How Doctors Get Paid By Medicare Clearly Explained

Want to know how doctors get paid?  What is a  CPT® 99223 (review the AMA CPT® 2018 Standard Edition for definitive authority)?  What does that mean? It means everything and it means nothing. It is the vast land of numbered codes.  It is the  mystery of  CPT® coding that every physician must understand in order to get paid  for services provided. It is how doctors get paid to remain a viable business of providing health care.  It is called coding.  It  is how physicians get paid.  As much as I love coding, the process difficult and arbitrary, so much so that audits by  Medicare often result in multiple different opinions by self described coding experts. 

How doctors get paid is based on a system of confusion. The process is absolutely insane.  It is the system of codes, which all third party insurance rules (Medicare/Medicaid/private insurance) use to determine the  level of care provided.  This code is used to  determine how much your time/surgery/procedure is worth. How much you get paid. It is, in the end, the most important and life sustaining element for physicians.    Coding determines your revenue and revenue determines your viability.   Coding is the futile attempt to bring rings of value to medical services which are so vastly different and unique for every patient. I will attempt to walk you through an example of the payment system, and how it relates to relative value units (RVUs) and ultimately how doctors get paid.

The number of codes are massive and incorporate all imaginable procedures, encounters, surgeries. Any possible health care interaction has a CPT® code.  Hospitalist medicine is limited in the types of codes we use. So I only have to remember a few.
95% of my billing is based on about 20 CPT® codes.
3 Admit codes 
3 follow up codes.
2 critical care codes
5 consult codes 
7 observation codes
2 Discharge codes 
There are a few others, but these 22 codes determine my very financial existence.  They determine how hospitalists get paid.  Medicare says so. Imagine a surgeon, a primary care doc and a medical subspecialist. Every single interaction has a code. There are codes for codes, modifiers for codes, add on codes, disallowed codes, V codes, M codes. It seems like the list is endless. And you have to get it right every time or you don't get paid. Or you are accused of fraud. It is an impossible feat. The process of taking care of patients has turned into crazy E/M documentation.   It has drastically affected the efficiency for the practice of medicine.

Let me walk you through a 99223, the CPT® code for the highest level admit for inpatient care. This is called the  level three. There are generally accepted guidelines, 1995 and 1997  guidelines used in combination with the Marshfield Clinic audit tool.   Even the guidelines from different years are different and you are allowed to pick and chose from both.  The following is my understanding of what Medicare requires to bill a level three admit, CPT® code 99223. You must have every one of these components or it's considered fraud, over billing or waste if you don't .
1) History of Present Illness (HPI) : This requires 4 elements (character, onset, location, duration, what makes it better or worse, associated signs and symptoms) or the status of three chronic medical conditions.

2) Paste Medical History (PMH): It requires a complete history of medical (medical problems, allergies, medications), family (what does your family suffer from), social (do you smoke or shoot up cocaine?) histories.

3) Review of Systems (ROS): A 12 point review of systems which asks you every possible question in the book, separated by organ system. 
4) Complete Physical Examination (PE): With components of all organ systems.

5) High Complexity Medical Decision Making: This one is great. It is broken down into 3 areas and you must have 2 of 3 components as follows. Pull out your calculator.

5a) Diagnosis. 4 points are required to get to high complexity. Each type of problem is defined by a point value (Self limiting, established stable, established worsening, new problems with no work up planned and new problems with work up planned). You must know how many points each problem is worth. Count the number of problems. Add up the point value for each one and you get your point value for diagnosis. You must have four points to be considered high complexity.
5b) Data. 4 points are required for high complexity. Different data components are worth  different numbers of points. For example, data includes such things as reviewing or ordering lab, reviewing x rays or EKGs yourself, discussing things with other health care providers, reviewing radiology or nuc med studies, and obtaining old records etc. Each different data point documented (remember you have to write all this down too) is given a different point value. You must add up the points to determine your level of complexity. Get four points and you get high complexity.

5c) Risk.  Predefined, sometimes vague (very vague) medical process that are defined as "high risk". Such as the need to closely monitoring drug therapy for signs of toxicity, de-escalating care, progression or side effect of treatment, severe exacerbation with threat to life or limb, changes in neurological status, acute renal failure, cardiovascular imaging with identified risk factors. There are many of categories that are defined as a high risk concept.

Out of 5a, 5b, and 5c, you must meet criteria on two out of three to be considered high complexity for medical decision making.  .
There you have it folks.  This is how doctors get paid.  This is what I have to document every time I admit a patient to the hospital to get paid and not be accused of fraud. This is what the government has decided is necessary for doctors to get paid. This is what I must consider every  time I take care of you to get paid. I find myself wondering if I wrote down that I personally reviewed that EKG. I wonder if  I wrote down that your great great grand mother died of "heart problems". I wonder if I remembered to write down all your pertinent positives on your 12 point review of systems and I wonder if  I documented the lack of positives in all other systems that were reviewed.

Oh yeah. I forgot, I have to do all this while actually taking care of your medical problems and making sure I'm taking care of you based on sound medical principles.  This is how doctors get paid in the twentieth century.

This is coding in a nutshell. A 99223. This is what I think about when I'm admitting you through the emergency room. This is E&M medicine. This is Medicare medicine. This is how your government has decided the practice of medicine should be. For doctors to get paid, I must document what Medicare says I must in order to care for you, the patient. It doesn't matter what I think is important to write in the chart. What matters is what is required to get paid. Like I have said before, the medical chart has become nothing more than a giant invoice for third parties to assert a sense of control.  It is a terribly inefficient and expensive way to practice medicine.

And I might remind you, the exercise above was an example of just one patient on one day. I do this upwards of 15-20 times a day. Every day. Day after day. Year after year. Oh yeah, and the rules are different for inpatient followup codes, discharge codes, critical care codes, and observation/admit same day codes. They all have their different requirements for doctors to get paid. And I have to get it right for every single patient I see with the expectation of 100% accuracy or us doctors will be accused of fraud.  You see, in the eyes of Medicare, you are a 99223. 

You can see much more in my free lectures on evaluation and management and resources for hospitalists.  


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6 Outbursts:

  1. Happy Hospitalist:

    I work in the health information field (tech support for practice management systems) and I believe their MUST be away to somewhat standardize health care. The largest problem is that the people who are experts in process analysis are not medical experts. I don't believe nurses, physicians and other medical staff are trained in the ways of 6 sigma and ITIL (examples of process optimization methodologies). The human body is unlike product or service out there.

    It will take an inter-disciplinary effort to solve this bitch of a problem called the US healthcare system.

  2. "The system is insane." Yeah, you could say that again!

    Great Blog by the way!

    I work in revenue cycle management for a multi-specialty physician practice, so I’m all too familiar with you're plight.

    I think it's also important to point out that these arcane billing structures transcend to commercial payers as well. While all insurance companies adopt basic CMS guidelines, most if not all insurance companies have their own rules as well. Oh, and don't forget about personal injury cases and workers comp. All have different rules depending on what State you practice in.

  3. Does anybody remember the story from the Brigham (?) where docs started using PDA's to better their charge capture?

    Kicker is that they GOT SO GOOD at charge capture that insurance companies readjusted their payments downwards to balance this out.

    Am I crazy in remembering this? I believe it happened in MA.

  4. Interesting blog... How do you feel about the medicare pay cut Dr's might have to face soon? Or the fact that many elderly people cant afford to pay their increasing premiums while the major insurance companies sit back and collect everyone's money?? This is exactly why AARP has set up so that we can all sign a petition to make our voice heard. While your there you can also read updated news, watch videos, and even e-mail your congressman to let him know how you feel. I’m working to help AARP promote better Medicare because this is an important issue that isn't getting enough attention.

  5. The simple way is to just get Statcoder on your palm. This way you don't have to remember the requirements for all the codes. Whenever you aren't sure, just peck out the bullets & it gives you the code. Best $75 I ever spent.

  6. Wow you are the like guru of coding! Ive learned so much from your posting...i wish i had read this before as I realize i have been undercoding for years for fear of getting audited and constantly being intimidated by coding/billing for possible audit.

    is there a link for me to download a clear version of your yellow card and the medical decision making sheet?


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