CMS Proposes Significant E/M Coding and Documentation Changes

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On July 27, 2018, the Centers for Medicare & Medicaid Services (CMS) published its proposed annual update to the Medicare Physician Fee Schedule, which proposes changes to the E/M coding and documentation process that CMS believes should reduce burdens on physicians and create a process that better reflects current medical practice. This year’s proposals apply only to office and outpatient visits (CPT codes 99201 through 99215), but CMS promises to consider changes to other areas (inpatient hospitals and emergency departments, for example) in the future.

The proposed rule recognizes that the current E/M coding system was developed in the 1990s, based upon the prevailing medical practice of that time. Changes in practice, however, have resulted in an E/M coding system that does not accurately reflect current practice and, in particular, the physician and other resource costs associated with different E/M visits. For these reasons, the proposed rule includes new options for level of service reporting, creating a single reimbursement rate for Levels 2 through 5 for new patients, a single reimbursement rate for Levels 2 through 5 for established patients, and a new bundling policy and add-on G-codes to more accurately distinguish (and reimburse) certain E/M visits.

New Options for Level of Service Reporting

If the proposed rule is finalized, physicians would have new options for selecting an E/M visit code level of service beginning January 1, 2019. Instead of selecting a level based on the 1995 or 1997 documentation guidelines alone, physicians would choose between the 1995 or 1997 guidelines, time, or medical decision-making as a basis for their selection. Per CMS, “[t]his would allow different practitioners in different specialties to choose to document the factor(s) that matters most given the nature of their clinical practice.”

Under the current rules, time can be used as the basis for determining the level of service only if at least 50 percent of the visit involved counseling or coordination of care. The proposed rule would eliminate this requirement so that physicians would document a visit based on time regardless of the amount of counseling or coordination of care provided.

One Payment Rate for Levels 2 through 5

CMS intends to collapse the payment amounts for Levels 2 through 5 into a single rate for new patients and a single rate for established patients, subject to adjustment via a series of proposed add-on G-codes (discussed below). The proposed rule indicates that CMS considered creating entirely new HCPCS codes to reflect the payment amounts, but decided to retain existing HCPCS codes to reduce the administrative burden associated with such changes. Under the proposed rule, physicians would still bill the code that matches the level of service furnished, but the rate paid would be the same regardless of level. CMS indicates that its goal is to relieve documentation burdens, noting that, by equalizing reimbursement regardless of level, visit levels would no longer need to be audited. CMS has provided the following chart that shows how the proposed changes would translate to payment rates if they had been implemented in calendar year 2018.

New Patients


Current Non-Facility Payment Rate

Proposed Non-Facility Payment Rate

















Established Patients


Current Non-Facility Payment Rate

Proposed Non-Facility Payment Rate

















New Bundling Policies and G-Codes

While eliminating changes in reimbursement based upon the traditional HCPCS code level, the proposed rule reflects CMS’s view that adjustments are necessary to distinguish certain E/M visits. The proposed rule makes those adjustments through a new bundling policy and newly created G-codes. Under the new bundling policy, separately identifiable E/M visits provided on the same day as a procedure would be bundled with the procedure and CMS would reduce by 50 percent the reimbursement for the less expensive of the separately identifiable E/M visit or the procedure. The proposed rule also includes additional G-codes to distinguish E/M visits that CMS believes involve work and resources beyond the typical E/M visit. These new G-codes would identify primary care E/M visits for continuous patient care, specialist E/M visits involving inherent complexity, podiatry E/M visits, and E/M visits involving prolonged care and result in additional reimbursement for those visits.

Estimated Impact of E/M Coding Changes

The proposed rule includes CMS’s estimate of the impact of these E/M coding and reimbursement changes on various medical specialties. CMS predicts that Obstetrics/Gynecology would see the largest increases in reimbursement – at approximately 4 percent, and that Rheumatology, Dermatology, and Podiatry would see the largest decreases in reimbursement, -3 percent, -4 percent, and -4 percent respectively, with other specialties falling somewhere between these extremes. In general, CMS observes, specialties that provide a significant proportion of E/M visits on the same day as procedures would see larger reductions in E/M visit reimbursement, while specialties that bill a larger proportion of procedures at lower HCPCS levels, and utilize a higher proportion of the add-on G-codes for inherent visit complexity, would likely see greater increases in E/M visit reimbursement.

Focused Efforts to Reduce Documentation

CMS is proposing several changes to reduce documentation in targeted areas.

  • For office/outpatient E/M visits, physicians would need to meet only the documentation standards required for a Level 2 visit, provided they are documenting based on the 1995 or 1997 requirements or medical decision-making.
  • E/M physicians would no longer need to document the medical necessity of a home visit versus an office or outpatient visit.
  • When ancillary staff or a patient has entered information in the medical record regarding the patient’s chief complaint and history, physicians would no longer need to re-enter that information. The physician needs to simply indicate in the record that he/she reviewed and verified the information.

While these changes may be a sign that CMS is listening to the medical community and focused on updating a decades-old system to match current practice, provider reaction is likely to be mixed given the predicted changes in reimbursement. CMS is accepting comments until September 10, 2018.

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