Preventing Compliance Risks and Repercussions Through Accurate Modifier Understanding

Modifiers are an integral part of billing for laboratory services. A modifier is a two-character suffix that the reporting entity (the hospital or physician) appends to a code to indicate that some specific circumstance has altered a service or procedure, but not the fundamental elements in the definition of the code. Modifiers have proven to be an area of challenge for many coders and compliance professionals and often applied inaccurately. By assessing and understanding the foundations of modifiers, coders can safeguard reimbursement and compliance.

Indications and Circumstances

For level 1 codes, modifiers are considered numeric and are located in Appendix B of the CPT manual. Understand that modifiers for Level II codes are both alphabetic and alpha-numeric. The goal of modifiers are to provide clarification on the procedures performed and it is common for payers to require them to indicate specificity. The following are examples of circumstances that modifiers can indicate:

• Only the technical component of a procedure was performed (TC).
• The physician component is being reported separately (26).
• A service is for preventive screening covered under pertinent laws and patient cost-sharing is not applicable (33).
• A service is distinct or independent of other services (59 or one of the X{EPSU} modifiers).
• A referred test from a physician office laboratory or independent laboratory (90). Note that in contrast to the initial guidance for use of modifier 90 that current industry practice limits use of this modifier to independent laboratories. Physician offices are restricted by Medicare and commercial payers from submitting claims on behalf of the testing laboratory for the tests referred by the physician to an outside laboratory.
• A repeat clinical laboratory test was performed on the same day to obtain a subsequent test result (91).
• The service was provided at an off-campus, outpatient, provider-based department of a hospital (PO or PN).
• Cost-sharing waived for Medicare Part B COVID-19 testing-related services during the COVID-19 public health emergency (CS).

Payment Modifiers

Understand that the professional component (26) and technical component (TC) modifiers are payment modifiers. This means that these modifiers, when appended to a claim, are first listed before the other laboratory modifiers of 59, 90 or 91. Coders should be careful with both the TC and 26 modifiers. These modifiers are restricted to procedures identified on the Medicare Physician Fee Schedule as having separately billable technical and professional components. Note that this set of modifiers would not be utilized on the facility claim.

A Preventive Modifier

Modifier complexities do not end with payment modifiers. In response to the Patient Protection and Affordable Care Act (PPACA), modifier 33 was released by the AMA and became effective for billings with date of service January 1, 2011. So how is this modifier different from previous modifiers? Modifier 33 communicates to a payer that the service or test being billed is preventive under pertinent laws and indicates that patient cost-sharing is not applicable. Be warned though that for separately reported services that are specifically identified as preventive, the modifier should not be used. Even more, the Medicare Preventive Service Benefit manual does not reference this modifier as applicable for laboratory testing billed to the Medicare program. Understand that at present, application of this specific modifier for billing of laboratory services should be restricted to the intentional instruction of commercial and private payers.

A Costly Compliance Risk

Under normal circumstances, modifiers, especially those related to laboratory and pathology services, are appended by the billing office, revenue integrity or medical records staff and not hard-coded on the chargemaster. Modifiers may also be appended through charge entry options by the technical staff. Modifiers remain an area of scrutiny for Medicare, since they are a continued subject of abuse. As a consequence, Medicare demands strict adherence to documentation guidelines. Improper application of modifiers poses a compliance risk.

Prior to appending a modifier it is best practice to assess accuracy of the code or codes assigned. Sometimes the correct action is a change of procedure code rather than appending of a modifier. Note that as of Mid-2013, the correct application of modifiers in the laboratory was further limited by the introduction of guidelines from commercial payers that no longer acknowledge the use of modifier 59 as appropriate for laboratory billing.

However, to add to the confusion the AMA descriptions of the modifiers 59 and 91 were not revised. The AMA coding guidelines for Microbiology continue to reference use of modifier 59 when billing for separate results that are reported for different species or strains that are described by the same code. Note that the subsection for Drug Testing also includes instructions for use of modifier 59 when the same procedure is performed on the same date of service on more than one specimen source, such as blood, saliva and urine.

In transmittal R1422OTN, the Centers for Medicare & Medicaid Services (CMS) stated, “ Modifier 59is associated with considerable abuse and high levels of manual audit activity, leading to reviews, appeals and even civil fraud and abuse cases.” Consequently, on January 1, 2015, four new HCPCS modifiers, which define subsets of modifier59 (distinct procedural service), took effect.CMS refers collectively to the four new modifiers as the X{EPSU} modifiers. The descriptors of the modifiers are self-explanatory. Specifically:

• XE—separate encounter: A service that is distinct because it occurred during a separate encounter
• XP—separate practitioner: A service that is distinct because it was performed by a different practitioner
• XS—separate structure: A service that is distinct because it was performed on a separate organ/structure
• XU—unusual non-overlapping service: The use of a service that is distinct because it does not overlap usual components of the main service.

According to the NCCI policy updated and effective January 1, 2023, modifier 59 or XS may be appended, when supported by documentation, “for different anatomic sites during the same encounter only when procedures which are not ordinarily performed or encountered on the same day are performed on different organs, or different anatomic regions, or in limited situations on different, non-contiguous lesions in different anatomic regions of the same organ.”

These are not all the tips and insights necessary to tackle laboratory modifiers and gain correct comprehension for accurate coding. Purchase our Coding Essentials for Laboratories to master all laboratory modifiers, reinforce full reimbursement, and safeguard against compliance risks. Gain knowledge in this area and so much more for success throughout 2023.