Common Medical Billing and Coding Errors: How to Avoid Common Administrative Concerns in the HealthCare Field

January 20, 2024

Medical billing errors are common and costly. This can be financially crippling from the patient’s perspective, with one-third of American adults admitting to receiving unexpected bills and many struggling to pay them.[1]This, in turn, limits patient satisfaction and adherence but is also problematic for the healthcare systems plagued by these errors — spelling considerable losses in productivity, not to mention a lack of reimbursement for care provided and even the potential for fines and other compliance concerns.

The solution? Well-trained medical billers and coders who can streamline the administrative components of the healthcare industry to help to boost patient satisfaction and organizational profits. In this guide, we offer a detailed answer to the common question: How can inaccurate coding affect your practice? We will also reveal strategies for limiting coding errors with the ultimate intention of boosting both administrative functions and clinical care.

The World of Medical Billing and Coding

Medical billing and coding plays an outsized role in determining everything from patient satisfaction to healthcare profitability. These distinct (but connected) administrative processes transform clinical documentation into billable data. As Forbes Advisior[2] explains, coders and billers form “the backbone of the healthcare reimbursement cycle.”

Why Is It Important to Get It Right?

Accuracy is crucial in medical billing and coding. This entire system is built on a framework of trust, and if this is eroded, the implications for the medical profession could be far-reaching and downright devastating.

Even at the individual level, the ripple effect of a seemingly simple billing or coding error can be extensive: such errors commonly result in denied claims, which are understandably frustrating for patients. This can also impact patient health by misleading practitioners or forcing them to spend their already limited time dealing with extra administrative burdens.

From the organizational standpoint, errors must be limited because they make it more difficult to predict revenue — not to mention that the process of tracking down and fixing these errors can prove costly.

What Are the Most Common Errors?

Medical billing and coding errors can take many forms but tend to follow a few distinct patterns, as outlined below:

Can’t Identify the Right Patient

Accurate patient identification is a central component of effective billing and coding. This can prove surprisingly complicated, as a single patient may have dozens of identifiers with various providers. This can lead to fragmented health records and, ultimately, inaccurate coding or billing. Currently, the Social Security Number (SSN) is widely deemed the de facto method of patient identification, but, ideally, photo IDs and quality checks will be built into administrative procedures.

Diagnosis Code Wasn’t Found

Not every patient visit results in a diagnosis, nor does every service produce a diagnostic code. If patients seek services and do not receive actual diagnoses, however, confusion can arise, and errors are more likely. In these situations, International Classification of Diseases (ICD) guidelines must be followed carefully to overbilling, particularly if symptoms are integral to the eventual diagnosis.

Combining Multiple Procedures

Bundling occurs when multiple codes from the Current Procedural Terminology (CPT) are combined to create one overarching code. This isn’t always a problem, and sometimes, bundling can be successfully carried out if multiple procedures are performed together and regarded as a single service. However, because bundling is inherently complicated and may require the targeted use of modifiers, errors are common.

Change to Patient Insurance

Research published in JAMA Network Open[3] indicates that, in the United States, patients disenroll and reenroll in commercial health insurance plans on a regular basis.[4] These constant changes can have a negative impact on continuity of care and, unfortunately, also contribute to coding and billing errors.

Why Do Billing Errors Happen?

A variety of oversights can potentially lead to billing errors. These are often attributed to medical billers and coders, although the fault sometimes lies with other administrative professionals or even clinical providers. Common concerns include:

Outdated Medical Billing Manuals and Resources

Coding resources are regularly updated and, while keeping abreast of these changes can feel overwhelming, it’s a core responsibility of coders, billers and other administrative professionals.

The American Medical Association (AMA)[5] cites the failure to regularly check National Correct Coding Initiative (NCCI) edits as one of the top medical coding mistakes to negatively impact healthcare organizations. Revisions to the aforementioned CPT and ICD must be followed closely, along with changes to the Healthcare Common Procedure Coding System (HCPCS).

Poor Documentation

Documentation ensures that every service is properly recorded and identified. To that end, it should be thorough, with everything from progress notes to authenticated medical records and even insight into intent to order services or procedures.

ModMed[6] explains that “documentation is considered poor or subpar if it lacks sufficient specificity for the coder to assign accurate ICD-10-CM, CPT, HCPCS codes and/or modifiers.” Keep in mind that, in addition to facilitating accurate and compliant billing, solid documentation serves a legal function: it demonstrates which services were rendered and why — and can even function as evidence in a court of law.

Undercoding and Overcoding

Coding should indicate the exact level of service performed and documented. If codes that reflect these services are left out, however, it can be difficult to accurately convey the full extent of the services provided.

Known as undercoding, this practice is rarely intentional but can lead to significant losses if services are provided but never reported or properly reimbursed. The journal Exploratory Research in Clinical and Social Pharmacy[7] refers to undercoding as “billing visits for a lower level of service than may be justified.”

Overcoding is even more worrisome, as it can be deemed medical fraud. This occurs when codes are misrepresented to suggest that services were more extensive or costly than they were in reality. Research published in the journal Perspectives in Health Information Management[8] reveals that overcoding or “upcoding has occurred too often throughout healthcare practices, suggesting CMS [Centers for Medicare & Medicaid Services] fraud and abuse.”

Inexperienced Medical Coders

While some of the issues highlighted above occur at the organizational level or even reflect intentional concerns such as fraud, many stem from a general lack of insight or experience. It takes time, after all, to master increasingly complex billing and coding practices.

Extensive experience is especially important for bundling and unbundling medical billing, where, as mentioned previously, the lack of appropriate modifiers can cause problems. Hence, the need for training programs that emphasize practical, hands-on opportunities, along with continuing education to ensure that critical skills remain fresh and up to date.

What Happens When an Error Occurs?

The implications of medical coding errors can be far-reaching. As we’ve touched on, these issues harm individual patients and entire healthcare organizations. Key problems include:

Worse Patient Care

Coding errors go beyond administrative concerns. These can directly impact patients, including their quality of clinical care. Incorrect diagnostic codes, for example, may prompt clinical professionals to inadvertently provide the wrong services or even withhold essential medications.

Loss of Income

Medical billing and coding serve as an essential link between clinical services and billable revenue. If these processes are inaccurate or incomplete, payments may be delayed or even rejected altogether. This can prompt sizable differences in reimbursement, sometimes totaling thousands (or tens of thousands) for a single patient or service. In the most severe cases (especially involving overcoding), monetary penalties can arise in accordance with the False Claims Act.

Denied Claims

Claim denials often occur in response to bundling and overcoding. Duplicate claims are also unfortunately common, with coders sometimes mistakenly submitting more than one claim for the same service performed with the same patient. The cost of reworking denied claims (or dealing with duplicate claims) can prove exorbitant, even before losses in productivity are considered.

How to Start a Career in Medical Billing and Coding

Coding errors are far from inevitable. With a strong workforce of thoroughly trained coders and billers, many common errors could be avoided. This presents a huge opportunity for aspiring coding and billing professionals who, with proper training, can easily demonstrate their value to employers. Quality educational programs allow aspiring billers and coders to quickly obtain — and practice — an in-depth understanding of coding systems and procedures.

Education

A high school diploma is always necessary in medical billing and coding, but that’s only the beginning. Entry-level positions may call for a certificate of achievement or an associate degree. Employers often favor applicants with practical experience, which can be achieved by seeking and completing externship opportunities.

Keep in mind that employers may prefer job candidates who possess not only targeted degrees or certificates but also credentials such as:[9]

Certified Billing and Coding Specialist (CBCS) from the National Healthcareer Association (NHA)
Certified Professional Coder (CPC) or Certified Professional Biller (CPB) from the American Academy of Professional Coders (AAPC)

Preparation for rigorous credentialing exams can be achieved while completing a targeted educational program. Depending on the credential, participating in a relevant training program may be a core requirement to take the credentialing exam in the first place.

Find Your Career in Medical Billing

If you envision a future in medical billing and coding, you will find comprehensive and in-depth training at Carrington College. Available in a blended online format, our certificate program could prepare you for the full range of challenges and opportunities that exist within today’s administrative career tracks. Reach out today to learn more.

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