Upcoding Is Serious Fraud
In the healthcare industry, it’s imperative that medical billing is accurate. Why? Because it guarantees that patients, providers, and insurers are all properly compensated. But a practice known as upcoding is attracting attention because it undermines this equity-based system.
Exactly what is upcoding? It’s intentionally billing for a more expensive service or procedure than what was provided. This fraudulent practice forces insurers and patients to overpay, and it can trigger serious legal and financial consequences for healthcare providers.
The Upcoding Problem
Upcoding occurs when a healthcare provider intentionally selects a billing code that corresponds to a more complex, more expensive, or higher level of service than what was rendered. In medical billing, every service, procedure, and diagnosis is assigned a specific Current Procedural Terminology (CPT) code or Healthcare Common Procedure Coding System (HCPCS) code. These codes are used to determine reimbursement rates from insurance companies or government programs like Medicare.
Each code corresponds to a specific level of care, with higher codes typically representing more complex procedures or longer, more intensive visits. For example, if a physician sees a patient for a routine office visit—but bills for an extensive consultation requiring more time and resources—that would be classified as upcoding.
How Does Upcoding Work?
Here are the ways upcoding can take shape:
- A provider could overbill for routine services, such as billing for a comprehensive exam when they only performed a basic check-up.
- A provider could misrepresent how complex the service was, such as reporting simple procedure like removing a splinter from a finger as a much more complex intervention (like surgery), leading to a higher reimbursement.
- A provider could require extra tests or procedures by adding unnecessary procedures or diagnostic tests to the bill, even if they weren’t required, to jack up the payment.
- A provider could execute a procedure known as “leveling up visits” by coding a simple office visit (a low-level code) as a more detailed and costly visit (a higher-level code), even though the provider delivered services that weren’t more involved.
Upcoding Entails Very Serious Legal and Ethical Issues
Authorities don’t merely view upcoding as an administrative mistake. It’s considered fraud under U.S. law, specifically under the False Claims Act. If upcoding is suspected, it can lead to investigations by agencies like the Department of Justice (DOJ) or the Office of Inspector General (OIG) for Health and Human Services (HHS). If you’re found guilty of upcoding, you can face hefty fines, penalties, and even criminal charges.
Upcoding also violates the medical profession’s ethical standards. According to the Hippocratic Oath, healthcare providers are bound by ethical principles to act in their patients’ best interest. Not only does intentional overbilling violate the trust among doctors, insurers, and patients—it can result in serious financial damage for those of us who rely on insurance coverage to help pay for out medical care.
