Question

A payer practice in which a reported evaluation and management service is reduced to a lower level based strictly on the diagnosis code reported is known as:

Select one:
a. unbundling
b. downcoding
c. upcoding
d. bundling

Answer 1

The practice of reducing an evaluation and management service to a lower level based on the diagnosis code is known as down coding. This is contrasted with upcoding, bundling, and unbundling, all of which are different billing practices in healthcare.

Step-by-step explanation:

The practice described in the student's question, where a reported evaluation and management service is reduced to a lower level based solely on the diagnosis code reported, is known as down coding. Downloading can happen when payers believe that the diagnosis code submitted does not justify the level of service billed by the provider. This is an issue in fee-for-service health financing systems where providers are reimbursed for services based on costs or complexity. Unlike downcoding, upcoding refers to the practice of billing for a higher level of services than was actually provided. Bundling refers to the grouping of related services into a single billing code, while unbundling is the opposite, breaking down a bundled code into separate services for higher reimbursement.

In health maintenance organizations (HMOs), however, the reimbursement system is different. Providers receive a fixed fee for each patient, regardless of the number of services provided, which requires careful allocation of resources. Understanding these billing practices is essential in the efficient management of healthcare services and the prevention of adverse selection in insurance markets.