Most Practices Left Money on the Table the Day the E/M Rules Changed
When the AMA and CMS rewrote the office and outpatient evaluation and management guidelines effective January 1, 2021, the stated goal was to cut documentation burden. Physicians would no longer need to count bullet points in a review of systems or tally organ systems in a physical exam just to justify a level-4 or level-5 visit. Medical decision making and total time became the determining factors. The change was real, meaningful, and broadly welcomed.
What happened next in a large number of practices was not what policymakers intended. Coding patterns did not shift upward to reflect the clinical complexity that was now codeable. They stayed where they were. In many cases they drifted lower, because templates built for the old rules kept generating documentation that looked like a level-3 visit even when the physician was managing genuinely complex problems. Undercoding under the new framework is not rare or occasional. It is systematic, and it is costing practices and hospital outpatient departments significant reimbursement every single month.
What the Guideline Changes Actually Did
The 2021 Office and Outpatient Revision
Before 2021, level selection for office and outpatient E/M codes (99202 through 99215) required meeting criteria across three components: history, examination, and medical decision making. The 1995 and 1997 documentation guidelines specified exactly which elements counted and how many you needed. A physician documenting a problem-focused history and a detailed exam might still land at a lower level even if the clinical thinking involved was genuinely complex.
The 2021 revision eliminated history and physical exam as components of level selection entirely. A visit is now coded either to the level supported by MDM or to the level supported by total time on the date of service. You choose whichever method produces the appropriate level for the care rendered. History and exam are still clinically necessary and should still be documented, but they do not drive the code.
The 2023 Extension to Other E/M Categories
Many revenue cycle teams absorbed the office and outpatient changes and assumed that was the full scope of the revision. It was not. Beginning January 1, 2023, the AMA extended the restructured MDM and time-based frameworks to hospital inpatient and observation care (99221 through 99236, along with the consolidated 99234 through 99236 observation or inpatient codes), emergency department visits (99281 through 99285), nursing facility services, home and residence services, and several other E/M categories. The same logic applies: MDM drives level selection, or total time can be used where the category permits. Practices and hospitals that adapted only partially to 2021 now face a second layer of uncaptured revenue in 2023 and beyond.
For a deeper look at how these changes intersect with facility and professional fee coding in complex settings, the post on ED coding accuracy covers the emergency department category in detail.
How MDM Level Is Actually Determined
Medical decision making is assessed across three elements: the number and complexity of problems addressed, the amount and complexity of data reviewed and ordered, and the risk of complications and morbidity. To reach a given MDM level, a visit must meet or exceed requirements in at least two of the three elements.
Problems Addressed
This element is where practices most commonly undercount. "Problems addressed" means problems the physician actually managed or considered at that visit, not merely problems listed in the medical record. A patient presenting for a follow-up on hypertension who also has their type 2 diabetes reviewed, a new complaint evaluated, and a prescription medication decision made is not a straightforward single-problem visit. The AMA's current definitions recognize that managing two or more chronic conditions with exacerbation, or an undiagnosed new problem with uncertain prognosis, can support high-complexity MDM on the problems element alone. Physicians who mentally classify such visits as "just a follow-up" and code 99213 are systematically leaving higher-supported visits uncoded.
Data Reviewed and Ordered
The data element has three categories: tests and documents reviewed or ordered, independent interpretation of tests, and discussion with an external provider or appropriate source. Each category has specific point values, and reaching certain thresholds contributes to moderate or high complexity. Practices that do not document the independent interpretation of an EKG or the conversation with a specialist are forfeiting credit for work the physician is already doing.
Risk of Complications
The risk element includes prescription drug management as a standalone path to moderate complexity. A visit where the physician prescribes, continues, or discontinues a prescription medication meets the moderate risk threshold, regardless of how simple the rest of the visit appears. This single fact should have shifted a meaningful share of level-3 visits to level-4 for any practice managing chronic disease patients on prescription regimens. In practices still coding from old habits, it often has not.
Total-Time Coding and What It Actually Requires
The time-based alternative to MDM is genuinely useful for visits where the physician spends extended time coordinating care, counseling, or reviewing records, even if the clinical complexity does not independently push to a high MDM level. Under the current rules, total time includes all time on the date of the encounter: reviewing results before the visit, documenting the note, ordering tests, communicating with the patient or family, and coordinating care with other providers. Face-to-face time is no longer the only time that counts.
The documentation requirement is straightforward but specific. The note must state the total time spent and must reflect the activities that justify it. A note that simply says "45 minutes" without any description of how that time was spent is not adequate. Where total-time coding is appropriate and properly documented, it frequently supports a level-4 or level-5 code for visits that would have been coded at a lower level under a misapplied MDM analysis.
Practices interested in systematically improving documentation to capture time correctly should consider CDI program support, which addresses documentation gaps prospectively rather than after the claim is filed.
Why Fear and Old Templates Drive Undercoding
Audit anxiety is real. Physicians who trained under the old bullet-point rules internalized the idea that upcoding is a compliance risk and that coding conservatively is always the safe choice. That instinct made sense under the 1995 and 1997 guidelines, where the line between a defensible level-4 and a defensible level-5 was genuinely thin and heavily scrutinized by RAC auditors and UPIC investigators.
Under the current MDM framework, the line is clearer, not murkier. The criteria are published, the thresholds are defined, and a properly documented visit that meets two of three MDM elements at a given level is a correctly coded visit. Coding it lower is not conservative. It is inaccurate in the other direction, and it is costing the practice real revenue.
The template problem compounds this. Many electronic health record systems still present documentation prompts organized around the old history-and-exam structure. Physicians fill in the familiar fields and generate notes that document a physical examination nobody needed for coding purposes, while failing to document the specific MDM elements that would now justify a higher level. The note looks thorough. The code is still wrong.
The post on undercoding and revenue integrity covers the financial and compliance dimensions of this problem across service lines, including how payers treat systematic undercoding in audit reviews.
How to Check Whether Your E/M Distribution Reflects the Care Delivered
The most direct diagnostic tool is a comparison of your practice's E/M distribution against national or specialty-specific benchmarks. If your level-3 visit codes (99213 for established patients, 99203 for new) account for a disproportionate share of your outpatient E/M mix and your payer mix includes a significant share of Medicare chronic disease patients, that imbalance is a signal worth investigating.
A more granular review pulls a sample of visits coded at 99213 and asks whether those visits involved prescription drug management, more than one chronic condition, or independent test interpretation. If a meaningful percentage of those visits meet the criteria for 99214 under the current MDM rules, the practice has a measurable undercoding gap. That gap compounds across thousands of visits per year.
For inpatient and observation visits coded since January 2023, the same exercise applies to the 99232 versus 99233 distinction and to the initial visit codes in the 99221 through 99223 range. MDM now governs those codes the same way it governs office visits, and the same patterns of undercoding appear when coding habits have not been updated.
When an Audit or Outsourced Coding Review Recovers the Gap
A structured coding quality review does two things simultaneously. It identifies undercoded visits where a higher level was clearly supportable under current guidelines, and it identifies overcoded visits where the documentation does not meet the threshold claimed. Both findings matter for compliance. But in practices that have been coding to old habits since 2021, the undercoding findings typically represent substantially more revenue than the overcoding findings represent risk.
Quantifying that gap requires reviewing a statistically valid sample of claims, mapping each visit to the correct MDM level under current rules, and calculating the reimbursement difference. For a practice seeing several thousand established patients per year, a one-level shift on even ten to fifteen percent of visits produces a material annual revenue recovery. For a hospital outpatient department or a multi-specialty group, the figures scale quickly.
Practices and billing companies that want to know their specific number before committing to a full program can start with the free Coding Outsourcing ROI Calculator to estimate the potential revenue impact based on their visit volume and payer mix.
Ongoing outsourced physician coding (ProFee) ensures that every visit is coded to the level the documentation actually supports under the rules currently in effect, not the rules that governed coding five years ago. Coders working under a structured quality program are not defaulting to the level that feels safe. They are applying the MDM criteria as written and documenting the reasoning.
For organizations that want to validate their internal coding team's accuracy before making any structural changes, a coding quality audit provides a clear baseline. It shows exactly where current coding patterns diverge from correct application of the guidelines and what that divergence costs per year in net revenue.
The Revenue Is There. The Question Is Whether You Are Capturing It.
The E/M guideline changes were designed to align coding with the complexity of actual clinical work. For practices that have updated their coding approach, the new rules deliver on that promise. For practices still working from 2019 habits and 2015 templates, the rules have changed but the revenue has not followed.
The gap between what is being coded and what is supportable under current MDM criteria is measurable, recoverable, and ongoing. Every month of delay is another month of reimbursement that will not be recaptured.
Contact MedCodex Health today to schedule a coding quality audit and find out exactly what your current E/M coding patterns are costing you.