Aetna spokesperson David Whitrap said the insurer “has an obligation to monitor for appropriate coding on behalf of our clients and members,” and to “safeguard against fraud, waste, and abuse in the government programs we serve.”
“Evaluating the appropriateness of level 4 and 5 codes helps us ensure providers are billing for their services consistent with national guidelines,” Whitrap said. He also said that “only 3% of providers” are affected by the payment policy, but did not clarify how Aetna determines when providers are coding inappropriately.
A spokesperson for Cigna Healthcare said approximately 1% of providers in its network will be affected by its upcoming downcoding policy, and “all have the right to request we reconsider individual claims reimbursement decisions.”
Humana and Molina Healthcare did not respond to requests for comment.
“It’s going to worsen our patient care”
Dr. Bobby Mukkamala, the president of the American Medical Association (AMA), described downcoding as a “game” to improve insurers’ finances.
“It’s going to worsen our patient care, but it’s going to improve their bottom line,” Mukkamala said. “And that’s the wrong calculus to use to improve health care in this country.”
Momentum for automatic downcoding comes as experts say an inverse problem of “upcoding” is on the rise. Upcoding is when patients and plans are billed as though a higher level of service occurred, like when a bill is sent as though you had an appointment with the doctor, but you 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 brings improper billing cases, both criminally and civilly, against health care providers.
But the AMA position is that automatic downcoding — as opposed to insurers reimbursing for a lower level of service after reviewing additional information from physicians — doesn’t have any clinical logic behind it.
For instance, when you visit a doctor for a sinus infection, the doctor typically sends your insurance a claim referencing two sets of codes, one that lays out the ultimate diagnosis, and another that indicates the level of service or complexity of the visit. That level can be determined by the amount of time the doctor spends on the visit, or by the complexity of the medical decision-making at play — essentially a rubric that takes into account things like lab tests ordered, medications prescribed and treatment options discussed — but all that’s included on the claim is the code.
Downcoding based only on that knowledge assumes that an office visit for a certain set of diagnoses has a ceiling of complexity, regardless of the patient’s medical history and the realities of what actually occurred during that visit.
That’s where the AMA disagrees.
“‘Guilty until proven innocent’ infers that we’re in a court, right? That I’m to have my chance to say, ‘This is why I did what I did. But when this isn’t announced and this is something that happens in the background, this is a conviction before there’s even a court trial,” Mukkamala said. “I deserve to know what you think I did wrong so I can tell you my opinion of why it’s right.”
Since March, the AMA has sent letters to Blue Cross Blue Shield, Cigna and AHIP calling out the insurers’ downcoding practices. None of the organizations replied, the AMA said.
The AMA sent a similar letter about what it called Aetna’s “unjustified, blunt payment reduction tool” to Aetna’s then-chief medical officer, Cathy Moffitt, 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 “Claim and Code Review Program” does offer a glimpse at 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 breaking down Fort Knox’
Cheryl Crowder runs billing for a physician-owned practice group in rural southeast Ohio.
For more than a year, she says her doctors have been repeatedly downcoded by two insurance companies.
Hospitals often have the benefit of robust billing teams that exist, in part, to deal with such reimbursement issues. But for small physician-owned practices, downcoding can be as much of an administrative burden as a financial one.
“We have to copy records, and do claim audits and provide that information to them,” Crowder said.
It can also be costly. “We’re paying people overtime to do this work. Because we have 70-plus providers, and we have eight billers. It’s a ton of work,” she said.
Like many of the doctors’ offices in this article, Crowder’s practice group was told they could be removed from a downcoding program if they successfully overturned a certain percentage of their appealed claims, but the mechanics of actually achieving that are hazy.
“At what point do we measure that? Is it three months? Six months?” she said. “They couldn’t answer that.”
Crowder even considered ending her practice group’s contract with one of the insurers before finally getting some relief this summer.
In the same time frame that downcoding has become prevalent, another trend is compounding the problem, doctors said: the disappearance of dedicated representatives at insurance companies, whom doctors could reach out to in case of payment issues.
“It’s like breaking down Fort Knox,” said Kelly Sutton, a family medicine practice manager in Van Wert, Ohio.
In April, Sutton noticed Aetna was downcoding higher complexity office visits. Then Anthem and Humana started doing it, too.
She estimates her team is spending about four hours a week on appeals, and several more poring over documentation to see what might be causing the downcoding. But if there is a pattern, it remains elusive.
“I think they should spot-check physician’s offices, but whatever this algorithm is, it doesn’t seem to have a rhyme or reason,” Sutton said.
‘That is not good for patients’
Dr. Adrienne Hollander, a New Jersey-based rheumatologist, said when it comes to being downcoded by one of the main insurers she accepts, she’s simply at their mercy.
“They don’t send us a denial saying, ‘We don’t think that this is appropriate.’ They just automatically pay us less,” Hollander said.
Unlike Sutton’s practice, Hollander’s multiprovider rheumatology practice does have a representative at the insurer that’s downcoding her.
“At least we have an email, a resource, that we can go to and be like, ‘Hey, tell us what’s going on here.’ A lot of people don’t have that,” said Jennifer Buonavolta, the operations director at Hollander’s practice.
Even so, Hollander said she’s been unable to get out from under the downcoding program entirely.
“If we can’t fix this or renegotiate our contracts, then we stop taking insurers,” she said.
Three years ago, her practice made the decision to stop accepting UnitedHealthcare over a different set of reimbursement frustrations. “The problem is that that is not good for patients, because there’s not a ton of rheumatologists,” she said.
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 aiming to prohibit specifically AI or algorithm-based downcoding.
The AMA recently rolled out a template downcoding bill for interested states.
Mukkamala said his primary worry is that what doctors are experiencing now is just the beginning. “When an insurance company gets away with something like this, other insurance companies wouldn’t surprise me a bit if they said, ‘Well, that’s a good idea. We’re going to do that, too.’”
For doctors like Sarah Jensen, it’s easy to feel hopeless. In the past year, she’s sent letters to Missouri’s insurance commissioner, to the CEO of Anthem parent company Elevance, and to the American Academy of Dermatology. No one has been able to offer relief.
The share of doctors working in private practices has plummeted in recent years, driven in large part by the desire for better reimbursement rates. Jensen is coming to the reluctant conclusion that her days in private practice might, too, be numbered: She’s been talking to private equity about selling her practice.
“It’s like death by a thousand cuts,” she said.
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