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CMS Proposes Significant Changes to E/M Coding

The Centers for Medicare & Medicaid Services (“CMS”) recently released a proposal that would alter the Medicare Physician Fee Schedule (“MPFS”) and significantly change evaluation and management (“E/M”) code payment rates. Payment rates for services furnished by physicians and other non-physicians are published in the MPFS, and E/M visits account for about 40% of allowed MPFS charges. CMS’ goal with this new proposal is to make documentation less time-consuming and allow providers to spend more time with their patients.  However, the proposal, which would lower reimbursement rates, has not been well-received by all providers.

Currently, E/M codes range from levels 1-5; 1 being a relatively simple service performed by a non-physician, and 5 being the most complex service performed by a physician. CMS is proposing to collapse levels 2-5 for new and established patients, creating one flat rate for levels 2-5. By having a single payment rate, CMS is expecting patient care to improve.

Normally, when documenting for the higher-level codes, physicians use boilerplate language in order to meet billing requirements. There have been concerns that this boilerplate language can be harmful to patients because the clinically important information gets lost within it. Thus, by eliminating the need for nuanced language to distinguish each level, CMS hopes that patients will have more face time with their provider. Furthermore, when patients access their charts, they will be able to clearly understand what the issue is.

Despite the benefits that CMS anticipates with this proposal, many providers are concerned with the proposal, as they believe it will disincentivize providers from working with patients who have complex care needs if they can get paid the same amount for working with easier to manage patients. However, CMS claims that providers should only expect a 1-2% increase or decrease in reimbursement because the relative value units (RVUs) that payment rates are based off of will be the RVU midpoint between levels 3 and 4.

An example of how the payment rates will be changing is as follows: for new patients, a level 2 procedure would normally have a $76 payment rate, and a level 5 would have a $211 payment rate.  Under the proposed rates, both level 2 and level 5 will have a $135 payment rate. CMS claims that what providers lose in level 4 and 5 procedures, they will gain in the lower levels. CMS maintains that the potential loss of reimbursement for providers who primarily deal with level 4 or 5 cases will be made up by the large reduction in administrative and documentation burden.

With all of the polarizing comments CMS has received regarding this proposal, the future of it is unclear, but Wachler & Associates will continue to stay up to date with the trajectory of this proposal and other recent proposals by CMS. Furthermore, if you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at (248) 544-0888, or via email at You may also subscribe to our health law blog by adding your email at the top right of this page.

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