Revenue Cycle

Heads up: Contractors holding Method II 85X claims with modifier -22

Medicare Update for CAHs, May 2, 2012

On April 19, CMS sent out an e-mail notification regarding critical access hospitals (CAHs) that opt for Method II billing at their facility. Specifically, Method II CAHs that bill a modifier -22 (Increased Procedural Service) with the professional services on a  Type of Bill (TOB) 85X will temporarily see their claims held by their Medicare contractor(s).

Medicare pays for multiple surgeries by ranking from the highest Medicare physician fee schedule (MPFS) amount to the lowest amount. When the same physician performs more than one surgical service at the same session, the allowed amount is 100% for the surgical code with the highest amount and the allowed amount for the subsequent surgical codes is based on 50% of the MPFS amount. The notice explains that in rare situations, these payment rules do not apply and may be bypassed using modifier -22.

Since the beginning of April, this reduction has been misapplied to line items containing modifier -22, so contractors have been instructed to hold TOB 85X, including adjustments, if the modifier is present. These claims will be released upon a successful implementation of the fix, which is scheduled for June 4, according to the release.

Like Method I CAHs, Method II CAHs bill for outpatient services on the UB04 claim, and are reimbursed 101% of reasonable costs from furnishing services from its FI or MAC. Method I CAHs bill their related professional fees on a 1500 claim form, where payment is then made by the carrier or MAC on a fee schedule, charge, or other fee basis, with the place of service reported as a hospital outpatient department. Method II CAHs, on the other hand, bill for the related  professional fees and associated modifiers (including modifier -22) on the UB04 claim form using specific revenue codes (96X, 97X or 98X), and the CAH is reimbursed 115% of whatever the carrier or MAC would have paid using the physician fee schedule.

Even if a CAH has opted for Method II billing and the professional fees are reported on the UB04 rather than the 1500 claim form, the same professional fee coding guidance and modifier definitions apply, so when a provider reports modifier -22, they are claiming that the procedure required an unusual amount of time and effort beyond what would be considered to be a ‘difficult’ case, says Debbie Mackaman, RHIA, CHCO, regulatory specialist at HCPro, Inc.

CAHs should be cautious in reporting modifier -22 on the UB04 as these services are subject to pre- or post-payment medical review and documentation must clearly support that the work required to provide the surgical service was substantially greater than what would be typically required,” she says. “Because CMS has stated that the use of modifier -22 is rare, the impact on reimbursement should be minimal while the Medicare contractors fix this billing issue.”

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