News Release

The High Cost of Upcoding Outpatient Visits


The Peterson-Kaiser Family Foundations Health System Tracker recently found that over 18 years, claims for outpatient visits to physician offices, urgent care centers, and emergency departments trended towards higher level codes—even among specific, common diagnoses like urinary tract infections and headaches. The trend indicates that providers may be inappropriately billing for more complex, more expensive services, ie. “upcoding,” which contributes to higher outpatient medical spending. In 2021, outpatient spending was 4 percent higher in physician offices and emergency departments than the visits would have been if they were billed at 2011 levels.

    Adler is the associate director of the USC-Brooking Schaeffer Initiative for Health Policy. 

Adler told the Institute for Public Accuracy: “Patients and consumers pay directly for these higher healthcare costs. They pay for it through cost-sharing as a percentage of the price of procedures, because higher severity codes cost more money. These costs are also passed through to premiums. Most Americans are on employer plans, and the [costs] get passed to employees in the form of lower wages.” 

Going forward, Adler said that the Department of Justice can be more aggressive in identifying fraud and seeking penalties for Medicare upcoding. It’s more difficult to regulate commercial insurers. “We do have evidence that when some of these big ER staffing companies take over, they code more intensely,” said Adler, “and the same services get billed at a higher severity level. But [the companies] would argue that they’re coding correctly.” Lawmakers could try to limit the ability of parent companies to do chart reviews, which tend to persuade providers to upcode, and enact broader antitrust policies that can rein in larger, private-equity backed providers. The No Surprises Act also addresses the issue by creating an external process to dispute codes.