Updated on: December 21, 2017

How to Defend Your E&M Coding

Original story posted on: December 20, 2017

Confusion persists as providers anxiously await facility-specific guidelines from CMS.

Did UHC provide to facilities an ED criterion to use when assigning facility ED evaluation and management (E&M) codes to their patients? 

Probably not. 

Based on this, most facilities have used the Centers for Medicare & Medicaid Services (CMS) instructions and guidelines for all payers, unless otherwise directed from their payers. How, then, after the fact, can a payer say that it is going to use a proprietary analyzer to review your Levels 4 and 5 E&M services, and potentially downgrade them based on criteria that were never provided to you? This is crazy.

Since facilities have applied CMS’s guidelines to facility E&M coding due to a lack of specific guidelines from any particular payer, let’s take a moment and review what CMS guidelines have been. 

Prior to ambulatory payment classifications (APCs), hospitals did not have to report HCPCS/CPT® codes for all services provided, as hospitals were paid on a percent-of-charge/cost-to-charge methodology. With the implementation of APCs, payment became linked to a HCPCS/CPT code or codes, so CMS had to determine a way for hospitals to report “medical visits” when there may or may not be other codable procedures performed. CMS decided to have hospitals use the same HCPCS/CPT codes that physicians do for reporting outpatient visits, because they (CMS) did not have time to create a hospital-specific set of codes and guidelines.

CMS did realize that the reasons and resources reflected in a hospital component of a visit would be different than the physician component (hospitals bill for overhead, while physicians bill for performing the service), so CMS instructed hospitals to develop internal guidelines to determine what level of visit to report for each patient. While awaiting the development of a national set of facility-specific codes and guidelines, CMS has advised that each hospital's internal guidelines should follow the intent of the CPT code descriptors, in that the guidelines should be designed to reasonably relate the intensity of hospital resources to the different levels of effort represented by the codes.

CMS further clarified that as long as the hospital had a criterion that when applied by multiple people would result in the same code being assigned, and as long as the hospital was using the full range of codes, CMS would consider them to be compliant.

CMS indicated in the 2008 Final Rule that “we note our expectation that hospitals’ internal guidelines would comport with the following principles listed below:

  • The coding guidelines should be based on hospital facility resources. The guidelines should not be based on physician resources.


  • The coding guidelines should be clear to facilitate accurate payments and be usable for compliance purposes and audits.


  • The coding guidelines should meet the HIPAA requirements.


  • The coding guidelines should only require documentation that is clinically necessary for patient care.


  • The coding guidelines should not facilitate upcoding or gaming.


  • The coding guidelines should be written or recorded, well-documented, and provide the basis for selection of a specific code.


  • The coding guidelines should be applied consistently across patients in the clinic or emergency department to which they apply.


  • The coding guidelines should not change with great frequency.


  • The coding guidelines should be readily available for fiscal intermediary (or, if applicable, Medicare Administrative Contractor) review.


  • The coding guidelines should result in coding decisions that could be verified by other hospital staff, as well as outside sources.”

Hospitals need to be careful when assigning facility E&M codes, as CMS has stated that billing a visit in addition to another service merely because the patient interacted with a hospital staff member or spent time in a room for that service is inappropriate. CMS made the following statement in the 2008 Final Rule:

“We (CMS) also stated that we were concerned about counting separately paid services (for example, intravenous infusions, X-rays, electrocardiograms, and laboratory tests) as ‘interventions,’ or including staff and their associated ‘staff time’ in determining the level of service. We believed that the level of service should be determined by resource consumption that is not otherwise captured in payments for other separately payable services.”

Facility E&M codes are assigned to reflect hospital costs associated with providing care: items such as room overhead, nurses, other hospital staff, etc. What the physician does should not be incorporated into the facility E&M code determination, as physician services are reflected in the professional E&M codes and procedure codes, if applicable, for which they bill. Documentation for the facility E&M should be based mainly on the nurse and other hospital staff documentation. 

With the implementation of the electronic health record (EHR), this documentation can be very limited and may not be tied to the facility E&M criteria that a hospital may be using. It is important that hospitals review their EHR documentation to ensure that it is supporting the facility E&M code that is being billed.

If your payers have not provided you a specific facility E&M criterion to use and you have been following CMS’s instructions and guidelines, you should be reviewing any claims that are downgraded. Review any downgraded facility E&M codes against your ED criteria, and if they comply with them, then you should dispute the downgrade. Utilize CMS’s instructions above in your explanations to do so.

If you are using a criterion that is supplied by a software vendor, it may be more difficult to obtain it, as it is likely proprietary. You may want to reach out to your software vendor and ask how they will assist you in defending your ED claims downgrading.

Kim T. Charland, BA, RHIT, CCS

Kim Charland has over 30 years of experience in health information and revenue cycle management for hospitals and physicians. Kim has spent most of her career in product development related to healthcare consulting services, education, publishing, and software. She was responsible for the operations of a healthcare audit consulting division for many years and launched an Internet news and information platform, VBPmonitor, that focused on the transition to value-based payments. She was also the co-host of ICD10monitor’s weekly Internet news program, Talk-Ten-Tuesdays, for many years. Kim speaks nationally on topics such as quality and value-based payment initiatives, clinical documentation improvement (CDI), and documentation, coding, revenue cycle, and compliance-related issues. Kim is also the president of the New York Health Information Management Association.

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