Corporate Compliance

Note from the Instructor: CMS Releases Updated -X{EPSU} Modifier Guidance?Sort Of

Medicare Insider, January 26, 2015

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This week’s note from the instructor is written by Debbie Mackaman, RHIA, CPCO, CCDS, regulatory specialist for HCPro.  
Providers have been under CMS, OIG and other contractors’ scrutiny for many years regarding the use–and sometimes abuse–of Modifier -59. The National Correct Coding Initiative (NCCI) edits can be bypassed by reporting Modifier -59 when certain HCPCS code pairs are billed for the same date of service and reporting a modifier is allowed. In a general search of the internet on Medicare compliance with Modifier -59, many providers have fallen victim to government audits and have been subject to recoupments. Let me take you down memory lane to try to understand how we ended up where we are today.
In November 2005, the OIG released a report "Use of Modifier -59 to Bypass Medicare's National Correct Coding Initiative Edits" in which they found that 40% of code pairs billed with Modifier -59 in 2003 were not compliant with reporting requirements which led to $59 million in improper payments. Since most of the errors were due to services that were not distinct from each other or not documented sufficiently, the OIG recommended carriers perform pre- and post-payment audits of the use of this modifier. The OIG also recommended carriers update their claims processing systems to ensure providers bill the modifier with the correct code in the NCCI code pair.
Based on another study by the OIG, CMS responded in December 2009 stating it would explore a system edit for Modifier -59. CMS had issued Transmittal R902CP in 2006, which contained guidance on the matter. However, it was limited to drug infusions and further development of a specific edit was abandoned because CMS thought it would increase appeals volume. In light of the current appeals backlog, CMS’ crystal ball appeared to be working back then.
Fast forward to August 15, 2014, in Transmittal 1422, CMS states Modifier -59 is:
  • Infrequently (and usually correctly) used to identify a separate encounter;
  • Less commonly (and less correctly) used to define a separate anatomic site; and,
  • More commonly (and frequently incorrectly) used to define a distinct service.
Using data from the 2013 Comprehensive Error Rate Testing (CERT) report, the transmittal describes:
  • A projected $2.4 billion in Medicare Physician Fee Schedule (MPFS) payments were made on lines with Modifier -59, with a $320 million projected error rate. In facility payments, primarily OPPS, a projected $11 billion was billed on lines with a -59 modifier with a projected error of $450 million. This is a projected one year error of $770 million.
  • Note this is not entirely due to incorrect -59 modifier usage as other errors can and do exist on a -59 line. However, it has been observed that incorrect modifier usage was a major contributor although error code definitions do not allow an exact breakdown. If 10% of the errors on -59 lines are attributable to incorrect -59 modifier usage, it still amounts to a $77 Million per year overpayment as a result.
CMS’ solution to this ongoing problem was to introduce four new subset modifiers to replace Modifier -59, in most instances:
  • -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; and,
  • -XU, unusual non-overlapping service, the use of a service that is distinct because it does not overlap usual components of the main service.
This announcement appeared to be a bit premature when in an October 2014 MLN Connects Provider eNews, CMS stated providers would have the option to continue using Modifier -59 until CMS issues examples of circumstances in which the -X modifiers are or are not appropriate.
On January 22, 2015, CMS releases MLN Special Edition article SE1503, Continued Use of Modifier 59 after January 1, 2015.  Most providers have been waiting for this guidance since they first announced the new -X{EPSU} modifiers back in August 2014. Unfortunately, it does little to give physicians, hospitals, and DME providers direction on the proper use of the new modifiers, which will continue to be under the same-if not more-scrutiny than Modifier -59.
The guidance states providers may continue to appropriately use Modifier -59 after January 1, 2015 and MACs should be able to accept the –X {EPSU} modifiers. Additional guidance and education will be forthcoming as CMS continues to introduce the –X modifiers in a “gradual and controlled fashion”, although CMS had previously stated that “rapid migration” to reporting –X modifiers was encouraged. The article goes on to state future guidance will include additional descriptive information about the new modifiers and will also identify situations in which a specific –X {EPSU} modifier will be required.
The good news in all of this is CMS says it will publish specific guidance before implementing edits or audits. I am not sure this will produce a warm fuzzy feeling for providers who have strived to be in compliance with the NCCI edits all along and are struggling with training staff on the appropriate use of the modifiers. Since CMS announced the -X{EPSU} modifiers, providers have been on a never-ending rollercoaster ride and it doesn’t appear they are going to be getting off any time soon.

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