CMS Finalizes Overhaul of Medicare Outpatient Office Visit Documentation & Payment System

In November 2018, the Centers for Medicare & Medicaid Services (CMS) issued a 2,378-page regulation finalizing 2019 updates to the rules governing both the Medicare Physician Fee Schedule and the Medicare Access and CHIP Reauthorization Act (MACRA) Quality Payment Program (QPP.) The rule also finalized an overhaul of Medicare’s Evaluation & Management (E/M) outpatient office visit documentation and payment system that was initially proposed in July 2018.

2019 Documentation Reforms

To immediately reduce documentation burdens while more gradually transitioning to a new payment system, CMS made some reforms effective in 2019 while setting a 2021 transition for other documentation, coding, and payment reforms. In doing so, CMS made some critical changes from its July 2018 proposed regulation.

As finalized by CMS, for Medicare E/M outpatient office visits occurring on or after January 1, 2019:
  • For established patient visits, when relevant information is already contained in the medical record, clinicians can focus their documentation on what has changed since the last visit rather than having to re-document information.
  • For new and established patient visits, clinicians may simply review and verify information on the patient’s Chief Complaint and history that has already been entered in the medical record by ancillary staff or the beneficiary (rather than re-enter it in the medical record).
  • For visits furnished by teaching physicians, potentially duplicative requirements for certain notations in medical records that may have previously been documented by residents or other members of the medical team are eliminated.
  • For home visits, the requirement to document the medical necessity of a home visit in lieu of an office visit is eliminated.

2021 Documentation, Coding & Payment Reforms

Starting in 2021, CMS will offer clinicians the choice to document outpatient office E/M level 2-5 visits using:
  1. the existing 1995 or 1997 documentation guidelines;
  2. medical decision-making; or
  3. time. 
In 2021 CMS will establish a single payment rate for E/M outpatient office visit levels 2-4 that would only require documentation of the information needed to support a level 2 visit. For these cases, Medicare would require information to support a level 2 visit code for history, exam and/or medical decision-making. When time is used to document, clinicians would need to document the medical necessity of the visit and that the billing clinicians personally spent the required amount of time face-to-face with the beneficiary. 

In a key change from the proposed rule, CMS would maintain a separate payment rate for level 5 visits in order to account for the care and needs of complex patients.

As described at length in the rule, CMS believes that by setting a single rate for levels 2-4 while maintaining the payment rate for level 5, it has struck the proper balance between reducing payment variation and accounting for complex patients. However, the agency also recognized that the singled blended rate for levels 2-4 would not appropriately reflect the differences in resource costs between all level 2-4 E/M visits. To address this disparity CMS also created new payment codes that could be billed in addition to a level 2-4 E/M visit, including:
  • New Primary Care Complexity Code: $13 payment to recognize additional resources to address inherent complexity in E/M visits associated with primary care services.
  • New Non-procedural Specialty Care Complexity Code: $13 payment to recognize additional resources to address inherent complexity in E/M visits associated with certain non-procedural specialty care services.
  • New Extended Visit Code: $67 payment to account for the additional resources required when practitioners need to spend extended time (more than 30 minutes) with the patient. 
For level 5 visits, an additional $133 payment would be available under the existing prolonged service code which describes 60 minutes of additional time but is billable after 31 minutes of additional time.

Projected Impact

After factoring in the impact of these additional codes, CMS projects that most specialties would see annual changes in their overall Medicare payments in the range of 1-2 percent up or down, with no specialty seeing a greater than 5 percent decrease. However, certain specialties are predicting their own double-digit payment increases or decreases. 

In response to critics of these changes, CMS has stated that any negative payment adjustments for physicians would be outweighed by the significant reduction in documentation burden. As noted by CMS, “these policies will allow practitioners greater flexibility to exercise clinical judgment in documentation, so they can focus on what is clinically relevant and medically necessary for the beneficiary.” 

Key Takeaways

These reforms will create the most significant changes to the E/M documentation and payment system in more than 20 years. For physicians, the result could be reduced documentation requirements, workflow changes, and—with outpatient office visits accounting for 20 percent of all allowed Medicare charges for Physician Fee Schedule services—potentially significant reimbursement increases or decreases depending on specialty. 

Given the gravity of these changes, physician groups need to assess the financial impact these changes will have on their practice, explore the relevant new add-on payment codes, and begin the process of educating physicians and staff members whose work will be impacted by these changes.
Chris Emper is president of Emper Healthcare Advisors.

If you’d like more details about Chris’ take on the new CMS regulations, please follow this link to download his full whitepaper.

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