How E/M Payment Policy Changes Impacted Physician Reimbursement

March 08, 2023 - Evaluation and management (E/M) payment policy changes implemented in 2021 resulted in higher Medicare reimbursement for most physicians but only led to a modest decrease in the payment gap between primary care and specialty physicians, according to a study published in JAMA.

Medicare payment policies have historically undervalued E/M visits. These visits are common in primary care settings, leading to lower reimbursement for primary care physicians compared to specialists. There have been some concerns that the payment gap is larger than appropriate and may deter physicians from primary care specialties.

In January 2021, CMS increased Medicare reimbursement for E/M services provided by all physicians. The agency also reduced the Medicare conversion factor for all specialties, resulting in reimbursement cuts for non-E/M services.

At the same time, the American Medical Association (AMA) eased documentation requirements for E/M codes and modified time-based billing guidelines, making it easier to bill higher-intensity, more profitable E/M codes.

Researchers conducted an observational study to assess how the E/M payment policy changes impacted Medicare reimbursement and E/M coding intensity among primary care and specialty physicians. In addition, they simulated the volume-constant effect of the policy changes on Medicare payments and compared the simulated changes to the observed changes.

The study used data from July to December 2020, known as the pre-period relative to the policy changes, and July to December 2021, defined as the post-period. The sample included 180,624 office-based physicians who billed Medicare.

Following the E/M policy changes, reimbursement increases for E/M services ranged from 2.3 percent to 23.5 percent.

When repricing services provided in the pre-period at 2021 payment rates, radiology (-3.3 percent), ophthalmology (-2.8 percent), and general surgery physicians (-0.1 percent) lost reimbursement. However, most specialists would have gained revenue, the study found.

The specialty estimated to see the largest gains relative to pre-period payments was primary care, consisting of family practice (11 percent) and internal medicine (10.8 percent). Psychiatry (9.2 percent), neurology (5.7 percent), and obstetrics/gynecology (4.6 percent) followed.

Between July and December 2020, the reimbursement gap between primary care physicians and specialists was $40,259.8. After repricing pre-period services at 2021 rates, the gap narrowed slightly to $37,759.5.

After observing actual Medicare payments during the pre- and post-periods, researchers found that most specialties experienced reimbursement increases following the E/M policy changes.

Between July and December 2021, primary care physicians received $45,962.4 in Medicare payments, while specialty physicians received $85,397.05, for a reimbursement gap of $39,434.7. From 2020 to 2021, the gap between the two physician types decreased by $825.1, or 2 percent.

Family practice (12.1 percent), otolaryngology (9.9 percent), internal medicine (8.9 percent), dermatology (7.4 percent), and neurology physicians (6.9 percent) had the most significant payment increases. Meanwhile, radiology (-2.1 percent) and general surgery physicians (-4.2 percent) saw decreased Medicare payments.

When researchers compared July to December 2019 and July to December 2018 with the post-period, the payment gap decreased by 11.1 percent (-$4,930) and 8.1 percent (-3,472.7), respectively.

The share of high-intensity visits increased for almost every specialty after E/M policy changes were enacted. Psychiatry saw the biggest increase, with the share of visits billed at an intensity level of 4 or 5 rising from 46 percent in 2020 to 63.8 in 2021. The share of high-intensity visits for family practice physicians grew from 62.5 percent in 2020 to 67.5 percent in 2021.

Despite helping to boost Medicare reimbursement for primary care specialists, the E/M payment policy changes only had a minor impact on narrowing the gap between primary care and specialty physicians.

“If policymakers want to shrink the primary care/specialist pay gap, they may need to focus on broader changes to Medicare’s physician payment policies (ie, reforming the Relative Value Scale Update Committee, which advises Medicare on valuing the roughly 8000 payment codes comprising the physician fee schedule) and other tools such as primary care payment reform that are explicitly targeted to primary care physicians,” researchers wrote.