On January 1, 2021, new evaluation and management (E&M) coding guidelines for clinical office visits go into effect across the US. These guidelines, which reflect the most significant change in E&M coding undertaken since 1997, could rapidly affect up to 40 percent of all Medicare physician fee schedule charges and contribute to cost increases for people who pay all or part of their outpatient medical bills. One change in the new guidelines is that the billed “level of service” will be based largely on total time spent or the complexity of the clinician’s medical decision making during the office visit. The new emphasis on medical decision making leads to a far more subtle but potentially more important change in the updated guidelines: For the very first time, assessment of the complexity of medical decision making can take into account a patient’s socioeconomic risk factors.
The new guidelines are a surprisingly unambiguous policy statement by the American Medical Association (AMA), which proposed the guidelines, and the Centers for Medicare and Medicaid Services (CMS), which approved them, recognizing the influence of socioeconomic status on medical care and outcomes. Until now, the billed level of service for a patient living in poverty with diabetes, for instance, typically could not reflect the complexity of adjusting insulin doses based on the accessibility of food, availability of transportation, or the patient’s medication costs. So while clinicians working with patients in poverty or facing other socioeconomic barriers sometimes make adjustments based on social conditions, these adjustments generally have not been considered in medical coding. Previous coding guidelines (which were not designed to facilitate accounting for social factors) appeared to have had the intended effect: A randomized study with professional medical coders revealed that level of service assessments did not vary regardless of whether documented visits referenced patients’ socioeconomic barriers.
Although the new guidelines are specific to office visits, they could have more widespread implications. If they lead health care organizations to more systematically collect data on patients’ social risks, for instance, they could facilitate rate adjustments that account for social risk. Take the example of Massachusetts Medicaid, which has increased rates for providers caring for patients experiencing housing instability or homelessness, regardless of whether the housing situation was revealed or addressed during the billed encounter. The extent to which the E&M guidelines contribute to more systematic documentation of housing instability will affect the number of people classified as homeless under Massachusetts Medicaid. And in turn, the availability of that information could affect reimbursement rates for other health care services, not just outpatient office visits.
Additional Investments Are Needed
Ideally, the new coding guidelines will improve health and health equity not only by increasing social risk documentation but also by strengthening the resources available for patients and populations experiencing socioeconomic adversity. But like most initiatives in the health care system, the new E&M coding guidelines will not lead to meaningful improvements without several concurrent investments.
Outreach And Training
First, old coding habits die hard. This is likely to be especially true after 25 years without other big coding changes. CMS and professional coding associations will need to design outreach and training to ensure that medical coders and other health care professionals are aware of and use the new guidelines. This training should specify whether and how social conditions should be documented in electronic records to pass billing audits. In safety-net settings, this training could be targeted to clinicians, who often receive no instruction in coding or billing practices and may not know that social risk documentation can be entered by any care team member, including social workers and community health workers.
Research And Evaluation
Second, CMS, state health agencies, payers, and health care delivery systems must commit to research and evaluation. Evaluations should examine how the new guidelines impact documentation of social risk, support for social services (for example, whether health systems will share additional revenue with community-based social service partners), as well as health care costs, quality, and equity outcomes. Evaluations will need to keep close tabs on potential negative patient consequences of the new guidelines because unlike social risk adjustment in value-based purchasing systems, in which the patient bears no financial risk, the new approach could increase patient costs. For example, uninsured and underinsured patients might be billed more when social complexity is considered during office visits.
It’s Time For New Standards To Document Social Care
Third, to ensure that billing reflects social risk data and to enable research on the impact of the new coding guidelines, CMS should invest in developing new social care documentation standards. Existing medical codes intended to serve this purpose fail to adequately capture social risk and social care interventions that are common in clinical delivery settings. Developing new codes to document social risks and social interventions will require consensus on high-priority social domains and a process for developing appropriate codes. The Gravity Project—a national collaborative of payers, providers, medical informaticists, government agencies, and other stakeholders—has launched just such a process and now needs to pilot, revise, and scale the use of new standards.
Addressing Concerns About Perverse Incentives
Like social risk-adjusted quality payment, the new guidelines provide a systematic way to incorporate social complexity into reimbursement. However, there are important differences between these two approaches. In social risk-adjusted quality payment, social risk measures such as patient-reported poverty or a ZIP code–based social deprivation index are used to evaluate an organization’s performance on quality metrics (for example, readmission rates) and can then influence related financial incentives or penalties. Proposals for social risk-adjusted quality payment have led to a national conversation about the promise and pitfalls of adjusting quality expectations; these issues have been well-covered in recent perspectives, health policy research, and national reports.
In contrast to social risk-adjusted quality payment, the new coding guidelines apply at the provider level and enable clinical teams to increase the billed level of service, when appropriate, based on social complexity identified or addressed at that visit. The newer form of enhanced reimbursement may nonetheless spark concerns similar to those raised about social risk-adjusted quality payments, which have included the potential to mask poor quality care (the belief that worse outcomes among disadvantaged groups could reflect poor quality care rather than structural barriers traditionally perceived as beyond the health system’s control) and the perverse incentive problem. Although the first concern does not seem relevant to the new guidelines, the perverse incentive could be: Even in high-quality health care systems, if you get paid more money to provide a service for a food insecure patient, there could be an incentive to keep the patient food insecure. Could the E&M guidelines have the bizarre effect of making health systems want to ensure that the poor stay poor? If that perversity exists, we can’t bill our way out of it. One way to avoid it is to add health system- and provider-level incentives for high performance on quality metrics, including improved health outcomes. The quality incentives need to be big enough to overcome the perverse ones.
In short, the new E&M coding guidelines are a big deal. Ensuring that they benefit the people who need them is a bigger one. It is clearer now that the federal government and the AMA recognize the need to account for social factors in payment models, but we have more work to do to ensure that the guidelines lead to the delivery of high-quality care for all patients.
Authors’ Note
We are grateful to Carol Yarbrough for sharing her content expertise related to professional medical coding.
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December 03, 2020 at 08:10PM
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New Clinical Coding Guidelines Account For Patients' Social Risk: We Should Do More To Ensure They Advance Health Care Quality And Equity - Health Affairs
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