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Federal Government Makes Key Changes to Physician Payment Policies

November 9th, 2018

Sam Cohen

The Centers for Medicare and Medicaid Services (CMS) on Nov. 1 posted an advanced copy of the 2019 Medicare Physician Fee Schedule Final Rule. This rule makes a number of important changes to physician payment policies, including how evaluation and management (E&M) services are documented and paid. The new policy will have a significant impact on all physicians that accept payment from Medicare, making it particularly important that medical practice leaders take the time to educate themselves and prepare for impending changes.

Understanding Policy Changes

Payment Procedures

Following pushback from physicians on the original proposed policy, CMS made a number of significant changes to the E&M payment and documentation rules. Under the final rule, CMS will pay a single rate for Level II, III, and IV office visits, with one rate for established patients and a second rate for new patients. Level V office visits, however, will continue to receive a separate payment rate to account for patients with particularly complex needs. CMS also finalized proposals for add-on payments to account for any additional resources required by primary and non-procedural specialty care visits. As part of this final rule, new “extended visit” add-on codes can be used with E&M Level II, III, and IV office visits.

The new policy also provides flexibility regarding how E&M visit levels can be documented, permitting the use of the current framework, medical decision-making (MDM), or time to determine the appropriate E&M visit level. For providers using the current framework or MDM to document the visit, Level II, III, and IV visits will be required to meet only the current minimum supporting documentation standard for Level II visits. For a visual representation of the new E&M office visit payment structure, see below.

To view this chart on the CMS website, including a glossary of terms, click here.

CMS will push back the effective date of these new E&M payment and documentation requirements until 2021 in order to give physicians and medical practices time to prepare.

Other Documentation Policies

While the implementation of new documentation policies directly related to the revised E&M payment rates has been postponed, CMS did finalize various other changes as part of the Physician Fee Schedule Final Rule. Some of these changes include:

  • Eliminating the requirement to document the medical necessity of a home visit in place of an office visit.
  • Permitting practitioners to focus documentation on relevant changes for established patients with existing records if there is evidence that the provider reviewed the prior information and updated as necessary.
  • Clarifying that practitioners do not need to record the patient’s chief complaint and history when that information has been previously entered by ancillary staff or the beneficiary. In this case, the practitioner must indicate in the record that the information has been reviewed and verified.
  • Removing certain requirements for notations in the medical record for E&M visits furnished by teaching physicians when the information has already been entered by other members of the medical team.


CMS also finalized a number of other policies relevant to physicians in the PFS Final Rule. For those interested in learning about these additional documentation and payment policy changes, CMS has provided a summary of key provisions here.

What Do these Changes Mean for Physician Practices?

While the E&M payment rates and related documentation policy changes will not take effect until 2021, medical practices should begin early preparations by taking the following steps:

  • Run the numbers. Following the creation of the original proposal, CMS predicted that the new payment model would have minimal impact on medical practices, potentially causing a 2 percent variance in revenue. After performing financial analyses, however, practices have reported that these changes could cause as much as a 15 percent variance in yearly revenue. Taking into account the revised final rule, all practices should analyze the impact that the payment changes will have on their bottom line, and physicians should begin planning for how they might handle any potential negative effects on revenue.
  • Advocate for your practice. Practices that will be adversely affected by new payment policies should engage with physician associations and societies, as well as other physician advocacy organizations, to see what steps can be taken to modify or rescind specific guidelines. The two-year delay in implementation provides physicians with a window of time to propose additional changes to the new payment policies if necessary, and CMS has expressed a willingness to engage in further discussions. Practices that will be negatively affected by the new payment rates should make sure that their voices are heard as part of those discussions.


By following these two steps, physicians and practices will put themselves in the best possible position to mitigate any negative effects that may arise from the adoption of these new payment policies for E&M office visits.

Sam Cohen is Medical Mutual’s Senior Vice President of Health Policy. Medical Mutual members may contact him directly at sam.cohen@mmicnc.com and 919.878.7602. Readers also can follow him on Twitter @samuel_c_cohen.


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