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E/M Codes: Translating Quality Into Payment

e/m codes

E/M (Evaluation and Management) codes describe and quantify the interaction between the patient and the physician. These numeric codes are entered onto forms that are submitted to Medicare and insurance companies, who process the information and reimburse or compensate the physician for his/her services. E/M codes are a common language used between providers and payers and are easily translatable because of their numeric features. E/M codes identify and quantify a certain standard or quality of care that must be met before payments are made. Thus, EM codes translate quality into payment.

Evolutionary Beginnings

The Affordable Care Act of 2010 got the ball rolling in terms of changes to the way healthcare delivery was documented, billed and paid for. Federal level interventions were designed to decrease the cost of care, improve the quality of care and reduce the number of avoidable re-admissions within 30 days of discharge. CMS, aka Medicare, as well as third-party payers decided they would no longer passively pay for generic quantities of care. As a result, those who pay for healthcare became shoppers for the best quality and lowest cost of healthcare.

CPT Codes

In order to translate healthcare services into payments, the American Medical Association (AMA) developed five-digit CPT (Current Procedural Terminology) codes; these are the numbers that are entered onto forms that are submitted to payers.

E/M Codes: The Physician-Patient interaction

E/M codes exist within the set of Category 1 CPT codes that describe and quantify procedures and other medical practices between the patient and the physician. Other sections of Category 1 CPT codes include anesthesia services, surgery, radiology, pathology/ labs, and other services and procedures.

The Key Components

Although there are several components to a doctor’s visit, there are three key components of E/M services; history, examination, and medical decision-making. These three components must be addressed in order to satisfy the requirements for documentation. One exception to this is when time is the controlling factor, such as during counseling.


E/M services are divided into categories and within the categories, services are further classified into levels:

A problem-focused history is at the lowest level (Level 1) of the E/M service and is the least descriptive. For example, the requirements for a problem-focused history are the assessment of a chief complaint (CC) and a brief history of the present illness (HPI).

An expanded problem focused history moves one level up in complexity. This history requires one ROS (review of systems) in addition to the requirements of the problem-focused history.

Moving up another level in complexity is the detailed history. The greater the complexity, the more the physician can bill for his/her services. The requirements of a Level 2 history will be added to in addition to one element of PFSH (past family social history).

This highest level of history taking expands upon the previous levels’ requirements.

An extra E/M code is provided for when medical decision-making is high and the expectation is that an exam will require about 60 minutes.


There are rules and requirements for performing and documenting a physical exam. The CMS provides the 1997 Documentation Guidelines for Evaluation and Management Services. There are four levels of physical exams:

A problem-focused exam must address between 1 and 5 factors from the 1997 Guidelines, detailed within bulleted lists.

An EPF exam adds more bullets from the Guidelines to be addressed.

A detailed physical exam requires elements from the previous level with additional elements assessed.

A comprehensive physical exam will require the most detail.

Medical Decision-Making

Medical decision-making uses four levels of complexity to describe the quality of the complexity, the number of categories of data reviewed, called data points, and assigns a risk level to each consideration. Data points indicate the amount and nature of the data reviewed, including medical records review and consultation with other physicians.

data points
risk level
Straightforward Complexity 1 Data Point Minimal Risk
Low complexity 2 Data Points Low Risk
Moderate complexity 3 Data Points Moderate Risk
High complexity 4 Data Points High Risk

E/M Codes: Translating Quality Into Payment

The AMA developed CPT codes in response to federal requirements to improve the quality of care and decrease the cost of care. E/M codes are a category within the CPT code set that describe and value the services that physicians deliver to their patients. These codes are entered onto forms that are submitted to CMS and other payers, who then process the forms and reimburse the physician. So to conclude, E/M codes are a digital language that translates the quality of healthcare into payments to healthcare providers.

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To keep the edge on your offices fiscal health, check out our article on WHY THE -25 MODIFIER IS SO IMPORTANT TO MEDICAL CODING.

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