The medical decision-making (MDM) component of evaluation and management (E/M) services is perhaps the most crucial element in determining the correct level of service assignment for patient encounters. The majority of individuals involved in the E/M coding process may not agree on the interpretation of the components, but would agree that the clinical thought process expressed in the MDM components best describes the level of medical necessity, as well as the level of service necessary for that specific problem.

Medical Necessity Trumps All Else

E/M levels have typically been assigned based on three main components: history, exam, and MDM. Although only two of these three components may be necessary for an established or subsequent visit, the importance of MDM should not be underestimated. With the implementation of the “overarching criterion” by the Centers for Medicare & Medicaid Services (CMS) a number of years ago, it is clear that medical necessity is the driving force of the level of service assignment.

Although CMS does not give specifics on how the overarching criterion should be determined, many practices and facilities utilize the MDM component to make that determination. Some practices require that one of the two components needed must be MDM, while other practices have established their own interpretation of “overarching criterion.”

Although the interpretations may differ from one practice or facility to the next, carriers generally have accepted that the clinical complexity of the encounter must meet the guidelines found in the MDM component. It is clear that the intent of CMS was that medical necessity, for which many of the MDM components are captured — such as risk, management/diagnostic options, and data ordered and reviewed — would be considered in making the final determination of medical necessity, as well as other factors such as the chief/presenting complaint.

Specifically, CMS states in their statement of overarching criterion, “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.” (Medicare Claims Processing Manual 30.6.1)

New Guidelines Clarify Overarching Criterion

This may become even more important if CMS moves forward with revamping the E/M guidelines, as they have proposed for 2018.

In the 2018 Medicare Physician Fee Schedule (MPFS) proposed rule, released July 13, CMS announced its intentions to revamp the E/M guidelines and asked for comment on “whether it would be appropriate to remove … documentation requirements for the history and physical exam for all E/M visits at all levels.” They further stated, “Medical decision-making and time are the more significant factors.”

Under the proposed rule, “as long as a history and exam are documented and … consistent with MDM, there may no longer be a need for us to maintain such specifications … for the history and physical exam ….”

If adopted, this would certainly demonstrate that CMS does consider medical necessity and MDM indeed to be the overarching criterion for determining an E/M level.

Marsha Diamond