The Lifeblood of Your Practice

March 1, 2003

An interview with Curt Udell on billing and coding

Q: Most physicians perceive coding as just another hoop to jump through. How do you respond to that?

A: I have to agree; coding is tedious at best. It is another hoop to jump through. To that, I'd say you can go across the pond if you want to be a socialized physician. They don't have to code over in England.

But the reality is that coding is the lifeblood of practices. If physicians don't code effectively, they're not going to be profitable. And if they're not profitable, they're not going to have their doors open for very long. In the marketplace where I am, in Washington, D.C., physicians come to us when they haven't taken a paycheck for a month or two because the money's not coming in. Part of that is because of [poor] coding data quality.

Q: Why can't physicians leave coding to someone else?

A: Think of the medical record as the ultimate billing document. Because physicians are responsible for that, they are such an integral part, they are the start and the finish for coding outcomes. Coding provides a wealth of data for managing their practices. And if they don't focus on data quality, why should their staff? Why should the front-office person put in the right Social Security number? Why should they set up the patient with the right primary and secondary insurance? All of practice management, all of billing, is about data quality, and coding is part of that.

Coding also provides data for cost management. This is really important now because so many physicians have lost their shirts in capitation agreements because they didn't have any data for cost. Cost can be derived from your financial statements and now thru RBRVS [resource-based relative value scale]. So regardless of the system you're in - managed care, fee-for-service, self-pay - coding drives the lifeblood of your practice: profitability. And the green carrot is what everybody's after.

Q:What are some steps physicians can take to improve their coding processes?

A:One of the first things is benchmarking. No one likes to be compared to others, but benchmarking is very beneficial because it gives you a fairly objective view of how you stand relative to your peer group. This might mean looking at CPT utilization, ranking the top ICD-9 codes you're using from highest to lowest frequency - looking at those numbers is an eye-opener.

Second is self-auditing. Now, physicians are very reluctant to have their charts looked at. But audits are being done by the managed-care companies, and physicians had better be doing the same things. Managed care and Medicare are doing profiling using the benchmarks as well. So you need to be using the same data and the same processes they are, to make sure you're accurately coding and that you don't have any bombs lying in wait in your charts.

Lastly, too many physicians are using the 1997 Evaluation and Management Documentation Guidelines. Most physicians should be using the 1995 guidelines.

Q: What's the difference between the 1995 and 1997 guidelines?

A: Under 1995 examination requirements, they just listed the organ system. They didn't itemize all the things you had to look at within those systems. In 1997, the government came out with a revised E&M coding guideline, and for about 10 specialties they defined specialty-specific exams. If you were in ophthalmology, for example, you had to look at eight or nine areas within the eye. There were some exam elements you had to look at, some you had an option. It was very complex. In a sense, it was cookbook medicine. Actually physicians used it to their advantage, and the coding went up.

Then in 2000, HCFA [now CMS] released a draft set of guidelines saying, "We made a mistake in 1997, we're going back to the 1995 rules." And a lot of physicians aren't aware of that; they're knocking themselves out, documenting things that may not be necessary.

When Medicare does an audit of a physician, because there are two sets of guidelines out there, they have to audit using both. Whichever gives the physician the highest code is what they have to go for. Typically, the 1995s would afford them greater leeway in upcoding.

Q: How common is it for physicians to undercode, despite the fact that they can lose substantial amounts of money?

A: Because we are all creatures of habit, and physicians are no different, we gravitate to things we feel comfortable with. I constantly go into practices - primary-care, surgical, internal medicine - and see level 3s being overcoded and level 4s and 5s being undercoded. I see much more undercoding than overcoding - I call it "coding coercion." Physicians are being beat down, they get it from all sides: "You better be careful about your coding."

Q: How much are practices losing to undercoding?

A: The typical error rate is 11 or 12 percent - that's 12 percent of net revenue. I just visited a pediatric practice that was losing close to 40 percent. They could stand to gain another $225,000 next year. They're treating two acute chronic illnesses - otitis media and pharyngitis, or otitis media and strep, giving a prescription, and coding level 3. When you give a prescription, that's moderate complexity; that's level 4. So they cheat themselves.

Even 5 percent in undercoding can be a difference of $20,000 to $100,000, depending on the practice. A certain level of charitableness has a lot to do with it: "I don't want this patient to go out with more than a $50 or $60 bill." In a sense, billing is counter to the whole development of the physician-patient relationship.

Q: How can physicians build a better foundation of knowledge about coding?

A: They just have to have education. Physicians are a very educated lot, but very few of them have had any coding education. They've pretty much been thrown to the dogs. If they're younger physicians, they learned from someone else, maybe an attending physician who may not have [had] a good handle on coding, and they tend to gravitate to two or three codes. So there is a lot of "gut" coding, a lot of inference coding, and a lot of altruistic, or charitable, coding. It's that "coding coercion" from Medicare and other payers that's putting the fear of God into them ... thinking, "I don't want to risk a level 5." It's because they aren't comfortable with the documentation requirements and how to justify it.

Q: Can you give an example of how a higher level might be justified?

A: There are so many omissions when we talk to the doctor about how much time they spent counseling the patient, the face-to-face time. Physicians still don't know how to use time to code their services. That is a big issue with primary-care, OB, and pediatrics. In a case where they may have done a very brief history and looked at only one organ system, which would typically be a level 3 established patient visit, they end up spending 25 minutes with the patient counseling them on compliance or prognosis. If you do that, it should be at least a level 4.

Q: How much time should physicians devote to keeping up with coding?

A: If you have the proper people in your practice who can organize the data, copy the CPT book for the changes, provide you some education, it probably would be less than five or 10 hours a year. It isn't that difficult.

I'm not trying to turn physicians into certified professional coders, but I want them to feel comfortable with all the available codes based on the scenarios in which they treat patients. They can get help, from the front office being able to collect information properly, to keying the data right, having the superbill filled out properly, and providing education for the clinical staff to provide checks and balances on the completion of the superbill.

Q: What else can be done within the practice?

A: In many cases, practices are using formatted medical records that really don't help them. There are a lot of pharmaceutical "gimmes," or freebies. They're very colorful and nicely organized, but in a lot of ways they pigeonhole the documentation. They put too much reliance on these forms.

Practices also don't look at denials. The patient accounts and the billing people are typically the only staff members who see denials, the bundling, and the appeals that go on. That information does not get translated back to the physician to show them how their documentation impacts A/R or denials. The only way you can focus on reducing denials is to be aware of why they happen in the first place.

Also, it's important to educate patients. Practices don't do enough to let patients know just how many hoops they do have to jump through to get paid. Most patients don't understand that you're not getting paid what your charges and your costs are.
If physicians would do just some of the things we've talked about - the benchmarking, the audits - problems would become self-evident and can be corrected with minimal effort. By changing their forms, doing some education, they can increase their revenue by 10, 15, sometimes even 20 percent.

Curt Udell is a senior advisor with Health Care Advisors, Inc., a physician reimbursement, compliance, and practice management firm in Northern Virginia. He can be reached at or via

This article originally appeared in the March 2003 issue of Physicians Practice.