From the Editor

Major changes in Medicare billing are planned for January 2021: Some specialties fare better than others

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The changes decrease Medicare payments for procedural services but increase valuation of office-based services



The Centers for Medicare and Medicaid Services (CMS) finalized an increase in the relative value of evaluation and management (E/M) service codes effective January 1, 2021, which results in an overall decrease in the payment for procedural services in the Medicare program. (Due to the mandate for budget neutrality, an increase in relative value units [RVUs] for E/M resulted in a large decrease in the conversion factor—the number of dollars per RVU). This has increased payments for endocrinologists, rheumatologists, and family medicine clinicians and decreased payments for radiologists, pathologists, and surgeons.

In a major win for physicians, CMS proposes to simplify documentation requirements for billing and focus on the complexity of the medical decision making (MDM) or the total time needed to care for the patient on the date of the service as the foundation for determining the relative value of the service. Therefore, there is no more counting bullets—ie, we don’t have to perform a comprehensive physical exam or review of systems to achieve a high level code! Prior to this change, time was only available for coding purposes when counseling and coordination of care was the predominant service (>50%), and only face-to-face time with the patient was considered. Effective January 1, for office and other outpatient services, total time on the calendar date of the encounter will be used. This acknowledges the intensity and value of non–face-to-face work.

Acting through CMS, the federal government influences greatly the US health care system. CMS is an agency in the Department of Health and Human Services that administers the Medicare program and partners with state governments to administer the Health Insurance Exchanges, Medicaid, and the Children’s Health Insurance programs (CHIP).1 In addition, CMS is responsible for enforcing quality care standards in long-term care facilities and clinical laboratories and the implementation of the Health Insurance Portability and Accountability Act.1

In January, CMS plans the following major changes to coding and documentation2,3:

  1. Selection of the level of E/M service will no longer require documentation of bullet points in the history, physical exam, and MDM. The simplified system allows physicians and qualified health care professionals to code either by total time (both face-to-face and non–face-to-face) on the date of the encounter or by level of MDM.
  2. For established office patients, 5 levels of office-based evaluation and management services will be retained. CMS had initially proposed to reduce the number of office-based E/M codes from 5 to 3, combining code levels 2, 3, and 4 into 1 code.4 However, after receiving feedback from professional societies and the public, CMS abandoned the plan for radical simplification of coding levels.2,3 Implementation of their proposal would have resulted in the same payment for treatment of a hang nail as for a complex gyn patient with multiple medical problems. Both patient advocacy groups and professional societies argued that incentives originally were misaligned.
  3. For new office patients, since both 99201 and 99202 require straightforward MDM, the level 1 code (99201) has been eliminated, reducing the number of code levels from 5 to 4.
  4. History and physical exam will no longer be used to determine code level for office E/M codes. These elements will be required only as medically appropriate. This means that documentation review will no longer focus on “bean counting” the elements in the history and physical exam.
  5. Following a reassessment of the actual time required to provide E/M services in real-life practice, CMS plans to markedly increase the relative value of office visits for established patients and modestly increase the relative value of office visits for new patients. CMS operates under the principle of “neutral budgeting,” meaning that an increase of the relative value of E/M codes will result in a decrease in the payment for procedural codes. The actual RVUs for procedural services do not change; however, budget neutrality requires a decrease in the dollar conversion factor. The proposed changes will increase the payment for E/M services and decrease payments for procedural services.

Continue to: Refocusing practice on MDM complexity...


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