Question

A payer practice in which a reported evaluation and management service is reduced to a lower level based strictly on the diagnosis code reported is known as:

Select one:
a. upcoding
b. bundling
c. unbundling
d. downcoding

Answer 1

The correct term for the payer practice of reducing the level of service based on diagnosis code is d) downcoding. This practice can affect the reimbursement healthcare providers receive, a key aspect to consider in various healthcare reimbursement models such as fee-for-service and HMOs.

Step-by-step explanation:

The payer practice referred to in the question is known as downcoding. This occurs when the reimbursement level for an evaluation and management service is lowered based on the diagnosis code reported, rather than the actual level of service provided. Downcoding can lead to a mismatch between the service delivered and the payment received by healthcare providers, and it is typically not favored by medical practitioners as it might result in reduced compensation for the services rendered.

Healthcare providers are reimbursed in different ways, including the fee-for-service model where the cost is based on services provided, or through HMOs where payments are based on patient numbers. Challenges in the health insurance market, like adverse selection, can cause imbalances, where higher risk individuals are more likely to purchase insurance, potentially leading to increased costs for the insurer.