Changes of the Documentation Requirements and Fee Schedule for Evaluation and Management Codes

On July 27, 2018, CMS issued a proposed rule which would modify the documentation requirements. It would adopt a single payment for evaluation and management codes (“E/M Codes”) for levels 2 through 5. CMS took public comments on these proposed changes and issued a final rule on November 23, 2018.

Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2019; Medicare Shared Savings Program Requirements; Quality Payment Program; Medicaid Promoting Interoperability Program; Quality Payment Program-Extreme and Uncontrollable Circumstance Policy for the 2019 MIPS Payment Year; Provisions From the Medicare Shared Savings Program-Accountable Care Organizations-Pathways to Success; and Expanding the Use of Telehealth Services for the Treatment of Opioid Use Disorder Under the Substance Use-Disorder Prevention That Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act, 83 Fed. Reg. 59,452 (Nov. 23, 2018). CMS Adopted some and modified other proposals and established two different effective dates for those changes, January 1, 2019, and January 1, 2021

January 1, 2019 Changes

Under Prior CMS’s requirements, when documenting a home health visit E/M Code, CMS required a provider to document the medical necessity of furnishing a home visit in lieu of an office or outpatient, as well as documenting that the patient was confined to his or her home. Effective January 1, 2019, CMS is lifting this restriction, such that a provider documenting a home health care visit no longer needs to separately document the medical necessity of furnishing the service through a home visit. 83 Fed. Reg. at 59,630.

Also, effective January 1, 2019, CMS is removing redundancies in medical record documentation. Id. at 59,634-35. Prior guidelines for E/M Coding required documenting the review of systems and/or the pertinent past, family, and/or social history (“PFSH”) for the appropriate level of service. This often required a provider to unnecessarily document information that was already located in the medical record. Effective January 1, 2019, when a provider reviews information in the review of symptoms and/or PFSH, and there are no changes to the information. The provider only needs to document that he reviewed the old information, that there was no change in those areas and the date those earlier reviews were done.

A provider must still document anything that has changed in the review of symptoms or the PFSH or any pertinent items related to the service provided to the patient. However, providers no longer need to re-record review of systems and/or PFSH that has not changed, so long as it is documented that the information was reviewed and the date it was obtained.

Finally, as of January 1, 2019, practitioners need not re-enter information in the medical record related to a patient’s chief complaint or history that was obtained by ancillary medical staff or by the patient. Id. at 59,635.

January 1, 2021

Many of the proposals in the earlier rule were due to be effective on January 1, 2019. However, CMS recognized that many proposals may cause greater administrative burdens to implement and require time for practitioners to adjust their practices. Part of this was recognizing that the American Medical Association (“AMA”) CPT Code manual would not be modified by CMS’s decision or that private insurer would not necessarily follow suit, thus creating to different coding requirements and reimbursement levels for providers. As such, CMS has delayed implementation until January 1, 2021, on the following changes.

First, CMS is giving providers a choice in how to document the level of service being provided. Providers can choose from (1) the current framework of using the 1995 or 1997 guidelines; (2) the complexity of the medical decision-making involved; or (3) the face-to-face time the provider spent with the patient.


As part of the policy to merge various levels of service, when coding based off of medical decision-making, practitioners would only need to document the medical necessity of the visit and straightforward medical decision-making associate with a level 2 CPT Code, unless the visit is a level 5 service, at which point high-complexity medical decision making would need to be documented in the patient record.

Previously, use of time to code a level of service was limited only to instances in which counseling and/or coordination of care accounted for more than 50 percent of the encounter. Effective January 1, 2021, providers can use face-to-face time with a patient to determine the appropriate level of service. When using the time to document a level of service, a provider would need to document the medical necessity of the service and then the amount of face-to-face time spent with a patient typically associated with the level of service.

Second, in the July 27, 2018 proposal, CMS proposed merging levels 2 through 5, such that the documentation requirements and reimbursement would be the same for all levels of service. The table below demonstrates CMS’s proposed Rates.

Preliminary Comparison of Payment Rates for Office Visits

Id. at 59, 637.

Many commentators to the rule expressed concern that such a change would lead to lower reimbursements, disincentive practitioners from providing care to high-complexity cases. Providing high-complexity services at the lower reimbursement would cost more in resources. Following the comment period, CMS modified its proposal so that levels 2 through 4 would be merged for a single documentation requirement and that level 5 services would be a separate level of services.

For level 5 services, the service could be documented the same way it is, documented with the medical decision-making elements of a level 5 service, or documented with the typical times associated with level 5 services. The table below indicates the time and final inputs that will go into coding the various CPT Codes. CMS is currently working on the payment rates that will apply in CY 2021.

Finalized Inputs for E/M Office/Outpatient Codes for 2021

Id. at 59, 638.

Effects of the Changes

Once the changes go into effect, CMS expects they will alleviate administrative burdens on providers billing E/M Codes. However, some burdens may be increased should other payors not follow CMS’s example and update their requirements for E/M services. Furthermore, there is also likely to be a reduction in some of the payments made to providers under these changes. CMS noted in the rule that levels 3 and 4 were the most commonly billed E/M services.

Based off CMS’s proposed payment rates in July, reimbursement is equivalent to a midpoint between a level 3 and 4 payment. However, the proposed rates included a level 5. So, a level 5 is separately billed, it is likely that the single payment rates for levels 2 through 4. This is going to be close to the equivalent of a level 3 under the current system. Chapman Law Group will assist the practitioner affected by these changes in ensuring compliance with the documentation requirements. This ensures practitioners are billing for the appropriate service and being compensated in a fair manner for the work he or she is doing.

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Written By:

Aaron J. Kemp

Senior Attorney

Chairperson of Professional Licensing & Regulatory Affairs

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