New year, new rules: Medicare E&M changes are finally here, but the downstream impact to commercial health plans remains unknown

Blog Posts - 16 January 2019


On November 23, 2018, the Centers for Medicare and Medicaid Services (CMS) published the 2019 Medicare Physician Fee Schedule Final Rule which updates payment policies, payment rates, and other provisions for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2019.

Although the Medicare Physician Fee Schedule is published annually by CMS, there was a unique air of excitement and anticipation around this particular final rule due to proposals that CMS had put forth that would change Evaluation and Management (E&M) documentation guidelines and payment rates for the first time in over a decade.

Typically, the proposals and finalized regulations have the most impact on healthcare providers who bill Medicare Part B, but the E&M documentation and payment proposals meant there would be downstream ramifications for health plans and potentially patients, too. The regulatory team at Veradigm has analyzed the rule, and below we provide a summary of E&M payment guidelines that go into effect this year and in 2021, and how those regulations may potentially impact commercial health plans.

2019 policies targeted to remove clinician documentation burden
Starting this year (CY 2019), CMS has finalized several policies aimed at removing duplicative requirements in order to reduce clinician documentation burden. These policies include:

  • Eliminating the requirement to document the medical necessity of a home visit in lieu of an office visit.
  • For outpatient visits with established patients, practitioners do not need to re-record the defined list of required elements if the relevant information is already in the medical record and there is evidence that the practitioner reviewed the previous information and updated it as needed. Practitioners should still review prior data, update as necessary, and indicate in the medical record that they have done so.
  • For outpatient visits with new and established patients, practitioners do not need to re-enter in the medical record information on the patient’s chief complaint and history that has already been entered by ancillary staff or the patient, as long as the practitioner has indicated in the medical record that he or she reviewed and verified this information.
  • For E&M visits furnished by teaching physicians, medical record notations that have been included by residents do not require duplicative documentation.

These 2019 changes reflect proposals that were supported by many commercial payer organizations, as long as appropriate monitoring is in place to prevent fraud and to ensure that services are still meeting the minimum requirements related to medical necessity and appropriateness. There is also potential for confusion around whether these policies can be extended to non-Medicare patients, but in general these policies were well received by physician organizations and Medicare is encouraged to continue studying the impact of these policies on both payment outcomes and clinical efficiency.

2021 changes may have a stronger impact on health plans
The changes that CMS has finalized for 2021 are more dramatic and thus have the potential to negatively impact commercial payers and health plans in a more significant way. Specifically for CY 2021, CMS is finalizing the following policies:

  • Payment variation will be reduced by paying a single rate for E&M office/outpatient visit levels 2 through 4 for established and new patients. CMS will maintain the payment rate for E&M office/outpatient visit level 5 to account for the special needs of complex patient care.
  • For E&M office/outpatient visits levels 2 through 5, CMS will offer flexibility in how visit levels are documented— specifically a choice to use the 1995/1997 documentation framework, medical decision-making, or time.
  • For E&M office/outpatient level 2 through 4 visits, when using medical decision-making or the 1995/1997 framework to document the visit, CMS will apply a minimum supporting documentation standard associated with level 2 visits. When time is used, practitioners will document the medical necessity of the visit and that the billing practitioner personally spent the required amount of time face-to-face with the beneficiary.
  • CMS will implement add-on codes, not restricted by physician specialty, that describe the additional resources inherent in visits for primary care and particular kinds of non-procedural specialized medical care. These codes would only be reportable with E&M office/outpatient level 2 through 4 visits.
  • CMS will also adopt the use of a new “extended visit” add-on code for E&M office/outpatient level 2 through 4 visits to account for the additional resources required when practitioners need to spend extended time with the patient.

One positive aspect of these changes is that CMS did hear concerns from health plans about the originally proposed 2019 implementation and delayed required implementation until 2021. However, the finalized policies still include a number of changes that may cause concern for both Medicare practitioners and commercial health plans.

  • Physician organizations expressed concerns that these blended payment rate changes may indirectly hurt clinicians who serve the most complex patients.
  • For commercial payers, unexpected burden may be on the horizon in the next year as plans take the time to align contracts, fee schedules and pricing updates with CMS’ changes.
  • There is also a potential for these reduced documentation requirements to have a negative impact on risk adjustment and HEDIS reporting, since crucial aspects of a patient visit may not be recorded specifically in the medical record each visit.

In response to CMS’ proposed Physician Fee Schedule rules, America’s Health Insurance Plans (AHIP), said in public comments that they would “prefer a unified policy that could be used across payers rather than confusing physicians with multiple systems inadvertently creating more burden.” While CMS did appear to address concerns from health plans by delaying the implementation of these collapsed complexity payment changes, it’s clear that there is still a lot to understand about the potential impact of these rules. Whether CMS continues to hear out the concerns of commercial health plans in the next year, potentially revising these finalized rules in the 2020 Physician Fee Schedule proposed rule, remains to be seen.

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