Pathology/Lab Coding Alert

Plus GX is back for patient responsibility.

When your Medicare payer processes a denial quickly, that's usually bad news for your lab. But modifier GZ (Item or service expected to be denied as not reasonable and necessary) means you're already expecting a denial, so a speedy resolution actually helps by taking the claim off your lab's to-do list. CMS will make the denials happen even faster with a new policy to immediately deny all services with modifier GZ appended beginning July 1.

How Modifier GZ Works

If you're still wondering why anyone would want a quick denial, here's a closer look at how modifier GZ works.

If the lab performs a service you expect Medicare to find medically unnecessary based on the agency's rules, and there's no Advance Beneficiary Notice (ABN) on file, you should append modifier GZ to the CPT® code for the service. The advantage of reporting modifier GZ is avoiding the potential for fraud and abuse allegations. This modifier tells Medicare that you believe you're submitting the code for a service CMS won't cover and expect Medicare not to pay for it.

For instance: The laboratory receives a screening Pap test for a high-risk patient, but the order exceeds the annual frequency limitation. The lab bills Medicare using V15.89 (Other specified personal history presenting hazards to health; other) and a secondary diagnosis provided by the ordering physician to explain the risk factor -- history of sexually transmitted diseases (V13.8, Personal history of other specified diseases). Based on the lab procedure, the correct code for the service is G0123 (Screening cytopathology, cervical or vaginal [any reporting system], collected in preservative fluid, automated thin layer preparation, screening by cytotechnologist under physician supervision). Because the ordering physician and the lab failed to obtain a signed ABN, the lab bills G0123 with modifier GZ. That means the lab will have to write off the charge when the Medicare payer denies the claim -- you can't hold the patient financially liable without a signed ABN.

Get to the Bottom of GZ Denial Update

CMS's new policy to have modifier GZ trigger an instant denial should help prevent the current problem of the claims being subject to complex medical reviews, which can slow claims and create delays in your billing processes.

In black and white: "Effective for dates of service on and after July 1, 2011, contractors shall automatically deny claim line(s) items submitted with a GZ modifier," states Transmittal 2148. Your explanation of benefits will list the denial codes CO (Provider/supplier liable) and 50 (These services are noncovered services because this is not deemed a 'medical necessity' by the payer). To read the complete rule, released in Transmittal 2148, visit www.cms.gov/transmittals/downloads/R2148CP.pdf.

Caution: In the past, your Medicare payer would review a GZ claim and might end up covering the service, such as a Pap smear that you thought exceeded frequency limits but actually met the requirement. But the new policy means an automatic denial with no payer review. "That means you shouldn't use modifier GZ unless you're certain the service doesn't meet medical necessity requirements and you weren't able to obtain a signed ABN from the patient for some reason," cautions Genevieve Tang, reimbursement consultant at Quorum Consulting, a healthcare consulting company in San Francisco.

Best bet: Plan ahead to limit circumstances requiring GZ use. You should only append GZ in uncommon situations where the lab missed the opportunity to obtain the ABN or where the practitioner instructed the lab to provide the service anyway, based on medical judgment under the circumstances. Your lab should have a policy in place to collect ABNs when necessary.

Use GA/GX When You Have an ABN

GZ means you didn't get an ABN when you should have -- but GA (Waiver of liability statement issued as required by payer policy, individual case) means you did get the ABN as required by payer policy.

"ABNs are mandatory when the provider believes that Medicare may not determine the service to be 'reasonable and medically necessary,'" Tang says. That means you should have  a signed ABN when a test exceeds frequency limits or doesn't meet other coverage policy criteria such as a payable diagnosis.

GX is voluntary: If the test is statutorily non-covered -- such as most screening tests -- your lab isn't required to issue an ABN. But many labs choose to give an ABN for statutorily non-covered tests to ensure that the patient understands that Medicare won't pay, and perhaps to assist with secondary insurance coverage. In those cases, you would issue a voluntary ABN -- what used to be a Notice of Exclusion of Medicare Benefits (NEMB) -- and append modifier GX to the procedure code.

Here's why: "It is good patient relations -- giving them prenotification that a service may not be covered," says Barbara J. Cobuzzi, MBA, CPC, CENTC, CPCH, CPC-P, CPC-I, CHCC, president of CRN Healthcare Solutions, a consulting firm in Tinton Falls, N.J.

GY Gets Denial Statement, Too

Use modifier GY when the test is statutorily non-covered -- just like modifier GX -- but you didn't get a signed ABN. Remember that you're not required to issue an ABN in these cases. Using modifier GY means that the Medicare payer will issue a denial notice.