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Medical Necessity for Evaluation and Management Services

  1. Federal law requires that all expenses paid by Medicare, including expenses for Evaluation and Management (E/M) services, are "medically reasonable and necessary."
    • Medical necessity of E/M services is generally expressed in two ways: frequency of services and intensity of service (Current Procedural Terminology (CPT) level).
    • Medicare's determination of medical necessity is separate from its determination that the E/M service was rendered as billed.
    • Medicare determines medical necessity largely through the experience and judgment of clinician coders along with the limited tools provided in CPT and by the Centers for Medicare & Medicaid Services (CMS).
    • At audit, Medicare will deny or downcode E/M services that, in its judgment, exceed the patient's documented needs.
  2. Information used by Medicare is contained within the medical record documentation of history, examination and medical decision-making. Medical necessity of E/M services is based on the following attributes of the service that affected the physician's documented work:
    • Number, acuity and severity/duration of problems addressed through history, physical and medical decisionmaking.
    • The context of the encounter among all other services previously rendered for the same problem.
    • Complexity of documented comorbidities that clearly influenced physician work.
    • Physical scope encompassed by the problems (number of physical systems affected by the problems).

Tips for Correct Coding of E/M Services Based on Medical Necessity

  1. Identify all the presenting complaint(s) and/or reason(s) for the visit for which physician work occurred.
    • Demonstrate clearly the history, physical and extent of medical decision-making associated with each problem.
    • Demonstrate clearly how physician work (expressed in terms of mental effort, physical effort, time spent and risk to the patient) was affected by comorbidities or chronic problems listed.
  2. Ensure the nature of the patient's presentation corresponds to CPT's contributory factors of nature of the presenting problem and/or patient status descriptions for the code reported. For instance:
    • 99231 - "Usually the patient is stable, recovering or improving."
    • 99232 - "Usually the patient is responding inadequately to therapy or has developed a minor complication."
    • 99233 - "Usually the patient is unstable or has developed a significant complication or a significant new problem."
  3. Utilize Clinical Examples in CPT Appendix C.
    • The clinical examples are believed by CPT to represent the physician work that is reasonable and necessary in order to provide appropriate patient care in the specified clinical circumstance of the example.
    • Understand that Medicare expects actual documentation of services similar to the ones in the examples to also satisfy CMS documentation requirements to demonstrate that the service billed was provided.

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