E/M codes: Change is here

By Allison Evans, assistant managing editor, January 1, 2021

Evaluation and management (E/M) visit codes are by far the most heavily used codes across all specialties. They accounted for about 15% of all dermatology Medicare Part B expenditures in 2018, according to Medicare Part B utilization data. Before the updates to the Office or Other Outpatient E/M codes were implemented this year, E/M coding was complicated, and burdensome. In addition, the payments hadn’t been updated in a decade, said James Scroggs, MHA, the Academy’s associate director of regulatory and payment policy.

The Centers for Medicare and Medicaid Services (CMS) sought to address these issues in 2019 when the agency proposed merging the new and established patient E/M office visit levels 2-5 reimbursements into one payment amount.

“This would not have been helpful to dermatology as a whole because it would have reimbursed a simple, straightforward visit at the same level as some of the more complicated patients we see, like those with cutaneous t-cell lymphoma or lupus, which may require multiple medications, close monitoring, and lab work,” said Alexandra Flamm, MD, an alternate advisor for the Academy with the American Medical Association (AMA) RVS Update Committee (RUC).

To offset the cost of the consolidation, CMS also proposed reducing payments for the E/M service or the procedure by 50% when the E/M service was reported with modifier 25. The modifier 25 cut would have resulted in a reduction in office E/M payments for dermatologists of about 25%, or about 7% of total dermatology payments. After vehement opposition from the medical community, CMS held off on its proposal, giving the house of medicine the opportunity to take the lead.

The house of medicine attempts to solve the problem

The AADA, the AMA, and other partner organizations and societies implored CMS to allow the AMA CPT Editorial Panel and the RVS Update Committee to find a more equitable solution that would not penalize dermatologists and other specialty physicians and would reflect the actual amount of work done by a physician or qualified health professional (QHP) while also satisfying CMS’s financial concerns.

“We wanted to try to create something better, something that would decrease the administrative and documentation burden, but at the same time would appropriately reimburse physicians for the time spent with patients and the medical decision making that goes into it,” Dr. Flamm explained.

The CPT panel made several code changes and the RUC made valuation recommendations to CMS. The agency accepted the recommended changes, and these changes, as well as a few add-ins from CMS, went into effect Jan. 1.

This month, DermWorld provides a comprehensive overview of the restructuring of E/M codes so that dermatologists can confidently code office-based E/M services to ensure appropriate reimbursement. The article will also explain why dermatologists may see changes in payment in 2021 because of the changes to E/M codes.

Choose one: MDM or time

Most notably, and what is likely a breath of fresh air for dermatologists, coding for office or outpatient E/M services is now based solely on either the level of medical decision making (MDM) OR total time spent by the physician (or QHP) on the date of the encounter. While a medically appropriate history and examination must be documented in the patient record, it will not impact the billing level, said Alexander Miller, MD, who represents the Academy on the AMA-CPT Advisory Committee.

“Coding guidance for the 2021 E/M service codes has a clear focus on patient care,” said Scroggs. “By reducing the administrative burden of checking boxes for the history and examination, the new guidelines allow dermatologists to code for E/M services based on their medical decisions.” These changes promote appropriate coding and payer consistency when audits are performed.

“It’s just going to be easier,” said Dr. Miller. “You don’t have all of these different facets of history and physical exam and problem severity to deal with. We just have medical decision making or time.”

Physicians will need to decide whether it is more appropriate to report a patient visit by MDM or total time. In the previous structure, total time could be reported as the sole determinant — but only when greater than 50% of the time spent with the patient was spent on coordination of care or counseling. Now time alone can qualify, regardless of whether it is for coordination or counseling.

Breaking it down

Medical decision making

MDM includes establishing a diagnosis, assessing the status of a condition, and/or selecting a management option. “Within the criteria of medical decision making, the levels are explained much more effectively and with much greater specificity per level so that we can choose more easily,” explained Dr. Miller.

In 2021 there are four levels of MDM: straightforward, low, moderate, and high. The four levels of MDM include the following three elements:

• Number and complexity of problems addressed during the encounter

• Amount and/or complexity of data reviewed/analyzed

• Risk of complications, morbidity, and/or mortality of patient management

Two of the three elements listed above must be met or exceeded to qualify for each level of service. The combination of these elements determines the E/M level of service reported. None of the MDM concepts apply to code 99211 (keep reading to find out why).

Time

The AMA has changed the definition of the time element associated with codes 99202-99215 from typical face-to-face time to total time spent on the day of the encounter and the amount of time associated with each code. Total time includes non-face-to-face services and reflects clear time ranges for each code.

Total time includes time in activities that require the physician/QHP and does not include time in activities normally performed by clinical staff. Time includes the following activities, when performed:

• Pre-service work, such as obtaining and/or reviewing separately obtained history/laboratory data prior to a face-to-face interaction with the patient

• Intra-service work, such as face-to-face patient work including performing a medically appropriate examination and/or evaluation and counseling the patient/family/caregiver, and educating, charting

• Post-service work, such as coordination of care, ordering medications, laboratory tests or procedures, referral letter writing, and documenting clinical information in the electronic or other health record by the physician/QHP

Each CPT code, 99202-99205 and 99212-99215 has defined time ranges listed within the code descriptors.

So long, 99201

As most dermatologists may be aware, the new patient code 99201 no longer exists. “In 2020, the CPT-defined difference between codes 99201 and 99202 hinged upon distinctions in history and examination (problem focused versus expanded problem focused) areas, whereas the medical decision making is ‘straightforward’ for both,” Dr. Miller explained. Since code selection is now based solely on MDM or total time, and the MDM for both 99201 and 99202 is “straightforward,” the two codes would have had an identical MDM definition. Instead, physicians can use the new MDM qualifying criteria, a straightforward MDM visit, which would be reported with CPT 99202. Another option would be to report the visit based on the total time spent dealing with the patient’s problems on the day of the visit.

What about CPT code 99211? Is it deleted? “No. It is preserved, but somewhat modified,” said Dr. Miller. “Since 99211 describes attention given to minimal problems for which the presence of a physician/QHP may not be required, MDM is not factored into this code selection. Neither is time relevant, as a physician/QHP is not required, and time is only summed for services delivered by a physician/QHP.”

CMS’s add-on code and valuation changes

In addition to the coding changes proposed by the CPT-RUC workgroup, CMS included an add-on code, G2211, for complex E/M visits, which costs an additional $3 billion. “The Academy does not support this code and it is something we have actively opposed,” Scroggs said.

Furthermore, CMS has increased the value of several cognitive services to be paid more consistently with the office and outpatient E/M visits, including but not limited to: Transitional Care Management (TCM) Services; Cognitive Impairment Assessment and Care Planning, and Initial Preventive Physical Examination (IPPE); and Initial and Subsequent Annual Wellness (AWV) Visits. The AADA is advocating that the E/M reimbursement changes are reflected/flow through into those codes that have incorporated an E/M value into them, including procedures with global periods.

Budget neutrality and reimbursement

The work relative value units (RVUs) increased for nearly all E/M services, resulting in higher payment rates for the services that account for about 40% of all Medicare Physician Fee Schedule spending in a given year. CMS asserts it is required to apply the budget neutrality adjustment, which reduces the conversion factor by 10%.

Budget neutrality was passed on the congressional level, noted Dr. Flamm. “This means that we only have one pot for every single CPT code. If E/M codes are going to be valued higher, the conversion factor for all other codes has to be changed and decreased in order to account for this increase on the other side.” The money spent in providing higher reimbursement for office-based E/M visits must be paid for from elsewhere — and procedural codes have taken a substantial hit.

“If revisions to the RVUs cause expenditures for the year to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million,” CMS stated in the proposed rule. The final rule for the 2021 fee schedule indicated that payments to dermatology would be cut by 1%, with proceduralists facing larger cuts. Pathologists and general surgeons face an overall 9% and 6% reduction respectively. This reduction doesn’t consider the financial strain on dermatology practices as a result of the COVID-19 public health emergency (PHE). “This will be a hit to many dermatologists — and other physicians — and we want to make sure that CMS and Congress are aware of this tremendous burden during a precarious time,” said Dr. Flamm. “Throughout the pandemic, many practices have seen drops in patient volume and reimbursement and have received loans to maintain the viability of their practices,” said Dr. Miller. “Now, many dermatologists will be faced with an added penalty that can only be changed through congressional action.”

Congress addresses payment cuts

Before the end of 2020, Congress passed COVID-19 legislation that included important provisions to minimize some of the most egregious cuts under the 2021 Medicare Physician Fee Schedule. While Congress didn’t waive budget neutrality, or forego all scheduled payment cuts for 2021, it did take action to mitigate the impact in the short term. To help address the cuts, Congress:

• Provided an additional $3 billion for the Medicare 2021 Physician Fee Schedule, which increase payments for all codes by 3.75% over scheduled 2021 rates, mitigating but not erasing decreases from 2020 rates.

• Placed a 3-year moratorium on implementation of the add-on code for inherently complex evaluation and management visits (G2211) until 2024.

• Delayed the 2% Medicare sequester cut, which was scheduled to take effect in January 2021, for three additional months.

The AADA advocated vigorously seeking congressional action to address the anticipated Medicare cuts, and more than 1,000 members wrote or called representatives and senators seeking support. The AADA continues to work toward a long-term fix.

What does it mean for dermatologists?

Overall, the news is mixed because while dermatologists frequently use E/M codes, they also perform a lot of procedures, Dr. Miller said. Even non-surgical dermatologists are still likely to commonly destroy lesions with liquid nitrogen (17000-17004), and those procedures are still subject to the 10% reduction in valuation.

Change is often unwelcome, said Dr. Miller. It can be hard to see the benefit of any new system, even if not for very logical reasons. While the new system is not perfect, compared to what CMS was prepared to implement, the new E/M coding structure was a much better option for dermatologists. “We, as physicians, had the choice of accepting something predetermined for us by CMS, or we could offer our own revision of outpatient E/M coding and reimbursement via the CPT-RUC system, which facilitates input from the house of medicine,” Dr. Miller said.

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