Medical decision making: What is it, why is it important and what steps are involved?

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Medical decision making (MDM) represents the provider’s cognitive work when seeing a patient and is the most important of the three components required to level an E/M service. 

Some payers look mainly at MDM when determining medical necessity, which is the overarching criterion for payment. This is because the risk portion of MDM (risk of complications and/or morbidity or mortality) is closely tied to medical necessity. Some payers even require MDM as one of two factors when leveling services for subsequent or established patients. Furthermore, the Centers for Medicare & Medicaid Services (CMS) is moving toward requiring only MDM as the sole leveling factor for outpatient visits. Such a move could set the standard with other payers. Given its importance, MDM deserves a thorough review.



The MDM section of the encounter contains:

1. Diagnoses and treatment options
2. Test results and other data reviewed
3. The patient’s risk of complications and/or morbidity or mortality.

These define the complexity of care required. When scoring the MDM areas, the area documented with the lowest score can be dropped, and the remaining two can support the level of service.

Number of diagnoses or treatment options

Only conditions that are reviewed, assessed or treated are countable under diagnoses. Each of the diagnoses must be categorized as either:

1. Self-limited problem
2. Established problem to the provider and then further classified as
   1. improving
   2. stable
   3. worsening, inadequately controlled or failing to change as expected
3. New problem to the provider.

Those exact terms are not required in the documentation, but the concepts must be clear. New problems are defined in the guidelines as a presenting problem without an established diagnosis. They are then categorized as either with additional workup or without additional workup. Additional workup examples are lab or radiology services or a request for a consult. The number of diagnosis or management options are point-based (see scoring in Table 1) and categorized as:

• Minimal (1 point)
• Limited (2 points)
• Multiple (3 points)
• Extensive (4 points).

Data and complexity

This section gives the provider points for work performed.

When a provider documents ordering or reviewing tests (lab, radiology or medicine), only one point per category is assigned. Review of tests can be noted by initialing and dating the results.

A point is also assigned when a provider documents discussion of test results with the provider who performed the test. A summary of the discussion should be included. 

A point is assigned when a provider documents deciding to order old records or obtain history from someone other than the patient. This does not pertain to parents providing history for a pediatric patient, as this is considered customary. 

Two points are assigned if the provider reviews and summarizes the old records, obtains the history from someone other than the patient or if the provider discusses the case with another healthcare provider. The documentation must reflect the information gained. “Another healthcare provider” is not defined. Again, this does not pertain to parents providing history for a pediatric patient, as this is considered customary.

Two points are assigned if the provider does not simply review test results but also visualizes the image, tracing or specimen. These points cannot be assigned if the provider is billing for the test, because this would amount to being paid twice. Data amount and complexity is also point-based and categorized as:

• Minimal or none (1 point)
• Limited (2 points)
• Multiple (3 points)
• Extensive (4 points).

Points are awarded as shown below in Table 2 (with the maximum award in each category as shown):

Risk

This component of MDM evaluates the overall complexity of care and patient risk. Three categories are represented: presenting problem, diagnostic procedure(s) ordered and management options.

Scoring each of the three categories is unnecessary. Instead, an element from the table that best describes the most complex level of risk can be used. It is most efficient to begin with the column on the right.

Risk of complications and/or morbidity or mortality (see Table 3) is categorized as minimal, low, moderate or high.

Putting it all together 

So, finally, what’s the level of MDM? With the preceding instructions, use Table 4 to choose a level from each of the first three columns and drop the lowest of the three. The lower of the remaining two is the MDM level.



A thorough understanding of MDM will bolster the medical necessity of services provided, assist in proper leveling of the service and appropriate reimbursement, and will also mitigate risk in the event of an audit. Creating policies that clarify how to assess MDM will decrease confusion for all who play a role in the medical record documentation process.

Recommendations for incorporating MDM into practice flow

• Create a policy defining additional workup. Adding CPT codes to the definition will add clarity.
• Create a policy defining new problems, especially in a multispecialty practice.
• Determine if carriers require MDM as one of two factors when leveling services for subsequent visits or established patients.
• Create a policy in accordance with the determination.
• Define “another healthcare provider.” Create a policy in accordance with the definition, as well as the rationale.
• Create a policy stating that discussions with other healthcare providers or those who provide patient history must be summarized in the documentation.
• Create a policy stating that the provider must initial and date test results.