How Time-Based Billing Impacts Physician Reimbursement for E/M Visits

September 12, 2022 - Time-based billing was associated with higher physician reimbursement for longer evaluation and management (E/M) visits, while billing based on medical decision-making (MDM) led to higher reimbursement for shorter visits, according to a study published in JAMA Network Open.

Under a fee-for-service model, physicians are reimbursed for E/M services based on the number and complexity of problems addressed during a patient’s visit, known as the medical decision-making method.

However, physicians may spend time on tasks that are not reportable under MDM-based billing, such as medical record review, coordination of care, and documentation. This can lead to one to two hours of unreimbursed work for physicians.

Time-based billing is an alternative method that reimburses physicians based on the length of a patient visit. Previously, time-based billing only counted time spent face-to-face with patients, but the 2021 E/M guidelines stated that physicians could also bill for related tasks completed on the day of the patient encounter.

Researchers used 2018 National Ambulatory Medical Care Survey (NAMCS) summary data and 2019 CMS billing data to compare E/M reimbursement for physicians using time-based billing versus MDM-based billing for different visit lengths.

MDM-based billing generated the highest physician reimbursement for the shortest patient visit, which researchers classified as 20-minute new patient visits and 10-minute return patient visits. MDM-based billing for these visits was associated with a yearly E/M revenue of $846,273

As patient visit length increased, physician reimbursement decreased under MDM-based billing.

For example, E/M revenue was $564,188 for 30-minute new patient visits and 15-minute return patient visits and $423,137 for 40-minute new patient visits and 20-minute return patient visits.

The longest visits—90-minute new patient visits and 45-minute return patient visits—generated the lowest E/M revenue of $188,065. In contrast, the time-based billing model led to $409,894 in E/M revenue for the longest visits.

Physician reimbursement for E/M services under time-based billing remained relatively stable across all visit lengths, researchers found. E/M revenue was $400,432 for 30-minute new patient visits and 15-minute return patient visits and $458,718 for 40-minute new patient visits and 20-minute return patient visits.

Like MDM-based billing, the highest E/M revenue was associated with 20-minute new patient visits and 10-minute return patient visits at $567,649. The lowest yearly revenue was $385,614 for 50-minute new patient visits and 25-minute return patient visits.

Despite time-based billing leading to the highest reimbursement for the shortest visits, the revenue advantage of time-based billing over MDM-based billing increased with more extended visits.

For shorter visits, MDM-based billing led to higher revenues than time-based billing. As visit lengths progressed, time-based billing was associated with higher revenue compared to MDM-based billing.

The highest E/M revenue reflected in the study was for shorter patient visits under MDM-based billing. This indicates that time-based billing is unlikely to change financial incentives given for shorter visits, researchers said. Time-based billing is also less likely to be beneficial for high-volume, low-acuity specialties.

However, physicians with lower volumes and longer patient visits may benefit from time-based billing, as longer visits had higher reimbursement under time-based billing compared to MDM-based billing.

Additionally, physicians with longer patient visits could extend visit lengths without seeing a notable decrease in revenue as E/M revenue remained similar across visit lengths for time-based billing.

“The flexibility in patient scheduling afforded by time-based billing could help physicians better address preventive medicine,” researchers wrote. “A decrease in patients per hour could also be used to help physicians complete non–face-to-face tasks, such as documentation, that traditionally have been pushed to after hours, potentially contributing to decreased physician burnout.”