"Eye on Managed Care: Preventing Arbitrary Downcoding"


"Eye on Managed Care: Preventing Arbitrary Downcoding"

Third-party payers sometimes change the rules of the game without warning. Here’s a way to fight back.

Gil Weber, MBA
Consulting Editor

Adapted with permission from Ophthalmology Management
© Copyright, 2003. All rights reserved.
November 2003

Not long ago, a practice administrator posted the following e-mail: "A health plan recently sent out a bulletin in which they stated: ‘[Name of Plan] has developed separate tables that define the customary maximum level of service by diagnosis for new office visits, established office visits, and office consultation based on an extensive analysis of our claims data.'

"Using this rationale they recently downcoded a consult on one of our claims. My question is . . . If the documentation meets the E/M guidelines for that level and the physician has chosen the appropriate level, by what right can they do this? As an insurance company precedent it fills me with terror."

Payers Change Claims at Will

Some payers, on their own initiative and at their sole discretion, will decide that a physician's claims are improperly coded. They'll then downcode the claims and pay them at a lower level than submitted.

Payers get away with this for many reasons, not the least of which is that typically nothing in the Provider Agreement precludes a payer from developing and using any standards it wishes. A claims examiner may do the downcoding, or it may be done by rules-based software. In most cases the medical records aren't examined — the claim is simply changed and repriced.

Incredibly, in some contracts the physician agrees to allow the payer to adjust claims to comply with its utilization management programs (the details of which may be unknown to the physician). In such instances there's almost no counter argument to be made.

Fighting Back

Assuming state law affords you no protection against what appears to be arbitrary downcoding, you should try to contractually limit a payer's ability to manipulate claims. One way to do this is to ask the payer to insert the following language into the Provider Agreement (after having your attorney review the wording):


1. Use of Recognized Guidelines. Plan shall utilize only the current Centers for Medicare and Medicaid Services' Correct Coding Initiative (CCI) guidelines in determining the compensation due to Physician for Covered Services. In no event shall Plan utilize a different coding methodology or edit set to downcode claims submitted by Physician.

2. Notice and Justification Required. In the event Plan downcodes any claim submitted by Physician, Plan shall provide written notice to Physician of such downcoding, along with a reasonable justification supported by the CCI, within the claims adjudication period set forth in this Agreement.

3. Original Claim Deemed Appropriate. Plan's failure to provide both such notification and justification within the specified claims adjudication period shall be deemed an approval of Physician's claim at the rate payable for the CPT code specified by Physician in such claim.

4. No Waivers or Limits on Appeals. Physician's acceptance of compensation at a downcoded rate, or any other reduced rate, shall not constitute a waiver of, or otherwise limit, Physician's right to seek payment at the rate originally claimed by Physician through Plan's appeals process, or to pursue Physician's other available legal remedies.

5. Cooperation. Plan and Physician agree to review downcoding issues regularly and to confer regarding mutually acceptable parameters for appropriate CPT coding.

What if the Payer Says "No"?

If a payer won't agree to abide by CCI (or another, nationally recognized coding standard) and insists on the right to use its own coding edits, you may still be able to reach a compromise. Ask for the contract to stipulate that the payer must notify the physician of, and explain any variances from, CCI. Further, it should stipulate that the physician has the right to appeal any payment not conforming to the payer's published edits.

While this isn't as good as locking the payer into CCI, at least if you're notified in advance of any proprietary coding edits and changes you'll be better positioned to submit claims that won't result in surprises. And if you know the non-standard coding edits that will be used it'll be much easier for staff to determine if a claim has been paid properly, or if it's been "massaged."

Your attorney can draft appropriate language — internally consistent with other contractual provisions — that imposes notification responsibility on the payer and establishes your rights both to the information in question and to an appeals/dispute resolution mechanism.

Time for a Change?

If you've tried these suggestions and the payer still says "no" and insists on unrestricted, unilateral rights to massage your claims — without providing any explanation of the method behind its madness — then at least the payer has been unmasked and the truth revealed. That payer will take you to the cleaners without a second thought.

"This is all so frustrating," another administrator told me. "If we change a code it's fraud, but if they change a code it's contractual license. I think the tail is wagging the dog, and the dog needs to bite somebody's butt!"

Well said. Maybe it's decision time. Maybe that's a contract (and frustration) you really don't need?

Gil Weber, Ophthalmology Management's consulting editor, is a nationally recognized author, lecturer and practice management consultant to practitioners and the managed care and ophthalmic industries, and has served as Director of Managed Care for the American Academy of Ophthalmology.

Back To The Top

W3C valid xhtml 1.0 transitional design

© Copyright 2007-2017 Gil Weber / www.gilweber.com.
Site design and maintenance by www.cehartung.com
Powered by concrete5

W3C valid CSS2 style sheet