Under-coding in the emergency department is a quiet problem. It does not trigger a denial or generate an OIG notice. It just pays less, every single visit.
High-acuity ER visits are the most financially sensitive encounters in emergency medicine. Billing a complex critical care patient at Level 3 instead of Level 5 can cost more than $150 per claim. Add the number of patients per day, and the loss becomes hundreds of thousands of dollars per provider group, per year.
This article explains exactly what under-coding costs, why it happens, and what emergency practices must do to recover every dollar their documentation already supports.
How Much Revenue Does Under-Coding Actually Cost?
When a Level 4 emergency department visit is coded as a Level 3 visit , the provider gets paid less. A single coding mistake can reduce reimbursement by $40–$75 per claim. The total loss can add up quickly over time.
ACEP documents the math directly: a properly documented Level 4 visit coded down to Level 3 loses nearly half the total RVUs for that encounter. RVUs are the foundation of physician reimbursement. Lose RVUs, lose revenue.
The Congressional adjusted 2025 Medicare Physician Fee Schedule conversion factor is $32.35. The final CMS rule increases the conversion factor slightly for the 2026 rate period. Even at present levels, systematic under-coding is a significant loss of life per claim.
| REVENUE IMPACT PER CLAIM: UNDER-CODING SCENARIOS | ||
| Actual Level | Billed Level | Estimated Revenue Loss Per Claim (Medicare) |
| 99285 → 99284 | Level 5 coded as Level 4 | ~$45–$65 per claim (professional fee gap) |
| 99285 → 99283 | Level 5 coded as Level 3 | ~$110–$150 per claim (professional fee gap) |
| 99284 → 99283 | Level 4 coded as Level 3 | ~$40–$75 per claim (approx. half RVUs lost) |
| 99291 → 99285 | Critical care coded as Level 5 | ~$75–$100+ per claim (missed critical care differential) |
| 99292 missed | Add-on critical care not billed | ~$35–$55 per missed add-on unit |
These figures represent professional fees only.The facility-side coding gap is similar to the professional-side gap in the case of high acuity ER encounters.
Given that the ED sees 40,000 patients per year, 1,200 claims will be under-coded if only 3% of all claims are under-coded. At $60 average loss per claim: $72,000 in lost professional revenue, per year, per practice, at conservative estimates.
| $75,000+ | Annual professional revenue loss from missing critical care documentation in an ED with 50,000 annual visits, even at just 2% missed critical care encounters. |
Why Does Under-Coding Happen in High-Acuity ER Visits?
Under-coding in high-acuity ER visits happens for five predictable reasons: documentation habits formed before current MDM guidelines, physician underestimation of encounter complexity, fear of audit exposure, EHR template limitations, and incomplete critical care time documentation.
1. Physicians Are Documenting the Outcome, Not the Work
A patient presents with chest pain. Work up is extensive, Labs, imaging, ECG, cardiology consult consideration, risk stratification. The diagnosis in the end is musculoskeletal pain. The doctor is pleased with the benign diagnosis, and writes a moderate complexity note.
That is a coding error. E/M level selection must reflect the complexity of what the physician was evaluating and managing, not the final diagnosis. A chest pain workup with high-risk features is a Level 4 or Level 5 encounter regardless of what the diagnosis turned out to be.
2. Fear of Audit Exposure Causes Defensive Under-Coding
Physicians who are aware of upcoding risk sometimes over-correct. They habitually bill Level 3 for every encounter to avoid scrutiny. This pattern is called defensive under-coding. It is effective at avoiding audits but it guarantees revenue loss on every high-acuity visit.
The irony: consistent, heavily skewed Level 3 billing is itself a compliance flag. It suggests the practice is not coding to the complexity of its patient population, which creates different audit risks.
3. Critical Care Time Is Poorly Documented
Critical care codes 99291 and 99292 require documented time. Physicians who deliver critical care but fail to record their total time, or who record start time without stop time, cannot support critical care billing. The claim defaults to a standard E/M level.
Missing that documentation means the physician billed $100–$150 less than the encounter justified. When this pattern repeats across every shift, the annual loss from critical care under-billing alone can exceed $75,000 per physician.
4. EHR Templates Default to Conservative Code Levels
Many emergency department EHR templates are built around older documentation standards. They do not automatically capture all three MDM components, number/complexity of problems, data reviewed, risk of complications, in a way that supports high-level coding.
Providers who rely on default EHR templates without reviewing MDM outputs are systematically under-documenting, and under-billing, on every complex visit.
5. New and Resident Physicians Under-Code Systemically
ACEP and EMRA both document a consistent pattern: resident physicians and new attendings under-code because they are unfamiliar with how current MDM guidelines map to CPT levels. They document accurately but incompletely. They do not include the exact wording, abnormal lab tests, diagnostic uncertainty, risk stratification decisions, etc. that would code at a higher level.
The majority of these gaps are filled in 20 minutes of training per quarter, with a targeted educational intervention.
Which High-Acuity Encounters Are Most Commonly Under-Coded?
The five least coded encounter types in emergency medicine are: sepsis presentation, altered mental status evaluation, high-acuity polytrauma, critical care, and chest pain workups. Both require significant MDM complexity which is commonly under-documented by providers.
| HIGH-ACUITY ENCOUNTERS MOST VULNERABLE TO UNDER-CODING | |
| Encounter Type | Why It Gets Under-Coded |
| Critical care, sepsis, respiratory failure, shock | Physician forgets to document total critical care time; adds procedures but never records the time separately |
| Chest pain with high-risk features | Benign final diagnosis leads provider to under-document workup complexity; MDM was Level 4–5, note reads Level 3 |
| Altered mental status / neuro emergencies | Multiple diagnoses and extensive data review not captured in note; risk stratification underdocumented |
| Polytrauma / multi-system injury | Complexity of simultaneous decision-making not reflected; chart records findings without documenting the decision process |
| Acute decompensated heart failure | Chronic condition leads coder to default to lower acuity; exacerbation with systemic risk often justifies Level 5 |
| Drug overdose / toxicology | Clinical complexity of multi-agent exposures and monitoring decisions not documented to support critical care or high E/M level |
| Pediatric high-acuity visits | Providers apply adult documentation patterns; pediatric acuity modifiers and weight-based risk not captured |
Each of these encounter types regularly supports Level 4 or Level 5 billing, or critical care coding, when documentation is complete. The clinical work is being performed. The revenue is being left behind because the note does not capture what was done.
How Does Under-Coding Affect RVU-Based Physician Compensation?
Under-coding directly cuts into the bottom line for doctors who are paid by relative value units (RVUs). With under-coding of Level 4 visits to Level 3, a physician can lose around half the RVUs/visit and the impact is measurable when calculating his or her compensation over a year.
The majority of doctors in the hospital and group practice setting are paid on a wRVU (work RVU) basis.
The formula is simple:
Work RVUs multiplied by a dollar-per-RVU rate.
When a Level 4 visit (99284) is billed as Level 3 (99283), the physician loses nearly half the work RVUs for that encounter. Over a year of ER shifts, that pattern costs each physician thousands of dollars in personal income, independent of the practice’s revenue loss.
EMRA documents this precisely: if a Level 4 service is down-coded to Level 3, approximately half the RVUs are lost. For a physician generating 8,000 wRVUs per year with a $55/RVU rate, losing 400 wRVUs to under-coding represents $22,000 in annual compensation.
| 50% | Approximate percentage of work RVUs lost when a CPT 99284 (Level 4) encounter is down-coded to CPT 99283 (Level 3). |
This is why under-coding education resonates with physicians. It is not just a billing department problem. It is a direct hit to their income that they may not even know is happening.
Is Under-Coding Ever a Compliance Risk?
Yes. While under-coding is not fraud, consistent patterns of under-reporting can flag documentation deficiencies and attract payer scrutiny. It also creates legal exposure when billing patterns diverge significantly from patient acuity, suggesting possible systemic documentation failures.
Payers and auditors look at code distribution. If an ER practice bills 80% of its visits at Level 3 but serves a high-acuity urban population, that pattern is statistically abnormal. It suggests documentation problems, and auditors investigate documentation problems.
Under-coding also creates a different type of compliance risk: it misrepresents the complexity of care delivered. Medical records that consistently understate acuity can create problems in quality reporting, value-based care programs, and care coordination documentation.2
There is also a CMS Comprehensive Error Rate Testing (CERT) angle. CERT reviews calculate both overpayment and underpayment rates in Medicare claims. Underpayments, claims billed below what was actually provided, are also improper payments by definition, representing documentation and billing failures even when the practice loses money.
What Should ER Practices Do to Stop Under-Coding?
The five most effective interventions are: E/M distribution analysis, targeted physician documentation training, critical care time documentation protocols, EHR template optimization, and quarterly coding audits with feedback loops.
1. Run an E/M Distribution Analysis
Pull three months of billing data and map the distribution of codes billed: what percentage of visits are coded at each level (99281 through 99285)?
Compare that distribution to national EMRA/ACEP benchmarks. If your Level 4 and Level 5 percentage is significantly below benchmark for your patient acuity profile, under-coding is almost certainly occurring. National data shows approximately 30% of ED visits bill at Level 4 and 40% at Level 5, with variation by practice setting and patient mix.
2. Identify the Under-Coding Physicians
Distribution analysis by individual physicians reveals patterns. A provider who bills 60% Level 3 in a high-acuity department is almost certainly under-documenting. This is not about blame, it is about identifying a training opportunity.
Share individual coding reports confidentially. Most physicians are surprised and motivated to change when they see the data.
3. Fix Critical Care Time Documentation
Add a mandatory time-stamp field to every critical care encounter note. Document start time, end time, total critical care time, and procedures excluded from that time. This one change can recover tens of thousands of dollars annually from missed 99291 and 99292 billing.
Critical care codes require 30 to 74 minutes for 99291 and an additional 30 minutes per 99292 unit. The time is often delivered. It is just never written down.
4. Optimize EHR MDM Templates
Work with your EHR vendor or internal IT team to build MDM documentation prompts into every high-acuity note template. Include fields for:
- Number and complexity of problems addressed
- Specific data reviewed – labs, imaging, vital trends, external records
- Risk assessment – diagnostic uncertainty, treatment options considered, complications anticipated
When these fields are visible in the note template, physicians document them. When they are absent, physicians skip them, and code lower than the encounter deserves.
5. Conduct Quarterly Chart Reviews With Feedback
Quarterly audits should compare documentation to billed codes for a random sample of 20–30 charts per physician. The audit outcome should feed back to the individual physician, not just the billing manager.
Physicians who see their own documentation reviewed against MDM criteria learn quickly. One well-conducted audit review does more for coding accuracy than six months of generic compliance training.
Is Your ER Practice Leaving Revenue on the Table?
Maine Billing Services specializes in emergency medicine revenue cycle management. We review and audit your E/M coding patterns, and recover revenue that your documentation already deserves and encourages, without adding to your audit risk.
Call us today to schedule a free revenue recovery review.