States and professional organizations are increasingly challenging private insurers’ downcoding of evaluation and management (E/M) services, a practice clinicians say undermines physician judgment and delays appropriate reimbursement.
E/M downcoding occurs when payers automatically reduce the level of a clinician-reported E/M code, resulting in lower payment despite documentation supporting the original service.
Several states have acted in response. The Maryland Insurance Administration issued a letter to Cigna, announcing a fine of $80,000 and requiring the insurer to cease automatic downcoding, while the California Medical Association has successfully paused multiple downcoding policies pending regulatory review.
In addition to state regulatory efforts, legislative solutions are emerging. Indiana’s 2026 legislation restricts E/M downcoding by health plans, requires notice of downcoded claims, prohibits artificial intelligence-only downcoding, limits targeting of complex cases, and establishes a defined appeals process.
While some professional societies have secured exemptions for their members, automated downcoding continues to create financial and administrative burdens for many practices. To address these challenges, medical practices are encouraged to monitor claims for reductions, benchmark E/M utilization against similar practices, ensure documentation supports reported codes, and appeal inappropriate downcoding.
Please send any questions regarding E/M downcoding to coding@aasm.org.
