Downcoding in healthcare billing refers to the practice where an insurance company or payer reduces the level of reimbursement for a billed medical service or procedure to a lower or less expensive code than originally submitted by the healthcare provider. This often occurs when the insurance company determines that the billed code does not accurately reflect the severity or complexity of the patient’s condition or the services provided.

Downcoding can result in reduced reimbursement for healthcare providers, impacting their revenue. It may occur due to insufficient documentation, coding errors, or discrepancies in the interpretation of medical necessity criteria by the insurance company. Healthcare providers must carefully document and code services to minimize the risk of downcoding and ensure fair reimbursement for the care provided to patients.