E&M Codes (Part II): Why They Should Be Abandoned

Robert P. Nirschl, MD
Article Type: 
Feature Article
July/August 2000
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Reasons Against Current Medicare Guidelines

As noted in Part I of this article,(1) the focused intent of the guidelines is primarily governmental cost control and secondarily a re-allocation of perceived injustices of Medicare payments to some physician groups. The following discussion will review the basic concepts and point out clear reasons why the government core and ancillary goals will not be achieved, why the concept of quantitative E&M codes should be replaced with the original 1991 CPT codes and meaningful reform of a failing Medicare system be implemented.

Lack of Control of the Cost of Medical Services and/or Medicare Payments

The May 1997 guidelines clearly state a key purpose is "accurate and timely claims review and payment."(2) A quantification system will indeed supply an identifiable system not only to third party payers but also to physicians. Until this quantification model occurred, most physicians coded and billed on a qualitative basis and in many instances more likely undercoded rather than overcoded. The E&M quantitative system precisely defines safe harbors and therefore defines a route for the legal expansion of medical services. Full coding of these expanded but irrelevant or minimal value services (as adjudged by most physicians) will result in increased service volume cost with little or no increase in medical value to the patient.

In addition, the current traditional Medicare format does not control the volume of patient visits. It is well-known inside the medical community that a significant proportion of patients seek medical visits for emotional and social support reasons. This is especially true of the Medicare population. Physician time constraints in a quantitative system will severely limit these important patient care functions known as "the art of medicine" and "good bedside manner." Limited value time per visit will subsequently increase rather than decrease the volume of patient visits. Response to increased visit volume can be anticipated to ultimately result in government imposed regulatory constraint (e.g., rationing) and decreased patient access to medical services. This process in fact has already been imposed and is especially evident in the Medicare HMO programs.

A growing segment of the public now understands that the HMO concept is a rationing vehicle and dissatisfaction with this system is growing with resultant congressional efforts to pass patient protection legislation. Suffice it to say cost control and patient protection legislation are contradictory ideologies (e.g., societal cost control has collectivist goals whereas the delivery of medical services is individual). It is now clear that the HMO format cannot exist in current form as patient protection regulatory mandates increase costs.(3,4) This ideological conflict has now resulted in HMO management company withdrawal from segments of the Medicare market.(5) Finally, imposed quantitative approaches merely increase physician costs in time and personnel (e.g., the costs to deliver services will increase rather than decrease). In my office practice, additional personnel are now dedicated to obtaining and performing the quantitative screens. This additional mandated necessity further closes the gap of economic viability and quite candidly is resulting in necessary denial decisions concerning patient access.

The Guidelines Will Not Add Value

The expanded and distractive quantitative checklists have little or no relationship to the qualitative value of medical services. The real goal of any patient visit is the resolution of presenting problems with an outcome which restores a quality of life to the level enjoyed prior to the onset of the presenting disease or injury. Although checklists may be reminders of thoroughness, they in themselves add limited value to the cognitive thought processes so critical to outcomes and the success of the patient-doctor relationship.

An example may be illustrative. As an orthopedic sportsmedicine surgeon, I have the privilege of evaluating many delightful Medicare patients with athletic knee arthritis. Many of these patients have participated in endurance aerobic activities for years (e.g., jogging, running, tennis, etc.) and rarely have any major medical problems. Several quick questions such as medication taken, any allergies, or any past or current medical or heart problems will tell the story. Does a quantitative checklist of an entire family history or a laborious review of systems really add any meaningful value to the focused knee problem of an otherwise established patient?

In this example, precious little time can be spent on rehabilitation specifics, activity level recommendations and prognosis which are the real meaningful value factors. A quantitative inventory of irrelevant information from a medical perspective is of limited or no value other than as a billing tool.

In the current environment of health care financing, a reasonable patient volume has become a necessity. Understanding the complexities of the patient-doctor relationship, which include both the art and science of medicine leaves precious little time for inconsequential issues. The economic realities of a quantitative E&M system will clearly divert the patient encounter away from problem solving and detract from the patient's best interest. Indeed, in my practice, as suggested by HCFA, I have started to use the 1997 quantification inventory. Most patients ask why is this necessary and some have refused to comply.

The Privacy Issue

The patient-doctor relationship is fundamentally based on trust. In the initial visit, it is in the patient's best interest to inform the physician of complete medical background information and thorough medical review at this time is good medical practice. Updated information is germane on subsequent visits. The physician in turn gathers information by the time-honored thorough history, physical exam, and laboratory testing. Much of this information is important to implement appropriate treatment plans and solutions. Full patient disclosure of sensitive material is germane to this process and the patient in return has a right to expect privacy. There is now no question that third party access to the medical records for billing purposes exposes sensitive and private information to public disclosure. This reality clearly has a derogatory effect on the element of trust and patient's long-term best interest such as denial or acceptance into future health benefit programs, employment rejection, and as Tom Eagleton comes to mind, even political fortunes. These observed consequences will alter the disclosure of important information from patient to doctor thereby decreasing the value of the relationship and increasing the medical risk to the patient.

Criminalization of Medical Services

The patient-doctor relationship is already strained by the current functioning adversarial medical-legal malpractice system. Patient's are not uncommonly viewed as potential malpractice risks by some physicians creating a less than positive collaborative

relationship. The criminalization aspects of the Kassebaum-Kennedy law merely magnify this major problem. How can physicians concentrate on problem solving while functioning under the onerous cloud of guilty until proven innocent as monitored by a quantitative checklist. The punitive penalties of jail time and outlandish financial payments ($10,000) for each infraction is unconceivable when the offenses as stated in the law could be simple mistakes rather than intentional fraud and abuse.(6)

It has already been noted by HCFA that most billing deviation for orthodox physician services are errors rather than true criminal activity.(7) There are more accurate ways already implemented and functioning to define fraud and abuse rather than the harassment of the qualified and honest orthodox physicians (e.g., graduates of regular medical schools appropriately licensed by state medical licensure boards).(6) To include physician services with the broad brush of other ancillary groups and Wall Street controlled corporate enterprises (e.g., hospital corporations, home health agencies, corporate medical laboratories, durable goods salesmen, etc.) is inappropriate, unfair, and ultimately self-defeating.(8) This situation is further exaggerated and inflamed by the recent Clinton administration vigilante-like deputation of Medicare beneficiaries in an unholy alliance with the American Association of Retired Persons (AARP). This anti-fraud program entitled "Who Pays? You Pay" with a multi-city kickoff on February 24, 1999 is undisciplined and subject to massive abuse.(9-11)

Instructions are now given to beneficiaries in brochures on how to report your physician for suspected wrongdoing.(9,10) A toll free hot line telephone number to the Medicare carrier is also included. The spectrum of a totalitarian government spy network seems revisited with $1000 to whistle-blowers available if recovery occurs.(9,10) In 1998, the government reported 326 convictions for all types of Medicare fraud among all providers. HCFA as well estimates that by education improper payments have fallen 46 percent from 1996 to 1998 (from $23.2 billion to $12.6 billion) according to June Gibbs Brown (I.G. HHS).(6) This data was based on a review of 600 claims or 0.0015 percent of the 39 million Medicare beneficiaries.(11) What is missing in this campaign is a serious attempt by HCFA to distinguish between real fraud and legitimate differences of opinion concerning thousands of pages of confusing and arcane Medicare regulation. The anti-fraud initiatives of the E&M codes and the "Who Pay's? You Pay" program are in a word badly flawed. This public demonization anti-physician campaign will do little to enhance Medicare patient care.(12,13)

Lack of Oversight of HCFA

There is no functional congressional oversight of the Inspector General's (IG) activities of HCFA. Who is responsible for the protection of patient interests? Can physicians continue to function in their traditional role? Due process of law appears to be eliminated as a non-elected bureaucratic agency has been either given congressional approval or has usurped the traditional precedent of American jurisprudence (e.g., innocent until proven guilty). A federal agency acting in the role of police, judge and jury is unfair and most likely unconstitutional. The current situation is serious, dangerous, and certainly the antithesis of the medical value.


There are certain basic premises in problem solving. In the surgical practice of medicine, it is clearly stated: "Identify the pathoanatomy, deal with it in an appropriate manner, avoid harm to the norm, and leave before something bad happens." The government/HCFA approach has violated all of these principles. The fundamental problem is directly related to the 1965 design of the Medicare program. The availability of goods and services financed primarily by others (the children and grandchildren of Medicare beneficiaries), results in no constraint in the use of or oversight of the financing of these services by the recipient. It might be noted that the Medicare population is the wealthiest group in American society.

The solution to financing is not to destroy the patient-doctor relationship and shift the problem to physicians, but rather to restore the trust of the patient-doctor relationship. This requires true collaborative cooperation between patient and the treating physician with both financing and medical value oversight by the user of the service. In other words, to attain true value and cost control the empowerment must reside with the patient, not the government or corporate management companies. Appropriate patient financial obligation is critical to this effort. Implementation of a true insurance product (coverage for unanticipated events only) is also fundamental to the solution. To accomplish these core solutions a fundamental transformation of the Medicare model must occur.(14,15) It is unfortunate that the Medicare commission efforts to reform Medicare chaired by Senator John Breaux and Congressman Bill Thomas have now failed.(16) Rather than reform the Medicare model, recent discussion incredibly suggests an expansion of its flaws. Recent reports suggest that both the president and some members of Congress are considering the adding of financial coverage of prescription medication in the current Medicare model.(17) Such action would be the antithesis of true reform which requires a return to true insurance (e.g., coverage for unanticipated events). Expansion of coverage to anticipated events, such as medication coverage is not insurance but the pre-payment for anticipated medical consumption and is both unwise and ineffective as a way to achieve cost control. If segments of the Medicare population require aid in medication financing, the only rational approach is subsidy outside the Medicare model.


1. Nirschl RP. E&M codes (Part I): The demise of value. Medical Sentinel 2000;5(3):102-103, 110.
2. Documentation guidelines for evaluation and management services. American Medical Association and Health Care Financing Administration. Educational Manual, May 1994, pp. 1-54.
3. Goldstein A. Patients' rights is revived as a Congressional debating point. Washington Post, March 18, 1999, p. A-6.
4. Trautwein N. A threat to employee-based care. Washington Post, Sept. 4, 1998.
5. Josten R. U.S. Chamber of Commerce says story contains some "radical" errors, March 5, 1999. Response letter to editor regarding Washington Times story "Chamber/AMA aim to expand insurance," Washington Times, Feb. 19, 1998.
6. Widespread Medicare HMO defections starting to hit Medicaid too. American Medical News, Dec. 14, 1998, p. 5.
7. IG audit found errors not fraud in Medicare claims. Amer Academy of Orthopedic Surgeons Bulletin, June 1998, p. 13, Rosemont, IL, pp.1-12.
8. Medicare billing errors drop to new low. American Medical News, Feb. 22, 1999, p. 5.
9. American collage of physicians, understanding the fraud and abuse laws. Guidance for internists. Annals Internal Medicine 1998:128: 678-684.
10. Feds, senior lobby targeting Medicare fraud in American Medical News, Vol 40, No. 3, p. 2 and New crusade. American Medical News 1999;42(10):1.
11. Feds try new tack for stopping fraud. HETA looks to new tools to combat fraud and abuse. American Medical News 1999;42(9):1.
12. Attacking Medicare fraud. FEDS, AARP enlist beneficiaries as bill watch dogs. AARP Bulletin 1999;40(2):1.
13. Dickey N. Government to grandpa: rat out your doctor. E-Mail communication to AMA members, Feb 24,1999.
14. Nirschl RP. The core solutions to health care financing. Unpublished editorial.
15. Nirschl RP. Purchasing health care plans for employees. National Religious Broadcaster Magazine, Feb/March 1999, P70.82.
16. Goldstein A, Harris J. Medicare panel fails to agree on recommendations. Washington Post, March 17,1999, p. A2.
17. Goldstein A. Medicine costs spur battle on Medicare. Washington Post, March 14, 1999,p. 1.

Dr. Nirschl is an orthopedic surgeon in Arlington, Virginia and a member of the Editorial Board of the Medical Sentinel. His e-mail is: nirschl@erols.com.

Originally published in the Medical Sentinel 2000;5(4):132-133, 136. Copyright ©2000 Association of American Physicians and Surgeons.

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