Multiple Surgery Reduction Rule: Sometimes less is more

By Faith C. M. McNicholas, RHIT, CPC, CPCD, PCS, CDC, Manager, Lead Coding and Reimbursement Strategist, August 1, 2023

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

The Multiple Surgery Reduction Rule (MSRR) is a Medicare policy that was introduced and implemented in 1995 as part of the Balanced Budget Act (BBA). This rule aims to reduce the cost of medical care by decreasing the amount paid when multiple surgical procedures are performed on the same patient by the same physician or physicians in the same group practice during the same surgical session/visit. The rule applies to a wide range of medical procedures performed by dermatologists, and it includes both the professional and technical components of a procedure. The policy does not apply to Evaluation and Management (E/M) services, diagnostic radiology services, and anesthesia services.

In this article, we discuss the impact of the MSRR on coding and reimbursement for dermatology services.

Most dermatology procedures include pre-, intra-, and post-procedure work. The Medicare National Correct Coding Initiative (NCCI) manual states in part that when multiple procedures are performed at the same patient encounter, there is often overlap of the pre-and post-procedure work. Therefore, payment methodologies for MSRR account for the overlap of the pre-and post-procedure work.

The rule was developed to apply to services provided to Medicare beneficiaries and is designed to encourage dermatologists and non-physician clinicians to perform all necessary procedures during a single surgical session rather than spreading them out over multiple sessions. This policy has been in place for over two decades, and it has had a significant impact on the health care industry, resulting in private payers also adopting the policy. However, private payers may implement this policy differently from Medicare.

Impact on dermatology services

The MSRR has both positive and negative impacts on dermatology. On the positive side, the rule encourages efficiency in the delivery of care and reduces health care costs because dermatologists perform procedures efficiently and minimize the number of visits required for patients.

On the negative side, the rule impacts the payment rates for the secondary and all additional procedures performed during the same encounter. Because dermatology encounters frequently involve the performance of multiple surgical procedures during a single surgical session, the MSRR impacts payment for the second and all additional procedures on the date of service (DOS) which may discourage dermatologists from performing multiple procedures during a single visit, resulting in more patient visits and increased health care costs overall.

For example, during a typical dermatology encounter, the dermatologist may perform a biopsy and a lesion excision on the same patient during the same surgical session. Again, the NCCI manual defines multiple surgeries/procedures as separate surgeries/procedures performed by a single dermatologist or dermatologists in the same group practice on the same patient at the same operative session or on the same day for which separate payment may be allowed. Under the MSRR, the reimbursement for one of these procedures is reduced.

Medicare pays for multiple surgeries by ranking them from the highest Medicare Physician Fee Schedule (MPFS) amount to the lowest amount. When the same dermatologist performs more than one surgical service during the same encounter, the allowed amount is 100% for the surgical code with the highest MPFS amount. The allowed amount for the subsequent surgical codes is based on 50% of the MPFS amount.

For example, if a dermatologist performs a skin biopsy and skin lesion excision during a single encounter/session, the MSRR will be implemented, and payment rates will be reduced by 50% for the lower-valued procedure code. If more than two procedures are performed during the same session, Medicare will reimburse the service based on the 100%, 50%, 50%, 50%, 50% rule. (Please check directly with private payers as this rule may vary from one payer to another.)

Another challenge that dermatologists face is how to determine which procedure(s) are subject to the MSRR. This is because the rule applies to both “related” and “unrelated” procedures. Related procedures are typically performed together and considered to be integral to each other, such as a biopsy and a lesion excision. For example, during a lesion excision procedure, the tissue removed is typically submitted to pathology for histopathologic examination and determination of the final diagnosis. Therefore, in this circumstance, the submission of tissue removed during an excision is integral to the lesion excision and is not separately reported as a ‘biopsy.’ Unrelated procedures are those that are not typically performed together, such as a biopsy and wart destruction because skin tissue is rarely obtained for histopathologic examination before wart destruction unless the physician has other clinical concerns. The determination of whether a procedure is related or unrelated can be challenging, and it requires careful documentation by the dermatologist.

Impact on coding

It is important for dermatologists to accurately document the procedures that are performed during a single surgical session. The documentation must delineate the procedure(s) performed to indicate that they were either performed on different anatomic locations or during the same operative session on the same date of service, but are not related.

The reduction in payment rates will vary depending on the specific procedure performed and the number of procedures reported. That is why documentation is critical for accurate coding and billing as it will prompt the coder/biller to append an appropriate NCCI modifier that will allow for reimbursement to be processed accurately.

How does your Medicare Administrative Contractor (MAC) identify when to apply the MSRR?

It is important to note that not all procedure codes qualify for the MSRR. Medicare uses the Medicare Physician Fee Schedule Data Base (MPFSDB) policy indicator to determine which payment-adjustment rule for multiple procedures is applied.

***Appendix E of the AMA CPT® Coding Manual also has a list of procedure codes that are exempt from the MSRR.

MACs can identify and determine if the payment rules for multiple surgeries apply to any of the multiple surgeries billed on the same day by:

1. The presence of modifier 51 on the claim form or electronic submission; and

2. The presence of more than one separately payable surgical procedure by the same physician performed on the same patient on the same day, whether on different lines or with a number greater than 1 in the units column on the claim form or inappropriately billed with modifier “78” (i.e., after the global period has expired).

If any of the procedure codes reported on the claim contain MPFSDB policy indicator “0,” the multiple surgery rules do not apply to that procedure. If the procedure codes reported contain an indicator of “2,” the MSRR is determined as follows:

• 100% of the fee schedule amount for the highest-valued procedure;

• 50% of the fee schedule amount for the second through the fifth highest-valued procedures; or

• If more than five procedures with policy indicator “2” are reported, the first five procedures are paid according to the rules listed above, and the sixth and subsequent procedures are suspended for manual review and payment, if appropriate, based on “medical record documentation.” Payment is determined on a “by report” basis and payment for these procedures should never be lower than 50% of the full payment amount;

  • Services that are already reduced (e.g., 17003) are paid in units;

  • Procedures that are indicated as only once per session (e.g., 17340) are paid as one unit, regardless of how many lesions were destroyed.

• Bilateral surgeries reported as part of the multiple surgeries (e.g., Unna boot applied to both legs (CPT 29580-50)), the bilateral procedure is considered at 150% as one payment amount and is ranked with the remaining procedures, and the appropriate multiple surgery reduction is applied.

The following table helps you identify and understand the MFSDB multiple surgery indicators and how they impact claim adjudication.

Note: CPT codes with RVUs equal to zero are not included in the payment indicator file. These codes may have multiple-procedure indicators that are not shown.

There may be cases when Medicare Part A/Part B MACs must manually load contractor-priced Healthcare Common Procedure Coding Systems (HCPCS) codes that have multiple-procedure indicators and are not on the payment-indicator file. In these cases, the MAC enters a multiple-procedure indicator of “0.”

For more information on MPFS Database (MPFSDB) multiple-procedure indicators, see Section 30.2.2 of Chapter 23 (Fee Schedule Administration and Coding Requirements) of the Medicare Claims Processing Manual (PDF).

MSRR application by private payers

The discussion in this article is focused on how Medicare applies the MSRR. Private payers may apply the rule differently. We encourage you to check directly with each payer to understand how they apply the MSRR. Some private payers will reimburse as follows:

• 100% of the fee schedule amount for the first procedure;

• 50% of the fee schedule amount for the second procedure; and

• 25% of the third and subsequent procedures

In comparison to Medicare, reporting more than two procedures to the same patient on the same date of service by the same dermatologist to patients covered by private insurance may result in reduced reimbursement for the same number of services.

More coding guidance and resources can be viewed on the AADA Coding Resource center at staging.aad.org/coding.

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