Payer downcoding: What is it and what should you do about it?

Written by the AOA’s Coding & Reimbursement Committee. Excerpted from pages 36-39 of the spring 2024 edition of AOA Focus.

Every physician should have at least a basic understanding of the use of codes that describe the services they perform or order for their patients (CPT® codes) as well as a basic understanding of the ICD-10 codes. A successful practice is deeply engaged in medical coding and billing not only as a service to their patients but also as a condition of their contracts with health care and vision care companies. All physicians periodically encounter obstacles while running a practice and must learn to overcome them by following the advice of a trusted resource.

One such problem that some physicians have experienced is payer downcoding of an otherwise properly submitted claim. Payer downcoding occurs when the payer assigns a lower-level code to a medical service or procedure than what was submitted to the payer for the patient without review of the medical record. This results in lower reimbursements that can significantly impact a physician’s bottom line.

Physicians can take certain steps to avoid payer downcoding, such as using the correct code set. Physicians and payers are required to use standard code sets designated by the U.S. Department of Health and Human Services under the Health Insurance Portability and Accountability Act, such as CPT’s evidence-based codes, which accurately encompass the full range of health care services.

The AOA strongly opposes automatic programs that systematically downcode reported codes. This does not imply that the AOA limits instances when payers ask for review of charts prior to payment as set in a provider’s contract. The AOA engages directly with insurance companies that utilize these algorithms to raise concerns on behalf of doctors of optometry and the patients they serve. But even as the AOA continues to advocate for suspension of these ill-conceived programs, physicians must formally submit an appeal of all downcoded claims, such as through Aetna’s or Anthem’s claims correction program. If a provider were to take no action in defense of the original submission, the carrier will assume that the lower value code was, in fact, a more accurate reflection of the care delivered during the encounter and the process is likely to continue. If a high percentage of all downcoded claims are overturned upon appeal, doctors of optometry are typically removed from the program.

How to respond

If a doctor is included in a downcoding program based on their claims reporting history, they should do the following:

• Notify the AOA at stopplanabuses@aoa.org. This email address is monitored daily and concerns are addressed promptly.
• Thoroughly, accurately and legibly document all patient encounters and ensure all claims are correctly coded at the time of service. The AOA recently published a webinar on the proper documentation of patient records that can be viewed at org/practice/practice-success-resources/coding-and-reimbursement.
• With thorough documentation included, appeal to the plan’s medical director. The physician’s appeal should substantiate how they probed, identified and managed the chief complaint or presenting problem of the patient. The level of medical decision-making and/or time should directly correspond to the service reported on the claim if using Evaluation and Management Codes. If using General Ophthalmologic coding, ensure that the initiation of a diagnostic and treatment plan are clearly documented.
• Find a template appeal letter and an example of strong documentation to support the level of care provided. Keep detailed notes of everything that transpires during the appeal.
• If the appeal to the plan’s medical director does not resolve the issue, appeal to the state’s insurance department.
• Only add addendums to medical records and never change the original documentation when appealing claims or being audited.

The fight continues

Doctors and the AOA are not alone in this battle. Payer downcoding is systematic, and specialty societies representing many different provider types agree that automatic downcoding programs are inappropriate, burdensome, and compromise patient care. The AOA advocates according to the following principles:

• Automatic downcoding is inappropriate.
• Payers should make physicians aware that they are being subjected to an automatic downcoding program so they are alerted of potentially downcoded claims.
• Payer downcoding 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 downcoding 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 downcoding, the clinical reasoning behind the payer’s decision, and information on how the physician can appeal.

Review the code set basics from the CMS at bit.ly/3O94RO6.

Coding Questions

Q: When coding for Evaluation and Management visits, can the time a staff person spends with the patient count toward the time used for choosing the appropriate code level?

Per the Centers for Medicare and Medicaid Services, the time a staff member spends with the patient is considered a practice expense and is already factored into reimbursement levels. Only the time the doctor of optometry spends with the patient can be counted. This includes pre- or post-visit reviewing records and test or referring/communicating with other health care professionals that are not separately reported. Time spent on separately billed diagnostic testing, such as refraction, visual fields, fundus photography, are not included in the overall time. An updated chart on the Evaluation and Management codes can be found under “Updated Resources” on the AOA’s Coding and Reimbursement page.

Q: Is there a time limit following cataract surgery for a Medicare patient to use their durable medical equipment benefit toward eyeglasses or contact lenses?

Medicare will pay for one pair of post-cataract surgery glasses per lifetime per eye after cataract surgery.

Q: If a Medicaid patient is myopic and needs glasses, does the ICD-10 code for the exam need to be Z01.00 or Z01.01?

It is important for the doctor of optometry to verify the patient’s coverage because some Medicaid plans require a diagnostic code specific to the refractive error instead of a Z-code. If the plan utilizes Z-codes for their claims processing, it is recommended that the doctor of optometry use Z01.00 (encounter for general adult medical examination without abnormal findings) or Z01.01 (encounter for general adult medical examination with abnormal findings) to signal the intention of the patient to secure their coverage for a refractive exam.

For direct access to coding experts with answers to your coding questions, visit aoa.org/ask-the-coding-experts.