Consequences Of Incorrect Medical Coding And Billing
 Revenue Cycle Management

Consequences Of Incorrect Medical Coding And Billing

Susan Collins
Susan Collins
November 9, 2022
Last updated on:

November 9, 2022


Read time: 6 mins

The subject of health is very personal. Doctor visits are a sign of a trust not only with the individual but with the establishment facilitating. Ensuring mistakes are not a part of practice in any capacity is of highest importance.

From large scale invoice to smaller scale appointment management, hospitals thrive on organization. While the field of medicine does enjoy consistent demand and revenue generation, poor internal management systems could minimize these benefits. Medical coding errors in particular could cost an organization finances, their reputation and even encourage judicial intervention.

What is Medical Coding and Billing?

  • Medical Coding is the umbrella term describing how services are released and translated into billable invoices.
  • Every service provided corresponds to a unique CPT (Current Procedural Terminology) and HCPCS (Healthcare Common Procedure Coding System) code. This offers a unified system of organization to help categorize services and procedures across all concerned organizations.
  • The standardized system allows all medical insurance providers to understand the services or procedures received and the finances exchanged for the same.
  • Incorrect medical coding could cause a multitude or errors for all stakeholders involved and should be avoided.

Common Medical Coding Errors

1. Inaccurate Documentation of Data and Information

The consequences for incorrect medical coding and billing range from short term issues to long term problems. On a smaller scale, inaccurate information relays cause issues with reimbursements. This could cause significant delays, denials or even fractional payments. The paperwork alone to rectify a mistake in medical coding is vast. The stress and revenue investments could have a strong negative impact on your establishment.

2. Missing Information

Hospitals are high pressure environments. This forces patients, the establishment and, in some cases, insurance providers, to enter erroneous information or miss fields entirely. These missing pieces of information will cause complications going forward.

3. Unlinking Codes

Some procedures normally share a bundling of codes. They are normally interconnected and this helps with categorization and maintaining simplicity. However, if separate codes are attached to each service individually, this is known as unbundling. This method could be employed by organizations to generate higher revenue from the same set of services. When the healthcare provider chooses to outsource medical coding services, they usually send in the medical charts, the diagnoses, and the prescriptions electronically to the medical coder or the medical coding agency they are working with.

4. Upcoding

Upcoding refers to attaching codes for more complicated and expensive procedures to the simple services performed. This is not limited to services or procedures but also testing. The intention of re-coding is to generate higher revenue through inflating prices and is illegal.

5. Under coding

Under coding refers to attaching codes for simple and less expensive procedures to downplay the services rendered to the patient. This is normally done to assist a patient with lower costing or help with avoiding a need for an audit.

6. Duplicate Billings

Entering a bill twice could prove more hectic for the organization than the customer. The entry of this transaction means a payment must be made to the establishment, however current funds will reflect lower and cause issues with balancing financial information.

7. Unverified Modifiers

Pricing structures for medical services are slightly dynamic. If a medical professional is putting in more time and labor into achieving the initially discussed service, they must be compensated accordingly. However this leaves room for tampering. As a result, establishments are required to provide the proper paperwork for cost increases of standardized services to ensure no future issues arise.

What Happens When It Goes Wrong?

The consequences for incorrect medical coding and billing range from short term issues to long term problems. On a smaller scale, inaccurate information relays cause issues with reimbursements. This could cause significant delays, denials or even fractional payments. The paperwork alone to rectify a mistake in medical coding is vast. The stress and revenue investments could have a strong negative impact on your establishment.

Long term or larger scale issues involve claims of fraudulence and misconduct. Incorrect medical practices that cause monetary gain under false pretenses is considered medical fraud. This is punishable by the law. While fines and penalties may not seem as intimidating, the threat of closure becomes imminent.

If there are long standing flaws in the system managing medical coding that have not been addressed, it could affect a large percentage of patients and could be looked at as intentional. Large scale medical malpractice, especially out of negligence, will have large detrimental consequences. Outsourcing medical coding services to Invensis Technologies, a leading Healthcare BPO Services company, will provide you with accurate, high-quality results.

Dealing with patients and incorrect information will eventually lead to judicial intervention. However, if the flaws in the medical coding system are translated down to government claims like medical reimbursements or tax rebates, legal action will happen quickly and swiftly. The lack of verified information could be looked at as an attempt to defraud the government. This could even result in imprisonment.

While large consequences occur after consistent communication of incorrect information, the most common repercussion of bad medical coding management is the rejection of insurance claims. It would be better all round to introduce preventative measures while building your management system to ensure problems are less likely to occur, and when they do, they can be dealt with easily.


Medical coding issues can be a nightmare for all stakeholders involved. Patients could face cost increases or claim rejections. Organizations could face organizational chaos, dips in revenue and worst of all government intervention. There are no positives from medical coding and billing errors. It would be in an organization's best interest to introduce pre-emptive measures.

Invensis is an expert provider of outsourced HIPAA compliant Medical Billing Services. We provide end-to-end medical billing BPO services and act as a mediator between insurance companies and hospitals or healthcare providers.

Introduce methods that offer strong streamlining measures and an easy to use interface. Ensure data can be easily and accurately inputted and systems are in place to remedy any incorrect entry. Additionally methods to review must also be part of the management process. Consistent and frequent revisits to data pools ensure all information is accurate and leaves little room for claims of fraudulent or mismanagement.

Final Thoughts

Medical coding refers to the system of translating services or procedures rendered into billable documentation to be used by any stakeholder. If the information is erroneous, the consequences reflect in both small and large scale issues. These include rejection of insurance claims, internal mismanagement, reputation damage and even jail time.

It would be in the best interest of any establishment to ensure pre-emptive measures are taken. Avoiding the consequences of incorrect medical coding and billing can only be done through comprehensive yet streamlined management systems.

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