Primary Care Coding Alert

Question: When I file a skin tag removal claim with diagnosis code 701.9, why does Medicare deny payment?

Tennessee Subscriber

Answer: Medicare payment for benign skin lesion removal, such as 11200 (Removal of skin tags, multiple fibrocutaneous tags, any area; up to and including 15 lesions) and +11201 (... each additional 10 lesions [list separately in addition to code for primary procedure]) depends on the carrier. Tennessee's Medicare Part B carrier, CIGNA HealthCare Medicare Administration, doesn't list 701.9 (Unspecified hypertrophic and atrophic conditions of skin) as an ICD-9 code that supports medical necessity.

That doesn't mean CIGNA excludes 701.9. But if you file a claim with 701.9, the removal must meet medical- necessity guidelines.

The Medicare carrier in Tennessee will consider skin tag removal as medically necessary, and not cosmetic, if the family physician (FP) clearly documents in the medical record one of the following conditions:

1. The lesion has bleeding, intense itching and/or pain.
2. The lesion has physical evidence of inflammation, such as purulence, oozing, edema, erythema, etc.
3. The lesion obstructs an orifice or restricts vision.
4. Clinical uncertainty exists as to the likely diagnosis, particularly in cases in which the FP considers malignancy a realistic consideration based on lesion appearance.
5. The lesion is in an anatomical region subject to recurrent physical trauma, and documentation shows that such trauma has in fact occurred.

If your FP removes a benign skin lesion for one or more of the above listed reasons, you must append modifier -KX to 11200-11201 to indicate you have appropriate supportive documentation on file.

When your FP removes skin tags that don't meet CIGNA's coverage requirements, you should collect payment from the Medicare patient. Prior to performing the procedure, make sure to inform the patient that he will be responsible for 11200-11201 payment. You should have the patient sign an advance beneficiary notice indicating that Medicare will not cover cosmetic dermatological surgery and that the beneficiary will be liable for the service's cost. Because the service is noncovered, you don't need to submit a claim to Medicare.

But if the patient has supplementary insurance and needs a formal Medicare denial to receive payment, you should append modifier -GY (Item or service statutorily excluded or does not meet the definition of any Medicare benefit) to 11200-11201 and use diagnosis code V50.1 (Other plastic surgery for unacceptable cosmetic appearance). To view CIGNA's local medical review policy, visit www.cignamedicare.com/partb/lmrp/tn/cms_fu/96-10-06.html.