Inside the fight between doctors and insurance companies over ‘downcoding’

Aetna spokesman David Whitrap said the insurer “has an obligation to monitor proper coding on behalf of our customers and members” and to “protect against fraud, waste and abuse in the government programs we serve.”

“Assessing the adequacy of Level 4 and 5 codes helps us ensure providers are billing for their services in accordance with national guidelines,” Whitrap said. He also said “only 3 percent of providers” are affected by the payment policy, but did not say how Aetna determines when providers are coding inappropriately.

A Cigna Healthcare spokesperson said about 1% of providers in its network will be affected by its upcoming decryption policy, and “all have the right to request that we reconsider reimbursement decisions for individual claims.”

Humana and Molina Healthcare did not respond to requests for comment.

“This will worsen the care of our patients”

Dr. Bobby Mukkamala, president of the American Medical Association (AMA), described downcoding as a “game” aimed at improving insurers’ finances.

“It’s going to make the care of our patients worse, but it’s going to improve their bottom line,” Mukkamala said. “And that’s a bad calculus to use to improve health care in this country.” »

The push for automatic downcoding comes as experts say an inverse problem of “upcoding” is on the rise. Upcoding occurs when patients and plans are billed as if a higher level of service had been achieved, such as when a bill is sent as if you had an appointment with the doctor, but only ever saw a nurse practitioner.

In 2021, the Centers for Medicare and Medicaid Services called upcoding a “serious problem” and the federal government periodically files improper billing lawsuits, both criminal and civil, against health care providers.

But the AMA’s position is that automatic undercoding — as opposed to insurers reimbursing for a lower level of service after reviewing additional information provided by doctors — has no clinical logic behind it.

For example, when you see a doctor for a sinus infection, the doctor typically sends your insurance a claim referencing two sets of codes, one that presents the final diagnosis and another that indicates the level of service or complexity of the visit. This level may be determined by the amount of time the doctor spends on the visit or by the complexity of the medical decision-making involved – essentially a rubric that takes into account things like lab tests ordered, medications prescribed and treatment options discussed – but whatever is included in the claim is code.

Downcoding based solely on this knowledge assumes that an office visit for a certain set of diagnoses has a complexity ceiling, regardless of the patient’s medical history and the realities of what actually occurred during that visit.

This is where WADA disagrees.

“‘Guilty until proven innocent’ implies that we’re in court, right? That I have to have the chance to say, ‘This is why I did what I did. But when it’s not announced and it’s something that happens in the background, that’s a conviction before there’s even a trial,'” Mukkamala said. “I deserve to know what you think I did wrong so I can tell you my opinion on why it’s right.”

Since March, the AMA has sent letters to Blue Cross Blue Shield, Cigna and AHIP to denounce the insurers’ downcoding practices. None of the organizations responded, WADA said.

The AMA sent a similar letter about what it called Aetna’s “unwarranted and heavy-handed payment reduction tool” to Cathy Moffitt, then Aetna’s chief medical officer, in July 2024. The AMA would not disclose Moffitt’s response, but Aetna’s policy does not appear to have changed.

A 2024 marketing flyer for Aetna’s “Claims and Code Review Program” offers a glimpse into the insurer’s financial calculus — touting an average 6.4% reduction in costs for employer health plans, or $1.6 million in savings for a plan with 4,000 members.

“Like destroying Fort Knox”

Cheryl Crowder manages billing for a physician-owned group practice in rural southeast Ohio.

For more than a year, she has claimed that her doctors have been repeatedly devalued by two insurance companies.

Hospitals often benefit from strong billing teams that exist, in part, to address such reimbursement issues. But for small, physician-owned practices, subcoding can be as much an administrative burden as it is a financial burden.

“We have to copy the records, do claim audits and provide them with that information,” Crowder said.

It can also be expensive. “We pay overtime to do this work. Because we have over 70 contractors and eight billers. It’s a ton of work,” she said.

Like many of the physician practices cited in this article, Crowder’s practice group was told they could be removed from a decryption program if they succeeded in overturning a certain percentage of their claims on appeal, but the mechanisms for doing so are unclear.

“When do we measure that? Is it three months? Six months?” she said. “They couldn’t answer that question.”

Crowder even considered terminating his practice group’s contract with one of the insurers before finally getting relief this summer.

While downcoding has become widespread, another trend is making the problem worse, doctors said: the disappearance of dedicated representatives within insurance companies who doctors could contact with payment problems.

“It’s like destroying Fort Knox,” said Kelly Sutton, manager of a family practice in Van Wert, Ohio.

In April, Sutton noticed that Aetna was cutting back on more complex office visits. Then Anthem and Humana started doing it too.

She estimates her team spends about four hours a week on calls, and several additional hours reviewing documentation to see what might be causing the undercoding. But if there is a trend, it remains elusive.

“I think they should check doctors’ offices, but whatever this algorithm is, it doesn’t seem to have any rhyme or reason,” Sutton said.

“It’s not good for patients”

Dr. Adrienne Hollander, a New Jersey-based rheumatologist, said that when it comes to being downcoded by one of the major insurers she accepts, she’s simply at their mercy.

“They don’t send us a denial saying, ‘We don’t think this is appropriate.’ They automatically pay us less,” Hollander said.

Unlike Sutton’s practice, Hollander’s multi-provider rheumatology practice has a representative with the insurer who undervalues ​​her.

“At least we have an email, a resource, that we can go to and say, ‘Hey, tell us what’s going on here.’ A lot of people don’t have that,” said Jennifer Buonavolta, Hollander’s chief operating officer.

Despite this, Hollander said she was unable to completely break out of the downcoding program.

“If we can’t resolve this or renegotiate our contracts, then we stop taking insurers,” she said.

Three years ago, his office made the decision to stop accepting UnitedHealthcare due to another set of reimbursement frustrations. “The problem is that it’s not good for the patients, because there aren’t many rheumatologists,” she says.

This year, two states passed legislation regarding downcoding, both focused on transparency.

But several other attempts at state legislation have stalled, including bills in Ohio and New Jersey that would have effectively banned automatic downcoding, and one in Connecticut to specifically ban downcoding based on AI or algorithms.

The AMA recently rolled out a model downcoding bill for interested states.

Mukkamala said her main concern is that what doctors are experiencing now is just the beginning. “When one insurance company gets away with something like that, it wouldn’t surprise me at all if the other insurance companies said, ‘Well, that’s a good idea. We’ll do it too.'”

For doctors like Sarah Jensen, it’s easy to feel hopeless. In the past Last year, she sent letters to the Missouri insurance commissioner, the CEO of Anthem’s parent company, Elevance, and the American Academy of Dermatology. No one was able to offer relief.

The share of doctors working in private practices has fallen in recent years, largely because of a desire for better reimbursement rates. Jensen comes to the conclusion, reluctantly, that her days in private practice may also be numbered: She has been talking to private equity firms about selling her practice.

“It’s like dying by a thousand cuts,” she said.