MGMA In Practice blog

Guest blog by Lucien Roberts, MHA, FACMPE, MGMA member

Healthcare reform, proposed Medicare cuts, "meaningful use," the Red Flag Rule... all have taken or shared center stage in the past six months in healthcare. But the topic that concerns me most – Medicare's decision to eliminate consultation codes – remains below the radar of most medical practices. And it may have an equal or greater affect on many practices than any of these other issues.

The Centers for Medicare & Medicaid Services' (CMS') Oct. 30 decision to eliminate outpatient and inpatient codes, effective Jan. 1, will affect all medical practices. CMS' plans, which were addressed in detail in an MGMA Webinar, are budget-neutral to the Medicare program yet hold the potential of crushing the bottom line of many practices.

Consultation code blues

Consider neurology, where I have spent much of my career as a practice administrator. Neurologists code nearly 90 percent of their new outpatients and more than 90 percent of their initial inpatient work as consultations, according to Medicare Part B physician supplier national data from 2006. In Virginia (where I live), outpatient consultation codes (99241-99245) pay between 26 and 41 percent more than new office patient codes (99201-99205).

Even with Medicare's cursory 6 percent adjustment to the remaining outpatient evaluation and management (E&M) work relative value units (wRVUs) and 0.3 percent adjustment to the remaining inpatient E&M wRVUs, a neurologist in Virginia could face a $50,000 reduction in income if other payers follow suit.

Be forewarned: My analysis does not take into account Medicare's proposed 21 percent cut.

Neurologists are not alone. Consider these statistics also from the Medicare Part B 2006 physician supplier national data:

Do you think $44,000 of electronic health record stimulus money over six or seven years will offset the potential losses? Me neither.

'Budget neutrality' bad for business

In calculating for "budget neutrality," Medicare estimates that half of outpatient consultations will be coded as new office visits, while half will be coded as established patients (99211-99215). Had they correctly estimated that the majority of these consultations would be re-coded as new office patients, the 6 percent wRVU adjustment would have been much higher. But then again, that wouldn't have been budget neutral.

On the inpatient side, admission codes (99221-99223) will be used in lieu of consultation codes. The "true" admitting physician will use a modifier along with their admit code, while all consulting physicians will use the admit code without the admit modifier. Will your physicians grasp this change by Jan. 1? Do you think the minor increase in admit and follow-up RVUs will offset your loss of income? 

Will other payers follow suit?

I'm not aware of any other payer who has announced its intention to follow Medicare's lead. If they do, the probable loss of income will be greater for many physicians.

If they don't, you will have decisions to make and work to do. Your providers will use consultation codes for non-Medicare patients, but not for Medicare patients; or your practice can stop billing consultation codes for all payers and face the inevitable reduction in income.

If a patient has Medicare as secondary insurance and you bill a consultation, Medicare will not pay you because it will no longer recognize them. If a patient has Medicare as secondary insurance and you bill a new patient code, Medicare will pay you, but at the lower new patient rates.

Action steps: What you can do to offset consultation code elimination

• Download the on-demand Webinar with coding experts Nancy Enos and Joan Gilhooly's "Consultation Codes Eliminated: Now What?" and learn the specifics between consult codes and new patient/established patient codes, and see how the elimination will affect your bottom line.
• Meet with your providers and billing staff to go over the changes. Reach decisions on how Medicare and non-Medicare patients will be coded.
• Set mechanisms in place for making sure patients are coded correctly the first time to avoid denials.
• Consider alternative revenue streams and cost-control measures to reduce the impact of Medicare's decision.

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