Study Finds Many Doctors Consistently Bill For the Highest Level of Evaluation & Management Services

A recent analysis by ProPublica has found that almost 2,000 healthcare practitioners around the country, including physicians, nurse practitioners, and physician assistants, billed Medicare for the highest level of evaluation and management (E&M) service for established patients at least 90% of the time in 2015. These finding echo concerns of the HHS Office of Inspector General (OIG) that E&M services are “vulnerable to fraud and abuse.”


E&M services are ubiquitous among healthcare practitioners. To qualify for reimbursement, Medicare, Medicaid, and commercial insurance carriers require that E&M services be medically necessary and coded appropriately. The Centers for Medicare and Medicaid Services (CMS), for example, defines medically necessary services as those that are needed to diagnose or treat an illness, injury, condition, disease, or its symptoms where the service provided satisfies accepted standards of medicine. When billing for E&M services, providers must select the code that best represents the type of patient (e.g., new or established), the site of service (e.g., office, hospital, or nursing home), and the “level” of service performed according to the documented history, examination, and medical decision-making. As CMS summarized in the Medicare Claims Processing Manual:

Medical necessity of a service is the overarching criterion for payment in addition to the individual requirements of a [Current Procedural Terminology] code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted. The volume of documentation should not be the primary influence upon which a specific level of service is billed. Documentation should support the level of service reported. The service should be documented during, or as soon as practicable after it is provided in order to maintain an accurate medical record.

CMS promulgated E&M documentation guidelines in 1995 and 1997. Providers may select either set of guidelines when documenting E&M services but may not use a combination of them.

E&M services have long been the target of investigations and audits by OIG, CMS, state agencies, and commercial insurance carriers. A 2012 report from OIG, for example, found that physicians increased steadily billing for higher level E&M services between 2001 and 2010. This resulted in Medicare payments for those services increasing by 48% from $22.7 billion to $33.5 billion. Based on its findings, OIG recommended that CMS instruct its contractors to increase audits of healthcare practitioners who bill higher levels of E&M services relative to their peers. CMS concurred with this recommendation.

In a subsequent 2014 report, OIG found that 21% of E&M services billed in 2010 (representing $6.7 billion in Medicare reimbursement) were improperly paid because the claims were incorrectly coded or lacked supporting documentation. In light of these findings, OIG once again urged CMS to increase audit activity as related to E&M services.

In cases where CMS, OIG, or another review entity determines that healthcare practitioners routinely “over-code” E&M services, a variety of sanctions are available. These include overpayment assessments / recovery, payment suspensions, and revocation of the provider’s billing privileges. In egregious cases, the government may pursue criminal charges or file a civil False Claims Act suit against the provider. In 2016, for example, a dermatology practice in Atlanta paid $1.9 million to settle allegations that it had fraudulently billed Medicare for E&M services.

Recent Developments

In a recent Federal Register publication, CMS stated that it was in the process of revising and updating the E&M documentation guidelines:

We continue to agree with stakeholders that the E/M documentation guidelines should be substantially revised. We believe that a comprehensive reform of E/M documentation guidelines would require a multi-year, collaborative effort among stakeholders. We believe that revised guidelines could both reduce clinical burden and improve documentation in a way that would be more effective in clinical workflows and care coordination…We recognize that achieving the goal of reduced clinician burden and improved, meaningful documentation for patient care will require both updated E/M guidelines, as well as changes in technology, clinician documentation practices, and workflow.

CMS has proposed some general possible revisions to the E&M guidelines. One such proposal will render medical decision-making and time the most important factors when choosing the most appropriate level of E&M service at the expense of history and physical examination.

CMS further stated that it was considering amendments to the E&M code set itself, noting “We believe…[it is] difficult to utilize or rely on such a relatively small set of codes to describe and pay for the work of a wide range of physicians and practitioners in many vastly different clinical contexts.” Although CMS stated that its current priority is revising the E&M documentation guidelines, it nonetheless expressed a desire to continue working with stakeholders “in future years” to potentially alter the E&M code set.


Due to the wide range of potential sanctions available to the government, healthcare practitioners should exercise caution when documenting, coding, and billing E&M services. In addition, providers should consider the following:

·         Most Medicare contractors offer valuable resources for issues related to documentation, coding, and billing of E&M services. For example, Novitas Solutions has published E&M “Score Sheets” on its website that providers can use to determine the most appropriate level of service to bill.

·         Providers should always select the most appropriate level of service to bill based on guidelines for medical necessity and documentation instead of reflexively billing for certain codes in all or most cases. CMS and its contractors identify potential audit targets based largely on analysis of the providers’ billing data. Providers with aberrant billing (i.e., billing patterns that are distinct from their peers) are often selected for review. This means that providers who consistently bill for “level 5” E&M services are just as likely to be audited as those who regularly bill for “level 3” E&M services.

·         Providers should consider engaging certified coders (either in-house or externally) to review their medical records prior to billing to ensure the proper level of service has been selected.

·         Providers should perform routine audits at regular intervals (such as on a quarterly basis) of claims for various services to ensure that all documentation, coding, and billing requirements have been met. In the event that a claim was found to be documented or billed incorrectly, the provider should submit a request to correct the claim, re-bill the claim, or repay the money to the responsible payor source.


ProPublica’s recent analysis substantiates what OIG and CMS have stated for years: E&M services are prone to waste, fraud, and abuse. Given the steadily increasing Medicare expenditures for these services, audits and investigations will likely continue to increase. All healthcare providers, including those with a large volume of E&M services, should taken proactive steps to ensure that they are in compliance with applicable documentation, coding, and billing guidelines.

Adam Bird is a partner in the healthcare practice group at Calhoun Bhella & Sechrest LLP. Please contact him at (202) 804-6031 or to set up a free consultation.


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