Upcoding vs Downcoding: What's the difference?

Upcoding vs Downcoding: What’s the difference?

Medical billing is the process of submitting and following up on claims with health insurance companies to receive payment for medical services rendered. This process can be complicated and one issue that arises is the potential for upcoding and downcoding. Both issues involve assigning an incorrect billing code to medical procedures that can result in either overbilling or underbilling. 

These types of errors can harm the integrity of hospitals and can break the trust of patients. 

What is Upcoding? 

What is Upcoding? 

Upcoding is a fraudulent medical billing process in which the use of a billing code indicates a higher level of service than was provided to the patient. It will result in higher reimbursement rates from insurance companies. It can be intentional, to increase revenues for the hospital, or can be unintentional, due to some misunderstanding or lack of understanding of the coding system or documentation requirements.

For example, a healthcare provider may use a billing code for complex office visits when the actual visit was relatively routine. In this case, the provider may do this to increase revenue, even though the service provided did not warrant a higher billing code. This is intentional upcoding and it is considered fraudulent because the provider is billing for a service that was never provided.

It is a serious issue in the healthcare industry because it can lead to complications like overbilling, which will ultimately increase the price of Healthcare facilities. If patients get to know about it they will start losing trust from Health care providers. 

To prevent this, healthcare providers must ensure that they are completely documenting the service provided to the patient and they should cross-check it again. They should make sure that they are choosing the right code for billing. All regulations and guidelines regarding billing should be followed.

What is Downcoding? 

What is Downcoding? 

Another fraudulent medical billing technique is downcoding, which entails utilizing a billing code that denotes a lower level of care than was actually rendered to the patient. As a result, the insurance provider will offer a lesser reimbursement percentage. It may happen on purpose or accidentally.

For instance, when a healthcare professional bills a patient for a standard office visit even though the visit itself was more involved. The reason the supplier may have done this is that they either failed to note the visit’s increased complexity in their documentation or did not offer enough information to support a higher code. Because the provider is invoicing for a service that was misrepresented, in this case, the provider is regarded as fraudulent.

Downcoding may lead to underbilling, which may not only reduce the healthcare provider’s income but also lower the standard of treatment given to the patient. Healthcare providers may offer less comprehensive care or compromise on service if they are not paid fairly for the services they are rendering. 

Before selecting a code, healthcare providers must double-check everything to avoid this. They must ensure that everything is done as instructed.

Upcoding vs Downcoding

Upcoding vs Downcoding

Here is a table to differentiate between upcoding and downcoding: 

Upcoding Downcoding
Using a billing code that indicates a higher level of service than was provided Using a billing code that indicates a lower level of service than was provided
Results in higher reimbursement rate from the insurance company Results in lower reimbursement rate from the insurance company
Can be intentional or unintentional Can be intentional or unintentional
Often involves using a more complex billing code for a less complex service Often involves using a less complex billing code for a more complex service
Considered fraudulent because the provider is billing for a service that was not provided Considered fraudulent because the provider is billing for a service that was not accurately represented
This leads to overbilling which ultimately increases the cost of Healthcare for everyone This leads to underbilling which may harm the Healthcare providers’ revenue and undermine the quality of Healthcare provided to the patients
Healthcare providers must ensure that they are accurately documenting the service provided and selecting the appropriate billing code to prevent upcoding Healthcare providers must ensure that they accurately document the service provided and select the appropriate billing code to prevent downcoding

What are the possible errors which can lead to upcoding and downcoding? 

Both intentional and unintentional errors that can result in upcoding and downcoding are possible. Among the frequent mistakes are:

  • Lack of documentation: It is likely that service providers did not adequately describe every service they provide to support the use of a higher or lower billing code.
  • Lack of understanding: sometimes providers may not fully understand the coding system which can lead to unintentional errors in billing.
  • Pressure to increase revenue: sometimes providers may intentionally use a higher code to increase revenue. 
  • Inaccurate coding: unintentionally the provider may select the wrong code by mistake which will lead to incorrect billing.
  • Failure to follow regulation: providers may fail to follow regulations and guidelines set forth by Medicare and Medicaid, leading to inaccurate billing. 


In conclusion, billing practices including upcoding and downcoding might lead to inaccurate reimbursement rates for medical services. Downcoding entails using a lower-level code to earn a greater reimbursement rate, and upcoding entails using a higher-level code to accomplish so. Both actions are regarded as dishonest and may have severe repercussions for healthcare professionals. Healthcare providers must make sure they are appropriately documenting the services delivered and choosing the correct billing code in order to avoid upcoding and downcoding.