Dermatology benign, premalignant, and malignant destruction code utilization

The AADA coding team continues to educate dermatologists on the code utilization indicators for services provided in a dermatology setting. As a follow-up to the first in the series, How does your benign and malignant excision code utilization compare to the average in dermatology, the coding team has researched dermatology code utilization for benign, premalignant, and malignant destruction codes for calendar year (CY) 2018 and 2019 using the currently available Medicare Part B National Summary Data File.

This series of articles is designed to compile dermatology relevant data and provide the dermatology practice with the information it needs to assess, and adjust where applicable, its internal coding and reporting patterns. Dermatology practices are encouraged to use the information provided below as a benchmark to compare the practice’s reporting of benign, premalignant, and malignant destruction codes to the Medicare national utilization data.

What is a ‘destruction’?

According to the AMA CPT coding manual, destruction means the ablation of benign, premalignant, or malignant tissues by any method, with or without curettement, including local anesthesia, and not usually requiring closure.

Destruction can be performed using any method including electrosurgery, cryosurgery, laser and chemical treatment. Lesions that can be treated using the destruction technique include condylomata, papillomata, molluscum contagiosum, herpetic lesions, warts (i.e., common, plantar, flat), milia, or other benign, premalignant (e.g., actinic keratoses), or malignant lesions.

Medicare national utilization data for dermatology

1. Benign lesions

CPT codes 17110 and 17111 - Destruction (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement), of benign lesions other than skin tags or cutaneous vascular proliferative lesions; (based on number lesions treated) are reported when benign lesions such as warts, seborrheic keratosis etc. are treated using the destruction technique.

Medicare allowed benign lesion destruction codes represented 5% of all integumentary charges in CY 2018 and 2019. In 2018 and 2019, Medicare allowed payment of over $260 million and $276 million, respectively, for claims reported with CPT code set 17110 – 17111 for the destruction of benign lesions. This increase of $16 million represents a 6.4% rise in Medicare allowed charges for destruction of benign lesions from CY 2018 to 2019.

2. Premalignant lesions

CPT codes 17000, 17003 and 17004 - Destruction (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement), premalignant lesions (e.g., actinic keratoses); (based on number of lesions treated) are reported when premalignant lesions are treated using the destruction technique.

Medicare allowed premalignant lesion destruction codes represented 9% of all integumentary charges in CY 2018 and in 2019. These procedures accounted for a little over $520 million of allowed charges in CY 2018. In 2019, the same procedure codes accounted for just over $545 million or 4.8% in CY 2019 of the allowed charges. This represents an increase of approximately $25 million in CY 2019 for these charges.

3. Malignant lesions

CPT codes 17260 – 17286 - Destruction, malignant lesion (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement); (based on anatomic location and size in centimeters of lesion treated) are reported when malignant lesions are treated using the destruction technique.

Reporting of destruction of malignant lesion CPT codes is considered medically appropriate when there is confirmation through histopathologic review and written report that the lesion is malignant. Dermatologists must ensure that a copy of the report confirming malignancy is maintained in the patient medical record in case the payer questions the use of the malignant destruction code(s).

Medicare allowed malignant lesion destruction codes represented 2% of all integumentary charges in CY 2018 and in 2019. More than $130 million of these charges were allowed by Medicare compared to slightly more than $132 million in CY 2019. This shows an increase of $2 million or a little over 1.8% from CY 2018 to CY 2019.

The table below demonstrates in CYs 2018 and 2019, dermatologists reported premalignant destruction codes more often than the benign and malignant destruction codes.

Determining your billing frequency

To determine your billing frequency for a specific procedure or service, begin by accessing the Part B National Summary Data File to identify the national utilization for a specific code or range of codes. Once you have this data you can use the formula below to determine the Medicare national billing frequency ratio for a specific code set.

For example, the dermatology billing ratio for premalignant destruction codes to the malignant destruction codes can be calculated by dividing the total frequency for malignant destruction codes with the total frequency for premalignant destruction codes.

Dermatology practices can use the information provided in the Medicare Part B National Utilization Data as a tool to determine the national benchmark and identify the practice’s individual coding utilization pattern. This information can then be used to determine if additional physician/non-physician clinician education is required to ensure that the coding and documentation supports the practice’s utilization patterns.

More Medicare claims data can be viewed at Part B National Summary Data File.

Applying the data findings to your practice data findings

A discrepancy in your practice utilization patterns from those of the Medicare national benchmark does not necessarily indicate that these services are being reported incorrectly. The discrepancy could simply demonstrate that based on your patient population and geographic location, you may be performing more or less premalignant, benign, or malignant lesion destructions than other dermatology practices. But knowing this can help your practice be prepared to defend any discrepancies if they catch the notice of an auditor.

Treatment of lesions can be achieved using many other techniques, including excision technique and chemical treatment. The data presented here is focused solely on the destruction codes reported between CY 2018 and CY 2019 and in no way represents all other treatment methodologies for benign, premalignant, and malignant lesions not discussed in this research.

Documentation must support the medical necessity and accurately describe the procedure or service performed. For guidance on appropriate elements of documentation for dermatology services, see the AADA’s Principles of Documentation for Dermatology, Fifth Edition as well as coding resources in the Practice Management Center.

The Medicare national claims data can serve as a benchmarking tool for practices. The data allows dermatology practices to determine their practice billing tendencies compared to the national Medicare averages for specific codes. Examining your practice’s billing frequency (ratio) in relation to Medicare’s national benchmarks by code can assist you in understanding where your billing practices stand in relation to Medicare national utilization data, help you determine if your practice can be viewed as an outlier, and provide you the information to prospectively adjust your code utilization patterns.