New Jersey Subscriber
Answer: Most Medicare and some private insurers will not recognize a "reduced services" modifier or offer any payment unless you actually prepped the patient and started an incision. Check with your individual carrier regarding its policy for canceled surgeries. For carriers that do not have such a policy, the surgeon should report the appropriate procedure code (29880-29883) with modifier -53 (Discontinued procedure) appended to the surgical code.
According to the CPT descriptor for modifier -53, "Under certain circumstances, the physician may elect to terminate a surgical or diagnostic procedure. Due to extenuating circumstances or those that threaten the well-being of the patient, it may be necessary to indicate that a surgical or diagnostic procedure was started but discontinued."
If the patient's breathing was unstable enough to cancel surgery, it's likely that the orthopedist admitted the patient to the hospital. If your payer won't accept modifier -53 for this procedure and the surgeon admitted the patient, you may be able to report a hospital admission code (99221-99223).
Note: Modifier -53 is not appropriate to report the elective cancellation of a procedure prior to the patient's anesthesia induction and/or surgical preparation in the operating suite.