E/M Benchmarking: Strategies to Minimize Your Audit Risk

Understand your use of CPT® codes prone to audit review.

By Stacy Harper, JD, MHSA, CPC

In the current regulatory environment, physicians are searching for ways to minimize audit exposure. Medicare administrative contractors (MACs) frequently review high-level evaluation and management (E/M) services. Review may be based on a random sample, or targeted based on provider usage. In either case, providers with high targeted code use are more likely to be audited.

Certified Inpatient Coder CIC

The 2012 Office of Inspector General (OIG) Work Plan also includes scrutiny of providers with high cumulative Medicare Part B payments, trends in coding of E/M services, and potentially inappropriate E/M payments (see HHS OIG Work Plan FY 2012, Part I: Medicare Part A and Part B, Other Providers and Suppliers).

All Medicare contractors participate in pre- and post-payment review of E/M documentation. Some publish targeted service areas. For example, WPS® Medicare currently plans pre-payment reviews of 99223, 99203, 99233, 99232, and 99215. Palmetto GBA® has plans for pre-payment review of 99214 and Trailblazer® reports it has edits in place for all E/M service codes.

To minimize the risk of an audit, providers must be aware of and understand their utilization of CPT® codes prone to audit review. Some payers are assisting with this awareness by notifying providers with high usage of targeted E/M codes. Providers should not assume, however, that their use of each level of service is in line with usage benchmarks for their specialty just because they have not received such letters.

E/M Coding Benchmarks

The first step in determining a provider’s audit risk is to compare his or her utilization of E/M codes against other physicians’ in his or her specialty. The Centers for Medicare & Medicaid Services (CMS) publishes Medicare Part B utilization data each year. The most recent data available is based on claims paid in 2010, which covers the use of all E/M codes by provider specialty. Providers can calculate benchmarks, or bell curves, for E/M service usage in their specialty by comparing the number of allowed services for each CPT® code as a percent of the total allowed services for a given E/M subcategory billed by providers in the same specialty.

Usage percentages for the six highest volume Medicare specialties for new patient office visits, established office visits, inpatient admissions, and subsequent hospital visits, based on 2010 utilization data, are shown in Graphs A-D on the next page. Because the available data is for Medicare claims, it will be less accurate for specialties with low Medicare volumes. More accurate data may be available from professional specialty organizations for these providers.

Graph A


Graph B


Graph C


Graph D


When the benchmark or bell curve for a specialty has been determined, a physician’s claims for E/M services can be compared to identify deviations from benchmarks.

Service Volume

In addition to the distribution of the types of services a physician is billing, the overall volume of services may affect his or her risk of an audit. Providers can compare their total annual revenue to standards for their specialty. The Medical Group Management Association (MGMA) and other professional organizations gather physician revenue data and publish reports showing revenue by specialty. These reports show revenue for the 25th, 50th, 75th, and 90th percentiles. Providers with revenue in the higher percentiles are more prone to auditing.

Analysis of Your Physicians

Although usage may be outside of revenue and level-of-service averages for a specialty, services may still be appropriately coded. Deviations in utilization may be based on variations in patient mix, sub-specialization, marketed service areas, or increased productivity; however, high usage can also be related to improper coding, inflated documentation, and false claims.

For example, with the implementation of electronic health records (EHRs), physicians are now able to easily document more information for each visit. Electronic note configuration settings may cause the system to pull information into a note that is not relevant to the presenting problems or the provider’s treatment decision.

This shift in physician documentation patterns frequently correlates with a shift in the physician’s billing practices. When reviewing high-level E/M services, it is important to consider more than just the quantity of the documentation. Per the Medicare Claims Processing Manual, pub. 100-04, chapter 12, section 30.6, “Medical necessity of a service is the overarching criterion for payment in addition to the individual requirements of a CPT® code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted. The volume of documentation should not be the primary influence upon which a specific level of service is billed.”

To ensure billing and coding compliance you must understand the accuracy of physician coding. An effective auditing program is central to every corporate compliance plan (see OIG Compliance Program for Individual and Small Group Physician Practices, 65 FR 59434). You can minimize risk and improve compliance by aligning your auditing program to reflect the auditing programs of major payers. For E/M services, this means focusing your reviews on any high-level codes where the physician’s usage is above the “bell curve.”

Resolution and Compliance Improvement

Although the goal of any audit is to confirm compliance and justify any deviation from expected use, audits also frequently identify billing and coding errors. Any incorrectly coded services resulting in an overpayment to the physician must be corrected, and payment refunded to Medicare within 60 days of identification (see OIG Compliance Program for Individual and Small Group Physician Practices, 65 FR 59434). If a high error rate is discovered, a pattern of inaccurate coding may exist and additional auditing may be warranted.

In addition to correcting identified errors, auditing can be used as a foundation to educate providers and improve coding accuracy. Even when a physician’s coding is accurate, if high usage places him or her at increased risk for auditing, documentation improvement can be critical. When EHRs are used, review template settings to align the quantity of documentation with the nature of the presenting problem to improve coding accuracy and realign the provider’s usage with benchmarks.

Auditing of records by third-party payers is a reality in the current health care system. Medicare and other payers track where your providers fall in the spectrum of service use. Knowing your provider’s utilization, understanding the related level of risk, and identifying problem areas in his or her E/M coding is your best strategy to minimize the impact of external audits to your practice.


Stacy Harper, JD, MHSA, CPC, is a partner with Forbes Law Group, LLC where her practice focuses on regulatory compliance and health care reimbursement. She is licensed to practice law in Kansas and Missouri. Stacy has over 10 years experience working in health care, including former employment as a certified coder, physician practice manager, and compliance officer.


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