The Potential Impacts of a Flat Rate EM Reimbursement on our Industry

September 26th, 2018 - BC Advantage
Categories:   Evaluation & Management (E/M)   CPT® Coding   HCPCS Coding   Medicare   Reimbursement  

The proposed E&M changes by CMS would decrease provider administrative work burden by, per CMS, 51 hours a year; however, how will reducing documentation requirements truly affect the professionals of the healthcare industry? 

First, let’s discuss the 30,000-foot overview of the most impactful E&M changes—which is the change to the reimbursement model—and the documentation relaxation proposal. Then you will be challenged to share your opinion attending how this will impact the coding and auditing profession and healthcare in general.

Proposed Reimbursement Model Change

CMS is proposing to “collapse” the current office/outpatient E&M code (99202-99205 & 99212-99215) reimbursement. What this would mean is that regardless of which of these E&M codes are billed, CMS will reimburse one flat rate. CMS has offered their proposed Work RVU and Practice Expense RVU suggestion (this does not include Malpractice RVU), and using the 2018 conversion factor of $35.99, the proposed reimbursement rate change would be approximately $130 for a new patient service and $88 for an established patient encounter. Thus, if you are a practice that bills most of your established patients a 99212-99213, you will see a slight increase in reimbursement. However, if you are a specialty-based practice that sees complex patients reporting a high volume of 99214-99215, then you will see a decrease in reimbursement. Take Rheumatology for example; according to E&M Benchmarking, right at 65% of your established patients should be levels 4-5, and therefore this creates a large deficit. 

CMS has proposed G codes that would be used as an add-on code to represent additional revenue opportunities for provider, as well as modification of the prolonged physician service reporting with a new G code. 

GPC1X: This is a new code that would add-on to only the established office/outpatient CPT Code. The proposed description states, “Visit complexity inherit to evaluation and management associated with primary medical care.” This code would be used only for primary care services to capture additional resource cost beyond those involved in the base E&M service. Expectation of this code includes the following:

  • This code would only be used for established patient care.
  • CMS states that they would expect this code to be billed on every primary care established patient.
  • This code is not reimbursing for services that could be otherwise reimbursed and it is only reimbursing for face-to-face services.
  • While the code is proposed for primary care which generally impacts family practice, internal medicine, and general medicine, CMS is accepting comments regarding “other specialties” (e.g., OB/GYN or Cardiology) who are acting in the role of primary care.
  • It could also be appended as an add-on service to the new prolonged services code which we will discuss later in this article. 

GCG0X: A proposed new code to add-on to the report office/outpatient CPT Code. The proposed description for this G code states, “Visit complexity inherent to E&M associated with endocrinology, rheumatology, hematology/oncology, urology, neurology, OB/GYN, allergy/immunology, otolaryngology, cardiology, or interventional pain management-centered care.” These specialties were identified, because, although not all services include surgical intervention, the encounters demonstrate increased complexity. CMS indicates that they would also expect that this code would be used on nearly all specialty office/outpatient E&M encounters as well.

GPRO1: While a current code exists for prolonged physician services, a new G code has been created. The proposed description states, “Prolonged Evaluation and Management or psychotherapy service beyond the typical service time of the primary procedure.” This new code relieves the heavy burden of meeting an additional hour above the base service, and instead changes that time to a mere 30 minutes beyond the base service. What doesn’t change, however, is the specific code for direct patient contact between the provider and the patient.

Proposed Documentation Relaxation

CMS tells us the reason they are suggesting the reimbursement model change is that they are proposing to significantly modify documentation requirements. Essentially, your provider will not be required to exceed the documentation of what is currently required for a level 2 encounter regardless of what level they are billing. To clarify, your provider will only be required to document one (1) HPI element, one (1) organ system on exam, and a straightforward MDM in order to bill any level of outpatient/office E&M code. There is an inclusion of focusing documentation support on just the MDM, or just the time component even when counseling and coordination of care do not dominate the encounter, or even using the existing E&M Documentation Framework; however, the proposal is ultimately stating that there is no need for the documentation to exceed that of a level 2 encounter. 

While there are other new codes proposed and other documentation change considerations, these are the most impactful.  Simply stated:

CMS is essentially throwing documentation guidelines and requirements out of the window, but in exchange, they are modifying the reimbursement because of the administrative relief this change would create. 

Therefore, if accepted as proposed, your provider could bill any level of service in the office and document essentially whatever they want and it would be reimbursed at one flat rate. This also means that a splinter in the finger would reimburse at the same rate as a diabetic patient with MRSA and a gangrenous non-healing ulcer of the leg.

The Positives and the Negatives

As with most controversial topics, there are those who are in favor with the proposed changes and those who are not.  There are those who believe changes are needed, and others who don’t believe this is exactly what is needed. In order to help you make those decisions for yourself, the following points discuss some potentially positive and negative impacts of this proposed change. 

Less Work, More Time

It would seem that if there are minimal documentation burdens, then there would be more time for patient/visit centered care, but will that really translate? The hopeful answer is yes, but more of the potential reality is no. Providers who treat complex patients with extensive care needs tend to bill the current high-level office/outpatient E&M codes, but based on the current proposed RVUs, level 4 and 5 visits may see up to a $70 reimbursement reduction. Therefore, a provider would need to increase their volume of patients to mitigate the lost revenue. 

Patient Care

Based on the principle of flat rate reimbursement, will complex patients have difficulty in getting the care they need? The hopeful answer is no more so than they may have now, but the forced reality may certainly have an impact here. Oftentimes, people get upset when you discuss healthcare as a business, because it is our health and many times life or death situations, but currently, each practice/organization is a business with a P&L statement, many with a board and CFO, and operationally a business! Therefore, it’s necessary to put this problem in business terms. Complex patients equal more resources which represents higher overhead. Straightforward patients require less resources which represent lower overhead and provide a wider margin in which to meet payroll, pay bills, etc. If providers are taking a reimbursement cut for high level services, they must make up for that somewhere; so volumes will need to increase, which typically means that schedules need to be tightened for faster patient turnaround, which means complex patient care will not be the prime patient base to treat. 

Healthcare Provider Shortage

We are purportedly experiencing a physician shortage of about 120,000 in the U.S. Will these changes help reduce the shortage, increase the shortage, or will it have no impact? By relaxing the administrative burdens associated with documentation, there is a vote for a positive impact here in hoping this would help reduce the shortage. However, the flat rate reimbursement model may accelerate this shortage in that over time, there will be a continued decline in physician wages influencing career path decisions. Many would say that this may have no impact among most of those in the age bracket of choosing a career path as they likely do not know or understand the documentation requirements of E&M services. 

Electronic Medical Record Services

Many EMR vendors have hung their hats on the reduced administrative burden that EMRs would provide to the healthcare industry, and some people think CMS tried to use that as a positive selling point when they “forced” providers to move to EMR or face reimbursement reductions. Now, by proposing to essentially eliminate documentation requirements, the value need for an EMR just took a nose dive. EMR would still have its place of electronically housing something that would otherwise be paper, but isn’t that what Google Drive or a One Drive platform does and for a lot cheaper and with less confusion? EMRs do have many efficiencies, such as marrying the practice management systems to complete a circle of life for an RCM process. But will these extraordinary platforms, templates, and scoring wizards be required to the extent needed now? It doesn’t seem so as this change poses risk to securities that many of the EMR giants have been basking in over the past 8-10 years. 

Carriers and Audit Enforcement Agencies

While those on the physician side of business would be thrilled to see the carrier auditors and organizations, such as RAC, ZPIC, HEAT, etc. cease to exist, the potential decreased demand for audits and reviews of almost half of the services submitted to CMS could pose a threat to the availability of jobs in this line of work. While there certainly exists a full exploit of services and processes available for carrier review, the most confusing, and according to the OIG’s 2012 Coding Trends of Medicare E&M Services, codes with the largest potential for fraud and abuse would no longer have documentation requirements. This one truly is a positive and a negative.

Coding and Auditing Profession

I saved this one for last as it is the one closest to home for many of us. As a coding or auditing professional, how do you feel this change will impact your job and the job market for others? Don’t forget about coding and auditing educators as well. I have stood before many audiences and said these faithful words: “As coders and auditors, we are the frontline of compliance for our organizations. We ensure the documentation, billing, and coding is correct before the claim leaves the office.” Yes, we will still be needed, but when the largest volume of what we code/audit has such insignificant documentation requirements, then a concern for compliance with coding/documentation/billing is alleviated. Consider the proposed change to the way we pay taxes in this country. There is a push for a flat rate taxation plan, and while this idea is opposed for many reasons, most importantly it is because it would eliminate the need for the IRS, CPAs, and book keepers in most instances. In other words, it would cripple the industry. Coders and auditors are the bookkeepers and CPAs of the coding/documentation world, so how could our industry be affected by going to a flat rate reimbursement for office-based services? I realize it would not eliminate the need for coders and auditors, but it will have a significant impact on job availability.

When the revenue is no longer impacted by the coding/documentation/billing of these services, then the job opportunities could begin to rapidly decline. The careers we have built, the professionals we have matured into within healthcare, could certainly face hardships as jobs begin to decline. Will this be a consideration in the overall proposed redesign of these E&M codes? Probably not, but it should be your concern if you are a coder and/or auditor. 

Wrapping It Up

While it is nice to hear others’ opinions, I challenge you to form your own! 

Go to the full 1,472-page document and take the time and read pages 322-377 (it’s only 55 pages and double spaced). This will allow you to form your own opinion and to formulate your own comments to provide to CMS. They have requested our opinion on every element down to the implementation date (which, by the way, they would like to implement January 1, 2019, but they are taking comments to consider waiting until January 1, 2020.)

My opinion attending these proposed changes is that what we have works. Especially when you truly understand E&M documentation guidelines and how they work hand in hand with medical necessity. Granted, there are gray areas, but that is because they are guidelines—not rules. Guidelines are recommendations that say “If you do this, then you should probably do this,” but our industry has pushed these guidelines to a status of “rules, “and most rules I know do not have ambiguous statements. For example, if the speed limit is 70 and I set my cruise control to 92, I know beyond a shadow of a doubt that I am breaking the law. However, when documentation guidelines do not identify a specific definition of what quality is as an HPI element, then how do I really know what it is? We need the gray areas cleared, but we have spent 23 years working with these guidelines and many segments have been built within healthcare on these. The fundamentals of 1995 and 1997 Documentation Guidelines have not changed over the past 23 years. Go to the introduction of either set and read their five bullets on what documentation is and why it is so important. The top two reasons are patient care and defining how complex the patient’s needs are; isn’t that what it should still be about? 

Please submit your comments to CMS by September 11, 2018 by one of the following methods:

      1. Submit electronic comments on this regulation to Follow the instructions for “submitting a comment.”
      1. Mail written comments to:

        CMS-1676-P 2

        Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1676-P

        P.O. Box 8016
        Baltimore, MD 21244-8013.

        Allow sufficient time for mailed comments to be received before the close of the comment period.
      1. By express or overnight mail. You may send written comments to:

        Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1676-P

        Mail Stop C4-26-05

        7500 Security Boulevard
        Baltimore, MD 21244-1850.
      1. Deliver (by hand or courier) written comments before the close of the comment period to:

        Centers for Medicare & Medicaid Services, Department of Health and Human Services,

        Room 445-G, Hubert H. Humphrey Building,
        200 Independence Avenue, SW., Washington, DC 20201

Link to the full proposed rule:

Shannon DeConda, CPC, CPC-I,CEMC,CMSCS,CPMA is the founder and President of the National Alliance of Medical Auditing Specialist (NAMAS) as well as the President of Coding & Billing Services and a Partner at DoctorsManagement, LLC.



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