Good-bye to the SGR

In politics it has often been said that it is easy to put together a coalition of stakeholders who are unified in their opposition to a particular policy, it is altogether something else to put together a coalition of supporters for what should be the replacement.

Those who think a policy goes too far can be united with those who don’t think the policy goes far enough when it comes to opposing the status quo, even though their vision of the new policy might be vastly at odds.

For many years, this was part of the problem with repealing and replacing the SGR. There was near universal agreement that the SGR was bad policy but getting the provider community to agree on just what should replace the SGR was a challenge.

Last year, a ―unified‖ approach to the replace question emerged leaving policy makers with the final challenge – how to pay for the replacement.

That piece of the SGR repeal/replace effort fell into place earlier this year on April 16 th when President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015.

This legislation not only immediately repealed the SGR – retroactive to April 1, 2015, it set in place a transition from traditional fee-for-service payments by Medicare to a new ―value based‖ or ―quality based‖ payment model that would be fully in place by 2019.

This bill will transition Medicare FFS payments towards a value-based payment system and incentivize the development of new, value-based payment models. The bill also extends funding for the Children’s Health Insurance Program (CHIP) for two years, through September 30, 2017 and extends a number of temporary Medicare provisions colloquially referred to as ―extenders‖ through the end of 2017.

Before fully transitioning to the new payment models, there will be a period of relative stability and predictability to Medicare payments. Later this year (July 1, 2015) Medicare Physician Fee Schedule Conversion Factor (CF) will be automatically adjusted upward by .5%. Then, each January 1st, for the next four years, the CF will be automatically adjusted upward by .5%.

Adjustment to Conversion Factor

Date                                    CF  Automatic Adjustment

July 1, 2015                                    .5%

January 1, 2016                            .5%

January 1, 2017                            .5%

January 1, 2018                           .5%

January 1, 2019                            .5%

These increases are automatic and will not require any additional action by Congress to take effect.

Keep in mind that separate from this automatic update process, CMS will continue to make periodic adjustments to individual CPT code values (RVUs) reflecting changes in work, overhead or malpractice costs. But the specter of annual SGR related cuts or Congressional intervention to prevent these cuts is no longer looming over the physician community.

Between now and 2019, CMS has been directed to work with physicians specialty organizations and other stakeholders to develop Alternative Payment Models (APMs). Broadly, these will be payment models built on the fee-for-service payment architecture but that incorporate the concepts of value and quality into the final payment received by the provider.

CMS and their stakeholder partners will also use this time period to develop more bundled payment opportunities where providers will be paid a pre-determined amount of money based upon the primary diagnosis of the patient and the expected level of patient involvement. The goal here is to pay providers for treating and managing the patient rather than paying the provider for the accumulated value of the services rendered.

Beginning in 2019, the Conversion Factor will be frozen for five years. There will be no automatic updates. Instead, provides will have to ―earn‖ their annual updates either through participation in one of a number of ―to-be-developed‖ Alternative Payment Models or, through participation in a new program called MIPS – Merit-based Incentive Payment System.

MIPS will essentially be combining the existing PQRS, EHR Meaningful Use and Value Based Payment programs into a single new update initiative that will allow providers to obtain increases (or be subject to decreases) depending upon how well a provider scores on these initiatives compared to his/her peers.

Some providers may not want to participate in either MIPS or APM and the law gives the Secretary of Health and Human Services the authority to exempt providers. How easy or extensive that process will be remains to be seen. The operating assumption is, however, that remaining in traditional fee-for-service will be very unattractive financially due to the freeze and so the expectation is that the vast majority of providers will ―voluntarily‖ move to either an APM or MIPS.

The theory behind this shift in payment models is that by incentivizing the providers to better manage the patient, particularly patients with chronic diseases (diabetes, COPD, asthma, etc.), the rate of hospitalization and ER utilization for these patients can be dramatically reduced and Medicare will save money. Of course in 1997, in theory, SGR was supposed to incentivize physicians to modify their practice styles to fit the ―new‖ updating process and we know how that turned out…

While the repeal of the SGR brings to a close a rather tumultuous period in the Medicare program’s history, it also represents the beginning of a new phase for the Medicare program.


Source Article – Healthcare Billing & Management Association

CMS Proposed Medicare Physician Fee Schedule for 2015

On July 3rd, the Centers for Medicare and Medicaid Services publicized its proposed changes for the 2015 Medicare Physician Fee Schedule (PFS). The proposed rule addresses changes to the physician fee schedule, and other Medicare Part B payment policies.

CMS sets values for each medical procedure through the use of Relative Value Units (RVUs) which are then multiplied by a Conversion Factor (CF) along with some minor adjustments to account for geographic differences (GPCI) to determine how much CMS will pay for a medical procedure. This rule explains CMS’ methodology for determining each component of the RVUs.

CMS provides a preliminary assessment of the SGR related cut that will be required in the subsequent calendar year should Congress fail to prevent that cut. Because the current SGR “fix” carries over into 2015 (it expires March 31st) CMS has postponed any announcement on potential SGR related cuts until later this year.

A RVU for a medical procedure consists of three components: physician work, physician expense and malpractice expense. CMS uses a formula that combines the three components into one unit which is multiplied by a conversion factor to determine how much money Medicare will pay for a procedure.

A few of the provisions addressed are:

• A new payment code for primary care providers for non-face-to-face services for patients with two or more chronic conditions. This code can be billed once per month per patient. CMS will pay $41.92 for this code.

• CMS is required to identify codes it believes may be misvalued in the PFS. CMS identifies 80 potentially misvalued codes in the 2015 PFS.

• The PFS reclassifies medical equipment infrastructure costs for radiation therapy as indirect expenses as opposed to the previous classification as a direct expenses. This will result in an 8% reduction in the allowable charges for radiation therapy center and a 4% reduction in radiation oncology. Radiology itself would be reduced by 2%.

• The PFS also announces CMS’ intent to not finalize any revalued codes until a public comment period has been held and completed on the potentially misvalued codes being revalued. CMS plans to have this process in place by 2016.

• Under the misvalued code initiative, CMS proposes to transform all 10 and 90-day global codes to 0-day global codes beginning in 2017.

• As statutorily required, CMS will begin implementing the value-based payment modifier (Value Modifier) on January 1, 2015. It will be phased in and applied to all eligible professionals (EPs) by 2017. CMS also increases the max positive payment adjustment from 2% to 4% and decreases the max negative payment adjustment from -2% to -4%.




With only minutes to spare, the United States Senate joined the House of Representatives in passing legislation, the Preventing Access to Medicare Act of 2014, to prevent a 24% reduction in physician fee schedule payments slated to occur on April 1, 2014.  In lieu of this draconian cut, the Congress approved a one-year extension of the current Medicare Conversion Factor (CF) through March 31, 2015.  This means that Medicare will continue to pay for physician services through the remainder of 2014 what it has been paying for services for the first three months of 2014.

Up until the very end, many held out hope that the Congress would approve a permanent fix to the SGR problem but coming to an agreement on how to pay for the SGR fix remained elusive.  Earlier in March, the House and Senate leadership had reached agreement on new policies for replacing the SGR but they were unable to reach agreement on how to save the $130 – $180 Billion necessary to fix the SGR and other Medicare policies in need of correction.

For this reason, the Congress was forced to approve an SGR patch for the 17th time in the last 12 years in order to prevent steep cuts in Medicare physician fee schedule payments.  The total cost of patching the SGR for one year and extending the various programs is approximately $21 Billion.

The Protecting Access to Medicare Act of 2014 would:

(1)        Extend the .5% update to the Conversion Factor that has been in place since January, 2014, through the remainder of calendar year of 2014, and

(2)        Freeze the update to the single conversion factor at 0.00% for January 1, 2015, through March 31, 2015.

In addition to the temporary SGR fix, Congress also approved an extension of various Medicare programs scheduled to expire at Midnight, March 31.  Included among these so-called extenders were:

  • Extends Medicare work Geographic Practice Cost Index (GPCI) floor for 1 year
  • Extends Medicare therapy cap exception process for 1 year
  • Extends Medicare ambulance add-on payments for 1 year
  • Extends Medicare adjustment for Low-Volume hospitals for 1 year
  • Extends Medicare-dependent Hospital (MDH) program for 1 year
  • Extends Medicare Advantage Special Needs Plan for 1 year
  • Extends Medicare Reasonable Cost Contracts for 1 year

In order to “pay for” this legislation, Congress approved a series of changes in the Medicare program intended to save approximately $21 Billion over the next 10 years.  These included:

  • Establish a value-based purchasing program for Skilled Nursing Facilities (-$2 Billion)
  • Reform Medicare Payment policy for Clinical Diagnostic Laboratory tests (-$2.5 Billion)
  • Quality Incentives for developing Appropriate Use and Clinical Decision Making tools for Advanced Medical Imaging (- $200 Million)
  • Medicare misvalued code revaluation (-$4 Billion)
  • Changing the Medicaid Disproportionate Share program (-$4.4 Billion)
  • Revise and Realign Medicare Sequester (-$7.2 Billion)
  • Revise Medicare ESRD Prospective Payment Program (-$1.8 Billion)

The legislation also directs the Secretary of Health and Human Services (HHS) to continue through June 2015, and with a specified limitation, certain medical review activities related to the so-called two-midnight rule.  The two-midnight rule allows Medicare inpatient coverage of hospital stays for which a physician admits a beneficiary to a hospital and where the beneficiary is expected to require care that crosses two midnights.  If the care does NOT cross two midnights, Medicare will generally deny inpatient coverage of the care and instead, pay for the care on an outpatient basis.

The failure to complete action on permanent SGR repeal/replace legislation by the April 1 deadline does not necessarily mean all action on reaching a compromise on a permanent fix will end immediately.  Congress is further along in their efforts to reach a bi-partisan/bicameral solution than at any time in the history of the SGR.





government_400In December, Congress passed a sort term fix to the Sustainable Growth Rate (SGR) that is set to expire on March 31st. The short term fix was passed in order to give Congress additional time in finding a permanent fix to the SGR and to ultimately avoid a 24 percent reduction to the Medicare Physician Fee Schedule (MFPS). The short term fix also provided a .5 percent increase to the MFPS which took effect on on January 1st and was the first increase in 4 years.

Congressional leaders are currently in the process of consolidating three bills to repeal and replace the current Medicare SGR. The House Energy and Commerce, House Ways and Means, and the Senate Finance are the committees that have jurisdiction over the SGR reform. The committees have approved bills to repeal and replace the SGR but must reconcile the bills differences before moving forward.

Though there is a bi-partisan consensus that the SGR should be repealed, and also an emerging consensus on what type of system should replace the SGR, the question of how to pay for the “fix”, remains unanswered. Finding offsets is proving to be the real challenge for lawmakers. Committee staff is currently working through lists containing many options for potential offsets, but currently none have been endorsed.

The Congressional Budge Office (CBO) weighed in on just how much the SGR initiatives will cost. The House Ways and Means Committee approved bill is estimated to cost $121.1 billion over 10 years. The Senate Finance Committee bill is estimated to cost $150.4 billion over 10 years. The cost of each bill is less that originally anticipated. “Extenders” to the Finance bill is the reason for it being higher than the Ways and Means bill that didn’t include any “extenders”. The Extenders being:

  • Repeal the therapy cap after 2014 and replace it with a new medical review program.
  • Permanently codify (with modification) the work GPCI floor.
  • Extend ambulance add-ons for five years. New data collection requirements with 5% penalty for failure to provide data.
  • Permanently extend but modify the Medicare-dependent hospital (MDH) and low –volume hospital programs.

Confidence is low that a permanent fix can be accomplished by March 31st deadline. Another short term fix to allow for additional time past the March 31st deadline is a strong possibility.


2014 PQRS

CMSThroughout 2013 medical providers were encouraged by the Center for Medicare and Medicaid Services (CMS) to report back what they determined to be “quality measures” to ensure eligible medical providers were providing “quality care” to their patients. Through 2013, providers were required to report back at least 3 measures derived from the PQRS manual provided by CMS, on at least 50 percent of their Medicare Part B and Railroad Medicare patients to avoid a 1.5 – 2 percent reduction to their Medicare Physician payments.

Starting in 2014, CMS released that they will now require eligible health professionals to report back 9 measures, across 3 National Quality Strategy Domains in order to qualify for the .05 percent increase. The Domains are what the National Quality Strategy research division of the Health & Human Services (HHS) identified as areas of healthcare that require “improvement”. Reporting options for PQRS measures have also changed. In 2013 providers were able to choose from four options to report back PQRS measures.

  1. At the Claim level on Part B Claims
  2. Any qualified PQRS registry
  3. Through EMR/EHR product
  4. valid PQRS data submission vendor

In 2014, reporting methods for PQRS measures depend upon which measure is being reported. As you can see in the example below, Heart Failure can not be reported on the claim level or through a Web Interface.


Measure                                                                               Reporting Option

Diabetes: Hemoglobin A1c Poor Control                        Claims, Registry, EHR, Web Interface

Heart Failure                                                                        Registry, EHR, Measures group


The same incentives and penalties from 2013 still apply in 2014, providers are just required to report more to qualify for the incentive increase. If you report 9 measures, across 3 domains on 50% or more, you receive a .05 percent increase in payments. If less than 50 percent is reported on at least 3 measures then a 1.5 to 2 percent reduction in payments will be applied to the individual provider. All requirements are based at the individual provider level not at the group/entity.

For more information on the 2014 PQRS requirements, and for a copy of the 2014 PQRS manual, visit

SGR Repeal/Replace Proposal

government_400A bi-partisan group of members from both the House and Senate have released a draft proposal for repealing and replacing the Sustainable Growth Rate (SGR) formula. The group included the Chairmen and Ranking Minority Members of the House Ways and Means Committee and the Senate Finance Committee. These are two of the primary Committees with jurisdiction over the SGR issue.

This is an important next step in the process of permanently replacing the flawed SGR formula.  If enacted, this proposal would dramatically alter the way physician fee schedule payments are determined.  The financial and administrative implications for physicians are very significant.  For physicians wishing to continue to receive Fee-for-Service payments from Medicare, the amount of data that physicians will be asked to compile and report will be significant.

Because of the new data reporting requirements, it appears that there may be a strong incentive for providers to move to what the proposal refers to as alternative payment models (APMs).

Although not specifically stated in the summary released by the Committee leadership, it would appear that the phrase alternative payment model is a proxy for Accountable Care Organizations or Bundled Payments.  There appears to be a strong desire on the part of the authors of this initiative to want to move physicians from a payment model that places financial risk for clinical decision making on the payer (i.e. fee-for-service) to one where financial risk for clinical decision making is shifted to the provider.

Prior to adoption of the SGR formula for determining annual adjustments in physician fee schedule payment, physicians could expect an annual inflationary adjustment in their fee-for-service payments.  Since the adoption of the SGR, physicians have been threatened with ever increasing cuts in physician fee schedule payments and even when Congress stepped in to prevent these draconian cuts, the annual adjustments approved by Congress have been either non-existent or so nominal that the increases hardly kept pace with medical inflation.

Under the bi-partisan proposal, there will be no automatic annual adjustments in the physician fee schedule for 10 years.  Beginning in 2024, providers still in the fee-for-service system would receive a 1% annual inflationary adjustment.  Providers enrolled in one of the “to be approved” Medicare APMs would get a 2% inflationary update beginning in 2024.

There will be no inflationary updates for fee for service providers from 2014 to 2017.  The only changes in fee-for-service payments during that 3-year period would be for “misvalued” codes.


  1. Beginning in 2017, annual updates to the fee schedule would be physician specific and they would be “performance based” incentive adjustments – called the Value-Based Performance Program (VBP).  Physician scores on a prior year (not specified) would be used to determine the incentive adjustment.
  2. Performance based incentive adjustments would be based on a composite score, which would be a combination of:
  • Quality Score
  • Resource Use Score
  • Clinical Practice Improvement Activity
  • EHR Meaningful Use

3. Payment reductions for failure to report (PQRS) or meaningfully use EHR; and the Value-       based modifier penalties would be repealed.

4.  Physicians with low APB scores would see a reduction in their payments for that year.

5.  The VPB payment incentive (and penalties) program would be expanded to include PAs and NPs in 2018 and all others (subject to Secretarial discretion) paid under the fee schedule,    beginning in 2019.

Incentive payment scoring can occur either at an individual level or at the group level for providers who belong to a group.  There is a special process that could be used by “facility-based” professionals to determine their quality score.  Providers would receive “timely” updates indicating how they are doing through the course of the year.

As noted earlier, the overall goal of the initiative appears to be to encourage providers to move to an APM.  Physicians who receive a significant percentage of their Medicare revenue through a risk-sharing Alternative Payment Model, will receive an automatic 5% annual increase in payments between 2016 and 2021.

The proposal would also direct the GAO to undertake a study of the Relative Value Scale Update Committee (RUC) process for determining the “valuation of physician services.”  Concern has been expressed that organized medicine exercises too much control over the RUC process and as a consequence, efforts to adjust so-called “misvalued” codes have been undermined by physician specialty organizations.

Information for determining value would be obtained from “selected health professionals” rather than from physician organizations.  The proposal makes a vague reference to providers who submit the requested information being eligible for additional compensation.  However, should a provider fail to assist in the data gathering effort, they would be assessed a penalty – a 10% payment reduction.

The Secretary of Health and Human Services would also be directed to undertake an analysis of global surgical payments for work, focusing on post-surgical visits.

Finally, it should be noted that the proposal does not address how these changes will be “paid for.”  Under the budget rules governing the Congress, any change in the Medicare program that would increase Medicare expenditures above what had previously been budgeted, must be offset by either additional revenues or cuts elsewhere in the Medicare program.

Currently, the Congressional Budget Office (CBO) says that repealing the SGR and simply freezing payments for 10 years would result in higher Medicare expenditures of approximately $138 Billion.  CBO has not provided an estimate for the cost of this repeal/replace initiative.

To comply with the budget rules Congress must offset the cost of the SGR repeal/replace proposal with additional revenue into the Medicare Trust Fund or cut payments to other providers.

Here is the draft proposal for your review.


Collecting Patient Payments

Shaking handsWith out-of-pocket patient responsibilities increasing, it has become more important than ever that provider front office staff, billing and billing companies collaborate their efforts in collecting patient balances. Statistics for the “average practice” show that a providers accounts receivables (AR) revealed more and more delinquent patient accounts than in the past. Those statistics showed the reasoning for so much AR becoming delinquent was due to things like large deductibles, unpaid co-payments and co-insurances, no active insurance coverage, coordination of benefits issues, missing or lack of complete insurance information, incomplete workers compensation information, etc. This was resulting in large chunks of money being left on the table.

Don’t worry!! There is a solution that will help decrease the number of delinquent accounts. With staff training, incentives, and collaborative effort from front end provider offices and back end billing staff and services, you should start to see results after a few months. Here are few strategies that will assist with lowering delinquent accounts and in the end increase the bottom line.

Check Eligibility Benefits –

Checking eligibility and benefits is something that should be done all the time and every time as a requirement, not an option. This should happen at the same time as the front office takes a co-pay before the patient sees the doctor. If a co-pay can’t be made at the time, inform the billing staff to send a billing for the copay at the same time they submit a claim to the insurance. If a patient participates with coverage the provider is out-of-network with, or the patient has inactive coverage, collect payment upfront before the patient is seen. A fee structure or schedule for self pay patients will help keep consistency and equal treatment for all self pay patients and increase efficiency on front end staff.

Collecting New & Old Balances –

There is no better time to collect than when a patient is standing in front of you at the office. If they’re in the process of paying a copay, try to get them to pay old balances at the same time. For providers using billing services, coordinate balance information from them with your Electronic Medical Records (EMR) or scheduling software so the front desk can see outstanding balances. If the software capability is not available, use reports to keep your front desk staff up to date with any outstanding balances.

Patient Education –

An ever growing demand from patients is transparency in healthcare costs. More and more patients want to know what their costs will be and why are they receiving statements billings. Having a plan in place to educate patients on insurance billing and costs will assist in the patients good will and willingness to pay. Provide patients a frequently asked questions (FAQ) pamphlet for them to read in the waiting room. Post signs and notices around the waiting room and in exam rooms. Terminology is also something patients are confused by. Give them information on definitions and billing concepts for things like Co-pay, co-insurance, deductible, etc. so when they statement comes in the mail they no what to expect.

Coordination of Benefits –

Educating patients on their coordination of benefits will also help in avoiding denied claims and billing errors. If there is ever a change in the patients information (address, spouse info, employment status, auto accidents, etc.) The patient needs to be aware it is their responsibility to contact their insurance carriers to coordinate those benefits and changes.

Verify Patients Address –

With every patient encounter, or at least monthly, verify the patients address and demographic information. This is very simple but usually always overlooked. It also plays a key role in collecting money from patients.

Online access –

For those without online access for making payments and patient account information, now is the time. The American Medical Association conducted a survey in 2011 in which fifty percent of adult patients said they would consider changing doctors if it would give them access to online bill-pay and account information. By 2016 it is estimated that $300 billion will be spent on online transactions.


With the implementation of these strategies and the coordination of front office staff, back end billing or billing services, delinquent accounts and rising AR should begin to show a downward trend within a few months, and show an improvement to your bottom line.


Basic Health Program

government_400Part of the Affordable Care Act and Patient Protection plan provides states with a new coverage option called the “Basic Health Program”. This program is for the purpose of providing a health insurance program for citizens or lawfully present non citizens, who won’t qualify for Medicaid, the Children’s Health Insurance Program (CHIP) or other minimum essential coverage and also have an income between 133 percent and 200 percent the federal poverty level (FPL).

The Basic Health Program (BHP) was to be up and running by January 1st, 2014. CMS has issued a proposed rule for establishing the standards for BHP. Through this process, administration and the HHS have determined that it will not meet the January 1st, 2014 deadline and hope to have the program up and running by January 1st, 2015.

The purpose of BHP is to provide states with an option to establish health benefit programs for low-income individuals who would otherwise be eligible to purchase health insurance coverage through the Health Insurance Marketplace. The proposed rule establishes the framework for eligibility and enrollment, benefits, delivery of health care services, transfer of funds to participating states, administration and federal oversight.

The BHP benefits will include the ten essential benefits specified in the Affordable Care Act. Individuals eligible for the BHP will not be required to pay premium costs that will exceed what an eligible individual would be required to pay when receiving benefits through a Qualified Health Plan (QHP) through the Market Place. States that offer BHPs will qualify for federal funding equal to 95 percent of the amount of the premium tax credits and cost sharing reductions that would be provided to a eligible individual enrolled in a QHP through the Marketplace.

The rule proposes:

(1)        The procedures for certification of a state-submitted Basic Health Program blueprint, and standards for state administration of the Basic Health Program consistent with that blueprint;

(2)        Eligibility and enrollment requirements for standard health plan coverage offered                          through the Basic Health Program;

(3)        The benefits covered by such standard health plans as well as requirements of the              plans;

(4)        Federal funding of certified state Basic Health Programs;

(5)        The purposes for which states can use such federal funding;

(6)        The parameters for enrollee financial participation; and

(7)        Federal oversight of Basic Health Program funds.

The Rule establishes that eligibility determinations must be performed by government agencies. It uses the same criteria using most standards to those of the Internal Revenue Service when determining advance premium tax credits and cost sharing reductions. The rule also proposes the minimum benefit standard and makes provisions for additional benefits. It also establishes cost-sharing standards consistent with the Marketplace including the prohibition of cost sharing for preventive health services.


Government Shutdown on Medicare

government_400The governments fiscal year begins from October 1st and runs through September 30th meaning the 2014 fiscal year begins on Tuesday, October 1st, 2013. Typically during that time,  Congress is required to pass and the President sign appropriations bills that will release funds needed for the federal government to operate.

As of today, none of the 12 appropriations bills that will fund the government for the 2014 fiscal year, have been signed into law. What this means as of now, and at midnight tonight, that the government has no funds available to pay salaries of federal employees, grants, and other utilities for government operations. Congress is debating approving what is called the “Continuing Resolution” or CR. It is a legislation that will extend the 2013 fiscal year for a length of time agreed upon by Congress and the President to continue operations. Currently the length of time for a CR is unspecified. It can be one day or a CR can be extended up to a full year.

There is a possibility that Congress and the President will not reach a resolution on the adoption of the Continuing Resolution by midnight. If Congress and the President fail to reach a resolution, the result will be that all “non essential” federal employees will be told not to show up for work tomorrow, October 1, 2013.

Questions were raised that If a government shutdown occurs, will this also effect Medicare processing claims for payment for anything sent after October 1? The answer to that question is – “No”. The funds appropriated for Medicare benefits are not subject to the appropriations process because it is an entitlement program instead of a discretionary program, and processing of Medicare claims is considered “essential”. The Center for Medicare and Medicaid Services (CMS) announced that there should be no disruption of Medicare claims processing and all CMS activities will continue regardless of a delay in the appropriations process.





Prolonged Services

1314902_medical_doctorAll evaluation and management (E-M) service codes have a time value in conjunction with expanded problem focused history and medical complexity decision making. But occasionally providers will spend longer periods of time with patients but that extra time doesn’t justify coding to a higher level E-M code. To code a higher level E-M, not only does the time of a face-to-face encounter have to increase, but the complexity of medical decision making, problem focused history and counseling of care level must also increase.

The CPT manual shows two categories of codes that can be used as add-on codes to E-M codes when face-to-face time with a patient goes beyond the normal specified time values for each E-M code. The categories are outpatient/office for your typical clinic setting and inpatient/observation for hospital/Skilled Nursing Facility (SNF) patients.

99354 – 99355 – Outpatient/office

99356 – 99357 – Inpatient/Facility

Encounter Time –

Understanding what the CPT manual specifies as encounter time will help with knowing how to use and assign the prolonged visit codes. In an office/clinic setting, the encounter time is defined as face-to-face spent with the patient by the provider or practitioner. This time includes time spent on history review, obtaining records, performing the exam and counseling the patient. Activities performed before and after the face-to-face time are not included as part of the face-to-face time.

For example, a patient seen in a office/outpatient setting, a provider spends 15 minutes reviewing medical records and history, the spends 30 minutes face-to-face time with the patient, then spends another 20 minutes coordinating care with staff or other providers. The encounter time here is the 30 minutes that was spent face-to-face with the patient. The additional 35 minutes is not counted towards the actual encounter time.

When services are provided in an inpatient/facility setting, encounter time is defined as the time the physician/practitioner is present on the patients facility unit and at the patients bedside rendering services for that patient. This time also includes, medical record review, examining patient, encounter documentation, orders, communication with other professionals and patients family.

The additional time that must be spent with a patient in order to use the prolonged visit add on codes is 30 minutes. If a professional spends 25 additional minutes with the patient, then they cannot use the add on codes. The minimum time spent to qualify for the add on codes is 30 minutes and extends to 60 minutes. If the encounter time surpasses 75 minutes, a second add on code can be used. The encounter time for the prolonged visit codes is the same for both the outpatient/office setting and inpatient/facility setting.


Setting                               First Hour                    Add’l 30 minutes

Office/outpatient …………. 99354 ……………………. 99355

Inpatient/facility …………… 99356 ……………………. 99357

The encounter time does not have to be continuous. Blocks of time can be added together to account for the total encounter time. For example, a physician or practitioner spends time with a patient, goes to see another patient, then returns to the first patient, those separate times with the first patient can be added together for the total encounter time. However this time does not include staff time. Time is only counted by the physician/practitioners face-to-face time with the patient.

The prolonged visit add on codes are to be used in addition to the traditional E-M codes. The E-M codes are still the primary codes used for exams. So an example of the prolonged visit codes in conjunction with the E-M codes would work like this,

A provider sees an established patient in an office setting and determines the exam uses low medical decision making complexity and a problem focused history which supports a E-M code of 99213. A encounter lasts a total of 55 minutes and is not dominated by counseling or coordination of care. The CPT manual specifies encounter time of 15 minutes for a 99213, so the encounter has gone 40 minutes longer than the specified 15 minutes for the 99213. So the physician can add on the prolonged visit code of 99354 to be billed with the 99213. The same example can be used with the inpatient/facility setting using the corresponding E-M facility codes.

The prolonged service codes can be used in conjunction with all the typical E-M codes. The times will just need to be adjusted to qualify for the add on. So for a 99214, the CPT manual specifies 25 minutes for encounter time. So the total time will have to reach 55 minutes to use the add on codes.

Documentation –

Patients medical records must indicate the duration of the prolonged service. It must also show that the physician/practitioner personally provided the time specified in the code definition. The medical record should also show the total encounter time of the visit. Total time can represent the total face-to-face time in minutes, or the start and stop time of the visit. It should also be notated as to why the encounter was prolonged.

Prolonged services can provide providers with additional reimbursement for lengthy encounters but should be documented appropriately to show total time and reasoning for the prolonged service so as to withstand audit or review.