The fight between doctors and insurance companies over 'downcoding'

AI Arms Race in Medical Billing

• Several commenters suggest startups using AI to automatically contest insurer “downcoding.”
• Others predict an arms race: provider AIs vs insurer AIs endlessly auto-denying/appealing, with patients and small practices locked out due to cost.
• Practitioners note the data and contracts are a mess; disputing is easier than just figuring out what contracts say and where they are.

Contracts, Leverage, and Limited Legal Recourse

• Some argue doctors should treat underpaying insurers like any debtor and pursue collections or small-claims court.
• Others respond that network contracts typically waive the right to sue and force appeals/arbitration inside the insurer’s process.
• Insurers hold leverage by controlling patient volume and cash flow; a single plan can cripple a small practice by cutting it from the network.

Upcoding vs. Downcoding: Both Sides Game the System

• Many say “downcoding” is the mirror image of providers’ “upcoding,” with both sides aggressively manipulating codes.
• Some with industry experience claim deliberate upcoding is relatively rare and heavily policed, while underpayment/downcoding by insurers is routine and harder for small practices to fight.
• Anecdotes describe questionable provider behavior (extra visits, unnecessary tests, double billing) and equally aggressive insurer denials and downcoding.

Patient Experience and Billing Opacity

• Commenters recount spending hours chasing why “preventive” or doctor-recommended tests weren’t covered, often with no clear answer.
• Stories include absurd itemized hospital bills, phantom procedures, and pharmacy prices that swing wildly depending on formulary and discount programs.
• “Cash price” can be far cheaper or far higher than insurance rates; figuring this out is itself a burden.
• Flexible spending accounts and benefit design are criticized as confusing and punitive (guessing future expenses, forfeiting unused funds).

Profit Motive and International Comparisons

• Long threads debate whether healthcare should be for-profit, with distinctions between paying wages vs distributing profits.
• Multiple commenters contrast the US with systems in Europe, the UK, Canada, Australia, and East Asia, describing lower patient costs, more predictability, and fewer billing battles—even when there are queues or limitations.
• Others note foreign systems still rely on profit-seeking manufacturers and providers; they attribute differences mainly to regulation and price controls, not the absence of profit.

Insurer Incentives and Margins

• One side argues insurers are the only force restraining provider excess, citing fraud and over-treatment.
• Another highlights Medical Loss Ratio rules but notes insurers still profit by minimizing payouts and adding friction, and that industry profit margins, though not huge, still represent money not spent on care.
• There’s disagreement whether insurers try to increase medical spending (to justify higher premiums) or cut it (to widen margins); commenters cite both downcoding behavior and MLR math.

Structural Problems and Proposed Reforms

• Fee-for-service and per-code billing are seen as core problems, encouraging both overtreatment and coding games.
• Alternatives mentioned:
  • Bundled payments (one price for an episode like childbirth).
  • Shifting “medical necessity” burden from doctors to insurers, with post-payment clawbacks.
  • Stronger price transparency and universal co-pays to create real price sensitivity.
  • Integrated provider-insurer systems and direct-to-consumer memberships.
  • Single-payer or government-run insurance with private delivery, modeled on other countries.
• Many doubt incremental, market-based fixes can overcome entrenched incentives, lobbying power, and regulatory complexity; others think targeted reforms and new business models could still improve things.