Combat Upcoding Risks with Expert Medical Coding Outsourcing Companies - 3Gen

1. Healthcare Leaders Are Increasingly Concerned About Upcoding. Medical Coding Outsourcing Companies Could Be Your Best Answer. The risks around upcoding have incentivized many healthcare providers to consider medical coding outsourcing companies, and a recent survey proves that these concerns are only getting more severe. Healthcare fraud continues to be a primary concern for healthcare leaders, presenting not only an ethical challenge, but also forcing them to make strategic decisions around their revenue cycle operations to reduce the risk of upcoding and address any potential downstream impacts. Upcoding and the Benefit of Medical Coding Outsourcing Companies Black Book Market Research released a survey just ahead of the 2025 American Health Information Management Association (AHIMA) Conference. The survey questioned health information management professionals around critical medical coding challenges in Q3 of 2024. It revealed multiple controversies in USA medical billing, particularly upcoding and fraud – a full 90% of respondents to the survey identified these two issues as a “major ethical dilemma for staff coders” [1].

2. Upcoding is an issue that impacts multiple stakeholders in healthcare, including patients and clinicians. For example, surgeons at the University of Virginia Hospital say that their administration has been pressuring them to bill in ways that overcharge patients. Surgeons spoke out about some difficult conversations [2]. “The message was, ‘You guys don’t bill enough, and there’s clear evidence that you could be billing more because this other group bills a ton. They bill double what you guys are billing…For us to bill more would be fraud, because we’re already billing more than we think we should’.” This situation highlights the benefits of medical coding consulting and medical coding outsourcing companies – having external input to fill gaps in knowledge and awareness. Understanding the Source of Upcoding Not all upcoding is the same. This type of medical coding error falls under two categories of abuse and fraud. Upcoding fraud is intentional, often for the financial benefit of the provider or an individual. Abuse is an unintentional mistake, but still a grave issue for the healthcare revenue cycle. This form of upcoding is often a case of someone billing for a service that is more complex than what was actually performed and can be traced back to a misunderstanding of how the coding system works. The root cause can go back to training or a misunderstanding of legality. Identifying Upcoding in Your Revenue Cycle Upcoding is often discovered through whistleblowers (like the surgeons at the University of Virginia Hospital) or through medical coding audits, one of the services we offer at 3Gen Consulting. One of the key benefits of conducting regular medical coding audits through medical coding consulting vendors is uncovering upcoding issues and risks before they become a legal issue. Upcoding Risk Exists in Multiple Areas The Black Book survey revealed multiple areas of coding challenges and complexity that could potentially contribute to upcoding risk. ICD-11 Means Increased Coding Complexity The coming ICD-11 coding system presents new levels of complexity for all providers, including in home health coding, hospital billing, and physician billing services. It will feature about 17,000 unique codes and over 120,000 codable terms [3]. The survey found that 80% of respondents reported anxiety over training and the risk of increased coding errors. But still, only 11% of provider organizations have increased preparations, even while 87% are worried about readiness. Value-Based Care Coding Prompts Questions Value-based care has left 64% of survey respondents with questions around just how adaptable their current coding practices are. This system requires proper documentation and 29% of the providers

3. responding to the survey reported being challenged by aligning systems with this new model of reimbursement of billing and coding. Bundling is Controversial Bundling services was a key concern for survey respondents, with 55% stating a belief that bundling under a single code actually underestimates the true scope of care. The answer, unbundling, often maximizes reimbursements but also increases the risk of being accused of fraudulent medical billing practices. AI Might Not Be Accurate While artificial intelligence is touted by many as an ideal solution for coding, there is valid concern about its accuracy. A full 94% of survey respondents said they were worried about the nuance and accuracy of AI-generated codes, with 97% fearing the loss of human oversight. 77% also related concerns over the potential of AI to perpetuate biases in access to healthcare and medical billing and coding. Audits Are a Pressing Issue The survey also revealed many respondents questioning the fairness of medical coding audits, largely due to the complexity of the coding system. 85% of providers said that discrepancies identified during medical coding audits often lead to denials or demands for repayment. Addressing Upcoding in 2025 and Beyond As medical billing and coding in healthcare become more complex, revenue cycle leaders should know that this trend will only continue. Adapting and adjusting to these changes will require a proactive approach, and one that considers the position of medical coding outsourcing companies and medical coding consulting. Leaders will also need to rethink their strategic use of tactics like third-party audits to identify root cause issues of upcoding and keep their revenue cycle functions at the highest level possible. We specialize in providing expert third-party support at 3Gen Consulting and invite you to start a conversation about your options with us today. References [1] Black Book Research, "Medical Coding & HIM Industry Faces Mounting Challenges, According to Black Book's Latest Poll Ahead of AHIMA 2024 Conference," 18 October 2024. Available: https://www.newswire.com/news/medical-coding-him-industry-faces-mounting-challenges-accordin g-to-22444692. [2] E. Hemphill, "UVa surgeons detail 'upcoding' they say allowed health system to fraudulently bill patients," The Daily Progress https://dailyprogress.com/news/local/business/health-care/uva-surgeons-detail-upcoding-they-say- , 17 October 2024. Available:

4. allowed-health-system-to-fraudulently-bill-patients/article_192f0aa2-8b20-11ef-af72-2ba2dd7bf174.allowed-health-system-to-fraudulently-bill-patients/article_192f0aa2-8b20-11ef-af72-2ba2dd7bf174. html. [3] World https://www.who.int/news/item/11-02-2022-icd-11-2022-release. Health Organization, "ICD-11 2022 release," 11 February 2022. Available: Original Source - https://www.3genconsulting.com/healthcare-leaders-are-increasingly-concerned-about-upcoding-m edical-coding-outsourcing-companies-could-be-your-best-answer/