CMS Establishes New ‘X’ Modifiers for Use With Modifier 59

Laboratories need to be careful how they use modifier 59, Distinct Procedural Service, in 2015 because the Centers for Medicare and Medicaid Services (CMS) is trying a new tactic to ensure proper use of the modifier after several years of warnings and education without effect.

Program transmittal R1442OTN (change request 8863) adds four new Healthcare Common Procedure Coding System (HCPCS) code modifiers that define subsets of the 59 modifier for use beginning on Jan. 1, 2015. CMS estimates the one-year overpayments associated with misuse of modifier 59 are $770 million, more than enough incentive to try this new tactic to bring providers into compliance.

What Is the Problem?

The 59 modifier overrides edits imposed by the Correct Coding Initiative (CCI), including medically unnecessary edits or MUEs, and is the most used modifier. According to the transmittal, “it is also associated with considerable abuse and high levels of manual audit activity, leading to reviews, appeals and even civil fraud and abuse cases.” Modifier 59 is supposed to be used only when no other modifier is a better choice.

The most common incorrect use of the modifier is for a distinct service and, unfortunately for laboratories, this is the primary reason a laboratory might use it. Physicians or practitioners often order two CCI tests at the same time. CMS says using modifier 59 to override CCI edits is common and “not infrequently overrides the edit in the exact circumstance for which CMS created the edit in the first place.” The options available to labs are either to call the physician or apply the 59 modifier on the assumption that the physician knows what he is ordering.

Until now, the latter was a good, but risky, option for the lab because it saved time and money and usually required a post payment review to detect any problems. Going forward, the risk may not be worth the gain because CMS integrity auditors are likely to focus more effort in this area. That means more denials, audits, and medical review scrutiny and potentially whistleblower fraud and abuse cases and lawsuits.

Introducing the ‘X’ Modifiers
The solution, according to the transmittal, is more precise coding options, provider education, and selective editing. To accomplish this, CMS created four new HCPCS code modifiers to be used in place of the 59 modifier. The new modifiers, referred to by CMS as X{EPSU}, define specific subsets of the 59 modifier and allow contractors to use selective editing when they believe abuse is occurring. The new modifiers identify the reason a service is distinct.

  • XE Separate Encounter, distinct because it occurred during a separate encounter. For laboratories, an example would be a patient who had an abnormal glucose as part of an organ or disease panel in the morning who was then tested again as a single service in the afternoon after treatment has occurred. The 91 modifier for a repeat test would not be applicable because the two tests have different HCPCS codes.
  • XS Separate Structure, distinct because it was performed on a separate organ or structure. For labs, this could apply to pathology exams or cultures.
  • XP Separate Practitioner, distinct because it was performed by a different practitioner. For laboratories, this could be considered not applicable because of the use of the word performed. However, if CMS views this as ordered rather than performed it would be applicable to labs in the case of duplicate orders from different practitioners. This can be either legitimate or not. If the tests are duplicates or partially overlapping, the best practice would be to call the practitioner and clarify the orders rather than just adding the modifier and filing the claim.
  • XU Unusual Non-Overlapping Service, distinct because it does not overlap usual components of the main service. More explanation of the exact nature of this description is needed to determine when a laboratory would use this modifier.

Here is how this will work, at least in the near term. CMS will continue to accept the 59 modifier, but instructions associated with it state that 59 is to be used only when a more descriptive modifier is not available. The new HCPCS X{EPSU} modifiers are more descriptive. Essentially, do not use 59 when one of the new modifiers is specific to the circumstances of an individual claim. Do not use both the 59 and one of the X modifiers on the same claim line. CMS is going to encourage a rapid migration to the new X{EPSU} modifiers and has given local contractors the go ahead to start creating edits to that effect. Medicare Administrative Contractors (MACs) may introduce policies or issue notices that require one of the new modifiers for certain HCPCS codes where the MAC has determined that incorrect billing is occurring. Laboratory compliance officers and billing managers should watch for these notices.

Steps Laboratories Need to Take
Billing computers and software need to be revised to allow the use of the new modifiers and to edit for them. If local contractors notify labs that they will be requiring a new modifier in place of the 59 modifier for certain code sets, the software should be set to either drop the claim for review or attach the modifier. In the latter case, laboratories may choose to hard code these so that when the HCPCS codes in question are ordered together, their system will automatically apply the appropriate modifier. Do so with caution. If the contractor requires an X modifier for a specific code pair, it is imperative that the laboratory make certain the case described by the modifier is correct. If a laboratory hard codes the modifier, it should still drop claims for at least a brief review to verify the circumstances before releasing it.

Laboratories will need to educate their staff directly affected by the change, update their policies and procedures to reflect the changes, and modify or update their annual compliance training as necessary. Education of clients is also important, particularly in any case where frequent inappropriate orders occur. Finally, laboratories need to design audits to verify they are applying the 59 and X{EPSU} modifiers correctly.

Takeaway: CMS has focused on the 59 modifier because the agency believes it is commonly used incorrectly. Labs to have the same focus on use of this modifier and the X{EPSU} modifiers.  

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