Published 9/1/2010
Margaret M. Maley, BSN, MS

Back to basics

The multiple procedure reduction rule and modifier 51

Occasionally, it’s important to get back to basics. This article takes a back-to-basics look at modifier 51 and the multiple procedure payment policy.

When two or more medical procedures are performed during the same session by the same provider, Medicare does not reimburse all procedures at the full billed or allowable amount. Under the multiple procedure reduction rule, Medicare will allow 100 percent of the fee schedule amount (or billed amount if it is less) for the first procedure reported, and 50 percent for the second, third, fourth, and fifth procedures. When more than five procedures are performed in the same session, an operative report must be submitted and the Medicare carrier determines if any additional reimbursement is allowed.

(Medicare has separate rules for endoscopy procedures, including many arthroscopic procedures. See the end of the article for more on the endoscopy rules.)

Multiple procedures are reported at their full value, with the highest valued procedure listed first, followed by the additional procedures in descending order of value, with the modifier 51 appended (Table 1). The payor will then apply the discount.

The convention is to list the full value of each service; the payor is expected to apply the multiple procedure reduction(s). A similar discount should be considered when no third party payor is involved and the patient is “self pay.”

Other payors may use the Medicare policy or create their own policies for multiple procedure reimbursement. Some payors reimburse 100 percent of the allowable amount for the first procedure listed and just 25 percent of the allowable amount for any additional procedures. Non-Medicare payors may limit the number of procedures they will reimburse in the same session.

The multiple procedure payment policy does not apply to evaluation & management (E&M) or physical medicine and rehabilitation (PM&R) services, and it cannot be used to reduce the payment for supplies.

Codes that are defined as “add-on” procedures (found in Appendix D of the Current Procedural Terminology (CPT) manual and listed in the main body of the manual with a “+” proceeding them) are not subject to the multiple procedure reduction and should never be reported with a modifier 51. The same is true for “modifier 51 exempt” services found in Appendix E and listed with a “” preceding them in the main body of the manual. Reimbursement for these services should not be reduced for multiple procedures, and they should never have a modifier 51 appended. A good tip for procedures that are exempt from the modifier 51 rule is that many of the exempt procedures include the phrase “each additional” in their CPT descriptors.

The following modifier 51 exempt codes are frequently used in orthopaedics:

  • 20974—Electrical stimulation to aid bone healing; noninvasive (nonoperative)
  • 20975—Electrical stimulation to aid bone healing; invasive (operative)

The multiple procedure reduction rules do apply to office procedures such as injections. For example,
Table 2 shows the reporting and reimbursement for an orthopaedist who injects a new patient’s frozen right shoulder and also treats the patient’s right elbow effusion.

According to the 2010 Orthopaedic Code X, injections are subject to Medicare’s standard multiple procedure payment policy (Fig. 1). The details screen lists a “2” indicator next to “Multiple Procedures.” Clicking on the “Fee Schedule Definitions” arrow for multiple procedures reveals a list defining the indicators for multiple procedures.

The 2 indicator for multiple surgeries indicates that the standard adjustment rules of 100 percent, 50 percent, 50 percent, 50 percent, and 50 percent apply for Medicare and any payor following Medicare guidelines.

Some payors, including Medicare, may issue instructions not to append the 51 modifier when multiple procedures are performed, asserting that they will do the appropriate discounting. However, the AAOS recommends that practices append the modifier appropriately and check the Explanation of Benefits (EOB) to be certain that modifier 51 exempt and add-on services are not inappropriately discounted as multiple procedures.

Both the surgeon and the business office must understand the different multiple procedure discounting rules used by various, non-Medicare payors. This article outlines the Medicare policy, but practices should ensure that other payors clearly define their multiple procedure payment policy before the practice signs any managed care contract. Practices should also consider the reduction protocol when working with patients who pay cash. Add-on and modifier 51 exempt services should not be subject to the multiple procedure discounts.

Different rules for arthroscopies
Not all procedures are subject to the standard multiple procedure reduction. Medicare and some other payors apply a different set of rules when multiple arthroscopies are performed during the same session. These rules will be discussed next month.

Margaret M. Maley is a consultant with KarenZupko & Associates (KZA), a Chicago-based healthcare consulting firm. She is a presenter for the coding and reimbursement workshops jointly sponsored by the AAOS and KZA.