{"id":30908,"date":"2026-07-13T18:40:13","date_gmt":"2026-07-13T13:10:13","guid":{"rendered":"https:\/\/www.medicalbillersandcoders.com\/blog\/?p=30908"},"modified":"2026-07-13T18:43:23","modified_gmt":"2026-07-13T13:13:23","slug":"under-coding-vs-over-coding","status":"publish","type":"post","link":"https:\/\/www.medicalbillersandcoders.com\/blog\/under-coding-vs-over-coding\/","title":{"rendered":"Under-Coding vs Over-Coding: How to Avoid Lost Revenue and CMS Audits"},"content":{"rendered":"

Under-Coding vs Over-Coding is the single biggest coding decision that determines whether your facility keeps its revenue or hands it to CMS on a silver platter.\u00a0Under-coding happens when a coder assigns a lower-level code than the documentation supports, which quietly erases revenue every single day.\u00a0Over-coding happens when a coder bills a higher-level code than the note justifies, which invites a federal audit and possible False Claims Act exposure.<\/p>\r\n

Both mistakes come from the same root cause:<\/strong> documentation that does not match the code submitted. Get this one decision wrong at scale, and a multi-site group can lose six or seven figures a year without anyone noticing until an OIG letter arrives.<\/p>\r\n

Why Under-Coding vs Over-Coding Is a 2026 Compliance Priority<\/h2>\r\n

CMS reported the FY 2025 Medicare Fee-for-Service improper payment rate at 6.55%, or $28.83 billion, down from $31.70 billion the year before. That sounds like progress until you look at what is driving current federal attention. Recent OIG guidance and enforcement activity have intensified the focus on Medicare Advantage risk adjustment, E\/M coding accuracy, modifier usage, and medical necessity documentation.<\/p>\r\n

A January 2026 Work Plan addition specifically examines trends, patterns, and key comparisons between the V24 and V28 risk adjustment models, and the V28 model significantly reduced the number of ICD-10-CM diagnosis codes that map to HCC categories, which means fewer diagnoses now carry weight, and getting specificity wrong in either direction hits reimbursement harder than before.<\/p>\r\n

Meanwhile, payers most frequently audit practices for billing patterns that suggest upcoding, unbundling of services that should be billed together, and improper modifier use. On the other side of the ledger, under-coding rarely triggers an audit; it simply drains revenue quietly, month after month, until a facility’s leadership notices margins shrinking on flat or rising volume. This is exactly why Under-Coding vs Over-Coding needs to be measured as one connected problem, not two separate coding “mistakes.”<\/p>\r\n

Common Codes Most Often Under-Coded or Over-Coded<\/h2>\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
Code \/ Modifier<\/strong><\/td>\r\nTypical Direction<\/strong><\/td>\r\nWhy It Happens<\/strong><\/td>\r\n<\/tr>\r\n<\/thead>\r\n
99213 (established patient, low complexity)<\/td>\r\nUnder-coded<\/td>\r\nCoders default here even when the note supports moderate complexity, understating the visit<\/td>\r\n<\/tr>\r\n
99214 (established patient, moderate complexity)<\/td>\r\nBoth ways \u2014 over-coded when documentation is thin, under-coded out of audit caution<\/td>\r\nThe highest-volume E\/M code in Medicare, which also makes it the single most frequently reviewed code for coding errors<\/td>\r\n<\/tr>\r\n
99215 (established patient, high complexity)<\/td>\r\nOver-coded<\/td>\r\nCarries the highest audit risk of any outpatient E\/M code; payers expect it in only a small share of a provider’s total visit mix<\/td>\r\n<\/tr>\r\n
Modifier 25<\/td>\r\nOverused<\/td>\r\nA federal review of E\/M services billed the same day as minor procedures found roughly 4 in 10 same-day claims used modifier 25, and documentation supported the modifier in only a small fraction of the claims sampled<\/td>\r\n<\/tr>\r\n
Modifier 59<\/td>\r\nOverused<\/td>\r\nApplied to unbundle NCCI-edited code pairs without a medically necessary reason for the separate service<\/td>\r\n<\/tr>\r\n
Unspecified ICD-10-CM codes (e.g. M25.9, R10.9)<\/td>\r\nUnder-coded<\/td>\r\nCoders default to the unspecified code when the chart actually supports a laterality- or site-specific code, understating true patient acuity<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n

The pattern across this list is consistent:<\/strong> high-volume, high-reimbursement codes get pulled toward over-coding, while ambiguous or judgment-heavy codes get pulled toward under-coding. A coding audit that only checks one direction will always miss the other half of the revenue story.<\/p>\r\n

What Under-Coding Actually Costs a Facility<\/h2>\r\n

Under-coding is invisible on a denial report because the claim gets paid; it just gets paid less than it should. For a multi-OR facility running a $4M annual collection base, even a 3-4% under-coding gap on high-acuity encounters can mean $120K-$160K in silently forfeited revenue every year.<\/p>\r\n

Multiply that across a PE-backed group with five or six sites, and the number stops being a rounding error and starts being a board-level conversation. Under-coding also distorts Net Collection Ratio and Days in AR benchmarks, making a facility’s true performance look worse than its actual clinical output.<\/p>\r\n

What Over-Coding Actually Costs a Facility<\/h2>\r\n

Over-coding looks like a win on the first remittance, then becomes a liability the moment a MAC, RAC, or OIG auditor pulls the chart. Upcoding is cited among the top five causes of Medicare overpayments<\/a>, with annual recoveries reaching billions, and under the False Claims Act, purposefully submitting incorrect codes can carry civil penalties per claim plus triple damages on top of the original overpayment demand.<\/p>\r\n

Beyond the fine, a facility flagged for a coding pattern deviation typically faces extended prepayment review on every future claim, which slows cash flow across the entire revenue cycle, not just the flagged encounters.<\/p>\r\n

Under-Coding vs Over-Coding: Side-by-Side Comparison<\/h2>\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
Factor<\/strong><\/td>\r\nUnder-Coding<\/strong><\/td>\r\nOver-Coding<\/strong><\/td>\r\n<\/tr>\r\n<\/thead>\r\n
Immediate financial effect<\/td>\r\nClaim paid, but below actual acuity<\/td>\r\nClaim paid at higher (sometimes unjustified) rate<\/td>\r\n<\/tr>\r\n
Audit risk<\/td>\r\nLow, but compounds over time<\/td>\r\nHigh \u2014 a top OIG and payer audit trigger<\/td>\r\n<\/tr>\r\n
Root cause<\/td>\r\nConservative coder judgment, unspecified ICD-10 codes<\/td>\r\nDocumentation gaps, modifier misuse, template overuse<\/td>\r\n<\/tr>\r\n
Revenue pattern<\/td>\r\nSilent, gradual erosion<\/td>\r\nShort-term gain, long-term clawback risk<\/td>\r\n<\/tr>\r\n
Best detection method<\/td>\r\nRetrospective coding audit vs. chart acuity<\/td>\r\nProspective\/pre-bill audit and modifier scrubbing<\/td>\r\n<\/tr>\r\n
Long-term consequence<\/td>\r\nUnderstated NCR, weaker facility valuation<\/td>\r\nRecoupments, prepayment review, FCA exposure<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n

Where Coding Drift Hides by Specialty<\/h2>\r\n

Under-Coding vs Over-Coding does not show up the same way in every department, which is why one facility-wide accuracy number can hide serious problems. Orthopedics and general surgery tend to skew under-coded on multi-procedure cases, since complex bundling rules push coders toward the safer, lower-complexity code when documentation is ambiguous.<\/p>\r\n

Emergency departments and outpatient E\/M visits tend to skew over-coded, since higher-level visit codes are easier to justify on paper even when documented complexity falls short. Specialty-level reporting, not just facility-level reporting, is what actually surfaces where the real risk sits.<\/p>\r\n

How a Revenue Integrity Partner Closes Both Gaps<\/h2>\r\n

The fix for Under-Coding vs Over-Coding is not “code more carefully.” It’s building acuity-matched coding protocols that pull the correct ICD-10 codes and CPT\/E\/M levels directly from documentation, backed by dual-direction audits that check for both missed revenue and overstated claims in the same review cycle.<\/p>\r\n

This is where working with an experienced revenue integrity partner<\/a> changes the outcome: instead of reactive denial firefighting, facilities get continuous coding calibration that protects margin from both directions at once.<\/p>\r\n

General medical billing services that only chase denials will catch over-coding after the fact, but they rarely have the acuity-matched audit process needed to recover the revenue that under-coding leaves on the table.<\/p>\r\n

Building an Internal Defense: Coding Audit Cadence<\/h2>\r\n

Facilities that hold both directions of Under-Coding vs Over-Coding in check typically run quarterly retrospective audits sampling five to ten charts per provider, paired with prospective, pre-bill scrubbing on high-dollar encounters.<\/p>\r\n

Coders need feedback loops, not just error counts, so patterns get corrected in whichever direction they lean. Outsourcing this function to specialized medical coding services<\/a> often speeds up correction cycles, since the audit team isn’t also carrying a live claims queue.<\/p>\r\n

Get a Facility-Specific Coding Risk Review<\/h2>\r\n

If your facility cannot say with confidence which direction its coding risk leans, that is the gap costing you money right now. MBC’s coding audit team<\/a> reviews your last quarter’s high-acuity claims for both under-coding revenue leakage and over-coding audit exposure, then hands your CFO a plain-language report.<\/p>\r\n

You can request a Coding Risk Audit, review our full range of RCM services and pricing options<\/a>, or speak directly with our compliance team at 888-357-3226<\/strong><\/a> or info@medicalbillersandcoders.com<\/strong><\/a><\/p>\r\n

FAQs<\/h2>\r\n\r\n
\r\n
Q1: What is the main difference between under-coding and over-coding?<\/strong><\/strong>\r\n

Under-coding bills a lower-level code than the documentation supports, losing revenue. Over-coding bills a higher-level code than supported, risking denials and audits.<\/p>\r\n<\/div>\r\n

Q2: Does under-coding ever trigger a CMS audit?<\/strong><\/strong>\r\n

Rarely on its own, but a facility-wide pattern of unspecified ICD-10 codes<\/a> can still draw payer attention during routine documentation reviews.<\/p>\r\n<\/div>\r\n

Q3: How often should facilities audit for this kind of coding risk?<\/strong><\/strong>\r\n

Quarterly retrospective audits combined with pre-bill scrubbing on high-dollar claims is the current best practice for 2026.<\/p>\r\n<\/div>\r\n

Q4: Can outsourcing medical billing and coding services reduce this risk?<\/strong><\/strong>\r\n

Yes, when the partner runs dual-direction audits rather than only chasing denials, which catches revenue leakage and audit exposure in the same cycle.<\/p>\r\n<\/div>\r\n

Q5: What penalties apply to intentional over-coding under federal law?<\/strong><\/strong>\r\n

Intentional over-coding can trigger False Claims Act liability, carrying civil penalties per claim in addition to triple the original overpayment amount.<\/p>\r\n<\/div>\r\n<\/div>\r\n","protected":false},"excerpt":{"rendered":"

Under-Coding vs Over-Coding is the single biggest coding decision that determines whether your facility keeps its revenue or hands it to CMS on a silver platter.\u00a0Under-coding happens when a coder assigns a lower-level code than the documentation supports, which quietly erases revenue every single day.\u00a0Over-coding happens when a coder bills a higher-level code than the […]<\/p>\n","protected":false},"author":9,"featured_media":30910,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[6324,121,123,6323,6322,6321],"class_list":["post-30908","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-medical-coding","tag-coding-risk-audit","tag-medical-coding","tag-medical-coding-services","tag-over-coding","tag-under-coding","tag-under-coding-vs-over-coding"],"yoast_head":"\nUnder-Coding vs Over-Coding: How to Avoid Lost Revenue & Audit<\/title>\n<meta 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