Incorrect Use of Modifier 25 When Billing Evaluation and Management (E&M) Services Can Result in Costly Overpayments

In a recent review of outpatient claims for E&M, the Office of Inspector General (OIG) determined that Wing Memorial Hospital did not fully comply with the applicable Medicare billing requirements.  Wing Memorial Hospital, located in Palmer, Massachusetts, underwent a review of 156 outpatient hospital E&M services billed with Modifier 25 in conjunction with Supartz injections and diagnostic or therapeutic surgical procedures.  As part of the final outcome, Wing Memorial Hospital agreed to refund a total of $104,450 to its Part A Medicare Administrative Contractor (MAC), refund the professional component of the claims to Medicare Part B, take action to strengthen compliance controls and enhance staff education.

While determining the appropriateness of appending Modifier 25 is vital, ensuring the accuracy of the E&M service level is just as important.  The following are simple examples of billing errors that can result in erroneous overpayments:

  • The E&M service billed was not significant or separately identifiable.
  • The E&M service was not beyond the usual preoperative and postoperative care.
  • The level of E&M service billed was not appropriate.

To view the final OIG report for the Wing Memorial Hospital outpatient claims review, go to the following link:

Frequent use of Modifier 25 has been identified as a significant compliance risk for many years.  Inappropriate use of this modifier often stems from hard-coding within the charge description master (CDM) and/or insufficient staff education and knowledge on appropriate use.  If your facility regularly bills E&M services with Modifier 25, we recommend auditing a sample of claims and a review of the CDM to confirm compliant billing practices.  We also recommend a review of your facility E&M guidelines to ensure accurate level reporting.  HC Healthcare Consulting has a team comprised of consultants Certified in Healthcare Compliance along with certified coders, certified fraud examiners, statisticians and physician consultants.  We have extensive expertise in coding and billing compliance and regularly assist hospitals with ongoing auditing, education and corrective action needs.

DISCLAIMER:  This post contains only summary information and highlights; it should be read in conjunction with the full article or document provided as a link.  Any advice or recommendations given is general and specific questions should be directed to professional counsel.

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