On July 23, 2021, CMS published its proposal for changes to its Medicare Part B payment policies for calendar year 2022, including proposed changes for teaching physician billing. In addition, in the same proposed rule, CMS published a proposal to modify the reporting relating to teaching hospitals under the Open Payments system. This article describes how these proposals could limit teaching hospitals’ and teaching physicians’ options for assigning outpatient and office evaluation and management codes for patient encounters, as well as the benefits that teaching hospitals could expect from the proposed revisions to the Open Payments program.

This client alert is Part 4 of our series providing insight into current changes to the Medicare program relating to the teaching setting, including changes related to the COVID-19 pandemic. Part 1, which addresses resident moonlighting and redocumentation requirements, is available here. Part 2, which addresses billing requirements for physicians at teaching hospitals (the “PATH” rules) and the rules regarding cap transfers, is available here. Part 3, which addressed provisions of the Consolidated Appropriations Act, 2020, that created three distinct opportunities for teaching hospitals to obtain additional Medicare reimbursement by making new cap space available, creating an opportunity for teaching hospitals with historically low FTE caps to reset their caps and PRAs and incentivizing urban teaching hospitals to participate in rural-track training programs, is available here.


Recent Changes to Outpatient and Office E/M Coding

CMS’s proposed changes to the Medicare Part B fee schedule are rooted in recent updates to the method that practitioners use to bill for evaluation and management (“E/M”) services in the office and outpatient setting. In the calendar year 2020 Medicare physician fee schedule final rule (84 FR 62844 through 62860) and the calendar year 2021 Medicare physician fee schedule final rule (85 FR 84548 through 84574) CMS implemented significant changes to the Medicare rules for coding and code selection for office/outpatient E/M (“O/O E/M”) visits. CMS indicated that the intent of the policy change was to generally adopt and follow new guidance issued by the AMA’s CPT Editorial Panel, which had eliminated the “history and exam” component for selecting the level of code for O/O E/M billing. Starting January 1, 2021, practitioners can select the O/O E/M visit level to bill using either of two methods: the total time personally spent by the reporting practitioner or medical decision-making (“MDM”). See 86 FR 39211.

Under the “total time” method of O/O E/M level assignment, the code is assigned based on the amount of face-to-face and non-face-to-face time that the billing practitioner spent on the patient’s case on the date of the encounter. While total time spent by the practitioner for the visit is a matter of time measurement, the MDM method of code assignment looks at the complexity of the visit and the risks to the patient to assign a service level. Three factors are relevant to assigning an O/O E/M code using the MDM method:

  • Number and complexity of problems addressed;
  • Amount and/or complexity of data to be reviewed and analyzed; and
  • Risk of complication and/or morbidity or mortality of patient management.

The visit is assigned to one of four E/M levels (straightforward, low complexity, moderate complexity or high complexity) based on the amount of work that the practitioner completed in each of these three categories. For more information on MDM see this Hall Render article.

How These Changes Affect Teaching Hospitals and Physicians

When O/O E/M services occur in the teaching setting, both the teaching physician and the learning physician are spending time with the patient and performing other tasks related to the visit, where potentially the measurement of the amount of time spent both by the teacher and the learner is relevant. This article looks at these two CMS proposals:

  • For O/O E/M under the general Medicare PATH rule allowing teaching physicians to bill for services personally performed with the residents, if time is used, the only time that counts is the time that the teaching physician personally spends on providing services (and presumably using MDM level is also possible); and
  • For O/O E/M under the primary care exception, given the potential time inefficiency of residents performing services, only MDM can be used in assigning the level of care performed.

Proposed Changes to Teaching Physician Billing and Coding

While current CMS policy generally allows providers to select between total time or MDM for determining the level of coding for O/O E/M visits, due to what CMS views as the unique characteristics of the different teaching settings, CMS is proposing some additional limits for teaching-related services. Under the general PATH rule, CMS is proposing that the total time of the teaching physician only (excluding resident time), can be used for service level selection, and under the primary care exception, only MDM can be used to establish the service level.

General PATH Billing

In recognition of the structure of Medicare GME payments and the fact that the payments relating to the services of residents are paid through IME and DGME to teaching hospitals, CMS is proposing that for general PATH billing of O/O E/M services, only the time that the teaching physician spends present with the resident and the patient on the service can be used to establish service level selection. CMS goes on to add that the physician must be present with the resident and the patient during the key portions of the service, and that the time associated with that presence can determine the service level.

In the proposal, CMS does not specifically rule out the possibility of using MDM—instead of time—to select the visit level. However, it is also unclear if CMS’s proposal is to mandate teaching physician time only (and not MDM) as the tool for determining service level, since in its preamble discussion there is no mention of MDM. A comment by someone in the industry during the review and comment period on the proposed rule on this issue is likely in order.

Primary Care Exception

On the assumption that the residents performing the services in primary care clinics may be slower in performing the services with the patients and therefore may take more time than an experienced and fully enrolled provider, CMS is proposing that only MDM—and not time—can be used to select the level of service under the primary care exception (“PCE”). Combining the slower work pace of the residents and the fact that under the PCE, the teaching physician can be supervising up to four residents simultaneously, CMS states its belief that the use of MDM will make a more accurate indicator of the level of complexity of the resident PCE visit. However, in connection with the proposal, CMS is also seeking comments on whether, notwithstanding the stated rationale of CMS, others in the industry believe that time is an accurate indicator of PCE service complexity level and whether a different approach to service level coding besides just exclusively MDM may be warranted.

In its discussion, CMS also mentions that the coverage of level 4-5 O/O E/M visits under the PCE will only occur during the COVID-19 PHE period, so once the COVID-19 PHE period ends, the PCE will revert to covering only level 2-3 visits and the other services as included in the PCE rule and policy.

Open Payments Information for Teaching Hospital Payments

While unrelated to teaching practitioner billing, in its June 23, 2021 publication CMS is also proposing changes to the Open Payments program that could potentially benefit teaching hospitals.  These changes will require that the reporting entities provide additional information that the teaching hospitals can use to identify and validate the payments that they are reported to have received.

The Open Payments program, which is sometimes called the Physician Payments Sunshine Act, is a statutorily mandated system of public reporting of financial relationships between health care providers (including teaching hospitals) and pharmaceutical and medical device companies. Under the Open Payments program, drug and device companies are required to report payments that they make to health care providers; providers do not have a corresponding obligation to report payments they receive. This has caused concerns among providers who are unable to verify that they received payments that the drug or device companies report.

CMS’s 2022 Part B payment systems rule proposes a new tool that teaching hospitals can use to verify these payments. Based on prior public comments to CMS, the agency is proposing that a mandatory “payment context” field be added to the information reported by the pharmaceutical and medical device industry reporting entities intended to make it easier for teaching hospitals to recognize and verify or dispute reported payments. CMS mentions that it received information from teaching hospitals during informal interviews that the reporting submissions as they exist now do not contain sufficient information to identify reported payments or transfers of value, meaning that teaching hospitals can see reported payments or other transfers of value to them, but without more information, the exact details of the context of the payment/transfer is not easy to identify. Without the ability to cross-check the payment/transfer on the information reported, the teaching hospitals need to make additional requests and expend additional resources to validate or dispute the reports.

What additional information might be reported to assist teaching hospitals in understanding report details? In its discussion, CMS mentions that “The check number or electronic wire number for the payment; related department of the hospital, or other pieces of relevant information” will be required to populate the new mandatory payment context field.

Practical Takeaways

The Comment Period for CMS’s 2022 Part B payment systems rule ends September 17, 2021, so teaching physicians, teaching physician groups, faculty group practices and teaching hospitals should consider submitting comments on:

  • Whether, in addition to the amount of time spent by the teaching physician with the resident and the patient, MDM can be used under the general PATH billing rule.
  • Whether CMS is correct that MDM is a better measure of complexity for PCE services than time, and whether CMS should limit the ability of providers who rely on the PCE to use time to assign O/O E/M codes.
  • For Open Payments and the new mandatory context reporting field, the type of information that teaching hospitals might want to see from reporting entities to assist the teaching hospitals in understanding reported transfers of value and payments.

If Hall Render can assist in comment preparation, please contact:

  • Scott Geboy at (414) 721-0451 or sgeboy@hallrender.com;
  • James Junger at (414) 721-0922 or jjunger@hallrender.com
  • Your regular Hall Render attorney.

Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer an individual’s questions that may constitute legal advice.

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