The 411 on Medical Coding

The importance of understanding coding cannot be understated. Knowing how to code well will ensure you get paid appropriately for what you do. It will also help you avoid/survive an audit, and make you more efficient at documenting. Unfortunately, coding is complicated and not intuitive. It is something you need to spend time studying and learning; look for sessions at conferences to help you become familiar.

Evaluation & Management (E & M) codes are used to bill for office visits (we’ll talk about procedures another time). These codes are separated into new patient (99201-99205), established patient (99211-99215), and consults (99241-99245). A new patient is any patient who has not been seen by any physician (not just you) in the same specialty and same practice in the past three years.

For consults, you must have a documented request and report back to the consulting physician. Consults are not covered by all insurance plans (for those you should use new patient instead).

To choose a code within the correct category listed above, you need to consider three elements: the history, physical exam, and medical decision-making. You’ll need to meet the criteria for 2/3 for a given code for an established patient and all 3/3 for a new patient or consult.


To simplify this part of the billing, remember the 4-2-1 rule. Also if you always include a chief complaint, 4 items in your history of present illness, 2 review of systems (with 1 related to skin), and 1 past, family. Or social history, you’ll always meet the criteria for a level 3 new patient (99203). And a level 4 established patient (99214), which are the highest levels normally billed in dermatology. Stick to “4-2-1” for all your patients and you never have to think about the level of your history again.

Physical Examination

This is where it gets more complicated since there are two sets of criteria – the 1995 and 1997 guidelines. For the lower level visits (99202 and 99213), you need to document exam of the skin (which can be limited) and one other system (saying the patient is alert and oriented and in no acute distress would qualify) using the 1995 criteria. For higher level visits (99203 and 99214), you should document 12 bullet points (each body part examined is a bullet point) using the 1997 criteria. The physical exam is often the limiting factor for dermatologists billing the highest levels. Unless you are doing a very thorough examination (including thyroid, lymph nodes and leg edema), you probably won’t be able to bill higher than a 99203 for new patients.

Medical Decision Making

This is often the easiest criteria to meet so don’t ignore it! There is a point system for determining the “severity” and criteria identify the “risk level.” See the tables below. Plug these levels into the third table and whichever is lower will determine which code to use. Eventually this will become second nature and you won’t need to add up points. Remember, you only need 2/3 of these to qualify for any given code for an established patient but all 3/3 for a new patient.

Time Based Coding

In special situations when you spend a lot of time with a patient. But don’t meet criteria for a high level visit, you can bill based on time alone and ignore all the other criteria. You must document that more than half the visit was spent. Directly counseling the patient face-to-face or coordinating care and you must document the length of the visit. (See table.)