Under-Coding: Financial Repercussions and Solutions

Under-coding can be defined as the procedure of medical coding where the codes do not reflect the full extent of the treatment provided to a patient. This can usually happen due to many reasons but the most common are errors or misreading of codes or because of the misconception that the chances of insurers paying would increase because of under-coding. The truth is that under-coding can affect your revenue in a negative manner as a health care provider and even get you into the habit of chronic under-coding which can lead to losses and improper patient care in the future.


Under-coding can occur due to numerous reasons such as lack of skilled staff, the fear of rejection of claims by payers, or errors in understanding the correct codes. The skill of the physician staff can be increased by providing proper training which would also ensure lesser amounts of errors. Another situation which can lead to under-coding can be avoided by providing uniform coding for patients who are fully insured and those who choose to pay cash for smaller illnesses or visits. Discrepancy in the codes for the same procedure provided to an insured patient and cash-paying patients can be termed as discriminatory billing by payers.

Avoiding under-coding

Under-coding can be avoided by familiarizing with the latest codes and hiring or training the staff and hire professional medical billers and coders who have tested the new codes with other entities such as payers and clearinghouses. This would ensure that the performance of physicians and the treatment is correctly captured. Another way of avoiding under-coding and mistakes in coding is to refer to the annual updates of ICD-9 codes and identify the most under coded procedures using ICD-9. In times where ICD 10 implementation is just round the corner, the threat of under-coding is at its peak. Proper training and implementation can help in avoiding these mistakes when the use of ICD-10 codes becomes imperative.


The fact that under coding is seen as an unethical if not an illegal practice even when revenues for health care providers decrease may implicate negligence on the part of physicians, clinics, or hospitals. While under-coding for cash patients is on no account correct, in the case of Medicare, it can be seen as inducement, which could then be regarded as fraud or abuse or both. According to Medicare, inducement is “offering any free service to a patient to encourage providing a service that would be covered by Medicare.” Such abuse can lead to legal actions since these indicate non-uniformity and providing of free goods or services to patients in order to influence future purchases by consumers of the covered services.


Training for proper coding procedures is an integral part of avoiding under-coding and such training can be provided to assistants, while physicians themselves can train on basic codes that are often needed and encountered. CMS provides training as far as the technology is concerned and this can also help in familiarizing with EMRs and EHRs which can be an added advantage for health care providers, especially solo practitioners or physicians working as a small group.


The most important aspect as far as under coding is concerned is the amount of revenue which can dramatically decrease due to incorrect coding for multiple reasons. The easiest way to make sure that revenue is not affected in a negative manner is to familiarize you as a physician with some of the most commonly used codes and hire medical billers and coders who can provide relevant advice in order to use the correct codes. Dedicated medical billers and coders are aware of the pitfalls and the areas where mistakes are often made and can ensure these errors are not repeated.

The migration from ICD-9 to ICD-10 codes

The reason for migration from ICD-9 to ICD-10 codes is not just because they are extensive but also because of the sheer volume of codes and the extent to which they can cover the treatment that is provided. However, on the other hand, ICD-10 codes are so extensive that payers can deny claims that do not accurately reflect the treatment or diagnosis provided. The scope for mistakes and under-coding is becoming a growing concern among physicians and health care providers since payers would be happy to deny claims based on a technicality. Since the number of codes have increased almost 9 times compared to ICD-9, it becomes imperative to train the in-house staff cope with the ensuing changes at various levels, while the core process of medical billing and coding can be outsourced to professionals who are specialized in this area.

For more information on how under coding is likely to impact physicians and their billing processes, and how to cope with it in an effective and pro-active manner, or to know more about our coding services and coding training services on how physicians can handle such and similar issues in their practice, please visit medicalbillersandcoders.com, the largest consortium of billers and coders in the US across all specialties.