Deeper Than the Headlines: Why Modifiers Matter

Compliance officers don’t necessarily need to know everything about medical coding and modifiers, but at a minimum, compliance officers should know that modifiers matter.

On June 13, 2017, the U.S. Attorney’s Office for the Northern District of New York announced a settlement with the University of Rochester over allegations of improper modifier usage.

Court records show that a qui tam relator (whistleblower) filed a complaint in U.S. District Court outlining the accusations of modifier misuse. Specifically, the modifier in question was modifier -25.

Modifier -25 should only be appended to an evaluation and management (E&M) code when the E&M is a significant, separately identifiable E&M service from a procedure, above and beyond the pre-op or post-op care associated with the procedure. When modifier -25 is appended to an E&M code reported on a claim with a procedure code, both the E&M and the procedure are reimbursed. The complaint stated the physicians were almost always billing for an E&M with modifier -25 in addition to intravitreal injections (eye injections) although the medical records lacked sufficient documentation to support billing for care beyond the injection procedure itself.

From a coding and documentation standpoint, it’s important to understand some of the key terms and phrases in the definition of modifier -25 in order to apply it appropriately:

Significant — the E&M work needs to be significant. It should substantial and documented as such if that is actually the case.

Separately Identifiable — the work and effort associated with the E&M should be distinct and different from the work (and documentation) associated with the procedure itself.

Beyond the pre-op and post-op care -- Every procedure is going to have some work associated with it before and after the procedure.  That work is typically included in the work represented by the procedure code itself.  An E&M code should only be reported if it is above and beyond the work associated with the procedure.

If the documentation only supported the work of a procedure, then only the procedure code should be reported. Remember, an E&M service is usually represented by key components such as medical history, physical examination and medical decision making.

For example, if a physician performed these E&M components a week prior and decided the patient needed to come back on different dates of service for periodic intravitreal injections, it might not be appropriate to bill both an E&M code and the injection procedure code on those return visit unless some additional, medically necessary E&M service was performed and appropriately documented.

The settlement in this case was for $113,722.10 which covered the allegations under both the Federal False Claims Act as well as the New York State False Claims Act. Interestingly, the relator’s complaint was filed in March of 2015 and court records mention that in April of 2015, without knowledge of the pending civil action, the provider disclosed overpayments relating to modifier –25 similar in nature to the allegations raised by the relator. Regarding this proactive disclosure by the University of Rochester (UR), the New York Attorney General said, “When an organization catches an error in their Medicaid billing and self-reports, it prevents hardworking New York taxpayers from having to absorb the cost. I commend UR for their willingness to come forward, and for their cooperation throughout this matter. Reimbursing Medicaid for false claims is vital to the integrity of the program, and we will continue working to ensure that all providers repay what is owed.”

It appears the New York Attorney General appreciated the self-disclosure and perhaps this action scored some points for the provider when negotiating the settlement amount.

However, most compliance officers probably agree that providers would be better off avoiding this kind of scenario altogether.  Organizations should consider proactively auditing their billing claims which contain modifiers, especially those modifiers that identify services in such a way that additional reimbursement is obtained. In other words, compliance officers should know that modifiers matter.

Questions or Comments?