Solving The Codes In Evaluation And Management Utilization, Are You An Outlier?

Evaluation and management (E&M) utilization review is the most prevalent form of profile analysis done by Medicare intermediary carriers and other third-party payers. It is responsible for the most reviews, audits, and overpayment demands and the most likely area to raise red flags for the medical practice.
E&M utilization is the number-one compliance issue in the medical practice. Improper coding techniques can do one of two things:
• Result in lost revenues by undercoding services.
• Cost the practice significant dollars in the case of overpayment demands from overutilization and exposure to civil and criminal penalties.

As part of the efforts to overhaul the E&M system, the federal government studied over 132 million E&M codes to determine the percent distribution of each of the codes within their respective categories. This data, maintained by the Centers for Medicare and Medicaid Services (CMS), is available to all Medicare carriers. It can also be purchased by private practices through Part B News in Rockville, Md.

This data is used to constantly update national and regional utilization statistics for comparison with local practices. E&M utilization has become the key monitoring factor in controlling costs for managed care providers. The utilization analyses are used as a primary screen to determine whether or not a medical office is potentially engaged in fraudulent or abusive practices as related to the E&M codes. Most Medicare intermediaries are required to perform pre-payment audits on E&M codes and to perform random chart audits and reviews on participating medical practices.

Checking The Averages

By utilizing an Microsoft Excel spreadsheet, you can compare your practice’s E&M utilization against averages for your specialty. With this data, you can produce comparative bell curves. By comparing your practice’s E&M utilization against averages for your specialty, you can identify utilization problems in your practice the same way auditors do. This can enable you to determine if your practice as a whole or a certain individual provider within is being profiled as an outlier.

As you compare your utilization to these national averages, keep in mind the concept of ‘E&M shifting.’ This refers to measuring the direction and degree of variance in each subcategory. Consider new office visits (99201-99205). If a practice has a much higher utilization of the top two or three E&M codes (say, 99203-99205) than the national averages, this profile would be ‘right-shifted,’ meaning the practice’s utilization curve shifts to the right, or higher, end of the scale. It could signal that a practice is overutilizing these higher codes.

The flip side, which is frequently seen in physicians’ offices that undercode for fear of attracting the fraud police, is underutilization, or a left-shift profile. In this scenario, the practice overutilizes the lower-intensity two or three codes (say, 99201-99202) and underutilizes the upper codes. The practice may well avoid an audit, and it’s not likely the payer will alert the practice of this shift. This is because underutilization benefits the third-party payer and causes a financial loss to a practice. Our experience indicates that most physicians undercode, losing out on thousands of dollars every year.

It is important to note that deviations from the peer averages do not necessarily translate into improper coding techniques. The demographics of your patient base may justify the variance, as may the work performed and the related documentation. These should, however, prompt you to have an independent chart review performed, especially if your variances are 10{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} to 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} higher or lower than your peer averages.

The Bottom Line

There is virtually no downside to performing an E&M utilization analysis and having an independent chart review performed. On the upside, if it is found that physicians in your practice are undercoding, staff and physician training will more often pay for itself several times over in annual revenue increases. If it is determined that physicians are overcoding, training and monitoring can guide you back into compliance and keep the practice off the CMS radar screen.

James B. Calnan, CPA, is partner-in-charge of the Health Care Services Division of Meyers Brothers, P.C., in Longmeadow; (413) 567-6101.

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