Insurance Downcoding Practices Under Scrutiny

Aetna’s representative, David Witrup, stated that insurance companies have a responsibility to oversee proper coding on behalf of their clients and members, as well as to combat fraud and mismanagement in the governmental programs they support. He emphasized that reviewing Level 4 and 5 codes is crucial to ensure that billing aligns with national standards. Witrup mentioned that only about 3% of providers are impacted by this payment policy, though he didn’t clarify how Aetna identifies inaccurate coding.

Cigna’s spokesperson indicated that around 1% of their network’s providers would be influenced by the upcoming downcoding policy, stating that every provider has the right to appeal their individual claims. Meanwhile, neither Humana nor Molina Healthcare commented on the matter.

“Patient Care is Going to Get Worse.”

Dr. Bobby Mukkamala, president of the American Medical Association (AMA), criticized downcoding as a strategy to bolster the financial standing of insurance firms. He argued that such practices would degrade patient care while enhancing profit margins, which he considers a misguided approach to healthcare improvement.

The trend of automatic downcoding is rising as experts note an increase in “upcoding” — where bills are submitted for higher service levels than actually provided. For instance, a patient might have a doctor’s appointment, but the billing inaccurately reflects only a nurse’s visit.

In 2021, the Centers for Medicare and Medicaid Services identified upcoding as a “serious issue,” leading the federal government to pursue legal action against healthcare providers for improper billing.

The AMA contends that automatic downcoding lacks clinical justification, unlike situations where insurers adjust reimbursements based on additional physician information. When a patient visits a doctor for something like a sinus infection, the bill usually references two codes: one for the final diagnosis and another for the complexity of the visit. This complexity code depends on factors like consultation time and medical decisions made, incorporating variables such as tests ordered and treatments discussed, even though the claim might only present the one code.

Relying solely on this information for downcoding suggests a fixed complexity level for a visit tied to certain diagnoses, without considering the patient’s complete medical history or the specifics of the visit itself. This is where the AMA sees a flaw.

Mukkamala expressed concern over the implications of being “guilty until proven innocent,” suggesting that this mindset unfairly presumes wrongdoing without proper assessment. He highlighted the critical need for transparency in the downcoding process.

Since March, the AMA has reached out to Blue Cross Blue Shield, Cigna, and AHIP to denounce their downcoding methods, but none have replied. In July 2024, the AMA sent a letter to Aetna’s former chief medical officer concerning what it termed “unfair payment reduction tools,” but it appears that Aetna has not altered its policies since then.

“It’s Like Destroying Fort Knox.”

Cheryl Crowder manages accounts for a physician-owned group in rural southeastern Ohio and noted that her doctor has been downgraded by two insurers continuously for over a year. Larger hospitals can generally afford dedicated billing teams to handle these reimbursement issues, but for smaller practices, the burden of downcoding is both administrative and financial.

“We have to duplicate records, audit claims, and supply the necessary information back to them,” Crowder explained, adding that this effort often incurs overtime pay due to the extensive workload involving 70 providers and eight claimants.

Like other practices, Crowder’s group was told it could be removed from the downcoding program if they successfully overturned a certain percentage of appeals, but the criteria for assessment remain unclear. “When do you measure it? Three months, six months?” she questioned, without receiving any answers.

At one point, Crowder considered terminating her practice group’s contract with one insurance company but managed to find some relief over the summer. Simultaneously, the absence of a dedicated insurance agent for smaller practices makes navigating issues like payment discrepancies more challenging.

Kelly Sutton, a family medicine practice manager in Van Wert, Ohio, likened the situation to “bringing down Fort Knox.” She noted that Aetna began downcoding more complicated office visits, a trend that continued with Anthem and Humana. Sutton estimates her team dedicates about four hours weekly to file appeals and assess documentation causing the downcoding, but any patterns remain elusive.

“That’s Not Good for the Patient.”

Dr. Adrienne Hollander, a rheumatologist from New Jersey, expressed that when it comes to receiving down-coded payments from large insurance companies, her practice feels powerless. “They don’t inform us directly with a retraction; they just lower our payment,” she remarked.

In contrast to Sutton’s practice, Hollander’s multi-provider clinic does have insurance reps managing downcoding issues, allowing for some level of communication. “At least we have contacts to discuss these issues with, but many don’t,” stated Jennifer Buonavolta, operations director at Hollander’s clinic. Yet, despite these resources, Hollander noted that they’ve not been able to escape the downcoding program entirely.

“If we can’t resolve this or renegotiate the contract, we’ll have to end our partnership with the insurer,” she shared. Her practice previously opted out of UnitedHealthcare due to unsatisfactory reimbursement experiences, lamenting, “The problem is there aren’t enough rheumatologists, which isn’t good for patients.”

Some states have addressed downcoding through new laws aimed at promoting transparency. Yet, numerous legislative attempts to restrict automatic downcoding have faltered, including efforts in Ohio and New Jersey aimed at banning algorithm-driven downcoding, akin to a law passed in Connecticut.

The AMA recently introduced a template bill regarding downcoding for interested states. Mukkamala expressed concern that if one insurer implements such practices, others may follow suit, further exacerbating issues for healthcare providers.

For doctors like Sarah Jensen, the situation feels increasingly hopeless. She has reached out to various entities, including Missouri’s health secretary and the CEO of Anthem’s parent company, all without relief.

Amidst decreasing numbers of physicians in private practice, largely driven by the search for better reimbursement rates, Jensen is now contemplating selling her practice, feeling that her time in private medicine may be limited. “It’s like dying from a thousand cuts,” she reflected.