A study examines the differences in reimbursement for medical decision-making (MDM) billing and time-based billing.
Which billing model leads to more revenue for physicians? That depends on length of patient visit, according to a study published in JAMA Open Network.
The findings revealed time-based billing was associated with higher reimbursement for longer evaluation and management (E/M) visits, whereas MDM billing was associated with higher reimbursement for shorter visits.
To compare the billing models, researchers used 2018 National Ambulatory Medical Care Survey summary data, 2019 billing data for outpatient E/M codes, and 2021 reimbursement rates from CMS.
MDM billing is used under a fee-for-service model, which remains the most common among U.S. physicians and reimburses providers for E/M services based on the number and complexity of problems addressed in a patient visit. This does not include medical record review, documentation, and coordination of care, meaning physicians are left with unreimbursed hours for after-hours work.
Time-based billing, on the other hand, reimburses physicians based on the length of visit, which previously only accounted for time spent face-to-face with patients.
However, changes made to time-based billing guidelines in 2021 now allow physicians to also be reimbursed for time spent on medical record review, documentation, and coordination of care on the day of the visit.
Results of the study showed that yearly E/M revenue was dependent the length of patients visits for MDM billing. The shortest visits, spanning 20 minutes with new patients and 10 minutes with return patients, led to the highest E/M revenue of $846,273.
As visits increased to 30 minutes for new patients/15 minutes for return patients and 40 minutes for new patients/20 minutes for return patients, yearly E/M revenue decreased to $564,188 and $423,137, respectively. The longest visits, spanning 90 minutes for new patients and 45 minutes for return patients, created the least revenue at $188,065.
With time-based billing, revenue remained mostly similar across visit lengths, with $400,432 generated for 30 minutes with new patients/15 minutes for return patients and $458,718 for 40 minutes with new patients/20 minutes with return patients.
The highest revenue was associated with the shortest visit, $567,649 for 20 minutes with new patients/10 minutes with return patients, while the lowest revenue was generated for the longest visit, $385,614 for 50 minutes with new patients/25 minutes with return patients.
Though the findings reveal the advantages of time-based billing for longer visits, the researchers note that MDM billing still leads to the most revenue when visits are shorter, which incentivizes physicians with greater volume.
Where time-based billing really shines is in its capability of freeing physicians up.
"Previous studies have shown that physicians with time constraints are less likely to complete preventive medicine tasks. Therefore, the flexibility in patient scheduling afforded by time-based billing could help physicians better address preventive medicine," the researchers stated.
"A decrease in patients per hour could also be used to help physicians complete non–face-to-face tasks, such as documentation, that traditionally have been pushed to after hours, potentially contributing to decreased physician burnout."
Jay Asser is the contributing editor for strategy at HealthLeaders.