As profit margins continue to shrink, accurate coding has become more important than ever to practices’ financial viability. You can’t afford not to closely monitor your group’s coding performance, particularly where office visit codes are concerned. Many practices hire outside consultants to do the job, but there is an easy way for practices to analyze their own coding patterns.

The first step is to obtain what is generally referred to as a CPT Productivity Report or CPT Utilization Report for each doctor in the group. Most medical billing software programs are set up to generate this type of report, which provides utilization information by CPT code for all of the evaluation and management (E/M) codes. This report should reflect at least 12 months of production.

The next step is to prepare a spreadsheet like the one below. This will enable you to easily compare physicians’ coding frequencies with one another and with national benchmarks, such as those published by the Centers for Medicare & Medicare Services that are incorporated in our spreadsheet. (You can download a working copy of the spreadsheet below for use in your own practice.)

To use the spreadsheet, simply enter each physician’s name and the number of times he or she has billed each office visit code during the period you’re analyzing. The spreadsheet will calculate the frequency percentages for you. By reading across the rows, you’ll be able to make easy comparisons. Look for evidence of the following problems:

Using a limited number of levels of service

It is quite common to find during this analysis that certain family physicians tend to favor one particular office visit code. If this results in a utilization pattern that is markedly different from other physicians, it could trigger an audit or review of the medical practice by a governmental agency or another third party. In these instances, it is critical that the chart documentation supports the billing of these codes. It may also be a good indication that the physician is upcoding or downcoding, both of which can be costly.

Upcoding

In my experience, physicians upcode because they are not sufficiently educated about coding or because the charge ticket is inadequate (e.g., some codes are missing).

Though I have very seldom found it to be the case, upcoding is sometimes intentional. A physician may be upset about the amount of reimbursement that payers provide and decide to game the system to make up the difference. In such cases, a third-party audit could result in significant penalties and repayments.

Family practices cannot and should not tolerate upcoding. If you think a physician in your practice is upcoding, you may want to consider engaging an independent third party to conduct a chart review to confirm or rule out your suspicions.

Downcoding

Downcoding is common among family physicians. They may downcode because they fear a third-party audit or because they are not educated about coding. Downcoding is particularly pervasive in small communities where many people have lower incomes and physicians are particularly concerned about their ability to pay. Physicians also downcode because they know they have done a poor job of documentation. Rather than make the effort to learn how to accurately document their services, they simply select a lower code hoping that this will cover them in case of an audit.

Downcoding results in lost revenues and, if pervasive, can seriously threaten a practice’s profitability. It will also hurt the practice should it ever move into capitation, since capitation rates are usually based on prior utilization.

Analysis

The spreadsheet accompanying this article compares coding patterns for three physicians who perform similar services at ABC Family Practice Clinic. A close look suggests the practice needs to determine the following:

• Why is Dr. A recording so many Level-II visits (54 percent of his new patient visits and 70 percent of his established patient visits)? Is he down-coding? If so, why? Or are the other doctors upcoding?

• Are Drs. B and C using Level-III codes more often than they should? Does the documentation in these medical records support billing this level of service?

Answers to these questions will ascertain if the practice is in coding compliance and might also improve revenues. In today’s ruthless reimbursement environment, such attention to coding performance is critical to success.