Evaluation and Management (E/M) codes account for a substantial percentage of outpatient medical practice revenue. Following major revisions by the American Medical Association (AMA) and Centers for Medicare & Medicaid Services (CMS), E/M code selection is based either on the level of Medical Decision Making (MDM) or the total time spent by the physician on the date of encounter. Understanding these rules protects practices from undercoding legitimate work or facing post-payment audit recoupments.
The Three Core Elements of Medical Decision Making
To assign an E/M code based on MDM (CPT 99202–99205 for new patients; 99212–99215 for established patients), the documentation must satisfy requirements in at least two of the three recognized categories:
- Number and Complexity of Problems Addressed: Evaluates whether the patient presented with minimal, low, moderate, or high-severity conditions (e.g., acute uncomplicated vs. chronic illness with severe exacerbation).
- Amount and Complexity of Data to Be Reviewed and Analyzed: Accounts for independent review of external notes, ordering and interpreting tests, and discussions with external healthcare providers.
- Risk of Complications and Morbidity or Mortality: Assesses patient management decisions—such as prescription drug management, decision regarding major surgery, or social determinants of health influencing care.
Time-Based Leveling: What Qualifies and What Does Not
When clinicians choose to bill E/M services based on time rather than MDM, total time includes both face-to-face and non-face-to-face physician or qualified healthcare professional time spent on the date of encounter.
Qualifying activities include reviewing past medical records prior to seeing the patient, examining the patient, ordering medications and diagnostic tests, communicating with other healthcare professionals, and documenting clinical notes in the EHR. Activities performed by clinical staff (e.g., medical assistants taking vitals) cannot be counted toward the physician's billing time.
The Cost of Habitual Undercoding
Audit anxiety often causes providers to routinely bill Level 3 encounters (99213) even when documentation clearly supports a Level 4 visit (99214). Over hundreds of encounters per month, habitual undercoding results in substantial legitimate revenue loss. Certified coding audits help clinicians align documentation with accurate code levels while preserving complete audit compliance.
