Everything Old is New Again: Payors are Again Downcoding Physician Services

There is a recent increase in healthcare insurance payors downcoding the services billed by physicians. Like children with new toys, payors are using automatic claims-editing algorithms to pay for a lower level of service than the physician claims he or she provided, often without any review of the underlying patient records supporting those services.

Payors are targeting evaluation and management codes, …or E&M codes… for this downcoding surge. The AMA has found that “Payors are downcoding claims unilaterally with growing frequency and without notice – and doing so in ways that make it extremely difficult to identify in coding audits.” E&M Codes are particularly susceptible to automatic downcoding. As physicians know, E&M Codes provide for a range of activity and time spent in the evaluation, treatment and diagnosis of a patient. Factors that feed into a determination of what level of E&M Code is appropriate include a patient’s co-morbidities, multiple prescriptions, coordination of referrals and lab results, and the age of the patient. These codes are not simply about time spent with a patient, and cannot be screened effectively by a computer algorithm looking for outliers. As succinctly stated by Ryan Nadelson, Chair of the Department of Internal Medicine at Northside Hospital in Gainesville, GA,: “Complexity in medicine cannot be reduced to a billing code. A patient with hypertension, diabetes, or depression may look “routine” on paper, yet the visit may involve reconciling medications, …side effects, screening for complications and navigating barriers like cost or insurance approvals. That is not a three-minute problem; it’s a 30 to 40-minute conversation.”

Doctors increasingly have powerful tools to prevent automatic downcoding … the electronic medical record. A recent letter received by a client medical group from a large Blue Cross/Blue Shield payor alleged that thousands of billings might be denied or downcoded due to “insufficient documentation” to justify the services. This provider group has the ability to send literally millions of pages of clinical data for the patients justifying its services. The payor acknowledged that it does not have the capability to review such a volume of clinical data, even while it was alleging that the billing was not justified by that same clinical data.

This insidious return of the denial of claims based on automatic downcoding needs to be addressed by state insurance regulators. The use of computer programs to question a doctor’s services is a slippery slope that can only lead to more distrust by patients in the nation’s healthcare system and higher costs incurred by patients.

Gregory J. Pepe

Gregory J. Pepe, founding principal, practices in the areas of commercial finance, healthcare law, alternative dispute resolution and mediation, and general business law. Attorney Pepe represents numerous physician groups, including large integrated practices, IPAs, and PHOs. He has been an advisor to many state medical societies, including the Connecticut State Medical Society regarding physician practice management issues within the context of organized medicine, and regarding initiation of litigation by medical societies against managed care companies.