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Coding: Motion on Modifiers


Expert Bill Dacey clarifies some recent changes in  the correct use of modifiers.

In December 2005, the Health and Human Services's Office of the Inspector General (OIG) released two modifier-related reports - one related to -25 and one to -59 - that outlined the findings of recent investigations. The American Medical Association's (AMA) 2006 CPT manual contains changes to the description for modifier 25.

There's a connection here: CMS and its carriers are cracking down on the inappropriate use of certain modifiers, and the AMA is doing what it can to help you by clarifying when the -25 modifier should be used.

If you take time to learn about the changes and understand how to use some of the most confusing modifiers, you will prevent costly claims denials.


Here's a summary of one of the OIG reports that acted as a catalyst. (See the full report at www.oig.hhs.gov/oei/reports/oei-07-03-00470.pdf.):


"OIG conducted this study to assess the extent to which use of modifier -25 meets program requirements. Modifier -25 is used to allow additional payment for evaluation and management (E&M) services performed by a provider on the same day as a procedure, as long as the E&M services are significant, separately identifiable, and above and beyond the usual preoperative and postoperative care associated with the procedure. OIG found that 35 percent of claims for E&M services allowed by Medicare in 2002 did not meet program requirements, resulting in $538 million in improper payments. Modifier -25 was also used unnecessarily on a large number of claims, and while such use may not lead to improper payments, it fails to meet program requirements.

"OIG recommends that CMS work with carriers to reduce the number of claims submitted using modifier -25 that do not meet program requirements, emphasize that providers must maintain appropriate documentation of both the E&M services and procedures, and remind providers that modifier -25 should only be used on claims for E&M services. CMS concurred with OIG's recommendations."

It is unclear whether the 35 percent of claims not meeting program requirements were those that did not demonstrate the qualities of being significant, separate, and identifiable enough to meet program standards based on the separateness of documentation, or whether it was an issue of separateness of a different sort - actual relatedness of the two services. 


This ties in nicely with the AMA's new effort, begun in January of this year, to clarify what the -25 modifier means. For several years now, the first part of the description has read:

"Significant, separately identifiable evaluation and management service by the same physician on the same day of the procedure or other service. The physician may need to indicate that on the day a procedure or service identified by a CPT code was performed, the patient's condition required a significant, separately identifiable E&M service above and beyond the other service provided or beyond the usual pre-operative or post-operative care associated with the procedure that was performed.

This year the AMA has added the text: "A significant separately identifiable E&M service is defined or substantiated by documentation that satisfies the relevant criteria for the respective E&M services to be reported."

Although clearly the intent was to clarify for providers what is meant by "significant, separate, and identifiable," what this sentence really provides is some standard of documentation for the provision of two services in one encounter - physicians have to be able to document an E&M visit either distinct from, or in addition to, the other service performed.

That's some help for providers, but you can still expect plenty of denials from payers even for properly documented E&M services. From the payer's perspective, a denial is not always about whether two services were performed and documented, but the relatedness of the services. For them, the E&M just seems like part of the procedure, regardless of how much medical decision-making or history-taking got done. 


Indeed, even coding that is absolutely correct in every way, including modifiers, does not guarantee payment - contrary to popular opinion.

Although all modifiers are intended to "modify" or provide additional information pertaining to the use of a particular code in a given situation, there are several modifiers - -24, -25, -57, -59, and -79 - that are regarded as the "pay me" modifiers. In other words, these modifier descriptions all contain language indicating that the service to which they are appended is separate from some other service performed by the same provider.

It is true that these modifiers can have the effect of two separate services being reimbursed by a given payer - but their mere presence is no guarantee of payment.

One source of the frustration is that coding experts and reliable coding authorities often point out to providers that improper use of modifiers, or missing modifiers, may cause a claim or service element on a claim to be denied. And this is true.

But the opposite isn't. The correct use of modifiers isn't a payment guarantee. Payers judge each claim based on a larger set of criteria than simply CPT codes and their modifiers. So something can easily be "correct" according to the book and still be denied.

There is no one way that all payers will adjudicate a combination of claims. It can be difficult for providers to predict these outcomes in the absence of detailed knowledge of a given payer's payment policies. This said, it is still the best course for any provider to represent their services as accurately as possible using CPT and modifiers as needed. Correct coding on behalf of the provider cannot help but improve the chances of any appeal or contract renegotiation.

If this does not provide relief (in the form of payment) on the level of a particular claim, a body of such claims properly coded and documented, and denied, may serve well when brought to the negotiating table. Consistent and accurate coding, including modifiers, is a must to make a good case here.


This applies not only to modifier -25 situations, but to all coding and modifier situations. Let's look at the modifier used for two "distinct" procedures. The OIG has been worried about its use, too. Here's an excerpt. (Access the full report at www.oig.hhs.gov/oei/reports/oei-03-02-00771.pdf.)


"Modifier -59 is used to indicate that a provider performed a distinct procedure or service for a beneficiary on the same day as another procedure or service. This modifier would allow the code pair to bypass the edit and both services would be paid. This inspection found that 40 percent of code pairs billed with modifier -59 in fiscal year 2003 did not meet program requirements, resulting in an estimated $59 million in improper payments.

"Specifically, modifier -59 was used inappropriately with 15 percent of code pairs because the services were not distinct from each other and with 25 percent of code pairs because the services were not adequately documented."

This inspection also found that 11 percent of code pairs billed with modifier -59 in fiscal year 2003 were paid when modifier 59 was billed with the incorrect code. This billing error represented $27 million in Medicare paid claims. In addition, OIG found that most carriers did not conduct reviews of modifier -59 but those carriers that did found providers who were using modifier -59 inappropriately.

OIG recommended that CMS: (1) encourage carriers to conduct prepayment and postpayment reviews of the use of modifier -59 and (2) ensure that carriers' claims processing systems only pay claims with modifier -59 when the modifier is billed with the correct code. CMS concurred with these recommendations."

In this case, OIG has distinguished between actual distinctness and the failure to document two distinct services. Carrier systems will pay both parts of a code pair when modifier -59 is applied to codes that are inclusive. This is perhaps the best reason for carriers and all payers to audit this modifier - many office managers have been heard to state, "Well I just put a 59 on it, and I get paid better!" This may be so, but that doesn't mean you are entitled to better payment.

Since CMS adopted CCI edits in 1996, this aspect of the editing system has run rather well if providers use modifier -59 appropriately, and carriers review that use responsibly. Again, the larger issue here seems to be that better documentation would go a long way to reducing providers' review woes.

Even so, there will always be differences of opinion about what "separate" means. When an orthopod does procedures in two compartments of a knee, he may feel that the services are separate - hence -59. Medicare is more likely to say, "It's a knee - same site, not separate."

Although not a cure for reimbursement, contractual, and regulatory woes, modifiers do perform the task for which they were intended - to modify or provide context for the code to which they are applied. It helps if you use them correctly and provide documentation to support your decision.

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 over 10 years. He can be reached at billdacey@msn.com or via editor@physicianspractice.com.

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

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