CMS Facility-Based Emergency Department E/M Levels: Dead in 2014?

Rick Newell

Rick Newell , MD, MPH

Chief Transformation Officer

Published July 31, 2013


Medicare is fighting hard to remain a financially viable program in an era of austerity. On July 8, 2013, Centers for Medicare & Medicaid Services (CMS) posted several proposed changes to its rules surrounding outpatient facility coding and invited public comment. Because this proposal could impact patient care and the financial viability of emergency departments around the country, it's important that hospitals review the proposed changes, understand the implications and voice any concerns to CMS.

Under its Hospital Outpatient Prospective Payer System (OPPS), CMS currently uses a five-level system for coding, billing and reimbursing emergency department care at the facility level. The lower evaluation and management (E/M) levels (which carry smaller reimbursements) typically involve less complex complaints such as rashes, earaches, musculoskeletal injuries and minor cuts. The higher levels cover more significant and complex problems that require more testing and intervening, such as chest pain, abdominal pain, vomiting, headache and stroke.

Effective 2014, CMS proposes to do away with leveling and instead assign a single E/M facility code to all emergency department visits regardless of complexity. According to a CMS press release, the change would "maximize hospitals' incentives to provide care in the most efficient manner, discourage upcoding, and continue to set accurate payments." It also adds that the proposal would "remove incentives to provide medically unnecessary services or expend additional, unnecessary resources to achieve a higher level of visit."

Although this proposal may have some benefits in the form of transparency, efficiency and administrative streamlining, hospitals and CMS need to consider further implications of the proposed change:

Revenue: CMS has proposed that the single ED facility code be reimbursed at $212.90. This falls between the current level 1 of $51.82 and the current level 5 of $344.71. The proposed single reimbursement amount was likely determined to be budget-neutral.

If Medicare's proposal is implemented, there will be winners and losers, with EDs that see lower-acuity Medicare patients likely to benefit financially, while those with a higher-acuity patient mix would be forced to do more with less.

Access to Emergency Care and Tertiary Services: Over the last decade, there have been numerous ED closures across the country. This further financial stressor may result in more ED closures and a significant impact on public health and safety. Among the hospitals hardest hit under Medicare's proposal would likely be teaching/academic institutions and trauma centers — all of which tend to see higher-acuity patients. Critical access hospitals (including those in provider shortage areas) may also be jeopardized.

Patient Care: If hospitals are not receiving additional reimbursement for increasingly complex patients, there may be downward pressure on ED physicians to unscientifically minimize testing. While everyone agrees that only medically necessary tests should be performed, this change may push the pendulum too far in the other direction. This could lead to poorer outcomes for some of the most vulnerable patients — Medicare patients.

Patient satisfaction may also be negatively affected, as many Medicare patients simply do not have access to needed primary care and thus have no choice but to utilize the ED for their care. Due to downward pressure to minimize workups, these patients may not receive the ED evaluations that they need — even when they have nowhere else to turn.

The Domino Effect: As Medicare goes, other payers frequently follow. In addition, one could envision CMS making future proposals that collapse physician E/M codes into a single level. This would only exaggerate the implications mentioned above.

CMS is accepting public commentary on the proposal through Sept. 6, 2013. To weigh in, visit the proposal page at Commenting is fast and easy, and you can even attach supporting documents. As of this writing, only 20 comments had been posted, so your voice is very much needed on this important issue.

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