Comparative Billing Reports to Focus on Evaluation, Management Services

Michigan Medical Law Report, summer 2012

Amy K. Fehn, Esq.
Wachler & Associates, P.C.

Recent communications from the Centers for Medicare and Medicaid Services (CMS) and the Office of the Inspector General (OIG) for the Department of Health and Human Services indicate that CMS and its contractors intend to focus on and strictly scrutinize physicians’ patterns of utilization related to Evaluation and Management (E/M) codes. All providers who bill E/M codes should take steps as part of their internal compliance program to confirm that the codes billed appropriately reflect the level of service provided, that they have appropriate documentation in their medical records to support the levels of codes billed, and that the level of service was medically necessary.

Since 2010, CMS has contracted with SafeGuard Services to issue Comparative Billing Reports (CBRs) to providers regarding services that present a potential vulnerability to the Medicare program. CMS recently identified E/M Services as a CBR topic and announced that the reports will be released beginning June 4, 2012. CBRs contain data-driven tables and graphs comparing a provider’s billing and payment patterns to his or her peers on a national and state-wide basis. A maximum of 5,000 physicians will receive these reports. Those who do should carefully review the information to determine whether the information identifies them as an outlier as compared to their peers.

Although CMS has stated that CBRs are intended to be a compliance tool and are not intended to be punitive or an indication of fraud, the focus on E/M Services for CBRs coincides with the release of an OIG report titled “Coding Trends of Medicare Evaluation and Management Services.” The OIG report examined coding trends in E/M services between 2001 and 2010 and concluded that charges for these services increased 43% between these dates. Although the OIG report looked only at trends and not the sufficiency of underlying documentation, it was stated to be the first of several reports that will examine this issue. In this report, the OIG encouraged CMS to produce CBRs for E/M Services and to use these reports to identify and monitor physicians who consistently bill higher levels of E/M codes.

The OIG report also urged CMS to conduct additional reviews of physicians with consistently higher level E/M codes to ensure that claims are appropriate and to recover identified overpayments. To assist CMS, the OIG also provided a list of approximately 1700 physicians who consistently billed higher level E/M codes in 2010 and stated that these physicians would also be considered for further review by the OIG.

In light of the current regulatory environment and the focus on E/M services, all physicians should ensure that they have an appropriate understanding of the documentation that is needed to support the various levels of E/M codes. With the exception of counseling or coordination of care services which are determined by time, E/M code levels are dependent on three key components: history, examination, and medical decision making. Each of these components must be documented with sufficient

detail to support the code level in accordance with either the 1995 or the 1997 CMS Documentation Guidelines for Evaluation and Management Services.

Many providers make the mistake of assuming that they can justify higher level codes simply based on the level of complexity of the patient’s illness. It is important to remember that the documentation in the medical record must also support the level of code chosen.

Conversely, even if a claim is well-documented and includes very detailed documentation, the overarching criterion for payment is the medical necessity of the service. This has become a greater problem with the increased use of electronic medical records which make the documentation of the history and examination easier and more detailed through the use of templates. It is not appropriate to bill a higher level of E/M service when a lower level of service is warranted, despite the amount of documentation.

Another common pitfall for many providers is the decision to select the same level code consistently. Many providers select codes lower than that warranted by the patient’s condition either because they are fearful of an audit, they do not have time to document all of the information necessary for a higher level code, or they do not have an understanding of the E/M selection criteria. CMS expects to see a range of E/M codes resembling a bell-shaped curve, so consistently choosing a lower code than necessary can cause a provider to be an outlier and can create audit risk. To this end, it is important that all superbills, routers or EMR templates contain all levels – not just the higher levels or those that are “expected” to be used because of the patient population.

The appropriate selection of E/M codes is a complicated process that also has an element of subjectivity. Appropriate use of E/M codes should be considered a risk area that is addressed in a providers’ compliance program. The use of an outside auditor to review the use of E/M services as well as to educate physicians on appropriate use of the codes is an excellent method of decreasing the potential risk of overpayment allegations related to E/M services.