E/M Medical Decision Making: How to Apply the “Two of Three” Rule

Evaluation and Management (E/M) coding is the bread of butter service of most physicians and non-physician practitioners who do not perform high volumes of procedures. And even for proceduralists, E/M coding plays a big role in their revenue cycle. 

Understanding how to select the level of E/M code is essential to compliant coding and billing. For most categories of E/M codes, the level can be selected based on time or the level of medical decision making (MDM). This article focuses on using MDM to select the appropriate level of service. 

The individual E/M code descriptor will specify the overall level of MDM required to select that particular code. For example, the established office or other outpatient visit codes require the following overall MDM level: 

 Selecting the overall MDM requires the examination of three subcomponents and the visit must meet or exceed two of the three subcomponents in order to qualify for the overall MDM. 

The three MDM subcomponents are: 

1. The number and complexity of problem(s) that are addressed during the encounter. 
2. The amount and/or complexity of data to be reviewed and analyzed. 
3. The risk of complications and/or morbidity or mortality of patient management. 

Mistakes are often made when an individual who is selecting the E/M code selects the overall MDM level based on only one of the three subcomponents instead of the required two of three subcomponents. 

For example, documentation of prescription drug management qualifies as moderate for the third subcomponent “risk of complications and/or morbidity or mortality of patient management.” But if subcomponent 1 or 2 do not also meet or exceed the moderate level, then the overall MDM level of ‘moderate’ is not met. Remember, the overall MDM is determined by at least 2 of the 3 subcomponents meeting that level. 

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