Practice Management Articles

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Incorrect use of Modifer 25 & 59

The Office of Inspector General recently released two reports, shown below, that bear repeating to all providers. It would serve all practices well to conduct a coding audit of all modifier use. Not just 25 & 59.

You can bet that the Medicare Carriers will be auditing, whether you do or not. Find and correct your coding mistakes now.

Use of Modifier 59 to Bypass Medicare's National Correct Coding Initiative Edits (OEI-03-02-00771) http://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.

Use of Modifier 25 (OEI-07-03-00470) http://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.