E&M Flat Rate Reimbursement Delayed to 2021

Original story posted on: November 2, 2018


CMS on Thursday released the 2019 Medicare Physician Fee Schedule.

For 2019 and 2020, we will see no changes to our outpatient, office-based evaluation and management (E&M) services, but things will change come 2021 – that according to the E&M Final Rule released Thursday by the Centers for Medicare & Medicaid Services (CMS).

Before we go through the changes to come, I would like to offer a huge point of consideration. Since 2004, CMS has stated through the Claims Processing Manual that medical necessity is the overarching criterion in the selection of E&M levels of service. This will not change in 2021. What is changing in 2021? Your payment rate and the documentation “bullet requirements.” So as we review these changes, keep that in mind. Additionally, consider that while this is the Final Rule, there is still an opportunity for the American Medical Association (AMA) and others to petition CMS to modify or repeal it. As the Final Rule is digested throughout the healthcare industry, there will be more information to come on how and why organizations should continue to push for reconsideration of this CMS guidance.

The flat-rate reimbursement model for 2021 did pass, and the Proposed Rule suggested two considerations for the flat rate – one was that all office-based E&M levels have a flat rate, and the other that level 5 services would be excluded from the flat-rate approach. The Final Rule adapted the latter consideration by indicating that office outpatient levels of service 2-4 will have a blended rate, while the level 5 service would be exempt from the blended rate. CMS indicated that based on comments submitted, they understand that there should be a higher level of reimbursement associated with treating a complex patient.

However, consider a level 4 encounter. According to medical necessity, based on a patient’s presenting problem, such encounters represent an episode of care for an acute, complicated, and/or chronic exacerbated patient. Level 4 services still represent complex care, and are not representative of the same complexity of patients receiving a level 2 or 3 E&M service. It appears that CMS did take the thousands of comments into consideration when considering the time and mental effort required to care for complex patients, but failed to truly digest the message. The ironic thing is, CMS’s own message is that it reimburses for care that is patient-centric/visit-centric, but this new reimbursement model places all patients who do not present with threat to life or bodily function or a severely exacerbated condition (the medical necessity indicators for a level 5) into the same reimbursement bucket.

The Proposed Rule included a modifier 25 change, and that thankfully did not pass. The proposed change indicated that when a provider handled an office visit and a procedure on the same day and utilized a modifier 25 to unbundle the services to allow for full reimbursement for each, whichever of the two was of lower reimbursement would have a 50 percent reduction imposed on it. This proposal was based on considering the multiple procedures reduction by indicating that the E&M would be inherent with the medical decision-making (MDM) process for the procedure, and therefore not additionally reimbursed. There were many holes in this proposal, which may have contributed to the decision not to implement this change at this time. One such hole would be encounters during which a separate problem is also treated, and not just the reason for the procedure addressed. In such a case, the E&M was for a completely unrelated need, but with the proposed change, there would have been no additional reimbursement for encounters requiring significant additional work burdens. Many of the commercial carriers have already adapted similar reimbursement policies, and while we have been granted a reprieve from this change for 2019, the best guess is that it will rear its ugly head again in the near future.

The proposed new podiatric codes received a tremendous amount of negative feedback through the comments on the Proposed Rule. CMS took these comments into consideration and made the decision not to implement these new service codes at this time. While the conversation is now pretty much a moot point, I want to add a perspective on this. I read many of the comments posted by podiatric providers and suppliers, and I understand their concerns of feeling ostracized through the separation of their care. However, I believe what was overlooked was the increased reimbursement, which would have been an absolute windfall for this specialty. Many podiatrists are seeing more complex extremity care in their practices, and the care they provide should be reimbursed to more specifically reflect the care provided for complex problems than based on ill-perceived concepts of these specialized services.

CMS also identified new add-on codes they were considering. These codes would add to codes for office-based E&M services. GCG0X will be the add-on code used for specialty care providers in conjunction with the level 2-4 office-based outpatient E&M services. GPC1X is the add-on code to be used when primary care services are provided to a patient, and it too would be added to the reported 2-4 office-based outpatient E&M service. Note that in both scenarios, the new add-on codes are not to be reported with a level 5 encounter. The Final Rule includes CMS’s consideration of many of the American Academy of Family Physicians (AAFP’s) comments expressing concern for the interpretation of primary care, since there are some specialists that provide primary care for their patient populations. While CMS is soliciting additional comments to best posture these codes in two years for final adaptation, they are indicating that if a provider that routinely provides primary care such as a GP, FP, IM, or pediatrician reports, this code would not represent additional documentation needed to support the add-on code. However, if a specialist were to report this primary care code, we would expect the documentation to provide the relevance (i.e., medical necessity) of their provision of this category of care. Also worthy of note is that CMS also indicated that in the Proposed Rule, it was suggested that this code would be applicable to established patient encounters, but not necessarily new patient encounters. The Final Rule states that if the documentation identifies that even though the patient is new, the provider-patient relationship is one in which the provider will assume the role of primary care provider, then the code is reportable in conjunction with a new patient 2-4 level of outpatient E&M service.

GCG0X is the add-on code that should be used to represent the inherent complexity of an E&M furnished with non-procedural specialty care. In the Final Rule, the “official” code description acknowledges specialties, to include endocrinology, rheumatology, hematology/oncology, urology, neurology, obstetrics/gynecology, allergy/immunology, otolaryngology, interventional pain management, cardiology, nephrology, infectious disease, psychiatry, and pulmonology, all of which would be expected to report the specialty add-on code with each visit. Again, it would be expected that these providers would use these codes for each patient encounter within the code ranges of 2-4 for outpatient E&M services.

GPRO1 is another new G code that has been approved for 2021 implementation. It is an add-on code, again, used for levels 2-4 to represent “extended care” above and beyond the E&M encounter. This code is relevant to our current prolonged physician services rendered face-to-face. The provider must, as previously stated, document the total time of the encounter, to include a statement of medical necessity to support the additional time. The time required for this new G code is between 34 and 69 minutes (for established patients) and between 38 and 89 minutes (for new patients) of face-to-face time with the billing practitioner. CMS additionaly stated, “because we are not finalizing many of the changes for CY 2019 as proposed, we believe the inclusion of those same discussions in this final rule is unnecessary and could potentially be confusing.” Therefore, more details are to come before final implementation.

Finally, let’s discuss the big one: documentation relaxation, proposed for implementation in 2021. CMS fully adapted the provider’s ability to document encounters based on MDM, time, or the current framework documentation, as noted in the Proposed Rule. For documentation that is based specifically on MDM for levels 2-4, representing the blended reimbursement model, the provider would need to document the MDM to a level 2, at minimum. However, when opting for a level 5, they would need to better meet the current framework of such an encounter. When considering documentation based on time only, the minutes for new and established patients did not change from that laid out in the Proposed Rule. The biggest mindset change here for 2021 will be that counseling and coordination of care do not have to dominate the encounter to use time. Any visit may use time. The current framework is also a viable documentation instrument, and if commercial carriers and Medicare Advantage plans do not also adapt these changes, using it may increase administrative burden, as your provider will have to be cognizant of the insurance provider of every patient they document.

Regardless of the level of service reported, or your approach of MDM, time, or the current framework, the medical necessity of each encounter must be appropriately documented. Our current framework, if used properly, has featured this provision ever since the adaption of medical necessity in conjunction with the documentation guidelines. In 2004, CMS changed the game, according to the Claims Processing Manual, to indicate that we would no longer choose our level of service based on documentation content alone. That was only nine years after the adaptation of documentation guidelines, but long before electronic medical record/electronic health record (EMR/EHR) documentation, which does not always convey the complexity of medical necessity due to the cookie-cutter templates that have become an industry standard.

CMS changed the game. Medical necessity was the overarching criterion, so in 2004, CMS announced that documentation components ultimately would not define the level of service – but moving forward, it would be a combination of medical necessity and documentation requirements. That is long before EMR commercialization changed the face of our healthcare industry. But what is mind-blowing is how many people still do not know that this change to E&M code selection took place. For those who do know, often the problem is understanding exactly how we define medical necessity of an E&M encounter, and this problem won’t go away in 2021.

Before we move forward on defining medical necessity and showing how it and documentation guidelines marry so perfectly, let me explain what medical necessity is not. It is not evaluating the clinical care that was provided to the patient. As a non-clinician, I could never attempt to evaluate care delivered to a patient. What the medical necessity of the encounter should define is how complex the patient was to treat during today’s encounter. Complexity of care is the better term. How complex was the patient to treat today?

This makes perfect sense, as Medicare states that the medical necessity of a patient is driven by the presenting problem of the patient. Furthermore, our providers are tasked with painting a portrait of the patient upon each encounter to demonstrate this complexity of care. In order to truly assess the complexity of care, and to determine the level of medical necessity supported by the encounter, we consider the history to identify the severity of the patient’s problem according to the patient. This means defining the problem they’re here for, the symptoms they are experiencing because of that problem (and how their organ systems are being impacted by the problem), and what we need to know about their past family or social history that could complicate the problem. Then we have our assessment and plan. The problem is that the assessment is typically not used the way it should be. The assessment should identify the provider’s clinical opinion of how severe the patient's problem was during today's encounter. When we consider the severity of the patient’s account of their problem and compare that to the clinical assessment of the severity of the patient’s problem, we should then be able to see a clear connection of complexity to point us to the correct level of service. This is medical necessity, and unless the description changes in the next two years, it will remain what we need to consider through 2021 for each encounter.

Using the declared severity of the patient within the documentation of the encounter, we can now reasonably determine the level of service according to medical necessity, and here is how:

  • Level 1-2 requires very minimal medical intervention and should be reserved for those cases such as discharge from global care or an acute problem that the patient could have self-treated.
  • Level 3 is either a chronic problem that is stable or an acute uncomplicated problem.
  • Level 4 is a chronic exacerbated problem, or when our provider has adequately addressed two or more stable problems within the history and the plan of care (or, an acute complicated problem).
  • Level 5s are reserved for those patients who have an acute problem posing threat to life or bodily function, or patients who have a chronic problem with severe exacerbation- during today’s encounter (not if left untreated two weeks, two months, or two years from now).

While the current Final Rule indicates that we will randomly choose levels 2-4 in 2021, we still will be required to demonstrate the medical necessity of each encounter. The current framework defines how complex our patients truly are, and even in 2021, it would be the best way to support your patient encounters.

Consider this: under the current framework, for an established patient level 3, we need one HPI (symptom(s) the patient is having), one ROS (verifying if other organ systems are being impacted by the problem), and zero PFSH, with two organ systems on exam. Let’s use an example to show how medical necessity (complexity of care) and documentation guidelines marry perfectly:

A patient presents with chronic stable diabetes. They are here for follow-up and medication refills. Based on the medical necessity, as noted above, that would represent a 99213 as one chronic stable problem. Remember, I only need one HPI, one ROS, and two organ systems on exam, but doesn’t this make sense? If the diabetes is “stable” (which is “quality,” in the HPI) then would our patient have any other symptoms? No, so there wouldn’t be a need for further HPI. If the problem is stable, then our provider should validate this by checking to see if a related organ system is being impacted; we would expect the organ system check to be negative, further validating stability and meaning there is no need to go further with other organ systems. We don’t need PFSH because again, the patient is stable. On exam, our provider needs to evaluate two organ systems related to the problem again to ensure the problem truly is under control.

You see, we don’t need a 10-point ROS or an eight-point body system exam. Many of us coders and auditors have stood behind providers for years, saying “please just give me four HPI, 10 ROS, three PFSH, and an eight-organ system exam so I can bill whatever I need…” So, we taught note bloat. In trying to make it easier for them, we actually complicated the process. Then EMR came on the scene and commercialization entered the healthcare documentation space, further blowing this out of proportion.

So in 2021, we may not need specific ROS, PFSH, or exam elements, but we will still need to demonstrate the medical necessity of every encounter.

Let’s use one more example to ensure this makes sense:

The same patient comes in today, and their sugars are not stable. They are having issues trying to keep their sugars under control. Now they are chronically exacerbated, and according to medical necessity, that has the ability to support a level 4 or maybe a 5, depending on how uncontrolled the sugars really are. Now, documentation guidelines change for a level 4. My patient is not stable, so I need to know more about them to best provide the treatment they need. Now we need a score of 4 for HPI, 2 for ROS, 1 for PFSH, and two organ systems on exam with the impacted system in “detail” (1995 exam guidelines) for a 99214, and this makes complete sense. The diabetes is no longer stable, so it makes sense that my provider would need to know more HPI, such as how long the patient has had diabetes, how high their sugars have been, what medications the patient is currently on, and when the sugars are fluctuating the most. Four HPI elements give the provider the personal history about my current problem to reflect how severe it really is.

Now we turn to ROS;we still do not need 10 ROS, we need a minimum of two, and again, this makes sense. If the problem is not stable, then the provider should inventory what organ systems might be impacted at this time to know how to best treat the problem. In our example of diabetes, our provider might ask about weight loss/gain (constitutional ROS) and edema (cardiology ROS), because, depending on the severity of the uncontrolled diabetes, these organ systems (and potentially others) may be impacted. If they are, this would again show the severity of the patient’s problem. Now, we do need one element of PFSH. The PFSH so often is copied and pasted and pulled forward, and yes, we count that, but think about this: in our uncontrolled diabetic patient, couldn’t we actually use social history to better show the complexity of the patient? The patient drinks a bottle of wine at her Tuesday/Thursday bunco games; now we know why her sugars are all over the place. On exam we need two organ systems reviewed, with the impacted organ system in detail. Again, we could point to vital signs, and cardiovascular, because if the sugars are uncontrolled, these systems (and potentially others) might be impacted.

Under the current framework, we do not need a 10-point ROS or an eight-point exam unless our provider is billing an established patient level 5 or a new patient 4/5. Our providers are using templates as seatbelts, because they have been taught to make sure they have 4 HPI, 10 ROS, 3 PFSH, and eight exam elements, yet all the while they fail to demonstrate truly how sick and complex the patient is, because they relied on templates just to make sure they had all of the documentation bullets met – even though they weren’t needed.

We need to understand that the current way in which we document E&M office-based services is not arduous, difficult, or creating an administrative burden – we have done that ourselves by not fully understanding the concepts of medical necessity and their proper integration with documentation guidelines. Changes to E&M reimbursement or documentation requirements is not what we need, although it appears we are getting a full dose of it. We all have endured countless training sessions on E&M services that focus on the documentation requirements of what must be in the documentation for each encounter, but maybe the real change we needed was focused training on what we don’t need in every single E&M service.

Regardless, we have two years to ramp up to MDM, time, or stick with what we know. It seems we have much more to discover (and help CMS discover) about the new path they are blazing in E&M services. I am willing to admit that one of my weaknesses is a resistance to change (could you not tell that by the tone of my article?), but I will challenge myself and you to ask the question: is it time for change? Is this what will make healthcare return from defensive strategies of patient care and continuity care being at the forefront? With such a drastic change, we can only hope so.

Shannon DeConda CPC, CPC-I, CEMC, CMSCS, CPMA®

Shannon DeConda is the founder and president of the National Alliance of Medical Auditing Specialists (NAMAS) as well as the president of coding and billing services and a partner at DoctorsManagement, LLC. Ms. DeConda has more than 16 years of experience as a multi-specialty auditor and coder. She has helped coders, medical chart auditors, and medical practices optimize business processes and maximize reimbursement by identifying lost revenue. Since founding NAMAS in 2007, Ms. DeConda has developed the NAMAS CPMA® Certification Training, written the NAMAS CPMA® Study Guide, and launched a wide variety of educational products and web-based educational tools to help coders, auditors, and medical providers improve their efficiencies. Shannon is a member of the RACmonitor editorial board and is a popular guest on Monitor Mondays.

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