Is Upcoding Responsible For Higher Medical Bills In 2023?

by  Find-A-Code™
May 8th, 2023

A recently released Kaiser Family Foundation and Peterson Center on Healthcare study shows that upcoding has been a common practice in healthcare for more than 15 years. It stands to reason that the practice contributes to higher medical bills. Is it responsible for higher bills in 2023? The research seems to indicate as much.

Upcoding is loosely defined as the practice of billing procedures at a higher level in order to charge more. For example, urinary tract infections were coded as level 3 claims at a rate of 54% in emergency departments back in 2004. The level 3 rate had dropped to 31% in 2021. Meanwhile, there was a commensurate increase in level 4 claims for urinary tract infections.

Higher Level Claims In 3 Settings

In order to compile their data, researchers looked at claims made between 2004 and 2021. They were specifically interested in claim complexity trends involving medical coding in emergency departments, urgent care centers, and doctor's offices.

Across all three settings, level 3 claims fell from 60% in 2004 to just 45% in 2021. Likewise, level 4 claims increased from 19% in 2004 to 37% in 2021. Level 5 claims doubled from 3% in 2004 to 6% in 2021.

The numbers are pretty clear. They are also hard to dispute. So now the question is why. Are healthcare providers purposely upcoding in order to increase reimbursements? If not, are changes to the codes or diagnostic and treatment procedures leading to higher intensity claims?

Researchers discovered that higher complexity codes were more frequently used even for conditions that don't tend to get worse over time. That being the case, it would seem that purposeful upcoding is at least partially to blame for higher medical bills. But given the fact that payers consistently try to pay as little as possible, it would make sense that providers would counter by pushing bills as high as they possibly can.

Complexity Is a Matter of Perspective

If upcoding really is the major culprit here, it is made possible by the fact that determining complexity is a matter of perspective. According to the researchers, "complexity is determined by the level of evaluation and management services billed by the provider or hospital." It is partially influenced by the Current Procedural Terminology (CPT) codes. But there is plenty of wiggle room in those codes.

The general rule is that payers reimburse healthcare providers based on visit complexity. The higher the complexity level, the more they pay. Given that our entire healthcare system is built on these various code sets, it would be nearly impossible for a payer to prove intentional upcoding in order to increase reimbursements.

This is not to say that healthcare providers are upcoding intentionally and on a regular basis. But it is possible. Not only that, but the previously mentioned research also seems to suggest a strong possibility.

Medical Codes Are a Complex Beast

To the medical coder or biller just doing her job, upcoding is a non-issue. Medical codes are a complex beast all by themselves, regardless of a healthcare facility's policy toward upcoding. Keeping up with tens of thousands of codes and a myriad of rules is enough to keep any coder or biller occupied for an entire career.

As for healthcare providers, is it possible that the higher bills they generate in 2023 are higher because of upcoding? Yes, however, upcoding is probably not the only root cause. After all, inflation makes everything more expensive. But it is hard to deny the research. Bills have been trending upward for more than 15 years. Upcoding appears to be a contributing factor.