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CMS Introduces Modifiers to Combat Abuse

The Office of Inspector General (OIG) has identified continued abuse of modifier 59, Distinct Procedural Service.  This modifier indicates when physicians’ services that are usually considered integral to each other may be reported separately for additional payment.  Frequently, this modifier is applied to services that should not be billed separately and the provider inappropriately receives reimbursement.  Transmittal 1422 states that the 2013 Comprehensive Error Rate Testing (CERT) data projected a $320 million error rate in physician claims and $450 million in facility claims appended with modifier 59. The Centers for Medicare and Medicaid Services (CMS) indicate that four new modifiers will be implemented in January 2015 in an attempt to better identify inappropriate claims. 


These new Healthcare Common Procedure Coding System (HCPCS) modifiers, referred to collectively as -X{EPSU} modifiers, are considered subsets of modifier 59:

  • XE indicates a Separate Encounter, A Service That Is Distinct Because It Occurred During A Separate Encounter  
  • XP indicates a Separate Practitioner, A Service That Is Distinct Because It Was Performed By A Different Practitioner    
  • XS indicates a Separate Structure, A Service That Is Distinct Because It Was Performed On A Separate Organ/Structure  
  • XU indicates an Unusual Non-Overlapping Service, The Use Of A Service That Is Distinct Because It Does Not Overlap Usual Components Of The Main Service

CMS believes that by identifying specific reasons for utilizing modifier 59, it will be easier to filter claims that may be billed inappropriately.  Provider education is crucial for submitters to understand when a service can be appropriately “unbundled.”  Nonetheless, we can expect frequent audits of claims with both modifier 59 and the new subset modifiers.  Ensure that documentation substantiates distinct services whenever claims are submitted, or expect to forfeit payment and undergo potentially time-consuming audits.

Nancy Clark is a Manager in the Health Care Services Group. Her expertise focuses on coding and documentation audits, which includes chart review and report compilation.

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