National Correct Coding Initiative

PURPOSE

To determine (1) whether modifier 59 is being used inappropriately to bypass Medicare's National Correct Coding Initiative (CCI) edits and (2) to what extent Medicare carriers are reviewing the use of modifier 59.

BACKGROUND

In January 1996, the Centers for Medicare and Medicaid Services (CMS) began the CCI. This initiative was developed to promote correct coding by providers and to prevent Medicare payment for improperly coded services. The initiative consists of automated edits that are part of the carriers' claims processing systems.

Specifically, the CCI edits contain pairs of Healthcare Common Procedure Coding System codes (i.e., code pairs) that generally should not be billed together by a provider for a beneficiary on the same date of service. All code pairs are arranged in a column 1 and column 2 format. The column 2 code is generally not payable with the column 1 code. Throughout this report we will refer to the column 1 code as the primary code or service and the column 2 code as the secondary code or service.

Under certain circumstances, a provider may bill for two services in a CCI code pair and include a modifier on the claim that would bypass the edit and allow both services to be paid. A modifier is a two-digit code that further describes the service performed. Thirty-five modifiers can be used to bypass the CCI edits. Modifier 59 is one of these modifiers.

Modifier 59 is used to indicate that a provider performed a distinct procedure or service for a beneficiary on the same day as another procedure or service. It may represent a different session, different procedure or surgery, different anatomical site or organ system, separate incision or excision, separate lesion, or separate injury (or area of injury in extensive injuries). Modifier 59 should be attached to the secondary, additional, or lesser service in the code pair. According to CMS, this is the second code in a CCI code pair. When modifier 59 is used, a provider's documentation must demonstrate that the service was distinct from other services performed that day.

CMS provides carriers with guidance and instructions on the correct coding of claims, including the use of modifier 59, through manuals, transmittals, and CMS's Web site. Carriers, in turn, are required by CMS to educate providers concerning issues such as correct coding. Carriers are also responsible for developing their own prepayment and postpayment medical review strategies to identify billing errors.

We selected a stratified random sample of 350 code pairs for services that bypassed CCI edits using modifier 59 in fiscal year (FY) 2003. An independent contractor conducted a coding review of the medical records for these services to determine the appropriateness of the use of

modifier 59. We performed separate analysis on our FY 2003 data to determine whether modifier 59 was billed with the primary or secondary code. We also surveyed each Medicare carrier to learn about their medical review activities, claims processing systems, and provider education activities related to modifier 59.

FINDINGS

Forty percent of code pairs billed with modifier 59 in FY 2003 did not meet program requirements, resulting in $59 million in improper payments. Medicare allowed payments for 40 percent of code pairs that did not meet the following program requirements: (1) the services were not distinct from each other or (2) the services were not documented. Specifically, modifier 59 was used inappropriately with 15 percent of the code pairs because the services were not distinct from each other. Medicare allowed an estimated $31 million for the secondary services in

these code pairs. Secondary services are the services that CCI edits would deny. Most of these services were not distinct because they were performed at the same session, same anatomical site, and/or through the same incision as the primary service. Five code pairs represented

53 percent of the services that were not distinct. In addition to services that were not distinct, 25 percent of the code pairs billed with modifier 59 were not adequately documented. Medicare allowed an estimated $28 million for these services. In most of these cases, either one or both of the services billed were not documented in the medical record, or the documentation indicated that another code should have been billed for one or both of the services performed. In the remaining cases, either the documentation was insufficient to make a determination, or the documentation was not provided.

Eleven percent of code pairs billed with modifier 59 in FY 2003 were paid when the modifier was billed with the incorrect code. Pursuant to the "Medicare Claims Processing Manual," modifier 59 should be billed with the secondary, additional, or lesser service in a CCI code pair. However, our analysis of 3.4 million code pairs showed that 11 percent of the code pairs were paid when modifier 59 was attached to the primary code only. This billing error represented $27 million in Medicare paid claims. Our analysis also indicated that 37 carriers paid for at least 10 percent of their claims billed with modifier 59 when the modifier was attached to the incorrect code.

Most carriers did not conduct reviews of modifier 59, but those carriers that did found providers who were using modifier 59 inappropriately. Between 2002 and 2004, 11 of 56 carriers conducted 1 or more reviews of the use of modifier 59. Ten carriers completed at

least one review and one carrier's only review was still in progress. All of the carriers that completed reviews found providers who were using modifier 59 inappropriately. One-third of 32 reviews completed found error rates of 40 percent or more for services billed with modifier 59.

Source: United States Department of Health and Human Services. (2005). Use of modifier 59 to bypass Medicare's National Correct Coding Initiative edits. Retrieved from http://oig.hhs.gov/oei/reports/oei-03-02-00771.pdfLinks to an external site.

QUESTION:

1. What should CMS encourage carriers to do moving forward with regards to the use of modifier 59?