Medical billing is the backbone of any healthcare practice’s revenue cycle. Yet many providers leave significant money on the table by underbilling Current Procedural Terminology (CPT) codes. Understanding why CPTs get underbilled is essential for maintaining financial health and ensuring your practice receives proper reimbursement for services rendered.
What Are CPT Codes and Why Do They Matter?
CPT codes are five-digit numeric codes developed by the American Medical Association (AMA) that describe medical, surgical, and diagnostic services. These codes communicate to insurance companies what procedures and services were performed during a patient visit. Proper CPT coding directly impacts your practice’s revenue, making accurate billing crucial for financial sustainability.
The Hidden Cost of Underbilling
Before exploring why CPTs get underbilled, it’s important to understand the financial impact. Studies show that healthcare providers lose billions of dollars annually due to coding errors and underbilling. Even small mistakes, when multiplied across hundreds of patient encounters, can result in substantial revenue loss that affects your ability to invest in staff, equipment, and patient care improvements.
Common Reasons Why CPTs Get Underbilled
1. Lack of Documentation
One of the primary reasons why CPTs get underbilled is insufficient or incomplete documentation. Providers often perform services that justify higher-level codes but fail to document the complexity of care adequately. According to the Centers for Medicare & Medicaid Services (CMS), documentation must support the level of service billed. Without detailed notes describing the medical decision-making process, examination complexity, and time spent, coders must default to lower-level codes.
2. Inadequate Coding Training
Medical coding is complex and constantly evolving. Staff members without proper training may not understand the nuances of CPT code selection. They might choose familiar, safe codes rather than the most accurate ones. The American Academy of Professional Coders emphasizes that ongoing education is essential for maintaining coding accuracy and maximizing reimbursement.
3. Fear of Audits
Many providers underbill intentionally due to fear of audits and accusations of upcoding. This conservative approach, while well-intentioned, results in lost revenue. It’s important to understand that accurate coding based on proper documentation is not upcoding. Billing for services actually provided and documented is both ethical and appropriate.
4. Time Constraints
In busy practices, providers and coders face significant time pressure. When rushed, staff may default to lower-level codes rather than taking time to review documentation thoroughly and select the most appropriate code. This hurried approach becomes a costly habit that affects the practice’s bottom line over time.
5. Failure to Capture All Billable Services
Another reason why CPTs get underbilled is the failure to bill for all services provided. Providers may perform additional procedures, prolonged services, or counseling that warrant separate billing but forget to document or code them. This is particularly common with add-on codes and modifiers that could increase reimbursement.
6. Outdated Coding Practices
CPT codes change annually, with new codes added and others deleted or revised. Practices that don’t stay current with these updates may use outdated codes or miss opportunities to bill for newly recognized services. The AMA releases CPT code updates each year, and staying informed about these changes is critical.
7. Misunderstanding of Evaluation and Management (E/M) Guidelines
The complexity of E/M coding guidelines contributes significantly to underbilling in CPTs. Many providers don’t fully understand the 2021 E/M guideline changes that allow for medical decision-making or time-based coding. These updates often permit higher-level coding than many providers realize, yet underbilling persists due to a lack of knowledge about the new rules.
How to Fix CPT Underbilling
Improve Documentation Practices
The foundation of proper billing is thorough documentation. Providers should document all aspects of patient encounters, including:
- Chief complaint and history of present illness
- Review of systems and past medical history
- Physical examination findings with specific details
- Medical decision-making complexity, including differential diagnoses and risk assessment
- Time spent when relevant for time-based coding
- All procedures performed, no matter how minor
Consider using documentation templates that prompt providers to capture all necessary information. However, ensure these templates don’t lead to cloning or copy-paste practices that could trigger audit flags.
Invest in Coding Education
Regular training for both providers and coding staff is essential. This includes:
- Annual CPT and ICD-10 update training
- Specialty-specific coding workshops
- E/M guideline education focusing on 2021 and subsequent changes
- Modifier usage and add-on code identification
- Documentation improvement training for providers
The American Health Information Management Association (AHIMA) and AAPC offer excellent resources and certification programs that can enhance your team’s coding expertise.
Conduct Regular Coding Audits
Internal audits help identify patterns of underbilling and areas needing improvement. Review a sample of charts regularly to ensure:
- Code selection matches documentation
- All billable services are captured
- Documentation supports the level of service billed
- Modifiers are used appropriately
Consider engaging external auditors periodically for unbiased assessments and fresh perspectives on your coding practices.
Implement Technology Solutions
Modern electronic health record (EHR) systems and coding software can help prevent underbilling through:
- Real-time coding suggestions based on documentation
- Built-in compliance checks
- Alerts for missing documentation elements
- Automated code scrubbing to identify potential errors
According to the Office of the National Coordinator for Health Information Technology, well-implemented EHR systems can improve coding accuracy and reduce revenue loss.
Create a Coding-Friendly Culture
Address the fear of audits by creating a culture that values accurate coding over conservative underbilling. Educate your team that:
- Proper coding based on solid documentation is appropriate and ethical
- Underbilling is as problematic as overbilling
- Compliance means accurate billing, not necessarily lower billing
Establish Clear Communication Channels
Create systems for coders to easily communicate with providers when documentation is unclear or incomplete. Quick clarifications can mean the difference between underbilling and appropriate reimbursement. Consider:
- Regular coding meetings to discuss challenging cases
- Query templates for requesting additional documentation
- Provider feedback sessions on coding patterns
Monitor Key Performance Indicators
Track metrics that reveal underbilling patterns:
- Average revenue per visit by provider and specialty
- Distribution of E/M codes compared to national benchmarks
- Percentage of charts requiring queries
- Add-on code utilization rates
Comparing your practice’s coding patterns to specialty benchmarks can reveal opportunities for improvement.
Stay Current with Payer Policies
Different insurance companies may have varying requirements for documentation and coding. Regularly review payer policies and local coverage determinations to ensure you’re meeting all requirements for reimbursement. The CMS website provides extensive resources on Medicare billing requirements that often serve as industry standards.
The Bottom Line
Understanding why CPTs get underbilled is the first step toward fixing the problem. The solution requires a multi-faceted approach involving improved documentation, ongoing education, appropriate technology, and a culture that values accurate coding. By addressing these issues systematically, your practice can capture the revenue it deserves while maintaining compliance and ethical billing practices.
Proper CPT billing isn’t just about maximizing revenue. It’s about ensuring fair compensation for the valuable services you provide to patients. When you bill accurately based on thorough documentation, you create a sustainable practice that can continue delivering quality care for years to come.
Take action today by evaluating your current coding practices, identifying underbilling areas, and implementing the strategies outlined above. The financial health of your practice depends on it.
FAQs
What is the main reason why CPTs get underbilled?
The main reason is insufficient documentation that doesn’t adequately capture the complexity of services provided, forcing coders to select lower-level codes.
Is underbilling CPT codes illegal, or is it just a lost-revenue issue?
Underbilling isn’t illegal, but it represents lost revenue and can be considered a compliance issue because it doesn’t accurately reflect the services provided.
How often should we audit our coding practices to prevent underbilling?
Conduct internal coding audits at least quarterly, with annual external audits recommended for comprehensive assessment and compliance verification.
Can updating our EHR system really help reduce CPT underbilling?
Yes, modern EHR systems with built-in coding suggestions, compliance checks, and documentation prompts can significantly improve coding accuracy and reduce underbilling.