Effective July 1, 2026, Blue Cross and Blue Shield of Texas (BCBSTX) implemented an evaluation and management (E/M) downcoding policy that may result in reimbursement at a lower E/M service level than the physician originally billed. The Texas Medical Association met with BCBSTX leadership on Sept. 4, to raise concerns on transparency, process, and administrative burden under the policy.
1. What is downcoding, and why did BCBSTX implement this policy?
Downcoding occurs when a health plan reduces reimbursement by determining that a lower-level E/M service is supported rather than the level physician submitted .
2. Which physicians and specialties are affected?
The policy applies across specialties and places of service. BCBSTX says it identifies physicians whose E/M coding patterns differ from peers in the same specialty and geographic region. BCBSTX says being identified as a coding outlier does not necessarily mean a physician has coded incorrectly.
3. How does BCBSTX determine whether to downcode a claim?
BCBSTX says it evaluates coding patterns and reviews submitted CPT and diagnosis codes to assess whether the billed E/M level appears supported. Physicians with E/M coding patterns that differ from peers in the same specialty and geographic region will be flagged. BCBSTX says flagged claims are reviewed by human coders. However, the complete medical record is not considered, and it is unclear whether the human coder receives a recommended action or how long each flagged claim is reviewed.
4. How will I know if my claims have been downcoded?
A downcoded claim may appear on an Explanation of Benefits (EOB) as a payment reduction or other remittance advice. Some physicians may also receive educational notices or letters from BCBSTX’s Special Investigations Unit regarding their coding patterns.
5. How can I appeal a downcoded claim?
Physicians should review affected claims, compare the payment with the originally submitted E/M code, and submit an appeal with documentation supporting the billed level of service. Supporting documentation may include medical records, medical decision-making or time documentation, and relevant CPT E/M guidelines. Follow the applicable plan’s appeal instructions and deadlines.
6. Can I be removed from BCBSTX’s downcoding review process?
BCBSTX says physicians may be removed from the list of physicians with E/M coding patterns that differ from peers in the same specialty and geographic region when subsequent review demonstrates consistently appropriate coding or establishes that their patient population or services justify higher-level E/M coding. BCBSTX says it reassesses data approximately every two weeks but has not disclosed its specific removal thresholds.
7. What is TMA doing to address this issue?
TMA is advocating for greater transparency, clearer claim-level explanations, fair and accessible appeals, and reduced administrative burden.
What should physicians do now?
- Monitor EOBs and remittance advice for unexpected E/M payment reductions.
- Flag adjustment code CO-186, which indicates a level-of-care change adjustment.
- Document affected claims, retaining the original code submitted, payment information, and all supporting documentation. Submit an appeal in accordance with the applicable plan’s appeal instructions and deadlines.
TMA is here to help.
TMA members have access to assistance with payer disputes, downcoding, claim denials, appeals, and reimbursement concerns at no additional cost as a membership benefit. Contact TMA’s Physician Payment Resource Center to obtain assistance.
NOTICE: This FAQ is provided as general information only and is not intended to provide advice on any specific legal matter. Payment, coding, billing, and appeal requirements may vary depending on the terms of the relevant contract. This information should NOT be considered legal advice, and receipt of it does not create an attorney-client relationship. This is not a substitute for the advice of an attorney or other professional. Although TMA has attempted to present materials that are accurate and useful, some material may be outdated, and TMA shall not be liable to anyone for any inaccuracy, error or omission, regardless of cause, or for any damages resulting therefrom. You should not rely on this information when dealing with personal legal matters; rather advice from retained legal or other appropriate counsel should be sought. The information herein is not a recommendation or endorsement of any entity, product, service, company, or business model and should not be referenced in any way to imply such approval or endorsement.
This FAQ reflects information provided by BCBSTX during its Sept. 4, 2026 meeting with TMA.