OIG Identifies Improper Payments Associated with Modifiers 25 & 59

Thirty-five percent of claims unnecessarily used Modifier 25 resulting in the overspending of $538 million by Medicare, according to an investigation conducted by the Office of Inspector General (OIG). The Modifier is important because it may be attached to claims to allow additional payment for evaluation and management (E/M) services on the same day as the performance of a procedure when the services exceed the usual pre-operative or post-operative care.

Generally, E/M services are considered part of Medicare's reimbursement for that particular procedure and are not reimbursed separately. The majority of the claims that resulted in improper payment were attributable to the provider's failure to (1) properly document the E/M services or procedure, (2) include necessary identifying information, and (3) respond to requests for information. Only two percent of the claims leading to improper payment were the result of claims submitted that did not meet the requirement that the services be significant, separately identifiable, and above and beyond the usual pre-operative or post-operative care associated with the procedure.
From OIG Report, OEI-07-03-00470, Nov. 1, 2005

Another OIG report found significant losses due to inappropriate uses of modifier 59, used to bypass correct coding initiative (CCI) edits for provider billing. The OIG said these errors caused approximately $59 million in improper Medicare payments for fiscal year (FY) 2003. The report noted that 40 percent of code pairs billed with modifier 59 in FY 2003 did not meet program requirements because either the services were not distinct from each other or the services were not documented. The OIG found that modifier 59 was used inappropriately with 15 percent of the code pairs because the services were not distinct from each other. When used correctly, the modifier 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.

Providers must provide documentation to support correct use of this modifier. OIG found, however, that most of the services investigated were not distinct because they were performed at the same session, anatomical site or through the same incision as the primary service. Five code pairs represented 53 percent of the services that were not distinct. Additionally, 25 percent of the code pairs were not adequately documented. These errors resulted in $28 million loss to Medicare.

Eleven percent of the code pairs billed with modifier 59 were paid when the modifier was billed with the incorrect code. Modifier 59 should be attached to the secondary, additional, or lesser service in the code pair. However, under OIG's analysis of 3.4 million code pairs, 11 percent were paid when the modifier was attached to the primary code only. This billing error represented $27 million in Medicare paid claims.
OIG Report, No. OEI-03-02-00771, Nov. 2005

Update on Beneficiary Assignment of Benefits

You probably were aware of the requirement by law to have the Medicare beneficiary sign an assignment of benefits in order to file the insurance claim and receive payment directly. This required signature was to be obtained by both non-participating providers when providing a mandatory assignment of benefits service (i.e. clinical lab) as well as the participating provider required to accept assignment on all services.

Effective November 14, 2005 that requirement has changed. It was really a redundant requirement when dealing with a service that was mandatory by law provided only on an assigned basis. As such it was non-billable to the patient.

Briefly stated, Change Request (CR) 3897 amends the Medicare Claims Processing Instructions as follows:
  • Providers accepting assignment from Medicare may not attempt to collect more that the deductible and coinsurance amount from the beneficiary, his/her other insurance, or any one else.
  • If the physician/supplier is not satisfied with the amount allowed by Medicare, procedures are in place for appeal of the contractor initial determination.
    Matters Number: MM3897
  • If an enrollee has private insurance in addition (secondary) to Medicare the physician/supplier is in violation of his/her assignment if he/she collects from the enrollee or the private insurance an amount that when added to the Medicare benefit exceeds the Medicare allowed amount.
  • The beneficiary must continue to authorize the release of medical or other information necessary to process the claim.
  • A nonparticipating physician/supplier who accepts assignment for some Medicare covered services is not prohibited from billing the patient for services for which he/she does not accept assignment. Also, the nonparticipating physician/supplier is not precluded from billing a patient for services that are not covered by Medicare.
  • Physicians/suppliers should remember they may not attempt to "fragment" their bills. Fragmenting is defined as accepting assignment for some services and then billing the enrollee for other services performed at the same place and on the same occasion. When Medicare carriers become aware that services are being "fragmented" they will inform the physician/supplier that the practice is unacceptable and that he/she must either accept assignment or bill the enrollee for all services performed at the same place on the same occasion.
  • There is an EXCEPTION. In situations where assignment is mandatory, i.e., where a physician/supplier must accept assignment for certain services as a condition for any payment or for full payment to be made (e.g., clinical diagnostic laboratory tests, physician assistants), he/she may accept assignment for those conditional services without accepting assignment for other services furnished by him/her for the same enrollee at the same place and on the same occasion.

    • Seats at the 2006 National Conference for Certified Professionals Going Quickly

    Just two weeks left to take advantage of the $100 registration fee discount!

    You won't want to miss it! Practice Management Institute's National Conference for Certified Professionals will be the most comprehensive, interactive, and information-packed training that PMI has ever presented! Hear cutting-edge topics from PMI's acclaimed Faculty and our special Guest Presenters.

    This year's conference features three general sessions and 20 breakout sessions. Conference topics include critical administrative issues that impact today's physicians and their practices such as, "EMRs -- Should you Implement a Paperless System?" "Pay For Performance and Consumer Driven Healthcare," and "Making Sense of the New Competitive Acquisition Plan."

    Round table luncheons will also allow attendees to get to know fellow attendees in an interactive format, designed to promote group interaction with participants and faculty members.

    These two information-packed days of learning are not limited to PMI-certified professionals. The AAPC has granted 11.5 CEUs for CPCs who attend this conference. Non-certified professionals are also welcome to attend. But don't delay; this conference is now just two months away. More than 100 people have already signed up to attend, and remaining seats will go quickly.

    Visit the web site: www.pmiMD.com and click on the conference link for new details, including breakout session topics, schedule of events, information on the guest speakers, accommodations, and much more!

    Another Chance to Change Provider Participating Status with Medicare

    You have probably heard the good news about the Deficit Reduction Act of 2005, enacted on February 8, 2006. Among other things this important legislation took away the -4.5 percent conversion factor reduction from the 2006 Medicare Physician Fee Schedule. Even though the Act replaces the -4.5 percent with a .0 percent update from 2005 most practices are grateful for the lesser of two evils.

    Each year many providers base enrollment participation on many factors including the conversion factor for the upcoming year. Because of the change in the conversion factor for 2006, providers this year have a second opportunity of 45 days for Medicare enrollment. The enrollment/election period of time runs from February 15, 2006 through March 31, 2006. Any changes made by the provider during this time will be retroactive to January 1, 2006. You may access the Participation Agreement through your state Medicare web site or link directly to the form (CMS 460 - 10/05) at http://www.cms.hhs.gov/CMSForms/CMSForms/list.asp