Billing: Consultation or Referral - Knowing the Difference

October 31, 2007

When asked to a see a patient by another physician, does it really matter if you bill an E&M visit as a consult or a referral? It sure does - and using these terms interchangeably can cost your practice thousands. We help sort out the differences.


Some physicians and coders may use the terms “consult” and “referral” interchangeably. No big deal, right? Wrong. It’s a very big deal potentially worth thousands of dollars. If a practice codes a consult when the physician saw the patient as a transfer of care, the practice could collect more money than it should. Conversely, if a service is submitted as a new patient visit rather than a consult, they could be leaving thousands of dollars on the table.

Let’s delve into how to distinguish between these two types of evaluation and management services.

Suppose a new patient is seen upon request by your medical practice. The physician recommends further testing and possible surgery. The patient pays her copayment and leaves the office. Your physician is about to dictate and asks his coder how to bill the service.

What questions should the coder ask? What questions should the physician ask? What do the guidelines suggest?

The coder needs to ask how the patient came to the office. Was she sent by her primary-care physician? Her specialist? Her neighbor? Did an Internet search pave the way?

The answer to this question could determine whether this is a consultation or a new-patient visit. The guidelines indicate that to bill a consultation, the request for service must be made by a physician, another provider, or another healthcare entity.

To answer the first question, if a neighbor sent the patient to your office or your physicians were found as a result of an Internet search, the visit would not be a consultation. Only when a PCP or specialist recommends the office visit is it a consultation.

CPT Assistant, July 2007 indicates that “there may be circumstances when a consultation is initiated by sources other than a physician, such as a physician assistant, nurse practitioner, doctor of chiropractic, … social worker, lawyer, or insurance company.” This helps to explain who can be considered another provider or healthcare entity. Reporting a consultation would be appropriate if the service was at the request of one of these professionals.

If a patient comes to the practice on his own or a friend recommends the visit, the service would not satisfy the consultation criteria, and therefore a new-patient service - not a consultation - should be billed.

The physician should know the additional documentation requirements for a consultation as opposed to a new-patient visit. The guidelines indicate that the request and reason should be indicated within the patient’s medical record. This is usually done at the requester’s office. Because the consultant doesn’t have control over this part of the process, it is recommended by many that a fax system be in place. The consultant would fill out a form indicating the intent of the visit at the time of scheduling and would fax it to the requesting office for confirmation of the reason and request.

The next piece of documentation that is required over and above that of a new-patient service is the report back to the requesting physician. To bill a consultation, the consulting physician must keep the requesting physician informed of the outcome of the visit.

Therapy, procedures, testing, and the like can be ordered and performed by the consulting physician if the patient agrees, but all of this information must be conveyed back to the requesting physician. The report should be directed to the requesting physician. Carbon copies of notes or letters written to other providers are not the recommended routes of communication when billing and performing consultations.

What happens when a physician is asked to see a patient in the hospital for a consultation? The guidelines don’t really change in this case; however, they are often easier to determine. The request and reason have to be provided in the patient’s medical record. But because the medical record is shared, the consultant has better access to this notation.

The consultant performs the service and then writes a note in the shared record, indicating who requested the service and why. Here, too, the consultant can order additional tests, perform procedures, prescribe medications, etc., during the visit, and it can still be billed as a consultation.

An in-patient consultation should not be billed when the requester assumes that the consulting physician will be taking over the care of the patient. Often this occurs in the emergency department. The ED physician will ask a specialist to see the patient and take over care if admission is warranted. The initial in-patient service code would be the appropriate route to take in this situation (99221-99223).


Often, at the time of a consultation, the specialist may spend a lot of time with the patient. The consulting physician may be offering alternative treatment methods, answering questions, or reviewing test results. When the majority of the visit time is spent on these activities, a consultation can be billed based on time.

The guidelines clearly illustrate the time elements that are customarily allotted for consultations. The outpatient consultations begin with 15 minutes for a Level 1 consultation (99241) and can involve as much as 80 minutes for 99245 if the service is medically necessary. The inpatient consultation times range from 20 minutes (99251) to 110 for the highest service level (99255).

When documenting a consultation based on the time allotment, the physician must still illustrate who requested the consultation and why. Then she should document all of the history, physical, and decision-making done during the visit. But the required elements for billing based on time also include documenting the total time spent with the patient. The note must also clearly state that at least half of that total time was spent in one of the aforementioned activities (question/answer, counseling, results review, etc.).

A summary of that discussion must be produced. This should detail what was discussed, which tests were reviewed, the questions asked, and any other pertinent information obtained during that time. If the documentation includes all of these elements, the service can then be billed at the level based on time, and not by using the history, physical, and medical decision-making elements alone.

Consultations are among the higher-paying evaluation and management (E/M) services. For this reason, offices want to bill them as often as possible. The Office of the Inspector General (OIG) has had consultations in its work plan for several years. Conducting regular audits of your office’s consultation billing (and even the accuracy of your new-patient billing) will help to assure complete compliance with the guidelines.

You need to make certain that all of the guidelines for your practice’s consults are being closely followed and monitored.

The most common mistake practices make is failing to report back to the requesting physician. Physicians must make certain they are closing the documentation loop so that the billing is appropriately substantiated.

A defined protocol should be established in your office to determine when a consultation is appropriate to bill. This should include a verification mechanism for determining the requester’s intent for the visit. Is it a transfer of care (new patient) or a consultation? The letter/report back to the requesting physician must also be strictly adhered to in order to comply with the guidelines. The established protocol should be monitored and then, as mentioned, audited on a regular basis.

Audits can be done internally, or an external auditor can be hired for the task. Whichever method is selected, the results should be tracked and filed, and recommendations should be implemented immediately.

Specialists see many patients in consultation. PCPs may even see a consultation when a surgeon is requesting surgical clearance. The codes, when appropriate for the services provided, pay a higher reimbursement, and thus carry specific guidelines. Hopefully, all the parties in the office are now a little more aware of the important differences between a consultation and a referral.

Suzan Hvizdash, CPC, is the physician educator for the department of surgery at UPMC in Pittsburgh. A former member of the American Academy of Professional Coders’ national advisory board, Hvizdash holds the following credentials: CPC, CPC-EMS, CPC-EDS, and CPC-EMA. She can be reached via editor@physicianspractice.com.

This article originally appeared in the November 2007 issue of Physicians Practice.