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What is Rule-Based Procedure Coding?

Medical billers and coders must have knowledge of coding guidelines from the Current Procedural Technology (CPT) book. The codebook is published annually by the American Medical Association and is available in print and digital formats. Some Payers also have their own policies and guidelines so it's important to pay attention to them.

Filing a claim with insurance

Each insurance company will have clinical practice guidelines and reimbursement policies. The clinical practice guidelines are documents that present evidence-based recommendations to help clinicians in the treatment of particular diseases or groups of patients. These are essentially recommendations on how a provider should treat a disease or classification of patients. The reimbursement side, however, is different.

For a clinician to get paid, there are recommended CPT codes, diagnosis codes, and modifiers that must be used when submitting a claim to the insurance company. Claims must also meet authorization and medical necessity guidelines. If a biller does not meet the Payer reimbursement guidelines, they will not be able to collect reimbursement on behalf of the clinician. It's a losing situation for everyone — except the insurance company.

What are E&M guidelines?

The Centers for Medicare and Medicaid Services (CMS) releases Evaluation and Management coding guidelines every year. The three key components to remember when selecting the appropriate level of E/M services provided are history, examination, and medical decision making. There are exceptions if the patient visit consists predominantly of counseling and/or care coordination. For these visits, time is the controlling factor to qualify for a particular level of E/M services.

If you are a coder, you should be familiar with these guidelines and how your provider is documenting the service. You also need to know the modifier used so you can code it correctly.

What are the most commonly used CPT code modifiers?

Modifier 25 and 59 are used and abused a lot when filing claims with insurance, so these modifiers are always on the Office of Inspector General's (OIG) work plan. If your provider is using these modifiers on a regular basis, you may want to caution them because these are some of the red flags that may trigger an audit.

What is Modifier 25?

Modifier 25 is used to report separately identifiable Evaluation and Management (E/M) service by the same physician or other qualified healthcare professional on the same day of a procedure or other service. Modifier 25 indicates that on the day of a procedure, the patient's condition required a significant, separately identifiable E/M service, above and beyond the usual pre and post-operative care associated with the procedure or service performed.

All E/M services provided on the same day as a procedure are part of the procedure and Medicare only makes separate payments if an exception applies. This just means that CMS wants to make sure they are paying for actual services rendered and not for services that are inappropriately billed.

What is Modifier 59?

Modifier 59 is for certain situations where it may be necessary to indicate that a procedure or service was distinct or independent from other non-evaluation and management (E/M) services performed on the same day. Modifier 59 is used to identify procedures/services, other than E/M services, that are not normally reported together, but are appropriate under the circumstances.

What is a Local Coverage Determination (LCD)?

Medical billers and coders have two types of coverage determinations with Medicare — local and national. It's important to be familiar with both. When a fiscal intermediary or contractor makes a ruling whether a service or item can be reimbursed, this is known as a local coverage determination (LCD). When CMS decides whether a service or item may be covered, it is known as a national coverage determination (NCD).

Local coverage determination is always based on medical necessity. LCDs only apply to the area served by the contractor who made the decision. Procedural codes that rely on local coverage determination are noted in the CPT manual. If the provider plans to submit a procedural code that's LCD-dependent, you should always verify the guidelines for the item before you submit it.

What is a National Coverage Determination (NCDs) policy?

National coverage determination rulings detail the Medicare coverage of specific services at the national level — and all Medicare contractors are required to follow them.

If you run into a situation where an item or service is not defined by an NCD, the decision for coverage is the responsibility of the local contractor. In cases where neither an LCD or NCD exists and it's unclear whether or not a service will be covered, the provider should secure an advanced beneficiary notice (ABN) before performing the service in order to get reimbursed.

It's important to remember that both NCDs and LCDs create policies that are specific to an item or service. They also define the specific illness or injury for which the item or service is covered. LCDs may vary depending on your location.

What is the National Correct Coding Initiative?

NCCI guidelines are all about bundling and unbundling. You will need to determine whether a modifier is required for the two codes that you're billing or whether they are mutually exclusive.

If you are working in a big healthcare system or you're working in a hospital a lot of these things are likely automated in your practice management software. As a coder or biller responsible for revenue cycle management, it's important to stay current on industry changes. Don't just rely on your practice management software to show you a warning or alert. You should also be able to look at an encounter and know if something doesn't seem right. If you're able to catch these issues at a glance it can save a lot of time and prevent your claim from being denied.

Why is it important to code to the highest level of specificity?

While a provider is expected to document the most specific clinical diagnosis, it's just as important for medical coders to assign diagnosis codes to the absolute highest level for that code — meaning the maximum number of digits for the code being used.

For example, if the diagnosis is for a broken limb it's important to note whether it's an arm or leg and the side of the body where the broken limb is located. If the provider's notes do not include that information, you may want to have a conversation with them to stress the importance that every detail counts. If the diagnosis is not documented fully, it's not a reimbursable claim.

Payer rules, guidelines, and restrictions

There are Payer rules, guidelines and restrictions that have to be followed too. At the start of the COVID-19 pandemic telehealth visits became more common because of the waivers that Medicare / CMS put in place to ensure patients could still receive care without coming into the office.

This ended up creating billing issues because there was little guidance from CMS on how to use them. The agency also cycled through a series of code modifiers which ended up causing even more confusion. That's why it's crucial to stay current on all of these rules and which guidelines each payer is following.

Payers may have similar guidelines, but may have specific requests that are unique to them. Following the guidelines of each payer is extremely important to ensure your claims get paid.

What is the difference between physician and provider?

Many practices are now hiring non-physician practitioners like Nurse Practitioners and Physicians Assistants. Services performed by one of these roles are generally reimbursed at 85% of the rate compared to a physician performing the same service. There are also specific billing guidelines for these roles including incident-to rules and shared services guidelines which may be determined by the physician's scope of practice.

Scope of practice is highly dependent upon the state in which you work. For example, Texas may have a different scope of practice or guidelines for Nurse Practitioners or Physician Assistants than New York. In most cases, the physician needs to be in the office to bill for these encounters. They don't have to be in the room, but they must be in the office suite for it to be billed as an incident-to service. Otherwise, the service must be billed under the nurse practitioner's National Provider Identifier (NPI).

What is an example of incident-to billing?

The current CMS rules state that when a patient visit is performed in part by a physician and in part by a non-physician provider (NPP) in an office setting, the physician is allowed to bill for the visit under their own NPI and receive the higher Medicare payment rate. These are considered to be services furnished "incident to" a physician's professional services and must meet other Medicare requirements for "incident to" services.

CMS established rules to help determine whether the physician or non-physician provider performing a split or shared visit should bill Medicare for the encounter.

Typically, when determining whether a physician or an NPP may bill for a split or shared encounter, either the physician or the NPP could bill for the service as long as the billing practitioner performed a "substantive portion" of the visit.

In the final rule, CMS clarified its policy and, effective January 1, 2023, will utilize time as the key factor in determining whether the physician or the NPP performed the majority of the visit. CMS finalized its proposal to limit the billing practitioner to the individual who performed more than 50% of the visit. For critical care services, which are time-based codes, the physician or NPP must provide more than half of the total time in order to bill for the encounter.

If you are unsure about the most current guidelines, we recommend scheduling a code review with a medical billing consultant to avoid issues later in the event of an audit.