Touted as a major step in its efforts toward Medicare modernization, CMS issued a proposed Physician Fee Schedule rule on July 12, 2018 that would, in part, gut the current five-tier structure for Evaluation and Management (“E/M”) codes and collapse levels 2 through 5 down to one payment rate. The proposed payment overhaul, coupled with changes in the documentation required to support certain claims for reimbursement, is geared toward simplifying the Medicare billing rules and reducing the administrative burden for physicians so that they can focus on patient care.

E/M services comprise about 40% of the charges approved by Medicare under the physician fee schedule, with office visits representing half of that amount. Currently, documentation for these visits must comply with rigorous Documentation Guidelines that require a record of all clinically relevant information, as well as justification for medical necessity and appropriateness. There are five visit levels in each new patient and established patient E/M code family, and documentation must justify the code level being billed. Each visit level is tied to a different reimbursement rate reflecting different levels of service complexity and time spent.

The proposed rule would retain the existing CPT coding structure, but provide for a single, blended reimbursement rate for both new and established patients for outpatient E/M level 2 through 5 office visits. Add-on codes will be available to reflect additional resources involved in providing complex primary care and non-procedural services. The documentation standards for more complex office visits would be reduced to the amount required for a level 2 visit. While many providers would continue to document justification for higher levels of care, in part because of non-Medicare payers, CMS asserts that the change would provide immediate relief from the need to “audit against the visit levels.” The single work RVU for the collapsed office visit category would fall somewhere between the current level 2 and level 5 amounts. The following example is provided in the proposed rule:

Preliminary Comparison of Payment Rates for Office Visits, New Patients

HCPCS Code	CY 2018 Non-facility Payment Rate	CY 2018 Non-facility Payment Rate under the proposed methodology
99201	$45	$44
99202	$76	$135
99203	$110
99204	$167
99205	$211

The proposed rule has been met with a mix of approval and frustration, garnering near universal support for the effort to reduce the administrative burden on providers yet sharp criticism for the reduction in E/M tiers. A letter sent to CMS Administrator Seema Verma from 50 state medical societies and 120 national provider organizations on August 27, 2018 illustrates this tension. The group urged immediate adoption of the following proposed changes in documentation:

1. Changing the required documentation of the patient’s history to focus only on the interval history since the previous visit;
2. Eliminating the requirement for physicians to re-document information that has already been documented in the patient’s record by practice staff or by the patient; and
3. Removing the need to justify providing a home visit instead of an office visit.

However, the letter goes on to vigorously object to the collapse of reimbursement levels stating that it “could hurt physicians and other health care professionals in specialties that treat the sickest patients, as well as those who provide comprehensive primary care, ultimately jeopardizing patients’ access to care.”

CMS has proposed a January 1, 2019 implementation date but is considering comments on whether a January 1, 2020 date would be more appropriate. The comment period closed on September 10, 2018.

For more information about the proposed rule or to hear more about CMS efforts to modernize Medicare, contact Kara Morse at kara.morse@stoel.com or (206) 386-7657.