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Billing and Collections: Rules to Code By


With thousands of complex coding rules and a busy practice to run, some billing mistakes are inevitable. And every mistake costs you money. What to do? With our help, learn how to avoid the most common coding blunders, and get paid on time (almost) every time.

Debbie Alverson’s team bills for 54 providers. That’s about 575 claims a day, says the COO of Cornerstone Medical Management. With all that experience, you’d think they’d have coding down cold.

But Alverson says even they get overwhelmed. “Coding in today’s world is very complex, and the coding rules are very complex, and it’s very overwhelming to keep up with all the changes. When you are keying all these things, and the physicians are rushing around, and patients are waiting … you are going to make mistakes.”

Trouble is, every mistake means lost or delayed revenue. Every bounced claim or denial means even more work for your staff, work that they sometimes never get around to doing.

The solution? Send out claims that get paid the first time, every time.

How is that possible? Well, at the very least, correct common mistakes in E&M coding, using modifiers, and coordinate CPT and ICD-9 codes - the hot spots for errors in most practices.

Here’s your guide.

Better E&M coding

E&M visits account for more than 50 percent of revenue in most primary-care practices. And Medicare reimbursements for E&M visits across specialties added up to around $30 billion in recent years - more than 1 percent of the entire federal budget. So you better believe Medicare carriers are paying attention to how you are using these codes.

But most physicians are rather uncomfortable with them. “Physicians don’t clearly understand the requirements for each level of service, so they can end up upcoding and undercoding,” says La Verne Jones, director of evaluation and management services for The Coding Network. Jones performs chart audits for physician practices and regularly sees upcoding for level four and five visits.

Here’s a quickie primer:

  • Level four visits require a moderate level of medical decision-making.

  • Level five visits require a high level of medical decision-making (see chart below for an extended explanation).

  • Both level four and level five visits require a comprehensive history. That means including:

  • A history of the chief complaint;

  • An extended history of the present illness;

  • A review of relevant systems plus a review of other systems following either the 1995 or 1997 guidelines;

  • Complete past, family, and social histories. (This is the part Jones often finds left off. It may be true that family history isn’t relevant to some specialties, say in orthopedics with a fracture,” she admits. But if you think the level of care is a four or five, you are required to have a family history.)

Still confused? Many practices have templates for physicians to follow - either on paper or through an EMR - to make sure they cover what’s needed. For some samples, visit our

Tools Section


Here’s another great idea: Have a coder visit your practice, audit your charts, and show you what is specifically missing from your documentation. That can be more efficient than abstract education, although it might also be worthwhile to invest a day studying E&M documentation alongside an expert. Getting it right reduces the risk of a Medicare audit going south and may also translate into more revenue, especially if you routinely undercode now. In truth, there’s no way to avoid taking the time to learn the basics.

Consult or new-patient visit?

Picking the right code level is the big issue in E&M, but practices also make mistakes when determining whether an encounter is a consult or a new-patient visit, says Jones. Consults pay better, so it’s worth getting right.

What’s the difference? “The focus has to be on the intent of the visit - whether another provider is requesting advice on the patient or if the physician has already determined that care needs to be transferred to the specialist,” Jones explains. In short, if another physician just wants your opinion, it’s a consult. If he is actually transferring care to you, it’s a new-patient visit (or established patient if you or anyone in your practice in the same specialty has seen this patient in the past three years).

For a consult, make sure to document the “Three Rs”:

  • The Reason for the consult;

  • The Requesting physician’s name; and

  • The Report back to the requesting physician.

Timing is everything

If you spend more than half of an E&M visit counseling the patient or coordinating their care face-to-face, you can bill the visit based on time. “Say a patient is coming in after an MRI and you have concerns about a neoplasm. The visit is going to be going over the MRI and treatment options with risks and benefits. Maybe there is no exam, but there is medical decision-making and probably some history,” Jones explains. This can all take a good chunk of time - the sort of visit where you should consider a time-based code.

In many instances, this can be more lucrative than a bill based on the exam, history, and medical decision-making. Just make sure to document the time you spent and what the discussion was about.

Modify modifier use

“Modifier use is one of the easiest ways for an office to mitigate denials as well as improve their cash flow, but modifiers tend to stymie people,” says Belinda Ratcliff, director of client services for Global Healthcare Alliance, which offers Web-based claims processing software and services to physicians.

“Over the past 90 days, we’ve had over 300 questions that relate to modifier use,” adds Jill Wolf, vice president, content and service integrity for Accuro Business Intelligence, confirming the complexity of the problem.

But you can get this. Grab some EOBs and review your use of these three core modifiers:

26 – Professional component: Attaching this modifier indicates that you performed only the professional part of a service (studying a report) but not the technical component (such as actually taking an X-ray). It means you should get paid for just a portion of the service. The big mistake here, says Ratcliff, is overuse of the modifier. “It’s OK to bill for complete reimbursement if the equipment and overhead [the technical component] is yours.”

25 – Significant, separately identifiable, evaluation and management service by the same physician on the same day of the procedure or other service: Practices have a tendency not to use this modifier, or not to bill an E&M at all if they do a separate procedure or other service the same day, Ratcliff says. But this is simply choosing to perform the service for free, because “if you don’t use it, you will not be paid.” If there is a complete E&M and a completely separate service - say, for example, you notice a lesion in the course of an exam for bronchitis and you remove it - then add the 25 modifier to the E&M and also bill the lesion removal. Payers may still balk at paying you, but at least you’ve coded correctly.

59 – Distinct procedural service: If you need to use a combination of codes that would usually be bundled, but should not be in this instance (say, because you focused on more than one part of the body), this modifier alerts the payer that it should not bundle. The secret here is (a) knowing what is usually bundled, and (b) knowing when it’s appropriate to unbundle. Ask your coder or biller to sit down and explain when you should indicate that there are unusual circumstances for procedures that are commonly bundled. “It all boils back down to being educated,” Ratcliff says.

Manage those edits

Sometimes, the biggest problem for a practice isn’t picking the right codes, but pairing them to avoid denials for medical necessity and watching for inappropriate bundling edits.

Most medical necessity denials happen because diagnosis codes (ICD-9 codes) on the claim don’t match up with procedural codes (CPT codes). “The connection between ICD and CPT is very crucial from a medical necessity standpoint,” says Wolf. “This is where physicians often fall down.”

Imagine if you saw a claim that indicated the patient was suffering from an ear infection, but the procedure coded was for a colonoscopy. You’d know right away that something was wrong; that’s what payers see, too. But most CPT/ICD-9 problem pairs aren’t this obvious. “You’d like to think [the edits] are built on common sense, but one of the things we see is … CMS issues a coverage determination, and then it’s up to the individual contractors to determine how they are going to operationalize that,” Wolf says. In other words, every Medicare carrier, and every commercial payer for that matter, may have its own rules about what can be billed with what.

Mismatches can also occur because of failure to follow the dreaded Local Medical Review Policies or National Coverage Determinations. These are Medicare’s policies about what carriers will cover. Commercial payers roughly follow Medicare, but also make up their own rules on what is OK to do for every possible diagnosis.

Bundling edits are another mess. Every payer makes up its own rules as to what services it considers part of a larger service. If you send it a bill for two services, it will bundle it and pay you for one. That’s an accounting nightmare. Plus, if your practice isn’t on its toes, you may miss the chance to appropriately unbundle the services with a 59 modifier, or payers might suggest that you are purposefully trying to overcharge them.

Between the complexities of basic coding, medical necessity edits, and bundling edits, “it’s really mind boggling,” says Ken Bradley, Navicure’s vice president, transaction and interface development.

“It’s basically impossible unless you do practice with a single payer, but that’s not a common situation. Payers are certainly not going to tell the practice how to file a claim for maximum reimbursement.”

So, what to do?

It may help to have your billing staff organized by payer, so that they gain expertise in the rules of individual companies. But an increasing number of physicians are also investing in technology that keeps track of all the edits for them. 

Even with technology’s help, coding rules may seem overwhelming. Take the time to track the major errors in your own practice; they may well be one of those listed here. Then focus on fixing one at a time for better results. Your goal: Reduce the number of claims that need to be reworked. “The goal is always that your collectors are exception processors. They shouldn’t touch every claim,” says Ratcliff.

Pamela Moore is senior editor for Physicians Practice. She can be reached at pmoore@physicianspractice.com.

This article originally appeared in the March 2008 issue of Physicians Practice.

By Pamela Moore, PhD, CPC

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