CMS proposes major change to coding and payment for evaluation and management (E&M) services

It’s no secret that physicians and payers have become increasingly dissatisfied with the coding requirements and payment differentials for evaluation and management (E&M) services. For payers, this has become particularly true due to the wide-spread adoption and use of electronic health records (EHRs). Many EHRs prompt physicians to include additional components to their patient encounters to “up code” the visit to a higher-level E&M service.

In response to the misvalued payments associated with the current E&M levels, many specialty societies – including the College – have suggested expansion of the E&M coding options to create opportunities for more appropriately valued payments. These would be “tweener” codes that would allow for higher payments without having to jump to the next full level of coding (i.e. Level 3.5 or Level 4.5).

As part of the 2019 Medicare Physician Fee Schedule Proposed Rule Notice of Proposed Rule Making (MPFS/NPRM), CMS has proposed to effectively do away with most E&M levels and the associated payments and go to a two-level process.

A differential for “new” and “established” patients would be retained but instead of five E&M levels, there would only be two and the “low-level” E&M code would largely be reserved for “incident to” services performed by auxiliary personnel under the direct supervision of the physician.

Office visit – new patients

HCPCS/CPT CodeCurrent non-facility payment rateProposed Medicare non-facility payment rate


Office visit – established patient

HCPCS/CPT CodeCurrent non-facility payment rateProposed Medicare non-facility payment rate


Add-on payment

CMS acknowledges – in the proposed rule – that some specialties may see a disproportionate percentage of high acuity patients and is proposing a “complexity” adjustment of $14. Allergy/immunology would be one of nine specialties eligible for this add-on payment. This is referred to as “Visit Complexity Inherent to Evaluation and Management.” This payment would be in addition to the $93 dollars paid for an established patient or $135 paid for a new patient.

Burden reduction

In the name of burden reduction, CMS is seeking to move documentation standards away from chart entries – done to justify a particular level of E&M payment – to entries relevant to the clinical needs of the patient.

CMS estimates that eliminating the documentation requirements necessary to warrant the various levels of coding will save more than 50 hours in administrative time annually – time which CMS argues can be spent seeing more patients.

CMS estimates that the average payment differential on a physician practice will be 1% – 2% (up or down) from the current methodology. The problem with this type of analysis is that there is no such thing as an average practice.

Advocacy Issue: 
Billing, Coding & Payments