Private payer coding issues

By Tiffany McFarland, RHIT, Analyst, Coding & Reimbursement, and Louis Terranova, MHA, Assistant Director, Practice Advocacy, April 1, 2022

Academy coding staff address important coding topics each month in DermWorld Coding Consult. Read more Derm Coding Consult articles.

In 2021, dermatologists and non-physician clinicians (NPCs) faced many coding challenges, largely due to the adoption of the 2021 Evaluation and Management (E/M) coding guideline revisions on Jan. 1, 2021. As a result, dermatologists and NPCs have sought guidance from the AADA coding team and the Academy’s Private Payer Resource Center about several coding and reporting issues with private payers.

This article addresses some of the issues brought to the attention of Academy staff and provides guidance on effective resolutions and resources you can use.

Overutilization of modifier 25

CMS and private payers have indicated overutilization of modifier 25 by dermatologists and NPCs. This resulted in the Office of the Inspector General (OIG) including auditing modifier 25 in the 2021 OIG Work Plan, which indicated that dermatologists and NPCs reported an E/M service on the same date as a minor procedure resulting in the use of modifier 25 on the claim more than 50% of the time. Learn more about the 2021 OIG Audit Work Plan.

Resolution

Understand the appropriate use of modifier 25.

Resources

According to AMA and CMS coding guidance, modifier 25 is reported when a significant, separately identifiable E/M service is performed by the same physician or other qualified health care professional on the same day of the procedure or other service. The E/M service should include work that is above and beyond the usual pre- and post-operative care associated with the procedure or service performed on the same date of service.

Medical record documentation for the E/M service must adequately support the AMA’s 2021 CPT® office or other outpatient E/M guidelines based on medical decision making (MDM) or total time to be justified as distinct from the minor procedure.

The AADA has developed a series of E/M coding articles that include dermatologic vignettes, with coding examples based on the 2021 E/M and other outpatient service guidelines, to assist with determining the appropriate level of service and documentation required for E/M services reported with a minor procedure on the same date.

Further, the AADA Modifier 25 Workgroup is developing a strategy to educate key decisionmakers on the appropriate use of modifier 25 in a dermatology setting.

The AADA Practice Management Center includes articles on modifier 25. You can also consult these resources:

• DermWorld: Modifier 25 under the microscope

• Coding Resource Center

• DermWorld: Modifier 25 revisited

• DermWorld: Modifier 25 E/M 2021 coding

Modifier 25 payment reduction

Private payers continue to look at modifier 25 to reduce payment primarily due to their misperception of overlap between E/M services and minor procedures performed on the same day. For example, in 2021, Blue Cross Blue Shield of Massachusetts implemented a policy to reduce payment for reported E/M services appended with modifier 25 when reported on the same date as a minor procedure (0- and 10-days post-operative period) or major procedures (90-days post-operative period). Such payment policies that reduce payment impede access to effective and efficient patient care when services are provided on the same day.

CPT guidelines specify that modifier 25 is used to report a significant, separately identifiable E/M service by the same physician or health care professional on the same day as a procedure or other service. Furthermore, in the AMA RUC valuation of codes, overlap in time and work is being removed to address “double counting” and further reductions are unnecessary.

Resolution

AADA advocacy.

Resources

The AADA opposes payer policy edits that create unnecessary barriers to efficient care and result in unwarranted claim denials, which contribute to the growing administrative burdens impacting practices across the country. To assist members, the AADA has created several resources to address modifier 25 payment reductions including:

• Modifier 25 payer advocacy tools

• Private payer appeal letter tool: Appeal letter templates help dermatologists and NPCs appeal private payer denied claims when payments are inappropriately reduced. The template may be modified to specifically address the practice’s circumstances.

E/M downcoding

Some payers such as Anthem, Aetna, and UnitedHealthcare (UHC) have sent out provider “education” letters to dermatology practices with an attempt to show how the practice’s E/M coding compares to their specialty peers. Payers are reviewing claims from dermatologists and NPCs that are identified as coding high levels of E/M service compared to their peers.

Some private payers are using proprietary algorithms that may incorrectly link specific diagnoses to certain levels of E/M, triggering claim edits within their claim-processing systems. If the payer deems that the diagnosis reported on the claim does not support the high-level E/M service code based on their internal claim review process, the carrier may:

• Deny the claim and request resubmission of the claim with the appropriate E/M level;

• Hold the claim and request medical record documentation that supports the E/M code reported; and/or

• Adjust reimbursement to reflect the lower E/M level supported by the diagnosis on the claim.

Resolution

Ensure the medical record documentation supports medical necessity for the service reported.

Resources

The practice’s medical record documentation must support the E/M level reported. This information supports the practice in the defense of the coding and billing reported on the claim to the payer.

The Academy has several resources to guide dermatology practices in appropriate medical record documentation and E/M coding. Dermatology practices must also conduct periodic internal audits of their medical record documentation to ensure it justifies medical necessity and supports the level of services provided and reported.

UnitedHealthcare changes to fee schedules

UHC has sent notifications to practices in several states announcing planned changes to their commercial plans’ contracted fee schedule, resulting in substantial rate reductions. The UHC letter states that the rates will be adjusted to the 2020 CMS Medicare physician fee schedule RVUs.

While CPT coding guidelines do not have direct impact on reimbursement rates, and the coding guidelines only apply to how services are reported, the published values for each CPT code are used by payers to determine payment.

Resolution

Contact UHC and review practice fee schedule.

Resources

It is important for dermatology practices to review their UHC fee schedule annually to ensure the reimbursement rates reflect the current AMA/Specialty Society Relative Value Unit Scale.

If the RVUs are inconsistent with current values, we recommend that dermatologist consider making a counteroffer to UHC that takes into consideration the annual increase in practice expense, as this increase is accounted for each year in the CMS Medicare physician fee schedule RVU update.

Dermatology practices should verify that UHC is in compliance with the contracted fee schedule by periodic review of paid claims, to determine if the allowed charges are in line with the agreed-upon fee schedule.

Additionally, the contract should include a clause that prohibits unilateral changes by the payer to terms of the contract without the practice signing off on those changes. At the very least, the contract should require the insurer to notify the practice about substantial changes to the fee schedule, providing sufficient time for the practice to review.

The AADA Private Payer Resource Center provides a webinar and additional resources such as a DermWorld article on negotiating fee schedules to support practices in their negotiations on payer contracting.

Additional DermWorld Resources