Study: Outpatient visits increasingly billed at higher levels

Providers are more frequently billing for outpatient evaluation and management (E/M) services with high-level codes, which has led to higher outpatient spending, according to a Peterson-KKF Health System Tracker study published on February 27.

The study analyzed claims for almost 14 million people in large group market plans from 2004 to 2021. Outpatient settings in this analysis included emergency departments (ED), physician offices, and urgent care centers.

In 2004, 19% of studied claims were level 4 and 3% were level 5. In 2021, 37% of studied claims were level 4 and 6% were level 5. However, this trend was most pronounced in EDs. In 2004, 25% of studied ED claims were level 4 and 8% were level 5. In 2021, 35% of studied ED claims were level 4 and 25% were level 5.

The study also looked at outpatient billing levels for claims involving specific diagnoses. Knowing that certain conditions warrant a higher level of billing, study authors analyzed claims for conditions that are not likely to worsen over time and which are less impacted by comorbidities.

For urinary tract infections treated in EDs, 23% of studied claims in 2004 were level 4 and 3% were level 5. In 2021, 46% of studied claims were level 4 and 20% were level 5.

In addition, the study analyzed how these billing practices have impacted outpatient spending. In the 18-year time period, the average cost for level 5 claims increased by 185% in EDs, 79% in physician offices, and 59% in urgent care centers.

The study analyzed how 2021 spending would have been impacted if visits were billed using 2011 and 2004 levels. “We find that if the distribution of claim levels had stayed consistent over the prior ten years, outpatient evaluation and management costs would have been 4% lower in 2021,” said study authors.

Using 2004 billing levels, the study determined that 2021 spending would have been 10% less in physician offices and 11% less in EDs.

Although the study authors mentioned concern over upcoding, they also acknowledged that improved clinical acuity, new clinical standards and treatment, and more services being provided in outpatient settings rather than inpatient settings could explain these billing practices and data.

Providers must ensure they are billing appropriately for outpatient E/M visits. Review guidance from CMS and the American Medical Association on E/M billing and coding. Ensure that outpatient E/M claims, particularly ED claims, are included in internal audits. Conduct education for billing and coding staff where necessary and work with clinical documentation integrity staff to ensure education provided to clinical staff is consistent.

Editor’s note: Find more NAHRI coverage on E/M coding here.