Hi Marc,
The KFLOP Encoder inputs handle 1000000 counts/sec and you seem to be only moving at 200000 counts/sec so that is not likely to be an issue.
Also I would expect total loss of encoder tracking if that was the issue.
But you didn't show the rest of your parameters so I can't be sure what you are doing.
I assume these are brushed DC motors?
Maybe you don't have enough power supply voltage? What is your supply voltage and what is the back-emf constant for your motor?
Regards