Why Do Doctor Bills Vary Widely?

Ever wonder why doctor bills vary so widely? Check out my guest post on Capture Billing's blog to learn more!

Modifiers

Part of CPT and HCPCS coding are modifiers. Modifiers are two digit codes that indicate a modification to clarification to the CPT or HCPCS. Modifiers can be found in the CPT and HCPCS books in Appendix A. In many instances the proper use of a modifier can avoid claim denials. Understanding modifiers is very important.

There are three kinds of modifiers and understanding the differences is imperative as it directly relates to their usage. The first are evaluation and management (E&M) modifiers, these can only be used on E&M services. Remember that E&M are office visits only, these do not include diagnostic testing or surgery, please review the evaluation and management section in CPT coding earlier in this writing.

The second type is procedure modifiers. These modifiers only apply to procedures including diagnostic and therapeutic and surgery. Included in this group are location modifiers, such as RT for right and LT for left. Finally the last group is general modifiers that may be used on either type of service.

On the CMS 1500 form, modifiers are listed in the service line just after the service code, like this: (this sample uses the modifier 25 next to 99213. Please note, a modifier 25 generally indicates the presence of another CPT code on the same claim. This is not depicted in the image because this image is strictly to show you the location of the modifier fields.)

As you can see, there are 4 modifier spots. On a paper claim form, you can only have 4 modifiers. It is pretty rare to need more than 4 modifiers per claim line or service line.

Follow this link to see a complete list of modifiers and their descriptions from Medicare: Modifiers for Billing

Medical Necessity

Coding is an abbreviated way to tell the insurance company a story about the patient in order to request reimbursement or payment for services rendered. The story that you tell to the insurance is VERY important. Like any story you ever read, the story we tell to the insurance has to make logical sense.  Accordingly, it needs a beginning or  ‘why it was done’ and an ending or ‘what was done’. The ‘what was done’ has to be a logical solution for the why it was done.

For example, here is a plain language story that makes sense: I have a headache, so I took Advil. The ‘why’ is my headache. The ‘what was done’ is that I took Advil.

Now, let’s look at the same example that doesn’t make sense. I have a headache, so purple unicorns flew me to never-never land. That’s foolish, right? Exactly. That is the basis for one on the most important parts of medical billing and coding. I fancy terms, we call this medical necessity.

ICD-9 codes (diagnosis) are used to explain why a patient sought treatment by a physician and CPT detail the treatment provided. The diagnosis (ICD-9) or the reason for the visit must justify the procedure (CPT) performed. This is called medical necessity. Think of it this way: a doctor wouldn’t cut off a patient’s finger if their toe was infected (at least we hope not!). From a billing stand point a toe infection wouldn’t justify medical necessity of a finger amputation. Unfortunately, it is not always that easy. Many times the differences are not obvious to a non-physician.

Insurance companies have guidelines (rules) in place for CPT and ICD-9 linkage and many offer references on their web sites for selecting the best coding combination. If the specific carriers do not have guidelines readily available the best reference site is your local Medicare or CMS (Centers for Medicare and Medicaid Services). Once on the web site, look for a coding link or one that says LCD (local coverage determinations) or NCD (National Coverage Determinations). The LCD policies spell out code usage, documentation guidelines and very often list the applicable diagnosis codes for each procedure.

As an example, check out the following Medicare web site at (NGS Medicare). The Medicare web sites also offer a link to the NCD (national coverage determinations) which are the coding guidelines created and maintained by CMS on a national level. NCD is also a good resource containing valuable coding information, but often they do not have the ICD-9 codes listed.  Although coding help is available, it is fraudulent to assign a diagnosis on this basis alone. The physician must be the one to choose the patient’s diagnosis based on their findings and use the LCD for correct linkage when you are not sure or to follow up on a medical necessity denial. If you have received a medical necessity denial show the doctor the LCD and ask for clarification.

Several times I have referred to ICD-9 and CPT linkage and code order and I feel that this needs a little something more. So we will begin now to slowly introduce the form used in paper medical billing. Today, most billing is done electronically; however, learning the CMS 1500 form, is the best way to get a tangible understanding of medical billing. 

Look at the example below, the picture is a portion of a CMS 1500 form. The locations for ICD-9 are circled in red. The CPT area is circled in green.

First note the ICD-9 code section (box 21). The first location (location #1) is important. It must always be the “primary diagnosis code”. You should not have supporting diagnosis in the first field. For example, a patient sees the doctor for pneumonia, as a result of the pneumonia the patient is suffering from congestion. The primary diagnosis is always going to be the overall reason for the visit, in this case pneumonia. Congestion is a supporting diagnosis. The diagnosis codes are listed box 21 first and then there is a linkage index (box 24E) next to each of the 6 available service lines (box 24D).

In box 24E, the linkage index, you would list the location  of the ICD-9 to be linked to the service indicated on each service line. To better understand that look again at box 21. See how each of the spaces are numbered 1,2,3,4 – those numbers (1,2,3,4) are the ‘location’.

Now, let’s look at how it looks completed with CPT, ICD-9, and the linkage index or pointer:

HCPCS, just like CPT, require a valid ICD-9 linkage. The ICD-9 states the reason for needing the supply or service and the CPT or HCPCS state the service performed or the supply used/given. CPT and HCPCS are sometimes used at the same time to tell the whole story. CPT and HCPCS can share diagnosis codes and be billed on this same claim form. A good example of a CPT, HCPCS and ICD-9 claim would be for an injection. When a patient has an injection there is the CPT service of administration (sticking the needle in to the patient) and the HCPCS to describe the actual medication or vaccination what was administered.  

Here is something from Medicare that may help you to get a good understanding of the CMS 1500 form: 1500 form at a Glance

To review the while 1500 form follow this link: CMS 1500 Form

Lastly, you can learn more about medical necessity from this Medicare site: Medical Necessity

CPT and HCPCS Coding

CPT Category 1

CPT (Current Procedural Terminology) level one codes are procedure codes generally used by physicians and in other outpatient settings. They are updated annually. 

A procedure is any action taken by the doctor and staff for the treatment or diagnosing the patient. CPT can also be divided in to category as follows:

Anesthesia: This is the practice of giving pain numbing medicines to patients for surgery. (00001-09999)

Evaluation and Management: These are services where the doctor will assess your problem, make a diagnosis and recommend treatment, but does not do any surgery or testing. Previously we noticed a pattern in bold print spelling out SOAP. SOAP is a common evaluation and management method. It also helps the doctor know what to write in his/her notes.  (99201-99255)

Surgery: These are invasive codes, meaning to go through the skin. The surgery section is further divided by body system such as musculoskeletal (skin, muscle and bone) or cardio-vascular and respiratory (heart, veins and arteries and lungs). (10000-69999)

Radiology: Radiology describes diagnostic or therapeutic procedures involving several different forms of x-ray. (7000-79999)

Pathology: These services include the analysis of blood, tissue and urine (80000-89999)

Medicine: The medicine section encompasses all other medical services that do not fit in to the sections above including non radiology diagnostic services and non surgical therapeutic treatments, physical therapy and chiropractic. (90000-99100)

Category II and III

Both category 2 and 3 codes are for reporting purposes. They report medical treatment outcomes and assessments of clinical trials and new technologies.  They are generally not reimbursable (they don’t get paid) and are used in addition to traditional CPT level 1 codes as appropriate.  Not all physicians report using these codes so it is important to ask the provider is they do or if they are involved in clinical trials. To follow is the official description of category 2 and 3 codes from the AMA web site:

“Category II CPT Codes are intended to facilitate data collection by coding certain services and/or test results that are agreed upon as contributing to positive health outcomes and quality patient care. This category of CPT codes is a set of optional tracking codes for performance measurement. These codes may be services that are typically included in an Evaluation and Management (E/M) service or other component part of a service and are not appropriate for Category I CPT codes.”

“The purpose of this category of codes is to facilitate data collection on and assessment of new services and procedures. These codes are intended to be used for data collection purposes to substantiate widespread usage or in the FDA approval process. As such, the Category III CPT codes may not conform to the usual CPT code requirements that:

Services/procedures are performed by many health care professionals across the country;    FDA approval be documented or be imminent within a given CPT cycle; and the service/procedure has proven clinical efficacy.”  (http://www.ama-assn.org/ama/pub/category/12886.html)

HCPCS

HCPCS codes include all products or items used in medical treatment and service codes which have not yet been assigned to CPT. It also includes non-medical care such as ambulance transportation. An example of HCPCS are known as durable medical equipment (DME) which are supplies provided to patients that can be used repeatedly such as crutches or a wheel chair. Other examples of HCPCS are medications or drugs, surgical trays, and bandages. 

Medical and Surgical Coding Introduction

Ok, here is where it gets more challenging (not really, coding is easy once you learn how)... We are entering the wonderful world of coding.


After a patient is seen by the doctor a coder must translate the office visit in to codes. The codes used are called ICD9, CPT and HCPCS. The codes are a different language used to tell a story about the patient’s doctor's office visit. The codes are all maintained by different agencies  and updated periodically. Here is a list of which agency is responsible for which code set.

• The National Center for Health Statistics (division of the Centers for Disease Control) maintains ICD-9-CM (diagnosis codes), http://www.cdc.gov/nchs/
• The Centers for Medicare and Medicaid Services maintains HCPCS codes (supply and service codes), www.cms.hhs.gov
• American Medical Association owns and maintains CPT-4^® codes (medical service codes), http://www.ama-assn.org/

(It should be noted that the United States is planning to begin using ICD-10 (10th revision) in 2013. Since we are still using ICD-9 as of the time of this post, I will only discuss ICD-9 at this time. I will talk more on ICD-10 in later posts.)

Before beginning a coding overview, I want to clarify one common misconception about coders (BTW, I am a Certified Coder). This misconception, I find, scares a LOT of people away from coding. So, here is what you need to understand. Coders do not memorize every code. We do not know everything about every disease or procedure in existence. Given, we know a lot of codes. After using them enough, you would too. So, you ask, what makes a coder so special if we do not memorize 25,000+ codes? 

Here is the truth about coders (that some don't want you to know because, in general, we like that you think we are brilliant)... All we coders really know are coding rules, how to use the coding books, where to find the best resources, and anatomy. THAT'S IT! 

In the next few posts, I will share most of this with you in a summary form. It won't be enough to run out and take the CPC or CCS exams, but hopefully, this will remove some of the fears associated with coding. 

So, now we will begin with ICD-9...