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CMS Proposed Rule Would Overhaul E/M Visit Payments and Documentation

“Historic changes” may be coming for providers who treat Medicare beneficiaries, according to the Centers for Medicare & Medicaid Services (CMS).

On July 12, 2018, CMS published its latest proposed rule—1,473 pages addressing topics that range from telemedicine to reimbursement rates for Part B drugs to the Merit-Based Incentive Payment System. The agency’s press release touted the rule as an effort “to modernize Medicare and restore the doctor-patient relationship.”

This post unpacks two of those proposals, which would fundamentally alter how CMS pays for outpatient Evaluation & Management (E/M) visits and how providers document those encounters.

Blended Rates for Levels 2-5

Outpatient E/M visits account for 20% of all allowed charges under the Physician Fee Schedule (PFS). Providers and practice managers are all too familiar with CMS’s five-tiered coding structure based on visit complexity, as well as the documentation required to support each code.

CMS now proposes to eliminate the reimbursement structure tied to those codes. Instead of tying payments to specific levels, CMS would pay providers the same rate for all E/M visits coded Level 2 to Level 5. The blended rates CMS suggests–$135 for new patients and $93 for established ones–would increase compensation for Levels 2 and 3 but decrease it for Levels 4 and 5.

In addition, CMS proposes a series of add-on codes to capture services beyond what a standard visit at any particular level might involve. For instance, one add-on ($5) would recognize that primary care E/M visits often require extensive, face-to-face patient communication or involve inherent complexity in the management of chronic conditions. Current codes often do not account for these factors. Another add-on ($9) is designed to reflect inherent complexity for specialists whose billing includes a high proportion of Level 4 and Level 5 E/M visits.

Streamlined Documentation and Provider Choice

In a related proposal, CMS is looking to reduce the paperwork burden associated with E/M visits by eliminating requirements that do not contribute to patient care. CMS Administrator Seema Verma issued an open letter to doctors on July 18, 2018, acknowledging that the current regulations require providers to “document[] lines of text that add no value to a patient’s medical record” and to waste valuable time “clicking through screens and copying and pasting.”

To address this problem, CMS’s proposed rule would give providers more flexibility to conform their documentation to the needs of their practices. Providers would be able to use one of three methods to determine what level is appropriate for any E/M visit: (1) the current framework under the 1995 or 1997 documentation guidelines; (2) medical decision-making; or (3) time. The rule would establish a minimum documentation requirement with an interval-focused history and exam. Moreover, physicians could simply verify some information entered into the record by an ancillary staff member or a beneficiary instead of re-entering that data.

Possible Impact on Providers

Should these proposed rules go into effect on January 1, 2019, their impact will likely vary based on provider specialty, setting, and patient population. On its face, the rule would seem to disadvantage clinicians who provide more complex care.

CMS created a statistical model to forecast the effects of the blended billing code and add-on codes on Medicare payments to particular specialties. It predicts the biggest winners from the proposed system would be OB/GYN specialists and nurse practitioners, who could enjoy 4% and 3% gains, respectively. Podiatrists, dermatologists, and rheumatologists fare the worst under the model, with expected decreases in payments of 4%, 4%, and 3%. For the fast majority of specialties, CMS predicts a change of less than 3%.

Moreover, CMS says the reduced administrative burden from simplified billing and documentation would make up for any reduction in reimbursement rates. CMS estimates that its proposed changes would save an individual provider 51 hours per year, if 40% of his or her patients are Medicare beneficiaries. It also predicts that practices’ administrative costs would decline because the new blended payment would eliminate the need to audit against codes.

CMS is soliciting public comment on these issues and all others addressed in the proposed rule. The comment period ends on September 10, 2018.


David Senter is a member of the firm’s health care industry group and advises health care providers concerning regulatory compliance matters. David also advises and represents clients in state and federal court in a number of areas including business litigation, products liability, and trucking and transportation. Contact David at (919) 861-5095 or David.Senter@youngmoorelaw.com.


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