey proves that these concerns are only getting more severe. Healthcare fraud continues to be a primary concern for healthcare leaders, presenting not only an ethical challenge, but also forcing them to make strategic decisions around their revenue cycle operations to reduce the risk of upcoding and address any potential downstream impacts.
Upcoding and the Benefit of Medical Coding Outsourcing Companies
Black Book Market Research released a survey just ahead of the 2025 American Health Information Management Association (AHIMA) Conference. The survey questioned health information management professionals around critical medical coding challenges in Q3 of 2024. It revealed multiple controversies in USA medical billing, particularly upcoding and fraud – a full 90% of respondents to the survey identified these two issues as a “major ethical dilemma for staff coders” [1].
Upcoding is an issue that impacts multiple stakeholders in healthcare, including patients and clinicians. For example, surgeons at the University of Virginia Hospital say that their administration has been pressuring them to bill in ways that overcharge patients. Surgeons spoke out about some difficult conversations [2].
“The message was, ‘You guys don’t bill enough, and there’s clear evidence that you could be billing more because this other group bills a ton. They bill double what you guys are billing…For us to bill more would be fraud, because we’re already billing more than we think we should’.”
This situation highlights the benefits of medical coding consulting and medical coding outsourcing companies – having external input to fill gaps in knowledge and awareness.
Understanding the Source of Upcoding
Not all upcoding is the same. This type of medical coding error falls under two categories of abuse and fraud. Upcoding fraud is intentional, often for the financial benefit of the provider or an individual. Abuse is an unintentional mistake, but still a grave issue for the healthcare revenue cycle. This form of upcoding is often a case of someone billing for a service that is more complex than what was actually performed and can be traced back to a misunderstanding of how the coding system works. The root cause can go back to training or a misunderstanding of legality.
Identifying Upcoding in Your Revenue Cycle
Upcoding is often discovered through whistleblowers (like the surgeons at the University of Virginia Hospital) or through medical coding audits, one of the services we offer at 3Gen Consulting.
One of the key benefits of conducting regular medical coding audits through medical coding consulting vendors is uncovering upcoding issues and risks before they become a legal issue.
Upcoding Risk Exists in Multiple Areas
The Black Book survey revealed multiple areas of coding challenges and complexity that could potentially contribute to upcoding risk.
ICD-11 Means Increased Coding Complexity
The coming ICD-11 coding system presents new levels of complexity for all providers, including in home health coding, hospital billing, and physician billing services. It will feature about 17,000 unique codes and over 120,000 codable terms [3].
The survey found that 80% of respondents reported anxiety over training and the risk of increased coding errors. But still, only 11% of provider organizations have increased preparations, even while 87% are worried about readiness.
Value-Based Care Coding Prompts Questions
Value-based care has left 64% of survey respondents with questions around just how adaptable their current coding practices are. This system requires proper documentation and 29% of the providers responding to the survey reported being challenged by aligning systems with this new model of reimbursement of billing and coding.
Bundling is Controversial
Bundling services was a key concern for survey respondents, with 55% stating a belief that bundling under a single code actually underestimates the true scope of care. The answer, unbundling, often maximizes reimbursements but also increases the risk of being accused of fraudulent medical billing practices.
AI Might Not Be Accurate
While artificial intelligence is touted by many as an ideal solution for coding, there is valid concern about its accuracy. A full 94% of survey respondents said they were worried about the nuance and accuracy of AI-generated codes, with 97% fearing the loss of human oversight. 77% also related concerns over the potential of AI to perpetuate biases in access to healthcare and medical billing and coding.
Audits Are a Pressing Issue
The survey also revealed many respondents questioning the fairness of medical coding audits, largely due to the complexity of the coding system.
85% of providers said that discrepancies identified during medical coding audits often lead to denials or demands for repayment.
Addressing Upcoding in 2025 and Beyond
As medical billing and coding in healthcare become more complex, revenue cycle leaders should know that this trend will only continue. Adapting and adjusting to these changes will require a proactive approach, and one that considers the position of medical coding outsourcing companies and medical coding consulting.
Leaders will also need to rethink their strategic use of tactics like third-party audits to identify root cause issues of upcoding and keep their revenue cycle functions at the highest level possible. We specialize in providing expert third-party support at 3Gen Consulting and invite you to start a conversation about your options with us today.
References
[1] Black Book Research, “Medical Coding & HIM Industry Faces Mounting Challenges, According to Black Book’s Latest Poll Ahead of AHIMA 2024 Conference,” 18 October 2024. Available: https://www.newswire.com/news/medical-coding-him-industry-faces-mounting-challenges-according-to-22444692.
[2] E. Hemphill, “UVa surgeons detail ‘upcoding’ they say allowed health system to fraudulently bill patients,” The Daily Progress , 17 October 2024. Available: https://dailyprogress.com/news/local/business/health-care/uva-surgeons-detail-upcoding-they-say-allowed-health-system-to-fraudulently-bill-patients/article_192f0aa2-8b20-11ef-af72-2ba2dd7bf174.html.
[3] World Health Organization, “ICD-11 2022 release,” 11 February 2022. Available: https://www.who.int/news/item/11-02-2022-icd-11-2022-release.
August 2024 Newsletter
We’ve assembled the latest news for healthcare revenue cycle leaders to help you stay on top of industry challenges and adapt your revenue
How the No Surprises Act Has Impacted Providers and Physician Billing Services
The No Surprises Act (NSA) brought with it large amounts of speculation on its impact on physician billing services, and now, in 2024, it’s been in play long enough to finally understand how it’s affecting providers and how they’re responding.
Two years in, the industry is seeing results that anyone responsible for physician coding and billing services should consider – and information they should evaluate as they consider their relationship with physician billing companies as a potential solution.
Looking Back at the No Surprises Act
The No Surprises Act went into effect on January 1, 2022, shaking up physician billing services around the country. It was intended to address “surprise medical bills” – the issue of insured consumers receiving care with an out-of-network provider they didn’t choose. They’re then shouldered with a bill they weren’t expecting and didn’t authorize. This issue happens in 20% of emergency department visits and around 9-16% of in-network hospitalizations in relation to services from providers like an anesthesiologist. Since the bill took effect, there have been developments around the arbitration process, dispute resolution, and the impact on patients.
When the act first took hold, the American Medical Association stepped in to help physicians understand their rights when caring for patients who obtained out-of-network services without their knowledge [1]. It put together a toolkit that focused on three operational challenges that physicians would need to address.
- Notice-and-consent requirements which physicians are now required to make publicly available for all patients enrolled in commercial health coverage
- Rules around emergency services and post-stabilization for hospitals
- Their obligation to provide good faith estimates for their uninsured and self-pay patients
Impact of the No Surprises Act on Physicians
While consumers have generally celebrated the outcomes of the NSA, many are realizing that providers are now experiencing financial hardships and other burdens. Out of all providers, physicians’ groups and air medical transportation companies have shouldered much of the burden in their work to provide emergency services. This is reflected in the fact that bankruptcies in healthcare jumped 84% between 2021 and 2022, with many in the industry directly blaming the NSA along with other factors like payer contracts and higher costs of debts [2]. By November 2023, 30 public companies had pointed to the NSA as a risk to their financial performance [3].
Today, providers are open about emerging issues that are affecting them and their efforts in physician coding.
Claims Are Backlogged
One of the downstream effects of the NSA is the impact of the dispute and settlement process. When the law was created, it included requirements to address negotiations and settlements between providers and payers to handle services rendered outside contractual agreements. This falls under the “open negotiation” process, meaning that if the parties don’t come to an agreement within 30 business days of open negotiation, the decision then falls to the Independent Dispute Resolution (IDR) process which involves submission to an independent third party. The case can vary depending on the insurance plan type, sometimes following federal rules and sometimes falling under a process determined by the state.
The result has been increased complexity and slower processing in the healthcare revenue cycle. The U.S. Government Accountability Office (GAO) reports that while federal departments expected around 22,000 disputes through the IDR process in 2022, over 490,000 were submitted between April 2022 and June 2023. As of June 2023, a full 61% of the disputes were unresolved [4].
Increased Resource Use of Physician Billing Services
Of course, these new requirements don’t exist in a vacuum. Physicians have had to employ additional resources to meet the requirements of the act. Providers are required to inform every patient about protections against balance billing and have an obligation to provide good faith estimates for their uninsured and self-pay patients.
All this is happening in the midst of a healthcare revenue cycle staffing shortage that is affecting physician coding and billing across the board. According to Becker’s Hospital Review, 32% of revenue cycle leaders report challenges with hiring and training staff in 2024 [5]. This issue directly impacts provider revenue cycle outcomes, since shortages contribute to already growing denial rates.
Processes That Are More Complex
Complexity is an ongoing concern in physician medical billing. Offices face falling reimbursement rates, shifting payer relationships, and increasing costs. In addition, many are inundated with pressures to use data to make increasingly productive decisions. The NSA only increased many of these demands.
Leaders in charge of physician billing services have to adapt their revenue cycle to document and address low payments from payers they’re not contracted with. They also have to augment their staff with professionals who understand physician billing services and have the physician revenue cycle management and contract management skills that align with NSA processes.
In response to pressures from legislation like the NSA, many healthcare leaders are looking into the support of physician billing companies. These partners can help improve revenue cycle results, increase efficiency, and manage the future impact of the act. To explore some of your options, contact us today.
References
[1] A. Robeznieks, “The No Surprises Act is in effect. What physicians need to know.,” American Medical Association, 14 January 2022. Available: https://www.ama-assn.org/health-care-advocacy/access-care/no-surprises-act-effect-what-physicians-need-know.
[2] F. J. Thomas, “84% Increase of Healthcare Bankruptcies Due to No Surprises Act,” WorkersCompensation.com, LLC, 8 October 2023. Available: https://www.workerscompensation.com/daily-headlines/84-increase-of-healthcare-bankruptcies-due-to-no-surprises-act/.
[3] S. Biswas and B. Yerak, “Surprise Medical Billing Law Heaps Pressure on Healthcare Providers,” Dow Jones & Company, Inc, 28 November 2023. Available: https://www.wsj.com/articles/surprise-medical-billing-law-heaps-pressure-on-healthcare-providers-f9583485.
[4] U.S. Government Accountability Office, “Roll out of Independent Dispute Resolution Process for Out-Of-Network Claims Has Been Challenging,” 12 December 2023. Available: https://www.gao.gov/products/gao-24-106335.
[5] A. Cass, “The biggest challenges facing revenue cycle departments in 2024,” Beckers Hospital Review, 24 January 2024. Available: https://www.beckershospitalreview.com/finance/the-biggest-challenges-facing-revenue-cycle-departments-in-2024.html.
Top Risks of AI Medicare Coding Audits
New technologies in the healthcare revenue cycle are often exciting, but as many healthcare leaders have learned, it’s important to understand the risks of any new type of solution before implementing.
This is especially true in
