Increasing Enforcement of Modifier Codes 

enforcement of modifier codes cj wolf

Two of the most significant healthcare compliance risks are medical coding and billing. Enforcement agencies like to “follow the money,” so to speak, and they often find it in medical claims submitted to government payors such as Medicare and Medicaid. This is why selecting appropriate medical codes is essential for operating and being reimbursed compliantly.  

Since claims are submitted electronically, Medicare and others use a system of claims edits to avoid paying claims inappropriately. This system of edits is called the National Correct Coding Initiative, or NCCI. Under normal circumstances, the edits often do not allow for two procedure codes to be reported on the same claim when a single, more comprehensive code is more appropriate.  

However, there may be unique clinical circumstances that might allow for two separate codes to be reported. When this is the case, a provider must append a modifier (a two-digit code) to the medical procedure codes to signify it was appropriate for both, or multiple, codes to be reported on the same claim and reimbursed. These modifiers will bypass the NCCI edits and result in additional reimbursement. Sometimes this is appropriate, but many times it is not. 

Consequently, these modifiers can be used inappropriately by providers to secure higher reimbursement when the clinical circumstances are not appropriate. Enforcement agencies and whistleblowers are increasingly scrutinizing modifier usage, and because of that compliance programs should be as well.  

Examples of Inappropriate Modifier Use 

Recently, a vascular surgeon in Michigan was sentenced to 80 months in prison and agreed to pay up to $43 million to resolve false claims act allegations. One of these allegations included the improper use of the medical coding modifier 59 to “unbundle” services that should have been billed together in a single claim. By unbundling, the surgeon allegedly increased his reimbursements from federal health care programs. 

In a different case involving a hospital, a whistleblower alleged she had alerted hospital leadership of modifier misuse. In this case, three modifiers were involved (25, 59 and XU) which bypass billing edits and can result in greater reimbursement. In a complaint filed with the court, the whistleblower alleged the hospital had been improperly adding these modifiers to claims between 70 and 95 percent of the time. In essence, they routinely double-billed for certain aspects of patients’ care. She also claimed the hospital failed to reimburse payors for overpayment stemming from these improperly coded claims. The hospital ultimately settled and agreed to pay $3.3 million. 

Modifier 25 is used appropriately when both a procedure and a separate evaluation and management service (a non-procedural service) are provided on the same day. However, if the evaluation and management service is not significant and separately identifiable, then only the procedure should be reported. Modifier 25 can often be misused, resulting in reimbursement that should not have been obtained by the provider. 

In Connecticut, a practice recently paid $400,000 to settle allegations of improper billing that involved modifier 25. The services involved allergy immunotherapy preparation and office visits, also known as evaluation and management services, billed to Medicare and Medicaid.  

These payors generally consider evaluation and management services that occur on the same day to be procedures that precede other patient care work. As a result, they do not allow a separate payment for the office visit. The government alleged this practice caused improper claims to be billed by adding modifier 25 when no significant, separately identifiable evaluation and management services were provided. 

A similar case also recently occurred in Washington state. An organization with providers specializing in wound care treatment settled allegations of improper billing by agreeing to pay approximately $300,000. The providers traveled to skilled nursing and care facilities, where they identified and treated patients with wounds caused by pressure, dermatitis, vascular disease, diabetes, and surgery. Allegedly, the organization improperly billed for evaluation and management services with modifier 25 on the same day as the wound care procedures. To be separately billable on the same day as a wound care procedure, the service needs to be significant, separately identifiable, and above and beyond the usual pre- and post-operative care for the procedure. 

Coding policies are based on coding conventions defined from several sources. These include the American Medical Association’s “Current Procedural Terminology (CPT) Manual,” national and local Medicare policies and edits, coding guidelines developed by national societies, standard medical and surgical practice, and/or current coding practice. Compliance programs should proactively monitor these policies and conventions — while ensuring their use of modifiers (especially 25 and 59) is fully compliant. 

CJ Wolf, MD, M.Ed. is a healthcare compliance professional with over 22 years of experience in healthcare economics, revenue cycle, coding, billing, and healthcare compliance. He has worked for Intermountain Healthcare, the University of Texas MD Anderson Cancer Center, the University of Texas System, an international medical device company and a healthcare compliance software start up. Currently, Dr. Wolf teaches and provides private healthcare compliance and coding consulting services as well as training.  

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