Payers are blaming “aggressive provider coding” for driving up medical costs, but health systems are pushing back on that narrative, arguing that the real issue lies not in upcoding, but in increasingly adversarial payer-provider relationships and administrative red tape.
Several major insurers have flagged high-acuity claims and increased utilization as key headwinds in recent quarterly earnings calls. UnitedHealth Group, Elevance Health, Cigna Group, CVS Health, Centene and Molina Healthcare in the second quarter all cited higher morbidity levels, rising demand for behavioral health and specialty drugs, and increased emergency room use — particularly within the Medicare Advantage, Medicaid and ACA markets. But layered within those trends was another common thread: concern over provider coding practices.
“We also do see a subset of providers employing more aggressive coding tactics,” Elevance CEO Gail Boudreaux told investors, noting that some organizations may be “inappropriately leveraging” the independent dispute resolution process to inflate payments.
That narrative doesn’t sit well with many hospital leaders, particularly those working within tight federal regulations and mounting revenue cycle complexity.
“The idea that hospitals are coding aggressively to drive up costs is misleading,” Robert Boos, vice president and chief revenue officer at Lynchburg, Va.-based Centra Health, told Becker’s. “Coding is governed by strict federal and industry standards, and health systems invest heavily in compliance, training and auditing to ensure accuracy. Higher-acuity coding often reflects more specific physician documentation and a sicker patient population, not manipulation.”
The clash over coding comes as health insurers are under mounting pressure themselves. UnitedHealth said its Medicare Advantage cost trend is now projected at 7.5% for 2025, up from just over 5%. Emergency department use, bundled outpatient services and pharmacy infusions are all contributing to the increase. The commercial market is also seeing elevated orthopedic and pharmacy costs, while Medicaid spending is being fueled by behavioral health and home health services.
Centene and Molina pointed specifically to “aggressive provider coding” as a key factor in the ACA business, where morbidity levels continue to rise. Some executives linked higher costs in Medicaid to redetermination efforts, which have shifted higher-acuity patients to the ACA and uninsured populations.
However, providers argue the coding narrative oversimplifies the broader issues at play, particularly around delays, denials and disputes that eat into clinical and administrative bandwidth.
“The real challenge isn’t aggressive coding; it’s the growing volume of payer denials and administrative friction,” Mr. Boos said. “Too often, claims are rejected for technicalities or through automated algorithms that don’t align with clinical realities. This isn’t a new issue, but we’re seeing a sharper escalation. Framing providers as the problem distracts from the fact that both payers and health systems should be working toward the same goal: ensuring appropriate payment for the right care delivered to the right patient.”
This growing friction may mark another phase in what many CFOs and revenue cycle executives describe as an ongoing payer-provider arms race, with each side deploying its own tools — data analytics, prior authorization software, audit teams, etc. — to manage margins. Whether this signals a more systemic shift in payer strategy or a short-term cost-control maneuver remains to be seen.
What is clear: the mistrust between payers and providers is building, and it’s putting more strain on already fragile reimbursement systems.
