The excellent care your specialty practice gives to patients won’t change. But how much Medicare pays you for seeing your patients might, starting in 2021. That’s when Medicare’s latest proposed changes to evaluation and management—or E/M codes—are set to take effect. With the right preparation, your patients will continue to get great care and your practice will maintain and protect its E/M revenue stream.

Let’s briefly review the latest proposed coding changes and implications for your specialty practice. I’ll walk you through five universal steps to take to prepare your practice for any changes that CMS may make now or in the future. Then, I’ll identify the benefits you’ll receive by taking these steps now rather than right before any new coding changes take effect.

How changes could affect your practice

As you know, E/M codes have been around since 1995. They’re the codes your specialty practice uses to represent the charges for a patient’s office visits. They include the following:

  • Outpatient office visit charges are first identified as either new patient encounters or established patient follow-up visits
  • Each patient type currently has five possible levels for a total of 10 unique codes
  • Each level has a sliding payment scale based on the intensity and complexity of the E/M services you provide
  • The level one rate is the lowest, and the level five rate is the highest

Essentially, CMS pays you more based on the acuity of the patient.

In its proposed Medicare Part B regulations for 2020, CMS said starting in 2021:

  • Medicare would keep the same five E/M codes for established patients
  • Medicare would eliminate one of the five E/M codes for new patients (the level one E/M code would be deleted)
  • Medicare would redefine each of the remaining nine codes based on new standards set forth by the American Medical Association
  • The new definitions would make each of the remaining nine codes more accurately and distinctly reflect care provided by specialty practices at each level for both existing and new patients
  • Deficient patient histories and physical exams will no longer count against the level of service provided as medical decision-making by itself can support E/M visit levels

The new proposal to tweak E/M codes replaces a previous plan by CMS to start paying one rate to your specialty practice for all level two, three and four office visit encounters in 2021. That change would have created three reimbursement rates instead of the current five.

To minimize the potential hit and maximize the potential bump, regardless of whether it’s from the new E/M coding plan from CMS or any future E/M coding plan from CMS, your specialty practice should take five universal steps to prepare. Not only will these five steps improve your reimbursement outlook under any scenario, they’ll reduce your chances of being audited if you make any sudden moves right before any new rules take effect.

Reducing your financial and audit risks

Your specialty practice can avoid both risks—less reimbursement and more audits—by taking the following five steps.

1. Assess E/M code utilization by individual physicians

Your specialty practice should use its internal billing system to pull and sort the E/M codes used by the physicians in your practice. It’s smart to go back at least once a year to see how many visits each physician billed at each of the five levels over the past 12 months. Then, break down those visits by percentage. For example, you should know that Dr. Smith billed 50 percent of his established patient visits at level four.

2. Compare physicians’ E/M code utilization against national averages

CMS publishes national averages of E/M coding by medical specialty each year. You should compare where your physicians stand against the national and regional average for their specialty. You’ll be able to see if your specialists overbill or underbill for visits with the same patients compared with their peers. If your practice is like most, physicians tend to underbill for two reasons: insufficient documentation and fear of a CMS audit.

3. Educate physicians on proper documentation

Whatever level E/M codes your physicians are using, they must be able to support their coding decisions with the proper clinical documentation. That documentation is found in the progress notes your physicians complete in a patient’s EMR following an office visit. Of the three key elements in the notes— history, physical exam and medical decision-making—the medical decision-making is the area where your physicians are likely not capturing all the necessary information to justify a higher level code. The medical-decision-making is primarily calculated using the information in the Assessment and Plan portion of the progress note. Physicians should record all the following for patients:

  • Diagnoses treated
  • Treatment plans
  • Chronic conditions
  • Comorbidities
  • Lab tests and radiologic exams (ordered or reviewed)
  • Requests for records
  • Current drug therapies
  • Interventions and disposition

4. Adjust E/M code utilization over time

You may find your physicians are underbilling Medicare for visits. Many physicians we work with typically bill 3-4 percent of their established patient visits at level five even when their documentation supports billing closer to 10 percent. But rather than immediately tripling your share of level five visits after your documentation education efforts take root—or right after any new E/M coding rules take effect—a better idea is to adjust the billing gradually, over long periods of time. If the documentation supports it, physicians should try to raise their utilization by a percentage point or two each quarter until they mirror the national average. This will reduce the risk of spurring an external audit by agencies like CMS and the OIG, while still increasing your revenue stream from E/M services.

5. Conduct regular internal billing audits

The final step is to conduct regular internal audits. You should do quarterly and ongoing reviews of your physicians’ documentation, coding and billing. You can do this yourself or by hiring an audit and compliance expert. Either way, the goal is to ensure that your documentation continues to support your coding, and that your coding continues to support your billing. You can flag and fix any gaps as soon as they come up rather than finding out about them after it’s too late.

How your specialty practice benefits

Following the five steps I’ve outlined above will generate two benefits for your specialty practice after any new E/M coding changes take effect.

First, your practice will see an increase in revenue from Medicare as your bills more accurately reflect the intensity and complexity of your visits with patients.

Second, you’ll reduce the chances of a CMS audit. Ensuring that your documentation is robust and billing your office visits appropriately not only reduce the risk of incurring an audit, they also mitigate potential monetary recoupments should one occur.

If your specialty practice supports clinical documentation improvement initiatives and conducts regular internal or third-party audits, your patients will continue to get great care, you’ll preserve and protect your revenue and you’ll avoid CMS audits.

Related: Learn more about McKesson’s business consulting services for specialty practices

Brad Howard

About the author

Brad Howard is a Practice Advisor for McKesson. With twenty years of healthcare experience, including reimbursement roles focused on billing, coding and auditing, he provides physician education, auditing services and clinical documentation improvement support. He has worked within multiple healthcare settings such as inpatient hospitals, outpatient clinics and ambulatory surgical centers. Brad is an AAPC Certified Professional Coder (CPC) and an ICD-10 CM/PCS Trainer accredited through American Health Information Management Association.

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