Understanding is key to avoiding denials
Modifier 25 is used when a minor procedure (one with a 0- or 10-day global period) and a significant and separately identifiable evaluation and management (E/M) service are performed during the same session or day.

The Office of the Inspector General (OIG) and Medicare have identified the use of modifier 25 as an area of potential overuse and misuse. This is not a new issue; problems with the use of modifier 25 have been known since 2005, when the OIG published an analysis showing that 35 percent of Medicare claims with modifier 25 did not meet program requirements.

Medicare and other payers are increasing scrutiny on the use of modifier 25. In two recent investigations, the OIG and federal prosecutors settled with physicians who allegedly misused modifier 25 and received payments. In addition, physicians often experience systematic claim denials and/or reductions in payments when modifier 25 is used.

Understanding the correct use of this modifier and the required documentation is key to avoiding problems and adjudicating inappropriate claim denials or underpayments. This article reviews the current rules and guidelines and provides clinical scenarios as examples.

Definitions and rules
Billing and coding guidelines are generally based upon Current Procedure Terminology (CPT) and/or Medicare rules, which are not always the same. Fortunately, the rules are reasonably similar for modifier 25.

CPT indicates that it may be necessary to indicate that, on the day a procedure or service identified by a CPT code was performed, the patient's condition required a significant, separately identifiable E/M service. This E/M service was above and beyond the usual preoperative and postoperative care associated with the procedure performed, though this E/M service may be prompted by the same symptoms or condition for which the procedure and/or service were provided. As such, different diagnoses are not required for reporting the E/M services on the same date.

Medicare rules regarding modifier 25 can appear to be inconsistent, contradictory, and often confusing. Moreover, payers often selectively use limited content from Medicare documents to justify claim denials, without understanding and applying the overall context and specific details.

The Medicare Claims Processing Manual states, "the decision to perform the minor procedure is typically done immediately before the service, it is considered a routine preoperative service and a visit or consultation is not billed in addition to the procedure." In another section, the manual indicates "the initial evaluation is always included in the allowance for a minor surgical procedure."

Thus, it appears that Medicare does not allow a physician to bill for an E/M service on the same day as a minor procedure. However, this is not correct because Medicare provides clear rules as to when an E/M service can be billed on the same day as a minor procedure.

According to Medicare:

• Modifier 25 is used to facilitate billing of E/M services on the day of a procedure for which separate payment may be made.
• It is used to report a significant, separately identifiable E/M service by the same physician on the day of a procedure.
• The physician may need to indicate that on the day a procedure was performed, the patient's condition required a significant, separately identifiable E/M service above and beyond the usual preoperative and postoperative care associated with the procedure that was performed.
• Different diagnoses are not required for reporting the E/M service on the same date as the procedure or other service.
• Both the medically necessary E/M service and the procedure must be appropriately and sufficiently documented in the patient's medical record to support the claim for these services.
• This circumstance may be reported by adding the modifier 25 to the appropriate level of E/M service.

Medicare payment rules also specify that claims containing E/M codes with modifier 25 should not be denied and subject to prepayment review except when contractors have met the following conditions:

• Conducted a specific medical review process and determined, after reviewing the data, that an individual or group have high statistics in terms of the use of modifier 25
• Have done a case-by-case review of the records to verify that the use of modifier -25 was inappropriate
• Have educated the individual or group as to the proper use of this modifier

It is the opinion of the AAOS that the Medicare rules and payment policies regarding modifier 25 should be followed by all third-party sponsors.

Determining significant and separately identifiable services
What exactly does "significant and separately identifiable" mean? It is any E/M service that is above and beyond the usual preoperative and postoperative care associated with the procedure. Thus, the critical issue is understanding the usual or typical E/M work performed prior to and after the procedure.

The specific components of the preoperative and postoperative work of procedures are included in the data elements used by the Relative Value Update Committee and the Centers for Medicare & Medicaid Services for the assignment of relative value units to minor procedures. This information can be obtained from commercially available coding resources.

For joint injections and similar procedures, the preservice work includes explaining the procedure to the patient and/or family, discussing possible complications, and obtaining informed consent. The postservice work includes applying a dressing, monitoring for immediate side effects, providing recommendations on activity modification, and counseling the patient and/or family about symptoms and signs of possible complications.

If the services provided in the E/M visit are more than this typical pre- and postservice work, they can be considered significant and separately reportable.

Clinical scenarios
The following clinical scenarios provide examples of when it is or is not appropriate to bill an E/M service with a minor procedure.

Example 1: A 45-year-old male new patient is seen for assessment and management of shoulder pain. The physician completes an evaluation consisting of a detailed history and detailed examination. Radiographs of the shoulder are ordered and personally viewed. A working diagnosis of rotator cuff tendinitis is formulated.

The patient is educated about the nature of the illness and counseled on treatment options. A prescription for an NSAID and a referral to physical therapy are provided. After a discussion of the risks and benefits, the patient elects for a subacromial injection of local anesthetic and corticosteroid, which is administered by the physician at the time of the office visit.

The E/M service meets the criteria of a level 3 new patient (99203). Because the E/M work of the office visit is above and beyond that included in the procedure, the visit is considered separately reportable.

The same diagnosis can be used for both the office visit and the procedure. It is strongly recommended that the documentation have a separate "procedure" report or paragraph for the injection. The procedure note should routinely include the specific elements of pre- and postservice detailed above.

Example 2: A 52-year-old woman with knee pain returns to her surgeon 2 years following arthroscopic medial meniscetomy. The physician completes a detailed history and examination. The operative report and photographs are reviewed. The images from a recently performed MRI are viewed and compared to the official report. Plain radiographs of the knee are ordered and personally viewed. The diagnosis of knee arthritis is formulated.

The patient is educated about the nature of the illness and counseled on treatment options. Prescriptions for an NSAID and an unloader brace are provided, as well as a referral to physical therapy. After a discussion of the risks and benefits, the patient elects to receive an intra-articular injection of local anesthetic and corticosteroid, which is administered by the physician at the time of the office visit.

The E/M service meets the criteria of a level 4 established patient (99214). Because the E/M work of the office visit is above and beyond that included in the procedure, the visit is considered separately reportable.

Again, the same diagnosis can be used for both the office visit and the procedure; a separate "procedure" report or paragraph for the injection is recommended.

Example 3: A 56-year-old female is seen for evaluation of knee and shoulder pain 18 months after the most recent visit. The physician completes an expanded, problem-focused history and examination. Radiographs of the knee and shoulder are ordered and viewed. The assessment and diagnoses are rotator cuff tendinitis and knee osteoarthritis.

The patient is educated about the nature of the problems and counseled on multiple treatment options. Prescriptions for an NSAID, an unloader brace, and physical therapy are provided. After a discussion of the risks and benefits, the patient elects to receive a subacromial injection of local anesthetic and corticosteroid, which is administered by the physician at the time of the office visit.

The E/M service meets the criteria of a level 3 established patient (99213). The procedure is for the rotator cuff tendinitis, whereas the E/M visit is for both the rotator cuff tendinitis and knee arthritis. Because the E/M service is for a different diagnosis than the procedure, the office visit is considered separately reportable. The diagnosis for the E/M visit should be only knee osteoarthritis and the diagnosis for the injection procedure is rotator cuff tendinitis.

Summary
Understanding the correct use of modifier 25 and the required documentation is critical to avoiding problems and adjudicating inappropriate claim denials or underpayments.

The key requirement of a "significant and separately identifiable" E/M service is that the work for the E/M service is substantially more and different than the typical preoperative and postoperative E/M work included in the minor procedure.

William R. Creevy, MD, is a member of the AAOS Coding, Coverage, and Reimbursement Committee.

Reference:
Medicare Claims Processing Manual Chapter 12 - Physicians/Nonphysician Practitioners. Revision 3476, 03/11/16. Section 40.2 A8, page 97.