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Improper E/M coding leads to loss of revenue for practices

August 21, 2014

Improper E/M coding leads to loss of revenue for practicesIt is no secret that E/M claims, also known as Evaluation and Management claims, have been causing major problems for the medical industry over the past several years. According to a study by the Department of Health and Human Services, as much as $6.7 billion was inappropriately paid in 2010. That amounted to 21% of Medicare payments and a staggering 42% of incorrectly coded claims. In fact, the $6.7 billion that was inappropriately paid disguises the extent of the problem, due to the fact that the incorrect coding included both upcoding and downcoding, with the majority of incorrect claims being downcoded.

How improper E/M coding affects the medical practices

Evaluation and Management (E/M) miscoding is expensive for the entire medical industry. Not only is Medicare paying out billions more than they should, but doctor’s offices and other medical facilities that are downcoding are losing out on revenue that they are legally entitled to as well. While many of the downcodings are in fact mistakes, a significant number of them are entered deliberately by doctors who want to counteract the upcoding they presume (or know) has also been entered on their behalf.

Improper E/M coding can be broken into two major categories. The first is due to upcoding, which ultimately costs Medicare billions of dollars on higher fees. This in turn impacts the long-term viability and solvency of the entire program, and burdens taxpayers and other parties within the medical industry unfairly. While some of this improper upcoding is done purposefully, a great deal of it is simply the result of administrative mistakes or a lack of appropriate knowledge in medical offices.

The other major problem with improper E/M coding occurs when doctor’s offices and medical facilities accidentally downcode their billing reports. Much like improper E/M upcoding, this results misallocated revenue, however in this instance it is the doctor’s office or medical facility that suffers the consequences. Although downcoding does not cost Medicare additional revenue, it does result in a loss of revenue for the medical facilities themselves, many of which are already dealing with shrinking margins as it is.

Solving the problem of improper E/M Coding

According to the Department of Health and Human Services, there are already mechanisms being put into place to counter improper E/M coding. With the cost already in the billions of dollars, and with such a large percentage of medical facilities and doctor’s offices committing these mistakes, Medicare contractors are starting to focus on E/M coding and documentation, particularly among doctors who have a high percentage of their billings as E/M billings.

Industry leaders are also recommending that doctors begin the practice of self-audits on their own offices. In addition to hopefully reducing the number of E/M errors, this practice can also ensure that the office is billing properly and in full compliance with the relevant regulations. In addition, for offices that have been inadvertently downcoding, there is the possibility of increased revenue from the correction of improperly coded E/M claims. However, even if a particular office finds that it is actually upcoding, this can still be a financial benefit to the office, as it prevents the possibility of expensive legal action; it is also of course the right things to do.

In addition to the recommendations by the Department of Health and Human Services listed above, doctors and medical offices should also learn to document their patient encounters more accurately and in more detail. This can help in the self-auditing process and is also a smart best practice to utilize in general.

E/M claims are an important part of the medical industry, and in particular for doctors whose patients are on Medicare. With the problem of improperly coded E/M claims rising rapidly, now is the time to make sure that your own office is in order. Utilizing M-Scribe’s medical billing and coding services is one of the best ways to ensure that your office is complying with and properly coding E/M claims. Their services will give you the peace of mind you need to run your practice effectively. For more information about how M-Scribe E/M billing and coding services can help you, please visit M-Scribe E/M coding services. 


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