BASIC PRINCIPLES FOR EVALUATION AND MANAGEMENT (E/M) SERVICES

amount and/or complexity of data to be reviewed

documentation of the review of (1) results of diagnostic tests; (2) personal review of films or slides to confirm or augment reported results; (3) collaboration with other health professionals regarding test results or prior history; (4) review of old records or history from other sources.

associated signs and symptoms

details that are included in the definition of a medical problem, or details that are used to narrow the choices when a diagnosis has not yet been established. An element of the history of present illness (HPI).

brief HPI

a brief history of present illness; the medical record documentation should describe one to three elements of the present illness.

(1) chief complaint; a concise statement describing the reason for an outpatient visit; (2) complications and comorbidities; those additional conditions that increase the length of an inpatient stay by at least 1 day in at least 75% of patients.

complete PFSH

complete past, family, and/or social history; a documented review of two or all three PFSH areas, depending on the category of E/M service. All three areas are required for comprehensive assessments.

complete ROS

complete review of systems; the documented report of an inquiry about the body system(s) directly related to the problem(s) identified in the HPI plus all additional body systems (at least 10).

comprehensive exam

(1) 1995 guidelines: a general multi-system examination or a complete examination of a single organ system or body area; (2) 1997 guidelines for multi-system exam: should include at least nine organ systems or body areas. For each system/area selected, all elements of the examination identified in a table by a bullet (•) should be performed, unless specific directions limit the content of the examination. For each area/system, documentation of at least two elements identified in a table by a bullet (•) is expected; (3) 1997 guidelines for single organ system exam: should include performance of all elements identified in a table by a bullet (•), whether in a shaded or unshaded box. Documentation of every element in each shaded box and at least one element in each unshaded box is expected.

comprehensive history

documentation must include the chief complaint, an extended HPI, a complete ROS, and complete PFSH.

consultation

used when only an opinion or treatment advice is requested from the consulting physician. The consultant must send a written report to the requesting physician, or both physicians must document a telephone discussion.

context

details that relate a medical problem to other factors (not timing) about other specific events (e.g., right upper quadrant abdominal pain or right shoulder pain that occurs after eating only when fatty foods are eaten). An element of HPI.

contributory elements

the elements of documentation that confirm or augment the selection of codes for E/M services but that usually do not play a large enough role to make a difference in code choice. The exception is when counseling or coordination of care takes more than half the intraservice time for the encounter; then time is used to determine code selection.

detailed exam

(1) 1995 guidelines: an extended examination of the affected body areas or other symptomatic or related organ systems; (2) 1997 guidelines for multi-system exam: should include at least six organ systems or body areas. For each system/area selected, performance and documentation of at least two elements identified in a table by a bullet (•) is expected. Alternatively, a detailed examination may include performance and documentation of at least 12 elements identified in a table by a bullet (•) in two or more organ systems or body areas; (3) 1997 guidelines for single organ system exam: examinations other than eye or psychiatric examinations should include performance and documentation of at least 12 elements identified in a table by a bullet (•), whether in a shaded or unshaded box. Eye and psychiatric examinations should include the performance and documentation of at least nine elements identified in a table by a bullet (•), whether in a shaded or unshaded box.

detailed history

documentation must include the chief complaint, an extended HPI, an extended ROS, and a pertinent PFSH.

documentation guidelines

official guidelines developed by the Centers for Medicare and Medical Services (CMS) and published in the Federal Register; a method of evaluating physician performance by defining services and counting the items documented. All physicians are required by law to follow either the 1995 or the 1997 guidelines, or the most current guidelines once another set of guidelines is released.

duration

the length of time involved for each episode or occurrence of a medical problem or symptom. An element of HPI.

established patient

one who has been seen within the last 3 years by the practice or by the specialty group within a multi-specialty practice.

evaluation and management (E/M)

the process of evaluating a patient for suspected, known, or potential problems or conditions; assessing the findings; rendering an opinion; and developing and initiating a plan of action.

examination

the process of obtaining and recording the physician’s or other health care provider’s medically significant observations and findings.

expanded problem-focused exam

(1) 1995 guidelines: a limited examination of the affected body area or organ system and other symptomatic or related organ systems; (2) 1997 guidelines for multi-system exam: performance and documentation of at least six elements identified in a table by a bullet (•) in one or more organ system(s) or body area(s); (3) 1997 guidelines for single organ system exam: performance and documentation of at least six elements identified in a table by a bullet (•), whether in a shaded or unshaded box.

expanded problem-focused history

documentation must include the chief complaint, a brief HPI, and a problem-pertinent ROS.

extended HPI

the medical record documentation describes at least four elements of the present illness or describes the status of at least three chronic and/or inactive conditions.

extended ROS

extended review of systems; the documented report of an inquiry about the body system(s) directly related to the problem(s) identified in the HPI and a limited number (two to nine) of additional body systems.

face-to-face time

documented time spent face to face with a patient or a patient’s family in an office or other outpatient setting; outpatient intraservice time.

family history

a documented review of the history of medical events in the patient’s family, including hereditary diseases, contagious diseases, and any other diseases or conditions that place the patient at risk.

floor/unit time

documented time spent working directly on behalf of an inpatient while physically present on the patient’s floor or unit; inpatient intraservice time. It includes but is not limited to face-to-face time.

high-complexity medical decision-making

documentation of (1) an extensive number of diagnoses or management options; (2) an extensive amount of data or complexity of data to be reviewed; and (3) a high risk of complications and/or morbidity or mortality.

high-severity presenting problem

a medical problem in which the risk of morbidity without treatment is high to extreme; there is moderate to high risk of mortality without treatment; or there is high probability of severe, prolonged functional impairment.

history of present illness (HPI)

a chronological description of (1) the development of the patient’s present illness or problem from the first sign or symptom or (2) the development of the patient’s present illness or problem from the previous encounter to the present. It includes the following elements: location, quality, severity, duration, timing, context, associated signs and symptoms, and modifying factors.

intraservice time

documented face-to-face time or floor/unit time used to calculate the level of E/M code when time is the determining factor.

key components

the elements of documentation that best describe the amount of work performed and that are used to determine the code choice for E/M services.

location

the anatomical location of a medical problem. An element of HPI.

low-complexity medical decision-making

documentation of (1) a limited number of diagnoses or management options; (2) a limited amount of data or complexity of data to be reviewed; and (3) a low risk of complications and/or morbidity or mortality.

low-severity presenting problem

a medical problem in which the risk of morbidity without treatment is low; there is little to no risk of mortality without treatment; full recovery without functional impairment is expected.

medical decision-making (MDM)

documentation of the thought processes required to evaluate medical findings, documentation of the amount of work performed when evaluating medical data, and documentation of the conclusions drawn and the resulting plan of care. The amount of risk involved is also factored into the level of MDM chosen.

minimal presenting problem

a medical problem that may not require the presence of a physician, but the service is provided under the physician’s supervision.

moderate-complexity medical decision-making

documentation of (1) multiple diagnoses or management options; (2) a moderate amount of data or complexity of data to be reviewed; and (3) a moderate risk of complications and/or morbidity or mortality.

moderate-severity presenting problem

a medical problem in which the risk of morbidity without treatment is moderate; there is a moderate risk of mortality without treatment; uncertain prognosis or increased probability of prolonged functional impairment.

modifying factors

details that alter the definition or scope of a medical problem (e.g., the fact that a patient smokes must be considered and it changes the scope of many medical problems). An element of HPI.

new patient

a patient who is new to the practice or who has not been seen by a physician in the practice (or the specialty in a multi-specialty group) within the past 3 years.

number of diagnoses or management options

documentation of (1) every diagnosis and every diagnosis option the physician thought about and considered, including new diagnoses, the status of previously established diagnoses, and rule out of possible diagnoses; and (2) every treatment and every treatment option the physician thought about and considered, including the initiation of or changes actually made in treatment and alternative treatment options discussed with the patient.

outlier

payors use software programs to determine patterns of code use. They know the usual patterns for every region and every physician who submits claims. Those who fall outside the normal statistical patterns for a specialty or for a region are called outliers. Claims from outliers are scrutinized more carefully.

past history

documentation of the patient’s past experience with illness, operations, injuries, and/or treatments.

past, family, and/or social history (PFSH)

a documented review of the patient’s past history, family history, and/or age-appropriate social history and activities.

pertinent PFSH

a documented review of PFSH that is directly related to the HPI. At least one item from any of the three PFSH areas must be documented.

problem-focused exam

(1) 1995 guidelines: a limited examination of the affected body area or organ system; (2) 1997 guidelines for multi-system exam: performance and documentation of one to five elements identified in a table by a bullet (•) in one or more organ system(s) or body area(s); (3) 1997 guidelines for single organ system exam: performance and documentation of one to five elements identified in a table by a bullet (•), whether in a shaded or unshaded box.

problem-focused history

documentation must include the chief complaint and a brief HPI.

problem-pertinent ROS

problem-pertinent review of systems; the documented report of an inquiry about the body system(s) directly related to the problem(s) identified in the HPI.

quality

the details used to distinguish differences between similar problems (e.g., pain may be sharp, stabbing, cramping, dull, heavy, burning). An element of HPI.

referral

used whenever partial or total care of the patient is transferred to another physician.

review of systems (ROS)

a documented inventory of normal and abnormal subjective findings and/or symptoms reported by the patient or others.

risk of significant complications, morbidity, and/or mortality

risks are based on documentation of the presenting problem(s), the procedure(s) performed, treatments ordered, and other possible management options.

self-limited or minor presenting problem

a medical problem that runs a definite and prescribed course, is transient in nature, and is not likely to permanently alter heath status or has a good prognosis when treatment is given as ordered.

severity

the details used to distinguish levels of seriousness for a medical problem. An element of HPI.

social history

a documented, age-appropriate review of the patient’s past and current activities.

straightforward medical decision-making

documentation of a minimal number of diagnoses or management options, zero to minimal data or complexity of data to be reviewed, and a minimal risk of complications and/or morbidity or mortality.

timing

the details that relate a medical problem to when other specific events occur, or that identify a pattern of occurrences. An element of HPI.

Introduction

Payors declare that more than 80% of all medical claims received are for evaluation and management (E/M) services. Therefore this chapter focuses solely on E/M services and how to code them.

Evaluation and management is the process of evaluating a patient for suspected, known, or potential problems or conditions; assessing the findings; rendering an opinion; developing a plan of action; and documenting the encounter. As appropriate, the E/M process also may include writing prescriptions for medications and ordering tests, treatments, equipment, and supplies.

E/M services only include evaluation and management activities. Procedures are governed by different rules and are coded separately. Procedure coding is covered in Chapter 7.

Medical office employees are often caught in the middle of a battle between physicians and payors about issues related to the documentation of E/M services. Legally, you are required to code and bill E/M services according to the current E/M documentation guidelines. You are personally subject to the provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), including the penalties of the law. Although it is becoming less of a problem, you might someday have to choose between making every effort to help your physician(s) come into compliance with the law or personally facing stiff penalties if the E/M codes you place on a medical claim form do not match chart documentation. You are more likely to succeed in inspiring a physician to change his or her documentation patterns when you understand the history and the underlying battles regarding E/M documentation.

The following excerpt is from a Medicare news release dated October 6, 2004:

“The Healthcare Common Procedure Coding System (HCPCS) was established in 1978 to provide a standardized coding system for describing specific items and services provided in the delivery of health care. Such coding is necessary for Medicare, Medicaid, and other health insurance programs to ensure that health insurance claims are processed in an orderly and consistent manner. Initially, use of the codes was voluntary, but with the implementation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) use of the HCPCS for transactions involving healthcare information became mandatory.”

In a fact sheet from the United States Department of Health and Human Services (HHS) dated October 2003, it is made clear that HIPAA required HHS to adopt national standards for health care transactions.

Later, the fact sheet states that HHS’ Center for Medicare and Medicaid Services was charged with overseeing the implementation of the standards for electronic transactions and code sets.

The Current Procedural Terminology (CPT) code-book is the official code set for Level I of HCPCS. The HCPCS codebook is the official code set for Level II of HCPCS. E/M codes are part of the CPT codebook. When the Centers for Medicare and Medical Services (CMS) developed and released documentation guidelines for E/M services, the 1995 guidelines were mandatory for Medicare and voluntary for all others; but, under HIPAA, the 1997 guidelines became mandatory for every health care claim until the official ruling was released that suspended mandatory implementation of the 1997 Guidelines and ruled that either the 1995 or the 1997 guidelines may be used to meet the now-mandatory documentation requirements.

For many years, E/M services were purely subjective and very difficult to measure. Physicians were not under contract with insurance companies, so insurance companies had no legal basis for regulating how physicians performed and documented services.

According to George C. Halvorson in his book Strong Medicine, the insurance industry concluded that the potential for undetected fraud and abuse existed. Payors worked to develop measurable ways to uniformly define E/M services so they could better detect fraud and abuse. They began by first defining various types of E/M services. They established multiple levels for some services to provide a method to correctly identify the amount of work performed.

Initially, physicians fulfilled payor requests to better define E/M services. Since 1992, the American Medical Association (AMA) has included an E/M code section in the CPT codebook (Level I of HCPCS) to dispel payors’ worries about E/M fraud and abuse. The original E/M CPT codes defined or described each service, and an appendix in the back of the CPT codebook gave examples, or scenarios, in which each code might be used if the code description matched medical record documentation. Physicians learned the new codes and began to use them to report E/M services.

Once physicians consistently used E/M codes, payors compared code usage with medical record documentation across the nation and concluded that medical coding for E/M services was not consistent. They realized that they still did not have proof that these services were actually performed.

In Strong Medicine, Halvorson, an HMO president and CEO, gives an inside look at how payors think. Payors often suspect physicians are billing for higher levels of service than were actually performed or higher levels than were warranted by the patient’s medical condition. He clearly documents why payors suspect physicians of wrongdoing, and he published numerous comments he said were made by physicians that confirmed and fueled those suspicions. His book effectively and convincingly presents payor viewpoints. Mr. Halvorson testified before Congress on health care matters. He served on the Minnesota Healthcare Commission, and he served as chairman of the Group Health Association of America.

The Health Care Financing Administration (HCFA), now called the Centers for Medicare and Medicaid Services (CMS), a federal agency that governs Medicare, Medicaid, and other federal programs, responded to payor complaints by establishing a system designed to give payors the proof they demanded. During 1994, HCFA developed documentation guidelines for E/M services, and they implemented the new requirements at the beginning of 1995. These requirements were mandatory for Medicare claims and voluntary for all others.

Documentation guidelines are a method of evaluating physician performance by defining items that must be documented for each E/M code. This allows payors to count items actually documented in the medical record to confirm the validity of an E/M code.

Although physicians accepted the use of E/M codes to better define the type and amount of work performed, physicians were deeply offended by the imposition of E/M documentation guidelines. A battle began that has yet to be resolved.

The Board of Medicine in each state closely regulates the practice of medicine. Patients and communities rely on the Board of Medicine, not the insurance industry, to set standards for care. Physicians have traditionally been respected and trusted by the community. Documentation guidelines were not developed in response to patient or community complaints. They were developed in response to insurance industry suspicions. By imposing E/M documentation guidelines, payors sent the message that they distrust physicians.

The legal system in the United States is based on the premise that a person is presumed innocent until proven guilty. The AMA has stated that physicians believe documentation guidelines, contrary to the rule of law, are based on the premise that physicians are presumed guilty until proven innocent. However, whether they agree with it or not, physicians are now required by law to follow current documentation guidelines.

Beginning with the 1995 edition of CPT, the AMA has included material and directions taken from the 1995 E/M documentation guidelines at the beginning of the E/M section in the CPT codebook. However, many physicians questioned the legality of the guidelines and voluntarily chose to delay using them while the AMA pursued legal channels to try to get them repealed. The use of E/M documentation guidelines was mandatory for Medicare claims beginning January 1, 1995; however, funding was not provided for enforcement. Most physicians honestly believed the law was unenforceable, and that the AMA would succeed in getting it repealed.

During 1996, the documentation requirements for E/M services were revised again by HCFA. Mandatory implementation for all medical claims, not just Medicare claims, was to occur in 1997, and because HIPAA was signed into law, ample funding was provided for enforcement.

Physicians loudly protested the 1997 version of the documentation guidelines, claiming they were too cumbersome to use. Mandatory implementation of the 1997 guidelines was suspended. Until a new version is approved, physicians may legally follow either the 1995 documentation guidelines or the 1997 documentation guidelines. The material and directions taken from 1995 guidelines continued to be published in CPT as recently as the 2005 edition of the CPT codebook. The 1997 guidelines are available from CMS but have never been included in the CPT codebooks.

For a time, claims were paid regardless of whether the guidelines were followed, but the grace period ended in 1997 when funding was made available for enforcement. Now payors are not required to pay claims unless documentation shows that the services were performed as billed.

Payors do not check documentation on every claim submitted. Instead, they periodically ask for documentation to support a particular claim, and they make broad assumptions based on claims actually reviewed. Sometimes when specific problems are found with reviewed claims, it triggers a wider audit of claims from that physician.

In addition, some payors perform “targeted reviews.” Specific codes are named for review each year, and every claim with one of those codes undergoes a documentation audit.

This chapter focuses on teaching both the 1995 and the 1997 documentation guidelines as these are the versions from which billing is currently done. Please keep in mind that most physicians still dislike the imposition of documentation guidelines, and they struggle to meet even the less restrictive 1995 guidelines. Until a new version becomes official, most coding is done from the easier 1995 guidelines. Whichever guidelines your practice chooses to use, each physician must consistently use one set of guidelines. Physicians who continue to ignore all guidelines put themselves and their employees at risk of prosecution under HIPAA.

Although physicians prefer the 1995 guidelines, payors prefer the 1997 guidelines. Some payors try to penalize claims that are coded using the 1995 guidelines. You can and should challenge these penalties. The 1995 guidelines are valid and may be used until the date the next version becomes mandatory.

Medical codes are subject to annual revision, and coding becomes more complex every year. Physicians seldom know enough about current medical coding rules to correctly code their own services. Therefore medical coding has become a distinct specialty in the medical office.

E/M coding is a complex subject. The information presented in this chapter is an introduction to E/M coding and a broad overview of the most important documentation rules and coding conventions.

The compliance guidance documents issued by the Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) strongly recommend that job descriptions be used to assign accountability for specific tasks in the medical office. The OIG developed the compliance guidance documents to help various types of medical entities meet the “accountability’’ requirements of HIPAA (Public Law 104-191). Many of the OIG’s recommendations relate directly to billing and collections, including assigning responsibility for gathering the information for the billing and coding of medical claims. The Medicare website for medical office education, which is now sponsored by numerous government agencies, www.cms.hhs.gov/medlearn/cbts.asp, notes how accountability is typically assigned in a medical office, and that information provided the basis on which accountability is addressed in this chapter. However, please remember that each medical office decides exactly which employee positions are assigned individual accountability for each task, and it will vary from one office to another. In addition, in a small medical office, one multiskilled professional often fills numerous employee positions.

Typically, medical billers are held accountable for the codes submitted on medical claims unless the responsibility for medical coding is clearly assigned to someone else, such as a certified professional coder (CPC, CPC-H) or a certified coding specialist (CCS, CCS-P). If the medical office you work for does not have a certified coding employee, you should consider completing a full medical coding course before accepting this responsibility.

This chapter introduces the concepts of E/M coding that every medical office employee should know in order to recognize when something is obviously wrong.

For example: You will know something is obviously wrong when:

A patient who was seen by the same physician recently is assigned a “new patient” code.

A new patient is assigned an “established patient” code.

An outpatient is assigned an “inpatient” code.

An inpatient is assigned an “office visit” code.

An assigned code for a comprehensive service has only a little documentation.

An assigned code for a limited service has comprehensive documentation.

1995 Documentation Guidelines for E/M Services

TABLE 6-1

Decision Chart for History

Type of History	Chief Complaint	History of Present Illness (HPI)	Review of Systems (ROS)	Past, Family, and/or Social History (PFSH)
Problem focused	Yes	Brief (1-3 elements)	N/A	N/A
Expanded problem-focused	Yes	Brief (1-3 elements)	Problem pertinent	N/A
Detailed	Yes	Extended (4-8 elements)	Extended	Pertinent
Comprehensive	Yes	Extended (4-8 elements)	Complete	Complete