Payer Down Coding

Unfortunately, down coding of claims is becoming a more common occurrence.

Down coding occurs when a payor changes the service code (CPT code) that the provider submitted to one that represents a lower level of service than was actually provided to the patient. This results in a lower payment to the provider than the provider would have received if the appropriate, higher-level code had been approved.

Why It Happens

Payers may down code claims for several reasons, including using algorithms to automatically review claims. Theoretically, this should have been less of an issue with the 2021 changes to the E&M coding guidelines. The new E/M medical decision-making (MDM) are based on any two of three components:

1. Number and complexity of problem(s) that are addressed during encounter
2. Amount and/or complexity of data to be reviewed and analyzed
3. Risk

And the MDM must meet or exceeding the same level of complexity (straight-forward, low, moderate, or high) for two of three components. However, some payer algorithms may only factor one component.

Additional payers may adjust codes without reviewing medical records, or due to specific diagnoses or types of services. And sometimes these reviews target specific providers and/or specific diagnoses.

Impact on Providers

This inappropriate down coding of claims can significantly reduce practice revenue, especially when it becomes routine, is done but multiple payors, or results in an audit.  It can also create administrative burdens for providers who need to appeal down coded claims and provide documentation to support their original billing.

Impact on Patients

While the immediate impact on patients may be minimal (they patient may not even notice), down coding can create a perception that the level of care provided was lower than needed, or that the provider is over-charing. It can also affect the future quality of care of the patient, if the severity of a patient’s condition is not accurately represented in their medical records because of down coding.

Principals Involved:

The American Optometric Association has taken a position very similar to the American Medical Association, with the AOA advocating the following principles:

• Automatic down coding is inappropriate.
• Payers should make physicians aware that they are being subjected to an automatic down coding program so they are alerted of potentially down coded claims. Payer down coding algorithms should focus only on physicians with abnormal coding patterns vis-à-vis other physicians within their specialty.
• Payers should implement educational curricula that instruct physicians with abnormal coding histories on how to code correctly.
• Before down coding a claim, payers should first review the patient’s medical record and allow the physician the opportunity to provide documentation in support of the claim.
• In writing, payers should notify the physician of the payment adjustment. This written notification also should include the payer’s reason for the down coding, the clinical reasoning behind the payer’s decision, and information on how the physician can appeal.

Responding

To prevent your practice from experiencing down coding, make sure that you thoroughly review your explanation of benefits (EOB)to check for down coding. If you see down coding, follow these steps:

1. Check the details of the EOB to see why the claim was down coded, including the specific clinical rationale behind the decision. Try to determine if the down coding was due to a coding error, lack of documentation, or a policy issue with the insurance plan.

2. First try to call the payor. Sometimes the payor will respond favorably to a phone call and reverse the down coding. (Many of our clients have had success with this). If that does not work,

3. Gather Supporting Documentation:

1. • Detailed medical records that document the patient’s condition, the services provided, and the medical decision making for the higher-level coding.
   • You can even Include the E/M medical decision-making table and reference how your documentation specifically supports the three components (problems, data analyzed, risk).
   • Any relevant clinical guidelines or peer-reviewed articles that support the medical necessity of the services.
   • Any other relevant information, such as prior authorizations, can also be helpful.

4. File an Appeal. Each insurance company has its own appeal process, so review their specific instructions.
   1. Most appeals require a written letter or form that explains why you believe the claim should be reconsidered.
   2. Clearly and concisely state your case, referencing the payer’s policies, medical necessity, and any supporting documentation. Be sure to submit your appeal within the payer’s specified timeframe.

You can also report issues of down coding to the AOA at: stopplanabuses@aoa.org

If you successfully appeal and demonstrate proper coding competency, you should request that the payer remove from the payer’s target list because of the successful appeal.

Additional Resources

In some cases, you may need a consultant to advocate on your behalf to reverse down coding. You may also want to consider a proactive training audit of your records so that you know that you are properly, documenting, coding, and filing claims.

Should you have any questions, need consultation, or want a training audit, feel free to reach out at Peter@PracticePerformancePartners.com