Consultation Coding for Physicians

Elin Baklid-Kunz, MBA, CPC, CCS, for HealthLeaders Media , September 3, 2009

Consultation coding can be challenging for many physicians, and correct documentation is vital to correctly bill for these services. Many physicians learn about specific consultation requirements only after a third-party payer audit results in the reclassification of their consultations to new patient office visits or subsequent hospital visits.

To see how a physician's consultation coding compares with that of other physicians in his or her specialty, review the CMS data on physicians by practice, which shows the E/M codes physicians report most. When a physician's ratio of reporting consultation codes (99241–99245) to new patient office visit codes (99201–99205) is much higher than that of his or her peers, review the requests and documentation for the consultations to determine whether the physician has met requirements.

Remind physicians who have never been audited that CMS expects them to know the regulations related to billing and submitting claims to Medicare and Medicaid. The government outlines its concerns annually in the HHS Office of Inspector General (OIG) Work Plan.

The OIG included consultation coding in the 2002, 2003, and 2004 Work Plans and issued a report in March 2006 highlighting $1.1 billion in estimated Medicare overpayments made to physicians in 2001 for consultations (a 75% error rate).

In response to the 2006 report, CMS issued Transmittal 788, Change Request 4215 in the Medicare Claims Processing Manual. This transmittal includes:

  • Clarifications regarding the definition of a consultation
  • Documentation requirements
  • Clarifications regarding who may perform consultations
  • Clarification that physicians may not report consultations for split or shared E/M services

Since the 2006 OIG report, more private payers have audited physicians. And with the Recovery Audit Contractor (RAC) permanent program, which relaunched in March, now is a good time to review consultation coding. Even though the RAC permanent program has record limits, there are major concerns about each RAC's ability to extrapolate (i.e., apply the error rate to all claims). RACs must abide by the following record request limits per 45 days:

  • 10 records for solo practitioners
  • 20 records for partnerships (i.e., two to five physicians)
  • 30 records for group practices (i.e., six to 15 physicians)
  • 50 records for large group practices (i.e., more than 16 physicians)

If damages from billing physician E/M services are $150 per claim on average, and RACs can only request 10 records per 45 days for a solo practitioner, this adds up to only $1,500. However, RACs may turn these findings over to the OIG if they believe they have identified a pattern in reporting practices. After further investigation, the OIG can apply the error rate to the whole universe of claims or cumulative number of claims that fit the criteria for claims under investigation.

Therefore, if the OIG were able to apply the error rate to this significantly larger number of claims, that could total much more than $1,500.

Editor's note: Baklid-Kunz is the director of physician services at Halifax Health in Daytona Beach, FL. E-mail her at ekunz@ This article was adapted from one that originally appeared in the September 2009 issue of The Doctor's Office, a HealthLeaders Media publication.

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