MDM-Based vs. Time-Based E&M Coding: Which is Best For Your Practice?

Choosing the right type of documentation for coding E&M encounters isn’t just important for medical practices and medical professionals to right-size their revenue, but also to ensure insurance carriers are being accurately billed, and to gather information regarding treatments, procedures, and patient experiences that could be important for future reference. 

When choosing between Time-based or MDM-based documentation, the method that provides the most practical and financially beneficial option for a medical practice depends on the adequacy of the MDM documentation compared to the length of time spent on the encounter.

Understanding “MDM”

MDM, or “Medical Decision Making”, is the practice of basing the code chosen on what is required to properly manage their condition, and what actions are taken by the medical provider to complete the level of care such as: their specific ailment, conditions, injury, or problem and acuity for the patient. This type of coding isn’t just determined by cumulatively adding up tasks, but through assessing factors such as the number and complexity of diagnoses or treatments required, the amount and complexity of data that has to be collected, and the risk complications, morbidity, or mortality associated with a patient’s treatment or conditions

Ideally, taking all these factors into account amounts to an accurate assessment of the risks for the patient based on the specific procedures and circumstances directly associated with it. This ensures the encounter is coded in accordance with all aspects of what is required to treat them.

MDM Classification

In order to classify the acuity related to the MDM process, there are four levels of classification for patient visits based on the severity and complexity of treatment required: Straightforward, Low, Moderate, and High, each with strict criteria that a patient’s condition must adhere to in order to qualify.

What constitutes a straightforward level is just that, there is only one minor or limited problem the patient needs to address, the complexity of data to be analyzed is minimal, and there is a minimal risk of complications from the required testing or treatment; because of this, Straightfoward is the lowest classification of MDM coding, meaning it results in the lowest level of service and thus revenue per encounter.

A Moderate or High level could mean a patient has one or more chronic illnesses with exacerbation or side effects from treatment, or 2 or more stable chronic illnesses for example. Moderate and High levels also come with a large amount of complex data that needs to be analyzed, such as reviewing and ordering of each unique test their treatment requires, their test results may need to be assessed by multiple parties, and that data may even have to be discussed with external physicians or other appropriate healthcare professionals. 

Moderate and High levels also have risk factors identified with required minor or major surgeries, they may need prescription drug management, and their diagnosis or treatment may be limited by social determinants of health such as economic stability. Therefore, the higher level of care required corresponding to higher revenue per encounter.

Understanding Time-Based Coding

Time-based coding is determined by how much time is spent on treating and managing the condition of a patient; the encounter is then coded based on the range of time associated with each level of service. Although Time-based coding doesn’t factor in the processes undergone within that time, it doesn’t just concern the amount of time a medical practitioner is treating the patient face to face, but also how long practitioners take to prepare for the treatment a patient requires, and the time they spend meeting to discuss a patient’s treatment with other health care professionals. For example, the amount of time taken to prepare to see the patient, order medications, tests, or procedures, consult other healthcare professionals when necessary, and the time taken by Care Coordination. However, much like MDM billing, Time-based coding isn’t without its rules and limitations.

Activities that contribute to the time must be conducted by qualified healthcare professionals on the same day of the patient’s visit. Also, if more than one medical professional spends time on their encounter with a patient, that time can be added up, but notably, any time professionals spend together to discuss the patient or meet with them can only be counted towards the billing once. As a further billing limitation, the time spent on a patient by non-medical professional staff can’t be counted towards time accumulation.

Comparing MDM-Based and Time-Based Coding

One of the major advantages of MDM coding is its emphasis on accuracy; something incredibly important to make sure valuable information like medical procedures, patient diagnoses, and healthcare services are correctly billed and documented. Coding accuracy is invaluable to ensure patients are billed accurately and for the financial viability of any medical practice.

However, while it’s true Time-based coding requires a considerably higher level of descriptive documentation to eliminate potential coding errors, it can lead to higher revenue per patient visit when documented correctly. As previously stated, determining which form of documentation will yield higher profits with more comprehensive patient care depends on the demographics of the practice’s population, the length of a patient’s visit, and the severity or complexity of the treatment required.

When is MDM the Better Option?

When it comes to patients with shorter visits, MDM coding is generally more ideal; longer visits typically yield higher revenues when they are time-based, while shorter visits yield higher revenues when they are MDM-based because the coding isn’t bound by the time the visit took, rather it is determined by what was done and what resources were used during the visit.  

When using an MDM model, there is no incentive to make sure a patient’s care takes up a particular amount of time, meaning medical professionals are incentivized to work more efficiently, ensuring a larger number of patients can hypothetically be treated in a day.

When is Time Coded the Better Option?

Time-based coding can be beneficial to medical professionals with patients that take a longer time to treat, even if their conditions lack the severity of a High-level classification under the standards of MDM documentation, so professionals can bill more accurately for time spent without needing to fulfill the stringent requirements needed to escalate treatment levels.

Conclusion

Document each encounter fully including a start and stop time for that patient encounter.  Code the Time-based first to see the maximum code that can be obtained with this methodology.  If you’ve already achieved the highest level of service there is no need to do anything else, go ahead and bill that level.  Otherwise, you must then code the MDM on the chart to determine if that level of service exceeds the Time-based level of care.  Therefore, there is no one-size-fits-all approach when it comes to coding accurately. In reality, practices can and should alternate between MDM-based and Time-based coding on a patient-by-patient basis; understanding when it’s best to use either can yield the most appropriate level of care for each encounter.