January 8, 2004 – More than a year after implementation of the Medicare Outpatient Prospective Payment System there are unexpected variances in the assignment of Evaluation and Management (E&M) codes on emergency department claims. These codes reflect the extent of clinical staff (i.e. physician, technician, nurse, etc.) involvement with a patient and define payments ranging from $63 to $408 for the medical component of a hospital-based outpatient visit. Undercoding can result in lower levels of reimbursement. Overcoding can be a compliance problem requiring immediate intervention and correction.

A recent study by American Hospital Directory used hospital outpatient PPS claims to define normal Medicare payment levels and distributions of patients among various levels of (E&M) codes for calendar year 2002. Data for some hospitals indicate that there may be systematic undercoding or overcoding of emergency department encounters.

For example, there were eight hospitals with more than 90% of their patients classified to APC 610, the lowest level of evaluation and maintenance. While there could be operational reasons for such a low intensity, a hospital falling outside normal ranges should make certain that valid reasons exist. If patients are being routinely classified to the lowest APC regardless of actual circumstances, a hospital would be underreimbursed. Conversely, there were nineteen hospitals with fewer than 2% of their patients classified to APC 610. Again, it is important to understand the reasons. If patients are being erroneously classified to a higher range there could be a compliance problem related to overreimbursement.

Paul Shoemaker, President of American Hospital Directory, states, “The findings of this study should be useful in helping a hospital to determine whether its E&M coding is within expected ranges. The study explains useful measures and provides comparative information to help hospitals in reviewing their own experience.” These findings were collaboratively reviewed with The enVision Group, Inc., a resource management and consulting firm, which has analyzed and collected emergency department E&M data utilizing specific case studies along with all other hospital-based outpatient services. Lois Yoder, CEO, notes that these studies have ultimately led to the creation of service line tutorials for coding and charge management.

Medicare implemented an Outpatient Prospective Payment System (OPPS) for hospital outpatient services in 2000. Under this system a hospital is paid fixed rates for various Ambulatory Payment Classifications (APCs). The procedures detailed on a Medicare patient's bill are grouped into these APCs in order to determine payment. Complete and accurate coding of procedures is therefore important in order to ensure that a hospital receives accurate payment. The AHD study focuses on the assignment of Evaluation and Management services (E&M codes) since they are used frequently and can be problematic.

The complete study can be retrieved from the American Hospital Directory website at http://www.ahd.com. The American Hospital Directory has been providing the operating details of virtually every hospital in the United States as a free on-line service since September 1997. On-line reports describe a hospital's general characteristics, services provided, financial information, volumes, average lengths of stay, average charges and much more. The free service is provided to over 5,000 users each day. AHD also offers more detailed subscription services and custom data reporting for those who need it.

Click here to view the study.

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