Are your Claims Downcoded? Find Out how to Collect What you are Due

Are your Claims Downcoded? Find Out how to Collect What you are Due

The concern among many physicians is timely payment, which arises from payer adopted reimbursement polices – both formal and informal. If payers are “downcoding” your claims to save money, the physician may suffer payment delays, lost revenue, and more. Many insurers downcodingdowncode claims because they know the physician will not appeal the lowered payment. Also, downcoding occurs from within, when billers and coders are not properly trained.


When evaluation and management (E&M) service levels do not match the usual level for certain diagnostic codes, insurers may flag those claims for further review, resulting in delayed or lowered reimbursement. These codes are used to reflect the level of the effort by the physician. A recent American Medical Association’s report found that 42% of physicians report that 10% of claims have been denied by managed care plans, and 39% said that 10% of claims are downcoded.


Downcoding by Insurance Companies


In a recent lawsuit involving 27,000 members of the Medical Society of New York, six N.Y. insurers were cited for engaging in “unfair and deceptive practices.” This included acts of arbitrarily denying care and reducing payments. The insurance companies in the lawsuit were Aetna U.S. Healthcare, Empire Blue Cross Blue Shield, Cigna, Excellus, United Healthcare, and Oxford. Doctors reported that claims for E&M services for certain diagnostic codes were lowered to a level 3 without payer explanation.


A medical director of one of these companies admitted that the insurer routinely downcoded E&M services, depending on the patient’s diagnosis. After 84 million claims were analyzed, the service, the company developed this policy. Based on their analysis, a level 3 E&M service was needed for many diagnoses because these diagnoses did not meet complex or comprehensive level claim criteria. Physicians who analyzed the claims found that these diagnoses rarely supported a service intensity of greater than level 3.


Diagnoses Flagged for Downcoding


Certain specialties are now subject to automatic flagging for downcoding by insurance companies. The ICD codes that were selected by one company include:


  • Inflammation of the cervix/vagina
  • General symptoms
  • Menstrual disorder
  • General respiratory symptoms
  • Diabetes
  • Asthma
  • Hypertension
  • Esophageal disorder
  • Osteoarthrosis
  • Lipid/cholesterol disorder
  • General abdominal/pelvic symptoms
  • Unspecified joint disorder
  • Allergic rhinitis
  • General skin condition
  • Chronic sinusitis


Physicians can dispute downcoded E&M service by providing documentation of the service rendered. Most insurance companies go by Medicare’s E&M guidelines and adjust the claims according to standards. When an extraordinary medical history exists with multiple symptoms, the physician may bill a level 4 or 5 E&M claim. Upon appeal to the payer, the physician can provide thorough documentation to justify these higher levels. To ensure that claims pass an appeal, be systematic and complete with your documentation. If the level of service provided is not reflected in the patient’s medical record, it is the same as if it was not done.


It is a good idea to have your coding specialists track denials and claim reductions to determine payer patterns. If the coding specialist questions a particular code, then communication between the physician and biller is a must. The coder should notify the physician of suggested changes, and include a copy of the section he/she is referencing. Physicians should also be aware of the many state and local medical societies and organizations that are active in protesting what are unfair downcoding policies.


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