E/M Update: DOJ Targets Improper Use of Modifier 25

Evaluation and management (E/M) services are visits to patients by physicians and non-physician practitioners to assess and manage a patient's health.[i] E/M services are grouped into visit types, including office visits (new patient and established patient) and hospital visits (inpatient and subsequent), and are billed by visit type and the complexity of the services. Each visit type has three to five E/M codes[ii]. Medicare reimbursement rates increase as the level of complexity increases. The complexity of the E/M services is determined by the amount of skill, effort, time, responsibility and medical knowledge required by the physician to render the services. Physicians bill for these services based on the patient history, physical examination and medical decision-making. In billing Medicare, physicians must use either the 1995 or 1997 Documentation Guidelines for Evaluation and Management Services[iii] to document the medical record with the appropriate clinical information.

In May 2012, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) published a report regarding "Coding Trends of Medicare Evaluation and Management Services."[iv] As a background, E/M services have long been a target for the OIG as these services are vulnerable to fraud and abuse[v]. The report revealed that from 2001 to 2010, physicians increased their billing of higher level E/M codes in all visit types and that, in 2010, approximately 1,700 physicians consistently billed higher level E/M codes. The OIG recommended to and the Centers for Medicare and Medicaid (CMS) agreed that physicians continue to be educated on proper billing for E/M services and that its contractor be encouraged to review physicians' billing for E/M services. CMS partially agreed with the OIG's recommendation to review physicians who bill higher level E/M codes[vi].

In September 2012, CMS approved the Recovery Auditor (RA) (formerly Recovery Audit Contractors (RACs)) review of certain E/M coding, including claims that contain higher-level CPT codes, specifically CPT codes 99214 and 99215. The approval came following the May 2012 OIG report. On September 11, 2012, the AMA wrote to the CMS strongly opposing the audit of E/M coding by RAs, as well as the authority given to RAs to extrapolate their findings based on a statistical sampling of these claims[vii]. As of today, Connolly Consulting, the RA with jurisdiction for Region C, is performing a "test phase" and has reviewed a sample of 30 records from three providers. While not performing E/M audits per se, HealthData Insights (HDI), the RA with jurisdiction in Region D, posted in the approved issues section as of December 11, 2012, the review of Excessive Units of New Patient Office Visits (CPT Codes 99201-99205). Other RAs have not yet been approved to audit E/M services, however, approval will likely come in the future.

As discussed, all E/M services are billed according to the type of patient seen, the setting of the services and the complexity of the services performed. In regards to medical and surgical procedures, most services rendered are "integral to accomplishing" that procedure and are, therefore, bundled into payment of the principal procedure[viii]. As such, Medicare will not make payment for services rendered associated to the procedure. If a physician provides E/M services on the day of the procedure, the physician cannot separately bill for those E/M services. However, physicians may use Modifier 25 to indicate that an E/M service was provided by the same physician to the same patient on the same day as another procedure. Use of the E/M Modifier indicates that the E/M services were "significant and separately identifiable" above and beyond the services typically related to the pre- and post-procedure operative work of the procedure[ix].

Recent news indicates that the government is targeting not only E/M services themselves, but also the use of modifiers billed with those E/M services. On April 3, 2013, the United States Attorney's Office for the Middle District of Pennsylvania reported that Easton Hospital had agreed to pay $454,866 to the Government to resolve allegations that from January 1, 2004 to May 28, 2009, the hospital submitted claims to Medicare for payment of improperly coded E/M services. An investigation by the OIG revealed that Easton Hospital had billed for E/M services using Modifier 25 improperly. Easton Hospital attached Modifier 25 to services that were not significant and separately identifiable from the underlying procedure for which Medicare also paid the hospital. On that same day, the United State's Attorney's Office for the Middle District of Pennsylvania reported a settlement with St. Luke's University Health Network in the amount of $1,029,791 to resolve allegations that from January 1, 2002 through June 30, 2012, the hospital improperly attached Modifier 25 to E/M services which were not significant and separately identifiable from the underlying procedures.

While no further action has been reported by the RAs, the recent investigation and action in the Middle District of Pennsylvania shows that the government is seeking to reclaim money and stop fraud and abuse from all fronts. E/M services billed to Medicare continue to be a target for both CMS through its contractors and the OIG.

[i] American Medical Association (AMA), Current Procedural Terminology (CPT), 2010.

[ii] E.g., Office visit with a new patient will be billed from 99201 (lowest complexity) to 99205 (highest complexity)

[iii] Evaluation and Management Services Guide (December 2010) - All of the information on E/M guidelines according to Medicare available at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNEdWebGuide/EMDOC.html

[iv] OEI-04-10-00180

[v] According to the OIG Report from May 2012, in 2009, two health care entities paid over $10 million to settle allegations that they fraudulently billed Medicare for E/M services.

[vi] Id.

[viii] MCPM, Pub. 100-04, Chapter 12, §30.

[ix] MCPM, Pub. 100-04, Chapter 12, §30.6.6