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E&M Changes: How Will They Affect Your Practice?

As many of you have heard, there are major changes coming to evaluation and management (E&M) codes in 2021. The changes were finalized in the 2020 Physician Final Rule.

The good news is that the Centers for Medicare & Medicaid Services (CMS) gave us all a year to prepare. I know it seems like a long time away, but I promise, it will be here before you know it. It won’t be as sweeping as the implementation of ICD-10, but it will have an impact on most every physician practice in the country (some more than others, depending upon the specialty).

If you haven’t already begun to familiarize yourself with the new guidelines, I strongly suggest you take the time to do that over the next month or two. The highlights are:

  • Only office and other outpatient codes will be affected in 2021. These are the E&M codes ranging from 99201-99215;
  • New patient Level 1 code 99201 will be deleted;
  • The new guidelines eliminate history and physical exam as elements for code selection; however, providers will still be required to document a clinically relevant history and exam; and
  • The most significant change is that levels of service will be determined based on medical decision-making OR time.

I have read through these guidelines multiple times and have presented them to several different audiences, and one thing that has come to light is that there are still important questions that have yet to be answered. Although the American Medical Association (AMA) did a really nice job defining many of the terms that in the past were somewhat ambiguous – such as chronic, stable, and minor problem, for example – there is still some ambiguity in other areas of the guidelines.

However, the most important unanswered question is this: how will it affect revenue?  

According to CMS, codes 99201-99215 account for 40 percent of all reported CPT codes, and 20 percent of revenue. Though relative value units (RVUs) for E&M codes are increasing in 2021, it is important to note that all changes to the Medicare physician fee schedule must be budget-neutral. Therefore, if RVUs for E&Ms are increasing, the money to pay for it must come from somewhere else. And like all budget-neutral changes, there will be winners and there will be losers.

To offset increased spending from the finalized E&M changes, CMS will need to make across-the-board reductions. Some industry experts predict a possible reduction in the physician conversion factor, which would reduce payment for all services reimbursed under the physician fee schedule, compared to rates without the budget neutrality adjustment. It is also possible that CMS could lower the RVUs on procedures.

The financial impact on physician practices will ultimately be driven by a mix of E&M and other services reported. Specialties and practices that bill a higher mix of E&M services are likely to see the greatest increase, whereas specialties that bill a lower mix of E&M service are likely to see a decrease in reimbursement.

CMS acknowledges that there will be a “redistribution impact” of the finalized E&M changes; however, the agency has stated that it intends to further consider these concerns and address them in future rulemaking.

The bottom line is that more changes are likely coming; therefore, it will be imperative for physicians, practice administrators, CFOs, and coders to prepare and stay informed.