Navigating the coding odyssey


By David E. Geist, MD

Learning how to accurately select and apply codes is a key skill for managing an efficient dermatology practice. Unfortunately, it is not one we learn in medical school.

We all struggle to ensure that we are coding and billing accurately, but understanding the nuances can be challenging. Should I use a modifier here? My patient came in for follow-up care but asked me to look at a new rash that had developed. How do I code for that visit?

Compounding these challenges, we have to be aware of varying payer policies and worry about steering clear of claims audits — not to mention preparing for the ICD-10 conversion and implementation. Below I discuss some of our biggest issues, as well as resources the AAD offers to help us run an effective practice.

Modifiers: Use them, don’t abuse them

Many physicians do not really understand how or when to use modifiers. Modifiers should be added to CPT codes when they are required to more accurately describe a procedure performed or service rendered. A modifier should never be used just to get higher reimbursement or to get paid for a procedure that will otherwise be bundled with another code.

But, modifiers can be tricky. Many times lack of understanding of accurate modifier utilization leads physicians to inappropriately use them, an abuse that can lead to claim denials. In dermatology practices, two of the most commonly misused modifiers are modifier 25 and modifier 59.

Modifier 25, meant to signify an E/M service performed during the same encounter as a procedure, too often is not recognized and is unjustly denied by insurers.. While many payers claim to recognize the modifier 25, the claim edit is set to pay for the E/M or the procedure but not both on the same day. Practices should find out which payers claim to recognize and reimburse for the modifier, and what documentation is required.

Misuse of Modifier 59 is another area of concern in a dermatology practice. Simply stated, it tells the payer that two or more procedures were performed at the same visit/encounter on different sites of the body or different incisions of the same anatomic location. It should never be used strictly to prevent a service from being bundled or to bypass the insurance carrier’s claim edit system. When using modifier 59, documentation substantiating that the services were performed separately should be included in the patient’s medical record.

Get it right...or get audited

From the government’s perspective payments made based on coding errors result in misuse of taxpayer dollars. And when that happens — and it will for some — they classify it as fraud and abuse, at which point an audit is initiated by either CMS or a Recovery Audit Contractor (RAC)depending on the audit type. The biggest audits now center on office visits billed with Modifier 25. RACs have an incentive in that they receive a contingency fee for every error they find the Medicare corrects and recoups funds for.

Additionally private payers may also conduct audits and seek to recoup payments they deem inappropriate. 

Start preparing for ICD-10

The transition and conversion to and implementation of ICD-10, which all health care providers are required to be in compliance with by Oct. 1, 2014, is supposed to help reduce coding issues that stall reimbursement claims and sometimes can lead to claims audits. However, medical practices nationwide have expressed concern regarding the impact of the ICD-10 switchover. A recent survey by Nuesoft Technologies reported that 72 percent of respondents anticipate ICD-10 will significantly affecting their practice financially and/or operationally.

With so much changing in healthcare, it’s understandable that you would want to avoid thinking about transitioning to the ICD-10 code set, particularly since the government has delayed implementation to Oct. 1, 2014. However, those who haven’t begun getting their operations up to speed are at great risk of a severe revenue disruption. Early ICD-10 testing will allow your practice to identify and resolve issues before they disrupt your claims process and cash flow.

Code with confidence

Streamlining your claims process is crucial to keeping your practice running smoothly and profitably. Fortunately, the AAD offers the following resources to help you code with confidence.

  • Pre-orders are now being accepted for the 2014 Coding and Documentation for Dermatology manual, which includes new and revised AMA CPT procedure codes, ICD-10 codes and implementation information, RAC Audit Toolkit, and much more.
  • AAD’s expert coding staff regularly provide webinars on the most significant topics in coding and reimbursement.
  • Derm Coding Consult provides practices with reliable and timely information about coding issues.
  • The coding and reimbursement section of offers a wealth of resources to help you and your practice staff understand the intricacies of correct coding, ICD-10 transition, RAC audits, and dealing with Medicare, managed care, and self-pay patients.
  • Cracking the Code, a monthly column in Dermatology World addresses important coding and documentation questions.
  • Coding courses are available at the Academy’s Annual and Summer meetings.
Dr. Geist is chair of the American Academy of Dermatology’s Coding and Reimbursement Task Force. He is a Mohs Surgeon at Adult and Pediatric Dermatology, PC in Marlborough and Concord, Massachusetts. His professional interests include high risk cutaneous oncology, Mohs reconstruction, melanoma management, immunosuppressed dermatology, leadership development, and quality improvement.

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