October 2018
Spotlight: How Much Revenue Could Your Practice Lose Under Proposed Medicare E&M Code Changes for 2019?
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Documentation requirements would be streamlined under the CMS proposal and would allow greater flexibility for providers to code based on the changes since the last visit, or based on time spent with the patient (which would be at or greater than a minimum time requirement). The provider also would have the ability to agree with other providers’ previously written documentation for the same visit. There no longer would be a requirement to document the reason for a home visit. Providers would be free to determine the code used from level 2-5 without fear of a coding audit, as both wRVUs and the payment rate would be the same for each.
The intent is to allow providers to spend as much time as necessary with the patient, document what is medically necessary, and be paid at the same amount for each visit. Multiple visits on the same day to providers in the same specialty within a group would be permitted (they are not permitted currently). The new G codes could be used for primary care and complex specialty visits, longer visits, or when a visit and procedure are performed on the same day.
As one of the main goals of the proposed E&M code change is to reduce coding time, estimating the time saved in coding by provider would be helpful. Questions to consider in evaluating the impact include:
  • How much time might be saved in coding for each patient?
  • Can current documentation by nurses or residents be used in reducing provider coding time?
  • How many more patients will the provider be able to see in a day, month, or year?
  • Would the provider need to use the current documentation standards regardless, to meet documentation requirements of other payers?
Provider compensation also may be affected. Organizations that use wRVUs in calculating provider compensation should consider the impact of a single wRVU value change for E&M codes for specific providers. They may need to consider instituting shadow wRVU values at the 2018 levels to maintain current provider compensation levels.

Another unknown is whether other payers would follow CMS’ lead. In cases where Medicare may be a partial or secondary payer in addition to a commercial plan, organizations may have to follow current 2018 coding standards for commercial payers that do not implement the changes.
If providers limit time to see a patient under the proposed E&M structure, some patients may need to come back to the practice more often for care. This may have implications for patient satisfaction, and practice patient scheduling templates may need to be modified as a result.
Ultimately, the proposed changes would affect various practices differently, depending on the specialties within the practice, the average wRVUs, and payments. To assess the impact on their financial health, individual practices will need to conduct a detailed analysis based on their specific providers and practice data.
Other Implications and Considerations
Many physician practices could see significant decreases in Medicare payments for outpatient services in 2019, if the Centers for Medicare and Medicaid Services (CMS) moves forward with proposed changes to the Physician Fee Schedule announced in July. Public comment on the proposed rule closed September 10, and CMS officials currently are reviewing responses. The implications of the revised rules would vary for different specialties and individual practices. To prepare, healthcare organizations should evaluate their current share of outpatient visits that would be affected by the changes, and calculate the projected financial impact based on current and anticipated future payment levels.
Proposed Changes
Financial Implications
Assessing Financial Implications
To determine financial implications for a practice, organizations should calculate—by provider—the average wRVU value for new and established patients, and average payments for all visits in E&M code levels 2-5. They then can compare the results to the new wRVU values and payments, including estimating G codes when appropriate.
For example, consider a physician practice that has 53,718 new patient visits and 427,704 established patient visits in 2018. The analysis below calculates the financial loss to the practice. In the sample data set, levels 3 and 4 account for 89 percent of visits to the practice, resulting in an overall average of 3.54 wRVUs, with an average of 3.57 wRVUs for established patients and 3.29 wRVUs for new patients. The practice’s compensation plan is wRVU based, so the practice would generate 18,212 wRVUs less or 2.8 percent less without G codes (see Figure 1).
The next step is to analyze the practice’s current outpatient volumes for established and new patients based on the current and proposed payment rates. In this case, the practice would see an estimated decline in payments of more than $310,000 annually, with $47.34 million under the current methodology versus $47.03 million under the proposed changes (see Figure 2).
To understand the impact on individual provider compensation, the practice would need to calculate compensation using the new wRVU values. Alternatively, it could use the existing wRVUs per visit to calculate compensation under the new E&M code payment structure (without the wRVUs for the G codes).
Figure 1: Sample Comparison of wRVUs under Current vs. Proposed Methodology
Source: Kaufman, Hall & Associates, LLC
Figure 2: Sample Analysis of Average Charge, Payment Rate, Weighted Proposed Rate, and Total Impact
Source: Kaufman, Hall & Associates, LLC
Proposed Changes
The proposed changes are intended to simplify and streamline outpatient evaluation and management (E&M) coding and payment, following years of criticism citing cumbersome and duplicative documentation requirements that do not benefit patient care.
The current coding structure uses five levels, each with different payment rates based on factors such as patient history, physical exam, and medical decision making. Under CMS’ proposed changes, four of those levels (levels 2-5) would receive a standard payment rate. Each visit, irrespective of the level coded, would earn 1.9 work Relative Value Units (wRVUs) for new patients and 1.22 wRVUs for established patients. Payments would be $135 for new patients, compared to a current range of $76 to $211, and $93 for established patients, compared to a current range of $45 to $148. CMS also is proposing instituting new “G codes” as add-on payments for patient visits lasting more than 30 minutes, or to supplement payments for more complex care provided by primary care providers, or certain specialists, such as Immunologists, Cardiologists, Endocrinologists, or Oncologists.
In theory, variations from current payment rates for different types of visits would balance out with the uniform payment rate, allowing practices to earn cumulative payments similar to what they receive under the current methodology. A CMS analysis of all U.S. specialties projects that aggregate payments to each specialty would be within plus or minus 3 percent from current rates, with a few exceptions. For two specialties—Nurse Practitioners and Obstetrics—aggregate payments would increase by 3 percent or more . In three specialties—Dermatology, Rheumatology, and Podiatry—payments would decrease by 3 percent or more.
For specific practices, the proposed G codes may help to close any gaps. For example, primary care providers coordinating care could earn an additional 0.07 wRVUs per visit when applying the G code. Specialists with complex patients using the G code could earn an additional 0.25 wRVUs per visit. Other G codes could be used for Podiatry, prolonged visits, or psychotherapy.
Proposed Changes
Financial Implications
©2018 Kaufman, Hall & Associates, LLC
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