You’ve probably heard the saying: “Heads I win, tails you lose.” For many healthcare providers, that’s exactly what payor coding practices feel like.

Over the past several months, payors have quietly reintroduced “downcoding” tactics — the systematic lowering of submitted claim codes that result in lower reimbursements. These same payors, meanwhile, continue to push “upcoding” practices on the Medicare Advantage side of the business, inflating patient complexity scores to increase payments from the federal government.

This behavior isn’t just contradictory. It’s exploitative. And for providers trying to deliver quality care, it’s also unsustainable.

Here we go again

This isn’t the first time payors tried to shortchange physicians by systematically lowering reimbursement codes. Payors must think our collective memory doesn’t stretch back as far as the early 2000s. In 2004, major insurers negotiated a $140 million settlement to end a class action lawsuit over downcoding and promised to end the practice. Cigna even pledged $400 million to overhaul their billing systems and put the practice to rest.

Now that the settlement period has expired, multiple insurers  are once more reducing visit codes automatically — no clinician input, no documentation review. Instead of evaluating the actual complexity of care, they default to lower-level codes based on diagnosis alone. That means a provider might spend 45 minutes on a complex evaluation and still get reimbursed for a routine check-up.

This practice sends a message that algorithms have a better understanding of what happened in a clinical encounter than providers who were in the room.

Payors say this is about catching fraud, waste, and abuse, but if that were the case, the practice would be limited in scope. It’s not. And there’s a degree of arrogance in this practice that’s mind-boggling. Any revenue is better than taking time to fight for what you’re owed, right?

Think twice about just accepting the downcoding and reduced payment. Yes, it does offer some level of timely payment, but it’s a tacit acceptance of the practice. Providers fought before and won — you can again. Some have already started, like the Coalition of State Rheumatology Organizations. If you paid $400 million to extricate yourself from a class action lawsuit and then, as soon as the settlement period expired, went right back to the practices that got you sued in the first place… what does that say about your ethics?

Meanwhile, payors are upcoding on their own terms

Here’s the irony: these same insurers have been aggressively burdening providers asking for upcoding based on medical records on Medicare Advantage plan patients for years. In fact, lobbying groups aligned with the payor industry are actively fighting legislation like the “No UPCODE Act,” which aims to rein in inflated risk scores that drive higher payments from CMS.

The American Medical Association develops CPT coding guidelines to reflect what happens in clinical encounters. When a provider codes accurately based on these guidelines, the claim gets knocked down. When a payor codes a Medicare Advantage claim, the risk score goes up — and so does their revenue.

With trust at record lows, payors seem determined to make it worse

Payors aren’t just faceless middlemen and public sentiment toward insurers is sliding. A recent study found that only 14% of healthcare providers trust health insurers, signaling a deep provider–payor confidence crisis.

When payors flip submitted codes downward or aggressively upcode risk scores on their side, we’re not just dealing with accounting games. They’re reinforcing the perception that insurers are operating with one hand on the scales which deepens the trust gap even more.

More broadly, Americans’ confidence in the health system is receding. Polls from Gallup, Pew, and others show decades of decline in trust across institutions — and healthcare has not been spared. Much of this erosion is due to the fact that payors and plan sponsors are increasingly shifting more of the cost of care to consumers. Providers who bill honestly for services provided should be paid the corresponding rates from contracts they negotiated in good faith. When payors say categorically that providers are overcharging, it creates confusion and distrust in the provider-patient relationship. There is no room for distrust in healthcare; the stakes are too high.

What needs to change

Let’s be clear: ethical providers aren’t asking for a blank check. They do deserve a process that respects their clinical judgment, especially when coding standards are based on the AMA’s own definitions.

Here’s what needs to happen next:

• Greater transparency in payor-side code adjustments, including AI-driven decisions
• Testing adjustment logic before implementing it and revisiting it annually — especially if it’s wrong a majority of the time
• Fast, fair, and consistent appeals processes
• Legislative pressure to hold payors accountable for coding discrepancies, both up and down

And maybe most importantly: a renewed focus on aligning incentives between those who provide care and those who cover it. Because right now, they’re moving in opposite directions.

Authenticity starts with accountability

As we said in Authentic Healthcare Marketing, the key to rebuilding trust in healthcare is authenticity. It can’t be reserved for campaigns and taglines. Authenticity has to show up in policy, in reimbursement, in the way we treat physicians — and in the way we interact with patients clinically and financially.

Downcoding didn’t go away. And it’s more important than ever that we should be drawing attention to it.