Understanding Multiple Procedure Payment Reduction Rule
Have you ever wondered how Medicare determines when to apply the multiple procedure payment reduction rule (MPPR) and how it affects claim-reimbursement amounts?
The American Medical Association’s (AMA’s) Current Procedural Terminology (CPT®) code manual describes individual services and procedures. The AMA/Specialty Society Relative Value Scale (RVS) Update Committee (RUC) vignettes and content database and Chapter 1 of the Centers for Medicare & Medicaid Services (CMS) National Correct Coding Initiative (NCCI) guidelines state that most medical and surgical procedures include pre-, intra-, and post-procedure work. When multiple procedures are performed during the same patient encounter, the pre- and post-procedure work often overlap. The work overlap is accounted for in the payment methodologies for surgical procedures.
Therefore, these intraoperative services, incidental surgeries, or components of major surgeries are not separately billable.
Bilateral surgeries are procedures performed on both sides of the body during the same operative session or on the same day. Bilateral surgeries may also trigger the MPPR.
In many dermatology practices, patients receive multiple medical and/or surgical services during the same encounter from the same provider. To avoid overpayment when multiple procedures are performed by a single provider or providers in the same group practice on the same patient during the same encounter, Medicare applies a reduction in reimbursement for the secondary and subsequent procedures that occur.
When a dermatological procedure with a policy indicator of “2” is billed, payment is made at:
100% of the fee schedule amount for the highest valued procedure; and
50% of the fee schedule amount for the second through the fifth highest valued procedure.
Medicare pays for these services by ranking them from the highest Medicare Physician Fee Schedule (MPFS) amount to the lowest, allowing 100% of the allowed amount for the first procedure with the highest MPFS amount and 50% for the subsequent five surgical codes. In addition, any special endoscopic pricing– rules are applied before the multiple-surgery rules, where applicable, according to CMS. The reason for this is because many of the component services that comprise the physician’s work (e.g., surgical approach and closure) should be paid only once per session, according to payers.
Group practice
CMS defines a group practice as a group of two or more physicians and nonphysician practitioners legally organized in a partnership, professional corporation, foundation, not-for-profit corporation, faculty practice plan, or similar association. See the following list for the different group practice criteria:
Group practice criteria
Each provider who is a member of the group routinely provides the full range of services through the joint use of shared office space, facilities, equipment, and personnel.
Including medical care, consultation, diagnosis, or treatment
All the services of the providers, who are members of the group are:
provided through the group;
billed in the name of the group; and
payments received are treated as receipts of the group.
The overhead expenses of and the income from the practice are distributed in accordance with methods previously determined by members of the group.
Must meet other standards as the Department of Human Services Secretary may impose by regulation to implement §1877(h)(4) of the Social Security Act.
The group practice definition also applies to healthcare practitioners
For more information, see Chapter 5 of the Medicare General Entitlement Policy (Section 90.4) at https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/ge101c05.pdf.
Determining Multiple Surgeries
Multiple surgeries are defined as separate procedures performed by a single physician or physicians in the same group practice on the same patient at the same date of service (DOS), for which separate payment may be allowed.
Multiple surgeries are identified on the claim form when more than one separately payable surgical procedure by the same provider is performed on the same patient on the same day, whether on different lines or with a number greater than 1 in the unit’s column. In this circumstance, payment rules for multiple surgeries apply to any of the multiple surgeries billed on the same day.
Medicare Multiple Surgical–Claims Carrier Processing Rules
Multiple surgery reductions are applied regardless of whether the services are submitted on the same or separate claims. However, when services are submitted on separate claims, additional processing time is required and this may delay payment or result in denial of service(s).
Section 30.6.5 – Physicians in Group Practice Chapter 12 (Physicians/Nonphysician Practitioners) of the Medicare Claims Processing Manual states that “[p]hysicians in the same group practice who are in the same specialty must bill and be paid as though they were a single physician.”
Services provided in a dermatology setting have special rules relative to the multiple surgeries reduction–rule, as listed in Section 40.6 –Claims for Multiple Surgeries (subsection C, item #12), which states that “[i]f more than five procedures with policy indicator of “2” are billed, pay for the first five according to the rules listed in 9, 10, and 11 above and suspend the sixth and subsequent procedures for manual review and payment, if appropriate, ‘by report.’”
Payments determined on a by-report basis for these CPT codes are never lower than 50% of the approved full-payment amount. Services that are already reduced (e.g., codes 11103, 11105, 17003) are paid by the unit and those listed as “per session” or “per day” ( e.g., 96567) are paid only once per session, regardless of how many lesions were destroyed.
MPFS MPPR Policy Indicator
The MPPR policy indicator is used to determine which payment-adjustment rule for multiple procedures is applied to the multiple-procedures service. In the following table, number “2” indicates that standard payment-adjustment rules for multiple procedures apply. Payment is based on the lower of the billed amount, or:
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
| Multiple procedure (Mod. 51) indicator | Description (Indicates which payment-adjustment rule for multiple procedures applies to the service._ |
|---|---|
| 0 | No payment-adjustment rules for multiple procedures apply. If the procedure is reported on the same day as another procedure, base payment on the lower of: <br/> (a) the actual charge; or <br/> (b) the fee schedule amount for the procedure |
| 1 | Standard payment-adjustment rules in effect before January 1, 1996, for multiple procedures apply. <br/> If a procedure is reported on the same day as another procedure with an indicator of 1,2, or 3, rank the procedures by fee-schedule amount and apply the appropriate reduction for the CPT code (100%, 50%, 25%, 25%, 25% t, and by report). <br/> Base payment on the lower of: <br/> (a) the actual charge; or <br/> (b) the fee-schedule amount reduced by the appropriate percentage |
| 2 | Standard payment-adjustment rules for multiple procedures apply. If the procedure is reported on the same day as another procedure with an indicator of 1, 2, or 3, rank the procedures by fee-schedule amount and apply the appropriate reduction to the CPT code (100%, 50%, 50%, 50%, 50%, and by report). <br/> Base payment on the lower of: <br/> (a) the actual charge; or <br/> (b) the fee-schedule amount reduced by the appropriate percentage |
| 3 | Special rules for multiple endoscopic procedures apply if procedure is billed with another endoscopy in the same family (i.e., another endoscopy that has the same base procedure). The base procedure for each CPT code with this indicator is identified in the endoscopic base-code field.<br/> Apply the multiple endoscopy rules to an endoscopic family before ranking the endoscopic family with other procedures performed on the same day (e.g., if multiple endoscopies in the same endoscopic family are reported on the same day as endoscopies in another family or on the same day as a non-endoscopic procedure).<br/> If an endoscopic procedure is reported with only its base procedure, do not pay separately for the base procedure. Payment for the base procedure is included in the payment for the other endoscopic procedure. |
| 4 | Subject to MPPR reduction |
| 5 | Concept does not apply |
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 (A/B) Medicare Administrative Contractors (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 the Section 30.2.2 of Chapter 23 (Fee Schedule Administration and Coding Requirements) of the Medicare Claims Processing Manual at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c23.pdf.
MPFSDB Status Indicators
Medicare assigns each HCPCS/CPT code a letter that signifies whether Medicare will reimburse the service and how it will be reimbursed. The indicator also helps to determine whether policy rules, such as packaging and discounting, apply.
See the following chart for a list of the MPFSDB status indicators and descriptors:
| A | Active code | These codes are separately paid under the physician fee schedule (PFS), if covered. There will be RVUs and payment amounts for codes with this status. The presence of an “A” indicator does not mean that Medicare has made a national coverage determination regarding the service; A/B MACs (B) remain responsible for coverage decisions in the absence of a national Medicare policy. |
| B | Payment for covered services are always bundled into payment for other services not specified | There will be no RVUs or payment amounts for these codes and no separate payment is ever made. When these services are covered, payment for them is subsumed by the payment for the services to which they are incident to (for example, a telephone call from a hospital nurse regarding care of a patient). |
| C | A/B MACs (B) price the code | A/B MACs (B) will establish RVUs and payment amount for these services, generally on an individual case basis following review of documentation, such as an operative report. |
| D* | Deleted/discontinued codes. | |
| E | Excluded from PFS by regulation | These codes are for items and/or services that CMS chose to exclude from the fee-schedule payment by regulation. No RVUs or payment amounts are shown and no payment may be made under the fee schedule for these codes. Payment for them, when covered, continues under reasonable-charge procedures. |
| F | Deleted/discontinued codes | Code is not subject to a 90-day grace period. These codes are deleted effective the beginning of the year and are never subject to a grace period. This indicator is no longer in effect as of January 1, 2005. |
| G | Not valid for Medicare purposes | Medicare uses another code for reporting of and payment for these services. Code is subject to a 90-day grace period. This indicator is no longer in effect as of January 1, 2005. |
| H* | Deleted modifier | For 2000 and later years, either the TC or PC component shown for the code has been deleted and the deleted component is identified in the database by the “H” status. |
| I | Not valid for Medicare purposes | Medicare uses another code for reporting of and payment for these services. The code is not subject to a 90-day grace period. |
| J | Anesthesia services | No relative value units or payment amounts for anesthesia codes are in the database. These codes are used to facilitate the identification of anesthesia services. |
| L | Local codes | A/B MACs (B) will applied this status to all local codes effective as of January 1, 1998, or when subsequently approved by the central office for use. A/B MACs (B) will complete the RVUs and payment amounts for these codes. |
| M | Measurement codes | Used for reporting purposes only |
| N | Non-covered service | These codes are carried on the HCPCS tape as noncovered services. |
| P | Bundled/excluded codes | There are no RVUs and no payment amounts for these services. No separate payment is made for them under the fee schedule. If the item or service is covered as incident-to a physician service and is provided on the same day as a physician service, payment is bundled into the physician service to which it is incident (e.g., an elastic bandage furnished by a physician incident to a physician service). If the item or service is covered as other than an incident-to a physician service, it is excluded from the fee schedule (e.g., colostomy supplies) and is paid under the other payment provision of the Social Security Act. |
| Q | Therapy functional information code | Used for required reporting purposes only |
| R | Restricted coverage | Special coverage instructions apply |
| T | There are RVUs and payment amounts for these services, but they are only paid if there are no other services payable under the PFS billed on the same date by the same provider. If any other services payable under the PFS are billed on the same date by the same provider, these services are bundled into the physician services for which payment is made. | |
| X | Statutory exclusion | These codes represent items or services not included in the statutory definition of “physician services” for fee-schedule payment purposes. No RVUs or payment amounts are shown for these codes and no payment may be made under the PFS (e.g., ambulances services and clinical diagnostic laboratory services). |
*Codes with these indicators had a 90-day grace period before January 1, 2005.
For more information, see Section 40.6 of Chapter 12 (Physicians/Nonphysician Practitioners) of the Medicare Claims Processing Manual at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c12_phys-nonphy_052603_r2.pdf.
