Study shows higher upcoding rates in outpatient settings

Upcoding is becoming a more common practice across all outpatient settings, according to a recent Trilliant Health report.

Outpatient facilities can bill for evaluation and management (E/M) services by using a range of Current Procedural Terminology (CPT®) codes that reflect the time spent, medical decision-making, and other factors that impact the complexity of the visit. Trilliant Health analyzed a sample of E/M claims billed at the following facilities:

• Emergency departments (ED) (CPT codes 99281–99285)
• Urgent care centers (CPT codes 99202–99205)
• Primary care/physician offices (CPT codes 99211–99215)

The data revealed a trend toward higher acuity procedure codes across all care settings. In the ED setting, the share of visits billed with CPT code 99284 grew from 32.5% in 2018 to 39.6% in 2023. Urgent care centers displayed a 6.6% increase in their use of higher acuity codes such as CPT code 99204, as well as a 6.6% decrease in their use of lower acuity codes such as CPT code 99202. In the physician office setting, the use of CPT code 99214 increased from 38.5% of volume to 45.0%.

Researchers also determined that the share of visits billed with high-acuity CPT codes increased across all diagnosis chapters for all three settings. The largest observed increase in the ED was linked to diseases of the eye and adnexa, jumping from 28.1% in 2018 to 46.7% in 2023. Urgent care centers experienced an 18.9% increase in high-acuity coding for diseases of the blood and immune disorders, and physician offices showed a 12.5% increase for mental and behavioral health claims.

The report also included high-acuity coding data on the most commonly treated diagnoses in the ED setting. Within the study timeframe, the largest increases were observed for rashes and other non-specific skin eruptions (19.7%), enlarged lymph nodes (15.9%), and hemorrhage not elsewhere classified (14.9%).

Researchers have already identified and raised concerns over the increasing rates of upcoding in the outpatient setting, but this recent report reinforces the need to re-evaluate current reimbursement models.

“The way in which this trend impacts nearly every diagnosis category suggests that it is not isolated to specific clinical areas but instead reflects a broader evolution in healthcare delivery and administration,” according to the report.

While the researchers attributed some of the coding behavior changes to patient acuity, it acknowledged the impact of certain systemic incentives, such as the following:

• Documentation templates that encourage more detailed coding
• Revenue cycle strategies designed to optimize reimbursement
• Increased familiarity with the nuances of E/M billing guidelines

In response to the upcoding trend in the outpatient setting, payers are becoming stricter in their claims review processes, deploying algorithms to identify questionable bills, and introducing additional prior authorization requirements, according to the report. With additional scrutiny on these claims, revenue integrity professionals must ensure their organization is coding visits at the correct complexity level. Review E/M claim guidelines and conduct internal audits to identify inappropriate coding and billing practices.

Editor’s note: Find more NAHRI coverage on E/M coding here.