Pathology/Lab Coding Alert

You might report the proper procedure code, but if you don't get a signed advance beneficiary notice (ABN) or use the right modifiers, your lab may not get paid for all the Pap tests it performs.
 
If the physician orders a Pap test that doesn't meet your payers' coverage rules, you'll need a signed ABN so you can bill the patient for the test. You may need an ABN, for example, if a physician orders a screening Pap more frequently than allowed or if he orders a diagnostic Pap or HPV without a payable diagnosis.

Modifiers Tell the Tale

When billing Medicare, you'll get stuck with the cost of medically unnecessary tests if you don't report appropriate ABN modifiers. "Labs use modifiers to tell Medicare whether an ABN is on file," says Joyce Ludwick, clinical laboratory compliance consultant with Park City Solutions Laboratory Services Group in Ann Arbor, Mich. "With the proper modifier, Medicare can inform patients whether they must pay for the service." Use modifiers when submitting claims to carriers on form CMS 1500.
 
For example, if you have an ABN for a screening Pap smear ordered more frequently than covered by Medicare, append modifier -GA (Waiver of liability statement on file) to the Pap code. If Medicare denies the claim, the explanation of benefits (EOB) instructs the patient that she must pay the lab for the service. "Without the modifier, Medicare doesn't return the EOB that allows the lab to bill the patient," Ludwick says. "In fact, Medicare will send the patient an EOB stating that she does not have to pay for the service."
 
In the same example, if your lab does not have a signed ABN, use modifier -GZ (Item or service expected to be denied as not reasonable and necessary) with the Pap code. "By notifying Medicare that you don't have an ABN for a claim that you expect it to deny, you reduce the risk of allegations of fraud or abuse when filing claims that are not medically necessary," Ludwick says.
 
Report modifier -GY (Item or service statutorily excluded or does not meet the definition of any Medicare benefit) with the Pap code if the physician orders a service without a payable diagnosis, such as a screening HPV test. Using -GY means that Medicare will generate a denial notice that the patient may use to seek payment from secondary insurance, Ludwick says.