How to survive and thrive with the 2021 E/M coding changes

By Faith C. M. McNicholas, RHIT, CPC, CPCD, PCS, CDC, manager, coding & reimbursement, May 1, 2021

Academy coding staff address important coding topics each month in Derm Coding Consult. Read more Derm Coding Consult articles.

Dermatology practices have by now implemented the 2021 coding guidelines for documenting and reporting the appropriate level of the office visit and other outpatient evaluation and management (E/M) services. It is vital to have a sound strategy for E/M coding in the future to not only survive but thrive in the proposed future reimbursement arena.

The office and other outpatient E/M CPT^® codes were revised to:

• simplify and streamline coding and documentation for the office and other outpatient E/M office visits, making them clinically relevant and reducing excessive administrative burdens

• ensure coding consistency

• promote payer consistency when audits are performed

• support higher-level activities of medical decision-making (MDM)

Major changes to the office or other outpatient E/M codes

The office or other outpatient E/M level of service is now reported based on either:

• MDM; OR

• Total time spent by the dermatologist or non-physician clinician (NPC) with the patient on the date of the encounter, including time spent performing non-face-to-face services.

Tackling the new coding challenges

The revisions to the office-visit coding guidelines are meant to be simpler and more flexible. To minimize the administrative burden, dermatology practices must adopt a comprehensive documentation strategy and apply new terminologies for MDM. Below are some tips on how to successfully do that.

i. Analyze and implement changes to the electronic health record (EHR) system.

Dermatologists must ensure that the EHR system is updated with the ability to capture and classify the patient condition(s), data reviewed, and risk of management in the appropriate category to reflect the chronicity or acuity and complexity of the encounter correctly.

The AAD/A has developed a dermatology-specific resource with a PDF of definitions of MDM elements terminology (also available via staging.aad.org/MDMdefinitions) to help dermatology practices understand and apply the new terminologies appropriately to the services provided during an encounter. The resource provides specific examples of what is considered a chronic illness with poor progression versus one that is chronic but stable, and many more. Critical thinking and appropriately defining the patient problems seen in a dermatology setting can result in a higher and accurate E/M level of service. Sounds too good to be true — but it is!

As such, reviewing and understanding how these concepts apply to dermatology encounters will be greatly beneficial in how dermatologists determine the appropriate office E/M level of service and avoid misclassification of the patient’s condition(s) which could result in undercoding.

ii. Ascertain significance of physical exam and history documentation requirements for both compliant and optimal coding.

Beginning January 2021, the history and/or physical examination is no longer required to determine the E/M level of service. Though required clinically, a medically appropriate history and/or physical examination is not required for the code level selection. Therefore, dermatologists and NPCs should not spend too much time documenting non-pertinent elements of the history and physical examination, but rather focus only on those that are pertinent to the presenting problem and determined plan of care. More information on coding based on time is discussed in the article “E/M coding changes — what has changed: Part 1.”

iii. Guard against the unanticipated financial impact.

Dermatologists must recognize the potential financial impact of the 2021 E/M coding changes to their bottom line, understand the coding rules in advance, and apply the new terminology concepts appropriately to the conditions they treat. This will ensure that the appropriate level under number and complexity of problems addressed, amount and/or complexity of data to be reviewed and analyzed, as well as the risk of complications and/or morbidity or mortality of patient management elements are selected to reflect the accurate E/M level of service.

Reporting an incorrect E/M code can result in lower payment for the work performed or future post-payment claim audits leading to recoupment.

iv. Update your compliance plan.

The U.S. Department of Health & Human Services (HHS) Office of Inspector General (OIG) has developed a series of voluntary compliance program guidance documents targeted for various segments of the health care industry, including individual and small group physician practices, to encourage the development and use of internal controls to monitor adherence to applicable statutes, regulations, and program requirements. Development and incorporation of a compliance plan can assist the dermatology practice in preventing the submission of erroneous claims or engaging in unlawful conduct involving the federal health programs.

Many dermatology practices have incorporated a compliance plan to help avoid such ethical and legal mistakes. If your practice already has a plan in place, this may be a good time to revisit and update your internal protocols and procedures to assist providers in preventing coding and billing errors.

HHS has created a roadmap (PDF) to help physician practices develop and implement a compliance plan. As your practice transitions to the new E/M guidance, ensure that your updated protocols and procedures remain consistent with your current compliance plan.

v. Guard against fraud and abuse law infractions.

The False Claims Act (FCA) and other federal and state fraud and abuse laws remain in effect. Although the new E/M office visit coding guidelines allow greater flexibility, dermatology practices should continue to document appropriately and guard against inadvertent overbilling.

As you continue to bill for services using the flexible coding guidance, it is important to understand that violating the FCA due to overcoding could result in criminal penalties, civil fines, exclusion from the federal health care programs, or loss of your medical license by your state medical board.

If your practice appropriately reports for services under the new E/M documentation guidelines but still receives an overpayment demand, the AAD/A has resources to help you navigate the audit and appeal process.

vi. Bill based on "total time."

Dermatologists can now report the office encounter based on the total time spent addressing the patient’s problem(s) on the date of service. It is helpful to know that the total time now includes pre-, intra-, and post-service time. More information on coding based on time is discussed in the article “E/M coding changes — what has changed: Part 2.”

Total time is considered both face-to-face and non-face-to-face time personally spent by the dermatologist and/or NPC on the day of the encounter. It includes time spent performing activities that require the dermatologist or NPC but does not include time spent on activities normally performed by clinical staff. It may include counseling and/or coordination of care even though this is no longer the only determining factor for choosing a time-based level of service.

Explore more information and resources to help you address the 2021 E/M coding challenges.

Additional DermWorld Resources