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Blog | Physician Payment and Reimbursment

Recent changes to E/M coding mean time-based billing could be advantageous for longer visits, study finds

Blog | Physician Payment and Reimbursment

Recent changes to E/M coding mean time-based billing could be advantageous for longer visits, study finds

Depending on patient volumes, some clinics would benefit from incorporating time-based billing instead of relying on CPT coding approaches.

Physicians working in clinics that tend to have longer patient visits can increase E/M revenue if they incorporate time-based billing, according to a study.

As published in JAMA Network Open, researchers with the University of Chicago and Oregon Health & Science University sought to quantify whether time-based billing can generate more revenue compared with billing that’s based on medical decision-making as reflected in CPT codes.

The researchers used 2019 (i.e., pre-pandemic) billing data for outpatient E/M codes and 2021 reimbursement rates from CMS. Modeling was based on a full-time physician working in a primary care clinic with fee-for-service billing.

If billing was based on medical decision-making (MDM), the physician would earn significantly more E/M revenue from shorter visits (30 minutes for new patients, 15 minutes for returning patients) compared with longer visits (40 and 20, respectively). When extrapolated across a year, revenue would decline from $564,188 for shorter visits to $423,137 for longer visits.

Under time-based billing, annual E/M revenue would increase from $400,432 for shorter visits to $458,718 for longer visits.

Not surprisingly, the choice of E/M billing approach had a different impact on different specialties. For cardiology, time-based billing generated more revenue only for visits lasting 60 minutes or more for new patients and 30 minutes or more for returning patients. For dermatology, in contrast, time-based billing brought in more revenue starting with visits lasting 30 minutes or more for new patients.

Potential implications

“Studies show that physicians spend substantial time doing work that is not explicitly reportable by the E/M system of MDM-based billing, including medical record review, documentation and coordination of care,” the researchers wrote. “As a result, many physicians report averaging one to two hours of unreimbursed, after-work hours daily.”

Meanwhile, 2021 changes to E/M guidelines “allow physicians to bill for face-to-face time and for previously unreimbursed time spent on medical record review, documentation and coordination of care on the day of the patient encounter.”

The findings could have consequences for care quality, patient experience and physician satisfaction because “time-based billing removed the association between patients seen per hour and revenue, allowing physicians to have longer patient visits without a loss of E/M revenue,” the researchers noted.

However, because the highest annual revenues ($846,273) seen in the study were for 10-minute returning-patient visits billed according to MDM criteria, “time-based billing is unlikely to change financial incentives given for shorter visits” at many clinics. But clinics with lower volumes and longer visits should consider implementing time-based billing if they haven’t done so already.

The researchers noted a downside to time-based billing is that it could hamper access by promoting longer patient visits in an era of healthcare staff shortages. Such a system also may “penalize efficient physicians and team-based clinic workflows and reward inefficiencies while increasing healthcare costs.”

The researchers acknowledged a few factors that may limit the study’s applicability, including that the reliance on Medicare data could skew the projections of MDM-based billing revenues if Medicare beneficiaries require higher-intensity visits than the rest of the population.

About the Author

Nick Hut

is a senior editor with HFMA, Downers Grove, Ill. (nhut@hfma.org).

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