E/M upcoding puts your hospital at risk — and you may not know it

Physicians’ medical decision making is the weak link

One health information services (HIS) department made a troubling discovery when it took over the billing for evaluation and management (E/M) codes for several of its hospitals.

The company that had handled the outsourced coding functions had often "upcoded" or assigned higher levels of service — and higher reimbursement — than government guidelines permit.

Anita Orenstein, ART, CCS, CCS-P, HIS compliance coordinator, quickly made the decision to have the HIS department take over the coding functions, too. "We wanted to ensure the quality and compliance since we were taking the risk for liability," she says.

Orenstein’s employer, Intermountain Health Care in Salt Lake City, is a corporation comprised of more than 20 hospitals. The HIS department now takes care of the E/M coding and billing functions for six of those facilities.

"Sometimes there is an incentive for outsourcing services to upcode," Orenstein says. "They either get a percentage, or they just want to maintain their contract. If they keep their physicians happy with good reimbursement, the physicians are not going to let them go. But if you follow the guidelines the way they are meant to be used, then you don’t have all those higher levels of service. We wanted to ensure that ours were by the book."

E/M codes are used to report physician visits, consultations, and similar services. The level of service assigned is intended to reflect the work involved in providing the service.

Two out of the three primary components (history, examination, and medical decision making) must meet or exceed the stated requirements to qualify for a particular level of E/M service for the following established or follow-up patient categories or subcategories:

- office;

- established patient;

- subsequent hospital care;

- follow-up inpatient consultations;

- subsequent nursing facility care;

- domiciliary care, established patient;

- home, established patient.

In June, the current procedural terminology (CPT) editorial panel of the American Medical Association (AMA) in Chicago submitted its recommendations to the Health Care Financing Administration for revising its documentation for the E/M codes.

The proposed guidelines are said to be less rigid for physicians to use. But the guidelines also may make it easier for physicians to justify a higher level of service. (For more information about the proposed guidelines, see Hospital Payment & Information Management, September 1999, p. 135.)

Fault of the system?

E/M upcoding is always going to be a problem, says Caren Reney, RN, CCS, owner and technical consultant for HealthCare Quality Consultants in Avon, CT. "It’s never going to go away."

Several issues contribute to the upcoding problem, she says. One factor is the push toward increased physician productivity. "We have the government saying physicians have to comply with these guidelines and it’s going to pay them X amount [for the services]. Then we have organizations and physician practices saying physicians have to bill X amount of dollars to receive a particular salary in a year.

Both sides are working against each other.

"[Productivity standards] are counterproductive to the physician, but the system is now set up that way," she continues. "I work with academic institutions and private institutions, large groups, hospitals. Everyone has the physician on some sort of productivity standard. The physicians as a general group aren’t happy. They are hoping that the new guidelines will give them more flexibility to reach those higher levels of codes."

Another issue pertains to the number of people, such as accountants, who present themselves as coders.

"It’s frightening," Reney says. "Some of them don’t have the knowledge. When you are hiring accountants with a little bit of coding background, they are going to figure out that the higher codes bring higher dollars. They are trying to meet their customers’ requests, which has a tendency to be a problem." Some "true" outside coders refuse to misrepresent the physician services, but Reney calls them "few and far between."

The primary problem that leads to E/M upcoding is a lack of physician knowledge, she says. "Medical necessity is the key to E/M services; a lot of physicians are not being educated to that level. The majority of physicians I speak to about medical necessity don’t have a clue what it means.

"They are just being educated on meeting the key components, the documentation requirements — such as doing a history, including family and social history — and so many reviews of systems and so many elements for an examination," she continues. "They are not being educated on medical decision making, which is [contrary to their job as a physician]." (For more information about educating physicians on E/M coding, see story, p. 163.)

When coders or auditors review physician E/M service levels, they often find that the physician meets the history and examination requirements. The medical decision-making aspect, however, is "usually down at a low level, in around one and two," Reney says. "That is usually the weakest area."

For example, one doctor documented a visit with an elderly patient who had anemia. "The doctor wrote in the chart that the patient had anemia, but the doctor gave no parameters for the anemia. There were no blood levels [in the report] even though a lab sheet was in the medical record." The doctor also never said what he was going to do to treat the anemia. "That’s medical decision making." The medical director who reviewed the documentation decided that it was not sufficient to justify the service.

The "bell curve" for E/M coding is at the third level, Reney says, but many physicians feel that their time is worth more than just that third level. "They are not understanding that time isn’t playing a role anymore."

To address the coding problem at the outset, physicians should be taught E/M coding and documentation in medical school, Reney suggests. "The rare school in the United States teaches it at that level."

Physicians with an established practice can teach themselves about E/M coding, too. According to Reney, physicians should use these resources:

- They can access the AMA Web site (www.ama-assn.org) to review the guidelines.

- They can purchase pocket guides that spell out the guidelines. "The guides are multipurpose and can go anywhere," she says.

- They can implement E/M documentation templates for what they see most in their practice.

In recent months, Reney has been providing E/M coding training to residents who have recently graduated from medical school.

"It’s been a constant complaint that they have not received any of this training and they are thrown out on the streets to make a living. Then they find out that they can’t," she explains.