Proper Use of Modifiers in Outpatient Coding

by | Published on Jan 8, 2016 | Medical Coding

Outpatient Coding
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Outpatient coding refers to assigning medical codes for the services provided for a patient who is treated in a free-standing or hospital-based clinical setting and is under care for less than 24 hours. Medicare determines reimbursement for these services on the basis of Outpatient Prospective Payment System (OPPS). ICD and CPT coding on the medical claims help identify diagnosis and procedures respectively on the basis of which providers are reimbursed. However, the use of modifiers is equally important to ensure reimbursement for outpatient services. The modifiers you use must be accurate and appropriate to the services provided.

If you are not applying modifiers properly in your claims, those claims will be flagged for review and you will be asked for additional documentation. Your claims will be rejected if you fail to submit the required documentation or the submitted documentation doesn’t clearly support the use of modifiers. In this way, modifiers can be a source of outpatient coding errors, if you don’t give proper attention. Here are some important modifiers used for outpatient services and their proper use.

Modifier 25

The description of modifier 25 is as follows:

Modifier-25: Significant, separately identifiable evaluation and management service by the same physician or other qualified health care professional on the same day of the procedure or other service.

To be more specific, this modifier may be appended to an evaluation and management (E/M) service code if:

    • A distinct E/M service is provided on the same day (at the same or a separate encounter) as another E/M service or a minor procedure (for example, a procedure with a zero- or 10-day global period)


  • Performed by the same physician or other qualified healthcare professional

As per Medicare regulations, physicians in the same group practice who are in the same specialty must bill and be paid for same day E/M service as if they were a single physician. The use of modifier 25 is also appropriate in the rare circumstance of an E/M service provided during the day before a major surgery that is not the decision for surgery, but represents a significant, separately identifiable service.

Your claims with modifier 25 will be eligible for reimbursement only if:

  • The E/M services are medically necessary, significant, and separately identifiable
  • Each separately billed E/M service meets documentation requirements for the code level chosen
  • There is separate documentation to support the fact that the distinct, significant E/M service is ideal, especially if you are appealing a denied claim

Modifier 59

The description of modifier 59 is as follows:

Modifier-59: Distinct procedural service

In certain circumstances, it may be essential to indicate a procedure or service was distinct or independent from other non-E/M services performed during the same day. Modifier 59 is used to identify procedures/services, other than E/M services, which are not normally reported together, but appropriate under the circumstances.

If you are appending this modifier to a code, your clinical documentation must support the following:

  • A different session
  • A different procedure or surgery
  • A different site or organ system
  • A separate incision/excision
  • A separate lesion
  • A separate injury (or area of injury in extensive injuries)

The appropriate use of modifier 59 is explained below:

  • This modifier is typically used as the modifier of last resort, which means if another already established modifier such as LT (Left side), RT (Right side), 50 (Bilateral procedure) exists, you should use that modifier instead of 59. To be more specific, modifier 59 should be used only if there is no descriptive modifier available and modifier 59 best explains the circumstances.
  • You should not append modifier 59 to the code that indicates multiple sites or sides, such as in ophthalmology or integumentary with multiple lesions. For example, in the case of intralesional injection of nine lesions on the face, neck, and back, you would report 11901 (Injection, intralesional; more than 7 lesions) without a modifier since the code description specifies more than seven lesions.

New X Modifiers

The Centers for Medicare and Medicaid Services (CMS) introduced new X modifiers on January 1, 2015 to extend the specific definition of use for modifier 59. The modifiers are:

  • XE Separate encounter – A service that is distinct as it occurred during a separate encounter
  • XS Separate structure – A service that is distinct as it was performed on a separate organ/structure
  • XP Separate practitioner – A service that is distinct as it was performed by a different practitioner
  • XU Unusual non-overlapping service – A service that is distinct as it does not overlap usual components of the main service

Initially, CMS will accept either modifier 59 or X modifier. Even so, as per Change Request (CR) 8863, you should use X modifier if you are sure which X modifier should be appropriate for a particular circumstance. Certain commercial payers request the use of modifier 59 at the first spot with modifier X used in the second spot. You should check for specific reporting requirements with your payer during the insurance verification process.

To ensure proper and timely payment for your outpatient services, make sure your staffs and providers are well-trained on new guidelines and regulations related to outpatient coding. You should also consider performing reviews of outpatient coding prior to billing. This will help to identify errors and correct them before the submission of claims. If yours is a busy practice, especially a hospital-based clinical setting, it will take a lot of time and effort to ensure all these. An expert’s service is indispensable in such cases. Reliable medical billing and coding companies can provide invaluable support for outpatient facilities helping them save their time and focus more on providing quality care.

Rajeev Rajagopal

Rajeev Rajagopal, the President of OSI, has a wealth of experience as a healthcare business consultant in the United States. He has a keen understanding of current medical billing and coding standards.

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