Hundreds of E/M (evaluation and management) codes are provided in the Current Procedural Terminology® (CPT) Manual. The most frequently used codes are for clinic visits, including new patient encounters (99201-99205) and established patient encounters (99211-99215).

Proper coding for physician E/M levels has been a long-term challenge dating all the way back to the implementation of the Medicare Physician Fee Schedule on Jan. 1, 1992. The fundamental documentation guidelines are found in the CPT® Manual itself. While there are a number of different factors, the main criteria for selecting E/M levels are:

  1. The history
  2. The examination
  3. The medical decision-making.

Each of these is subdivided further into four subcategories. For instance, the history or examination can be problem-focused, expanded problem-focused, detailed, or comprehensive. The four categories for decision-making are classified as straightforward, low, moderate, and complex. With a little consideration, you can conclude that translating the documentation in the record into the correct categories to produce the correct E/M level often presents a challenge.

Note: Physicians, coding staff, compliance personnel all should be aware that when a CPT code is used, it originates from a standard code set as established under the HIPAA TSC (Transaction Standard/Standard Code Set) Rule. The official guidelines must be followed regardless of the third party. Physicians may be lulled into a sense of security by using the lowest E/M level, 99212, as a default regardless of the documentation generated. At a minimum, however, the E/M level guidelines within CPT must always be followed.

The Medicare program has issued two sets of additional documentation guidelines:

  • 1995 Documentation Guidelines
  • 1997 Documentation Guidelines

The 1995 guidelines continue to be considered the official guidelines, although the 1997 guidelines can be used if beneficial, but one or the other must be used for Medicare. The 1997 guidelines were quite extensive, yet the medical community basically rejected them. Given all of the directives for E/M coding, one might think this should be a coding area presenting little difficulty, but that has not been the case.

OIG Involvement

The U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) long has been concerned about physician E/M coding. Several studies performed over the years have indicated that E/M coding is also an ongoing issue for physicians. Just last month the OIG issued a new report, titled Improper Payments for Evaluation and Management Services Cost Medicare Billions In 2010.

This OIG report is part of a series of reports addressing physician E/M coding accuracy. The findings of this report are not atypical from those of previous reports. The relevant study addressed E/M coding for 2010. Basically, 42 percent of the E/M codes were found to have been applied incorrectly, with 26 percent citing an inappropriately high cost, 15 percent citing a lower cost, and 19 percent lacking documentation. The incorrect payments amounted to $6.7 billion, the report indicated.

This is an overall error rate approaching 50 percent. Given the fact that these E/M codes have been in use for two decades, this continuing error rate is astounding! By any measure, these are significant improper payment amounts. Thus, there is little question that E/M level coding presents a major challenge.

Enter EHRs for Physicians

Recently, there has been a big push for electronic health records (EHRs) for physicians and clinics. The Medicare program has provided financial incentives tied to meaningful use. These systems are useful and generally result in increased documentation on the part of physicians, as well as documentation that is more readily retrievable. Some of these systems assess the documentation and then suggest an E/M level based on what is documented.

Going back some years, if you were an auditor conducting a physician E/M review, you would select cases based on a sampling of visits. While you might have had the main records for review, these records easily could refer to previous visits, separate problem lists, separate medication lists, etc. Thus, the documentation you had to review in the main records might be quite minimal. Even referring back to previous encounters may have yielded minimal information.

The documentation for each encounter is supposed to be self-contained, and meeting this mandate with manual records often represented a challenge. However, EHRs are quite adept at generating complete, self-contained records. Even if you are using only a standard template that is filled in, the record will tend to be complete.

However, there is a small downside relative to the ability to copy and paste with these EHRs. For instance, a patient may be presenting for a follow-up from an encounter that occurred two months ago. Consider a case study in which there was a visit at that time performed with a detailed history and detailed examination that was thoroughly documented. For the new encounter, it is all too easy to simply copy that history and examination and paste it into the new record. While there might be slight updates, most of the documentation is from the previous visit.

The remainder of the encounter will involve medical decision-making and will be so documented. If an auditor looks at this record, there will be a detailed history, a detailed examination, and medical decision-making documentation that is straightforward. Because this is an established patient, only two out of the three main elements need be present, and this would seem to support a level 4 (that is, the 99214 code).

Based upon this description for this case, it is most likely that 99212 is more appropriate, however. The American Health Information Management Association (AHIMA) has recognized this possible misuse of EHRs, having issued a paper titled “Appropriate Use of the Copy and Paste Functionality in Electronic Health Records”. Currently there are no real standards in this area, although the AHIMA paper discusses quite nicely what is needed (see also AHIMA’s “Auditing Copy and Paste”).

What about the RACs?

E/M coding has not really been on the radar of the Recovery Auditors (RAC s). Recent changes with APCs (ambulatory payment classifications) seem to have reduced the incidence of any real auditing for E/M services on the hospital and/or facility side of things. Currently there is only one hospital clinic visit code, and the Centers for Medicare & Medicaid Services (CMS) probably will revise the ED E/M codes (99281-99285) and critical care codes to reduce the volume.

However, on the physician side, the RACs certainly will take note of the aforementioned $6.7 billion figure. Keep in mind that the RACs are paid for identifying overpayments and underpayments. Thus, at least some share of this amount would seem fully available to them. This figure likely has grown over the years, too, and considering a multi-year span, the potential amount of inappropriate expenditures easily could approach $20 billion. This figure also may be increased by inappropriate copying and pasting activities.

How could a RAC possibly approach this kind of a monumental payday? The answer is through statistical extrapolation. Each individual E/M case would not involve that much of a payment differential, either higher or lower than what is appropriate. However, when considering tens and hundreds of thousands of cases at a time, even a differential such as $50 can add up quite rapidly, as the OIG has concluded.

The bottom line is this: 

  1. The proper choice of E/M levels for physicians and clinics continues to present an ongoing challenge, even in light of existing documentation guidelines.
  2. The OIG estimates that for 2010, there were $6.7 billion in improper payments issued.
  3. Physicians and clinics are moving toward EHRs, which have the possible disadvantage of allowing inappropriate copying and pasting.
  4. The RACs are certain to notice the possible huge recoupments available through statistical extrapolation.

About the Author

Duane C. Abbey, Ph.D., CFP, is an educator, author and management consultant working in the healthcare field. He is president of Abbey & Abbey Consultants, Inc., which specializes in healthcare consulting and related areas. His firm is based in Ames, Iowa. Dr. Abbey earned his graduate degrees at the University of Notre Dame and Iowa State University.

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