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Unfortunately, many EDs unknowingly undermine their ability to capture all the revenue they earn by employing inaccurate coding practices. Depending on the severity of the problem, faulty coding can add up to millions of dollars in lost revenue for an ED and can pose undue compliance risks.

The Complexity Challenge

Proper ED coding is vital for several reasons.

  • Compliance with Centers for Medicare and Medicaid Services (CMS) regulations
  • Capture of all appropriate ED revenues
  • Accounting for all ED resource utilization (costs)But the coding process in the ED is unique and can be highly complicated.

As outpatient departments, EDs are subject to the rules and regulations established by the Outpatient Prospective Payment System (OPPS), which is overseen and administered by CMS. EDs are instructed to use the same codes employed by emergency physicians to bill the technical component of the service. Listed in the CPT Manual under “Emergency Department Services,” evaluation and management (E/M) level codes 99281, 99282, 99283, 99284 and 99285 reflect higher acuity as the numbers ascend.

Coders are given specific rules to follow when choosing E/M levels for physician services, but CMS has not defined specific criteria for EDs to follow in determining an E/M level. Instead, CMS provides general guidelines for EDs to use in developing their own criteria (sometimes called facility criteria) to guide coders in choosing an E/M level of service for billing. Although some EDs adopt criteria published by third-party organizations, a large percentage of hospitals task clinical staff with developing the facility criteria internally without offering formal training in the rules and regulations about coding and with little guidance on how to create and test optimal criteria that captures and reflects resources.

Consequently, many EDs deploy coding criteria that have little correlation to actual resources used to treat patients. In some cases, the facility criteria are designed in a way that results in high code selection levels for patients who require few resources or low code selection levels for patients who require many resources, both of which may cause the government to question a hospital’s method for assigning codes. Most frequently, a hospital’s facility criteria design results in the selection of lower E/M levels for very ill, high-intensity patients who require extraordinary hospital resources.

Poorly designed facility criteria typically cause several problems for a hospital, such as:

  • Lost revenue
  • A inaccurate perception of the ED’s patient acuity profile as a result of underreporting actual resources consumed—reflecting a misleading “moderate” acuity within the department given the predominance of moderate to low E/M codes billed (i.e., 99282s and 99283s)
  • Compliance issues when the facility criteria are not clearly written or are misunderstood by staff responsible for assigning codes

Accurate Procedure Coding

Since the inception of OPPS, in addition to an E/M level, EDs are required to use CPT codes to bill for procedures performed during a patient’s visit. An ED “charge-master” may contain as many as 300 to 400 procedure codes that represent services performed during an encounter.

Hospitals often rely on clinical or non-clinical staff to choose a charge or procedure code for billing. Individuals who are not properly trained may inadvertently choose incorrect codes or miss coding a procedure altogether. In addition, a charge-master may contain outdated codes or incorrectly “crosswalk,” resulting in an improperly billed code or charge.

Incorrectly billed codes result in over- or under-payment to a hospital, which may not be discovered until a governmental or payer audit. In these situations, at best the hospital loses revenue, and at worst the hospital undergoes an audit that results in compliance issues with possible penalties and fines.

Pinpointing the Problem

EDs that are noticing lost charges and flagging revenue will often focus efforts on improving efficiency and /or building strong patient volumes. They realize that they have a problem, but they don’t go the extra step of investigating their coding practices to discover whether the cause is faulty coding criteria, choosing the wrong procedure codes, or omitting procedure codes.

To identify the extent of a problem with facility-level coding, the ED should conduct a review of the department’s E/M level distribution. This requires retrospectively tracking the number of times each E/M level was billed per month for the prior year, then calculating an average for the year. Similarly, the ED should analyze its procedure coding practices to identify any chronic problems.

Solution: Implement Proven Coding Practices

To eliminate the issues of lost revenue and compliance risk associated with incorrect coding practices, EDs should adopt proven coding criteria and methods. The benefits of this approach include:

  • No staff time spent on redesigning coding criteria
  • Increased revenue
  • Proper capture of all expended resources
  • Ensured coding compliance


This has been an abbreviated version of the white paper. For the full white paper on coding challenges and the proven coding practices to solve them, click download below.