Selecting Level of E/M Service Based on Medical Decision Making (MDM)

Selecting an accurate level of Evaluation and Management (E/M) service is challenging due to the number of factors affecting the selection. Primarily, E/M service selection is based on two factors i.e. the level of the MDM as defined for each service and the total time for E/M services performed on the date of the encounter. In this article, we will be focussing on selecting the level of E/M service based on Medical Decision Making (MDM). We referred revised E/M guidelines published by American Medical Association (AMA), you can refer the ‘2023 CPT E/M Descriptors and Guidelines’ guidelines for detailed understanding.

Guidelines for Selecting Level of E/M Service Based on Medical Decision Making (MDM)

Four types of MDM are recognized: straightforward, low, moderate, and high. The concept of the level of MDM does not apply to procedure codes 99211, and 99281. MDM includes establishing diagnoses, assessing the status of a condition, and/or selecting a management option. MDM is defined by three elements. The elements are:

• The number and complexity of the problem(s) that are addressed during the encounter.
• The amount and/or complexity of data to be reviewed and analyzed. These data include medical records, tests, and/or other information that must be obtained, ordered, reviewed, and analyzed for the encounter. This includes information obtained from multiple sources or inter-professional communications that are not reported separately and interpretation of tests that are not reported separately. Ordering a test is included in the category of test result(s) and the review of the test result is part of the encounter and not a subsequent encounter. Ordering a test may include those considered but not selected after shared decision-making. For example, a patient may request diagnostic imaging that is not necessary for their condition and a discussion of the lack of benefit may be required. Alternatively, a test may normally be performed, but due to the risk for a specific patient, it is not ordered. These considerations must be documented. Data are divided into three categories:
  • Tests, documents, orders, or independent historian(s). (Each unique test, order, or document is counted to meet a threshold number.)
  • Independent interpretation of tests (not separately reported).
  • Discussion of management or test interpretation with an external physician or other qualified health care professional or appropriate source (not separately reported).
• The risk of complications and/or morbidity or mortality of patient management. This includes decisions made at the encounter associated with the diagnostic procedure(s) and treatment(s). This includes the possible management options selected and those considered but not selected after shared decision-making with the patient and/or family. For example, a decision about hospitalization includes consideration of alternative levels of care. Examples may include a psychiatric patient with a sufficient degree of support in the outpatient setting or the decision to not hospitalize a patient with advanced dementia with an acute condition that would generally warrant inpatient care, but for whom the goal is palliative treatment.

When the physician or other qualified health care professional is reporting a separate CPT code that includes interpretation and/or reports, the interpretation and/or report is not counted toward the MDM when selecting a level of E/M services. When the physician or other qualified health care professional is reporting a separate service for discussion of management with a physician or another qualified health care professional, the discussion is not counted toward the MDM when selecting a level of E/M services.

The Levels of Medical Decision Making (MDM) table is a guide to assist in selecting the level of MDM for reporting an E/M services code. The table includes the four levels of MDM (i.e., straightforward, low, moderate, high) and the three elements of MDM (i.e., number and complexity of problems addressed at the encounter, amount and/or complexity of data reviewed and analyzed, and risk of complications and/or morbidity or mortality of patient management). To qualify for a particular level of MDM, two of the three elements for that level of MDM must be met or exceeded. Examples in the table may be more or less applicable to specific settings of care. For example, the decision to hospitalize applies to the outpatient or nursing facility encounters, whereas the decision to escalate the hospital level of care (e.g., transfer to ICU) applies to the hospitalized or observation care patient.

Accurate MDM-level selection is not just a coding compliance concern — it is a direct driver of net realized revenue growth for practices managing high volumes of moderate and high-complexity encounters. When MDM is under-documented or incorrectly leveled, the downstream effect is systematic undercoding that erodes Net Collection Ratio and creates invisible revenue leakage across entire payer mixes. MBC's Revenue Integrity Framework applies payer variance detection at the claim level to identify where MDM-based E/M codes are being systematically downgraded by payers — and builds the appeal infrastructure to recover what is contractually owed.

E/M denials rooted in MDM disputes are among the most recoverable — and most consistently ignored — denial categories in outpatient and facility billing. Denial root-cause engineering at the MDM level requires cross-referencing documented complexity against payer-specific LCD criteria and medical necessity thresholds, not just AMA guidelines. MBC's financial performance metrics infrastructure tracks E/M denial patterns by CPT code, payer, and MDM element to surface systemic gaps before they compound into EBITDA drag. This level of technological efficiency in denial analytics is what separates a leading medical billing services partner from a transactional claim-submission vendor.

For physician groups and facility administrators managing $1M to $5M or more per month in collections, MDM miscoding carries compounding risk mitigation implications — from OIG audit exposure to lost Yield EBITDA on high-acuity encounters that were never billed at the appropriate level. A complimentary 90-Day AR Diagnostic from MBC identifies exactly where MDM-level revenue is being left on the table, quantifies the recovery opportunity, and benchmarks your enterprise revenue integrity posture against specialty-specific performance standards. Request your free Revenue Diagnostic to understand how MBC's transparent fee structure and 25+ years of E/M coding expertise translate into measurable net realized revenue growth — without disrupting your existing workflow.

Medical Billers and Coders (MBC) is a leading medical billing company providing complete revenue cycle services. We hope that from the above table might have cleared all your doubts regarding selecting the level of E/M service based on Medical Decision Making (MDM). If you need any assistance in Evaluation and Management (E/M) coding, email us at: info@medicalbillersandcoders.com or call us at: 888-357-3226.