Proposed Medicare E/M Payment Overhaul Draws Mixed Reviews

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

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ACA Debate Intensifies Ahead of Midterm Elections

Ten Republican Senators have introduced a bill that they say will require health insurers to cover pre-existing conditions if the Affordable Care Act (“ACA”) is invalidated. Critics counter that the bill offers little actual protection. Like the ACA, it would prohibit insurers from denying enrollment based on pre-existing conditions, but unlike the ACA, it would not require insurers to cover the conditions themselves.

The bill is the latest volley in an ongoing battle over the fate of the ACA. Here are some key steps that set the stage:

  • The 2017 tax bill eliminated the ACA tax penalty on individuals who do not have health insurance, effective as of 2019. This is one of two elements that has brought more healthy people into the individual market; the other is subsidized plans for those in lower income brackets.
  • In April 2018, CMS and HHS issued a rule permitting states to establish the levels of coverage insurers must offer in their health plans. Federal law no longer requires insurers to cover all of the ACA’s “essential health benefits.”
  • This month, hearings in Texas v. United States begin. A group of 20 states will argue that the tax penalty is a constitutional linchpin of the ACA, without which the law is invalid. The states also are asking for a preliminary injunction to halt operation of the ACA while the case is litigated. Seventeen states have filed an opposing motion.
  • The Justice Department is not defending the ACA in the Texas case. It has suggested that without the tax penalty, some parts of the ACA may still be valid, but the individual mandate, the pre-existing condition coverage requirement, and the prohibition on charging higher premiums based on medical history are not.

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