CHAPTER 42
Evaluation and Management of Coding and Documentation
Sybil Yeaman
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PROFICIENCY IN SELECTING THE appropriate level of evaluation and management (E&M) codes and thorough documentation regarding medical necessity of services in patient medical records generate correct reimbursement, facilitate compliance with regulatory guidelines, and lower malpractice risks. Inappropriate coding and lack of supporting documentation in medical records put medical providers at risk for consistent underpayments or audits for recoupment of overpayments, and higher malpractice risks. Information about E&M coding and documentation is provided here only for education purposes. Readers should always refer to American Medical Association (AMA), Centers for Medicare & Medicaid Services (CMS), and health insurance plan guidelines for specific coding and documentation requirements.
E&M codes were established in 1995, yet correct coding is still a challenge because of the complexities incorporated into the coding process for purposes of determining medical necessity and level of code for services rendered.
Prior to the late 20th century, medical providers personally determined the medical necessity of the services they provided to their patients. Reimbursement came directly from their patients in a monetary or barter remuneration system. The increasing popularity of purchased health insurance coverage in the late 20th century generated a growing business of health insurance plans, which provided coverage for member services. To control costs, health plans began to define medical necessity to determine which medical claims to pay and which to deny. When payments were linked to medical necessity, conflicts and complexity regarding the definition and appropriate levels of reimbursement came to the fore, and they remain ongoing issues.
With reimbursement linked to medical necessity, physicians no longer determine medical necessity based solely on their individual professional opinion. Government medical programs (i.e., the CMS), individual state regulators, and health insurance plans have each defined medical necessity for their own needs and carry financial risk for determination of what is medically necessary. Our system of medical coding and accompanying reimbursement rates are based on predetermined medically necessary levels of health care provided by health-care providers and documented in the medical record. Five E&M levels for new patients and five for established patients each begin with minimal services and escalate to more complex services. Relative value units (RVUs) are assigned to each escalating level of service as part of a resource-based relative value system; the designated value for each level arises from calculation of the numbers of units of medical services provided, anticipated expense for the practice (facility), and the level of medical decision making and risk. These RVUs are in turn used to establish provider reimbursement rates. Higher E&M levels indicate more complex medical care and result in a higher RVU reimbursement.