American College of Physicians: Internal Medicine — Doctors for Adults ®


Why you still need to pay attention to E/M guidelines

If you don't worry about HCFA's documentation rules, you may be setting yourself up for trouble

From the June 1998 ACP Observer, copyright © 1998 by the American College of Physicians.

By David L. Blecker, FACP

From conversations with colleagues, I have discovered that many physicians have been misled about HCFA's evaluation and management (E/M) guidelines. Because of HCFA's recent decision to revise the E/M guidelines, many practitioners believe that they no longer need to adhere to the E/M documentation rules. Nothing could be further from the truth.

Earlier this spring, HCFA announced that it would work with providers to revise its newest E/M guidelines to establish more clinically relevant rules. However, the agency has clearly stated that physicians must continue to meet documentation guidelines and that it will enforce them. If documentation does not match the level of service billed, any overpayment—plus penalties and interest—must be refunded.

Some physicians mistakenly believe that HCFA is no longer enforcing the E/M guidelines. On the contrary, Robert Mills, chief information officer for the AMA, explained to me that HCFA will continue auditing charts while the E/M guidelines are reviewed. In addition, experts with whom I have spoken say that the agency plans to continue reviewing more than 1% of Medicare charts each year. Denise Sanders, JD, a specialist in health law for the New Jersey law firm of Kern, Augustine, Conroy and Schoppmann, told me that a number of practices have received notification of an audit since HCFA announced that it would be revising the guidelines.

There are several upsides to all of this. For one, HCFA has promised to partner with physicians to make the E/M rules more user-friendly and clinically relevant over the next two years. During that time, providers can follow either the original guidelines published in 1994-95 or the rules published in 1997 and scheduled for implementation this year. Auditors have been instructed to determine the intensity of patient visits using both sets of guidelines—and to use the value that benefits providers.

Documentation problems

While many physicians have complained that the E/M rules are burdensome, the reality is that most chart notes contain inadequate documentation. Many chart notes are illegible, and few provide useful information to help other physicians trying to understand the care plan and the patient's status.

As a chart auditor at my local hospital for many years, I rarely see notes that communicate the patient's problems, status and treatment plan. Chart notes infrequently achieve the goal of SOAP notes: to promote better communication and improve care for each patient. While ideal charts allow another physician to seamlessly assume care, many notes confuse rather than guide other physicians. The new E/M guidelines were the first attempt to standardize charting.

The fact that HCFA wants physicians to help develop more user-friendly guidelines is not surprising. All government agencies need the support and consent of the parties they oversee. HCFA officials have indicated their willingness to support physicians who attempt to comply with the guidelines. After all, practices that comply reduce the amount of effort, money and hassles for the agency. Merely by informing physicians that there are low-level visits has already helped HCFA reduce its payments to practitioners.

By allowing physicians to control the level of service rendered, HCFA has given us autonomy. This contrasts with other third-party payers that reimburse providers exclusively for low-level visits. I have met with insurance administrators who refuse to reimburse for high-level visits. They are confident that few physicians document a high level of service to justify greater payments. HCFA permits providers to evaluate each clinical situation and determine the appropriate intensity of service.

How the guidelines work

Although written in cryptic government language, the new E/M guidelines are far less complicated than most of the journal articles we read. Every physician can learn them in one or two hours, and there is no need to commit the guidelines to memory once the principles are understood.

Most services are divided into five levels. Completing the requirements for a level-five visit is akin to achieving a final letter grade of A in an academic course. The next highest level (level four) is similar to a grade of B, and so on.

To determine the overall level for each encounter, visits are subdivided into three major components: history (HX), physical exam (PE) and decision-making effort (DE). If a visit is like an academic course, then each component can be thought of as a test. The history, physical exam and decision-making effort are each graded individually, based on the amount of information supplied. (Again, think of a level-five visit as similar to an A, a level-four visit as a B and so on.)

The final level for the visit is determined by these individual section grades. For new patients and consults, the lowest section grade is used as the overall level of service. For established patients, the median grade is the visit's intensity of service.

For each component, there are specific required bits of information called elements. The greater the number of elements documented, the higher the grade for that section.

Physicians who do not comply with the guidelines cannot attain high levels of service—and the accompanying reimbursement. Although the system may be burdensome, HCFA and other payers will continue to demand that there be a correlation between the amount of information supplied and the payment approved. From HCFA's view as a purchaser of health services, this makes sense.

The new and the old

While it is true that the 1997-98 rules are more complicated and more specific than the earlier rules, they also allow providers to more easily achieve a higher level of service.

The most important difference between the two sets of guidelines is the physical examination. The newer (1997-98) E/M guidelines allow physicians to perform a single-system physical exam. These new guidelines divide the physical exam into individual maneuvers. For example, the lung exam is composed of four maneuvers: inspection, percussion, palpation and auscultation. The number of maneuvers performed determines the exam's value. For a detailed physical exam, physicians must perform 12 maneuvers, which can be accomplished by examining one organ system.

In contrast, the original guidelines determined the value or intensity of the physical exam according to the number of systems inspected. Under these guidelines, a "detailed" physical exam required a detailed study of two to seven organ systems to qualify for the same level of service.

A comprehensive physical exam may be easier to achieve using the older guidelines. Fortunately for physicians, however, auditors must determine the intensity of the physical exam using both sets of guidelines—and credit the provider with the higher level.

Achieving an extended history of present illness is also easier under the newer E/M rules. According to the original guidelines, an extended history of present illness requires four items of information that describe the chief complaint. If the chief complaint is pain, for example, the history of present illness might contain the onset, palliation, quality, radiation, severity or timing of the pain.

For some chief complaints such as hypertension, however, finding four descriptive bits of information can be difficult. Under the latest E/M guidelines, an extended history of present illness can be achieved by supplying information about three other diseases present in the same patient. Again, auditors must give credit for a history of present illness that complies with either rule.


Because the elements of the E/M guidelines are too numerous to memorize, I developed templates that prompt providers to supply the necessary elements of documentation—and choose the highest appropriate level for their patient visits.

Progress-note templates allow providers to specify which maneuvers in the physical exam they performed. While a check mark may occasionally be used, specific information can be supplied on each line of the template. Legibility is improved, less writing is needed, and notes are better organized. (My local HCFA auditors have said they prefer progress-note templates to computerized notes.)

For the present, providers need to study the guidelines and improve their documentation. Showing interest in improved charting will help physicians convince HCFA to design rules that are more clinically relevant and easier to use. Resistance to understanding the guidelines will make this process more difficult.

Only by being familiar with the regulations can physicians achieve the highest appropriate reimbursement. Internists, because of their broad overview of patient care, should be able to attain high-level visits. But only those who learn the E/M regulations will be able to do so.

Dr. Blecker, who has his MPH, is a practicing nephrologist in Atlantic City, N.J. He is a lecturer and consultant on practice management issues and use of the E/M guidelines. He is also editor of "Doctor 2 Doctor: A Physician Practice Guide," a newsletter on reimbursement and E/M guidelines that appears on the Web at He can be reached by fax at 609-383-8352.

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