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Depression is a prevalent and debilitating mental health condition that poses significant challenges for healthcare providers, researchers, and policymakers. The diagnostic coding specificity of depression is crucial for improving patient care, resource allocation, and health outcomes. We propose a novel approach to assess risk-adjusted coding specificity for individuals diagnosed with depression using a vast cohort of over one million inpatient hospitalizations in the United States. Considering various clinical, demographic, and socioeconomic characteristics, we develop a risk-adjusted model that assesses diagnostic coding specificity. Results demonstrate that risk-adjustment is necessary and useful to explain variability in the coding specificity of principal (AUC = 0.76) and secondary (AUC = 0.69) diagnoses. Our approach combines a multivariate logistic regression at the patient hospitalization level to extract risk-adjusted probabilities of specificity with a Poisson Binomial approach at the facility level. This method can be used to identify healthcare facilities that over- and under-specify diagnostic coding when compared to peer-defined standards of practice. [ABSTRACT FROM AUTHOR]