The key to deflecting downcoding? Diagnosis code reporting

Written by the AOA’s Coding & Reimbursement Committee. Excerpted from page 18 of the Summer 2025 edition of AOA Focus. 

Doctors across several states have begun to see the effects of downcoding, the practice in which the payer assigns a lower-level code to a medical service or procedure than what was submitted by the provider. This tactic by payers results in lower reimbursements and can significantly impact a physician’s bottom line.  

Here’s how it works: Doctors are typically notified that an analysis of the doctor’s claims has shown they are coding Level 4 and 5 codes at a higher rate than their peers. They are then placed in a program in which they repeatedly see their claims being downcoded. This applies mostly to Level 4 or higher codes, and both 92xxx and 99xxx codes are subject to the adjustment. 

Deter downcoding

To best support the level of service provided, it is critical that the appropriate diagnosis codes be reported to justify and reinforce the CPT code reported. For higher-level 99xxx codes, moderate or high medical decision-making is required in order to substantiate the reporting of the higher-level E/M code. Diagnosis coding should show patient complexity; it is critical to report: 

• Any chronic conditions that may have progressed 
• Any stable chronic conditions 
• Any new problems 
• Any acute illness or injury  

Ensuring your diagnosis code reporting justifies the 99xxx or 92xxx code reported can help you avoid automatic downcoding. 

The importance of appeals  

If your claims are downcoded despite strong diagnosis code reporting, the AOA recommends you review the patient record and appeal the claim when appropriate. Strong documentation is critical to a successful appeal. That’s why the AOA offers members a template appeal letter and an example of strong documentation to support the level of care provided.  

If you are unsuccessful in having your claims overturned despite the record supporting the higher code, the AOA has been successful in getting doctors out of the downcoding program by requesting a secondary review of appealed claims. Plans will only do that secondary review if the doctors have appealed a high percentage of their downcoded claims.  

Members who have been subjected to this downcoding can reach out to the AOA with progress updates by emailing stopplanabuses@aoa.org. 

More coding resources 

The AOA has an online coding resource available at no charge for members. 

Still have questions? Email the AOA’s Coding Experts at askthecodingexpert@aoa.org.