- September 3, 2026
- Posted by: Josh Knoll
- Category: Medical Coding
Talk to any revenue cycle director for more than five minutes, and coding accuracy will surely come up. And, there is a good reason for that. Every patient visit including a quick follow-up, a complicated multi-specialty surgery or a routine lab panel; all must be translated into a standardized diagnosis and procedure code before a claim ever reaches a payer. Get that translation wrong, even a little, and the fallout rarely stops at one rejected claim. In fact, federal Medicare data illustrates the financial scale of improper payments associated with coding and documentation errors and they are not small. CMS’s 2024 Medicare Fee-for-Service Supplemental Improper Payment Data report found that evaluation and management (E/M) services carried a rate which roughly translates to about $3.9 billion in projected improper payments in a single reporting period. Almost half of that, 49.1%, came down to incorrect coding. Another 34.1% was insufficient documentation, and 13.1% was missing documentation altogether. Widen the lens to the entire Medicare fee-for-service program and it gets bigger still. HHS reported that CMS paid out more than $439 billion in Medicare FFS claims and $28.8 billion of that was accounts for around 6.6% was flagged as improper. Just one line item, established patient office visits, accounted for over $853 million in projected improper payments, and 65% of those errors traced back to incorrect coding, not fraud. While these are not even abstract percentages sitting in a government PDF somewhere. They are real money; either walking out the door as overpayments that eventually get clawed back, or sitting uncollected because a claim was undercoded and nobody caught it. This is exactly the gap an expert medical coding company was built to close. A coding error is mostly just a mismatch. Simply put, a coding error happens when what is written in the medical record does not line up with whatever is written on the claim. This can generally reflect as: Honestly, most of these do not even happen because someone was sloppy. It is usually more mundane than that. For instance, a physician’s note skips a detail they assumed was obvious; a coder reads ambiguous language one way when the intent was another, or a claim goes out the door on a Friday afternoon before anyone gets a second look at it. Keeping track of all these can be tiresome for practitioners like you. And that is probably why the practice of hiring an expert medical coding company has gained such traction among US healthcare providers. A denied claim is never just denied. In fact, AHIMA has pointed out that most coding denials trace back to the same handful of culprits, which are often the medical-necessity issues, modifier errors, coding edits, and documentation deficiencies, among other causes. A claim that should have been paid in two weeks can drag on for two months, and every one of those extra days is cash flow the organization does not have. Undercoding generally does not set off alarms the way a denial does. Here, the claim usually gets paid, just at least less than it should have been. That is what makes it dangerous. A practice can go months, even years, without realizing it has been leaving money on the table, because nothing about it looks broken from the outside. Regular audits are really the only way to catch this kind of leak before it adds up. Flip it around, and overcoding is a different kind of problem entirely. Bill for a higher level of service than the documentation supports, and you are not looking at a correction anymore; you are looking at a payer audit, a repayment demand, maybe worse. That is the whole point of doing coding properly: it was never about squeezing out the maximum reimbursement. It is about getting paid accurately for what actually happened and being able to defend every line of it. Every coding error kicks off its own little chain of work; pull the chart, track down the discrepancy, loop the provider back in, fix the code, resend it, watch for the payer’s response, and if it comes back denied again, write the appeal. Multiply that across hundreds of claims a month and it quietly becomes someone’s entire job, when it really should not have to be. Not every denied or delayed claim gets fixed. Once a claim ages past a certain point, or the appeal window closes, or staff simply run out of time to chase it, it gets written off instead; and that revenue is gone for good, not just delayed. It is the quiet, permanent version of everything above. Keeping all this in-house is getting tougher every year. Not because internal teams lack skill, but because claim volume, specialty complexity, and the pace of payer rule changes have simply outgrown what most billing departments were originally built to handle. That is usually where a specialized medical coding company starts to make a real difference. People who work in ICD-10-CM, CPT, HCPCS, and modifier logic day in and day out develop a kind of pattern recognition that is tough to replicate with a generalist team, especially in complex or multi-diagnosis cases. CMS’s own National Correct Coding Initiative uses procedure-to-procedure and medically unlikely edits to flag improper payments before they happen. And a good coding partner builds that same instinct into its everyday review, not just an annual compliance sweep. The real value is not just cleaning up a denial after it lands. Identifying the reason as to why denials keep happening is equally important. Regular audits and continuous education are two of the most effective ways to get ahead of payer trends instead of reacting to the same mistake repeatedly. Sometimes the coder did everything right, and the real problem is upstream, in the clinical note itself. An expert medical coding company notices those patterns and works with providers to address them. Because better documentation leads to cleaner coding, which leads to fewer denials, which leads to getting paid faster. Not every medical coding company is built the same, and price alone will not tell you much. Worth asking about instead: The right partner does not feel bolted on. It feels like it is just part of your team. The link between coding errors and lost healthcare revenue is not a theory. Rather, it is sitting right there in CMS’s own numbers, year after year, in the billions. Denials, delayed payments, under collected revenue, audit risk, all that rework; it all traces back to the same root cause which is codes that do not quite match what was documented. This is exactly the gap SunKnowledge was built to close. For nearly two decades, an expert medical coding company like us has worked less like an outside vendor and more like an extension of the revenue cycle teams it partners with; treating a provider’s accuracy and cash flow as if it were their own. The numbers reflect that: Strong reimbursement does not start at the payer’s desk. It starts with a coder getting it right the first time. If coding errors have been quietly chipping away at your revenue, it is worth finding out what a dedicated, accuracy-first partner could do instead. Curious what that would look like for your organization? Reach out to us for a free coding and billing assessment and see exactly where your revenue cycle is leaking; and how fast it can be fixed.What Actually Counts as a Coding Error?
How This Actually Shows Up on the Revenue Side
1. Denials and the slow bleed of delayed payments
2. Undercoding is the quiet one
3. Overcoding is the riskier one
4. The rework nobody budgets for
5. Some of it just gets written off
Why Healthcare Organizations Work With Medical Coding Companies
1) Coders who actually specialize:
2) Audits before they get expensive:
3) Prevent denials and not just fixing them:
4) Closing the loop with providers:
What to Actually Look for in a Coding Partner
Why Healthcare Organizations Choose SunKnowledge