Medicare Compliance & Reimbursement

Improper unbundling lands healthcare organization in hot water.

Now, that you’ve aced all the latest ICD-10 and CPT^® updates, your work is done — right? Wrong. One recent false claims case suggests that being lax about how you report modifier 59 (Distinct procedural service) claims could spell disaster for your practice.

Context: Last month, the Department of Justice (DOJ) settled with founder and owner Emil DiIorio, MD and his Philadelphia-based organization, Coordinated Health Holding Company, LLC (Coordinated Health), for false orthopedic surgery claims submitted to Medicare and other federal programs under the False Claims Act (FCA), suggests a release on the case. In addition to a five-year Corporate Integrity Agreement, which includes monitoring of future billing practices, Coordinated Health will pay $11.25 million to alleviate the FCA allegations while Dr. DiIorio agreed to pay $1.25 million for his part in the scheme, according to the DOJ.

Problem: The organization unbundled orthopedic surgery claims to bump up its Medicare take-home pay. “The government alleges that from 2007 through mid-2014, Coordinated Health routinely exploited modifier 59 to improperly unbundle orthopedic surgery claims, including for many total joint replacement and arthroscopic surgeries,” the DOJ notes. “As a consequence, federal healthcare payers, including Medicare and Medicaid, overpaid Coordinated Health by millions of dollars.”

Two separate coding consultants alerted the organization to its modifier 59 issue, mentions the release. However, “motivated by its bottom line, Coordinated Health simply ignored the consultants’ recommendations and continued abusing modifier 59 to improperly unbundle orthopedic surgery claims until mid-2014,” stresses the DOJ.

See details about the DOJ settlement at www.justice.gov/usao-edpa/pr/coordinated-health-and-ceo-pay-125-million-resolve-false-claims-act-liability.

Here’s Why This Case Matters

Despite warnings, Coordinated Health continued to ignore global surgery rules and billed Medicare separately for services that were already included in the global surgery package. “While use of this modifier can be justified in certain circumstances, according to DOJ the defendants allegedly used the modifier systematically to override technical safeguards designed to prevent double-billing for services that are part of the same procedure,” explain attorneys Conor O. Duffy and Anna R. Gurevich in legal analysis of the case in the Robinson & Cole Health Law Diagnosis blog.

“This settlement serves as a reminder to hospitals and other providers of the significant potential exposure associated with a failure to implement compliance efforts to identify and return overpayments, and the risk for individuals involved with potential billing improprieties,” Duffy and Gurevich advise.

Consider This Expert Advice for Modifier 59 Mastery

Before you append modifier 59, a thorough understanding of how and when to use it is critical to avoid denials or worse. It’s a good idea to review coding guidelines and Medicare’s rules, too, before using this popular code.

Remember: CMS reminds providers that there must be valid reasons to report a claim with modifier 59.

“Documentation must support a different session, different procedure or surgery, different site or organ system, separate incision/excision, separate lesion, or separate injury (or area of injury in extensive injuries) not ordinarily encountered or performed on the same day by the same individual,” cautions CMS.

CCI reminder: The Correct Coding Initiative (CCI) publishes a list of comprehensive/component edits consisting of two codes (procedures) that cannot reasonably be performed together based on the code definitions or anatomic considerations, experts say. Each edit consists of a column 1 and column 2 code.

When the modifier indicator is “1,” this means that you may be able to report both codes of an edit pair under certain circumstances by using a modifier. For example, you can overcome the edit, if appropriate with the use of a modifier like modifier 59, explains Mary I. Falbo, MBA, CPC, president and CEO of Millennium Healthcare Consulting Inc. in Lansdale, Pennsylvania.

Caveat: Just because you can add a modifier, that doesn’t mean you should. Be sure you have the supporting documentation for requesting payment for both codes before adding a modifier to the bundled pair.

“Modifier 59 and other CCI-associated modifiers should not be used to bypass a CCI edit unless the proper criteria for use of the modifier 59 are met,” Falbo adds. “Documentation in the medical record must satisfy the criteria required by any CCI-associated modifier that is used.”

You can use modifier 59 when the surgeon performs the bundled procedures for different anatomic sites/regions, different organs, or in limited situations on different, non-contiguous lesions in different anatomic regions of the same organ, Falbo explains.

Caution: You should never append modifier 59 to an evaluation and management (E/M) service.

Don’t miss: Although CCI bundles indicate which CPT^® and HCPCS codes you should normally not report together, Marcella Bucknam, CPC, CCS-P, COC, CCS, CPC-P, CPC-I, CCC, COBGC, revenue cycle analyst with Klickitat Valley Health in Goldendale, Washington reminds coders that CCI is more than just a list of codes that bundle together.

“There are general rules for all coding concepts and general rules for each CPT^® chapter,” Bucknam says. “Read through these rules and be sure you understand the concepts for the chapters you work in most often. This will help you understand what is likely to bundle and will guide you even if you don’t have software that tells you when you make a bundling error.

The X factor: Each year, more payers are switching to the X modifiers; these are a more specific set of modifiers that are meant to replace modifier 59. The X modifiers are:

• XS (Separate Structure)
• XE (Separate Encounter)
• XP (Separate Practitioner)
• XU (Unusual Non-Overlapping Service)

Tip: If you’re unsure of your payer’s stance on modifier 59 and/or the X modifiers, be sure to check your contract before filing a claim with distinct procedural services.