Can an Insurance Company Downcode Your Claims Automatically?


It is becoming increasingly common that payors downcode certain services provided in emergency departments and even office visits without reviewing records.  Generally, those plans that have implemented practices to determine whether an episode of care is warranted based solely on a final diagnosis may be crossing the line in breach of the provider agreement.

Some plans even go further, automatically denying coverage based on an unpublished list of final diagnoses without looking at the patient’s record or other diagnoses to fully understand the patient’s presenting symptoms.  The burden is then shifted to the provider to appeal and move to reconsideration of the claim.

The legal threshold in determining whether an emergency service is covered is generally based on a prudent layperson standard.  The question to answer is would a prudent layperson have reasonably considered the medical situation to be an emergency?  The standard is a low threshold.

Payors may be in breach of their contract, obligation to provide coverage, or law.

Looking at the payor contract is critical.  It is not uncommon for payors to implement a policy which ultimately changes the reimbursement terms and other provisions of a contract.  Generally, contracts cannot be revised or amended by a unilateral policy created by a payor.  Reimbursement cannot be modified by side-stepping the terms of an agreement and creating a policy which effectively changes the reimbursement terms of an agreement.

Depending on the Provider Agreement, a payor may be in breach by using such improper methods of payment.

It is not practical for a provider to appeal and challenge every downcoded or denied claim.  In these situations, working with a reimbursement attorney could be helpful particularly if there is a high volume of claims which have been impacted by such tactics.