Knowledge Base Article

We have all experienced times when our first attempt at something did not work out the way we planned. Then, if we didn’t just give up, we had to tweak our solution or try something different to accomplish our goal. Evidently Medicare is having a similar experience with their attempts to reduce Medicare paid claims error rates through the National Correct Coding Initiative and the Medically Unlikely Edits. CMS has recently made some modifications to both with the hope of better controlling improper coding and billing.

NCCI Edits and Modifier 59

The National Correct Coding Initiative (NCCI) contains Procedure to Procedure edits to prevent unbundling of services and inappropriate payments. The edits are based on the principle that the second code defines a subset of the work of the first code. However for some code combinations, there are times when reporting the two codes together on a claim is appropriate and there are HCPCS modifiers that allow some CCI edits to be by-passed.

One of the most commonly used modifiers is modifier 59 which is used to indicate that a service is “separate and distinct” from another service with which it is sometimes bundled. Directions in the NCCI manual instruct to use modifier 59 (if no other modifier fits) to report different encounters, different anatomic sites, and distinct services. For providers it is sometimes difficult to know exactly when the 59 modifier is appropriate and CMS reports that this modifier is indeed associated with considerable abuse and high levels of manual audit activity.

Modifier 59 is used infrequently and usually correctly for different encounters and used more frequently, but less correctly for separate anatomic site. And interestingly, CMS says the most common reason for using modifier 59 is also the most frequently incorrect usage – that is when it is used to define a distinct service. All of this incorrect usage voids the very purpose of the CCI edits.

In Transmittal 1422 (see MLN Matters Article MM8863), CMS is proposing four new HCPCS modifiers to define specific subsets of the -59 modifier. These modifiers are not required to be used at this time, and CMS will accept either a -59 modifier or one of the new modifiers for now, although they are encouraging providers to “rapidly” implement use of the new modifiers. CMS and/or the local Medicare Administrative Contractors (MACs) may require the usage of the new modifiers in the future especially for certain codes at high risk for incorrect billing.

The new modifiers (known as –X {ESPU} modifiers) are:

• XE Separate Encounter, A Service That Is Distinct Because It Occurred During A Separate Encounter
• XS Separate Structure, A Service That Is Distinct Because It Was Performed On A Separate Organ/Structure
• XP Separate Practitioner, A Service That Is Distinct Because It Was Performed By A Different Practitioner
• XU Unusual Non-Overlapping Service, The Use Of A Service That Is Distinct Because It Does Not Overlap Usual Components Of The Main Service

Transmittal 1422 explains a little better than the corresponding MLN Matters article that modifier 59 will still be accepted in many instances. However current, existing guidance concerning modifier 59 continues to apply - “the -59 modifier should not be used when a more descriptive modifier is available” which now includes the new more descriptive –X {ESPU} modifiers.

Medically Unlikely Edits

In a separate Transmittal (see MLN Matters Article MM8853) CMS reviews modification to the Medically Unlikely Edit (MUE) Program. This is basically the same information as previously presented in MLN Matters Special Edition article SE1422 but more details are provided (see the MMP article Medicare MUEs and Correct Bilateral Billing from July).

Like the NCCI edits, the MUE program (which began in January 2007) was implemented to reduce the Medicare paid claims error rate. The MUE is a limit on the number of units that Medicare will adjudicate. Initially, the MUE values were only adjudicated against the units reported on each line item of a claim. In April, 2013, CMS modified the MUE program so that some MUE values would be date of service edits. This means that if the units reported for one day of a HCPCS code (with a date of service MUE) exceed the MUE limit, no payment would be made for that code unless the denial was overturned on a provider-initiated appeal.

At the same time as the date of service edits, CMS introduced an “MUE adjudication indicator” (MAI) to the MUE edit table. The MAI field was not made public knowledge or published until the July 2014 MUE update. These indicators describe the type of MUE and how it is adjudicated.

• An MAI of “1” is a claim line edit. The MUE may be by-passed when appropriate by reporting units exceeding the MUE on separate lines with an acceptable modifier.
• An MUE with an indicator of “2” is an absolute date of service edit. Units of service exceeding the MUE value are considered “impossible” because they are contrary to statute, regulation or subregulatory guidance, including correct coding policies. Denials for services with an MAI of “2” will not be overturned on appeal.
• MUEs for HCPCS codes with an MAI of “3” are date of service edits based on clinical guidelines. These edits will cause an automatic denial if the units for a date of service exceed the limit, but the denial may be overturned on appeal if there is adequate documentation of medical necessity of correctly reported units.

Additional information in this MLN article reminds providers that a denial of services due to an MUE is a coding denial and not a medical necessity denial. Therefore an Advance Beneficiary Notice (ABN) will not shift liability to the beneficiary. There is also a reminder that bilateral services should be reported on one line with a modifier 50 and units of 1 to avoid an MUE denial. Corresponding Transmittal 1421 explains that in determining date of service edits, Medicare will consider all units of the date of service HCPCS on “all claim lines on the current claim and paid claim lines of prior finalized claims”, although only lines on the current claim will be denied. Is this a proactive step to prevent providers from reporting units on separate claims?

As Medicare modifies their regulations, hospitals have to modify their processes to comply and adjust to the new requirements. The two transmittals discussed here will require hospitals to utilize new modifiers and be aware of the different types of MUEs and their impact on billing and appeals. It is always something!