Coding: Consult or Confusion?

May 1, 2006

Expert Bill Dacey explains the rules governing consults.


Despite clear guidelines from both the AMA and CMS defining what constitutes consultation codes, physicians seem to have a difficult time knowing when to use them - or, more to the point, when not to use them.

For several years the inappropriate use of consult codes was on the Office of Inspector General’s Workplan for Physicians watch list. In 2001, Medicare paid out more than $2 billion for these physician services, and double-digit percentages of these were perceived to have been assigned incorrectly.

Indeed, the outpatient and inpatient versions of consultation codes are very close in the description of physician work to the new-patient office visit codes. In fact, the physician work descriptions are identical when it comes to the components of history, exam, and decision-making.

The work components may be the same when it comes to the actual evaluation of the patient, but the payments aren’t the same - and there is a reason for that. Part of the work value of a consult code is the writing of a consult note, or report, which needs to be forwarded to the requesting physician. It is this extra bit of work that accounts for the slightly higher payment amounts associated with the consult codes.

It may also be this element that accounts for some of the misuse of the codes. It may be no accident that providers overuse the consult codes in lieu of the office visit codes, or in the inpatient setting instead of the appropriate inpatient code; they may simply be gravitating toward the higher payment.

Symptoms and myths

Some providers, specialists in particular, don’t have any new-patient codes on their productivity reports at the end of the month - all new visits are coded as consults. This may stem from a belief that as specialists, they provide consultative services and don’t do office visits. This is incorrect.

Some providers believe that when a patient is referred by another physician, the patient is entitled to a consult. Incorrect again - although true consults are technically also referrals, the word “referral” is generally read as “transfer of care.”

Some providers believe that if they write a note back to the referring provider they are entitled to the consult code. I frequently see letters back to the referring physician that begin with “Dear Dr. Jones, thank you for allowing me to participate in the care of Mrs. X,” followed by a description of the encounter elements and plans or treatments. The presence of this type of letter also does not make for a consult. Although it is courteous and professional, it is simply marketing - thanking that referral base, which feeds your specialty practice.

A true consult defined

We’ll start with the definition of a consult from the subsection guidance in the 2006 CPT Manual:

“A consultation is a type of service provided by a physician whose opinion or advice regarding evaluation and/or management of a specific problem is requested by another physician or other appropriate source.”

In this first and most important sentence, the AMA gives us the core of a consult - that your opinion or advice is requested. It doesn’t say it’s a consult when you offer it; it is when you are asked. It also doesn’t say that whenever a patient presents in some relation to an encounter with another provider that it is a consult - it clearly states that the nature of consult is dependent upon whether or not the other provider is seeking opinion or advice. So much for the first two myths noted above.

Let’s go on:

“A physician consultant may initiate diagnostic and/or therapeutic services at the same or subsequent visit.”


Read as: You can assume management of a problem as the result of a consult, and treatment performed or initiated does not invalidate a consult.

“The written or verbal request for a consult may be made by a physician or other appropriate source and documented in the patient’s medical record. The consultant’s opinion and any services that were ordered or performed must also be documented in the patient’s medical record and communicated by written report to the requesting physician or other appropriate source.”

This paragraph has always had a few gaps. Although it says that the request must be documented in the patient’s medical record, it doesn’t actually say in which record - that of the physician requesting the opinion or the one providing it. Common sense tells us that if you are the one providing the consultative service, and the one who would have to defend it, then you would be sure to document in your chart the nature of the visit. After all, you the consultant can’t be responsible for what the requesting physician writes in her chart.

Safety here lies in beginning all true consult notes or reports with, “Mrs. Jones seen in consultation at the request of Dr. X for the valuation of thus and such.” This will establish the nature of the visit at the start. Don’t make the same mistake many physicians make by writing “Patient referred by ...” This approach pretty quickly puts the nature of the visit in question.

Further below, when we look at what CMS says about these types of services, we’ll see that they have explicit instructions on who needs to write what and where.

The next four paragraphs from CPT are new in 2006 and address the fact that the confirmatory consults and follow-up inpatient consults were deleted. These changes should be pretty clear.

“A ‘consultation’ initiated by a patient and/or family, and not requested by a physician, is not reported using the consultation codes but may be reported using the office visit codes, as appropriate.

“If a consultation is mandated, e.g., by a third-party payer, modifier -32 should also be reported.

“Any specifically identifiable procedure (i.e., identified with a specific CPT code) performed on or subsequent to the date of the initial consultation should be reported separately.

“If subsequent to the completion of a consultation, the consultant assumes responsibility for management of a portion or all of the patient’s condition(s), the appropriateEvaluation and Management services code for the site of service should be reported. In the hospital setting, the consulting physician should use the appropriate inpatient hospital consultation code for the initial encounter and then subsequent hospital care codes. In the office setting, the appropriate established patient code should be used.”

That is the latest from the AMA on the subject.

That said, in any given specific billing scenario, you are more likely interested in the definitions and terms outlined by the payer of the services. Let’s see what Medicare has to say.

Medicare consult concerns

In December, CMS addressed consult issues. The following definitions and program requirements appear in the transmittal (No. 788), which took effect Jan. 17. (Italics are from the original transmittal, bolded text is mine and indicates areas in which Medicare clarifies AMA language.)

Test your beliefs about consults against these payer-specific rules and see how they match up:


  • A request for a consultation from an appropriate source and the need for consultation (i.e., the reason for a consultation service) shall be documented by the consultant in the patient’s medical record and included in the requesting physician or qualified NPP’s plan of care in the patient’s medical record.

Translation: The consultant needs to include the reason for the consultation in the medical record. The physician or nonphysician provider (NPP) requesting the consultant should also explain in her version of the patient record.

  • A transfer of care occurs when a physician or qualified NPP requests that another physician or qualified NPP take over the responsibility for managing the patient’s complete care for the condition and does not expect to continue treating or caring for the patient for that condition.

When this transfer is arranged, the requesting physician or qualified NPP is not asking for an opinion or advice to personally treat this patient and is not expecting to continue treating the patient for the condition. The receiving physician or qualified NPP shall document this transfer of the patient’s care, to his/her service, in the patient’s medical record or plan of care. In a transfer of care the receiving physician or qualified NPP would report the appropriate new or established patient visit code according to the place of service and level of service performed and shall not report a consultation service.

Translation: You are acting as a consultant until care is transferred to you. What exactly does “transfer of care” mean? Care has been transferred if you have taken over responsibility for managing the condition for the patient and the referring physician no longer expects to continue treating the patient for the condition.

  • A written request for a consultation from an appropriate source and the need for a consultation must be documented in the patient’s medical record.

The initial request may be a verbal interaction between the requesting physician and the consulting physician; however, the verbal conversation shall be documented in the patient’s medical record, indicating a request for a consultation service was made by the requesting physician or qualified NPP.

  • The reason for the consultation service shall be documented by the consultant (physician or qualified NPP) in the patient’s medical record and included in the requesting physician or qualified NPP’s plan of care. The consultation service request may be written on a physician order form by the requestor in a shared medical record.

  • Carriers shall instruct physicians and qualified NPPs that diagnostic services and treatments may be initiated at the initial consultation service or follow-up visits.

  • Carriers shall instruct physicians and qualified NPPs that a consultation service shall not be performed as a split/shared evaluation and management service.

  • Carriers shall instruct physicians and qualified NPPs that ongoing management following the initial consultation service shall be reported using the subsequent care visit codes for the appropriate place of service and level of service.

  • Carriers shall instruct physicians and qualified NPPs that in a transfer of care situation an appropriate new patient or established patient visit code, according to the place of service and level of service performed, shall be reported.

  • Carriers shall instruct physicians and qualified NPPs that the initial inpatient consultation may be reported only once per physician/qualified NPP per patient per facility (inpatient and NF) admission.

  • Carriers shall instruct physicians and qualified NPPs that in an office or outpatient setting, another consultation may be requested of the same consultant physician/qualified NPP if the consultant has not been providing ongoing management of the patient for this condition after his/her initial consultation.

  • Carriers shall instruct physicians and qualified NPPs that a second-opinion evaluation visit, to satisfy a requirement for a third-party payer, is not a covered service in
    Medicare.

  • Carriers shall instruct physicians and qualified NPPs that the CPT modifier -32 (Mandated Services) is not recognized by Medicare as a payment modifier.

  • Carriers shall instruct physicians and qualified NPPs that payment shall be made for a consultation if a physician or qualified NPP in a group practice requests a consultation from another physician or qualified NPP in the same group practice when the consulting physician or qualified NPP has expertise in a specific medical area beyond the requesting professional’s knowledge.

  • Carriers shall instruct physicians and qualified NPPs that a preoperative consultation at the request of a surgeon is payable if the service is medically necessary and not routine screening.

  • Carriers shall instruct physicians and qualified NPPs that following a preoperative consultation, if the same physician or qualified NPP assumes responsibility for management of all or part of the patient’s care postoperatively, the appropriate subsequent inpatient hospital care codes, subsequent NF codes or established office/clinic codes shall be used and shall not report the consultation codes.


Recognize that these instructions to carriers may not always be implemented as you read them. Recently we have seen CMS suggest that discretion is given to the various carriers in their “interpretation” of program memoranda. But the text above is the literal law of the land.

Note some of the bolded text that challenges long-held views about repeat consults by the same physician, or consults within a group or within the same specialty.

So, do your consult beliefs stack up against the rules? Or does confusion still reign?

Bill Dacey is principal in The Dacey Group, a consulting firm dedicated to coding, billing, documentation, and compliance concerns. Dacey is a PMCC-certified instructor and has been active in physician training for more than 10 years. He can be reached at billdacey@msn.com or via editor@physicianspractice.com.

This article originally appeared in the May 2006 issue of Physicians Practice.