What is the definition of "downcoding"?

Downcoding refers to the practice of assigning a code that represents a lesser level of service than what was actually provided during a medical encounter. This can occur for several reasons, such as an insurance company interpreting the documentation in a way that does not fully capture the complexity or extent of the service rendered. When downcoding happens, it can result in reduced reimbursement rates for healthcare providers, as they are compensated based on the codes submitted for the services performed. As a result, it is essential for healthcare providers to ensure that their documentation accurately reflects the services rendered to prevent downcoding and ensure appropriate payment.