Doctor working on a laptop with a stethoscope on the desk next to him.

With so much focus on the potential E&M reimbursement reductions that could result from the CMS proposed rule changes in its 2019 Physician Fee Schedule (PFS), there’s another crucial E&M provision that’s gotten precious little attention – but could significantly cut your E&M revenue next year.

Essentially, CMS proposes to adopt a variation of the modifier 25 payment cut policy implemented already by several private payers, starting with Independence Blue Cross Blue Shield (IBX) in Pennsylvania, then picked up by multiple other payers (though some have since rescinded the policy in the face of provider protests).

“We are proposing that, as part of our proposal to make payment for the E/M levels 2 through 5 at a single PFS rate, we would reduce payment by 50% for the least expensive procedure or visit that the same physician (or a physician in the same group practice) furnishes on the same day as a separately identifiable E/M visit, currently identified on the claim by an appended modifier -25,” CMS writes in the 2019 PFS proposed rule.

This provision would reduce by 50% the payment for the associated procedure or service and not the E&M service itself, unlike the IBX policy, which took 50% off the E&M code with modifier 25 appended. The CMS proposal would apply the 50% reduction to the service itself, hitting such mainstays of outpatient procedures as therapeutic injections, immunization administrations, and in-office laparoscopies. CMS would not cut the payment of the E&M service, though by transitioning the outpatient E&M codes to a single blended rate (differing only based on whether patients are new or established), it will in effect reduce E&M payments for providers that tend to bill higher-level E&M codes.

CMS justifies this proposal by saying there is sufficient resource overlap in providing an E&M with a same-session procedure that the cut won’t be a big deal. “We believe that the efficiencies associated with furnishing an E/M visit in combination with a same-day procedure are similar enough to those accounted for by the [existing surgical multiple procedure payment reduction] to merit a reduction in the relative resources of 50%.”

Another reason can be found in the agency’s next statement (both are found in the text of the 2019 PFS proposed rule): “We estimate based on CY 2017 Medicare claims data that applying a 50% MPPR to E/M visits furnished as separately identifiable services in the same day as a procedure would reduce expenditures under the PFS by approximately 6.7 million RVUs.”

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CMS won’t simply pocket the dollars that come from those RVUs, however; it will reallocate those RVUs to the new, proposed add-on codes that primary care providers and specialists will report along with the existing outpatient E&M codes to help offset the RVU loss from the blended payment rates.

Some potentially daunting math will be involved in projecting potential impacts for your practice: You’ll need to look at how many E&M services you report with modifier 25, what a 50% cut to the procedures associated with those visits will look like, and then calculate the impact of the blended E&M rates combined with the add-on codes.

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