Downcoding

Downcoding is defined as the unilateral alteration by a health care payor of the level of an evaluation and management service code or other service code submitted on a claim, ultimately resulting in a lower payment to the healthcare provider. This practice is a key focus of the Transparency in Downcoding Act.

Downcoding refers to the practice by an insurer or health maintenance organization of reducing the level of service or procedure code submitted by a healthcare provider to a lower, less complex, or less costly code. This action directly results in a reduction of the reimbursement amount paid to the provider. The law specifically prohibits downcoding in a manner that prevents a provider from billing for and collecting reimbursement for the actual healthcare service performed.