Fraud Spotlight: Why Modifier 25 FWA Continues

by Steve Nesnidal, MD, CPC, AHFI
Jun 7, 2023, 11:06 AM

In a recent $625,000 Departmentof Justice (DOJ) settlement, a pain management practice was alleged to have violated the False Claims Act (FCA) by submitting improper claims involving Modifier 25.¹ The provider allegedly submitted E/M services with a Modifier 25 that were not separately billable from other minor surgical procedures performed on the same day.

Modifier 25 utilization has been a major fraud, waste and abuse (FWA) issue for payers since the inception of the modifier. Modifier 25 usage on an E/M code along with another procedure on the same day of service allows a provider to get higher reimbursement. Back in 2005, the Office of Inspector General (OIG) issued a report on the abuses of Modifier 25.²Almost 2 decades later, the abuse continues. Recently, a major payer was set to implement a requirement that documentation must accompany claims for CPT codes 99212-99215 with a Modifier 25 and a minor surgical procedure on the same date of service. Although this payer has since delayed this policy implementation, it does not mean that future implementation is not on the horizon. In fact, the OIG is revisiting Modifier 25 misuse with a report due in 2023. The OIG Work Plan titled Dermatologist Claims for Evaluation and Management Services on the Same Day as Minor Surgical Procedures³ will audit dermatologists' claims for E/M services with Modifier 25 on the same day of service as a minor surgical procedure.

As a payer, how do you know when a provider may properly use Modifier 25 on an E/M CPT code on the same day of service as another procedure? The AMA provides a resource titled Reporting CPT Modifier 25⁴ that outlines guidelines for using this modifier and provides several examples of appropriate usage. Modifier 25 can be appended to an E/M code that is submitted on the same date of service (DOS) as a minor surgical procedure, but only if the E/M work is distinct from any pre-op/post-op work included in the valuation of the surgical code and only if it is significant in scope. The Centers for Medicare & Medicaid Services (CMS) also provides multiple appropriate usage examples of Modifier 25 in Medicare Claims Processing Manual Chapter 12 - Physicians/Nonphysician Practitioners.⁵ If a payer audits provider claims utilizing Modifier 25 on E/M codes, the provider documentation must clearly justify that a separate and distinct E/M service was performed.

Payers should use these resources as a means for developing and implementing comprehensive policies regarding the use Modifier 25. Payers should be very clear to providers when the use of Modifier 25 will be allowed and when it won’t be allowed, and therefore, denied and not reimbursed on the claim.

Effective detection of E/M code related FWA is vital for the efficiency of a Health Plan. Due to its prevalence as well as its insidious nature, this can be a challenging task. Context 4 Healthcare offers a series of FWA edits that can help our users detect aberrant patterns with E/M Modifiers 24, 25 and 57 on claims. We also offer FWA reports that can work alone or in concert with our edits to detect atypical E/M code patterns in batches of claims. The detection of an abnormal E/M code pattern can then provide a focus for a medical records review. It is only after a detailed review that the detected pattern can either be deemed justified or it can be determined to be usage the payer will not reimburse.

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