Grant Huang, CPC, CPMA
Director of Content at DoctorsManagement

CLARIFICATION – November 2020

The article below was originally published Dec. 14, 2018. Since that time, CMS made significant changes to its 2021 E/M provisions via the Medicare Physician Fee Schedule rule-making process. We have added the following updates to this article, to account for those changes. 

  • The single blended payment rate is dead. The original proposal to blend payment rates (assigning one flat rate for multiple codes) was scrapped. In fact, E/M payments for most codes will tick upwards (see below).
  • Payments are going up for outpatient E/M codes. CMS will revise work Relative Value Units (wRVUs) for these codes that were recommended by the AMA Relative Update Committee (RUC), which conducted a national survey on appropriate RVUs in 2018. The result is that most of the outpatient office E/M codes will pay slightly more in 2021.
  • You can’t choose which guidelines to follow. Earlier versions of the 2021 E/M rules in previous Fee Schedule rules allowed providers to use either the 1995/1997 guidelines or the new 2021 framework. Now there will be no choice: providers must use the 2021 rules starting Jan. 1, 2021.


Original Post December 14, 2018

CMS has granted coders and physicians a two-year reprieve from its decision to implement some of the biggest changes to E/M coding in decades – but even if the agency follows through with implementation in 2021, would your physicians’ workflow actually change?

There are many arguments for why 2021 won’t have much practical impact on your E/M coding and documentation, though it will alter your E/M payments under Medicare Part B, possibly by a significant amount (more on that later).

Remember: The changes begin with reducing the documentation requirements for the history and exam components, placing the emphasis on the level of medical decision making (MDM) and time spent with the patient. This change would also eliminate the existing requirement that counseling and/or coordination of care must dominate the time spent (occupy greater than 50%) in order for a code to be selected based on time.

The changes also drastically alter how E/M reimbursement works under Medicare, though we will discuss that later in this article. For now, let’s explore the reasons why the 2021 E/M changes are likely to have far less impact than might be expected.

  1. Only Medicare is committed to making the E/M change. CMS made the decision to alter its E/M rules, starting with suggestions and requests for comment in its 2018 PFS proposed rule, but CMS has no direct authority over any commercial insurance plans. Apart from Medicare Advantage plans, no commercial payer is bound to follow CMS down the E/M rabbit hole in 2021 – and not a single payer has publicly commented on their plans either way. This means you could only allow physicians to adopt more “relaxed” documentation rules for Medicare patients – and in most scenarios physicians rarely know the patient’s insurance situation prior to beginning their note. It seems likely physicians won’t want to lengthen their workflow by having to take this into account – it would be easier to ignore the E/M changes.
  2. Only outpatient office visit codes are affected. In an effort to gradually phase in the E/M changes, CMS is limiting the 2021 rules to outpatient office visit codes only (CPT 99201-99215). That means the changes will heavily impact physicians in private practice or those who primarily see patients in the office setting. Meanwhile, hospitalists and specialists who do the bulk of their E/M visits as inpatient consults will essentially be unaffected in 2021. Again, the difficulty lies in asking physicians to adopt two styles of documentation, one under the current rules, one under the relaxed rules.
  3. Some physicians won’t see enough Medicare patients to care. The type of physician most likely to see the biggest impact in 2021 would be adult primary care or geriatrics – any specialty whose patient population is of Medicare age. For such physicians, the rule change would mean that most of their visits could be documented more quickly. But would they want to tweak their note templates get used to a different rhythm? For some, the answer would be yes. For others, the answer might be no, especially if a significant minority of their patients are not on Medicare, so that every third or fourth patient would need an E/M note documented under the more rigorous existing standards.
  4. Time savings could be less than anticipated. Most providers familiar with E/M coding already spend relatively little time on documentation for level 2 and level 3 visits (especially for established patients), which represent straightforward and low complexity MDM respectively. The time savings would be greatest with level 4 and 5 visits, representing moderate and high complexity MDM respectively, and level 4s and 5s could make up the majority of visits for certain specialties. For example, primary care physicians favored level 4 codes in 2018, at least when billing for Medicare patients. An analysis of 2018 CMS claims data shows that internists selected 99204 (new patient office visit) about 50% of the time and 99214 (established patient office visit) about 52% of the time. What’s more, because level 5 services will not see a payment change, CMS would keep the time requirements the same: 40 minutes of face time with patients for 99215, 60 minutes for 99205. One improvement is that in 2021, coding based on time is simplified because the rules will eliminate the counseling requirement discussed at the top of this story.
  5. Medical necessity, not MDM, is still the overarching criterion. Medicare’s payment changes would appear to render the distinction between levels 2, 3, and 4 moot – they’ll be paid the same flat amount under the 2021 rules. Only the level 5 codes will retain their existing higher payment. However, nothing changes with respect to longstanding language in Medicare’s Claims Processing Manual that states medical necessity is the single most important driver of code level. Medicare expects, or at least its rules still require, that the code level chosen must accurately reflect the level of medical necessity shown in the note. So, the new rules don’t mean that physicians can pick a level 3 and forget about levels 2 and 4 because they pay the same. They are still obligated to pick a code level that corresponds to the severity of the presenting problem, intensity of management, and other aspects of medical necessity.
The real impact: E/M reimbursement changes

While the points discussed above support the argument that workflow won’t change much, what will change is E/M reimbursement under Medicare. The final rule scales back or eliminates some of the proposed provisions that would undeniably cut E/M reimbursement, but there will still be winners and losers under the final rule.

To recap, there will be two flat payment amounts for outpatient level 2-4 visits, with one payment for new patients and the other for established. Level 5 payments will be unaffected, because CMS agreed with fee schedule commenters that a higher-paying code is needed “to better account for the care and needs of particularly complex patients” in their words.

CMS released an updated table reflecting the final 2021 payment estimates, which we have included along with the 2019 proposed rules for comparison.

New patient 2018 rate 2019 rate (proposed, for comparison only) 2021 rate (final)
99201 $45 $44 $44
99202 $76 $135 $130
99203 $110 $135 $130
99204 $167 $135 $130
99205 $211 $135 $212
Established patient 2018 rate 2019 rate (proposed, for comparison only) 2021 rate (final)
99211 $22 $24 $24
99212 $45 $93 $90
99213 $74 $93 $90
99214 $109 $93 $90
99215 $148 $93 $149
Source: Table 24B, CMS 2019 PFS final rule; All rates are national average

To take again the example of primary care, because internists heavily utilized the level 4 codes when billing Medicare, the 2021 projection shows a payment drop of approximately 4% under the proposed rule. Internists’ utilization of level 5 services was relatively low nationwide under Medicare Part B, so the decision to allow the full payment amount for level 5s in 2021 has only a small impact on the overall reimbursement picture. What we don’t know is whether these changes would lead to more Medicare patients being seen in 2021 – or whether primary care billing patterns will change significantly due to the reductions in documentation requirements.

 NoteThese projections don’t include the impact of Medicare’s two new HCPCS codes for complex E/M services. These add-on codes, one for primary care and one for specialists, would tack on approximately $10 (using national average values) for more complex patients. We have no data on how frequently these would be billed, so we’ll have to wait until 2021 to factor in their impact.SCHEDULE YOUR FREE CONSULTATION

Here’s why thousands of providers trust DoctorsManagement to help improve their coding and documentation.

Quality of coders and auditors. Our US-based auditors receive ongoing training and support from our education division, NAMAS (National Alliance of Medical Auditing Specialists). All team members possess over 15 years of experience and hold both the Certified Professional Coder (CPC®) as well as the Certified Professional Medical Auditor (CPMA®) credential.

Proprietary risk-assessment technology – our auditing team uses ComplianceRiskAnalyzer(CRA)®, a sophisticated analytics solution that assesses critical risk areas. It enables our auditors to precisely select encounters that pose the greatest risk of triggering an audit so that they can be reviewed and the risk can be mitigated.

Synergy – DoctorsManagement is a full-service healthcare consultancy firm. The many departments within our firm work together to help clients rise above the complexities faced by today’s healthcare professionals. As a result, you receive quality solutions from a team of individuals who are current on every aspect of the business of medicine.

Call Us (800) 635-4040