by Ty Tagami |Capitol Beat News Service
ATLANTA — An initiative by insurance companies to reduce high-cost doctor visits could cause physicians to abandon private practice and work for big hospital chains, independent practitioners are warning.
They say the trend could drive up patient costs.
Cigna implemented a policy last week to flag bills that appear to be too high. The insurance company may reduce payouts by one billing level “when the encounter criteria on the claim does not support the higher-level” payment code, the new policy says.
Dr. David Eagle, vice president of the American Independent Medical Practice Association (AIMPA), expects the new cost containment approach to erode income for private doctors, with long-term consequences for their patients.
Providers will be able to appeal downgraded billing claims by sending detailed medical records, but it is a labor-intensive process, said Eagle, a blood and cancer specialist in New York. He suspects such “downcoding” decisions will be made using algorithms that rapidly assess claim forms containing few details. Small doctors’ offices won’t be able to keep pace, he said. “Basically, they’re going to be underpaying the doctors based on information on the claim form.”
Cigna said only about 1% of providers in its network will be affected by the new policy, which “aims to reduce overbilling.” A one-level claim downcode will result in an average $50 reduction in payment, the company said in a written statement.
But $50 per visit adds up for a practice that runs on thin margins, said Dr. Bradley Sumrall, a blood and cancer specialist in Macon.
“I see 25, 30 patients a day. If you take out fifty bucks a patient, that’s $1,500 a day. That’s several employees,” he said. “We run on thin margins. We need money coming back to us in a timely manner, and anything that erodes that or slows it down puts more pressure on us to stay afloat.”
Aetna has had a similar downcoding policy for at least a couple of years. A spokesperson responded in writing that the company is obliged to monitor payment claims for its clients and members and to prevent fraud, waste, and abuse of Medicare and Medicaid.
Independent providers worry that such cost-saving policies will erode their income and drive more of them to work under the umbrella of big businesses with robust billing departments. Independent doctors’ billing offices typically lack the firepower to push back as effectively as a hospital’s or a health system’s, Eagle said.
The proportion of physicians who left independent practice for employment under hospitals and health systems doubled over the past dozen years, rising to 55% in 2024, according to a study by the Physicians Advocacy Institute.
Independent doctors say downcoding policies could accelerate that trend, with long-term consequences for patient costs.
Dr. Elizabeth Burns, an Atlanta dermatologist, said she understands the motivation of the insurance companies, adding that it conflicts with a provider’s mission.
“They’re trying to save money. That’s their main objective,” she said. “The majority of doctors, their main objective is for the patient to get the best care.”
Some “outlier” physicians might overbill and should be audited, Burns said. “But it shouldn’t affect all the other people who are correctly coding and whose medical visit notes justify the codes that they’re submitting.”
Eagle predicted that this money-saving maneuver will drive up costs for patients.
He said he was previously in an oncology group in North Carolina that joined a hospital system to cope with expanding administrative burdens and decreasing reimbursements. His patients then encountered new facility fees and increased co-pays, he said.
“So, I’ve lived it. This does have an impact when physicians move from the private setting to the independent setting,” Eagle said. “Everything else was the same. I was the same doctor, it was the same patient, they came to the same building, they got the same service. And many of them, because of the facility fees, paid a lot more for their co-pays. And some of my patients just said, ‘Look, I can’t keep seeing you anymore.’ So, it can have an impact, no doubt about it. All of a sudden, that doctor that you’re used to seeing is now in a health system.”
