Modifier 25: Where, When, and How to Use It Correctly

Modifier 25: Where, When, and How to Use It Correctly

Modifier 25 remains that prickly modifier that seems to be a part of strategic planning for payment reduction to providers by health plans.

For anyone who may not be aware, this modifier is appended to the evaluation and management (E&M) service code on claims to report a significant, separately identifiable E&M service by the same provider on the same day of another service or minor procedure.

Last year, Cigna delayed implementation of its planned Modifier 25 policy, which would have required that providers submit their office notes with their claims for certain established office and other outpatient encounters. The burden of producing documentation for each billable encounter would have been tremendous. Let us remember that E&M services account for nearly 80 percent of all billable services for many providers.

It is important for providers and coders to understand the billing criteria for Modifier 25. When an E&M service is reported in conjunction with another procedure, the E&M service being billed should include work performed that is above and beyond the usual preoperative and postoperative services associated with the procedure performed on the same day.

Providers should be aware of what services are included in a surgical package, or as part of pre- and post-work. If the E&M service was focused solely on preparing, prepping, educating, or evaluating the patient to ready them for that same-day procedure, the E&M should not be billed. Remember, procedures, including minor procedures, includes Relative Value Unit (RVU) credit for the pre- and post-work; therefore, we cannot double-dip.

So, when is it appropriate? 

Let us consider an oncology case wherein a patient presents for chemotherapy for stage III breast cancer. The patient also complains of loss of appetite and grade III diarrhea on this encounter. The provider evaluates the patient, assesses these problems, and prescribes medication. This would be an example of work that is significant and separately identifiable.

For decades, the Centers for Medicare & Medicaid Services (CMS) has focused reviews of claims for which the E&M code(s) were billed with Modifier 25. In 2005, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) published an analysis that indicated a 35-percent error rate, when documentation did not support use of the modifier.

Fast-forward almost 20 years later, and Modifier 25 continues to be part of the OIG Work Plan, and the reason for several False Claims Act and civil monetary penalty settlements. We have seen many providers and provider groups held financially responsible for improper reporting of this modifier.

Because of all this activity, some payers have instituted policies through which use of Modifier 25 results in an automatic claim reduction in payment for either the E&M service or the associated procedure code. Many payers perform post-payment reviews that may result in an overpayment letter to providers.

A strong internal audit process will help identify risk areas and correct claims pre-bill where you can. The American Medical Association (AMA) published an article last year titled “Reporting CPT Modifier 25,” and it may serve as a resource for creating your own internal policy. All the Medicare Administrative Contractors (MACs) have published tools and resources for proper use of the modifier. Continuous education is needed to ensure proper reporting and reimbursement, so let us keep this one on our radar and support our providers where we can.

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