USE OF MODIFIER 59 TO BYPASS MEDICARE S NATIONAL CORRECT CODING INITIATIVE EDITS

Department f Health and Human Services OFFICE OF INSPECTOR GENERAL USE OF MODIFIER 59 TO BYPASS MEDICARE S NATIONAL CORRECT CODING INITIATIVE EDITS Daniel R. Levinsn Inspectr General Nvember 2005 OEI-03-02-00771

Office f Inspectr General http://ig.hhs.gv The missin f the Office f Inspectr General (OIG), as mandated by Public Law 95-452, as amended, is t prtect the integrity f the Department f Health and Human Services (HHS) prgrams, as well as the health and welfare f beneficiaries served by thse prgrams. This statutry missin is carried ut thrugh a natinwide netwrk f audits, investigatins, and inspectins cnducted by the fllwing perating cmpnents: Office f Audit Services The Office f Audit Services (OAS) prvides all auditing services fr HHS, either by cnducting audits with its wn audit resurces r by verseeing audit wrk dne by thers. Audits examine the perfrmance f HHS prgrams and/r its grantees and cntractrs in carrying ut their respective respnsibilities and are intended t prvide independent assessments f HHS prgrams and peratins in rder t reduce waste, abuse, and mismanagement and t prmte ecnmy and efficiency thrughut HHS. Office f Evaluatin and Inspectins The Office f Evaluatin and Inspectins (OEI) cnducts management and prgram evaluatins (called inspectins) that fcus n issues f cncern t HHS, Cngress, and the public. The findings and recmmendatins cntained in the inspectins generate rapid, accurate, and up-t-date infrmatin n the efficiency, vulnerability, and effectiveness f departmental prgrams. OEI als versees State Medicaid Fraud Cntrl Units which investigate and prsecute fraud and patient abuse in the Medicaid prgram. Office f Investigatins The Office f Investigatins (OI) cnducts criminal, civil, and administrative investigatins f allegatins f wrngding in HHS prgrams r t HHS beneficiaries and f unjust enrichment by prviders. The investigative effrts f OI lead t criminal cnvictins, administrative sanctins, r civil mnetary penalties. Office f Cunsel t the Inspectr General The Office f Cunsel t the Inspectr General (OCIG) prvides general legal services t OIG, rendering advice and pinins n HHS prgrams and peratins and prviding all legal supprt in OIG's internal peratins. OCIG impses prgram exclusins and civil mnetary penalties n health care prviders and litigates thse actins within HHS. OCIG als represents OIG in the glbal settlement f cases arising under the Civil False Claims Act, develps and mnitrs crprate integrity agreements, develps cmpliance prgram guidances, renders advisry pinins n OIG sanctins t the health care cmmunity, and issues fraud alerts and ther industry guidance.

Δ E X E C U T I V E S U M M A R Y OBJECTIVE T determine (1) whether mdifier 59 is being used inapprpriately t bypass Medicare s Natinal Crrect Cding Initiative (CCI) edits and (2) t what extent Medicare carriers are reviewing the use f mdifier 59. BACKGROUND In January 1996, the Centers fr Medicare & Medicaid Services (CMS) began the CCI. This initiative was develped t prmte crrect cding by prviders and t prevent Medicare payment fr imprperly cded services. The initiative cnsists f autmated edits that are part f the carriers claims prcessing systems. Specifically, the CCI edits cntain pairs f Healthcare Cmmn Prcedure Cding System cdes (i.e., cde pairs) that generally shuld nt be billed tgether by a prvider fr a beneficiary n the same date f service. All cde pairs are arranged in a clumn 1 and clumn 2 frmat. The clumn 2 cde is generally nt payable with the clumn 1 cde. Thrughut this reprt we will refer t the clumn 1 cde as the primary cde r service and the clumn 2 cde as the secndary cde r service. Under certain circumstances, a prvider may bill fr tw services in a CCI cde pair and include a mdifier n the claim that wuld bypass the edit and allw bth services t be paid. A mdifier is a tw-digit cde that further describes the service perfrmed. Thirty-five mdifiers can be used t bypass the CCI edits. Mdifier 59 is ne f these mdifiers. Mdifier 59 is used t indicate that a prvider perfrmed a distinct prcedure r service fr a beneficiary n the same day as anther prcedure r service. It may represent a different sessin, different prcedure r surgery, different anatmical site r rgan system, separate incisin r excisin, separate lesin, r separate injury (r area f injury in extensive injuries). Mdifier 59 shuld be attached t the secndary, additinal, r lesser service in the cde pair. 1 Accrding t CMS, this is the secnd cde in a CCI cde pair. 2 When mdifier 59 is 1 Medicare Claims Prcessing Manual, Chapter 23, sectin 20.9, http://www.cms.hhs.gv/manuals/104_claims/clm104c23.pdf. 2 Natinal Crrect Cding Initiative Frequently Asked Questins, http://www.cms.hhs.gv/physicians/cciedits/. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS i

E X E C U T I V E S U M M A R Y used, a prvider s dcumentatin must demnstrate that the service was distinct frm ther services perfrmed that day. 3 CMS prvides carriers with guidance and instructins n the crrect cding f claims, including the use f mdifier 59, thrugh manuals, transmittals, and CMS s Web site. Carriers, in turn, are required by CMS t educate prviders cncerning issues such as crrect cding. Carriers are als respnsible fr develping their wn prepayment and pstpayment medical review strategies t identify billing errrs. We selected a stratified randm sample f 350 cde pairs fr services that bypassed CCI edits using mdifier 59 in fiscal year (FY) 2003. An independent cntractr cnducted a cding review f the medical recrds fr these services t determine the apprpriateness f the use f mdifier 59. We perfrmed separate analysis n ur FY 2003 data t determine whether mdifier 59 was billed with the primary r secndary cde. We als surveyed each Medicare carrier t learn abut their medical review activities, claims prcessing systems, and prvider educatin activities related t mdifier 59. FINDINGS Frty percent f cde pairs billed with mdifier 59 in FY 2003 did nt meet prgram requirements, resulting in $59 millin in imprper payments. Medicare allwed payments fr 40 percent f cde pairs that did nt meet the fllwing prgram requirements: (1) the services were nt distinct frm each ther r (2) the services were nt dcumented. Specifically, mdifier 59 was used inapprpriately with 15 percent f the cde pairs because the services were nt distinct frm each ther. Medicare allwed an estimated $31 millin fr the secndary services in these cde pairs. Secndary services are the services that CCI edits wuld deny. Mst f these services were nt distinct because they were perfrmed at the same sessin, same anatmical site, and/r thrugh the same incisin as the primary service. Five cde pairs represented 53 percent f the services that were nt distinct. In additin t services that were nt distinct, 25 percent f the cde pairs billed with mdifier 59 were nt adequately dcumented. Medicare allwed an estimated $28 millin fr these services. In mst f these cases, either ne r bth f the services billed were nt dcumented in the medical recrd, r the 3 Medicare Claims Prcessing Manual, Chapter 12, sectin 30, http://www.cms.hhs.gv/manuals/104_claims/clm104c12.pdf. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS ii

E X E C U T I V E S U M M A R Y dcumentatin indicated that anther cde shuld have been billed fr ne r bth f the services perfrmed. In the remaining cases, either the dcumentatin was insufficient t make a determinatin, r the dcumentatin was nt prvided. Eleven percent f cde pairs billed with mdifier 59 in FY 2003 were paid when the mdifier was billed with the incrrect cde. Pursuant t the Medicare Claims Prcessing Manual, mdifier 59 shuld be billed with the secndary, additinal, r lesser service in a CCI cde pair. Hwever, ur analysis f 3.4 millin cde pairs shwed that 11 percent f the cde pairs were paid when mdifier 59 was attached t the primary cde nly. This billing errr represented $27 millin in Medicare paid claims. Our analysis als indicated that 37 carriers paid fr at least 10 percent f their claims billed with mdifier 59 when the mdifier was attached t the incrrect cde. Mst carriers did nt cnduct reviews f mdifier 59, but thse carriers that did fund prviders wh were using mdifier 59 inapprpriately. Between 2002 and 2004, 11 f 56 carriers cnducted 1 r mre reviews f the use f mdifier 59. Ten carriers cmpleted at least ne review and ne carrier s nly review was still in prgress. All f the carriers that cmpleted reviews fund prviders wh were using mdifier 59 inapprpriately. One-third f 32 reviews cmpleted fund errr rates f 40 percent r mre fr services billed with mdifier 59. RECOMMENDATIONS The Centers fr Medicare & Medicaid Services shuld encurage carriers t cnduct prepayment and pstpayment reviews f the use f mdifier 59. Our inspectin fund that 40 percent f cde pairs billed with mdifier 59 did nt meet prgram requirements. Carrier reviews als indicated that prviders were using mdifier 59 inapprpriately. We recmmend that CMS encurage carriers t cnduct prepayment and pstpayment reviews f the use f mdifier 59. We believe carriers shuld use data analysis t determine hw t best carry ut these reviews. Because we fund that a small number f cde pairs made up mre than half f the services that were nt distinct in ur sample, carriers may want t fcus their initial analysis n these cde pairs. The Centers fr Medicare & Medicaid Services shuld ensure that the carriers claims prcessing systems nly pay claims with mdifier 59 when the mdifier is billed with the crrect cde. The OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS iii

E X E C U T I V E S U M M A R Y Medicare Claims Prcessing Manual states that mdifier 59 shuld be billed with the secndary, additinal, r lesser service in the CCI cde pair. Hwever, ur analysis indicated that the majrity f carriers paid fr at least 10 percent f their claims billed with mdifier 59 when the mdifier was attached t the primary cde nly. This raises questins abut hw Medicare guidelines are being applied within the carriers claims prcessing systems. AGENCY COMMENTS CMS cncurred with ur recmmendatin t encurage carriers t cnduct prepayment and pstpayment reviews f the use f mdifier 59. CMS stated it wuld infrm its cntractrs f ur study s they can cnsider ur data when priritizing their payment review strategies. After these reviews are cmpleted, suspected fraud and abuse cases will be frwarded t the apprpriate prgram safeguard cntractr fr further develpment. CMS als cncurred with ur recmmendatin t ensure that carriers claims prcessing systems nly pay claims when mdifier 59 is billed with the secndary cde. Hwever, CMS reprts that it is nt able t implement an edit t ensure this crrect cding at the present time. Instead, CMS will: Distribute this reprt t its cntractrs respnsible fr identifying imprper payments and ptential fraud, waste, and abuse. Share this reprt with the Recvery Audit Cntractrs that were implemented n a pilt basis under the Medicare Prescriptin Drug, Imprvement, and Mdernizatin Act f 2003. Issue a Medlearn Matters article t prvide cntinuing educatin t physicians n hw t bill mdifier 59 apprpriately. The full text f CMS s cmments can be fund in the Agency Cmments sectin f this reprt. OFFICE OF INSPECTOR GENERAL RESPONSE We appreciate CMS s multiprnged apprach t addressing the inapprpriate billing and use f mdifier 59 n Medicare claims. While CMS reprts that it cannt implement a claims prcessing edit t ensure that claims with mdifier 59 are billed with the crrect cde at this time, we hpe CMS will cnsider implementing this type f edit in the future. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS iv

Δ T A B L E O F C O N T E N T S EXECUTIVE SUMMARY.... i INTRODUCTION... 1 FINDINGS... 9 Frty percent f services did nt meet requirements... 9 Mdifier 59 billed with incrrect cde... 12 Reviews fund inapprpriate use... 13 RECOMMENDATIONS... 14 APPENDIXES... 16 A: Descriptin f Stratified Sample... 16 B: Estimates and Cnfidence Intervals... 17 AGENCY COMMENTS... 18 ACKNOWLEDGMENTS... 20

Δ I N T R O D U C T I O N OBJECTIVE T determine (1) whether mdifier 59 is being used inapprpriately t bypass Medicare s Natinal Crrect Cding Initiative (CCI) edits and (2) t what extent Medicare carriers are reviewing the use f mdifier 59. BACKGROUND The Medicare prgram prvides cverage f health care services fr the elderly and disabled. The Centers fr Medicare & Medicaid Services (CMS) administers the Medicare prgram and cntracts with carriers natinwide t prcess mst Medicare Part B claims. Part B claims include thse fr physician, radilgy, and labratry services. Medicare paid apprximately $77 billin fr Part B services in fiscal year (FY) 2003. Natinal Crrect Cding Initiative In January 1996, CMS put the CCI int effect. This initiative was develped t prmte crrect cding by prviders and t prevent Medicare payments fr imprperly cded services. CMS develped the cding plicies based n cding cnventins defined in the American Medical Assciatin s Current Prcedural Terminlgy (CPT) Manual, natinal and lcal plicies and edits, cding guidelines develped by natinal scieties, a review f current cding practices, and analysis f standard medical and surgical practices. 4 CMS wrks with a cntractr t cntinually review and refine the CCI edits with input frm natinal medical scieties, carriers, and prviders. CMS prvides the CCI edit files t the carriers each quarter. The CCI edits are updated quarterly; hwever, the mst current versin cntains all prir additins and deletins f edits. Previusly, prviders had t purchase the CCI edits; but as f September 2003, the CCI edits are available fr prviders t reference r dwnlad frm CMS s Web site. 5 Natinal Crrect Cding Initiative Edits Medicare prviders use the Healthcare Cmmn Prcedure Cding System (HCPCS) t cde services prvided t Medicare beneficiaries. The CCI edits cntain pairs f HCPCS cdes (i.e., cde pairs) that 4 Natinal Crrect Cding Plicy Manual fr Medicare Part B Carriers, Intrductin, p. vi. 5 http://www.cms.hhs.gv/physicians/cciedits/default.asp. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 1

I N T R O D U C T I O N generally shuld nt be billed tgether by a prvider fr a beneficiary n the same date f service. All cde pairs are arranged in a clumn 1 and clumn 2 frmat. The clumn 2 cde is generally nt payable with the clumn 1 cde. Thrughut this reprt we will refer t the clumn 1 cde as the primary cde r service and the clumn 2 cde as the secndary cde r service. Mdifier 59 Under certain circumstances, a prvider may bill fr tw services in a CCI cde pair and include a mdifier n the claim. A mdifier is a twdigit cde that further describes the service perfrmed. A mdifier wuld allw the cde pair t bypass the edit and bth services wuld be paid. Each CCI cde pair has a mdifier indicatr that determines whether a mdifier can be used. Thirty-five mdifiers can be used t bypass the CCI edits. Mdifier 59 is ne f these mdifiers. In FY 2003, Medicare allwed $370 millin fr Part B services that bypassed the CCI edits using a mdifier. 6 Of this amunt, $245 millin (66 percent) was allwed fr services that bypassed the CCI edits using mdifier 59. Prper Use f Mdifier 59 Pursuant t the Medicare Claims Prcessing Manual 7 and the CPT Manual 2003, 8 mdifier 59 is used t indicate that a prvider perfrmed a distinct prcedure r service fr a beneficiary n the same day as anther prcedure r service. It may represent a: Different sessin, Different prcedure r surgery, Different anatmical site r rgan system, Separate incisin r excisin, Separate lesin, r Separate injury (r area f injury in extensive injuries). Mdifier 59 shuld nt be used with the radiatin treatment management cde 77427 r with the evaluatin and management 6 This figure represents the dllar amunt paid fr the secndary cde in a cde pair when a beneficiary had n mre than tw services n the same day by the same prvider. 7 Chapter 23, sectin 20.9. http://www.cms.hhs.gv/manuals/104_claims/clm104c23.pdf. 8 Appendix A, p. 404. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 2

I N T R O D U C T I O N service cdes 99201-99499. Mdifier 59 shuld nly be used if there is n ther CCI mdifier that best explains the circumstances. The Medicare Claims Prcessing Manual further clarifies that mdifier 59 shuld be attached t the secndary, additinal, r lesser service in the cde pair. 9 Accrding t CMS, this is the secnd cde in a CCI cde pair. 10 The fllwing example explains the prper use f mdifier 59: If an infusin prcedure is perfrmed, the rutine placement f the intravenus catheter fr that prcedure shuld nt be billed separately because it is cnsidered a cmpnent f the infusin prcedure. Hwever, if a catheter is placed in a different site later in the day, mdifier 59 shuld be attached t the cde representing the placement f the catheter. This wuld indicate that tw separate prcedures were actually perfrmed. In this case, bth cdes wuld be paid. 11 Dcumentatin Requirements Prviders must maintain adequate dcumentatin in the medical recrd t supprt the services billed. Sectin 1833(e) f the Scial Security Act requires that prviders furnish such infrmatin as may be necessary in rder t determine the amunts due in rder t receive Medicare payment. In additin, pursuant t the Medicare Claims Prcessing Manual, when mdifier 59 is used, a prvider s dcumentatin must demnstrate that the service was distinct frm ther services perfrmed that day. 12 Fr example, t allw bth a bne marrw bipsy prcedure and a bne marrw aspiratin prcedure t be billed tgether, the medical recrd must indicate that the services were perfrmed thrugh separate incisins r at separate sessins. 13 Other types f CCI cde pairs must have dcumentatin demnstrating that the services were 9 Chapter 23, sectin 20.9, http://www.cms.hhs.gv/manuals/104_claims/clm104c23.pdf. 10 Natinal Crrect Cding Initiative Frequently Asked Questins, http://www.cms.hhs.gv/physicians/cciedits/. 11 Adapted frm, Natinal Crrect Cding Plicy Manual fr Medicare Part B Carriers, versin 9.3, Chapter XI, p. 1. 12 Chapter 12, sectin 30, http://www.cms.hhs.gv/manuals/104_claims/clm104c12.pdf. 13 Natinal Crrect Cding Plicy Manual fr Medicare Part B Carriers, versin 9.3, Chapter I, pp. 14-15. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 3

I N T R O D U C T I O N perfrmed sequentially 14 r that a different level f service was prvided t indicate that the services were distinct frm each ther. 15 Carrier Guidance CMS prvides carriers with guidance and instructins n the crrect cding f claims, including the use f mdifier 59, thrugh manuals, transmittals, and the CMS Web site. CMS s Web site cntains the CCI edits as well as the Natinal Crrect Cding Plicy Manual fr Medicare Part B Carriers (NCCI plicy manual), the Medicare Claims Prcessing Manual, and respnses t frequently asked questins cncerning CCI. The NCCI plicy manual cntains a general plicy chapter and 10 narrative chapters each crrespnding t a separate sectin f the CPT Manual. Mst chapters cntain sme examples f circumstances when it is apprpriate t use mdifier 59 with certain cde pairs r types f cde pairs. This manual is updated each year in Octber. Educatin fr Prviders CMS requires carriers t educate prviders cncerning issues such as crrect cding. Using data analysis, carriers develp their wn strategies fr cnducting prepayment and pstpayment medical review t identify errrs. Carriers target individual prviders wh require educatin when claims review indicates billing prblems. Depending n the level f errr identified, carriers may address prviders cverage r cding-related prblems thrugh educatinal letters, telephne cnferences, r face-t-face meetings. Carriers als use mass media and training seminars t give timely and accurate Medicare infrmatin t the prvider cmmunity. Clarificatin f the Natinal Crrect Cding Initiative Plicy Manual During the curse f ur inspectin, we shared infrmatin with the CCI wrkgrup 16 cncerning CCI edits that were frequently bypassed using mdifier 59. The wrkgrup addressed many f the issues cncerning these cde pairs when updating the Octber 2004 versin f the NCCI plicy manual. 14 Natinal Crrect Cding Plicy Manual fr Medicare Part B Carriers, versin 9.3, Chapter XI, p. 9. 15 Ibid., Chapter X, p. 3. 16 The wrkgrup cnsists f staff at CMS headquarters and at the CCI cntractr. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 4

I N T R O D U C T I O N METHODOLOGY Sample Selectin We matched the CCI edits that were in effect in FY 2003 against 100 percent FY 2003 Part B claims data frm CMS s Natinal Claims Histry File. T determine if a cde pair was active n a particular date f service and if the cde pair allwed a mdifier n that date, we used the CCI edits frm versin 9.3 (Octber 2003) as well as the mdifier indicatr change lists frm versin 8.3 (Octber 2002) thrugh versin 9.3. We defined ur ppulatin as cde pairs that allwed a mdifier and that bypassed the CCI edits because mdifier 59 was present. The ppulatin cnsisted f apprximately 3.4 millin cde pairs with $227 millin in payments fr the secndary cdes after we excluded the fllwing services: Cde pairs that had anther valid CCI mdifier in additin t mdifier 59, 17 Services where a beneficiary had mre than tw services n the same day by the same prvider, 18 Services represented by cdes 99201-99499 r 77427 since mdifier 59 shuld nt be billed with these cdes, Services rendered by three prviders wh were under investigatin, and Services where the payment fr the secndary service in the cde pair was less than r equal t $24. 19 Frm the ppulatin, we selected a stratified randm sample f 350 cde pairs t send t an independent cntractr fr cding review. The strata definitins were based n the frequencies f cde pairs in the ppulatin, the dllar amunt f the secndary cde in a cde pair, and infrmatin received frm members f the CCI wrkgrup. The details f ur stratificatin are utlined in Appendix A. 17 These cde pairs were excluded t be certain that the use f mdifier 59 was the nly reasn CCI edits were bypassed. 18 N additinal analysis was cnducted t determine the effect this had n the types f services excluded frm ur ppulatin. 19 Excluding these services eliminated 25 percent f cde pairs (1 millin) and 6 percent f the dllars ($15 millin) frm ur ppulatin. OEI-03-02-00771 U SE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 5

I N T R O D U C T I O N Medical Recrd Request We sent ur initial written request fr medical recrds by Federal Express t all prviders in ur sample. The requests were sent t addresses fund in CMS s Unique Prvider Identificatin Number (UPIN) file. A number f requests were returned as undeliverable. We lked fr alternate addresses in the UPIN file, searched the Internet, and cntacted carriers t find crrect address infrmatin. We cntinued t send requests t alternate addresses until we fund a valid address r exhausted all pssibilities. We were unable t lcate six prviders. We remved the services perfrmed by these prviders frm subsequent data analysis. We sent up t tw fllw-up requests by Federal Express t prviders wh did nt respnd t ur first request. We were able t cntact prviders fr 344 cde pairs in ur sample. Three f these prviders were excluded frm ur data analysis because they were unable t prvide the recrds fr a valid reasn r the recrds arrived t late t be included in ur cding review. This left us with 341 CCI cde pairs fr analysis. Of these, six were cnsidered undcumented because the prvider did nt send the recrds requested. The remaining 335 recrds were frwarded fr cding review. Medical Recrd Review We sent 335 medical recrds t an independent cntractr fr cding review t determine whether mdifier 59 was used inapprpriately t bypass CCI edits. The recrds were reviewed by experienced certified cders. We asked the cders t determine whether bth services in the cde pairs were dcumented, whether anther cde shuld have been billed fr ne r bth f these services, and whether the services were distinct frm each ther. Fr services that were nt distinct, we asked the cders t describe why they were nt distinct services. We prvided the cders with a cpy f the Octber 2003 versin f the NCCI plicy manual and instructed them t refer t it as well as the 2002 and 2003 CPT and HCPCS manuals in making their determinatins. The cding review was cnducted between Octber and December 2004. Calculatin f Imprper Payments We calculated the ttal amunt paid fr secndary services in CCI cde pairs when the services were nt distinct r the secndary services were nt adequately dcumented. It is the secndary cde in the cde pair that wuld be denied by the CCI edits. We did nt include the dllar amunts fr cde pairs when the cding review determined that nly the OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 6

I N T R O D U C T I O N primary cde was nt dcumented 20 r that ne r bth services shuld have been cded differently. 21 We ttaled the allwed amunts fr inapprpriate services and weighted the estimates t reflect ur stratified sample design. The pint estimates and cnfidence intervals fr these statistics are presented in Appendix B. Claim Data Review We perfrmed separate analysis n the 3.4 millin FY 2003 cde pairs frm which we selected ur sample t determine whether mdifier 59 was billed with the primary r secndary cde in the CCI cde pairs. This analysis enabled us t determine whether the carriers claims prcessing systems handled claims accrding t the requirements in the Medicare Claims Prcessing Manual. The manual instructs prviders t bill mdifier 59 with the secndary, additinal, r lesser service in a CCI cde pair. 22 Accrding t CMS, this is the secnd cde in a CCI cde pair. 23 We cnsidered mdifier 59 t be billed with the incrrect cde when mdifier 59 was billed with the primary cde nly. T calculate the amunt paid when mdifier 59 was billed with the primary cde nly, we ttaled the payments fr the secndary services in these cde pairs. The Centers fr Medicare & Medicaid Services and Carrier Surveys We cnducted telephne surveys with CMS central ffice and each CMS reginal ffice t determine what rles they have in ensuring the prper use f mdifier 59. These surveys were cnducted between January and May 2004. We als surveyed all Medicare Part B carriers t determine the extent t which carriers review the use f mdifier 59. We asked the carriers abut their medical review activities, claims prcessing systems, and prvider educatin and utreach activities. We received 30 individual survey respnses. The 30 respnses represented all 56 carrier jurisdictins since sme carriers handle peratins fr mre than 1 State. If carrier peratins differed frm 20 These payments were excluded because ur estimates f imprper payments were based n the allwances fr the secndary cde nly. 21 Since we did nt analyze whether these services were upcded (billed at a higher level than the service actually perfrmed) r dwncded, we did nt calculate the amunt Medicare allwed fr the services. 22 Chapter 23, sectin 20.9, http://www.cms.hhs.gv/manuals/104_claims/clm104c23.pdf. 23 Natinal Crrect Cding Initiative Frequently Asked Questins, http://www.cms.hhs.gv/physicians/cciedits/. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 7

I N T R O D U C T I O N jurisdictin t jurisdictin, we instructed the carriers t cmplete mre than ne survey; therwise, we instructed them t cmplete ne survey. In ur analysis, we applied the carrier s respnse t all f the applicable jurisdictins. Therefre, ur ttal number f carriers is 56. We cnducted the surveys frm Octber thrugh December 2004. Standards This inspectin was cnducted in accrdance with the Quality Standards fr Inspectins issued by the President s Cuncil n Integrity and Efficiency and the Executive Cuncil n Integrity and Efficiency. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 8

Δ F I N D I N G S Medicare allwed payments fr Frty percent f cde pairs billed with 40 percent f cde pairs that did mdifier 59 in FY 2003 did nt meet prgram nt meet the fllwing prgram requirements, resulting in $59 millin in requirements: (1) the services were imprper payments nt distinct frm each ther r (2) the services were nt adequately dcumented. We estimate that Medicare allwed $59 millin fr these services in FY 2003. A summary f imprper payments is presented in Table 1 belw. Table 1. Cde Pairs That Did Nt Meet Prgram Requirements Type f Errr Percentage f Cde Pairs Prjected Allwed Amunt (Millins) Services nt distinct 15% $31 Services nt adequately dcumented 25% $28 - Primary, secndary, r bth services nt dcumented 12% $16 1 - Different cde shuld have been billed 7% N/A 2 - Dcumentatin insufficient t make a determinatin 5% $9 - Dcumentatin nt prvided 1% $3 Ttal 40% $59 1 Estimate includes allwed amunts fr secndary services nly. 2 We did nt estimate allwed amunts when ne r bth services shuld have been cded differently. Surce: Office f Inspectr General analysis f medical recrds request and cding review results, 2005. Fifteen percent f cde pairs billed with mdifier 59 were nt distinct. Mdifier 59 was used inapprpriately with 15 percent f the cde pairs because the services were nt distinct frm each ther. In mst cases, services were nt distinct because they were perfrmed at the same sessin, same anatmical site, and/r thrugh the same incisin. Medicare allwed an estimated $31 millin fr the secndary services in these cde pairs. Secndary services are the services that CCI edits wuld deny. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 9

F I N D I N G S Five cde pairs represented ver half f the services that were nt distinct. Just five cde pairs made up 53 percent f the services that were nt distinct, representing an estimated $11 millin in payments. We cmpared the percentage f services that were nt distinct fr these five cde pairs t the percentage f services that were nt distinct fr all ther cde pairs in ur ppulatin. Our cmparisn fund a statistically significant difference between these tw grups. 24 In ur sample data, mdifier 59 was used inapprpriately mst ften with the CCI cde pair fr bne marrw bipsy (38221) and bne marrw aspiratin (38220). This cde pair represented 13 f ur 62 sampled services that were nt distinct frm each ther. In all f these cases, mdifier 59 was inapprpriate because the tw services were nt distinct since they were perfrmed at the same sessin and thrugh the same incisin. Pursuant t the NCCI plicy manual, these tw prcedures are nly distinct when perfrmed thrugh different incisins r at different sessins. 25 A cde pair fr physical therapy (97140/97530) represented anther eight f ur sampled services that were nt distinct frm each ther. In all f these cases, mdifier 59 was nt apprpriate because the medical recrd did nt dcument that the services were perfrmed in different 15-minute time intervals. Pursuant t the Medicare Claims Prcessing Manual, time spent perfrming physical therapy services must be included in the medical recrd. 26 Withut this dcumentatin, these services cannt be cnsidered distinct. A cytpathlgy cde pair (88108/88104) represented six f the services billed inapprpriately with mdifier 59 in ur sample. In mst f these cases, the dcumentatin shwed that the services were perfrmed n the same specimen; therefre, pursuant t the NCCI plicy manual, nly ne cde shuld have been billed. 27 Tw cde pairs fr chemtherapy and IV infusin (96410/90780 and 96408/90780) represented anther six f ur sampled services that were nt distinct. In all f these cases, the dcumentatin shwed that tw 24 Fr the five cde pairs, 29 percent f services were nt distinct. Fr all ther cde pairs, 9 percent f services were nt distinct. This difference is statistically significant at the 95 percent cnfidence level based n a chi-square test f independence (p =.0016). 25 Versin 9.3, Chapter I, pp. 14-15. 26 Chapter 5, Sectin 20.2, http://www.cms.hhs.gv/manuals/104_claims/clm104c05.pdf. 27 Versin 9.3, Chapter X, p. 3. OEI-03-02-00771 U SE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 10

F I N D I N G S services were perfrmed but did nt indicate whether the supprtive medicatin was administered sequentially t the chemtherapy. Pursuant t the NCCI plicy manual, such dcumentatin is needed t demnstrate that these services were perfrmed at different sessins and, therefre, are bth payable. 28 Services fr an additinal 28 cde pair cmbinatins in ur sample were fund t be nt distinct. Each f these cde pairs had ne r tw services that were nt distinct. Twenty-five percent f the cde pairs billed with mdifier 59 were nt adequately dcumented. Mdifier 59 was used inapprpriately with 25 percent f the cde pairs because the services were nt adequately dcumented in the medical recrd. In mst cases, either ne r bth f the services in a cde pair was nt dcumented r the dcumentatin indicated that a different cde shuld have been billed fr ne r bth f the services. In the remaining cases, either the dcumentatin was insufficient t make a determinatin r the dcumentatin was nt prvided. Medicare allwed an estimated $28 millin fr the secndary services in these cde pairs. One r bth services nt dcumented. Fr 12 percent f the cde pairs, ne r bth f the services billed were nt dcumented in the medical recrd. Specifically, in 4 percent f cde pairs, the primary service was nt dcumented. We did nt calculate the amunt Medicare allwed fr these services. In the remaining 8 percent f these cde pairs, either bth services were nt dcumented r the secndary service was nt dcumented. Medicare allwed an estimated $16 millin fr secndary services when these services were nt dcumented. Fr example, ne prvider billed fr tw pdiatry services. Hwever, the medical recrd nly shwed that the patient visited the ffice t pick up medicatin. The recrd did nt include dcumentatin fr either pdiatry service billed. Different cde shuld have been billed. Fr 7 percent f the cde pairs, anther cde shuld have been billed fr ne r bth f the services perfrmed. We did nt analyze whether these services had been upcded (billed at a higher level than the service actually perfrmed) r dwncded. Therefre, we did nt calculate the amunt Medicare allwed fr these services. 28 Versin 9.3, Chapter XI, p. 9. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 11

F I N D I N G S Dcumentatin insufficient t make a determinatin. Fr 5 percent f the cde pairs, the dcumentatin prvided was nt sufficient t determine whether the services were distinct. In these cases, the dcumentatin prvided was nt legible r did nt sufficiently supprt the use f the cde(s) billed. Fr example, a prvider dcumented remval f plyps but nt the specific technique fr the remval. Therefre, the dcumentatin was insufficient fr the cder t determine the crrect cde fr the prcedure. Medicare allwed an estimated $9 millin fr the secndary services in these cde pairs. Dcumentatin nt prvided. Prviders did nt send us the requested recrds fr 1 percent f the cde pairs. These prviders either did nt send recrds fr the beneficiary fr the date f service we requested r did nt send recrds fr the beneficiary at all. Medicare allwed an estimated $3 millin fr the secndary services in these cde pairs. Cnfidence intervals fr these estimates are presented in Appendix B. The Medicare Claims Prcessing Eleven percent f cde pairs billed with mdifier Manual states that mdifier 59 59 in FY 2003 were paid when the mdifier was shuld be billed with the secndary, billed with the incrrect cde additinal, r lesser service in a CCI cde pair. Accrding t CMS, this is the secnd cde in a CCI cde pair. Hwever, ur review f 3.4 millin cde pairs billed with mdifier 59 in FY 2003 fund that 11 percent f the cde pairs were paid when mdifier 59 was attached t the primary cde nly. This billing errr represented $27 millin in Medicare paid claims. In additin, anther 13 percent f cde pairs were paid when mdifier 59 was billed with bth the primary and secndary cdes. The remaining 76 percent f cde pairs were paid when mdifier 59 was attached t the secndary cde nly. Fr each carrier, we analyzed the paid claims fr cde pairs billed with mdifier 59. Thirty-seven carriers paid fr at least 10 percent f their cde pairs when the mdifier was attached t the primary cde nly. These carriers paid between 10 and 32 percent f cde pairs billed with mdifier 59 when mdifier 59 was billed with the primary cde nly. Nineteen f the thirty-seven carriers paid between 10 and 15 percent, 16 carriers paid between 16 and 28 percent, and 2 carriers paid 32 OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 12

F I N D I N G S percent fr cde pairs billed with mdifier 59 when mdifier 59 was billed with the primary cde nly. Mst carriers did nt cnduct reviews f Between 2002 and 2004, 11 f 56 carriers cnducted 1 r mre mdifier 59, but thse carriers that did fund reviews f the use f mdifier 59. prviders wh were using mdifier 59 Tw carriers had cnducted inapprpriately prepayment reviews f mdifier 59, eight had cnducted pstpayment reviews, and ne cnducted bth types f reviews. Ten carriers cmpleted at least ne review and ne carrier s nly review was still in prgress. All f the carriers that cmpleted reviews reprted that they fund prviders wh were using mdifier 59 inapprpriately. Many carriers chse t fcus n mdifier 59 because they had identified vulnerabilities thrugh analysis f claims data r thrugh prvider appeals and denials. The 11 carriers cnducted a ttal f 32 reviews f services billed with mdifier 59. One-third f the 32 reviews cnducted by the carriers fund errr rates f 40 percent r mre amng certain prviders fr services billed with mdifier 59. Specifically, three f these reviews fund errr rates f nearly 100 percent amng prviders billing fr bne marrw bipsy and bne marrw aspiratin with mdifier 59. As stated previusly, this is the cde pair that made up the highest number f services in ur sample that were nt distinct frm each ther. Anther six reviews fund errr rates between 5 and 20 percent fr services billed with mdifier 59. Five reviews fund n errrs. We did nt receive errr rates fr 10 reviews because either the reviews were still in prgress r the errr rate was nt prvided by the carrier. Several carrier reviews resulted in the cllectin f verpayments. One carrier recvered ver $200,000 in imprper payments. In additin, sme carriers put certain prviders claims under review as a result f their findings. Carriers that cnducted reviews and fund inapprpriate use f mdifier 59 reprted that they either educated individual prviders n the prper use f the mdifier r ffered all prviders educatin n mdifier 59 thrugh seminars and/r newsletter articles. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 13

Δ R E C O M M E N D A T I O N S The Centers fr Medicare & Medicaid Services shuld encurage carriers t cnduct prepayment and pstpayment reviews f the use f mdifier 59. Our inspectin fund that 40 percent f cde pairs billed with mdifier 59 were inapprpriate. Carrier reviews als indicated that prviders were using mdifier 59 inapprpriately. We recmmend that CMS encurage carriers t cnduct prepayment and pstpayment reviews f the use f mdifier 59. We believe carriers shuld use data analysis t determine hw t best carry ut these reviews. Because we fund that a small number f cde pairs made up mre than half f the services that were nt distinct in ur sample, carriers may want t fcus their initial analysis n these cde pairs. The Centers fr Medicare & Medicaid Services shuld ensure that the carriers claims prcessing systems nly pay claims with mdifier 59 when the mdifier is billed with the crrect cde. The Medicare Claims Prcessing Manual states that mdifier 59 shuld be billed with the secndary, additinal, r lesser service in the CCI cde pair. Hwever, ur analysis indicated that the majrity f carriers paid at least 10 percent f their claims billed with mdifier 59 when the mdifier was attached t the primary cde nly. This raises questins abut hw Medicare guidelines are being applied within carriers claims prcessing systems. AGENCY COMMENTS CMS cncurred with ur recmmendatin t encurage carriers t cnduct prepayment and pstpayment reviews f the use f mdifier 59. CMS stated it wuld infrm its cntractrs f ur study s they can cnsider ur data when priritizing their payment review strategies. After these reviews are cmpleted, suspected fraud and abuse cases will be frwarded t the apprpriate prgram safeguard cntractr fr further develpment. CMS als cncurred with ur recmmendatin t ensure that carriers claims prcessing systems nly pay claims when mdifier 59 is billed with the secndary cde. Hwever, CMS reprts that it is nt able t implement an edit t ensure this crrect cding at the present time. Instead, CMS will: OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 14

R E C O M M E N D A T I O N S Distribute this reprt t its cntractrs respnsible fr identifying imprper payments and ptential fraud, waste, and abuse. Share this reprt with the Recvery Audit Cntractrs that were implemented n a pilt basis under the Medicare Prescriptin Drug, Imprvement, and Mdernizatin Act f 2003. Issue a Medlearn Matters article t prvide cntinuing educatin t physicians n hw t bill mdifier 59 apprpriately. The full text f CMS s cmments can be fund in the Agency Cmments sectin f this reprt. OFFICE OF INSPECTOR GENERAL RESPONSE We appreciate CMS s multiprnged apprach t addressing the inapprpriate billing and use f mdifier 59 n Medicare claims. While CMS reprts that it cannt implement a claims prcessing edit t ensure that claims with mdifier 59 are billed with the crrect cde at this time, we hpe CMS will cnsider implementing this type f edit in the future. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 15

Δ A P P E N D I X ~ A Descriptin f Stratified Sample Ppulatin Medicare Sample Strata Descriptin f Cde Pairs f Cde Pairs Allwance fr Secndary size Cde 1- High frequency cde pairs 17000/11100 Destry benign, premalignant lesin/ Bipsy f skin lesin 1,214,267 $ 65,981,193 75 96410/90780 Chemtherapy infusin methd/ IV infusin therapy, 1 hr 97140/97530 Manual therapy/ Therapeutic activities 2- High frequencydebridement services 96408/90780 Chemtherapy, push technique/ IV infusin therapy, 1 hr 11055-56/ Trim skin lesin-trim skin lesins, 2 t 4/ 11720-21 Debride nail, 1 t 5-Debride nail, 6 r mre 11719/11720 Trim nail(s)/ Debride nail, 1 t 5 11057/11721 Trim skin lesins, ver 4/ Debride nail, 6 r mre 11040/11721 Debride skin, partial/ Debride nail, 6 r mre 623,654 $ 21,373,167 50 3- Ptential high errr rate and high frequency cde pairs 88108/88104 Cytpathlgy, cncentrate tech/ Cytpathlgy, fluids 74,942 $4,554,038 40 38221/38220 Bne marrw bipsy/ Bne marrw aspiratin 4- Ptential high errr rate and lw frequency cde pairs 5- High secndary cde dllar amunt Any cmbinatins f the fllwing cdes: pathlgy cdes: 88104-88112 (excluding 88108/88104), 88160-88162, 88173, 88174, 88180, 88271-88275, 88300-88365; urinary cdes: 52000-52640; eye surgery cdes: 65400-67228; extremity surgery cdes: 23930-26952 Allwance fr secndary cde was greater than r equal t $200 (excluding cde pairs in strata 3 and strata 4) 41,741 $ 5,327,770 35 106,482 $ 39,225,417 50 6- Remaining cde pairs All ther cde pairs nt in strata 1 thrugh 5 1,365,551 $ 90,644,881 100 Ttal 3,426,637 $227,106,466 350 Surce: Office f Inspectr General sample f FY 2003 CCI cde pairs billed with mdifier 59. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 16

Δ A P P E N D I X ~ B The table belw cntains statistical estimates presented in the Findings sectin f this reprt. Pint estimates and cnfidence intervals were weighted based n the stratified randm sample design and are reprted at the 95 percent cnfidence interval. Estimates and Cnfidence Intervals Statistic Pint Estimate 95% Cnfidence Interval Ttal services that did nt meet prgram requirements 40.22% 34.12% - 46.32% $58,907,886 $47,210,537 - $70,605,236 Services that were nt distinct 14.79% 10.42% - 19.16% $30,616,030 $21,456,650 - $39,775,409 Services that were nt adequately dcumented 25.43% 20.04% - 30.82% $28,291,857 $19,466,497 - $37,117,217 Services where the primary, secndary, r bth services were nt dcumented 11.96% 7.94% - 15.98% $16,368,134 $9,589,143 - $23,147,125 Services where a different cde shuld have been billed Services where the dcumentatin was insufficient t make a determinatin 1 7.42% 4.28% - 10.56% 4.67% 1.98% - 7.36% $8,580,251 $3,688,575 - $13,471,928 Services where the dcumentatin was nt prvided 1 1.38% 0% - 2.77% $3,343,472 $0 - $7,089,485 Services represented by five cde pair cmbinatins that were nt distinct 53.36% 38.70% - 68.02% $11,222,880 $6,313,582 - $16,132,177 1 The relative precisin fr these estimates exceeds 50 percent. Surce: Office f Inspectr General analysis f medical recrds request and cding review results, 2005. OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 17

Δ A G E N C Y C O M M E N T S OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 18

A G E N C Y C O M M E N T S OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 19

Δ A C K N O W L E D G M E N T S This reprt was prepared under the directin f Rbert A. Vit, Reginal Inspectr General fr Evaluatin and Inspectins in the Philadelphia reginal ffice, and Linda M. Ragne, Deputy Reginal Inspectr General. Other principal Office f Evaluatin and Inspectins staff wh cntributed include: Tara Bernabe, Team Leader Nancy J. Mlyneaux, Prgram Analyst Linda Frisch, Prgram Specialist Dris Jacksn, Prgram Specialist Tricia Davis, Directr, Medicare & Medicaid Branch Barbara Tedesc, Mathematical Statistician Kevin Farber, Mathematical Statistician Sctt Hrning, Prgram Analyst Steve Milas, Prgram Analyst Michael P. Barrett, Prgram Analyst OEI-03-02-00771 USE OF M ODIFIER 59 TO B YPASS M EDICARE S CCI EDITS 20