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Correct use of modifier -AY for ESRD

APCs Insider, July 1, 2011

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Q: Our MAC started recouping payments on claims for lab tests such as a complete blood count (with and without diff), blood cultures, as well as potassium and magnesium levels. We looked at the specifics, and they are ED claims for patients with end stage renal disease (ESRD). The MAC initially paid the tests and medical necessity was met. Why is it retroactively recouping our payment? 

A: The recoupment is related to the ESRD Consolidated Billing regulations that went into effect in January 1, 2011. Per CMS Transmittal 2134, CR 7064, certain lab tests are included in the ESRD facility payment and are no longer separately payable to any provider other than the renal dialysis facility.

Effective January 1, 2011, section 153b of the MIPPA requires that all ESRD-related lab tests must be billed by the renal dialysis facility whether provided directly or under arrangements with an independent lab. When lab services are billed by providers other than the ESRD facility and the lab furnished is designated as a lab that is included in the ESRD PPS (ESRD-related), the claim will be rejected or denied. In the event that an ESRD-related lab service was furnished to an ESRD beneficiary for reasons other than for the treatment of ESRD, the provider may submit a claim for separate payment using modifier AY.

CMS’ claims processing system has been programmed to review all renal dialysis claims (TOB 72X) against other OP provider claims (TOB 13x, 14x, and 85x) for the beneficiary. When a renal dialysis claim is submitted, two things happen:

1. The system reviews all claims for the beneficiary that have been filed for the same dates covered by the 72x claim and retroactively denies and recoups the monies for services included in the consolidated billing.
2. The system reviews all claims submitted after the 72x claim and automatically line item denies the services related to the consolidated billing.

Based on the information provided, a 72x claim was submitted that covered the date of service on your claim. The system located your claim and retroactively denied the lab test(s) as related to the ESRD consolidated billing and recouped the payment.

CMS has established a new modifier to provide a mechanism for indicating a lab test was performed for a reason unrelated to the treatment for ESRD: modifier -AY. CMS defines modifier- AY as “Item or service furnished to an ESRD patient that is not for the treatment of ESRD”. Modifier AY can be appended to the individual line item to indicate that a test was unrelated to the treatment for ESRD.

Use this modifier with caution and only after reviewing the documentation in the medical record. The documentation must clearly support that the test was performed for a reason unrelated to the ESRD treatment. For example, if a beneficiary presents to the ED with a GI hemorrhage, a CBC would be performed to evaluate the blood loss from the hemorrhage. In this case, you could append modifier AY. However, the physician must clearly document his/her medical decision making to prevent any room for interpretation on what the intent may have been.

Additional information is available in the Medicare Claims Processing Manual (pub 100-04) chapter 8, section 60.1; and the Medicare Benefit Policy Manual (pub 100-02), Chapter 11.

During the June 1 Hospital Open Door Forum call, CMS acknowledged that it was aware of issues caused by the application of the edits in their claims processing system. CMS is investigating changes to the edits and will provide future guidance for calendar year 2012. Until further guidance is published, they referred providers to Transmittal 2134, CR 7064 for more information.

Editor’s note: Denise Williams, RN, CPC-H, director of revenue integrity services atHealth Revenue Assurance Associates, Inc., in Plantation, FL, answered this question.

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