CPT and ICD-9

Coding for Surgical

Residents and
New Surgeons
in Practice
by John T. Preskitt, MD, FACS

WITH CONTRIBUTIONS BY

John P. Crow, MD, FACS

Charles D. Mabry, MD, FACS

General Surgery Coding and

Reimbursement Committee

of the American College of Surgeons

Division of Advocacy and Health Policy

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Table of Contents
PAG E

Disclaimer and Copyrights 2

Chapter 1 Introduction to Coding 3

Chapter 2 Diagnosis Coding: ICD-9-CM Defines Medical Necessity 9

Chapter 3 Evaluation and Management Service Coding 15

Chapter 4 Coding for Surgical Procedures 27

Chapter 5 Teaching Physicians: Medicare Guidelines 37

Chapter 6 The Importance of Diagnosis-Related Groups 41

(DRGs) to Surgical Residents

Chapter 7 References and Internet Links for Coding Resources 44

1995 Documentation Guidelines

1997 Documentation Guidelines

ACS Bulletin Breast Coding May 2003

E&M Spreadsheet 1995 DG by Dr. Charles Mabry

Medicare New Physicians Guide September 2003

Teaching Physicians Article June 2004 A22210

Teaching Physicians Carriers Manual March 2003

Teaching Physicians CMD September 2002

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DISCLAIMER AND COPYRIGHTS

Copyright 2005 by the American College of Surgeons.

633 N. Saint Clair St. • Chicago, IL 60611-3211

All content is the mutual property of the authors and the American College of Surgeons.

The American College of Surgeons is not responsible for errors or omissions.

The authors and the American College of Surgeons are not responsible for changes in
CPT or ICD-9-CM coding after the publication, nor are we responsible for changes in
payment policy and documentation guidelines or requirements.

All specific references to CPT terminology and phraseology are

© 2004 American Medical Association. All rights reserved.
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CHAPTER 1

Introduction to Coding
Surgical residents use procedure coding daily to maintain the
case logs that document their operative experience. For that
reason, senior residents preparing to enter private or academic
practice frequently underestimate what they need to learn
about assigning codes to (and receiving payment for) the
patient services they provide. In fact, proper procedure and
diagnosis coding is not only critical for obtaining full and fair
payment, it is also critical to ensuring proper compliance
with the law. Heavy financial penalties can and have been
levied on institutions and individuals who routinely violated
some basic rules of coding and documentation.

The reasons for the federal focus are clear when you consider
that the United States government spends nearly 12 percent of
its gross domestic product on health care each year. There are “THE LINCOLN LAW”
numerous reports of waste and abuse within the health care
system, some true and some untrue. Medicare, the federally The False Claims Act is also known
mandated health care system for the elderly and disabled, is the as the “The Lincoln Law.” In 1863,
largest insurance plan within our system. Congress has made it during the Civil War, congressional
clear to the public that it intends to be a good steward of health hearings disclosed widespread
care dollars and that it will take this responsibility very seriously. instances of military contractor
The False Claims Act, also known as “The Lincoln Law,” fraud that included defective
gives the government the tools to prosecute individuals who products, substitution of inferior
perpetrate fraud against the government or any federal
material, and illegal price gouging
entitlement program (such as Medicare).
of the Union Army. Fraudulent war
Coding is how we communicate and report data within this profiteers were shipping boxes of
federal entitlement system. To payors, and especially to the sawdust instead of guns, or were
Centers for Medicare & Medicaid Services (CMS), coding known to be swindling the Union
describes or documents the work that we do and the medical Army into purchasing the same
necessity for the services CMS pays for or covers. Hence, coding cavalry horses several times. It was
is the means by which we can honestly and accurately report said, “You can sell anything to the
our services in order to receive fair reimbursement. Just as government at almost any price you
important, coding allows us to create accurate medical records
have got the guts to ask.” At the
that convey good information about our patients and the care
urging of Abraham Lincoln,
they have received. Good coding makes good sense.
Congress enacted the Civil False
Claims Act, including the qui tam
provision, as a weapon to fight
procurement fraud. This law has
also been known as “The Lincoln
Law” and “The Informer’s Act.”
C H A P T E R 1 I n t r o d u c t i o n t o C o d i n g ( CONTINUED ) 4

This manual is intended as an introduction to the principles of

good procedure and diagnosis coding for resident surgeons who
are preparing to enter either private or academic practice. It W H AT IS C M S ?
provides an overview of key concepts and some helpful advice
on resources that are available and how they should be used. CMS stands for the Centers for
However, the manual cannot and should not be relied on as Medicare & Medicaid Services.
a substitute for serious individual study and comprehensive It used to be called HCFA, which
coding instruction. By illustrating how much is involved in
stood for Health Care Financing
properly coding for surgical services, we hope residents will
Administration. Medicare is the
learn from this manual just how much they do NOT know
health plan. We sometimes use
and will enroll in a more formal instructional course.
the terms interchangeably when
we are referring to the institutions
System Fundamentals (Medicare says this, CMS states
that, HCFA used to say so and so….)
The system involves two lists of codes or
d a t a b a s e s , C P T a n d I C D - 9 - C M . The first, CPT—
Current Procedural Terminology — is used to
report the work physicians do. A five-digit number is assigned W H AT IS H C P C S ?
to each written description of the various surgical procedures
(such as colectomies), other nonsurgical procedures (such as The Healthcare Common
endoscopies), and the evaluation and management or visit Procedure Coding System
services we provide (such as consultations, office and hospital (HCPCS), maintained by CMS,
visits, care in the emergency room, and critical care). contains additional codes that are
ICD-9-CM—International Classification of Diseases, 9th needed. CPT does not contain all
Revision, Clinical Modification — is the nomenclature
of the codes that physicians and
system we use to describe “why we do the work,” or the
others need to report their services.
underlying diagnosis for the work we do. It is a three-, four-,
For example, it does not list
or five-digit numbering system that relates to each recognized
diagnosis, injury, symptom, and illness. The terms or phrases equipment, supplies, or most
associated with each number describe the medical necessity injections. HCPCS lists a few
for the work we do or the diagnoses. physician services that are unique
to Medicare, such as a code for
These two systems are published each year in book form. venous mapping.
Software versions are available, but it is advisable to get the
hard copy to use in your office and clinic. HCPCS is available from the
American Medical Association and
commercial sources. HCPCS is also
available on the CMS Web site at
www.cms.hhs.gov/providers/
pufdownload/default.asp#alphanu,
but the file is very large.

Technically, HCPCS includes CPT,

but the two systems are maintained
and made available for purchase
separately.
C H A P T E R 1 I n t r o d u c t i o n t o C o d i n g ( CONTINUED ) 5

Current Pr ocedural Terminology

The American Medical Association (AMA) publishes this
volume annually to reflect the 300 to 500 coding changes that
occur each year. We are required to implement these changes
in our billing systems and practices on January 1 of each
year. These changes may be new codes that are recently
added, old codes that have been deleted, or existing codes
that are revised. You should purchase at least one copy of the
Professional Edition, which has the entire coding system
with all introductory and explanatory statements as well as
the approved drawings and diagrams. The 2005 Professional
Edition costs about $87, a little less if you are an AMA
member ($70.95). CPT is copyright protected.

Get familiar with CPT. Most of the answers to coding

questions are in this book, which is divided into several
parts. The introduction is very important to read and
understand. It tells you how to use the book, which is not
as intuitive as you might think. The introduction tells about
different kinds of procedure codes and their significance,
as well as providing other information about terminology, SURGERY SUBSECTION
coding guidelines, using modifiers and so-called add-on codes,
special reports, and other information. When other searches 1. Integumentary System
fail, remember that the introduction is where you can find
2. Musculoskeletal System
this information.
3. Respiratory System
In the main part of the book are six sections of codes, each
4. Cardiovascular System
one preceded by an introduction called “Guidelines,” which
is a very important part of each section. The codes in these six 5. Hemic and Lymphatic Systems
sections are called Category I codes. They are the codes that
6. Mediastinum and Diaphragm
we use the most and are recognized by most payors and CMS
(with a few exceptions). The surgery section has 17 subsections 7. Digestive System
(see sidebar). You will spend most of your time using the
8. Urinary System
surgery section and the Evaluation and Management section.
9. Male Genital System
For Medicare payment purposes, all of the CPT codes have
10. Intersex Surgery
been through a process called the “RUC,” or AMA/Specialty
Society Relative Value Scale Update Committee. The 11. Female Genital System
RUC recommends relative value units (RVUs) to CMS for
12. Maternity Care and Delivery
incorporation into the Medicare fee schedule (although CMS
makes the final RVU decisions). In addition to the RVUs 13. Endocrine System
assigned to each service, CMS establishes a fee schedule
14. Nervous System
“Conversion Factor” each year that converts RVUs to dollar
payment amounts for each CPT code. Each new CPT code is 15. Eye and Ocular Adnexa
heavily investigated, reviewed, and discussed by the RUC
16. Auditory System
before being sent to CMS for final consideration.
17. Operating Microscope
C H A P T E R 1 I n t r o d u c t i o n t o C o d i n g ( CONTINUED ) 6

Two other special sections of codes toward the back of the book
are called Category II and Category III codes. Category II
codes are tracking codes that can be used for performance
measurement. They are more relevant to a primary care prac-
tice, at least for now. Category III codes are ones that surgeons
might use. They reflect emerging technology — services that
are not quite “ready for primetime.” These codes do not have
any assigned RVUs or dollar payment amounts. They are
sometimes also called tracking codes or “T-codes,” because they
give us a means to report services to payors and others, even
though we have not agreed on their relative value or efficacy.
Special rules apply to Category III codes that are not relevant
right now. Nonetheless, they are codes that do not last forever;
they have a sunset period if evidence does not develop to make
them into Category I codes.

There are additional appendices toward the back of the

book lettered sequentially starting with A. Appendix A, for
instance, lists all of the modifiers and their explanations—
a good source to know.

The surgery section, which surgeons will use the most, is

divided into subheadings and subsections of codes for specific
anatomic areas or work types such as the integumentary,
digestive, respiratory, cardiovascular, musculoskeletal, hemic,
and lymphatic systems. It also has an introduction that CPT SURGICAL
describes the “surgical package.” The surgical package is an PACKAGE
explanation of what service components are considered as
included in the work or reimbursement for each of these • Local infiltration, metacarpal/
CPT codes. Review this surgical package from time to time to metatarsal/digital block or
recall what things are included in a service you provide. This topical anesthesia
introduction also has a lot of other information, so remember
• Subsequent to the decision
it, bookmark it, and visit it often. for surgery, one related E/M
encounter on the date
Keep in mind that Medicare has its own definition of the
immediately prior to or
so-called global surgical package. Although it is quite similar
on the date of procedure
to the CPT surgical package, there are differences. For (including history and physical)
instance, Medicare defines the global period for each code as
the period of time before and after the procedure, during which • Immediate postoperative care,
all typical or usual care is reimbursed in one lump sum. The including dictating operative
global surgical period assigned to each CPT code may be 0, 10, notes, talking with the family
or 90 days. Copies of the Medicare Physician Fee Schedule are and other physicians
available from many sources and frequently contain the • Writing orders
global periods. CMS also has a “look-up” feature on its Web site
• Evaluating the patient in the
at www.cms.hhs.gov/physicians/mpfsapp/default.asp.
postanesthesia recovery area
Remember, however, that private payors may have their
own definitions of the global period, which can differ • Typical postoperative
from Medicare’s. follow-up care
C H A P T E R 1 I n t r o d u c t i o n t o C o d i n g ( CONTINUED )
EXAMPLES OF
CMS GLOBAL SERVICE PERIODS
CPT Code CPT Short Description Global Period
11300 Shave skin lesion
19101 Biopsy of breast, open
19160 Partial mastectomy
Early in your career, you will want to become
familiar with those sections of the CPT book
that include your high-volume services. That
will, of course, include parts of the surgical
section. Evaluation and Management (E/M)
codes are those CPT codes that cover
nonprocedural services such as consultations,
office visits, hospital visits, and critical care.
Other sections will be relevant, depending on
your practice pattern. Get in the habit early of
keeping up with your high-frequency codes so
you can begin to make your own reference
sheet or short list of codes that you use often.
When trying to figure out what the codes
mean, do not get hung up on semantics. CPT
makes every possible effort to make the
language clear, consistent, and standardized.
Nonetheless, there will be some cases where you
7
0 days
10 days
90 days
think the words mean one thing and payors will
think they mean something entirely different.
So, strive to understand the intent of CPT.
There are numerous resources, such as the
CPT Assistant (a periodical published by the
AMA that represents the “official” explanation
for CPT), Carrier Medical Directives and CMS
directives (where the government will tell you
how the codes are to be used), and payment
policy and coding directives from commercial
payors. Also, the monthly Bulletin of the
American College of Surgeons publishes
articles on coding tips, coding changes, and
other questions. The College also has a coding
hotline, which is provided as a service for its
members. You can call this number and receive
up to 10 free answers to coding questions
from certified coders and experts. The phone
number is 800/ACS-7911 (800/227-7911).
C H A P T E R 1 I n t r o d u c t i o n t o C o d i n g ( CONTINUED ) 8

DOWNLOADING ICD-9
ICD-9-CM
Since January 2, 2004, you
Unlike CPT, which is published by the AMA, ICD-9-CM was
can get a free download from the
originally created by the World Health Organization and
published as a listing of causes of mortality worldwide. Now, CDC Web site under National
it is maintained by CMS and the National Center for Health Center for Health Statistics at
Statistics (NCHS). ICD-9-CM is not copyright protected like http://www.cdc.gov/nchs/
CPT, so you can find sources for obtaining free downloaded icd9.htm#RTF.
versions. For instance, you can download ICD-9-CM from the
Centers for Disease Control and Prevention (CDC) Web site You should see a link to click that
(see sidebar). ICD-9-CM is updated October 1 each year. says “ICD-9-CM rich text files” or
Typically, about a dozen changes are made each year so it is something similar. You’ll go to a site
easy to consult the CDC Web site to obtain the update. that asks which year you want the
files for. Obviously, pick the most
ICD-9-CM has two important parts — the index to diseases current ones. You’ll be taken to a
(or indexed) part and the tabular part. Finding a code is a
site showing you several files. You’ll
two-step process: The index is used to find a term, and the tab-
want to download two files, one for
ular section is then used to determine how specific the coding
can be. The general rule for ICD-9-CM coding (and for report-
the indexed section for diseases
ing to payors) is code to the greatest degree of specificity possi- and one for the tabular section for
ble. Carry the numerical code to the fourth or fifth digit when diseases. Currently, they are
necessary. Not doing so may result in denied claims because Dindex04.zip and Dtab04.zip.
of a failure to document medical necessity.
If you don’t want to download for
ICD-9-CM is divided into sections. Although there are eight or free, you can order ICD-9 on a CD
so sections, physicians will mainly use volumes one and two, for a modest price. You’ll find this
including the sections on V codes and E codes. As with CPT, information at the same site.
an introductory section contains conventions used in the
coding system, CMS coding guidelines, and other information. SMART CODERS PICK
There is also a section of ICD-9-CM codes for procedures. THEIR OWN DIAGNOSES
Because we report our work using CPT rather than ICD-9-CM,
this section of the book holds less interest for us. Hospitals If you are smart, you will do your
report inpatient procedural codes using ICD-9-CM, so you own diagnosis coding or at least
should know that they exist. pick from your own lists. Or better
yet, learn and use ICD-9–specific
language to communicate to your
Conclusion billing staff. On the other hand, if
you are not smart, you will ignore
CPT and ICD-9-CM are two databases that are the language
ICD-9 altogether (a lot of doctors
of the system-based practice that we all must master.
Knowing the language, where to get the answers, and
do), and you will tell your office
something about how it changes will hopefully contribute person to look it up when you need
to your fluency. The following chapters address the common a diagnosis code. (“Oh, that’s not
coding needs for someone in practice today, whether in doctor work, that’s staff work!”)
private practice (urban or rural), group, or academic settings. Then, you will learn about delayed
reimbursement because of the
lack of properly documented
medical necessity.

CHAPTER 2
Diagnosis Coding:
ICD-9-CM Defines
Medical Necessity
Diagnosis coding is the proper assignment of
specific ICD-9-CM codes in our medical records
to document medical necessity in terms of dis-
ease, illness, injury, or symptoms. ICD-9-CM
was created to classify patient death and sick-
ness in the United States. It is compatible with
a system used for reporting death for interna-
tional statistical purposes. Diagnosis coding
first began in the London Bills of Mortality
as an ongoing statistical study of diseases. In
1937, it was formalized as the International
List of Causes of Death, and since then
revisions have been made, evolving into the
International Classification of Diseases.
Currently, the U.S. National Center for Health
Statistics (NCHS) and CMS are responsible for
updating ICD-9-CM. The parties responsible
for maintaining ICD-9-CM are the American
Hospital Association (AHA), the American
Health Information Management Association
(AHIMA), CMS, and NCHS.
9
Structure of ICD-9-CM
The ICD-9-CM manual comes in three volumes.
Volume 1 is the tabular (numerical) list of
diseases. Volume 2 is an alphabetical index
of diseases. Volume 3 is a tabular list and
alphabetic index of procedures. Volumes 1
and 2 are usually bound together in one book.
Surgeons use only volumes 1 and 2, because
we use CPT to code our procedures.
There are four parts of ICD-9-CM that all
surgeons need to use and become familiar
with: Volume 1 (Tabular List), including two
supplemental lists—V codes and E codes—
and Volume 2 (Alphabetical Index). The
introduction contains a great deal of useful
information, including the conventions
used in ICD-9-CM and common coding
problems. It is a good idea to become familiar
with this material.
C H A P T E R 2 D i a g n o s i s C o d i n g ( CONTINUED ) 10

VOLUME 1 TABULAR LIST

The Tabular List has 17 chapters (Table 2.1), which classify TABLE 2. 1 — CHAPTER
groups of diseases and injuries by cause or body site. They are GROUPINGS IN VOLUME
listed in numeric order by code numbers. 1 (TABULAR LIST) OF
The Tabular List is formatted to assist us in coding diagnoses ICD-9-CM
to the greatest possible specificity. Each of the 17 chapters
1. Infectious and
is divided into sections, which are groups of three-digit parasitic diseases
codes that represent a set of conditions or related conditions.
Each section is broken down further into categories — three- 2. Neoplasms
digit codes that represent a single condition or disease. 3. Endocrine, nutritional
Subcategories are code groupings arranged by the fourth and metabolic diseases,
digit (the first place to the right of the decimal). This system and immunity disorders
provides a higher degree of specificity, defining the site,
cause, or manifestation of the condition. When available, the 4. Diseases of the blood and
blood-forming organs
fourth digit must always be used. Some of the codes have a
fifth digit called the subclassification; when available, 5. Mental disorders
subclassifications must also be used because they provide
6. Diseases of the nervous
the greatest degree of specificity.
system and sense organs
As a general rule for surgical procedures, report the 7. Diseases of the
postoperative diagnosis if it differs from the preoperative circulatory system
diagnosis and if it is available at the time the claim is filed.
8. Diseases of the
However, when performing a biopsy with a 10-day global
respiratory system
period, you may want to follow different, but quite legitimate,
rules if you call the patient back in the global period. To 9. Diseases of the
be paid for both the biopsy and the visit, submit the claim digestive system
for the biopsy with a nonspecific diagnosis code such as
10. Diseases of the
“unspecified breast mass” (code 611.72) and submit the claim genitourinary system
for the office visit with the specific diagnosis for cancer of the
breast. We are getting ahead of ourselves, but to give you a 11. Complications of pregnancy,
complete answer, you should also attach modifier -24 to the childbirth, and the puerperium
code for the office visit, meaning the visit was within the 12. Diseases of the skin and
global period of another procedure. subcutaneous tissue
13. Diseases of the
musculoskeletal system
and connective tissue
14. Congenital anomalies
15. Certain conditions originating
in the perinatal period
16. Symptoms, signs, and
ill-defined conditions
17. Injury and poisoning
C H A P T E R 2 D i a g n o s i s C o d i n g ( CONTINUED )
SUPPLEMENTAL
CLASSIFICATIONS:
V AND E CODES
At the end of the tabular section are the
V and E supplemental classifications, which
are also quite important for surgeons.
The V code list includes codes used to document
factors influencing health status and contact
with health services. The V codes are used
mainly in three ways:
1. When a person with a known disease or
injury, whether current or resolving,
encounters the health care system for a
specific treatment of that disease.
2. When a person who is not currently sick
encounters the health services for some
specific purpose, such as to donate an
organ or tissue, receive a prophylactic
vaccination, or discuss a problem that is
not in itself a disease or injury.
3. When some circumstance or problem
is present that influences a person’s health
status but is not in itself a current illness
or injury.
11
Examples of circumstances that might involve
V codes are seeing a doctor after exposure to
a communicable disease, having a personal
history of a malignant neoplasm but with no
current evidence of disease, examining normal
newborns, ear piercing, adjusting an artificial
limb, and follow-up care for healing fractures.
The E codes are a classification of external
causes of injury and poisoning. Unlike the V
codes, they are not intended to be used alone
but in addition to other codes from the main
chapters of ICD-9-CM.
Examples of situations that might involve E
codes are motor vehicle traffic accidents involving
collision with a train, accidental poisonings,
accidental falls, accidents caused by fires,
suicide, homicide, and assault wounds. For
example, in the case of a liver laceration from
an assault stabbing, we would list a diagnosis
code such as 865.05 followed by E966.
A NOTE ABOUT M CODES
The M codes, or morphology of neoplasms
codes, come next in the book. Pathologists use
the codes to report specific neoplasms and
tumors; surgeons do not. Instead, we use the
neoplasm codes in the next part of the book —
the alphabetical index of diseases (see the
section on Neoplasms in the index).
C H A P T E R 2 D i a g n o s i s C o d i n g ( CONTINUED ) 12

THE VOLUME 2 INDEX

This index is where we actually start to look up ICD-9 codes.
The index is divided into three sections: the Index to
Diseases, the Alphabetical Index to Poisoning and External
Causes of Adverse Effects of Drugs and Other Chemical
TABLE 2.2—ESSENTIAL
Substances, and an Alphabetical Index to External Causes of STEPS TO PICKING
Injury and Poisoning (E Codes). The first section, the Index to THE CORRECT
Diseases, is the place to find the main term or condition. ICD-9-CM CODE
A condition is a category such as carcinoma, fever, arthritis,
encephalitis, endocarditis, enlarged, fistula, and so on. It is a 1. Look at the stated diagnosis
good idea to thumb through the section and get some idea of and select the main term
where these condition groups are located. Next, we look for the or condition.
involved organ or anatomic site. Finally, we look for modifiers 2. Look up that disease, condition,
that are specific to the condition or body site. See Table 2.2 or injury in the index.
for the essential steps to determine a correct code.
3. Do not rely on the anatomic
Examples of ICD Coding site until you have found the
condition; it’s not arranged
B R E A S T S U R G E R Y . A 40-year-old female presents to that way.
you with a palpable mass in her upper outer left breast. 4. Get the number from the index.
She has an open breast biopsy. The initial frozen section
diagnosis is fibrocystic disease. On the final pathology 5. Use THAT number to move
report, infiltrating ductal carcinoma is found. directly to Volume 1, where
you will check for special notes
The diagnosis for the need for the consultation and the or an indication that a fifth
preoperative diagnosis is found by going to the condition in the digit is required.
Index (Volume 2) and looking up Mass. Under Mass, we find Other “Pearls” to Remember
the anatomic site, Breast. The code is 611.72, Lump or mass
in breast. We go to code 611.72 in Volume 1 and find that no • There are no codes for
further delineation is necessary. “rule out” or “probable” or
“suspected” or “status post.”
To code the postoperative diagnosis, we look up the condition • NEC means Not Elsewhere
of Fibrocystic, the manifestation of Disease, and the anatomic Classifiable; there is not
site of Breast. The code is 610.1, Diffuse cystic mastopathy. enough information in the
We go to code 610.1 and find that no fifth digit is required. medical record to code
more definitively.
To code the final diagnosis, we can most easily go to the
Neoplasm table in the Index. There we look up the anatomic • NOS means Not Otherwise
site of Breast and the specific part of the breast, which is Specified; the code is
unspecified and you should
upper outer quadrant. Thus the code for a primary malignancy
continue to look for a more
of the upper outer quadrant of the breast is 174.4, Malignant
specific code.
neoplasm of female breast, Upper-outer quadrant. We
then refer to the Tabular section and see that no fifth digit is • Knowing what to do about
required for code 174.4. these “pearls” is why the
doctor needs to select the
diagnosis code.
C H A P T E R 2 D i a g n o s i s C o d i n g ( CONTINUED )
C H O L E C Y S T E C T O M Y . A patient with
gallstones and biliary tract symptoms
undergoes a laparoscopic cholecystectomy
and operative cholangiogram. She is
found to have gallstones and a small,
common duct stone. As the surgeon, you
believe that the stone will pass.
The preoperative diagnosis is cholelithiasis
and chronic cholecystitis. We can look up
Disease and reference Gallbladder, which
refers us to code 575.9, Unspecified disorder
of gallbladder. If we look up Cholecystitis in
the Index, we may also be referred to an
unspecified code, 575.1, Other cholecystitis.
If we look further in the Tabular section, we
find that code 574.1 is a nonspecific code for
cholelithiasis with cholecystitis. We are
instructed to code to a fifth digit indicating
whether there is an obstruction. If the
documentation does not specifically state
obstruction, coding convention tells us to
select 0 as a fifth digit, “without mention of
obstruction.” Thus the correct code for the
preoperative diagnosis is 574.10.
The operative findings also show that the
patient has common duct stones, or
choledocholithiasis. Further review of this
section reveals a better code for both gallstones
and common bile duct stones. Codes 574.6,
choledocholithiasis with acute cholecystitis, and
code 574.7, choledocholithiasis with other
cholecystitis, cover this condition. Code 574.7
specifically references any condition classifiable
to code 574.1. Hence we would select code
574.7, Calculus of gallbladder and bile
duct with other cholecystitis, and, following
the note about a fifth digit immediately
after code 574, select the fifth digit as 0, for
a five-digit code of 574.70.
13
I N G U I N A L H E R N I A . A 30-year-old male
has a recurrent left inguinal hernia.
Alternatively, a 4-year-old female has
an initial inguinal hernia.
We find the condition of Hernia in the Index
and refer to the anatomic designation of
Inguinal, which sends us to code 550.9,
Inguinal hernia, without mention of
obstruction or gangrene. Even in the
Index, we see a note that tells us to use 0-3
to select a fifth digit to code more specifically
for unilateral, bilateral, recurrent, and not
specified as any of the three. We go to code
550.9 in the Tabular volume and find even
greater specificity is available. The fifth digit
of 1 stands for unilateral or unspecified,
recurrent. For an inguinal hernia without
mention of obstruction or gangrene, which
is recurrent and unilateral, we would use
code 550.91.
For the second patient example, we use the
same set of codes. But because this case is not
recurrent, we would use code 550.90. The
fifth digit of 0 stands for unilateral or
unspecified (not specified as recurrent).
Unlike the CPT codes, which relate to physician
work, the ICD-9-CM codes do not differentiate
hernias according to age.
E P I G A S T R I C H E R N I A . A 50-year-old
female has an epigastric hernia.
In the Hernia section of the Index, we find
epigastric hernia as code 553.29, Other hernias
of abdominal cavity without mention of
obstruction or gangrene, ventral hernia,
other. This example illustrates why we need
to use the Index first, because if we tried to
find this code by browsing through the Hernia
sections, it could be difficult. Code 553.29 takes
us to the specific subtype of ventral hernia
called “other.” However, the explanatory note
under “other” specifically includes epigastric
hernia (and includes spigelian hernias). Hence,
code 553.29 is correct.
C H A P T E R 2 D i a g n o s i s C o d i n g ( CONTINUED ) 14

A C U T E A B D O M E N . A 60-year-old male is
seen in consultation for acute, left lower
quadrant abdominal pain. No testing has
yet been performed.
We remember that there are no “rule out” or
“suspected” diagnosis codes. Thus we will need
to use the Symptoms, Signs, and Ill-Defined
Conditions chapter of ICD-9-CM. We reference
the section of the Index for Pain. There we
find the anatomic site for Abdominal. We are
sent to the symptom part of the Tabular
volume. Code 789.0 covers abdominal pain.
For abdominal pain NOS (not otherwise
specified), code 789.0, we see that a fifth digit
is required for the specific location of the pain.
In this case, left lower quadrant abdominal
pain is code 789.04.
E S O P H A G E A L C A R C I N O M A . An
80-year-old male has a biopsy-proved
adenocarcinoma of the distal esophagus.
If we look under Carcinoma in the Index, we
find no reference to esophagus. If we look
under Esophagus, we are referred to the
Condition. If we look under Cancer, we are
referred to Neoplasm. There we will find the
answer, as with most cases of malignancy.
Here a primary malignancy of the lower
esophagus, or even the distal esophagus, gives
us code 150.5, malignant neoplasm of
esophagus, lower third of esophagus. If
we stopped at this point and did not go to
the Tabular section, we would be technically
wrong. If we look under code 150.5, there is an
“Exclusion” clause pertaining to adenocarcinoma
(code 150.5 refers to squamous cell carcinoma,
but you wouldn’t know that without going to the
Tabular section). We are directed to code 151.0,
which is used for malignant neoplasms of
the cardioesophageal part of the cardia
of the stomach. So, code 151.0 is the answer
for this example. Remember to use both the
Index and Tabular portions.

We could find Adenocarcinoma NOS under the

Morphology of Neoplasms Index, or the so-called
M codes, but as we recall, by convention, these
codes are for pathologists and not clinicians.

Summary
Adequate diagnosis coding requires the proper and logical use of current ICD-9-CM coding. Failure
to correctly document medical necessity — that is, failure to submit the correct ICD-9-CM codes for
the applicable CPT codes — is one of the most common reasons for claims denial when otherwise
correct CPT codes are submitted. Many surgeons fail to give the proper attention to diagnosis coding.
By following a few simple steps and frequent reference to a current ICD-9-CM reference tool, this
problem can be avoided.
 15

CHAPTER 3

Evaluation and
Management Service
Coding
The Importance of Evaluation and
Management Services
Evaluation and Management (E/M) services are a
very important part of what surgeons do. They comprise
consultations, office follow-up visits, hospital admissions,
emergency department consultations, hospital follow-ups,
critical care services, and on and on. E/M services also
include the follow-up visits for surgical procedures with
“global” payment, wherein we do not charge separately
(but are paid nonetheless) for postoperative visits.

E/M services represent a large amount of money to the

government and to insurance payors. Hence, the rules for
TABLE 3. 1 —
paying for E/M services and the documentation requirements FINANCIAL
have become very important issues. IMPORTANCE OF
E/M SERVICES
• In 2000, the U.S. gross
domestic product (GDP) was
$9.8 trillion.
• Total personal health care
expenditures (PHCE) were
$1.1 trillion, or 11.4% of GDP.
• Spending for physician and
clinical services was $286
billion, or 25.3% of total PHCE.
• E/M services are said to
account for 35% of physician
and clinical services.
• Or, about $100 billion per year
is spent for E/M services.
• Of that amount, Medicare is
about 20%, or $20 billion.
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 16

Documentation Guidelines
In 1994, the AMA and CMS collaborated to develop
documentation guidelines (DGs) for E/M reporting. Those
guidelines were implemented in 1995 and have become
known as the 1995 Documentation Guidelines. In 1997,
TABLE 3.2 — GENERAL
CMS wrote a revised version, adding specific elements that
should be performed and documented for examinations
PRINCIPLES OF
focusing on specific organ systems. This revision resulted MEDICAL RECORD
in the 1997 Documentation Guidelines. CMS allows DO C U M E N TAT I O N
providers to use either set of DGs.
1. The medical record should be
Prior to these publications, CMS and others defined general complete and legible.
principles of medical record documentation that are 2. The documentation of
applicable to either set of DGs. These principles should be each patient encounter
remembered in all documentation, and they can be modified should include:
to fit most any circumstance in E/M coding (see Table 3.2).
a. reason for the encounter
and relevant history,
physical examination
Selecting the Correct E/M Code findings, and prior
diagnostic test results
Table 3.3 provides the steps to follow in selecting the
b. assessment, clinical
correct E/M code.
impression, or diagnosis
c. plan for care
TABLE 3.3 — STEPS TO FOLLOW FOR
d. date and legible identity
E/M CODE SELECTION of the observer
3. If not documented, the rationale
1. Identify the category and subcategory of service. Is this an
for ordering diagnostic and
office visit with an established patient? Initial inpatient
other ancillary services should
consultation? Comprehensive nursing facility assessment?
be easily inferred.
New patient home services? Individual counseling for
preventive medicine services? Visit to the emergency 4. Past and present diagnoses
department? Hospital outpatient service? should be accessible to
the treating and/or consulting
2. Review specific notes and instructions for the selected
physician.
category and subcategory.
5. Appropriate health risk factors
3. Review the narrative descriptors within the category and
should be identified.
subcategory of the E/M services.
6. The patient’s progress, response
4. Using the definitions provided under each level of service,
to and changes in treatment,
determine the extent of history obtained.
and revision of diagnosis should
5. Determine the extent of examination performed using the be documented.
definitions provided under each level of service.
7. The CPT and ICD-9-CM codes
6. Determine the complexity of medical decision making. reported on the health
insurance claim form or billing
7. Select or verify the appropriate level of E/M service.
statement should be supported
Source: Smith GL: Basic CPT/HCPCS Coding. AHIMA 2004 ed, page 138 by the documentation in the
medical record.
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 17

Categories of E/M Services

Table 3.4 shows the current categories of E/M services.
All E/M services consist of the following five elements:

1. A unique CPT code number beginning with 99

2. Identification of the place or type of service

TABLE 3.4—
(for example, office or other outpatient service; C LASSIFICATION
initial or subsequent hospital care) OF E/M SERVICES

3. Definition of the extent or level of service • Office or Other

(for example, detailed history and detailed examination) Outpatient Services
• Hospital Observation Discharge
4. Description of the nature of the presenting problem
Services
(for example, moderate severity)
• Hospital Observation Services
5. Identification of the time typically required to
• Observation or Inpatient Care
provide a service
Services
• Hospital Inpatient Services
• Consultations
• Emergency Department
Services
• Pediatric Patient Transport
• Critical Care Services
• Intensive Care
(Low Birth Weight)
• Nursing Facility Services
• Domiciliary, Rest Home, or
Custodial Care Services
• Home Services
• Prolonged Services
• Standby Services
• Case Management Services
• Care Plan Oversight Services
• Preventive Medicine Services
• Newborn Care
• Special Evaluation and
Management Services
• Other E/M Services
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 18

Components Used to Define Some Helpful Charts

Levels of E/M Services The “hard copy” or documentation we use to
The descriptors for the levels of E/M services record consultations and visits should always
recognize the following seven components that be a reflection of good patient care. More often
are used in defining the levels of E/M services: than not, the medical record reflects what we
learned in medical school and refined in our
KEY COMPONENTS residency training. Once we have recorded the
• history information needed, how we organize it into a
• examination document becomes important in proving our
• medical decision making compliance with correct coding guidelines.

CONTRIBUTING FACTORS Tables 3.5–3.10 can be used as charts to ensure

• counseling our documentation corresponds with the level
• coordination of care of service provided. There are charts for the
• nature of presenting problem history, for the examination, and for assessment
• time of the complexity of medical decision making.
There are other charts that depict which key
The first three components (history, examination, components are needed for specific levels of
and medical decision making) are the key E/M service. Review these charts, and consider
components in selecting the level of E/M services. “cutting and pasting” them into a sheet,
Note that initial patient encounters (such as cards, or other format to use to keep your
new office visit, initial hospital care, office documentation consistent. Use them frequently
consultations, and initial inpatient consultations) to self-audit the work you do.
must meet or exceed the requirements for all
three of the key components for the code selected.
The remaining encounters must meet or exceed
the requirements for only two of the three
components. An exception to this rule regarding
the key components applies to visits that consist
predominantly of counseling or coordination
of care; for these services, time is the key or
controlling factor to qualify for a particular
level of E/M service. Stated differently, when
counseling or coordination of care comprises
more than 50 percent of the time involved in
an E/M visit, then time may be used to determine
code selection. Typical times are listed with
the code descriptors in the E/M section of the
CPT book.
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 19

HISTORY
The extent of history of present illness, review of systems, and past, family and/or social
history that is obtained and documented is dependent on clinical judgment and the nature of
the presenting problem(s). Table 3.5 shows the progression of the elements required for each
type of history. To qualify for a given type of history all three elements in the table must be met.
(A chief complaint is indicated at all levels.)

TABLE 3.5 — PROGRESSION OF HISTORY TAKING

History of the Review of Systems Past, Family, and/or
Present Illness (HPI) (ROS) Social History (PFSH) Type of History

Brief N/A N/A Problem Focused

Brief Problem Pertinent N/A Expanded

Problem Focused

Extended Extended Pertinent Detailed

Extended Complete Complete Comprehensive

TABLE 3.6 — COMPONENTS OF THE HISTORY

Chief Complaint or Reason for Visit Always required

History of the Present Illness (HPI) Document location, quality, severity, duration, timing, context,
modifying factors, and associated signs/symptoms

Review of Systems (ROS) Constitutional, eyes, ENT & mouth, cardiovascular, respiratory,
GI, GU, musculoskeletal, skin, neurological, psychiatric,
endocrine, hematologic/lymphatic, and immunologic

Past, Family, Social History (PFSH) Patient, family, and/or social (age appropriate)
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 20

EXAMINATION
The levels of E/M ser vices are based on four types of examination:

Problem Focused—a limited examination of the affected body area or organ system

Expanded Problem Focused—a limited examination of the affected body area or

organ system and any other symptomatic or related body area(s) or organ system(s)

Detailed—an extended examination of the affected body area(s) or organ system(s) and
any other symptomatic or related body area(s) or organ system(s)

Comprehensive—a general multisystem examination or complete examination of a

single organ system and other symptomatic or related body area(s) or organ system(s)

These four types of examinations have been defined for

general multisystem and the following single-organ systems:

• Cardiovascular • Musculoskeletal
• Ears, Nose, Mouth, and Throat • Neurological
• Eyes • Psychiatric
• Genitourinary (Female) • Respiratory
• Genitourinary (Male) • Skin
• Hematologic/Lymphatic/Immunologic

A general multisystem examination or a single-organ system examination may be performed by any

physician, regardless of specialty. The type (general multisystem or single-organ system) and content of
examination are selected by the examining physician and are based on clinical judgment, the patient’s
history, and the nature of the presenting problem(s).

TABLE 3.7 — COMPONENTS OF THE P HYSICAL EX A M I N AT I O N

1 or more Problem Focused (PF) Limited exam of affected body area
or organ system

2–7 Expanded Problem Limited exam of the affected body area or

Focused (EPF) organ system and other symptomatic or related
organ system(s)

2–7 Detailed (D) Extended exam of affected body areas(s) and

other symptomatic or related organ system(s)

8 or more Comprehensive (Comp) Multisystem exam of 8 or more organ systems

Body areas: Head and face, neck, chest/breasts/axillae, abdomen, back/spine, each extremity,
genitalia/groin/buttock

Organ systems: Constitutional, eyes, ENMT, cardiovascular, respiratory, gastrointestinal, genitourinary,

musculoskeletal, integumentary, neurologic, psychologic, hematologic/lymphatic/immunology
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 21

MEDICAL DECISION MAKING

The complexity of medical decision making (MDM) is one of the hardest areas to document for surgeons.
Much of our decision making is almost instinctive; surgeons pride themselves on reaching a decision
quickly. Frequently, the acuity of the illness demands a quick decision. But quick action does not imply
that a decision-making process did not occur; nor does it imply that the process is any less complicated
than it is for other specialties. A more complex presenting problem will, by its very nature, be reflected
in more complex medical decision making.

TABLE 3.8 — MEDICAL DECISION MAKING:

SELECTING THE FINAL LEVEL (NEED 2 ELEMENTS)
Moderate (MC
Straightforward Low (LC or or Moderate High (HC or
MDM Level (SF) Low Complexity) Complexity) High Complexity)

Diagnoses/
Management Options 0–1 2 3 4+
Amount/Complexity
of Data 0–1 2 3 4+
Risk Minimal Low Moderate High

You can determine the MDM level in Table 3.8 from Tables 3.9–3.11: Amount or Complexity of Data,
Number of Diagnosis/Management Options, and Level of Risk.

TABLE 3.9 — AMOUNT OR COMPLEXITY OF DATA

Review or order lab 1
Review or order radiology 1
Review or order from medicine section of CPT (90000s) 1
Discuss results with performing MD 1
Independent review of tests 2
Decision to obtain old records 1
Review and summarize old records/obtain hx from others 2
Total Points

TABLE 3. 10 — NUMBER OF DIAGNOSIS/MANAGEMENT OPTIONS

Self-limited/minor 1
Established patient, stable/improved 1
Established patient, worsening 2
New patient, no workup 3
New patient, workup needed 4
Total Points
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 22

TABLE 3. 1 1 — LEVEL OF RISK

Level Diagnostic Management
of Risk Presenting Problems Procedures Ordered Options Selected

Minimal • One self-limited or minor • Lab tests requiring veni- • Rest

problem, eg, cold, insect bite, puncture, chest x-rays, EKG/ • Gargles
tinea corporis EEG, urinalysis, ultrasound, eg, • Elastic bandages
echocardiography, KOH prep superficial dressings

Low • Two or more self-limited • Physiologic tests • Over-the-counter drugs

or minor problems
• One stable chronic illness, eg,
well-controlled hypertension,
non-insulin dependent
diabetes, cataract, BPH
not under stress, eg, • Minor surgery with no
pulmonary function tests identified risk factors
• Noncardiovascular imaging • Physical therapy
studies with contrast, • Occupational therapy
eg, barium enema • IV fluids without additives
• Superficial needle biopsies
Clinical laboratory tests
requiring arterial puncture
• Skin biopsies

Moderate • One or more chronic illnesses
with mild exacerbation,
progression, or side effects
of treatment
• Two or more stable
chronic illnesses
• Undiagnosed new problem
with uncertain prognosis,
eg, lump in breast
• Acute illness with systemic
symptoms, eg, pyleonephritis,
pneumonitis, colitis
• Acute complicated injury,
eg, head injury with brief
loss of consciousness
• Physiologic tests under stress,
eg, cardiac stress test, fetal
contraction stress test
• Diagnostic endoscopies with
no identified risk factors
• Deep needle or
incisional biopsy
• Cardiovascular imaging
studies with contrast and
no identified risk factors,
eg, arteriogram,
cardiac catheterization
• Obtain fluid from body
cavity, eg,lumbar puncture,
thoracentesis, culdocentesis
• Minor surgery with
identified risk factors
• Elective major surgery
(open, percutaneous,
or endoscopic) with no
identified risk factors
• Prescription drug
management
• Therapeutic nuclear
medicine
• IV fluids with additives
• Closed treatment of
fracture or dislocation
without manipulation

High • One or more chronic illnesses
with severe exacerbation,
progression, or side
effects of treatment
• Acute or chronic illnesses or
injuries that may pose a
threat to life or bodily function,
eg, multiple trauma, acute MI,
pulmonary embolus, severe
respiratory distress, progressive
severe rheumatoid arthritis,
psychiatric illness with potential
threat to self or others, peritonitis,
acute renal failure
• An abrupt change in neurologic
status, eg,seizure, TIA,
weakness, or sensory loss
• Cardiovascular imaging
studies with contrast with
identified risk factors
• Cardiac electrophysiological
tests
• Diagnostic endoscopies with
identified risk factors
• Discography
• Elective major surgery
(open, percutaneous, or
endoscopic) with
identified risk factors
• Emergency major surgery
(open, percutaneous,
or endoscopic)
• Parenteral controlled
substances
• Drug therapy requiring
intensive monitoring
for toxicity
• Decision not to resuscitate
or to deescalate care
because of poor prognosis

Source: 1995 Current Procedural Terminology. ©American Medical Association. All rights reserved.
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 23

Self-Auditing and Honesty

You will undoubtedly have a compliance program that addresses correct coding, especially adherence to
the established 1995 or 1997 documentation guidelines. Before “Big Brother” steps in and reviews your
documentation, try using the charts in Table 3.12 to audit your own E/M coding documentation for a
month. You can use the table as needed to make your own charts and cheat sheets. After a month or
so, you will know which consultations or office visits usually meet the requirements for the specific
levels. Then, you can double check to make sure your documentation is satisfactory for the work you
do. Do not fall into the trap of adding documentation you don’t need to provide the service. But, by
the same token, don’t fail to document all you do and are just too “lazy” to put in.

TA B L E 3 . 1 2 — E / M CO D I N G DO C U M E N TAT I O N

N E W PAT I E N T — O U T PAT I E N T V I S I T S ( N E E D 3 E L E M E N T S )

History
Level HPI ROS PFSH Exam MDM Time
99201 1–3 N/A N/A PF SF 10
99202 1–3 1 N/A EPF SF 20
99203 4+ 2–9 1 Detailed LC 30
99204 4+ 10 3 Comp MC 45
99205 4+ 10 3 Comp HC 60

E S TA B L I S H E D PAT I E N T — O U T PAT I E N T V I S I T S ( N E E D 2 E L E M E N T S )

History
Level HPI ROS PFSH Exam MDM Time
99211 N/A N/A N/A N/A Min 5
99212 1–3 N/A N/A PF SF 10
99213 1–3 1 N/A EPF LC 15
99214 4+ 2–9 1 Detailed MC 25
99215 4+ 10 2 Comp HC 40

I N I T I A L H O S P I TA L C A R E ( N E W O R E S TA B L I S H E D , N E E D 3 E L E M E N T S )

History
Level HPI ROS PFSH Exam MDM Time
99221 4+ 2–9 1 Detailed SF/LC 30
99222 4+ 10 3 Comp MC 50
99223 4+ 10 3 Comp HC 70
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED ) 24

TABLE 3. 1 2 (CONTINUED)

S U B S E Q U E N T H O S P I TA L V I S I T S ( N E E D 2 E L E M E N T S )

History
Level HPI ROS PFSH Exam MDM Time
99231 1–3 N/A N/A PF SF/LC 15
99232 1–3 1 N/A EPF MC 25
99233 4+ 2-9 1 Detailed HC 35

C O N S U LTAT I O N S — OFFICE OR OUTPATIENT (NEED 3 ELEMENT S,

NEW OR ESTABLISHED)

History
Level HPI ROS PFSH Exam MDM Time
99241 1–3 N/A N/A PF SF 15
99242 1–3 1 N/A EPF SF 30
99243 4+ 2–9 1 Detailed LC 40
99244 4+ 10 3 Comp MC 60
99245 4+ 10 3 Comp HC 80

C O N S U LTAT I O N S — I N PAT I E N T ( N E E D 3 E L E M E N T S , N E W O R E S TA B L I S H E D )

History
Level HPI ROS PFSH Exam MDM Time
99251 1–3 N/A N/A PF SF 20
99252 1–3 1 N/A EPF SF 40
99253 4+ 2–9 1 Detailed LC 55
99254 4+ 10 3 Comp MC 80
99255 4+ 10 3 Comp HC 110

C R I T I C A L C A R E ( D O C U M E N T YO U R T I M E )

99291 First Hour (30–74 minutes)

99292 Each additional 30 minutes over 1 hour

Source: 1995 Current Procedural Terminology. ©American Medical Association. All rights reserved.
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED )
E/M Services in the
Postoperative Period
You should document in the record each day
that you visit a patient in the hospital and for
each office visit a patient makes during the
postoperative period. Payors assume, “If it is
not documented, it was not done.” You will risk
losing the postoperative portion of your global
payment if you do not have documentation
that shows where you were and what you did.
However, your documentation does not have
to meet the documentation guidelines, because
you are not receiving a separate payment for
the services.
Modifiers for Use
with E/M Codes
For general purposes, three modifiers are
used to more accurately report E/M services.
The modifiers are always appended to the
appropriate E/M codes and are never applied
to procedure codes.
MODIFIER -24 Unrelated
Evaluation and Management
Ser vice by the Same Physician
During a Postoperative Period
The physician may need to indicate that
an evaluation and management service
was performed during a postoperative
period for a reason(s) unrelated to the
original procedure. This circumstance may
be reported by adding the modifier “-24” to
the appropriate level of E/M service.
“Postoperative period” refers to the “global”
period referenced in Chapter 4, Coding for
Surgical Procedures. During this period,
usually 10 days or 90 days, all usual E/M
services are reimbursed with the procedure
reimbursement in one lump-sum payment.
If a surgeon provides an E/M service during
the global period that is not related to the
25
procedure, he or she can report that service
appending modifier -24. There should be a
clearly separate and distinct diagnosis (that is,
different ICD-9-CM code) reported to justify its
separate medical necessity.
Example: Patient A is being followed after a
mastectomy during the global period (CPT code
19240; ICD-9-CM code 174.4), and she presents
with acute cholecystitis. You see and evaluate
her abdominal pain. If you are appropriately
consulted by another physician, you would
report the service in the office using CPT codes
99241–99245, appending modifier -24 to the
specific E/M code. You would also need to record
a different diagnosis code, such as 575.0. If she
directly calls on you for this problem and you do
not meet the criteria for reporting a consultation
code, you must choose among the codes 99211–
99215 and again append modifier -24.
MODIFIER -25 Significant,
Separately Identifiable Evaluation
and Management Ser vice by the
Same Physician on the Same Day of
the Procedure or Other Ser vice
The physician may need to indicate that
on the day a procedure or service identified
by a CPT code was performed, the patient’s
condition required a significant, separately
identifiable E/M service above and beyond
the other service provided or beyond the
usual preoperative and postoperative
care associated with the procedure that
was performed.
Modifier -25 is sometimes referred to as the
“minor procedure” modifier. It is used when a
separately identifiable E/M service is performed
on the same day as a procedure or service that
was not planned. Modifier -25 is appended to
the E/M service code (not the procedure CPT
code). Normally, E/M services provided on the
same day as a surgical procedure are considered,
by Medicare at least, as part of the global
surgical service. If you see a patient for a specific
reason, and in the course of that initial visit
C H A P T E R 3 E / M S e r v i c e C o d i n g ( CONTINUED )
determine that an unplanned minor procedure
should be performed, you would append modifier
-25 to the E/M code. Current coding guidelines
do not dictate that you have to report a different
diagnosis code (unlike modifier -24).
Example: You see patient B in consultation for
a breast mass. You would report a consultation
code such as 99242 and the diagnosis code for a
breast mass, 611.72. If in the course of that
consultation you find a suspicious nevus on
her arm (that turns out to be benign on the
pathology report), you can report the biopsy of
a skin lesion or excision of a benign skin lesion
as 11100 or the 11400 series, depending on the
procedure you perform. You would append -25
to the consultation code 99242 and use the
benign skin lesion diagnosis code appropriate
to the lesion, such as 216.6.
MODIFIER -57 Decision for Sur ger y
An evaluation and management service
that resulted in the initial decision to
perform the surgery may be identified by
adding modifier -57 to the appropriate level
of E/M service.
The definition of the CPT surgical package and
the CMS global surgical package includes E/M
services subsequent to the decision for surgery.
If you perform a consultation or other E/M
service that results in the decision for surgery,
by CPT and Medicare rules, you can (and
should) report that E/M service and append
modifier -57 to the E/M service in addition to
reporting the surgical procedure.
26
Example: You perform a consultation for
patient C for the problem of RUQ abdominal
pain. You determine you must perform an
urgent laparoscopic cholecystectomy on the
same day. You report a consultation code
such as 99242-57 (if in an outpatient setting
such as an emergency department) and
the diagnosis code for RUQ pain, 789.01.
The procedure is reported as laparoscopic
cholecystectomy, code 47562, with the diagnosis
code of 575.0. Remember, modifier -57 is
appended to the consultation code, not to the
surgical procedure code.
Summary
E/M services are provided as appropriate to the
presenting problem. The extent of the history
and examination and the complexity of the
medical decision making must be carefully
documented. Financially, this issue is important
for payors, and documentation is crucial to
avoid adverse audits. Following a few simple
rules and charts can keep the documentation
accurate and consistent.

CHAPTER 4
Coding for Surgical
Procedures
C o d i n g f o r Yo u r s e l f
We mentioned previously the importance of
you, the surgeon, choosing the correct diagnoses
codes. More importantly, the surgeon should
select the correct CPT code(s) for procedural
coding. Professional coders who also perform
practice management and compliance
consultations consistently state that those
surgeons who do their own coding have fewer
compliance issues and improved cash flow.
It makes sense from an audit or compliance
standpoint, it makes sense from a business
standpoint, and it makes sense from a
data standpoint (the “language” of the
system-based practice). One way or another,
you need to learn to code yourself.
There is more than one way a surgeon can code
his or her own records. You can sit down with
the CPT and ICD-9-CM books and code every
surgical procedure, writing the codes on your
chart and charge sheet. Or, you can develop
your own “superbill” or charge sheet with your
most common procedures and diagnoses, and
then just check off the correct codes. You can
develop the habit of dictating very crisp
operative notes that use CPT-like and ICD-9-
CM-like language in the procedure and diagnosis
sections, respectively; your staff can then code
the procedures from your operative notes. This
habit of dictating in CPT-like and ICD-9-CM-
like language is taught and encouraged by
practice managers and compliance auditors as
the best way to consistently ensure sound
documentation. Regardless of how you actually
select the codes for charge entry, you will have
good documentation.
27
As you can see, there are no options for you
to remain ignorant of the correct CPT and ICD-
9-CM coding. Blaming coding errors on staff
will be of no use if you are subjected to an
insurance audit. CPT coding errors can result
in incorrect payments by Medicare, and ICD-9-
CM coding errors result in incorrect documen-
tation of medical necessity. Both are serious
compliance issues.
One way or another — code it yourself, know
the coding language, and be sure you have
the correct documentation for the services
you submit.
Selecting the Correct Code
CPT is clear about how to select the correct
code. In the past, we were instructed to select
the code that would most closely describe the
work reported. This is no longer the case. In
the Introduction to the CPT book is a section
called “Instructions for Use of the CPT Book.”
It states: “Select the name of the procedure
or service that accurately identifies the
service performed. Do not select a CPT code
that merely approximates the service provid-
ed. If no such procedure or service exists, then
report the service using the appropriate
unlisted procedure or service code.”
(Emphasis added.)
If you must report a service using an unlisted
code, it is recommended that you include a
special report with the claim. This report
should include a description of the procedure
or service in fairly simple language. Include
CPT codes and descriptors of procedures that
closely approximate the service. For instance,
if you are performing a laparoscopic procedure
that does not have a specific CPT code,
include in your report the known laparoscopic
procedure it approximates and the known open
procedure it replicates. This information will
give the reviewer some basis for comparison.
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED ) 28

The Global Period and Bundling Rules

“Globals” and “bundling” rules are two important concepts we
have to understand in order to submit accurate codes on
claims and to use modifiers. Simply stated, the global period
is a period of time during which all usual care and services
are reimbursed as one “global” fee. Bundling is a process used
by payors to determine which procedures or services are
included or “bundled” into a single CPT code. “Unbundling”
occurs when you submit two or more codes for services
that normally would not be done at the same time or that
describe services considered to be components of a more
comprehensive code.

Chapter 1 mentions the “CPT surgical package.” The CPT

surgical package definition is stated clearly in the CPT book.
When the AMA CPT and RUC committees approve a code and
publish it in the surgical section of CPT, they are stating that
the six activities (see Table 4.1) are part of and included in the
work value of each code.

Medicare, on the other hand, has its own definition of the global
surgical package, which is similar to the CPT surgical package,
except that it also defines and includes a period of pre- and
postoperative times. Typically, Medicare assigns a global TABLE 4.1—CPT
service period of zero days for very minor diagnostic and SURGICAL PACKAGE
therapeutic procedures, 10 days for minor procedures that DEFINITION
involve some necessary follow-up care, and 90 days for
major surgical procedures. The package includes all “usual” • Local infiltration, metacarpal/
postoperative care. metatarsal/digital block or
topical anesthesia
In general, the two packages defined by CPT and by Medicare are
• Subsequent to the decision
similar, or at least compatible. CPT does not set global periods,
for surgery, one related E/M
but CMS does. You have to look outside the CPT book to find
encounter on the date
the global days; Medicare’s are published with the fee schedule.
immediately prior to or on the
date of procedure (including
You also need to know the CMS determination of what
history and physical)
services are bundled together in each CPT code. The Correct
Coding Initiative (CCI) is a series of edits maintained by CMS • Immediate postoperative care,
that prevents payment for unbundling. CCI is an ongoing including dictating operative
project that has “saved” Medicare hundreds of millions of notes, talking with the patient’s
dollars. New or updated lists of these edits are published by family and other physicians
CMS quarterly. (They can be downloaded at the CMS Web • Writing orders
site, http://www.cms.hhs.gov/physicians/cciedits/.)
Unbundling codes even unintentionally but especially • Evaluating the patient in the
intentionally and repeatedly is a serious compliance issue. postanesthesia recovery area
A surgeon’s business office must access and maintain • Typical postoperative
up-to-date CCI edit information. follow-up care
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED )
Although Medicare is required to use CCI as its
definition of unbundling, private payors are not.
Many programs do not use CCI and have
developed their own systems for identifying
unbundled services, which are frequently called
(somewhat pejoratively) “black box” edits. To
properly evaluate any insurance contract outside
Medicare, you should understand how that
carrier defines the global period and what
system of unbundling definitions is used.
Procedure Documentation:
The Operative Note
For coding and claim submission for surgical
procedures, the best source of information and
documentation is a well-done, timely operative
note. First and foremost, the operative note
is an essential and accurate record of patient
care; it is also a medico-legal document.
For both the surgeon and the patient, the
operative note is a vital data source and
medical record.
In terms of compliance and billing, the first
page of the operative note is key. The pre- and
postoperative diagnoses should agree or, when
appropriate, differ. They should use language
that is similar to or compatible with ICD-9-CM
terminology. The diagnoses portion of your
documentation justifies the medical necessity
of the services provided. Whether you code
your procedures yourself or you have a staff
coder code from your operative notes, you
must understand the language used. Use
ICD-9-CM-like language.
The statement listing the procedure or
procedures must be complete and accurate.
Here, ideal coding language, bundling and
unbundling, and global package information
must be set aside. For a good medical record,
you must clearly and completely state each
and every thing that was done during the
procedure, even if it is something you know
cannot be billed separately. Here is where you
29
or your coder must use your knowledge of the
global surgical package and CCI or other
unbundling rules to ensure you submit codes
and charges that are in compliance with
the published regulations. You must know
CPT-like language to do this.
Modifiers in Surgery
The CPT nomenclature uses modifiers as an
integral and important part of its structure. A
modifier appended to the end of a CPT code
provides a means by which a surgeon can
document that a service or procedure was
altered by specific circumstances, but has not
changed in its definition or code.
Within the CPT system, modifiers can
be used in the following ways:
• To indicate that a procedure was
performed bilaterally
• To report that multiple procedures were
performed at the same session by the
same provider
• To report that a portion of a service or
procedure was reduced or eliminated at
the physician’s discretion
• To report that the service or work
involved in that service was greater
than usually required
• To report assistant surgeon services
A complete list of modifiers is found in
Appendix A of the CPT book. There is also a
short list of symbols and modifiers on the
inside cover of the Professional Edition of
CPT. Following is a brief review of some of the
more common modifiers surgeons may use.
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED )
MODIFIER -22 Unusual
Procedural Ser vices
When the service(s) provided is greater
than that usually required for the listed
procedure, it may be identified by adding
modifier “-22” to the usual procedure
number. A report may also be appropriate.
This modifier applies to the unusually difficult
case where you think the added work deserves
more than the usual reimbursement. Of course,
its use is no guarantee of higher payment.
“When the service(s) provided is greater than
that usually required” means this case involved
a significantly greater amount of work than the
usual or typical case. Work is variously defined
as the time, complexity, and intensity of a
service. It is not time alone; you cannot expect
greater reimbursement just because you are
slow. These are cases where the complexity
and/or intensity are greater, which may be
reflected in greater time. There are no hard
and fast rules on how much time or complexity
must be involved, but a generally stated rule is
that it must be at least 50 percent greater than
your usual or typical case. Of course, you must
document the complexity of the case.
Remember the word “procedural,” because
modifier -22 can never be appended to an E/M
service. Modifier -21 is (rarely) used with an
E/M code.
The statement “A report may also be
appropriate” is a little misleading, because
you must assume that one is always needed.
This report must articulate for the person
reviewing the claim exactly what additional
work was required. It needs to state clearly
and simply what procedure was performed (the
primary CPT code), its medical necessity (ICD-
9-CM code[s]), and documentation for the
additional time, complexity, or intensity.
You need to state how much extra time was
involved, what additional diagnoses or
conditions led to the greater complexity (such
30
as extensive adhesions, prior radiation, prior
multiple procedures or reoperative status,
obesity). The procedure might not have taken
more time but was of greater intensity, such
as quickly operating on someone after
unexpected hemorrhage following a diagnostic
procedure (such as the liver biopsy site that
unexpectedly bleeds). Be sure to use the
correct ICD-9-CM codes that relate to these
more complex conditions.
MODIFIER -50 Bilateral Procedure
Unless otherwise identified in the listings,
bilateral procedures that are performed
at the same operative session should be
identified by adding the modifier “-50” to
the appropriate five-digit code. This
modifier is used to report bilateral
procedures that are performed at the same
operative session. The use of this modifier
is only applicable to services/procedures
performed on identical anatomic sites,
aspects, or organs (eg, arms, legs, eyes).
This instance brings up the issue of “one-line”
or “two-line” claim form reporting for bilateral
procedures. One-line reporting means you put
the information on one line on the CMS-1500
form, append modifier -50 to one code, and
place a “1” in the units box on the form to
indicate that one procedure was performed
bilaterally. However, some private payors’
systems cannot interpret this reporting, and
they prefer that you use two-line reporting. In
these cases, you report the procedure once on
one line as the five-digit CPT code (and LT or
RT for left or right) and report the code on a
second line as the five-digit CPT code plus
modifier -50 (plus RT or LT, and so on). Check
with your payor for what method of reporting
is preferred.
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED )
M O D I F I E R - 51 M u l t i p l e P r o c e d u r e s
When multiple procedures, other than
Evaluation and Management services, are
performed at the same session by the same
provider, the primary procedure or service
may be reported as listed. The additional
procedure(s) or service(s) may be identified
by appending the modifier “-51” to the
additional procedure or service code(s).
Modifier -51 has four applications.
It identifies:
• multiple medical procedures performed at
the same session by the same provider
• multiple, related operative procedures
performed at the same session by the
same provider
• operative procedures performed in
combination, at the same operative
session, by the same provider,
whether through the same or another
incision or involving the same or
different anatomy
• a combination of medical and
operative procedures performed at
the same session by the same provider
You do not append this modifier to add-on
codes or codes designated as -51 exempt.
Lists of these codes are found in Appendices D
and E in the back of the CPT book. Remember,
only surgery and medical codes can have
modifier -51; radiology codes cannot.
Most, but not all, payors will reduce the
payment for services when modifier -51 is
appended. However, it is recommended that
the claim form include the full fee for the
reported service. Because the first code on the
claim form will be paid in full, you want to
be sure the most “valuable” procedure is first,
the second most valuable second, and so on.
It becomes the responsibility of the payor to
enact its own payment policy.
31
MODIFIER -59 Distinct
Procedural Ser vice
Under certain circumstances, the physician
may need to indicate that a procedure or
service was distinct or independent from
other services performed on the same
day. Modifier “-59” is used to identify
procedures/services that are not normally
reported together, but are appropriate
under the circumstances.
This modifier is most commonly used to over-
ride unbundling rules from the payors to indicate
that, although this service is normally bundled
together into one CPT code, this procedure
was performed at a separate site or through a
separate incision, at a separate session on the
same day, on a separate injury, and so on.
Modifier -59 is also used to indicate, for those
procedures that have the designation “separate
procedure,” that the procedure was separate
and distinct from the usual circumstance.
“Usual circumstance” is when the particular
procedure is normally performed as part of
another comprehensive procedure.
Although many private payers do not honor
modifier -59, Medicare does when the modifier
is reported with certain codes. As stated earlier,
be sure you have a list of the CCI edits and know
when modifier -59 will override the edit.
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED )
MODIFIER -62 Two Sur geons
When two surgeons work together as
primary surgeons performing distinct
part(s) of a procedure, each surgeon
should report his/her distinct operative
work by adding the modifier “-62” to the
procedure code and any associated add-on
code(s) for that procedure as long as both
surgeons continue to work together as
primary surgeons. Each surgeon should
report the co-surgery once using the same
procedure code. If additional procedure(s)
(including add-on procedure[s]) are per-
formed during the same surgical session,
separate code(s) may also be reported with
the modifier “-62” added. Note: If a co-
surgeon acts as an assistant in the
performance of additional procedure(s)
during the same surgical session, those
services may be reported using separate
procedure code(s) with the modifier “-80”
or modifier “-82” added, as appropriate.
This modifier is the co-surgery modifier. If you
use it, read its descriptor a couple of times
because it tells you all you need to know to use
the modifier. Two surgeons, who do not have
to be (although frequently are) in different
surgical specialties or disciplines — but who
presumably have different skill sets — can both
report the same single CPT code at the same
session by appending modifier -62. They must
each dictate an operative note. The operative
notes should indicate the other surgeon was a
co-surgeon (not an assistant surgeon). The two
operative notes need to be complementary,
with each surgeon dictating his or her separate
part of the procedure.
32
You may also append modifier -62 to any add-on
procedures related to the primary procedure if
parts are done by both surgeons. If one surgeon
assists the other surgeon on an additional
procedure (unrelated to the procedure done
by co-surgeons), that procedure may be
reported using the appropriate assistant
surgery modifier (-80 or -82, as appropriate).
Most importantly, both surgeons must agree
ahead of time how the service is reported and
be sure that claims and operative notes from
both of them document the correct use of
modifier -62. If one surgeon submits a claim
with modifier -62 appended and one does not,
it is more than likely that one of the claims
will be denied.
MODIFIER -66 SURGICAL TEAM
Under some circumstances, highly
complex procedures (requiring the
concomitant services of several physicians,
often of different specialties, plus other
highly skilled, specially trained personnel,
various types of complex equipment) are
carried out under the “surgical team”
concept. Such circumstances may be
identified by each participating physician
with the addition of the modifier “-66” to
the basic procedure number used for
reporting services.
Modifier -66 is mentioned here mainly to point
out that it is rarely used because it is rarely
allowed by payors. There are very few CPT
codes for which CMS allows use of modifier -66.
The usual circumstances involve complex
transplant procedures or certain complex
congenital surgical procedures. Always
check with CMS or other payors before using
modifier -66.
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED )
MODIFIER -80 Assistant Surgeon
Surgical assistant services may be
identified by adding the modifier “-80” to
the usual procedure number(s).
Although the intent of the assistant surgeon
modifiers is to report physician services,
some payors accept these modifiers to report
nonphysician assistant services, which is not
the intent of CPT.
MODIFIER -82 Assistant Surgeon
(when qualified resident
surgeon is not available)
The unavailability of a qualified resident
surgeon is a prerequisite for use of
modifier “-82” appended to the usual
procedure code number(s).
If you work in a teaching hospital, there will be
times when no qualified resident is available to
assist at surgery, and it will be necessary to use
a fully trained physician. Report the procedure
code and append -82 to it.
33
Coding Examples
in General Surgery
BREAST SURGERY CODING
Breast mass excision: A patient had a
palpable mass in her breast. The mass was
excised without attention to margins for
diagnosis. The preoperative diagnosis was a
breast mass, 611.72. The procedure is coded
as 19120.
Sentinel lymph node biopsy: A patient with
proven breast cancer underwent a sentinel
lymph node biopsy. Blue dye was injected by
the surgeon in the operating room during the
procedure. The diagnosis is 174.4, Malignant
neoplasm of female breast, upper-outer
quadrant, and the procedure is coded as
38525 for excision of the lymph node, and
38792 is an add-on (no modifier -51) to report
the injection of the blue dye.
Lumpectomy with axillary dissection:
A patient had a palpable mass in her breast.
The mass was excised with attention to margins,
and an axillary dissection was performed. She
was found to have cancer according to the final
pathology report. The procedure is reported as
19162, and the diagnosis is 174.4.
CHOLECYSTECTOMY
Laparoscopic cholecystectomy, etc:
Your patient with cholecystitis and gallstones
underwent a laparoscopic cholecystectomy.
The procedure is reported as 47562,
Laparoscopic surgical; cholecystectomy.
If you also performed an operative
cholangiogram, then you would report 47563,
Laparoscopic surgical; cholecystectomy
with cholangiography. The diagnosis is
574.10, Calculus of gallbladder with
other cholecystitis, without mention
of obstruction.
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED )
Procedure begun as a laparoscopic
cholecystectomy but converted to an open
cholecystectomy: By CMS’s convention, you
can report only the definitive procedure. Report
it as 47600 for the (open) cholecystectomy. If
the preliminary attempt at the laparoscopic
procedure added significantly to the time,
intensity, or complexity, you should consider
adding modifier -22, which will require you
to submit a cover letter justifying the added
work and requested fee. You may or may not
get it. Don’t use modifier -22 every time a
laparoscopic procedure is converted to an open
one. Payors audit these reports, and they will
not let you get away with using modifier -22
every time you convert to an open procedure.
INGUINAL HERNIA
Unilateral mesh repair (“Lichtenstein”):
You performed a tension-free mesh repair
of an inguinal hernia. You report the procedure
as 49505. You read on in the book and want
to report 49568 for implanting the mesh.
However, your office manager tells you (as does
the descriptor in the CPT book) that you cannot
report it with 49505. The diagnosis is reported
as 550.90, Inguinal hernia, without
mention of obstruction or gangrene,
unilateral or unspecified (not specified
as recurrent).
Bilateral inguinal hernia repair: The
preferred coding is the “one-line” method,
wherein you report one code, 49505-50, one
time for both. If the payor has already told
you its software does not accept one-line coding
for bilateral procedures, you use the two-line
method, reporting 49505 on one line and
49505-50 on the second line. The diagnosis is
550.92, Inguinal hernia, without mention
of obstruction or gangrene, bilateral
(not specified as recurrent).
34
O F F I C E C O N S U LTAT I O N
Consultation, new patient: You saw a
patient in the office at the specific request of an
internist. You had never previously seen the
patient. You use one of the 99241–99245 codes.
You document that the consultation was
requested by Dr. So-and-So, you create a
report/consultation (hard copy in your office
chart), you send a report to Dr. So-and-So
(either a copy of the consultation or a letter
summarizing your findings), and you document
that you sent a report.
Consultation, established patient: You use
the same code as above, because you have
read in the CPT book that you can report a
consultation code for an established patient
as long as you meet the three requirements
(document the request, create the consultation
report, and send the report).
CALLED TO ER
You are on call for the ER, and the ER
doctor calls you: You went to the ER and
evaluated a patient with abdominal pain. You
diagnosed appendicitis and told the patient she
needs an urgent appendectomy. You report
the visit using the outpatient consultation
codes (document the three “R”s of Request
documented, Record the consultation in the
record, and Report it to the requesting doctor).
Even though the encounter is the hospital
emergency department, it is considered to be
an outpatient service by payors.
Internist had already admitted the patient
in the example above: Because the patient
was actually in the hospital, you would report
this encounter using one of the initial inpatient
consultation codes (again using the three “R”s).
This time, however, you should document the
consultation in the hospital record.
CO-SURGERY
Esophagogastrectomy by two surgeons:
You performed this procedure with a thoracic
surgeon using the Ivor-Lewis technique. You
discuss coding with the thoracic surgeon, and
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED )
you both report the code as 43117-62. You both
must dictate operative notes, and you should
both indicate in your operative dictation that
the other surgeon was the co-surgeon (not an
assistant). If the lesion is adenocarcinoma of
the distal esophagus, the diagnosis code is
151.0, Malignant neoplasm of stomach,
cardia. If it were squamous cell carcinoma,
you would use 150.5, Malignant neoplasm
of esophagus, lower third of esophagus.
You have to read the fine print in the ICD-9-
CM book to find that after code 150.5 is a note
that reads “Excludes adenocarcinoma (151.0).”
Exposure for spine surgery: A neurosurgeon
asked you to perform an anterior exposure
for a lumbar vertebral corpectomy. He actually
asked you to “assist” him. Your senior partner
diplomatically informs him that the CPT code
book, his national professional society, and
the American College of Surgeons all say this
procedure should be reported as co-surgery.
If he does two levels, you would both report
63087-62 and 63088-62, you would both
dictate operative notes, and you would both
name the other surgeon as the co-surgeon.
LAPAROSCOPIC PERFORMANCE OF AN
OTHERWISE OPEN PROCEDURE
You do not report the “open” code when there is
no laparoscopic code for the procedure you did.
You report the procedure using the Unlisted
procedure code at the end of the laparoscopic
section for the type of procedure being done if
there is one. Use the unlisted procedure code at
the end of the open section if there is not a
laparoscopic section. You also need to submit
a letter explaining what you did in simple
language. Submit the correct diagnoses, and
submit the most closely associated open codes
along with any similar laparoscopic code. If
there are no such codes, submit the open or
laparoscopic codes that include components
of the procedure you did perform. Again, use
specific ICD-9-CM codes and CPT-4 codes, as
well as clear, simple language describing the
procedure. CPT includes a section in the
Introduction to the surgical section describing
such special reports.
35
Coding Examples for
Pediatric Surgery
By John P. Crow, MD, FACS
Inguinal hernia repair in a child: The
operation was performed as an outpatient
procedure, with the indirect hernia sac resected
with high ligation performed. Hydrocelectomy
may have been performed concurrently if
present. Exploration was performed with
hernia repaired on the contralateral side in
the infant (an indication that is surgeon
dependent). The operation should be reported
using CPT code 49495-50 (or use the two-line
method of reporting if the carrier requires
that method), inguinal hernia repair in an
infant younger than 6 months with bilateral
procedure; 49500, unilateral inguinal hernia
repair, 6 months to under 5 years; 49505,
unilateral inguinal hernia repair, age 5 years
or older. ICD-9: 550.90 for unilateral
hernia, 550.92 for bilateral, and 778.6 for a
congenital hydrocele.
Inguinal hernia repair in a premature
infant: The patient was a neonate, formerly
26 weeks premature infant, who is now
16 weeks old with bilateral inguinal hernias
(postconceptual age of 42 weeks). High ligation
of indirect hernia sac was performed in
addition to floor repair bilaterally. The infant
was admitted overnight for monitoring.
We would use CPT code 49491-50 and ICD-9-
CM code 550.92. (Again, some carriers
require the two-line method of reporting
bilateral procedures.)
Umbilical hernia: The procedure was
performed on an outpatient basis, and the
umbilical sac was resected and the defect
closed primarily. The procedure would be
reported using CPT code 49580 in a child
younger than 5 years or 49585 in a child
age 5 years or older. The correct ICD-9-CM
code is 553.1.
C H A P T E R 4 C o d i n g f o r S u r g i c a l P r o c e d u r e s ( CONTINUED )
Orchiopexy, inguinal approach: The
procedure was performed on an outpatient
basis. Inguinal exploration revealed a normal
testicle at the external ring. A hernia sac was
dissected, and high ligation was performed.
After developing a dartos pouch in the
hemiscrotum, the testicle was passed through
a tunnel and fixed in the pouch. The correct
codes to use would be CPT 54640 and ICD-9-
CM 752.51.
Pyloromyotomy: A 6-week-old infant with
pyloric stenosis was admitted to the hospital
and intravenous fluids were administered.
For this service, you would use E/M 99221/2/3,
depending on the level of service, with modifier
-57 to indicate the decision for surgery, because
you decided to operate the following day.
On the following day, pyloromyotomy was
performed through a supraumbilical incision
with the pyloric muscle incised. You would
report the procedure using CPT code 43520
and ICD-9-CM code 750.5.
Tunnelled external catheter with reservoir
(venous port): Central venous access was
obtained in the subclavian vein on a 2-year-old
patient with leukemia. A venous pocket was
made on a remote site on the chest wall. The
catheter was threaded centrally and adjusted by
fluoroscopic image. The port was secured with
final placement confirmed by fluoroscopy. A hard
copy (fluoroscopic image) of the final catheter
position was made. The procedures would be
reported using CPT code 36560 for the catheter
placement and code 75998 for the fluoroscopy.
The diagnostic code would be code 459.89 (for
phlebosclerosis) or 204.0 (lymphocytic leukemia).
Thyroglossal duct cyst excision: On an
outpatient basis, a midline neck cyst was
resected in continuity with the middle portion
of the hyoid bone and fistulous tract to the
foramen cecum. CPT code 60280 would be
reported, along with ICD-9-CM code 759.2.
Appendectomy: The abdomen was entered
through incision (RLQ or midline), and the
appendix was resected with closure of the
36
cecum with suture or staples. A drain was
inserted. The procedure would be reported
using CPT code 44950, open approach
nonruptured; or 44960, open and ruptured;
or 44970, laparoscopic approach. The correct
diagnosis code is ICD-9-CM 540.9.
Appendectomy with abscess requiring OR
in global period: The abdomen was entered
through incision (RLQ or midline), an abscess
was encountered, and a drain placed. The
appendectomy was performed with closure of
the appendiceal stump. A postoperative small
bowel obstruction required enterolysis. You
would code using CPT 44960 with ICD-9-CM
540.1 for the first operation, and CPT code
44005-78 with ICD-9-CM 560.81 for the
subsequent operation.
Burn injury: A 4-year-old patient was
admitted with full thickness burn injury to her
leg covering 4 percent of the body surface area.
Tangential excision was performed and then
coverage obtained with a split thickness skin
graft. You would code using CPT codes 15000,
15001 (3 units), 15100, 15101 (3 units), and
ICD-9-CM 945.3. For the same burn in an
adult with 1.8-meter-square body surface area,
calculate 4 times 180 square centimeters equals
720 square centimeters, and code the procedure
using CPT codes 15000, 15001 (6 units), 15100,
15101 (6 units), and ICD-9-CM code 945.3, fol-
lowed by a fifth digit specifying the part or
parts of the leg. We need to take 945.3 to the
Tabular section to know that.
Summary
Procedural coding and the proper use of
modifiers and reports is the “bread and butter”
of a surgeon’s work. As mentioned in the first
chapter, you must become familiar with this
part of the CPT book. Always read the
introductory sections, the explanatory sections
before and after each code descriptor, and by all
means the code descriptors themselves.
Be advised that these explanatory notes can
change from year to year, even if the code
descriptors remain the same.

CHAPTER 5
Teaching Physicians:
Medicare Guidelines
CMS has published specific guidelines for
reporting services in teaching programs.
The rules are fairly simple, but nonetheless
important. Keep in mind that in approved
teaching programs, CMS (Medicare)
reimburses the hospital additional money for
the expenses of a teaching program. The
amount does not cover all of the expenses for
each resident, but neither is it insignificant.
The government looks at it like this: When a
teaching physician has a resident perform an
operation and then submits a charge to CMS
for the operation, it is a form of “double
dipping.” CMS believes Medicare has already
paid as much as it should for the services of
the resident.
Those of us involved in teaching programs
know this is not how most of the world works.
But in a sense, CMS has a point. CMS has met
us half way. It has issued directives stating
that CMS will reimburse hospitals their
calculated amount for the education part of
their expenses and they will reimburse the
teaching physician/surgeon, if he or she performs
or is present for the critical portions of the
procedure being billed. As always, the “catch”
with CMS is in the documentation. CMS
wants these situations documented in its own
specific way.
If you are involved in a teaching program, you
must know the rules.
37
Medicare Policy
Medicare publishes and updates a Medicare
Carriers Manual. It provides the local
carriers (local or regional subcontractors who
reimburse you—or not) guidelines on processing
claims and other things.
Included in the References chapter and on the
disk is Medicare’s policy on documentation for
teaching physicians, transmittal 1780 issued
on November 22, 2002. The policy is further
clarified in a carrier directive issued in March
2003. You should upload and print out the
entire document. From time to time, Medicare
also issues articles to clarify its policies or to
describe problems that have been encountered
and how to deal with them. Relevant to teaching
physicians is article A22210 issued on June 1,
2004. Information on obtaining these three
documents is included in the References chapter.
Definitions
R E S I D E N T means an individual who
participates in an approved graduate medical
education (GME) program or a physician who
is not in an approved GME program but who
is authorized to practice only in a hospital
setting. The term includes interns and fellows
in GME programs recognized as approved
for purposes of direct GME payments made
by the fiscal intermediary.
T E A C H I N G P H Y S I C I A N means a physician
(other than another resident) who involves
residents in the care of his or her patients.
DIRECT MEDICAL AND SURGICAL
S E R V I C E S mean services to individual
patients that are either personally furnished by
a physician or furnished by a resident under
the supervision of a physician in a teaching
hospital making the reasonable cost election
for physician services furnished in teaching
hospitals. All payments for such services are
made by the fiscal intermediary for the hospital.
C H A P T E R 5 T e a c h i n g P h y s i c i a n s ( CONTINUED )
T E A C H I N G H O S P I T A L means a hospital
engaged in an approved GME residency
program in medicine, osteopathy, dentistry,
or podiatry.
C R I T I C A L O R K E Y P O R T I O N means that
part (or parts) of a service that the teaching
physician determines is (are) a critical or key
portion(s). For purposes of this section, these
terms are interchangeable.
D O C U M E N T A T I O N means notes recorded in
the patient’s medical record by a resident
and/or teaching physician or others as outlined
in specific situations (section C) regarding the
service furnished. Documentation may be
dictated and typed, handwritten, or
computer generated. Documentation must
be dated and include a legible signature or
identity. Documentation must identify, at a
minimum, the service furnished.
P H Y S I C A L L Y P R E S E N T means that the
teaching physician is located in the same room
as the patient (or in a partitioned or curtained
area, if the room is subdivided to accommodate
multiple patients) and/or performs a face-to-
face service.
Documentation Rules for
Teaching Physicians
FOR E/M SERVICES
For purposes of payment, CMS requires
teaching physicians to personally document at
least the following for E/M services that they bill:
• That the teaching physician performed
the service or was physically present
during the key or critical portions of the
service when performed by the resident;
and
• That the teaching physician participated
in the management of the patient.
38
The following are examples of what
CMS considers minimally acceptable
documentation for each E/M ser vice:
Admitting Note: “I performed a history and
physical examination of the patient and
discussed his management with the resident.
I reviewed the resident’s note and agree with
the documented findings and plan of care.”
Follow-up Visit: “Hospital Day #3. I saw and
evaluated the patient. I agree with the findings
and the plan of care as documented in the
resident’s note.”
Follow-up Visit: “Hospital Day #5. I saw and
examined the patient. I agree with the resi-
dent’s note except the heart murmur is louder,
so I will obtain an echo to evaluate.”
(Note: If there are no resident notes, the
teaching physician must document as he or
she would document an E/M service in a
nonteaching setting.)
The following are examples of
unacceptable documentation for
E/M ser vices:
• “Agree with above,” followed by legible
countersignature or identity
• “Rounded, reviewed, agree,” followed by
legible countersignature or identity
• “Discussed with resident. Agree,” followed
by legible countersignature or identity
• “Seen and agree,” followed by legible
countersignature or identity
• “Patient seen and evaluated,” followed
by legible countersignature or identity
C H A P T E R 5 T e a c h i n g P h y s i c i a n s ( CONTINUED )
FOR PROCEDURE CODING
To bill for surgical, high-risk, or other
complex procedures, the teaching
physician must be present during all
critical and key portions of the procedure
and be immediately available to furnish
services during the entire procedure.
SURGERY (INCLUDING ENDOSCOPIC
O P E R A T I O N S ) . The teaching surgeon is
responsible for the preoperative, operative,
and postoperative care of the beneficiary. The
teaching physician’s presence is not required
during the opening and closing of the surgical
field unless these activities are considered
to be critical or key portions of the procedure.
The teaching surgeon determines which
postoperative visits are considered key or
critical and require his or her presence. If the
postoperative period extends beyond the
patient’s discharge and the teaching surgeon is
not providing the patient’s follow-up care, then
instructions on billing for less than the global
package apply. During noncritical or non-key
portions of the surgery, if the teaching surgeon
is not physically present, he or she must
be immediately available to return to the
procedure. That is, he or she cannot be
performing another procedure. If circumstances
prevent a teaching physician from being
immediately available, then he/she must
arrange for another qualified surgeon to be
immediately available to assist with the
procedure, if needed.
Keep in mind that under the definitions,
the surgeon’s presence for the key portions
of the procedure can be documented in the
handwritten operative note.
39
S I N G L E O P E R A T I O N . When the teaching
surgeon is present for the entire operation, his
or her presence may be demonstrated by notes
in the medical record made by the physician,
resident, or operating room nurse. For purposes
of this teaching physician policy, there is
no required information that the teaching
surgeon must enter into the medical record.
T W O O V E R L A P P I N G O P E R A T I O N S . To
bill Medicare for two overlapping procedures,
the teaching surgeon must be present during
the critical or key portions of both operations.
Therefore, the critical or key portions may not
take place at the same time. When all of the
key portions of the initial procedure have been
completed, the teaching surgeon may begin
to become involved in a second procedure. The
teaching surgeon must personally document in
the medical record that he/she was physically
present during the critical or key portion(s) of
both procedures. When a teaching physician
is not present during noncritical or non-key
portions of the procedure and is participating
in another surgical procedure, he or she must
arrange for another qualified surgeon to
immediately assist the resident in the other
case should the need arise. In the case of three
concurrent surgical procedures, the role of the
teaching surgeon (but not the anesthesiologist)
in each of the cases is classified as a supervisory
service to the hospital rather than a physician
service to an individual patient and is not
payable under the physician fee schedule.
M I N O R P R O C E D U R E S . For procedures that
take only a few minutes (5 minutes or less) to
complete (such as a simple suture), and involve
relatively little decision making once the need
for the operation is determined, the teaching
surgeon must be present for the entire procedure
in order to bill for the procedure.
C H A P T E R 5 T e a c h i n g P h y s i c i a n s ( CONTINUED ) 40

CLAIMS SUBMISSION
AND THE GC MODIFIER

Claims for teaching physician services involving

the use of a resident must be identified with a
“GC” modifier. The modifier “GC” is used to
indicate that the service has been performed
in part by a resident under the direction of a
teaching physician

Summary
Medicare has established fairly clear rules
for documenting the activities of teaching
physicians. The key points have been briefly
summarized in this chapter. The 2003
directive to Medicare carriers is listed in
the References chapter. Get in the habit of
watching for new directives and guidelines.

As a teaching physician, you must document

your presence and involvement in such a way
that your involvement could be easily verified
from the record.

CHAPTER 6
The Importance of
Diagnosis-Related
Groups (DRGs) to
Surgical Residents
By Charles D. Mabry, MD, FACS
The diagnosis-related group (DRG) system is
a way to organize the ICD-9-CM diagnosis and
procedure codes into an understandable system
of patient groups. The primary purpose of the
DRG system is to have a mechanism for the
federal government to pay hospitals for care
of Medicare patients under the Prospective
Payment System (PPS). Using DRGs allows
the government to pay more to a hospital for
treating a very sick and complex patient than
for one who doesn’t require as much equipment,
supplies, and other resources.
Understanding how a hospital assigns and uses
DRGs is important, because the physician’s
documentation determines, in large part, how
the eventual reimbursement to the hospital
is calculated. Good documentation in the
patient’s medical record allows the hospital to
capture all of the diagnoses that may improve
its eventual reimbursement.
DRGs also allow hospitals and physicians to
compare their patients’ severity of illness and
the services used with similar patients across
the nation. Although DRGs were designed for
Medicare reimbursement purposes, they are
now often used by hospitals for other purposes.
Each DRG that is assigned to a patient tells us
the national average of resources that are con-
sumed for similar patients. For a given DRG,
understanding how the length of stay for your
*Medicare Program: Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 2004 Rates; Final Rule. Federal
Register 68 no. 148:45346–45672
41
patients compares with the national average
gives you some idea of how your care compares
with a national average.
Many critical care pathways are designed for
and around major DRG groupings. Many
hospitals compare one physician with another,
based in part on what their Medicare length-of-
stay profiles are for various high-volume DRGs.
Quality reports and physician benchmarking are
becoming the norm in America, and most of
these reports use the DRG system to rank and
quantify physicians. Understanding how the
DRG system works is not only helpful to the
hospital, but also can help you improve your
own “score” for utilization of services and care
of your patients.
Where Do DRGs Come From?
How Do They Work?
In 1983, Congress passed a law that established
the PPS for all Medicare patients treated as
inpatients in most hospitals. Some hospitals are
excluded from the PPS and are paid by other
mechanisms: psychiatric hospitals, children’s
hospitals, long-term acute care hospitals, and
cancer hospitals.
CMS administers the PPS as well as the DRG
system. Each year, revisions and additions to
these systems are published in the Federal
Register, and for this chapter we are using the
information published in the 2003 version that
was effective on October 1, 2003.*
CMS can combine several DRGs into one new
DRG, or it may decide to split or break out
from an existing DRG a certain type of patient
and establish a new DRG, based on national
claims reporting of cases, hospital costs, and
ICD-9-CM codes. This rearrangement is
designed to keep pace with changing medical
care and to properly reflect the costs incurred
in caring for patients.
C H A P T E R 6 T h e I m p o r t a n c e o f D R G s ( CONTINUED )
Each DRG has a relative weight that
numerically describes the amount of resources
consumed (on average) by hospitals. A patient
assigned a DRG relative weight of 4 consumes
about four times the resources (nursing time,
medicines, laboratory services, equipment,
supplies, and so on) than a patient assigned
a DRG weight of 1. This relative weight
number helps determine the payment to a
hospital for each patient, but also gives an
overall look at the severity of illness of patients
treated by an individual hospital, the so-called
case mix index (CMI). Each hospital’s CMI
is determined by taking all relative weights for
the year and dividing by the number of Medicare
patients treated to arrive at an average relative
weight. This average relative weight (of
Medicare patients) is the hospital’s CMI.
Payment to the hospital for each Medicare
patient is determined by multiplying the DRG
relative weight by a factor called the hospital
base rate, which is a national payment amount
adjusted yearly by CMS (using information
from the CMIs from all hospitals for that year).
Each hospital has an adjustment applied to the
hospital base rate to take into account the local
labor rates that it has to pay.
The hospital payment for a
given patient is determined by
the following formula:
Hospital payment =
DRG relative weight × hospital base rate
Regardless of the cost of caring for an individual
patient, the reimbursement amount will be
the same, based on the average resource
consumption of similar patients. The more
efficient the care given, the better the hospital
does financially.
42
How Is a DRG Assigned?
Currently, 518 DRGs are used to place an
individual patient into a group of patients with
similar characteristics. The specific DRG is
determined by the principle diagnosis,
which is the diagnosis that after adequate
study and evaluation is the primary reason a
patient was admitted to the hospital. One DRG
is assigned to each inpatient visit based on this
principle diagnosis, but additional information
is also recorded to help further refine and
stratify the specific DRG assignment. Up to eight
additional diagnoses, a principal procedure, up
to eight additional procedures, and factors such
as age, sex, and discharge status are all used to
help accurately assign a DRG. These other
diagnoses are used to decide if the patient has
a complication or comorbid condition (CC) that
affects assignment and eventual payment.
Conditions such as alcoholism, congestive heart
failure, angina pectoris, malnutrition, and
diabetes mellitus are examples of CCs.
After a patient is discharged, the medical
records department reviews the chart and,
based on the information recorded (this is
where you come into the picture) — including
progress notes, history and physical
examinations, operative reports, and
discharge summary dictations — ICD-9-CM
diagnosis and procedure codes are assigned.
Using the principle diagnosis, the case is then
assigned into one of 25 major diagnostic
categories (MDC) that are mutually exclusive
of each other. Further sorting within an MDC
is based on whether the patient is placed into
a medical or surgical section depending on
the type of diagnosis and/or type of surgical
procedure. The last step incorporates the
patient’s age, presence or absence of CCs,
and discharge status to arrive at a final
DRG assignment.
C H A P T E R 6 T h e I m p o r t a n c e o f D R G s ( CONTINUED ) 43

HOW CAN I HELP GET THE PROPER DRG ASSIGNED?

The proper DRG assignment is crucial to the financial viability of each hospital. If a hospital has a case
mix index that is too low for the severity of illness of patients whom it cares for, it will go bankrupt. One
of the main reasons that a case mix index is too low is poor physician documentation. You can help in
this whole process by remembering to clearly document the following:

• Chief complaint • Abnormal test results (such as low

potassium levels)
• Principle diagnosis
• Any suspected conditions that you
• Any procedures performed on the investigate (such as ruling out deep
patient in the hospital venous thrombosis)

• Any complications that occur • Be as specific as possible

• Comorbid conditions that the patient

has prior to coming to the hospital

In the example below, you can see how important it can be to document whether a patient had a
concussion or was in a coma (even how long the coma lasted), as well as any existing CCs that account
for the relative weight and length of stay:

DRG
Relative Length
DRG DRG Title Weight of Stay
28 TRAUMATIC STUPOR & COMA, COMA <1 HR AGE >17 W CC 1.3609 5.2
27 TRAUMATIC STUPOR & COMA, COMA >1 HR 1.3514 3.7
31 CONCUSSION AGE >17 W CC .9165 3.5
29 TRAUMATIC STUPOR & COMA, COMA <1 HR AGE >17 W/O CC .6956 3.0
32 CONCUSSION AGE >17 W/O CC .5230 2.0

Summary
You can make a difference in how your hospital is reimbursed, as well as ensure that comparisons of the care
you give are valid, by paying attention to proper coding and documentation. The DRG system is a system you
should know and understand for the future.
 44

CHAPTER 7

References and Internet (Web URL) Links

for Coding Resources

American College of Surgeons Web site

http://www.facs.org/

American College of Surgeons Coding Links and Resources

http://www.facs.org/ahp/codingresources.html
http://www.acscodingtoday.com/

Bulletin of the American College of Surgeons: Breast Surgery Coding

http://www.facs.org/ahp/pubs/whatsurg0503.pdf

Bulletin of the American College of Surgeons: Organizing Your Surgical Practice

http://www.facs.org/ahp/pubs/tips/tips0204.pdf

Bulletin of the American College of Surgeons: CPT Changes in 2004

(Look for such updates every January or February in the ACS Bulletin)
http://www.facs.org/fellows_info/bulletin/2004/preskitt0104.pdf

American College of Surgeons Coding Hotline

http://www.facs.org/ahp/coding/secoding.html

Centers for Medicare & Medicaid Services (CMS)

http://www.cms.hhs.gov/

CMS Learning Network

http://www.cms.hhs.gov/medlearn/

CMS Physician Information Resources for Medicare

http://www.cms.hhs.gov/physicians/

CMS Correct Coding Initiative (CCI) Edits

http://www.cms.hhs.gov/physicians/cciedits/
 1995 DOCUMENTATION GUIDELINES
FOR EVALUATION & MANAGEMENT SERVICES

I. INTRODUCTION

WHAT IS DOCUMENTATION AND WHY IS IT IMPORTANT?

Medical record documentation is required to record pertinent facts, findings, and observations
about an individual's health history including past and present illnesses, examinations, tests,
treatments, and outcomes. The medical record chronologically documents the care of the patient
and is an important element contributing to high quality care. The medical record facilitates:

• the ability of the physician and other health care professionals to evaluate and plan the
patient's immediate treatment, and to monitor his/her health care over time.

• communication and continuity of care among physicians and other health care
professionals involved in the patient's care;

• accurate and timely claims review and payment;

• appropriate utilization review and quality of care evaluations; and

• collection of data that may be useful for research and education.

An appropriately documented medical record can reduce many of the "hassles" associated with
claims processing and may serve as a legal document to verify the care provided, if necessary.

WHAT DO PAYERS WANT AND WHY?

Because payers have a contractual obligation to enrollees, they may require reasonable
documentation that services are consistent with the insurance coverage provided. They may
request information to validate:

• the site of service;

• the medical necessity and appropriateness of the diagnostic and/or therapeutic services
provided; and/or

• that services provided have been accurately reported.

II. GENERAL PRINCIPLES OF MEDICAL RECORD DOCUMENTATION

The principles of documentation listed below are applicable to all types of medical and surgical
services in all settings. For Evaluation and Management (E/M) services, the nature and amount
of physician work and documentation varies by type of service, place of service and the patient's

1 3/4/99 1:36pm
status. The general principles listed below may be modified to account for these variable
circumstances in providing E/M services.

1. The medical record should be complete and legible.

2. The documentation of each patient encounter should include:

• reason for the encounter and relevant history, physical examination findings and
prior diagnostic test results;

• assessment, clinical impression or diagnosis;

• plan for care; and

• date and legible identity of the observer.

3. If not documented, the rationale for ordering diagnostic and other ancillary services
should be easily inferred.

4. Past and present diagnoses should be accessible to the treating and/or consulting
physician.

5. Appropriate health risk factors should be identified.

6. The patient's progress, response to and changes in treatment, and revision of diagnosis
should be documented.

7. The CPT and ICD-9-CM codes reported on the health insurance claim form or billing
statement should be supported by the documentation in the medical record.

2 3/4/99 1:36pm
III. DOCUMENTATION OF E/M SERVICES

This publication provides definitions and documentation guidelines for the three key components
of E/M services and for visits which consist predominately of counseling or coordination of care.
The three key components--history, examination, and medical decision making--appear in the
descriptors for office and other outpatient services, hospital observation services, hospital
inpatient services, consultations, emergency department services, nursing facility services,
domiciliary care services, and home services. While some of the text of CPT has been repeated
in this publication, the reader should refer to CPT for the complete descriptors for E/M services
and instructions for selecting a level of service. Documentation guidelines are identified by
the symbol •DG.

The descriptors for the levels of E/M services recognize seven components which are used in
defining the levels of E/M services. These components are:

• history;
• examination;
• medical decision making;
• counseling;
• coordination of care;
• nature of presenting problem; and
• time.

The first three of these components (i.e., history, examination and medical decision making) are
the key components in selecting the level of E/M services. An exception to this rule is the case
of visits which consist predominantly of counseling or coordination of care; for these services
time is the key or controlling factor to qualify for a particular level of E/M service.

For certain groups of patients, the recorded information may vary slightly from that described
here. Specifically, the medical records of infants, children, adolescents and pregnant women may
have additional or modified information recorded in each history and examination area.

As an example, newborn records may include under history of the present illness (HPI) the
details of mother's pregnancy and the infant's status at birth; social history will focus on family
structure; family history will focus on congenital anomalies and hereditary disorders in the
family. In addition, information on growth and development and/or nutrition will be recorded.
Although not specifically defined in these documentation guidelines, these patient group
variations on history and examination are appropriate.

3 3/4/99 1:36pm
 A. DOCUMENTATION OF HISTORY

The levels of E/M services are based on four types of history (Problem Focused, Expanded
Problem Focused, Detailed, and Comprehensive.) Each type of history includes some or all of
the following elements:

• Chief complaint (CC);

• History of present illness (HPI);

• Review of systems (ROS); and

• Past, family and/or social history (PFSH).

The extent of history of present illness, review of systems and past, family and/or social history
that is obtained and documented is dependent upon clinical judgement and the nature of the
presenting problem(s).

The chart below shows the progression of the elements required for each type of history. To
qualify for a given type of history, all three elements in the table must be met. (A chief
complaint is indicated at all levels.)

History of Present Illness Review of Systems (ROS) Past, Family, and/or

(HPI) Social History (PFSH) Type of History
Brief N/A N/A Problem Focused
Expanded Problem
Brief Problem Pertinent N/A Focused
Extended Extended Pertinent Detailed
Extended Complete Complete Comprehensive

!DG: The CC, ROS and PFSH may be listed as separate elements of history, or they
may be included in the description of the history of the present illness.

4 3/4/99 1:36pm
 !DG: A ROS and/or a PFSH obtained during an earlier encounter does not need to
be re-recorded if there is evidence that the physician reviewed and updated
the previous information. This may occur when a physician updates his or
her own record or in an institutional setting or group practice where many
physicians use a common record. The review and update may be documented
by:

• describing any new ROS and/or PFSH information or noting there

has been no change in the information; and

• noting the date and location of the earlier ROS and/or PFSH.

!DG: The ROS and/or PFSH may be recorded by ancillary staff or on a form
completed by the patient. To document that the physician reviewed the
information, there must be a notation supplementing or confirming the
information recorded by others.

!DG: If the physician is unable to obtain a history from the patient or other source,
the record should describe the patient's condition or other circumstance
which precludes obtaining a history.

Definitions and specific documentation guidelines for each of the elements of history are listed
below.

CHIEF COMPLAINT (CC)

The CC is a concise statement describing the symptom, problem, condition, diagnosis, physician
recommended return, or other factor that is the reason for the encounter.

!DG: The medical record should clearly reflect the chief complaint.

5 3/4/99 1:36pm
HISTORY OF PRESENT ILLNESS (HPI)

The HPI is a chronological description of the development of the patient's present illness from
the first sign and/or symptom or from the previous encounter to the present. It includes the
following elements:

• location,
• quality,
• severity,
• duration,
• timing,
• context,
• modifying factors, and
• associated signs and symptoms.

Brief and extended HPIs are distinguished by the amount of detail needed to accurately
characterize the clinical problem(s).

A brief HPI consists of one to three elements of the HPI.

!DG: The medical record should describe one to three elements of the present
illness (HPI).

An extended HPI consists of four or more elements of the HPI.

!DG: The medical record should describe four or more elements of the present
illness (HPI) or associated comorbidities.

6 3/4/99 1:36pm
REVIEW OF SYSTEMS (ROS)

A ROS is an inventory of body systems obtained through a series of questions seeking to identify
signs and/or symptoms which the patient may be experiencing or has experienced.

For purposes of ROS, the following systems are recognized:

• Constitutional symptoms (e.g., fever, weight loss)

• Eyes
• Ears, Nose, Mouth, Throat
• Cardiovascular
• Respiratory
• Gastrointestinal
• Genitourinary
• Musculoskeletal
• Integumentary (skin and/or breast)
• Neurological
• Psychiatric
• Endocrine
• Hematologic/Lymphatic
• Allergic/Immunologic

A problem pertinent ROS inquires about the system directly related to the problem(s) identified
in the HPI.

!DG: The patient's positive responses and pertinent negatives for the system
related to the problem should be documented.

An extended ROS inquires about the system directly related to the problem(s) identified in the
HPI and a limited number of additional systems.

!DG: The patient's positive responses and pertinent negatives for two to nine
systems should be documented.

A complete ROS inquires about the system(s) directly related to the problem(s) identified in the
HPI plus all additional body systems.

!DG: At least ten organ systems must be reviewed. Those systems with positive or
pertinent negative responses must be individually documented. For the
remaining systems, a notation indicating all other systems are negative is
permissible. In the absence of such a notation, at least ten systems must be
individually documented.

7 3/4/99 1:36pm
PAST, FAMILY AND/OR SOCIAL HISTORY (PFSH)

The PFSH consists of a review of three areas:

• past history (the patient's past experiences with illnesses, operations, injuries and
treatments);

• family history (a review of medical events in the patient's family, including diseases
which may be hereditary or place the patient at risk); and

• social history (an age appropriate review of past and current activities).

For the categories of subsequent hospital care, follow-up inpatient consultations and subsequent
nursing facility care, CPT requires only an "interval" history. It is not necessary to record
information about the PFSH.

A pertinent PFSH is a review of the history area(s) directly related to the problem(s)
identified in the HPI.

!DG: At least one specific item from any of the three history areas must be
documented for a pertinent PFSH .

A complete PFSH is of a review of two or all three of the PFSH history areas, depending on the
category of the E/M service. A review of all three history areas is required for services that by
their nature include a comprehensive assessment or reassessment of the patient. A review of two
of the three history areas is sufficient for other services.

!DG At least one specific item from two of the three history areas must be
documented for a complete PFSH for the following categories of E/M
services: office or other outpatient services, established patient; emergency
department; subsequent nursing facility care; domiciliary care, established
patient; and home care, established patient.

!DG: At least one specific item from each of the three history areas must be
documented for a complete PFSH for the following categories of E/M
services: office or other outpatient services, new patient; hospital
observation services; hospital inpatient services, initial care; consultations;
comprehensive nursing facility assessments; domiciliary care, new patient;
and home care, new patient.

8 3/4/99 1:36pm
B. DOCUMENTATION OF EXAMINATION

The levels of E/M services are based on four types of examination that are defined as follows:

• Problem Focused -- a limited examination of the affected body area or organ system.
• Expanded Problem Focused -- a limited examination of the affected body area or organ
system and other symptomatic or related organ system(s).
• Detailed -- an extended examination of the affected body area(s) and other symptomatic
or related organ system(s).
• Comprehensive -- a general multi-system examination or complete examination of a
single organ system.

For purposes of examination, the following body areas are recognized:

• Head, including the face

• Neck
• Chest, including breasts and axillae
• Abdomen
• Genitalia, groin, buttocks
• Back, including spine
• Each extremity

For purposes of examination, the following organ systems are recognized:

• Constitutional (e.g., vital signs, general appearance)

• Eyes
• Ears, nose, mouth and throat
• Cardiovascular
• Respiratory
• Gastrointestinal
• Genitourinary
• Musculoskeletal
• Skin
• Neurologic
• Psychiatric
• Hematologic/lymphatic/immunologic

9 3/4/99 1:36pm
The extent of examinations performed and documented is dependent upon clinical judgement and
the nature of the presenting problem(s). They range from limited examinations of single body
areas to general multi-system or complete single organ system examinations.

!DG: Specific abnormal and relevant negative findings of the examination of the
affected or symptomatic body area(s) or organ system(s) should be
documented. A notation of "abnormal" without elaboration is insufficient.

!DG: Abnormal or unexpected findings of the examination of the unaffected or

asymptomatic body area(s) or organ system(s) should be described.

!DG: A brief statement or notation indicating "negative" or "normal" is sufficient

to document normal findings related to unaffected area(s) or asymptomatic
organ system(s).

!DG: The medical record for a general multi-system examination should include
findings about 8 or more of the 12 organ systems.

C. DOCUMENTATION OF THE COMPLEXITY OF MEDICAL DECISION

MAKING

The levels of E/M services recognize four types of medical decision making (straight-forward,
low complexity, moderate complexity and high complexity). Medical decision making refers to
the complexity of establishing a diagnosis and/or selecting a management option as measured by:

• the number of possible diagnoses and/or the number of management options that must
be considered;

• the amount and/or complexity of medical records, diagnostic tests, and/or other
information that must be obtained, reviewed and analyzed; and

• the risk of significant complications, morbidity and/or mortality, as well as

comorbidities, associated with the patient's presenting problem(s), the diagnostic
procedure(s) and/or the possible management options.

10 3/4/99 1:36pm
 The chart below shows the progression of the elements required for each level of medical
decision making. To qualify for a given type of decision making, two of the three elements in
the table must be either met or exceeded.

Number of diagnoses or Amount and/or Risk of complications Type of decision

management options complexity of data to be and/or morbidity or making
reviewed mortality
Minimal Minimal or None Minimal Straightforward
Limited Limited Low Low Complexity
Multiple Moderate Moderate Moderate Complexity
Extensive Extensive High High Complexity

Each of the elements of medical decision making is described below.

NUMBER OF DIAGNOSES OR MANAGEMENT OPTIONS

The number of possible diagnoses and/or the number of management options that must be
considered is based on the number and types of problems addressed during the encounter, the
complexity of establishing a diagnosis and the management decisions that are made by the
physician.

Generally, decision making with respect to a diagnosed problem is easier than that for an
identified but undiagnosed problem. The number and type of diagnostic tests employed may be
an indicator of the number of possible diagnoses. Problems which are improving or resolving
are less complex than those which are worsening or failing to change as expected. The need to
seek advice from others is another indicator of complexity of diagnostic or management
problems.

!DG: For each encounter, an assessment, clinical impression, or diagnosis should

be documented. It may be explicitly stated or implied in documented decisions
regarding management plans and/or further evaluation.

• For a presenting problem with an established diagnosis the record

should reflect whether the problem is: a) improved, well controlled,
resolving or resolved; or, b) inadequately controlled, worsening, or
failing to change as expected.

• For a presenting problem without an established diagnosis, the

assessment or clinical impression may be stated in the form of a
differential diagnoses or as "possible", "probable", or "rule out"
(R/O) diagnoses.

11 3/4/99 1:36pm
 !DG: The initiation of, or changes in, treatment should be documented. Treatment
includes a wide range of management options including patient instructions,
nursing instructions, therapies, and medications.

!DG: If referrals are made, consultations requested or advice sought, the record
should indicate to whom or where the referral or consultation is made or
from whom the advice is requested.

AMOUNT AND/OR COMPLEXITY OF DATA TO BE REVIEWED

The amount and complexity of data to be reviewed is based on the types of diagnostic testing
ordered or reviewed. A decision to obtain and review old medical records and/or obtain history
from sources other than the patient increases the amount and complexity of data to be reviewed.

Discussion of contradictory or unexpected test results with the physician who performed or
interpreted the test is an indication of the complexity of data being reviewed. On occasion the
physician who ordered a test may personally review the image, tracing or specimen to
supplement information from the physician who prepared the test report or interpretation; this is
another indication of the complexity of data being reviewed.

!DG: If a diagnostic service (test or procedure) is ordered, planned, scheduled, or

performed at the time of the E/M encounter, the type of service, eg, lab or x-
ray, should be documented.

!DG: The review of lab, radiology and/or other diagnostic tests should be
documented. An entry in a progress note such as "WBC elevated" or "chest
x-ray unremarkable" is acceptable. Alternatively, the review may be
documented by initialing and dating the report containing the test results.

!DG: A decision to obtain old records or decision to obtain additional history from
the family, caretaker or other source to supplement that obtained from the
patient should be documented.

!DG: Relevant finding from the review of old records, and/or the receipt of
additional history from the family, caretaker or other source should be
documented. If there is no relevant information beyond that already obtained,
that fact should be documented. A notation of "Old records reviewed" or
"additional history obtained from family" without elaboration is insufficient.

12 3/4/99 1:36pm
 !DG: The results of discussion of laboratory, radiology or other diagnostic tests
with the physician who performed or interpreted the study should be
documented.

!DG: The direct visualization and independent interpretation of an image, tracing

or specimen previously or subsequently interpreted by another physician
should be documented.

RISK OF SIGNIFICANT COMPLICATIONS, MORBIDITY, AND/OR MORTALITY

The risk of significant complications, morbidity, and/or mortality is based on the risks associated
with the presenting problem(s), the diagnostic procedure(s), and the possible management
options.

!DG: Comorbidities/underlying diseases or other factors that increase the

complexity of medical decision making by increasing the risk of
complications, morbidity, and/or mortality should be documented.

!DG: If a surgical or invasive diagnostic procedure is ordered, planned or

scheduled at the time of the E/M encounter, the type of procedure, eg,
laparoscopy, should be documented.

!DG: If a surgical or invasive diagnostic procedure is performed at the time of the

E/M encounter, the specific procedure should be documented.

!DG: The referral for or decision to perform a surgical or invasive diagnostic

procedure on an urgent basis should be documented or implied.

The following table may be used to help determine whether the risk of significant complications,
morbidity, and/or mortality is minimal, low, moderate, or high. Because the determination of
risk is complex and not readily quantifiable, the table includes common clinical examples rather
than absolute measures of risk. The assessment of risk of the presenting problem(s) is based on
the risk related to the disease process anticipated between the present encounter and the next one.
The assessment of risk of selecting diagnostic procedures and management options is based on
the risk during and immediately following any procedures or treatment. The highest level of risk
in any one category (presenting problem(s), diagnostic procedure(s), or management options)
determines the overall risk.

13 3/4/99 1:36pm
 TABLE OF RISK
Level of Presenting Problem(s)
Risk
! One self-limited or minor
problem, eg cold, insect bite,
tinea corporis
Minimal
! Two or more self-limited or
minor problems
! One stable chronic illness, eg
well controlled hypertension
or non-insulin dependent
Low
diabetes, cataract, BPH
! Acute uncomplicated illness
or injury, eg, cystitis, allergic
rhinitis, simple sprain
! One or more chronic
illnesses with mild
exacerbation, progression, or
side effects of treatment
! Two or more stable chronic
illnesses
! Undiagnosed new problem
with uncertain prognosis, eg,
Moderate
lump in breast
! Acute illness with systemic
symptoms, eg,
pyelonephritis, pneumonitis,
colitis
! Acute complicated injury, eg
head injury with brief loss of
consciousness
! One or more chronic
illnesses with severe
exacerbation, progression, or
side effects of treatment
! Acute or chronic illnesses or
injuries that pose a threat to
life or bodily function, eg
multiple trauma, acute MI,
pulmonary embolus, severe
respiratory distress,
High
progressive severe
rheumatoid arthritis,
psychiatric illness with
potential threat to self or
others, peritonitis, acute renal
failure
! An abrupt change in
neurologic status, eg seizure,
TIA, weakness, or sensory
loss
Diagnostic Procedure(s)
Ordered
! Laboratory tests requiring
venipuncture
! Chest x-rays
! EKG/EEG
! Urinalysis
! Ultrasound, eg,
echocardiography
! KOH prep
! Physiologic tests not under
stress, eg, pulmonary
function tests
! Non-cardiovascular imaging
studies with contrast, eg,
barium enema
! Superficial needle biopsies
! Clinical laboratory tests
requiring arterial puncture
! Skin biopsies
! Physiologic tests under
stress, eg, cardiac stress test,
fetal contraction stress test
! Diagnostic endoscopies with
no identified risk factors
! Deep needle or incisional
biopsy
! Cardiovascular imaging
studies with contrast and no
identified risk factors, eg
arteriogram, cardiac
catheterization
! Obtain fluid from body
cavity, eg lumbar puncture,
thoracentesis, culdocentesis
! Cardiovascular imaging
studies with contrast with
identified risk factors
! Cardiac electrophysiological
tests
! Diagnostic Endoscopies with
identified risk factors
! Discography
14
Management Options
Selected
! Rest
! Gargles
! Elastic bandages
! Superficial dressings
! Over-the-counter drugs
! Minor surgery with no
identified risk factors
! Physical therapy
! Occupational therapy
! IV fluids without additives
! Minor surgery with identified
risk factors
! Elective major surgery (open,
percutaneous or endoscopic)
with no identified risk factors
! Prescription drug management
! Therapeutic nuclear medicine
! IV fluids with additives
! Closed treatment of fracture or
dislocation without
manipulation
! Elective major surgery (open,
percutaneous or endoscopic)
with identified risk factors
! Emergency major surgery
(open, percutaneous or
endoscopic)
! Parenteral controlled
substances
! Drug therapy requiring
intensive monitoring for
toxicity
! Decision not to resuscitate or to
de-escalate care because of
poor prognosis
3/4/99 1:36pm
D. DOCUMENTATION OF AN ENCOUNTER DOMINATED BY COUNSELING OR
COORDINATION OF CARE

In the case where counseling and/or coordination of care dominates (more than 50%) of the
physician/patient and/or family encounter (face-to-face time in the office or other outpatient setting or
floor/unit time in the hospital or nursing facility), time is considered the key or controlling factor to
qualify for a particular level of E/M services.

!DG: If the physician elects to report the level of service based on counseling
and/or coordination of care, the total length of time of the encounter (face-to-face or
floor time, as appropriate) should be documented and the record should describe
the counseling and/or activities to coordinate care.

15 3/4/99 1:36pm
 1997 Documentation
Guidelines for Evaluation
and Management Services
 TABLE OF CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What Is Documentation and Why Is it Important? . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What Do Payers Want and Why? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

General Principles of Medical Record Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Documentation of E/M Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Documentation of History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Chief Complaint (CC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
History of Present Illness (HPI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Review of Systems (ROS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Past, Family and/or Social History (PFSH) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Documentation of Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
General Multi-System Examinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Single Organ System Examinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Content and Documentation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
General Multi-System Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Cardiovascular Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Ear, Nose and Throat Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Eye Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Genitourinary Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Hematologic/Lymphatic/Immunologic Examination . . . . . . . . . . . . . . . . . . 29
Musculoskeletal Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Neurological Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Psychiatric Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Respiratory Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Skin Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Documentation of the Complexity of Medical Decision Making . . . . . . . . . . . . . . . . . . . . . 43

Number of Diagnoses or Management Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Amount and/or Complexity of Data to Be Reviewed . . . . . . . . . . . . . . . . . . . . . . . . 45
Risk of Significant Complications, Morbidity, and/or Mortality . . . . . . . . . . . . . . . 46
Table of Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Documentation of an Encounter Dominated by Counseling or Coordination of Care . . . . 48

1
 1997 DOCUMENTATION GUIDELINES
FOR EVALUATION AND MANAGEMENT SERVICES

I. INTRODUCTION

WHAT IS DOCUMENTATION AND WHY IS IT IMPORTANT?

Medical record documentation is required to record pertinent facts, findings, and

observations about an individual's health history including past and present
illnesses, examinations, tests, treatments, and outcomes. The medical record
chronologically documents the care of the patient and is an important element
contributing to high quality care. The medical record facilitates:

• the ability of the physician and other health care professionals to evaluate
and plan the patient's immediate treatment, and to monitor his/her health
care over time.

• communication and continuity of care among physicians and other health

care professionals involved in the patient's care;

• accurate and timely claims review and payment;

• appropriate utilization review and quality of care evaluations; and

• collection of data that may be useful for research and education.

An appropriately documented medical record can reduce many of the "hassles"

associated with claims processing and may serve as a legal document to verify the
care provided, if necessary.

WHAT DO PAYERS WANT AND WHY?

Because payers have a contractual obligation to enrollees, they may require

reasonable documentation that services are consistent with the insurance coverage
provided. They may request information to validate:

• the site of service;

• the medical necessity and appropriateness of the diagnostic and/or

therapeutic services provided; and/or

• that services provided have been accurately reported.

2
II. GENERAL PRINCIPLES OF MEDICAL RECORD DOCUMENTATION

The principles of documentation listed below are applicable to all types of medical
and surgical services in all settings. For Evaluation and Management (E/M)
services, the nature and amount of physician work and documentation varies by
type of service, place of service and the patient's status. The general principles listed
below may be modified to account for these variable circumstances in providing
E/M services.

1. The medical record should be complete and legible.

2. The documentation of each patient encounter should include:

• reason for the encounter and relevant history, physical examination

findings and prior diagnostic test results;

• assessment, clinical impression or diagnosis;

• plan for care; and

• date and legible identity of the observer.

3. If not documented, the rationale for ordering diagnostic and other ancillary
services should be easily inferred.

4. Past and present diagnoses should be accessible to the treating and/or

consulting physician.

5. Appropriate health risk factors should be identified.

6. The patient's progress, response to and changes in treatment, and revision of

diagnosis should be documented.

7. The CPT and ICD-9-CM codes reported on the health insurance claim form
or billing statement should be supported by the documentation in the
medical record.

3
III. DOCUMENTATION OF E/M SERVICES

This publication provides definitions and documentation guidelines for the three key
components of E/M services and for visits which consist predominately of counseling
or coordination of care. The three key components--history, examination, and
medical decision making--appear in the descriptors for office and other outpatient
services, hospital observation services, hospital inpatient services, consultations,
emergency department services, nursing facility services, domiciliary care services,
and home services. While some of the text of CPT has been repeated in this
publication, the reader should refer to CPT for the complete descriptors for E/M
services and instructions for selecting a level of service. Documentation guidelines
are identified by the symbol •DG.

The descriptors for the levels of E/M services recognize seven components which are
used in defining the levels of E/M services. These components are:

• history;
• examination;
• medical decision making;
• counseling;
• coordination of care;
• nature of presenting problem; and
• time.

The first three of these components (i.e., history, examination and medical decision
making) are the key components in selecting the level of E/M services. In the case of
visits which consist predominantly of counseling or coordination of care, time is the
key or controlling factor to qualify for a particular level of E/M service.

Because the level of E/M service is dependent on two or three key components,
performance and documentation of one component (eg, examination) at the highest
level does not necessarily mean that the encounter in its entirety qualifies for the
highest level of E/M service.

These Documentation Guidelines for E/M services reflect the needs of the typical
adult population. For certain groups of patients, the recorded information may
vary slightly from that described here. Specifically, the medical records of infants,
children, adolescents and pregnant women may have additional or modified
information recorded in each history and examination area.

As an example, newborn records may include under history of the present illness
(HPI) the details of mother's pregnancy and the infant's status at birth; social
history will focus on family structure; family history will focus on congenital

4
 anomalies and hereditary disorders in the family. In addition, the content of a
pediatric examination will vary with the age and development of the child.
Although not specifically defined in these documentation guidelines, these patient
group variations on history and examination are appropriate.

A. DOCUMENTATION OF HISTORY

The levels of E/M services are based on four types of history (Problem Focused,
Expanded Problem Focused, Detailed, and Comprehensive). Each type of history
includes some or all of the following elements:

• Chief complaint (CC);

• History of present illness (HPI);

• Review of systems (ROS); and

• Past, family and/or social history (PFSH).

The extent of history of present illness, review of systems and past, family and/or
social history that is obtained and documented is dependent upon clinical
judgement and the nature of the presenting problem(s).

The chart below shows the progression of the elements required for each type of
history. To qualify for a given type of history all three elements in the table must be
met. (A chief complaint is indicated at all levels.)

History of Present Review of Systems Past, Family, and/or Type of History

Illness (HPI) (ROS) Social History
(PFSH)
Brief N/A N/A Problem Focused
Expanded Problem
Brief Problem Pertinent N/A Focused

Extended Extended Pertinent Detailed

Extended Complete Complete Comprehensive

5
 !DG: The CC, ROS and PFSH may be listed as separate elements of history,
or they may be included in the description of the history of the present
illness.

!DG: A ROS and/or a PFSH obtained during an earlier encounter does not
need to be re-recorded if there is evidence that the physician reviewed
and updated the previous information. This may occur when a
physician updates his or her own record or in an institutional setting or
group practice where many physicians use a common record. The
review and update may be documented by:

• describing any new ROS and/or PFSH information or noting

there has been no change in the information; and

• noting the date and location of the earlier ROS and/or PFSH.

!DG: The ROS and/or PFSH may be recorded by ancillary staff or on a form
completed by the patient. To document that the physician reviewed the
information, there must be a notation supplementing or confirming the
information recorded by others.

!DG: If the physician is unable to obtain a history from the patient or other
source, the record should describe the patient's condition or other
circumstance which precludes obtaining a history.

Definitions and specific documentation guidelines for each of the elements of history
are listed below.

CHIEF COMPLAINT (CC)

The CC is a concise statement describing the symptom, problem, condition,

diagnosis, physician recommended return, or other factor that is the reason for the
encounter, usually stated in the patient's words.

!DG: The medical record should clearly reflect the chief complaint.

6
HISTORY OF PRESENT ILLNESS (HPI)

The HPI is a chronological description of the development of the patient's present

illness from the first sign and/or symptom or from the previous encounter to the
present. It includes the following elements:

• location,
• quality,
• severity,
• duration,
• timing,
• context,
• modifying factors, and
• associated signs and symptoms.

Brief and extended HPIs are distinguished by the amount of detail needed to
accurately characterize the clinical problem(s).

A brief HPI consists of one to three elements of the HPI.

!DG: The medical record should describe one to three elements of the present
illness (HPI).

An extended HPI consists of at least four elements of the HPI or the status of at least
three chronic or inactive conditions.

!DG: The medical record should describe at least four elements of the present
illness (HPI), or the status of at least three chronic or inactive
conditions.

7
REVIEW OF SYSTEMS (ROS)

A ROS is an inventory of body systems obtained through a series of questions

seeking to identify signs and/or symptoms which the patient may be experiencing or
has experienced.

For purposes of ROS, the following systems are recognized:

• Constitutional symptoms (e.g., fever, weight loss)

• Eyes
• Ears, Nose, Mouth, Throat
• Cardiovascular
• Respiratory
• Gastrointestinal
• Genitourinary
• Musculoskeletal
• Integumentary (skin and/or breast)
• Neurological
• Psychiatric
• Endocrine
• Hematologic/Lymphatic
• Allergic/Immunologic

A problem pertinent ROS inquires about the system directly related to the
problem(s) identified in the HPI.

!DG: The patient's positive responses and pertinent negatives for the system
related to the problem should be documented.

An extended ROS inquires about the system directly related to the problem(s)
identified in the HPI and a limited number of additional systems.

!DG: The patient's positive responses and pertinent negatives for two to nine
systems should be documented.

A complete ROS inquires about the system(s) directly related to the problem(s)
identified in the HPI plus all additional body systems.

!DG: At least ten organ systems must be reviewed. Those systems with
positive or pertinent negative responses must be individually
documented. For the remaining systems, a notation indicating all other
systems are negative is permissible. In the absence of such a notation,
at least ten systems must be individually documented.

8
PAST, FAMILY AND/OR SOCIAL HISTORY (PFSH)

The PFSH consists of a review of three areas:

• past history (the patient's past experiences with illnesses, operations, injuries
and treatments);

• family history (a review of medical events in the patient's family, including

diseases which may be hereditary or place the patient at risk); and

• social history (an age appropriate review of past and current activities).

For certain categories of E/M services that include only an interval history, it is not
necessary to record information about the PFSH. Those categories are subsequent
hospital care, follow-up inpatient consultations and subsequent nursing facility care.

A pertinent PFSH is a review of the history area(s) directly related to the

problem(s) identified in the HPI.

!DG: At least one specific item from any of the three history areas must be
documented for a pertinent PFSH .

A complete PFSH is of a review of two or all three of the PFSH history areas,
depending on the category of the E/M service. A review of all three history areas is
required for services that by their nature include a comprehensive assessment or
reassessment of the patient. A review of two of the three history areas is sufficient
for other services.

!DG: At least one specific item from two of the three history areas must be
documented for a complete PFSH for the following categories of E/M
services: office or other outpatient services, established patient;
emergency department; domiciliary care, established patient; and home
care, established patient.

!DG: At least one specific item from each of the three history areas must be
documented for a complete PFSH for the following categories of E/M
services: office or other outpatient services, new patient; hospital
observation services; hospital inpatient services, initial care;
consultations; comprehensive nursing facility assessments; domiciliary
care, new patient; and home care, new patient.

9
B. DOCUMENTATION OF EXAMINATION

The levels of E/M services are based on four types of examination:

• Problem Focused -- a limited examination of the affected body area or organ

system.

• Expanded Problem Focused -- a limited examination of the affected body area

or organ system and any ther symptomatic or related body area(s) or organ
system(s).

• Detailed -- an extended examination of the affected body area(s) or organ

system(s) and any other symptomatic or related body area(s) or organ
system(s).

• Comprehensive -- a general multi-system examination, or complete

examination of a single organ system and other symptomatic or related body
area(s) or organ system(s).

These types of examinations have been defined for general multi-system and the
following single organ systems:

• Cardiovascular
• Ears, Nose, Mouth and Throat
• Eyes
• Genitourinary (Female)
• Genitourinary (Male)
• Hematologic/Lymphatic/Immunologic
• Musculoskeletal
• Neurological
• Psychiatric
• Respiratory
• Skin

A general multi-system examination or a single organ system examination may be

performed by any physician regardless of specialty. The type (general multi-system
or single organ system) and content of examination are selected by the examining
physician and are based upon clinical judgement, the patient’s history, and the
nature of the presenting problem(s).

10
The content and documentation requirements for each type and level of examination
are summarized below and described in detail in tables beginning on page 13. In
the tables, organ systems and body areas recognized by CPT for purposes of
describing examinations are shown in the left column. The content, or individual
elements, of the examination pertaining to that body area or organ system are
identified by bullets (•) in the right column.

Parenthetical examples, “(eg, ...)”, have been used for clarification and to provide
guidance regarding documentation. Documentation for each element must satisfy
any numeric requirements (such as “Measurement of any three of the following
seven...”) included in the description of the element. Elements with multiple
components but with no specific numeric requirement (such as “Examination of
liver and spleen”) require documentation of at least one component. It is possible
for a given examination to be expanded beyond what is defined here. When that
occurs, findings related to the additional systems and/or areas should be
documented.

!DG: Specific abnormal and relevant negative findings of the examination of

the affected or symptomatic body area(s) or organ system(s) should be
documented. A notation of "abnormal" without elaboration is
insufficient.
!DG: Abnormal or unexpected findings of the examination of any
asymptomatic body area(s) or organ system(s) should be described.

!DG: A brief statement or notation indicating "negative" or "normal" is

sufficient to document normal findings related to unaffected area(s) or
asymptomatic organ system(s).

GENERAL MULTI-SYSTEM EXAMINATIONS

General multi-system examinations are described in detail beginning on page 13. To

qualify for a given level of multi-system examination, the following content and
documentation requirements should be met:

• Problem Focused Examination-should include performance and

documentation of one to five elements identified by a bullet (•) in one or more
organ system(s) or body area(s).

• Expanded Problem Focused Examination-should include performance and

documentation of at least six elements identified by a bullet (•) in one or more
organ system(s) or body area(s).

11
• Detailed Examination--should include at least six organ systems or body
areas. For each system/area selected, performance and documentation of at
least two elements identified by a bullet (•) is expected. Alternatively, a
detailed examination may include performance and documentation of at least
twelve elements identified by a bullet (•) in two or more organ systems or
body areas.

• Comprehensive Examination--should include at least nine organ systems or

body areas. For each system/area selected, all elements of the examination
identified by a bullet (•) should be performed, unless specific directions limit
the content of the examination. For each area/system, documentation of at
least two elements identified by a bullet is expected.

SINGLE ORGAN SYSTEM EXAMINATIONS

The single organ system examinations recognized by CPT are described in detail
beginning on page 18. Variations among these examinations in the organ systems
and body areas identified in the left columns and in the elements of the
examinations described in the right columns reflect differing emphases among
specialties. To qualify for a given level of single organ system examination, the
following content and documentation requirements should be met:

• Problem Focused Examination--should include performance and

documentation of one to five elements identified by a bullet (•), whether in a
box with a shaded or unshaded border.

• Expanded Problem Focused Examination--should include performance and

documentation of at least six elements identified by a bullet (•), whether in a
box with a shaded or unshaded border.

• Detailed Examination--examinations other than the eye and psychiatric

examinations should include performance and documentation of at least
twelve elements identified by a bullet (•), whether in box with a shaded or
unshaded border.

Eye and psychiatric examinations should include the

performance and documentation of at least nine elements
identified by a bullet (•), whether in a box with a shaded or
unshaded border.

• Comprehensive Examination--should include performance of all elements

identified by a bullet (•), whether in a shaded or unshaded box.
Documentation of every element in each box with a shaded border and at

12
least one element in each box with an unshaded border is expected.

13
CONTENT AND DOCUMENTATION REQUIREMENTS

General Multi-System Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration, 5)
temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Eyes C Inspection of conjunctivae and lids

C Examination of pupils and irises (eg, reaction to light and accommodation, size and
symmetry)

C Ophthalmoscopic examination of optic discs (eg, size, C/D ratio, appearance) and
posterior segments (eg, vessel changes, exudates, hemorrhages)

Ears, Nose, C External inspection of ears and nose (eg, overall appearance, scars, lesions, masses)
Mouth and
Throat C Otoscopic examination of external auditory canals and tympanic membranes

C Assessment of hearing (eg, whispered voice, finger rub, tuning fork)

C Inspection of nasal mucosa, septum and turbinates

C Inspection of lips, teeth and gums

C Examination of oropharynx: oral mucosa, salivary glands, hard and soft palates, tongue,
tonsils and posterior pharynx

Neck C Examination of neck (eg, masses, overall appearance, symmetry, tracheal position,
crepitus)

C Examination of thyroid (eg, enlargement, tenderness, mass)

General Multi-System Pg 1 of 5 14
 System/Body Elements of Examination
Area

Respiratory C Assessment of respiratory effort (eg, intercostal retractions, use of accessory muscles,
diaphragmatic movement)

C Percussion of chest (eg, dullness, flatness, hyperresonance)

C Palpation of chest (eg, tactile fremitus)

C Auscultation of lungs (eg, breath sounds, adventitious sounds, rubs)

Cardiovascular C Palpation of heart (eg, location, size, thrills)

C Auscultation of heart with notation of abnormal sounds and murmurs

Examination of:

• carotid arteries (eg, pulse amplitude, bruits)

• abdominal aorta (eg, size, bruits)

• femoral arteries (eg, pulse amplitude, bruits)

• pedal pulses (eg, pulse amplitude)

• extremities for edema and/or varicosities

Chest (Breasts) C Inspection of breasts (eg, symmetry, nipple discharge)

C Palpation of breasts and axillae (eg, masses or lumps, tenderness)

Gastrointestinal C Examination of abdomen with notation of presence of masses or tenderness

(Abdomen)
C Examination of liver and spleen

C Examination for presence or absence of hernia

C Examination (when indicated) of anus, perineum and rectum, including sphincter tone,
presence of hemorrhoids, rectal masses

C Obtain stool sample for occult blood test when indicated

General Multi-System Pg 2 of 5 15
 System/Body Elements of Examination
Area

Genitourinary MALE:

C Examination of the scrotal contents (eg, hydrocele, spermatocele, tenderness of cord,

testicular mass)

C Examination of the penis

C Digital rectal examination of prostate gland (eg, size, symmetry, nodularity, tenderness)

FEMALE:

Pelvic examination (with or without specimen collection for smears and cultures), including

• Examination of external genitalia (eg, general appearance, hair distribution, lesions) and
vagina (eg, general appearance, estrogen effect, discharge, lesions, pelvic support,
cystocele, rectocele)

• Examination of urethra (eg, masses, tenderness, scarring)

• Examination of bladder (eg, fullness, masses, tenderness)

• Cervix (eg, general appearance, lesions, discharge)

C Uterus (eg, size, contour, position, mobility, tenderness, consistency, descent or support)

C Adnexa/parametria (eg, masses, tenderness, organomegaly, nodularity)

Lymphatic Palpation of lymph nodes in two or more areas:

C Neck

C Axillae

C Groin

C Other

General Multi-System Pg 3 of 5 16
 System/Body Elements of Examination
Area

Musculoskeletal C Examination of gait and station

C Inspection and/or palpation of digits and nails (eg, clubbing, cyanosis, inflammatory
conditions, petechiae, ischemia, infections, nodes)

Examination of joints, bones and muscles of one or more of the following six areas: 1) head
and neck; 2) spine, ribs and pelvis; 3) right upper extremity; 4) left upper extremity; 5) right
lower extremity; and 6) left lower extremity. The examination of a given area includes:

• Inspection and/or palpation with notation of presence of any misalignment, asymmetry,

crepitation, defects, tenderness, masses, effusions

• Assessment of range of motion with notation of any pain, crepitation or contracture

• Assessment of stability with notation of any dislocation (luxation), subluxation or laxity

• Assessment of muscle strength and tone (eg, flaccid, cog wheel, spastic) with notation of
any atrophy or abnormal movements

Skin C Inspection of skin and subcutaneous tissue (eg, rashes, lesions, ulcers)

C Palpation of skin and subcutaneous tissue (eg, induration, subcutaneous nodules,

tightening)

Neurologic C Test cranial nerves with notation of any deficits

C Examination of deep tendon reflexes with notation of pathological reflexes (eg, Babinski)

C Examination of sensation (eg, by touch, pin, vibration, proprioception)

Psychiatric C Description of patient’s judgment and insight

Brief assessment of mental status including:

• orientation to time, place and person

• recent and remote memory

• mood and affect (eg, depression, anxiety, agitation)

General Multi-System Pg 4 of 5 17
 Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least two elements identified by a bullet from each of six areas/systems
OR at least twelve elements identified by a bullet in two or more
areas/systems.

Comprehensive Perform all elements identified by a bullet in at least nine organ systems or
body areas and document at least two elements identified by a bullet from each
of nine areas/systems.

General Multi-System Pg 5 of 5 18
 Cardiovascular Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Head and Face

Eyes C Inspection of conjunctivae and lids (eg, xanthelasma)

Ears, Nose, C Inspection of teeth, gums and palate

Mouth and
Throat C Inspection of oral mucosa with notation of presence of pallor or cyanosis

Neck C Examination of jugular veins (eg, distension; a, v or cannon a waves)

C Examination of thyroid (eg, enlargement, tenderness, mass)

Respiratory C Assessment of respiratory effort (eg, intercostal retractions, use of accessory muscles,
diaphragmatic movement)

C Auscultation of lungs (eg, breath sounds, adventitious sounds, rubs)

Cardiovascular C Palpation of heart (eg, location, size and forcefulness of the point of maximal impact;
thrills; lifts; palpable S3 or S4)

C Auscultation of heart including sounds, abnormal sounds and murmurs

C Measurement of blood pressure in two or more extremities when indicated (eg, aortic
dissection, coarctation)

Examination of:

• Carotid arteries (eg, waveform, pulse amplitude, bruits, apical-carotid delay)

• Abdominal aorta (eg, size, bruits)

• Femoral arteries (eg, pulse amplitude, bruits)

• Pedal pulses (eg, pulse amplitude)

• Extremities for peripheral edema and/or varicosities

Cardiovascular Pg 1 of 2 19
 System/Body Elements of Examination
Area

Chest (Breasts)

Gastrointestinal C Examination of abdomen with notation of presence of masses or tenderness

(Abdomen)
C Examination of liver and spleen

C Obtain stool sample for occult blood from patients who are being considered for
thrombolytic or anticoagulant therapy

Genitourinary
(Abdomen)

Lymphatic

Musculoskeletal C Examination of the back with notation of kyphosis or scoliosis

C Examination of gait with notation of ability to undergo exercise testing and/or participation
in exercise programs

C Assessment of muscle strength and tone (eg, flaccid, cog wheel, spastic) with notation of
any atrophy and abnormal movements

Extremities C Inspection and palpation of digits and nails (eg, clubbing, cyanosis, inflammation,
petechiae, ischemia, infections, Osler’s nodes)

Skin C Inspection and/or palpation of skin and subcutaneous tissue (eg, stasis dermatitis, ulcers,
scars, xanthomas)

Neurological/ Brief assessment of mental status including

Psychiatric
• Orientation to time, place and person,

• Mood and affect (eg, depression, anxiety, agitation)

Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least twelve elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Cardiovascular Pg 2 of 2 20
Cardiovascular Pg 3 of 2 21
 Ear, Nose and Throat Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

C Assessment of ability to communicate (eg, use of sign language or other communication

aids) and quality of voice

Head and Face C Inspection of head and face (eg, overall appearance, scars, lesions and masses)

C Palpation and/or percussion of face with notation of presence or absence of sinus tenderness

C Examination of salivary glands

C Assessment of facial strength

Eyes C Test ocular motility including primary gaze alignment

Ears, Nose, C Otoscopic examination of external auditory canals and tympanic membranes including
Mouth pneumo-otoscopy with notation of mobility of membranes
and Throat
C Assessment of hearing with tuning forks and clinical speech reception thresholds (eg,
whispered voice, finger rub)

C External inspection of ears and nose (eg, overall appearance, scars, lesions and masses)

C Inspection of nasal mucosa, septum and turbinates

C Inspection of lips, teeth and gums

C Examination of oropharynx: oral mucosa, hard and soft palates, tongue, tonsils and posterior
pharynx (eg, asymmetry, lesions, hydration of mucosal surfaces)

C Inspection of pharyngeal walls and pyriform sinuses (eg, pooling of saliva, asymmetry,
lesions)

C Examination by mirror of larynx including the condition of the epiglottis, false vocal cords,
true vocal cords and mobility of larynx (Use of mirror not required in children)

C Examination by mirror of nasopharynx including appearance of the mucosa, adenoids,

posterior choanae and eustachian tubes (Use of mirror not required in children)

Ear, Nose and Throat Pg 1 of 3 22

 System/Body Elements of Examination
Area

Neck C Examination of neck (eg, masses, overall appearance, symmetry, tracheal position, crepitus)

C Examination of thyroid (eg, enlargement, tenderness, mass)

Respiratory C Inspection of chest including symmetry, expansion and/or assessment of respiratory effort
(eg, intercostal retractions, use of accessory muscles, diaphragmatic movement)

C Auscultation of lungs (eg, breath sounds, adventitious sounds, rubs)

Cardiovascular C Auscultation of heart with notation of abnormal sounds and murmurs

C Examination of peripheral vascular system by observation (eg, swelling, varicosities) and

palpation (eg, pulses, temperature, edema, tenderness)

Chest (Breasts)

Gastrointestinal
(Abdomen)

Genitourinary

Lymphatic C Palpation of lymph nodes in neck, axillae, groin and/or other location

Musculoskeletal

Extremities

Skin

Neurological/ C Test cranial nerves with notation of any deficits

Psychiatric
Brief assessment of mental status including

• Orientation to time, place and person,

• Mood and affect (eg, depression, anxiety, agitation)

Ear, Nose and Throat Pg 2 of 3 23

 Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least twelve elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Ear, Nose and Throat Pg 3 of 3 24

 Eye Examination

System/Body Elements of Examination

Area

Constitutional

Head and Face

Eyes C Test visual acuity (Does not include determination of refractive error)

C Gross visual field testing by confrontation

C Test ocular motility including primary gaze alignment

C Inspection of bulbar and palpebral conjunctivae

C Examination of ocular adnexae including lids (eg, ptosis or lagophthalmos), lacrimal glands,
lacrimal drainage, orbits and preauricular lymph nodes

C Examination of pupils and irises including shape, direct and consensual reaction (afferent
pupil), size (eg, anisocoria) and morphology

C Slit lamp examination of the corneas including epithelium, stroma, endothelium, and tear
film

C Slit lamp examination of the anterior chambers including depth, cells, and flare

C Slit lamp examination of the lenses including clarity, anterior and posterior capsule, cortex,
and nucleus

C Measurement of intraocular pressures (except in children and patients with trauma or

infectious disease)

Ophthalmoscopic examination through dilated pupils (unless contraindicated) of

• Optic discs including size, C/D ratio, appearance (eg, atrophy, cupping, tumor elevation)
and nerve fiber layer

• Posterior segments including retina and vessels (eg, exudates and hemorrhages)

Ears, Nose,
Mouth and
Throat

Neck

Respiratory

Eye Pg 1 of 2 25
 System/Body Elements of Examination
Area

Cardiovascular

Chest (Breasts)

Gastrointestinal
(Abdomen)

Genitourinary

Lymphatic

Musculoskeletal

Extremities

Skin

Neurological/ Brief assessment of mental status including

Psychiatric
• Orientation to time, place and person

• Mood and affect (eg, depression, anxiety, agitation)

Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least nine elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Eye Pg 2 of 2 26
 Genitourinary Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Head and Face

Eyes

Ears, Nose,
Mouth and
Throat

Neck C Examination of neck (eg, masses, overall appearance, symmetry, tracheal position, crepitus)

C Examination of thyroid (eg, enlargement, tenderness, mass)

Respiratory C Assessment of respiratory effort (eg, intercostal retractions, use of accessory muscles,
diaphragmatic movement)

C Auscultation of lungs (eg, breath sounds, adventitious sounds, rubs)

Cardiovascular C Auscultation of heart with notation of abnormal sounds and murmurs

C Examination of peripheral vascular system by observation (eg, swelling, varicosities) and

palpation (eg, pulses, temperature, edema, tenderness)

Chest (Breasts) [See genitourinary (female)]

Gastrointestinal C Examination of abdomen with notation of presence of masses or tenderness

(Abdomen)
C Examination for presence or absence of hernia

C Examination of liver and spleen

C Obtain stool sample for occult blood test when indicated

Genitourinary Pg 1 of 4 27
 System/Body Elements of Examination
Area

Genitourinary MALE:

C Inspection of anus and perineum

Examination (with or without specimen collection for smears and cultures) of genitalia
including:

• Scrotum (eg, lesions, cysts, rashes)

• Epididymides (eg, size, symmetry, masses)

C Testes (eg, size, symmetry, masses)

• Urethral meatus (eg, size, location, lesions, discharge)

• Penis (eg, lesions, presence or absence of foreskin, foreskin retractability, plaque, masses,
scarring, deformities)

Digital rectal examination including:

C Prostate gland (eg, size, symmetry, nodularity, tenderness)

• Seminal vesicles (eg, symmetry, tenderness, masses, enlargement)

C Sphincter tone, presence of hemorrhoids, rectal masses

Genitourinary Pg 2 of 4 28
 System/Body Elements of Examination
Area

Genitourinary FEMALE:
(Cont’d)
Includes at least seven of the following eleven elements identified by bullets:

C Inspection and palpation of breasts (eg, masses or lumps, tenderness, symmetry, nipple
discharge)

C Digital rectal examination including sphincter tone, presence of hemorrhoids, rectal masses

Pelvic examination (with or without specimen collection for smears and cultures) including:

• External genitalia (eg, general appearance, hair distribution, lesions)

C Urethral meatus (eg, size, location, lesions, prolapse)

• Urethra (eg, masses, tenderness, scarring)

• Bladder (eg, fullness, masses, tenderness)

• Vagina (eg, general appearance, estrogen effect, discharge, lesions, pelvic support,
cystocele, rectocele)

• Cervix (eg, general appearance, lesions, discharge)

• Uterus (eg, size, contour, position, mobility, tenderness, consistency, descent or support)

• Adnexa/parametria (eg, masses, tenderness, organomegaly, nodularity)

• Anus and perineum

Lymphatic • Palpation of lymph nodes in neck, axillae, groin and/or other location

Musculoskeletal

Extremities

Skin C Inspection and/or palpation of skin and subcutaneous tissue (eg, rashes, lesions, ulcers)

Neurological/ Brief assessment of mental status including

Psychiatric
• Orientation (eg, time, place and person) and

• Mood and affect (eg, depression, anxiety, agitation)

Genitourinary Pg 3 of 4 29
 Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least twelve elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Genitourinary Pg 4 of 4 30
 Hematologic/Lymphatic/Immunologic Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Head and Face C Palpation and/or percussion of face with notation of presence or absence of sinus tenderness

Eyes C Inspection of conjunctivae and lids

Ears, Nose, C Otoscopic examination of external auditory canals and tympanic membranes
Mouth and
Throat C Inspection of nasal mucosa, septum and turbinates

C Inspection of teeth and gums

C Examination of oropharynx (eg, oral mucosa, hard and soft palates, tongue, tonsils, posterior
pharynx)

Neck • Examination of neck (eg, masses, overall appearance, symmetry, tracheal position, crepitus)

• Examination of thyroid (eg, enlargement, tenderness, mass)

Respiratory C Assessment of respiratory effort (eg, intercostal retractions, use of accessory muscles,
diaphragmatic movement)

C Auscultation of lungs (eg, breath sounds, adventitious sounds, rubs)

Cardiovascular C Auscultation of heart with notation of abnormal sounds and murmurs

C Examination of peripheral vascular system by observation (eg, swelling, varicosities) and

palpation (eg, pulses, temperature, edema, tenderness)

Chest (Breasts)

Gastrointestinal C Examination of abdomen with notation of presence of masses or tenderness

(Abdomen)
C Examination of liver and spleen

Genitourinary

Hematologic/Lymphatic/Immunologic Pg 1 of 2 31
 System/Body Elements of Examination
Area

Lymphatic C Palpation of lymph nodes in neck, axillae, groin, and/or other location

Musculoskeletal

Extremities C Inspection and palpation of digits and nails (eg, clubbing, cyanosis, inflammation, petechiae,
ischemia, infections, nodes)

Skin C Inspection and/or palpation of skin and subcutaneous tissue (eg, rashes, lesions, ulcers,
ecchymoses, bruises)

Neurological/ Brief assessment of mental status including

Psychiatric
• Orientation to time, place and person

• Mood and affect (eg, depression, anxiety, agitation)

Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least twelve elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Hematologic/Lymphatic/Immunologic Pg 2 of 2 32
 Musculoskeletal Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Head and Face

Eyes

Ears, Nose,
Mouth and
Throat

Neck

Respiratory

Cardiovascular C Examination of peripheral vascular system by observation (eg, swelling, varicosities) and
palpation (eg, pulses, temperature, edema, tenderness)

Chest (Breasts)

Gastrointestinal
(Abdomen)

Genitourinary

Lymphatic C Palpation of lymph nodes in neck, axillae, groin and/or other location

Musculoskeletal Pg 1 of 3 33
 System/Body Elements of Examination
Area

Musculoskeletal C Examination of gait and station

Examination of joint(s), bone(s) and muscle(s)/ tendon(s) of four of the following six areas: 1)
head and neck; 2) spine, ribs and pelvis; 3) right upper extremity; 4) left upper extremity;
5) right lower extremity; and 6) left lower extremity. The examination of a given area includes:

• Inspection, percussion and/or palpation with notation of any misalignment, asymmetry,

crepitation, defects, tenderness, masses or effusions

• Assessment of range of motion with notation of any pain (eg, straight leg raising),
crepitation or contracture

• Assessment of stability with notation of any dislocation (luxation), subluxation or laxity

• Assessment of muscle strength and tone (eg, flaccid, cog wheel, spastic) with notation of
any atrophy or abnormal movements

NOTE: For the comprehensive level of examination, all four of the elements identified by a
bullet must be performed and documented for each of four anatomic areas. For the three lower
levels of examination, each element is counted separately for each body area. For example,
assessing range of motion in two extremities constitutes two elements.

Extremities [See musculoskeletal and skin]

Skin C Inspection and/or palpation of skin and subcutaneous tissue (eg, scars, rashes, lesions, cafe-
au-lait spots, ulcers) in four of the following six areas: 1) head and neck; 2) trunk; 3) right
upper extremity; 4) left upper extremity; 5) right lower extremity; and 6) left lower
extremity.

NOTE: For the comprehensive level, the examination of all four anatomic areas must be
performed and documented. For the three lower levels of examination, each body area is
counted separately. For example, inspection and/or palpation of the skin and subcutaneous
tissue of two extremitites constitutes two elements.

Neurological/ C Test coordination (eg, finger/nose, heel/ knee/shin, rapid alternating movements in the upper
Psychiatric and lower extremities, evaluation of fine motor coordination in young children)

C Examination of deep tendon reflexes and/or nerve stretch test with notation of pathological
reflexes (eg, Babinski)

C Examination of sensation (eg, by touch, pin, vibration, proprioception)

Brief assessment of mental status including

• Orientation to time, place and person

• Mood and affect (eg, depression, anxiety, agitation)

Musculoskeletal Pg 2 of 3 34
 Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least twelve elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Musculoskeletal Pg 3 of 3 35
 Neurological Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Head and Face

Eyes • Ophthalmoscopic examination of optic discs (eg, size, C/D ratio, appearance) and posterior
segments (eg, vessel changes, exudates, hemorrhages)

Ears, Nose,
Mouth
and Throat

Neck

Respiratory

Cardiovascular • Examination of carotid arteries (eg, pulse amplitude, bruits)

C Auscultation of heart with notation of abnormal sounds and murmurs

C Examination of peripheral vascular system by observation (eg, swelling, varicosities) and

palpation (eg, pulses, temperature, edema, tenderness)

Chest (Breasts)

Gastrointestinal
(Abdomen)

Genitourinary

Lymphatic

Neurologic Pg 1 of 3 36
 System/Body Elements of Examination
Area

Musculoskeletal C Examination of gait and station

Assessment of motor function including:

• Muscle strength in upper and lower extremities

• Muscle tone in upper and lower extremities (eg, flaccid, cog wheel, spastic) with notation of
any atrophy or abnormal movements (eg, fasciculation, tardive dyskinesia)

Extremities [See musculoskeletal]

Skin

Neurological Evaluation of higher integrative functions including:

• Orientation to time, place and person

• Recent and remote memory

• Attention span and concentration

• Language (eg, naming objects, repeating phrases, spontaneous speech)

• Fund of knowledge (eg, awareness of current events, past history, vocabulary)

Test the following cranial nerves:

• 2nd cranial nerve (eg, visual acuity, visual fields, fundi)

• 3rd, 4th and 6th cranial nerves (eg, pupils, eye movements)
• 5th cranial nerve (eg, facial sensation, corneal reflexes)
• 7th cranial nerve (eg, facial symmetry, strength)
• 8th cranial nerve (eg, hearing with tuning fork, whispered voice and/or finger rub)
• 9th cranial nerve (eg, spontaneous or reflex palate movement)
• 11th cranial nerve (eg, shoulder shrug strength)
• 12th cranial nerve (eg, tongue protrusion)

C Examination of sensation (eg, by touch, pin, vibration, proprioception)

C Examination of deep tendon reflexes in upper and lower extremities with notation of
pathological reflexes (eg, Babinski)

C Test coordination (eg, finger/nose, heel/knee/shin, rapid alternating movements in the upper
and lower extremities, evaluation of fine motor coordination in young children)

Psychiatric

Neurologic Pg 2 of 3 37
 Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least twelve elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Neurologic Pg 3 of 3 38
 Psychiatric Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Head and Face

Eyes

Ears, Nose,
Mouth and
Throat

Neck

Respiratory

Cardiovascular

Chest (Breasts)

Gastrointestinal
(Abdomen)

Genitourinary

Lymphatic

Musculoskeletal C Assessment of muscle strength and tone (eg, flaccid, cog wheel, spastic) with notation of
any atrophy and abnormal movements

C Examination of gait and station

Extremities

Skin

Neurological

Psychiatric Pg 1 of 2 39
 System/Body Elements of Examination
Area

Psychiatric C Description of speech including: rate; volume; articulation; coherence; and spontaneity with
notation of abnormalities (eg, perseveration, paucity of language)

C Description of thought processes including: rate of thoughts; content of thoughts (eg, logical
vs. illogical, tangential); abstract reasoning; and computation

C Description of associations (eg, loose, tangential, circumstantial, intact)

C Description of abnormal or psychotic thoughts including: hallucinations; delusions;

preoccupation with violence; homicidal or suicidal ideation; and obsessions

C Description of the patient’s judgment (eg, concerning everyday activities and social
situations) and insight (eg, concerning psychiatric condition)

Complete mental status examination including

• Orientation to time, place and person

• Recent and remote memory

• Attention span and concentration

• Language (eg, naming objects, repeating phrases)

• Fund of knowledge (eg, awareness of current events, past history, vocabulary)

• Mood and affect (eg, depression, anxiety, agitation, hypomania, lability)

Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least nine elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Psychiatric Pg 2 of 2 40
 Respiratory Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Head and Face

Eyes

Ears, Nose, C Inspection of nasal mucosa, septum and turbinates

Mouth and
Throat C Inspection of teeth and gums

C Examination of oropharynx (eg, oral mucosa, hard and soft palates, tongue, tonsils and
posterior pharynx)

Neck C Examination of neck (eg, masses, overall appearance, symmetry, tracheal position, crepitus)

C Examination of thyroid (eg, enlargement, tenderness, mass)

C Examination of jugular veins (eg, distension; a, v or cannon a waves)

Respiratory C Inspection of chest with notation of symmetry and expansion

C Assessment of respiratory effort (eg, intercostal retractions, use of accessory muscles,

diaphragmatic movement)

C Percussion of chest (eg, dullness, flatness, hyperresonance)

C Palpation of chest (eg, tactile fremitus)

C Auscultation of lungs (eg, breath sounds, adventitious sounds, rubs)

Cardiovascular C Auscultation of heart including sounds, abnormal sounds and murmurs

C Examination of peripheral vascular system by observation (eg, swelling, varicosities) and

palpation (eg, pulses, temperature, edema, tenderness)

Chest (Breasts)

Respiratory Pg 1 of 2 41
 System/Body Elements of Examination
Area

Gastrointestinal C Examination of abdomen with notation of presence of masses or tenderness

(Abdomen)
C Examination of liver and spleen

Genitourinary

Lymphatic C Palpation of lymph nodes in neck, axillae, groin and/or other location

Musculoskeletal C Assessment of muscle strength and tone (eg, flaccid, cog wheel, spastic) with notation of
any atrophy and abnormal movements

C Examination of gait and station

Extremities C Inspection and palpation of digits and nails (eg, clubbing, cyanosis, inflammation, petechiae,
ischemia, infections, nodes)

Skin C Inspection and/or palpation of skin and subcutaneous tissue (eg, rashes, lesions, ulcers)

Neurological/ Brief assessment of mental status including

Psychiatric
• Orientation to time, place and person

• Mood and affect (eg, depression, anxiety, agitation)

Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least twelve elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Respiratory Pg 2 of 2 42
 Skin Examination

System/Body Elements of Examination

Area

Constitutional C Measurement of any three of the following seven vital signs: 1) sitting or standing blood
pressure, 2) supine blood pressure, 3) pulse rate and regularity, 4) respiration,
5) temperature, 6) height, 7) weight (May be measured and recorded by ancillary staff)

C General appearance of patient (eg, development, nutrition, body habitus, deformities,

attention to grooming)

Head and Face

Eyes C Inspection of conjunctivae and lids

Ears, Nose, C Inspection of lips, teeth and gums

Mouth
and Throat C Examination of oropharynx (eg, oral mucosa, hard and soft palates, tongue, tonsils, posterior
pharynx)

Neck C Examination of thyroid (eg, enlargement, tenderness, mass)

Respiratory

Cardiovascular C Examination of peripheral vascular system by observation (eg, swelling, varicosities) and
palpation (eg, pulses, temperature, edema, tenderness)

Chest (Breasts)

Gastrointestinal C Examination of liver and spleen

(Abdomen)
C Examination of anus for condyloma and other lesions

Genitourinary

Lymphatic C Palpation of lymph nodes in neck, axillae, groin and/or other location

Musculoskeletal

Extremities C Inspection and palpation of digits and nails (eg, clubbing, cyanosis, inflammation, petechiae,
ischemia, infections, nodes)

Skin Pg 1 of 2 43
 System/Body Elements of Examination
Area

Skin C Palpation of scalp and inspection of hair of scalp, eyebrows, face, chest, pubic area (when
indicated) and extremities

C Inspection and/or palpation of skin and subcutaneous tissue (eg, rashes, lesions, ulcers,
susceptibility to and presence of photo damage) in eight of the following ten areas:

C Head, including the face and

C Neck
C Chest, including breasts and axillae
C Abdomen
C Genitalia, groin, buttocks
C Back
C Right upper extremity
C Left upper extremity
C Right lower extremity
C Left lower extremity

NOTE: For the comprehensive level, the examination of at least eight anatomic areas must be
performed and documented. For the three lower levels of examination, each body area is
counted separately. For example, inspection and/or palpation of the skin and subcutaneous
tissue of the right upper extremity and the left upper extremity constitutes two elements.

C Inspection of eccrine and apocrine glands of skin and subcutaneous tissue with
identification and location of any hyperhidrosis, chromhidroses or bromhidrosis

Neurological/ Brief assessment of mental status including

Psychiatric
• Orientation to time, place and person

• Mood and affect (eg, depression, anxiety, agitation)

Content and Documentation Requirements

Level of Exam Perform and Document:

Problem Focused One to five elements identified by a bullet.

Expanded Problem Focused At least six elements identified by a bullet.

Detailed At least twelve elements identified by a bullet.

Comprehensive Perform all elements identified by a bullet; document every element in each box
with a shaded border and at least one element in each box with an unshaded
border.

Skin Pg 2 of 2 44
Skin Pg 3 of 2 45
 C. DOCUMENTATION OF THE COMPLEXITY OF MEDICAL DECISION
MAKING

The levels of E/M services recognize four types of medical decision making (straight-
forward, low complexity, moderate complexity and high complexity). Medical decision
making refers to the complexity of establishing a diagnosis and/or selecting a management
option as measured by:

• the number of possible diagnoses and/or the number of management options that
must be considered;

• the amount and/or complexity of medical records, diagnostic tests, and/or other
information that must be obtained, reviewed and analyzed; and

• the risk of significant complications, morbidity and/or mortality, as well as

comorbidities, associated with the patient's presenting problem(s), the diagnostic
procedure(s) and/or the possible management options.

The chart below shows the progression of the elements required for each level of medical
decision making. To qualify for a given type of decision making, two of the three
elements in the table must be either met or exceeded.

Number of diagnoses Amount and/or Risk of complications Type of decision

or management complexity of data to and/or morbidity or making
options be reviewed mortality
Minimal Minimal or None Minimal Straightforward
Limited Limited Low Low Complexity
Multiple Moderate Moderate Moderate
Complexity
Extensive Extensive High High Complexity

Each of the elements of medical decision making is described below.

46
NUMBER OF DIAGNOSES OR MANAGEMENT OPTIONS

The number of possible diagnoses and/or the number of management options that must be
considered is based on the number and types of problems addressed during the encounter,
the complexity of establishing a diagnosis and the management decisions that are made by
the physician.

Generally, decision making with respect to a diagnosed problem is easier than that for an
identified but undiagnosed problem. The number and type of diagnostic tests employed
may be an indicator of the number of possible diagnoses. Problems which are improving
or resolving are less complex than those which are worsening or failing to change as
expected. The need to seek advice from others is another indicator of complexity of
diagnostic or management problems.

!DG: For each encounter, an assessment, clinical impression, or diagnosis

should be documented. It may be explicitly stated or implied in
documented decisions regarding management plans and/or further
evaluation.

• For a presenting problem with an established diagnosis the record

should reflect whether the problem is: a) improved, well
controlled, resolving or resolved; or, b) inadequately controlled,
worsening, or failing to change as expected.

• For a presenting problem without an established diagnosis, the

assessment or clinical impression may be stated in the form of
differential diagnoses or as a "possible", "probable", or "rule out"
(R/O) diagnosis.

!DG: The initiation of, or changes in, treatment should be documented.

Treatment includes a wide range of management options including patient
instructions, nursing instructions, therapies, and medications.

!DG: If referrals are made, consultations requested or advice sought, the record
should indicate to whom or where the referral or consultation is made or
from whom the advice is requested.

47
AMOUNT AND/OR COMPLEXITY OF DATA TO BE REVIEWED

The amount and complexity of data to be reviewed is based on the types of diagnostic
testing ordered or reviewed. A decision to obtain and review old medical records and/or
obtain history from sources other than the patient increases the amount and complexity of
data to be reviewed.

Discussion of contradictory or unexpected test results with the physician who performed
or interpreted the test is an indication of the complexity of data being reviewed. On
occasion the physician who ordered a test may personally review the image, tracing or
specimen to supplement information from the physician who prepared the test report or
interpretation; this is another indication of the complexity of data being reviewed.

!DG: If a diagnostic service (test or procedure) is ordered, planned, scheduled,

or performed at the time of the E/M encounter, the type of service, eg, lab
or x-ray, should be documented.

!DG: The review of lab, radiology and/or other diagnostic tests should be
documented. A simple notation such as "WBC elevated" or "chest x-ray
unremarkable" is acceptable. Alternatively, the review may be
documented by initialing and dating the report containing the test results.

!DG: A decision to obtain old records or decision to obtain additional history

from the family, caretaker or other source to supplement that obtained
from the patient should be documented.

!DG: Relevant findings from the review of old records, and/or the receipt of
additional history from the family, caretaker or other source to
supplement that obtained from the patient should be documented. If there
is no relevant information beyond that already obtained, that fact should
be documented. A notation of “Old records reviewed” or “additional
history obtained from family” without elaboration is insufficient.

!DG: The results of discussion of laboratory, radiology or other diagnostic tests

with the physician who performed or interpreted the study should be
documented.

!DG: The direct visualization and independent interpretation of an image,

tracing or specimen previously or subsequently interpreted by another
physician should be documented.

48
RISK OF SIGNIFICANT COMPLICATIONS, MORBIDITY, AND/OR
MORTALITY

The risk of significant complications, morbidity, and/or mortality is based on the risks
associated with the presenting problem(s), the diagnostic procedure(s), and the possible
management options.

!DG: Comorbidities/underlying diseases or other factors that increase the

complexity of medical decision making by increasing the risk of
complications, morbidity, and/or mortality should be documented.

!DG: If a surgical or invasive diagnostic procedure is ordered, planned or

scheduled at the time of the E/M encounter, the type of procedure, eg,
laparoscopy, should be documented.

!DG: If a surgical or invasive diagnostic procedure is performed at the time of

the E/M encounter, the specific procedure should be documented.

!DG: The referral for or decision to perform a surgical or invasive diagnostic

procedure on an urgent basis should be documented or implied.

The following table may be used to help determine whether the risk of significant
complications, morbidity, and/or mortality is minimal, low, moderate, or high. Because
the determination of risk is complex and not readily quantifiable, the table includes
common clinical examples rather than absolute measures of risk. The assessment of risk
of the presenting problem(s) is based on the risk related to the disease process anticipated
between the present encounter and the next one. The assessment of risk of selecting
diagnostic procedures and management options is based on the risk during and
immediately following any procedures or treatment. The highest level of risk in any one
category (presenting problem(s), diagnostic procedure(s), or management options)
determines the overall risk.

49

Level of Presenting Problem(s)
Risk
! One self-limited or minor
problem, eg, cold, insect bite,
tinea corporis
Minimal
! Two or more self-limited or
minor problems
! One stable chronic illness, eg,
well controlled hypertension,
non-insulin dependent diabetes,
Low
cataract, BPH
! Acute uncomplicated illness or
injury, eg, cystitis, allergic
rhinitis, simple sprain
! One or more chronic illnesses
with mild exacerbation,
progression, or side effects of
treatment
! Two or more stable chronic
illnesses
! Undiagnosed new problem
Moderate with uncertain prognosis, eg,
lump in breast
! Acute illness with systemic
symptoms, eg, pyelonephritis,
pneumonitis, colitis
! Acute complicated injury, eg,
head injury with brief loss of
consciousness
! One or more chronic illnesses
with severe exacerbation,
progression, or side effects of
treatment
! Acute or chronic illnesses or
injuries that pose a threat to life
or bodily function, eg, multiple
trauma, acute MI, pulmonary
High embolus, severe respiratory
distress, progressive severe
rheumatoid arthritis, psychiatric
illness with potential threat to
self or others, peritonitis, acute
renal failure
! An abrupt change in neurologic
status, eg, seizure, TIA,
weakness, sensory loss
TABLE OF RISK
Diagnostic Procedure(s)
Ordered
! Laboratory tests requiring
venipuncture
! Chest x-rays
! EKG/EEG
! Urinalysis
! Ultrasound, eg,
echocardiography
! KOH prep
! Physiologic tests not under
stress, eg, pulmonary function
tests
! Non-cardiovascular imaging
studies with contrast, eg,
barium enema
! Superficial needle biopsies
! Clinical laboratory tests
requiring arterial puncture
! Skin biopsies
! Physiologic tests under stress,
eg, cardiac stress test, fetal
contraction stress test
! Diagnostic endoscopies with
no identified risk factors
! Deep needle or incisional
biopsy
! Cardiovascular imaging studies
with contrast and no identified
risk factors, eg, arteriogram,
cardiac catheterization
! Obtain fluid from body cavity,
eg lumbar puncture,
thoracentesis, culdocentesis
! Cardiovascular imaging studies
with contrast with identified
risk factors
! Cardiac electrophysiological
tests
! Diagnostic Endoscopies with
identified risk factors
! Discography
50
Management Options
Selected
! Rest
! Gargles
! Elastic bandages
! Superficial dressings
! Over-the-counter drugs
! Minor surgery with no
identified risk factors
! Physical therapy
! Occupational therapy
! IV fluids without additives
! Minor surgery with identified
risk factors
! Elective major surgery (open,
percutaneous or endoscopic)
with no identified risk factors
! Prescription drug management
! Therapeutic nuclear medicine
! IV fluids with additives
! Closed treatment of fracture or
dislocation without
manipulation
! Elective major surgery (open,
percutaneous or endoscopic)
with identified risk factors
! Emergency major surgery
(open, percutaneous or
endoscopic)
! Parenteral controlled
substances
! Drug therapy requiring
intensive monitoring for
toxicity
! Decision not to resuscitate or
to de-escalate care because of
poor prognosis
D. DOCUMENTATION OF AN ENCOUNTER DOMINATED BY
COUNSELING OR COORDINATION OF CARE

In the case where counseling and/or coordination of care dominates (more than 50%) of
the physician/patient and/or family encounter (face-to-face time in the office or other or
outpatient setting, floor/unit time in the hospital or nursing facility), time is considered the
key or controlling factor to qualify for a particular level of E/M services.

!DG: If the physician elects to report the level of service based on counseling
and/or coordination of care, the total length of time of the encounter
(face-to-face or floor time, as appropriate) should be documented and the
record should describe the counseling and/or activities to coordinate care.

51
 What surgeons
should know about...
Coding breast procedures
and other cancer operations
by John Preskitt, MD, FACS, Albert Bothe, Jr., MD, FACS,
and Jean A. Harris, Associate Director, Division of Advocacy and Health Policy
P
roper coding for breast procedures is com-
plicated because of the many ways the care
for such cases can progress. For example,
biopsies are sometimes performed on two or more
lesions in the same session, or a visit to discuss
the next steps in treatment may occur during the
postoperative period of the biopsy. To receive re-
imbursement, it is necessary in both instances to
indicate that these procedures are distinct.
This article describes in detail both diagnostic
and procedural coding for breast biopsies, excision
of benign breast lesions, lumpectomies, and mas-
tectomies with special attention to reporting mul-
tiple procedures and the use of other modifiers.
Although the focus of this article is on breast pro-
cedures, many of the same problems occur when
billing for other cancer operations.
This article is written for both surgeons and staff
who prepare claims and presents the normal In-
ternational Classification of Diseases (ICD-9-CM)
and Current Procedural Terminology (CPT) rules.
Of course, if a payor has specified different rules,
follow those rules for claims submitted to that in-
surer. Be sure to retain the rules so that you can
demonstrate why you are not following the nor-
mal CPT or ICD-9-CM rules.
Breast biopsies
Code 19101 is used to report an open, incisional
biopsy. The remaining breast biopsy codes are
for minimally invasive procedures. Code 19100
is used to report a percutaneous core needle bi-
opsy done without image guidance and code
19102 is used to report the same procedure but
with imaging guidance. Code 19103, Biopsy of
breast; percutaneous, automated vacuum assisted
or rotating biopsy device, using imaging guid-
All specific references to CPT terminology and phraseology are:
8 CPT only 2002 © American Medical Association. All rights reserved.
VOLUME 88, NUMBER 5, BULLETIN OF THE AMERICAN COLLEGE OF SURGEONS
ance, is for reporting biopsies performed with
either the advanced breast biopsy instrument or
Mammotome machines. It is appropriate to re-
port image guidance with code 19103 if the sur-
geon performs the procedure.
Localization clip or wire
At times the surgeon may choose to do a biopsy
and, at the same operative session, leave a metal-
lic localization clip so that the site may be found
later if it is necessary to remove more tissue. The
placement of a clip is reported using add-on code
19295, Image guided placement, metallic localiza-
tion clip, percutaneous, during breast biopsy. Re-
port code 19295 for each lesion that is marked with
a clip, and report the imaging guidance if the sur-
geon does the guidance. The additional work of
placing the clip is negligible, but the code is in-
tended to assist in recovering the expense of the
clip if the surgeon incurs it. Therefore, code 19295
may not be paid if the procedure is performed in a
facility where the institution bore the cost of the
clip.
Another technique used for marking a lesion is
the immediate preoperative placement of a local-
ization wire, which is reported using code 19290,
Preoperative placement of needle localization wire,
breast. If additional wires are placed in other le-
sions, use add-on code 19291 for each lesion that
is marked.
Excision and mastectomy
Code 19120, Excision of cyst, fibroadenoma, or
other benign or malignant tumor, aberrant breast
tissue, duct lesion, nipple or areolar lesion (except
19140), open, male or female, one or more lesions,
is used for the removal of a breast lesion that is
usually palpable or identified by means other than
“preoperative placement of a radiological marker.”
It is done with an incision and involves the com-
plete gross removal of a lesion that may be be-
nign or malignant, in males or females. Code
19120 is for the simple removal of a mass.
When a breast lesion or mass requires localiza-
tion by the preoperative placement of a radiologi-
cal marker, the excision of the first lesion or mass
is coded as 19125, Excision of breast lesion identi-
fied by preoperative placement of radiological
marker, open; single lesion. Each additional lesion
localized by a different radiological marker is
coded with the add-on code 19126. Obviously, ra-
diological guidance is always used for these pro-
cedures and is reported by the surgeon if he or she
does the guidance.
Code 19160, Mastectomy, partial, is used in the
surgical treatment of a breast malignancy when
conservative management is chosen. Documenta-
tion in the operative report should indicate that
the mass or lesion is removed with attention to
obtaining adequate margins of uninvolved breast
tissue appropriate for the lesion. If an axillary dis-
section is performed in conjunction with the par-
tial mastectomy, code 19162, Mastectomy, partial;
with axillary lymphadenectomy, should be used.
The classic radical, Urban type radical, and
modified radical mastectomy procedures are coded
19200, 19220, and 19240, respectively. Table 1 on
this page provides the complete descriptors for the
three codes. The most common procedure, code
19240, applies to complete surgical removal of the
breast and axillary lymph nodes. Code 19240 is
differentiated from code 19200 in that the pecto-
ralis major muscle is not removed. Code 19240 is
used regardless of whether the pectoralis minor
muscle is removed.
Sentinel lymph node biopsy
Sentinel lymph node biopsy is coded using the
injection code 38792, Injection procedure; for
identification of sentinel node, to report the work
of injecting radiotracer or blue dye, and the
appropriate lymph node excision code. The node
excision codes, 38500 or 38525, are used as ap-
propriate for the axilla. The full descriptor for
code 38500 is Biopsy or excision of lymph node(s);
open, superficial, and the full descriptor for code
38525 is Biopsy or excision of lymph node(s);
open, deep axillary node(s). If the lymph node
being excised is a cervical lymph node, code
38510, Biopsy or excision of lymph node(s); open,
Table 1. Complete descriptor
for mastectomy codes
CPT
code Complete descriptor
19200 Mastectomy, radical, including pectoral
muscles, axillary lymph nodes
19220 Mastectomy, radical, including pectoral
muscles, axillary and internal mammary
lymph nodes (Urban type operation)
19240 Mastectomy, modified radical, including
axillary lymph nodes, with or without
pectoralis minor muscle, but excluding
pectoralis major muscle
deep cervical node(s), is used. If it is an internal
mammary lymph node, code 38530, Biopsy or
excision of lymph node(s); open, internal mam-
mary node(s), is appropriate.
Reconstructive surgery
Sometimes reconstruction takes place in the
same operative session as the mastectomy. Either
one surgeon or two—a general or breast surgeon
and a reconstructive surgeon—may be involved.
When two surgeons operate, the general or breast
surgeon reports the mastectomy and the recon-
structive surgeon reports the appropriate recon-
structive procedure. Each surgeon writes separate
operative notes for his or her portion of the sur-
gery.
Global period services
Often services are provided during the global
surgery period but are unrelated to previous sur-
gery. The most obvious example is an office visit
to explore treatment options during the postop-
erative period of a positive breast biopsy. In this
instance, report the appropriate office visit, estab-
lished patient, with a modifier indicating an un-
related evaluation and management (E/M) service
by the same physician during a postoperative pe-
riod (modifier –24). 9
MAY 2003 BULLETIN OF THE AMERICAN COLLEGE OF SURGEONS
 Treatment after biopsy
Sometimes a breast tumor is excised during the
global period of the biopsy, or a re-excision may
be done during the global period of the initial tu-
mor excision. If either situation occurs, report the
initial procedure as usual, and report the second
procedure with a modifier to indicate a staged or
related procedure by the same physician during
the postoperative procedure (modifier –58). The
full text for this modifier says it should be used if
the second procedure was: “(a) planned prospec-
tively at the time of the original procedure
(staged); (b) more extensive than the original pro-
cedure; or (c) for therapy following a diagnostic
surgical procedure.”
In the case of surgical treatment following a
biopsy, the operative note should state, as part
of the indications and findings, that the latter
procedure is for therapy following a diagnostic
surgical procedure. Documentation for a “re-
excision” and the use of the –58 modifier should:
(a) include reference in the indications and find-
ings of the first procedure that, if final margins
are unsatisfactory, a subsequent procedure is
planned; or (b) include a discussion in the indi-
cations and findings of the second procedure
that surgery more extensive than the original
procedure is indicated by the final or permanent
pathological findings.
Imaging guidance
We have, in several instances, simply said that
if the surgeon performs imaging guidance, it is ap-
propriate to report the imaging guidance code
along with the code for the breast surgery. The
various breast procedures and associated imaging
guidance codes (with their full descriptors) are
shown in Table 2 (p. 11). The imaging guidance
codes are structured quite differently, with some
specific to breast procedures and others used for a
wider range of procedures. Code 76095 is reported
once for each lesion located. Codes 76096 and
76942 are reported twice if two or more lesions
are located bilaterally. Codes 76360 and 76393 are
only reported once regardless of how many lesions
are located.
The College spends considerable time and effort
helping surgeons become fully trained and creden-
tialed to perform ultrasound procedures. To en-
10 sure that surgeons who use ultrasound are quali-
VOLUME 88, NUMBER 5, BULLETIN OF THE AMERICAN COLLEGE OF SURGEONS
fied and that the ultrasound facilities and equip-
ment they use are appropriate for the medical ap-
plication and meet and maintain quality stan-
dards, a voluntary verification process has been
made available to Fellows.
Nevertheless, the College has received reports
from Fellows around the country that they are rou-
tinely denied payment for ultrasound-guided
breast examinations and biopsies. We recently
wrote to a large number of insurers who have de-
nied claims, asking them about their policies for
reimbursing ultrasound procedures. So far, the
overwhelming majority of replies have been posi-
tive. We will be following up with those who have
not responded and with a handful of insurers
whose responses were unsatisfactory.
Multiple procedures
To properly and completely report what the
surgeon did, many claims will contain multiple
procedures performed at a single setting. It is
important to select the correct modifier and to
understand the way CPT expects payors to set
fees. A multiple procedure may or may not be
reported with a multiple procedure modifier
(modifier –51). When it is reported as a multiple
procedure, the code is reduced in price by the
insurance company. On the other hand, an add-
on procedure code can never be reported with-
out an associated base procedure. Therefore, the
procedure is priced at its “true value,” is not
reduced, and is not reported with a modifier. The
following rules may help in selecting the cor-
rect modifier(s):
• Report separately each incision made or
each lesion biopsied percutaneously. Do not re-
port separately when more than one biopsy is
performed through a single incision.
• Report only the definitive procedure when,
in a single setting, a biopsy is taken, followed
immediately by a frozen section, and then the
full tumor is removed.
• Use a multiple-procedure modifier (modi-
fier –51) when there are multiple lesions that
are not bilateral. Individual Medicare carriers,
and perhaps some private payors, may prefer the
modifier for the right side of the body (modifier
–RT) or left side of the body (modifier –LT).
• For Medicare, report the codes in the or-
der of descending relative values and attach the
 Table 2. Breast procedures and associated imaging procedures
Breast procedures
19102 Biopsy of breast; percutaneous, needle
core, using imaging guidance
19103 Biopsy of breast; percutaneous, auto-
mated vacuum assisted or rotating biopsy
device, using imaging guidance
19125 Excision of breast lesion identified by pre-
operative placement of radiological
marker, open; single lesion
+ 19126 Excision of breast lesion identified by pre-
operative placement of radiological
marker, open; each additional lesion sepa-
rately identified by a preoperative radio-
logical marker
19290 Preoperative placement of needle local-
ization wire, breast
19291 Preoperative placement of needle local-
ization wire, breast; each additional lesion
All specific references to CPT terminology and phraseology are: CPT only © 2002 American Medical Association. All
rights reserved.
Imaging procedures
76095 Stereotactic localization guidance for
breast biopsy or needle placement (e.g, for
wire localization or for injection), each le-
sion, radiological supervision and interpre-
tation
76096 Mammographic guidance for needle place-
ment, breast (e.g, for wire localization or
for injection), each lesion, radiological su-
pervision and interpretation
76360 Computed tomography guidance for
needle placement (e.g., biopsy, aspiration,
injection, localization device), radiological
supervision and interpretation
76393 Magnetic resonance guidance for needle
placement (e.g., for biopsy, needle aspira-
tion, injection, or placement of localization
device) radiological supervision and inter-
pretation
76942 Ultrasonic guidance for needle placement
(e.g., biopsy, aspiration, injection, localiza-
tion device), imaging supervision and in-
terpretation
76095 Stereotactic localization guidance for
breast biopsy or needle placement (e.g., for
wire localization or for injection), each le-
sion, radiological supervision and interpre-
tation
76096 Mammographic guidance for needle place-
ment, breast (e.g., for wire localization or
for injection), each lesion, radiological su-
pervision and interpretation
76942 Ultrasonic guidance for needle placement
(e.g., biopsy, aspiration, injection, localiza-
tion device), imaging supervision and in-
terpretation
11
MAY 2003 BULLETIN OF THE AMERICAN COLLEGE OF SURGEONS
 multiple procedure modifier to all but the first
code. (If your carrier prefers modifiers –RT and
–LT, you probably must attach a modifier to the
first code also.)
• Place add-on codes immediately following
the base code identified in CPT. Do not attach a
modifier to the add-on code, and do not reduce
the fee. Add-on codes are identified in CPT by a
plus sign (+) to the left of the procedure code
with a note indicating which is the base code.
• Use the bilateral modifier (modifier –50)
when the same procedure is performed on each
breast. Remember to increase your fee above
what it normally is for a unilateral procedure.
• Remember the Correct Coding Initiative
(CCI) for Medicare and similar payor programs.
The most common edit in breast surgery is for a
biopsy of one lesion and an excision of another
lesion on the same day. Use the distinct proce-
dural service modifier (modifier –59). If the
payor requires it, use the multiple procedure
modifier (modifier –51) also.
Diagnostic coding
When reporting a diagnosis on a claim for a
breast biopsy, report what is known at the time
the claim is prepared, using ICD-9-CM code. If
the claim is prepared before the pathology re-
port has arrived, the only way to bill is to sup-
ply a nondefinitive diagnosis such as code
611.72, Lump or mass in breast. On the other
hand, if the pathological report is complete, the
diagnosis from the report for the biopsy may be
used. If an additional procedure is needed (for
example, re-excision to obtain satisfactory mar-
gins, mastectomy), use the definitive diagnosis
from the first pathological report. Some cases
involve two different diagnoses and it is impor-
tant to associate the correct diagnosis and pro-
cedure codes.
The index to diseases in ICD-9-CM has a very
large table containing codes for each anatomic
site for each of six neoplasms: primary malig-
nant, secondary malignant, cancer in situ, be-
nign, uncertain behavior, and unspecified na-
ture. There are also codes in the V10 series for
personal history of malignant neoplasm. The
V10 series should not be reported as a primary
diagnosis. Rather, the full four- or five-digit ICD-
12 9-CM code should be reported.
VOLUME 88, NUMBER 5, BULLETIN OF THE AMERICAN COLLEGE OF SURGEONS
Conclusion
As we said earlier, coding for breast disease is
complex because of the many ways care can
progress. However, by following the rules for the
diagnostic and procedural coding systems, it is
possible to report all of the care provided, whether
it involves multiple procedures done on the same
day, care within the global period of another pro-
cedure, or any number of other seemingly perplex-
ing scenarios. That allows us to give care when it
is needed—something we all want to do.
Nonetheless, payment will not necessarily be
made for all of the care surgeons render. Far too
many payors either do not accept or do not recog-
nize modifiers at this time, crippling their ability
to accurately learn what happened during an epi-
sode of care. Although the Health Insurance Port-
ability and Accountability Act (HIPAA) has im-
posed significant burdens on surgeons, perhaps it
will encourage payors to accept modifiers.
By October 16, most payors must be compliant
with the electronic transaction and code set pro-
visions of HIPAA. (Small payors—those with fewer
than 50 employees—have an additional year to be-
come compliant.) The code set standard adopted
for CPT says insurers must accept modifiers, al-
though it goes on to say they do not have to make
payment adjustments because of the presence of
modifiers. Nevertheless, that is an important first
step. The groundwork has been laid for local sur-
geons to explain to individual payors why they
should recognize modifiers and make a payment
differential for them. ⍀
 E&M spreadsheet 1995 DG by Dr. Charles Mabry.xls

1995 DOCUMENTATION GUIDELINES

FOR EVALUATION & MANAGEMENT SERVICES 1995dg.doc

History
History of Past, Family,
Review of
Type of History Present Illness and/or Social CPT code CPT code CPT code CPT code CPT code
Systems (ROS)
(HPI) History (PFSH)
Office, Hospital,
Office, new Hospital, initial Office consult
established subsequent
2 of 3 3 of 3 3 of 3 2 of 3 3 of 3
Problem Focused Brief (1 - 3) N/A N/A 99212 99201 99231 99241
Expanded Problem Problem
Brief (1 - 3) N/A
Focused Pertinent 99213 99202 99232 99242
Detailed Extended (4) Extended (2 - 9) Pertinent (1)
99214 99203 99221 99233 99243
Comprehensive Extended (4) Complete (10) Complete (2-3) 99215 99204 / 99205 99222 / 99223 99244 / 99245

Examination
Type of
Body areas Organ systems CPT code CPT code CPT code CPT code CPT code
Examination
Office, Hospital,
Office, new Hospital, initial Office consult
established subsequent
Problem Focused a limited examination of the affected body area or organ system.
99212 99201 99231 99241
a limited examination of the affected body area or organ system
Expanded Problem
and any ther symptomatic or related body area(s) or organ
Focused
system(s). 99213 99202 99232 99242
an extended examination of the affected body area(s) or organ
Detailed system(s) and any other symptomatic or related body area(s) or
organ system(s). 99214 99203 99221 99233 99243
a general multi-system examination, or complete examination of
Comprehensive (8
a single organ system and other symptomatic or related body
of 12)
area(s) or organ system(s). 99215 99204 / 99205 99222 / 99223 99244 / 99245

Charles D. Mabry MD Page 1 6/15/2005

 E&M spreadsheet 1995 DG by Dr. Charles Mabry.xls

1995 DOCUMENTATION GUIDELINES

FOR EVALUATION & MANAGEMENT SERVICES 1995dg.doc

Medical Decision Making

Number of Amount and/or Risk of

Type of Decision diagnosis or complexity of complications TABLE OF
CPT code CPT code CPT code CPT code CPT code
Making management data to be and/or morbidity RISK_95.doc
options reviewed or mortality
Office, Hospital,
Office, new Hospital, initial Office consult
established subsequent
Straightforward Minimal Minimal or none Minimal
99212 99201 / 99202 99221 99231 99241 / 99242
Low Complexity Limited Limited Low 99213 99203 99221 99243
Moderate
Multiple Moderate Moderate
Complexity 99214 99204 99222 99232 99244
High Complexity Extensive Extensive High 99215 99205 99223 99233 99245

Charles D. Mabry MD Page 2 6/15/2005

 MEDICARE RESIDENT & NEW PHYSICIAN
GUIDE
Helping Health Care Professionals Navigate
Medicare
Seventh Edition – August 2003

DISCLAIMER

This guide is designed to provide accurate and authoritative information with regard to the subjects
covered, and every reasonable effort has been made to assure the accuracy of the information within
these pages. However, the ultimate responsibility for correct coding/documentation lies with the pro-
vider of services.

Centers for Medicare & Medicaid Services employees, agents, and staff make no representation,
warranty, or guarantee that this compilation of Medicare information is error-free, nor that the use of
this handbook will prevent differences of opinion or disputes with the Medicare carrier/intermediary
as to the codes that are accepted or the amounts that will be paid to providers of services, and will
bear no responsibility or liability for the results or consequences of the use of this book. Medicare
Resident & New Physician Guide explains the Medicare Program but is not a legal document. The
official Medicare Program provisions are contained in the relevant laws, regulations, and rulings.

American Medical Association Notice and Disclaimer

CPT codes, descriptors and other data only are copyright 2003 American Medical Association. All rights reserved. Applicable
FARS/DFARS apply.

ICD-9 Notice
The ICD-9-CM codes and descriptors used in this publication are copyright 2003 under uniform copyright convention. All rights reserved.
 Table of Contents

Table of Contents
PREFACE ........................................................................................................................................................................... v
Medicare........................................................................................................................................................................ v
Contractors .................................................................................................................................................................... v
Quality Improvement Organizations.............................................................................................................................vi
Medicaid.......................................................................................................................................................................vi
The Medicare-Medicaid Relationship ..........................................................................................................................vi
Chapter 1 - OVERVIEW OF MEDICARE...................................................................................................................... 1
Overview ....................................................................................................................................................................... 1
Getting to Know Medicare Beneficiaries ...................................................................................................................... 3
Medicare Beneficiary Rights ......................................................................................................................................... 5
Identification of Medicare Beneficiaries ....................................................................................................................... 6
Claim Submission.......................................................................................................................................................... 7
Chapter 2 - BECOMING A MEDICARE PHYSICIAN ............................................................................................... 11
Medicare Part B Physicians......................................................................................................................................... 11
Medicare Part B Physician Enrollment........................................................................................................................ 13
Unique Physician/Practitioner Identification Number (UPIN) .................................................................................... 14
Participation Program.................................................................................................................................................. 15
Reimbursement ............................................................................................................................................................ 16
Facility Fee Pricing Schedule ...................................................................................................................................... 17
The Medicare Part B Physician Fee Schedule ............................................................................................................. 18
Medicare Part B Reimbursement of Physician Services.............................................................................................. 21
Chapter 3 - CLAIMS AND FILING METHODS.......................................................................................................... 23
Types of Claims........................................................................................................................................................... 23
How to Submit Claims................................................................................................................................................. 23
Electronic Data Interchange (EDI) .............................................................................................................................. 24
Filing Form CMS-1500 ............................................................................................................................................... 25
Remittance Notices...................................................................................................................................................... 26
Unprocessable Claims ................................................................................................................................................. 27
Chapter 4 - MEDICARE SECONDARY PAYER......................................................................................................... 29
Medicare Coordination of Benefits (COB).................................................................................................................. 29
Benefits of the MSP Program ...................................................................................................................................... 30
When is Medicare Considered Secondary? ................................................................................................................. 30
Potential Penalties for Noncompliance........................................................................................................................ 32
Chapter 5 - PART B POLICIES ..................................................................................................................................... 33
Overview ..................................................................................................................................................................... 33
Medicare Part B Physician Services ............................................................................................................................ 33
“Incident to” Provision ................................................................................................................................................ 34
Common Physician Services........................................................................................................................................ 35
Preventive Services...................................................................................................................................................... 40
Surgery Policies........................................................................................................................................................... 52
Services Medicare Does Not Pay For .......................................................................................................................... 57
Chapter 6 - EVALUATION AND MANAGEMENT DOCUMENTATION............................................................... 61
1995 Documentation Guidelines for E/M Services......................................................................................................... 61
I. Introduction .......................................................................................................................................................... 61
II. General Principles of Medical Record Documentation ................................................................................... 61
III. Documentation of E/M Services...................................................................................................................... 62
1997 Documentation Guidelines for E/M Services......................................................................................................... 72
I. Introduction .......................................................................................................................................................... 72
II. General Principles of Medical Record Documentation ................................................................................... 73
III. Documentation of E/M Services...................................................................................................................... 73
Chapter 7 - MEDICAL REVIEW ................................................................................................................................... 99
Overview ..................................................................................................................................................................... 99

Medicare Resident & New Physician Guide Page iii

Table of Contents

Mission and Objectives of the Medical Review Process .............................................................................................99

Benefits to Medicare Physicians..................................................................................................................................99
Progressive Corrective Action (PCA)........................................................................................................................100
Types of Corrective Action........................................................................................................................................101
Edit Development ......................................................................................................................................................102
Prepayment Review ...................................................................................................................................................102
Postpayment Review..................................................................................................................................................103
Proactive Measures Related to Local Medical Review Policy...................................................................................104
Chapter 8 - INQUIRY, APPEAL, WAIVER, AND OVERPAYMENT.....................................................................107
Inquiry .......................................................................................................................................................................107
Appealing Medicare Decisions ..................................................................................................................................107
Liability .....................................................................................................................................................................111
Overpayments ............................................................................................................................................................113
Chapter 9 – BUSINESS RELATIONS AND PAYMENT ACCURACY ...................................................................115
Helping Medicare “Pay It Right”...............................................................................................................................115
Ensuring Payment Accuracy ......................................................................................................................................116
Protecting Your Practice............................................................................................................................................118
Compliance Programs................................................................................................................................................121
Chapter 10 – PROTECTING THE MEDICARE TRUST FUND ..............................................................................123
Medicare Fraud and Abuse Defined ..........................................................................................................................124
Identification and Prevention of Fraud ......................................................................................................................125
Administrative Sanctions ...........................................................................................................................................127
Investigations.............................................................................................................................................................128
Chapter 11 - LEGISLATIVE ISSUES AFFECTING MEDICARE...........................................................................133
Clinical Laboratory Improvement Amendments........................................................................................................133
Guidelines for Teaching Physicians...........................................................................................................................134
Mandatory Claims Filing Requirements ....................................................................................................................135
Private Contracting with Medicare Beneficiaries ......................................................................................................136
Anti-Fraud Provisions................................................................................................................................................137
Health Insurance Portability and Accountability Act.................................................................................................138
Balanced Budget Act of 1997....................................................................................................................................139
APPENDIX......................................................................................................................................................................141
RESOURCES ..................................................................................................................................................................143
FORMS............................................................................................................................................................................147
GLOSSARY ....................................................................................................................................................................157
INDEX .............................................................................................................................................................................171

Page iv Medicare Resident & New Physician Guide

Preface

PREFACE
Medicare
Title XVIII of the Social Security Act, designated "Health Insurance for the Aged and Disabled," is
commonly known as Medicare. As part of the Social Security Amendments of 1965, the Medicare
legislation established a health insurance program for aged persons to complement the retirement,
survivors, and disability insurance benefits under Title II of the Social Security Act.
When first implemented in 1966, Medicare covered most persons age 65 or over. In 1973, the fol-
lowing groups also became eligible for Medicare benefits: persons entitled to Social Security or Rail-
road Retirement disability cash benefits for at least 24 months, most persons with End-Stage Renal
Disease (ESRD), and certain otherwise noncovered aged persons who elect to pay a premium for
Medicare coverage. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (Public Law 106-554) allowed persons with Amyotrophic Lateral Sclerosis (Lou Gehrig’s
Disease) to waive the 24-month waiting period.
Medicare has traditionally consisted of two parts: hospital insurance (HI), also known as Part A, and
supplemental medical insurance (SMI), also known as Part B. A new, third part of Medicare, some-
times known as Part C, is the Medicare + Choice Program which was established by the Balanced
Budget Act of 1997 (Public Law 105-33 or "BBA") and which expanded beneficiaries' options for
participation in private-sector healthcare plans. When Medicare began on July 1, 1966, approxi-
mately 19 million people enrolled. In 2001, about 40 million people were enrolled in one or both of
Parts A and B of the Medicare Program, and 5.7 million of them chose to participate in a Medicare +
Choice plan.
Contractors
Medicare's HI and SMI fee-for-service claims are processed by nongovernmental organizations or
agencies that contract to serve as the fiscal agent between providers and suppliers and the Federal
Government. These claims processors are known as intermediaries and carriers. They apply the
Medicare coverage rules to determine the appropriateness of claims.
Medicare intermediaries process HI claims for institutional services, including inpatient hospital
claims, skilled nursing facilities, home health agencies, and hospice services. They also process out-
patient hospital claims for SMI. Examples of intermediaries are Blue Cross Blue Shield (which util-
ize their plans in various states) and other commercial insurance companies. Intermediaries'
responsibilities include the following:
· Determining costs and reimbursement amounts
· Maintaining records
· Establishing controls
· Safeguarding against fraud and abuse or excess use
· Conducting reviews and audits
· Making payments to providers for services
· Assisting both providers and beneficiaries as needed
Medicare carriers handle SMI claims for services by physicians and medical suppliers. Examples of
carriers are the Blue Cross or Blue Shield plans in a state, and various commercial insurance compa-
nies. Carriers' responsibilities include the following:

Medicare Resident & New Physician Guide Page vi

Preface

· Determining charges allowed by Medicare

· Maintaining quality-of-performance records
· Assisting in fraud and abuse investigations
· Assisting both suppliers and beneficiaries as needed
· Making payments to physicians and suppliers for services that are covered under SMI

Quality Improvement Organizations

Under the direction of the Centers for Medicare & Medicaid Services (CMS), the Quality Improve-
ment Organization (QIO) Program consists of a national network of fifty-three QIOs responsible for
each U.S. state, territory, and the District of Columbia. QIOs work with consumers, physicians, hos-
pitals, and other caregivers to refine care delivery systems to make sure patients get the right care at
the right time, particularly among underserved populations. The program also safeguards the integ-
rity of the Medicare trust fund by ensuring payment is made only for medically necessary services,
and investigates beneficiary complaints about quality of care. The ongoing effort to combat monetary
fraud and abuse in the Medicare Program was intensified after enactment of the Health Insurance
Portability and Accountability Act of 1996, which created the Medicare Integrity Program. Prior to
this 1996 legislation, CMS was limited by law to contracting with its current carriers and fiscal in-
termediaries to perform payment safeguard activities. The Medicare Integrity Program provided
CMS with stable, increasing funding for payment safeguard activities, as well as, new authorities to
contract with entities to perform specific payment safeguard functions.
Medicaid
Title XIX of the Social Security Act is a Federal/State entitlement program that pays for medical as-
sistance for certain individuals and families with low incomes and resources. This program, known
as Medicaid, became law in 1965 as a cooperative venture jointly funded by the Federal and State
governments (including the District of Columbia and the Territories) to assist states in furnishing
medical assistance to eligible needy persons. Medicaid is the largest source of funding for medical
and health-related services for America's poorest people.
Within broad national guidelines established by Federal statutes, regulations, and policies, each state:
1. Establishes its own eligibility standards
2. Determines the type, amount, duration, and scope of services
3. Sets the rate of payment for services
4. Administers its own program
Medicaid policies for eligibility, services, and payment are complex and vary considerably, even
among states of similar size or geographic proximity. Thus, a person who is eligible for Medicaid in
one state may not be eligible in another state, and the services provided by one state may differ con-
siderably in amount, duration, or scope from services provided in a similar or neighboring state. In
addition, state legislatures may change Medicaid eligibility and/or services during the year.
The Medicare-Medicaid Relationship
Medicare beneficiaries who have low incomes and limited resources may also receive help from the
Medicaid Program. For such persons who are eligible for full Medicaid coverage, the Medicare

Page vi Medicare Resident & New Physician Guide

Preface

healthcare coverage is supplemented by services that are available under their State's Medicaid Pro-
gram, according to eligibility category. These additional services may include, for example, nursing
facility care beyond the 100-day limit covered by Medicare, prescription drugs, eyeglasses, and hear-
ing aids. For persons enrolled in both programs, any services that are covered by Medicare are paid
for by the Medicare Program before any payments are made by the Medicaid Program, since Medi-
caid is always the "payer of last resort."
Certain other Medicare beneficiaries may receive help with Medicare premium and cost-sharing
payments through their State Medicaid Program. Qualified Medicare Beneficiaries (QMBs) and
Specified Low-Income Medicare Beneficiaries (SLMBs) are the best-known categories and the larg-
est in numbers. QMBs are those Medicare beneficiaries who have resources at or below twice the
standard allowed under the SSI Program, and incomes at or below 100 percent of the Federal Poverty
Level (FPL). For QMBs, Medicaid pays the Hospital Insurance (HI) and Supplemental Medical In-
surance (SMI) premiums and the Medicare coinsurance and deductibles, subject to limits that States
may impose on payment rates. SLMBs are Medicare beneficiaries with resources like the QMBs, but
with incomes that are higher, though still less than 120 percent of the FPL. For SLMBs, the Medicaid
Program pays only the SMI premiums.
A third category of Medicare beneficiaries who may receive help consists of disabled and working
individuals. According to the Medicare law, disabled-and-working individuals who previously quali-
fied for Medicare because of disability, but who lost entitlement because of their return to work (de-
spite the disability), are allowed to purchase Medicare HI and SMI coverage. If these persons have
incomes below 200 percent of the FPL but do not meet any other Medicaid assistance category, they
may qualify to have Medicaid pay their HI premiums as Qualified Disabled and Working Individuals
(QDWIs). According to CMS estimates, Medicaid currently provides some level of supplemental
health coverage for 5 million Medicare beneficiaries within the above three categories.
For Medicare beneficiaries with incomes that are above 120 percent and less than 175 percent of the
FPL, the BBA establishes a capped allocation to States, for each of the 5 years beginning January
1998, for payment of all or some of the Medicare SMI premiums. These beneficiaries are known as
Qualifying Individuals (QIs). Unlike QMBs and SLMBs, who may be eligible for other Medicaid
benefits in addition to their QMB/SLMB benefits, the QIs cannot be otherwise eligible for medical
assistance under a State plan. The payment of this QI benefit is 100 percent federally funded, up to
the State's allocation.

Medicare Resident & New Physician Guide Page vi

Preface

Page viii Medicare Resident & New Physician Guide

Chapter 1 Overview of Medicare

Chapter 1 - OVERVIEW OF MEDICARE

This chapter introduces the Medicare Program, which consists of two parts: hospital insurance,
known as Part A and medical insurance known as Part B. A new third part of Medicare, sometimes
referred to as Part C, is the Medicare + Choice Program. This program was established by the Bal-
anced Budget Act of 1997 (BBA) and expanded beneficiaries' options for participation in private-
sector healthcare plans. This chapter also discusses the ways that various federal organizations affect
Medicare policies.
The following resources are available to beneficiaries and physicians who need information regard-
ing Medicare:
Beneficiary
· Call 1-800-MEDICARE (1-800-633-4227) or TTY users should call 1-877-486-2048
· Go to www.medicare.gov on the Internet and click on publications to read or print various Medi-
care booklets including the Medicare & You handbook. Also available is information on how to
contact local State Health Insurance Assistance Programs.
Physician
· Go to www.cms.hhs.gov/medlearn/tollnums.asp on the Internet to access phone numbers which
will help you obtain answers to specific physician/supplier questions

Overview
What is Medicare?
Medicare is a federal health insurance program that provides medical coverage for people 65 or
older, certain disabled individuals, and individuals with End-Stage Renal Disease (ESRD). The pro-
gram, established by Congress through Title XVIII of the Social Security Act, began July 1, 1966.
The U.S. Department of Health and Human Services (DHHS), through the Centers for Medicare &
Medicaid Services (CMS), manages Medicare.
CMS provides operational direction and policy guidance for nationwide administration of the pro-
gram, and it awards contracts to organizations called contractors to perform Medicare claims proc-
essing and related administrative functions.
Medicare Part A
Medicare Part A is Hospital Insurance. Fiscal intermediaries (FI) are contractors that administer
Medicare Part A. This coverage helps to pay for (but is not limited to):
· Inpatient hospital care
· Inpatient care in a skilled nursing facility following a covered hospital stay
· Some home healthcare
· Hospice care
Part A is financed by:
· Payroll taxes paid by employers and employees, through the Federal Insurance Contributions Act
(FICA)

Medicare Resident & New Physician Guide Page 1

Chapter 1 Overview of Medicare

· Self-employed individual contributions, through the Self-Employment Contributions Act

· Railroad workers and their employers and representatives, through the Railroad Retirement Act
Medicare Part B
Medicare Part B is Medical Insurance. Carriers are contractors that administer Medicare Part B. This
coverage helps to pay for (but is not limited to):
· Medically necessary services provided by a physician. These services may be furnished in a vari-
ety of medical settings including, but not limited to, the physician’s office, an inpatient or outpa-
tient hospital setting, rural health clinics, and ambulatory surgical centers.
· Home healthcare
· Ambulance services
· Clinical laboratory and diagnostic services
· Surgical supplies
· Durable medical equipment and supplies
· Services provided by practitioners with limited licensing, such as:
o Advanced Registered Nurse Practitioners (ARNPs)
o Independently practicing physical/occupational therapists
o Certified Registered Nurse Anesthetists (CRNAs)
o Licensed Clinical Social Workers (LCSWs)
o Audiologists
o Nurse midwives
o Clinical psychologists
o Physician’s Assistants (PAs)
Part B is financed by:
· Premium payments by enrollees
· Contributions from general revenues by the federal government
· Interest earned on the Part B “trust fund”
Medicare Part C
Medicare Part C or Medicare + Choice is a set of healthcare options created by the BBA to give
Medicare beneficiaries more choices in healthcare and contractors. A Medicare beneficiary may
choose to have covered items and services furnished to him or her through another plan, rather than
traditional Medicare. Medicare + Choice plans include:
· Health Maintenance Organization (HMO)
· Point of Service option (POS)
· Provider Sponsored Organization (PSO)
· Preferred Provider Organization (PPO)
· Private fee-for-service plan (PFFS)
· Religious fraternal benefit society plan (RFB)

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To participate in the Medicare Program, a Medicare managed care plan must have a contract with the
Secretary of DHHS. It must provide the same services a beneficiary would be eligible to receive
from Medicare if he or she were not a managed care plan enrollee. In other words, the beneficiary
still technically “has Medicare” but has selected a different contractor and is required to receive ser-
vices according to that contractor’s arrangements.
The beneficiary’s entitlement to Medicare is based on the same criteria, whether healthcare expenses
are payable by an HMO or traditional Medicare carriers and/or fiscal intermediaries.
The four types of election periods in which Medicare beneficiaries may enroll or disenroll from a
Medicare managed care plan are as follows:
· The annual election period, which occurs November 15 through December 31 each year.
· The initial coverage election period, which begins three months immediately before entitlement
to Medicare Part A or enrollment in Part B and ends three months after entitlement.
· The special election period, (granted in certain situations) to allow beneficiaries to change Medi-
care + Choice plans or to return to Original Medicare.
· The open enrollment period, which runs from January 1 through December 31 of each year
through 2004, if the health plan is open and accepting new members.
Medicare Eligibility
Hospital insurance (as well as medical insurance) is available to three basic groups of insured indi-
viduals:
· The aged
· The disabled
· Those with end stage renal disease
To be eligible for premium-free hospital insurance (Part A), an individual must be insured based on
his/her own earnings or those of a spouse, parent, or child. To be insured, the worker must have a
specified number of quarters of coverage (QCs), the exact number required is dependent upon
whether the person is filing for Part A on the basis of age, disability or end stage renal disease. QCs
are earned payment of payroll taxes under FICA.
Individuals, age 65 or older, who do not meet the insured status requirements for premium-free Part
A may enroll in Part A on a premium paying basis if they are entitled to medical insurance (Part B)
or are enrolling in Part B.
Medical insurance (Part B) is a voluntary program for which the enrollee pays a monthly premium.
All individuals who are entitled to premium-free Part A are eligible to enroll in Part B. Individuals
who are not eligible for premium-free Part A can enroll in Part B if they are: age 65, a resident of the
U.S., and a U.S. citizen or a permanent alien resident.
Getting to Know Medicare Beneficiaries
Aged Insured
An “aged insured” is at least 65 years old and eligible for Social Security, Railroad Retirement, or
equivalent Federal benefits.
Individuals with questions about Medicare eligibility and enrollment should be referred to their local
Social Security District Office or the 1-800-MEDICARE Helpline.
Medicare Part A, hospital insurance, is effective the month the individual attains age 65, if he or she
applies for the benefit within six months of his or her birth month. The rules governing the program

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state that age 65 is attained the day before the 65th birthday. For example, an individual born on De-
cember 1 attains age 65 on November 30. Therefore, Medicare Part A would be effective November
1, if all other eligibility criteria have been met. Entitlement generally does not end until death.
Medicare Part B, medical insurance, is voluntary, and becomes effective when the individual enrolls
and begins to pay the monthly premium. The earliest an individual may enroll in Part B is the first
month of his/her initial enrollment period. The initial enrollment period is a seven-month period that
begins the month a person turns age 65 and ends 7 months later. If a beneficiary enrolls during the
last four months of his/her initial enrollment period, the Part B effective date will be delayed. If a
beneficiary chooses not to enroll in Medicare Part B during the initial enrollment period, he or she
may only enroll during other specified times.
An individual’s coverage to premium-free Medicare Part A generally ends upon his or her death.
An individual’s coverage to Medicare premium Part A may be terminated whenever any of the fol-
lowing occurs:
· A voluntary request
· Nonpayment of premium
· End of entitlement to Medicare Part B
· Death of the beneficiary
An individual’s coverage to Medicare Part B may be terminated whenever any of the following oc-
curs:
· A voluntary request
· Nonpayment of premium
· Termination of Medicare Part A benefits
· Death of the beneficiary
Disabled Insured
An insured entitled to Social Security, Railroad Retirement, or equivalent federal benefits, based on
disability, is automatically entitled to Medicare Part A hospital insurance and enrolled for Medicare
Part B medical insurance unless coverage is refused. Generally, entitlement begins after the individ-
ual has received disability benefits for 24 months, not the date he or she became disabled. Beginning
July 1, 2001, individuals whose disability is Amyotrophic Lateral Sclerosis no longer have to wait 24
months for Medicare. These beneficiaries are entitled to Medicare effective the first month they are
entitled to disability benefits. This type of entitlement is also available to a disabled widow, or wid-
ower, or the disabled child of a deceased, disabled, or retired worker.
If an individual recovering from a disability is not dually eligible for Medicare, entitlement ends the
month following the month that notice of the disability termination is mailed. Medicare Part B enti-
tlement based on disability also terminates for any situation listed above for Medicare Part B termi-
nations for aged insured individuals.
End-Stage Renal Disease (ESRD) Insured
Individuals of any age who receive regular dialysis treatments or a kidney transplant are eligible for
Medicare if they:
· Meet certain work requirements for Social Security insured status or are entitled to monthly So-
cial Security benefits, or

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· Are eligible under Railroad Retirement Programs or entitled to an annuity under the Railroad Re-
tirement Act, or
· Are the spouses or dependent children of such insured or entitled persons.
Entitlement to Medicare usually begins after a three-month waiting period (e.g., with the first day of
the third month after the month in which a course of renal dialysis begins). Entitlement can begin at
an earlier date, if certain requirements are met.
Medicare is the secondary payer for claims for 30 months for ESRD beneficiaries who are covered
by a group health plan (GHP). The exception is an aged or disabled beneficiary who had GHP cover-
age that was secondary to Medicare when ESRD occurred. This 30-month coordination period be-
gins with the first day of Medicare eligibility.
Note: The BBA extended the ESRD coordination period from 18 months to 30 months for any indi-
vidual whose coordination period began on or after March 1, 1996.
For patients eligible to Medicare solely based on ESRD, coverage ends on the earliest of the follow-
ing dates:
· The patient’s date of death
· The last day of the 12th month after the month the course of dialysis is discontinued, unless the
patient receives a kidney transplant during that period or begins another course of dialysis.
· The last day of the 36th month after the month a person receives a kidney transplant. If the trans-
plant fails and a regular course of dialysis is initiated or another transplant is performed within
the 36 months, entitlement continues. If a patient whose entitlement based on ESRD has ended
begins a new course of dialysis or has a kidney transplant, re-entitlement begins without a wait-
ing period.
Medicare entitlement based on ESRD also terminates if any of the situations listed for Medicare Part
B terminations under “Aged Insured.”
Generally, an individual is not eligible to elect a Medicare + Choice plan if he or she is medically
determined to have ESRD. There are exceptions to this eligibility rule, such as individuals who are
already members of a Medicare + Choice plan when they develop ESRD and those individuals who
received a kidney transplant and no longer require a regular course of dialysis treatments.
Medicare Beneficiary Rights
The guaranteed rights of Medicare beneficiaries includes:
· Protection when they get healthcare services
· Assured access to needed healthcare services
· Protection against unethical practices
· The right to receive emergency care without prior approval
· The right to appeal the Original Medicare Plan’s decision about payment/services provided
· The right to information about all treatment options
· The right to know how their Medicare health plan pays its doctors
· The BBA (§4311) also gives beneficiaries the right to submit a written request to a physician or
supplier for an itemized statement for any Medicare item or service received. The physician or
supplier must furnish the itemized statement within 30 days of the request. Failure to provide the
statement on time can result in a civil monetary penalty of up to $100.00 for each occurrence.

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Chapter 1 Overview of Medicare

Identification of Medicare Beneficiaries

When an individual becomes entitled to Medicare, he or she receives a health insurance card. This
card contains important information that must be included on all claims submitted by providers:
· Name
· Sex
· Health Insurance Claim (HIC) number
· Effective date of entitlement to hospital (Part A) insurance
· Effective date of entitlement to medical (Part B) insurance
Most Medicare beneficiaries receive health insurance cards issued by CMS; however, the Railroad
Retirement Board (RRB) issues a Medicare card to individuals eligible for Medicare Railroad Re-
tirement benefits.
CMS-Issued Medicare Cards
Medicare cards issued by CMS typically reflect the Social Security Number (SSN) of either the in-
sured or a spouse (possible divorced or deceased) depending on the wage earner upon whose earn-
ings eligibility is based. An added alpha or alphanumeric suffix denotes the category of eligibility
including those who are required to pay monthly premiums for Part A coverage. Following is an il-
lustration of a sample CMS Medicare identification card:

RRB-Issued Medicare Numbers

Medicare numbers issued by the RRB may be the insured’s SSN or a six-digit number (zeros may be
added at the beginning to bring it to nine digits). Regardless of the length of the number, the in-
sured’s number will always have an alpha prefix (with one or more characters). For example, H000-
000 or H000-000-000 would be a railroad pensioner (by age or disability).
Verifying Beneficiary Eligibility
Eligibility for Social Security benefits is the basis for Medicare eligibility for most patients. The eli-
gibility source can be determined by asking to see the patient’s Medicare card. Maintaining a photo-
copy of the card in the patient’s file may prevent errors. Failure to record on a claim the beneficiary’s
name and identification number exactly as they appear on the Medicare card may result in a payment
denial or claim delay. The physician’s office should develop a process to regularly verify Medicare
insurance information and update patient records to reflect current information.
Note: Due to an increase in lost and stolen Medicare cards, verifying and copying a patient’s picture
identification is suggested to ensure the patient is eligible to receive benefits. If Medicare pays a
claim for services rendered to a non-Medicare-eligible beneficiary, a refund request may be gener-
ated.

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Claim Submission
Medicaid
Medicaid is a joint federal/state healthcare plan for beneficiaries who are financially unable to obtain
health insurance. For physicians who accept Medicaid assignment, the Medicare and Medicaid pay-
ments represent payment in full for services rendered. In cases based on program limitations, Medi-
caid does not pay for specific services. Therefore, physicians should follow Medicaid collection
guidelines.
A Medicaid beneficiary receives a Medical Identification Card (MIC) and an Authorization for
Medical Eligibility (Form HRS-ES 2014) or an HMO/PHP card. If he or she is eligible for Medicare
and Medicaid, the physician submits the claim to Medicare on an “assigned” basis (assigned claims
are discussed in Chapter 3). Additionally, the patient’s Medicaid identification number is entered in
block 10d (or the equivalent field on the electronic claim) of Form CMS-1500.
Note: Medicaid assigns each physician a unique provider number (separate from the Medicare pro-
vider number) for billing purposes. Physicians may contact the local Medicaid office for information
about becoming a Medicaid provider.
Private Contracting with Medicare Beneficiaries
Certain physicians and practitioners (under a limited definition for this purpose) privately contract
with Medicare beneficiaries. Please refer to Chapter 11, Private Contracting with Medicare Benefici-
aries, for more information.
Durable Medical Equipment Regional Carrier (DMERC)
Physicians are required to submit most claims for durable medical equipment, prosthetics, orthotics,
and supplies to one of the four Durable Medical Equipment Regional Carriers (DMERCs) that proc-
ess DME claims. A listing of DMERCs is also available at www.cms.hhs.gov/contacts/incardir.asp
on the Internet.
For a complete list of procedure codes billable to the DMERC, physicians may write to the local
Medicare contractor or local DMERC.
Regional Home Health Intermediary (RHHI)
RHHIs currently process Part A hospice and home healthcare claims. The beneficiary’s home state
determines which RHHI is responsible for processing his or her claim. For the appropriate State in-
termediary, physicians should contact their contractor. This information is also available at
www.cms.hhs.gov/contacts/incardir.asp on the Internet.
Railroad Retirement Beneficiaries
Please refer to the earlier topic in this chapter, “Identification of Medicare Beneficiaries,” for more
information. The local Medicare contractor can provide information on where to send claims for
Railroad Retirement beneficiaries.
United Mine Workers of America (UMWA)
Some Medicare beneficiaries are members of the United Mine Workers of America (UMWA). The
UMWA Health and Retirement Fund is a health benefit plan for retired UMWA coal miners,
spouses, and dependents. The local Medicare contractor can provide information on where to send
UMWA claims.
Medicare Managed Care Plan
When a beneficiary is a member of a Medicare managed care plan, the plan is responsible for paying
claims under the following conditions:

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Chapter 1 Overview of Medicare

· The physician is affiliated with the Medicare managed care plan

· The physician provides emergency services, urgently needed services, or other covered services
not reasonably available through the Medicare managed care plan
When a physician submits claims for a beneficiary enrolled in a Medicare managed care plan, the
local Medicare Part B carrier will deny payment (except dialysis and related services provided in a
dialysis facility).
Receiving Reimbursement When Medicare Managed Care Plan Doesn’t Pay
Physicians who do not have a contract with a Medicare managed care plan to provide services, yet
provides services to an enrollee, should bill the enrollee’s Medicare managed care plan. The physi-
cian can expect to receive what the physician would otherwise expect to receive under Medicare fee-
for-service. However, if the claim or service is denied by the Medicare managed care plan, the physi-
cian should not bill the Medicare enrollee for any amount other than the cost-sharing amount(s) that
the beneficiary would expect to pay as a member of a Medicare managed care plan. Medicare +
Choice program requirements prohibit non-contracting providers from pursuing Medicare beneficiar-
ies for payment of claims that are the legal obligation of a Medicare + Choice organization.
Physicians Who Are Not Medicare Managed Care Plan Providers
Before rendering service, physicians who are not Medicare managed care plan providers should em-
phasize to their Medicare managed care plan patients what their financial liability will be. If patients
choose to see a non-Medicare managed care plan provider for healthcare services, they should clearly
understand that they might be responsible for the full fee for services rendered.
Organizations That Affect Medicare
Federal Government
Congress passes laws that affect Medicare reimbursement of physicians and beneficiaries. Several
congressional committees deal with Medicare legislation, including:
House of Representatives
· Ways and Means Committee
· Appropriations Committee
· Energy and Commerce Committee
Senate
· Appropriations Committee
· Finance Committee
· Energy and Commerce Committee
The Commerce Clearing House Guide to Medicare and Medicaid describes proposed legislative
changes to the Medicare Program. For purchasing information, contact the Commerce Clearing
House at www.cch.com on the Internet, by phone at 1-800-835-5224, or by writing to the following
address:
Commerce Clearing House, Inc.
4025 West Peterson Ave.
Chicago, IL 60646-6085

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Chapter 1 Overview of Medicare

Social Security Administration (SSA)

The SSA, an independent agency, has special responsibilities in five major benefit areas: retirement,
disability, family benefits, survivors, and Medicare. SSA assures that beneficiaries are eligible for
Medicare benefits and enrolls them in Parts A and/or B, Black Lung (the Funds Program), or Medi-
care + Choice. When a patient enrolls in Medicare, SSA issues an enrollment package and a Medi-
care identification card.
SSA is also responsible for:
· Maintaining deductible status
· Replacing lost or stolen Medicare cards
· Address changes
· Maintaining and establishing beneficiary enrollment
· Collecting premiums from beneficiaries
· Educating beneficiaries regarding coverage and insurance choices
Department of Health and Human Services (DHHS)
DHHS is the United States cabinet-level department that oversees federal health programs, including
Medicare, and provides essential human services. The Secretary of DHHS contracts with private in-
surance companies to process Medicare claims. DHHS is responsible for conducting fraud and abuse
audits and investigations for the federal government.
Centers for Medicare & Medicaid Services (CMS)
CMS is an agency of DHHS. It administers Medicare, Medicaid, and the State Children’s Health In-
surance Program by creating carrier and intermediary policy according to congressional mandates.
CMS also regulates laboratory testing and surveys and certifies healthcare facilities, including nurs-
ing homes, home health agencies, intermediate care facilities for the mentally retarded, and hospitals.
The CMS central office is in Baltimore, Maryland; it provides operational direction and policy guid-
ance for the nationwide administration of the Medicare and Medicaid Programs. Each regional office
in Atlanta, Boston, Chicago, Dallas, Denver, Kansas City, New York, Philadelphia, San Francisco,
and Seattle provides policy guidance to several Medicare contractors.
Office of the Inspector General (OIG)
The OIG, a DHHS organization, helps to protect Medicare by investigating suspected fraud or abuse
and developing cases. It audits and inspects CMS programs and may act against individual healthcare
providers through civil monetary penalties and exclusions, such as the exclusion of providers con-
victed of healthcare related offenses. When appropriate, OIG has the authority to refer cases to the
U.S. Department of Justice for criminal or civil action.
State Government
A state agency (usually a health department component) surveys all Part A and certain Part B provid-
ers and suppliers and recommends to the Secretary of DHHS whether they are eligible to participate
in the Medicare Program. The state agency’s principal activities in this area include:
· Identifying an institution or facility that might qualify as a provider or supplier for the Medicare
Program, using guidelines provided by the Secretary

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Chapter 1 Overview of Medicare

· Inspecting, certifying, and recommending to the Secretary whether the provider or supplier quali-
fies as a participating provider or supplier
· Consulting with providers and suppliers to help them sustain quality standards compliance
State agencies are responsible for medical licensing of physicians. Physicians may contact provider
associations or local governments for a list of state agencies to contact for various specialties.
State, county, and city agencies are also responsible for issuing applicable business licenses, based
on jurisdictional law. Physicians should contact their state, county, and/or city for a list of appropri-
ate agencies to contact regarding required business licenses.
Quality Improvement Organizations (QIO)
CMS administers the Quality Improvement Organization (QIO) Program, which is designed to moni-
tor and improve utilization and quality of care for Medicare beneficiaries. The program consists of a
national network of fifty-three QIOs (formerly known as Peer Review Organizations) responsible for
each State, territory, and the District of Columbia. Each QIO maintains a staff of highly qualified,
multi-disciplinary experts in medicine, quality improvement, health information management, statis-
tical analysis, computer programming and operations, communications, public relations, and cleri-
cal/administrative support. Their mission is to ensure the quality, effectiveness, efficiency, and
economy of healthcare services provided to Medicare beneficiaries.
QIOs are required to review all written quality of service complaints submitted by Medicare benefi-
ciaries or their designated representatives. The review addresses whether the services met profes-
sionally recognized standards of healthcare and may include whether the appropriate services were or
were not provided in appropriate settings. The QIOs’ professional medical staff performs these re-
views. The results of the reviews are submitted to CMS.

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Chapter 2 Becoming a Medicare Physician

Chapter 2 - BECOMING A MEDICARE PHYSICIAN

This chapter discusses Medicare physicians and their reimbursement for services rendered, including
how a physician becomes a Medicare provider, assignment of claims, the benefits of the Medicare
Part B Participation Program, how reimbursement is calculated, payment incentives, and how limit-
ing charges affect a nonparticipating physician’s practice.
Medicare Part B Physicians
Physicians
The Medicare Program defines a physician as a doctor of medicine or osteopathy; a doctor of dental
surgery or dental medicine; a chiropractor; a doctor of podiatry or surgical chiropody; or a doctor of
optometry, legally authorized to practice by a state in which he or she performs this function. The
services performed by a physician within these definitions are subject to any limitations imposed by
the state on the scope of practice.
The issuance by a state for a license to practice medicine constitutes legal authorization. Temporary
state licenses also constitute legal authorization to practice medicine. If state law authorizes local po-
litical subdivisions to establish higher standards for medical practitioners than those set by the state
licensing board, the local standards are used in determining whether a particular physician has legal
authorization. If the state licensing law limits the scope of practice of a particular type of medical
practitioner, only the services within these limitations are covered.
Residents and Interns
For Medicare purposes, the terms interns and residents include physicians participating in approved
Graduate Medical Education (GME) training programs and those who are not in approved programs
but who are authorized to practice only in a hospital setting. These include, for example, individuals
with temporary or restricted licenses and graduates of foreign medical schools who do not have a
valid medical license. Receiving a staff or faculty appointment or participating in a fellowship does
not alter the status of “resident” for the purposes of Medicare coverage and reimbursement.
Generally, the intermediary pays services of interns and residents as physician services. Except for
services furnished by interns and residents outside the scope of their training program, the following
types of services performed by interns and residents are reimbursable to the hospital under Part B on
a reasonable cost basis:
· Services by interns and residents not in approved training programs
· Services performed for hospital outpatients
· Services generally covered under Part A, but for which the patient is not eligible under Part A
(e.g., all inpatient hospital benefit eligibility has been used)

Intern and Resident Services Furnished Under an Approved Training Program

Medical and surgical services furnished by interns and residents within the scope of their training
program are covered as physician services. This includes services furnished in a setting that is not
part of the nonphysician facility when a hospital has agreed to incur all or substantially all the costs
of training in the nonphysician facility. The physician is required to notify the Medicare carrier of
such agreements. When a licensed physician performs the services, but the physician incurs little or
none of the training costs, the carrier may reimburse the services on a reasonable charge basis.

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Intern and Resident Services Furnished Outside an Approved Training Program

Medicare reimburses resident and intern medical and surgical services that are not related to the in-
tern or resident training program if the services are performed in a hospital outpatient department or
emergency room. The services may be covered as physician services, reimbursable on a reasonable
charge basis, where the following criteria are met:
· Services are identifiable physician services that require performance by a physician in person and
contribute to the diagnosis or treatment of the patient’s condition
· Intern or resident is fully licensed as a physician for purposes of performing the services
· Services are performed under the terms of a written contract or agreement and can be separately
identified from services required as part of the training program
When these criteria are met, the services are considered to have been furnished by the individuals in
their capacity as physicians and not in their capacity as interns and residents. The Medicare carrier is
expected to review the contracts/agreements for such services to ensure compliance with the above
criteria.
Nonphysician Practitioners
Medicare allows payment for services furnished by nonphysician practitioners. These include but are
not limited to: Advanced Registered Nurse Practitioners (ARNP), Clinical Nurse Specialists (CNS),
Licensed Clinical Social Workers (LCSW), and Physician Assistants (PA).
To submit claims to Medicare for reimbursement, a nonphysician practitioner must first apply to the
program by completing Form CMS-855I and submitting the required documentation. If the applica-
tion is approved, payment is allowed for the practitioner’s services in all areas and settings permitted
under applicable state licensure laws.
Note: No separate payment may be made to the nonphysician practitioner if a facility or other physi-
cian payment is also made for such professional service.
When an ARNP or PA renders services that are integral, although incidental, to a physician’s service,
the physician’s provider number should be submitted on the claim. In this situation, a provider num-
ber for the ARNP or PA is not needed. Please refer to Chapter 5, “Incident to” Provision, for more
information.
Physicians/Suppliers
Medicare processes claims for certain physicians/suppliers (e.g., physician, nonphysician practitio-
ner, independent diagnostic testing facilities, ambulance providers, portable X-ray units, and phar-
macies). To submit claims to Medicare for reimbursement, providers/suppliers must apply to the
program by completing Form CMS-855I and/or CMS-855B along with the required supporting
documentation. If the application is approved, Medicare will notify the provider/supplier by issuing
an identification number.
Note: Durable Medical Equipment (DME) suppliers should submit Form CMS-855S to the National
Supplier Clearinghouse at: P.O. Box 100142, Columbia, SC 29202-3142. Claims for supplies, or-
thotics, prosthetics, equipment, and certain injectables are submitted to the Durable Medical Equip-
ment Regional Carrier (DMERC). The beneficiary’s home state determines which DMERC is
responsible for processing his or her claim. For the appropriate DMERC, providers should contact
their local carrier. This information is also available at www.cms.hhs.gov/contacts/incardir.asp on
the Internet.

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Medicare Part B Physician Enrollment

Physicians wishing to receive payment for Medicare services must complete the appropriate Form
CMS-855, provider/supplier enrollment application. This form requests payment and other general
information and documentation to ensure that an applicant is qualified and eligible to enroll in the
Medicare Program.
The completed Form CMS-855I and documentation are sent to the local carrier’s provider enroll-
ment department. The carrier verifies the information and documentation and notifies the applicant
of the decision. Notification includes the physician’s provider identification number (PIN) for Medi-
care billing, which is used in all communication with the local carrier. The enrollment application
may be obtained from the local carrier. This information is also available at
www.cms.hhs.gov/providers/enrollment on the Internet.
Physician/Supplier Specialties
Medicare Part B enrolls physicians/suppliers based on their credentials or specialties. Medicare rec-
ognizes many specialties. Physicians may have a primary and a sub-specialty. Since a physician’s
specialty may be used to determine peer utilization comparisons, physicians should notify the carrier
of their practice’s predominant specialty for annotation in Medicare records. No payment differential
is applied to a service based on specialty.
Physician Identification
Physicians receive several different identifying numbers:
· Provider Identification Number (PIN) – used as a provider billing number to receive reimburse-
ment
· Unique Physician/Practitioner Identification Number (UPIN) – used only when a service requires
a referring or ordering physician; never used as a provider billing number
Provider Identification Number
The PIN is the individual provider number issued by the local Medicare carrier. It identifies who
provided the beneficiary’s service and allows the physician/supplier or patient to receive reimburse-
ment for claims filed to the Medicare carrier. The PIN format is unique and varies from carrier to
carrier. All Medicare claims filed to the carrier require a PIN; if a provider fails to show a PIN in the
appropriate paper claim block or electronic claim field, an “unprocessable” claim denial will result.
Individual Healthcare Practitioners
Individual healthcare practitioners are physicians and nonphysician practitioners who render medical
services to Medicare beneficiaries and submit claims for the services rendered. These practitioners
must complete Form CMS-855I.
Those individual healthcare practitioners who bill the Medicare carrier directly for their services will
be issued their own individual PIN. The address tied to the PIN is usually the physician’s bill-
ing/mailing address, which may differ from his or her physical address where medical services are
rendered. Many carriers can maintain two addresses in the provider address file. Medicare may verify
a new provider’s address by contacting the post office, by a personal visit, or by other means.
Physician-Directed Group/Clinic Practice
A physician-directed group/clinic may be a partnership, association, or corporation composed of
physicians or nonphysician practitioners who wish to bill Medicare as a unit. The group must com-
plete Form CMS-855B.

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If a physician wishes to file claims as part of a group/clinic, the group/clinic must request a
group/clinic PIN number for billing purposes. Each local carrier issues it’s own group/clinic PINs, so
number formats will vary by carrier. The group/clinic PIN makes the group unique when filing ser-
vices to the local carrier.
The address tied to the PIN is usually the group/clinic’s billing or mailing address, which may differ
from the physical address. Many carriers can maintain two addresses in the provider address file.
Medicare may verify a new group’s address by contacting the post office, by a personal visit, or by
other means.
Reassignment of Benefits: Each member within the group/clinic must complete an Individual Reas-
signment of Benefits, Form CMS-855R, stating they agree to turn all monies over to the group/clinic.
After the reassignment agreement has been signed, the local Medicare carrier will tie the individual
physician’s PIN to the group/clinic PIN. When the group/clinic bills Medicare, they must use this
provider number when filing for services performed as part of the group.
New PIN, New Group Member, Change of Address
Providers/suppliers should contact the carrier with requests for the appropriate Form CMS-855 to
apply for provider numbers, add new group members, or change addresses. This information is also
available at www.cms.hhs.gov/providers/enrollment/forms on the Internet.

Unique Physician/Practitioner Identification Number (UPIN)

The UPIN is assigned by CMS. It is a six-character alphanumeric code identifying the Medicare pro-
vider. This number is assigned to physician, nonphysician practitioners, groups/clinics, and suppliers
(excluding those billing to the DMERC) to identify the referring or ordering physician on the Medi-
care claim.
Each individual practitioner (physicians and nonphysician practitioners only) receives one UPIN, re-
gardless of the number of practice settings. The individual practitioner keeps the UPIN throughout
his or her Medicare affiliation, regardless of the state he or she practices in. CMS uses the UPIN to
identify the ordering and referring physician, to aggregate payment and utilization information for
individual practitioners, to ensure compliance with contractor recommendations for sanctions, and to
validate duplicate services.
When a UPIN is Required
A UPIN is required if the service is requested by:
· A referring physician who requests an item or service for a beneficiary, for which payment may
be made under the Medicare Program
· An ordering physician who orders nonphysician services for a beneficiary, such as diagnostic
laboratory tests, clinical laboratory tests, or durable medical equipment
Services Requiring a UPIN
The UPIN requirement is based on the type of service, not the physician’s specialty. Services cur-
rently include:
· Consultation services
· Routine foot care
· Durable medical equipment and other medical supplies
· Orthotics/prosthetic devices, including optical supplies

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· Most diagnostic services, including laboratory and radiology services

· Services by independently practicing physical or occupational therapists
Entering the UPIN on a Claim
When filing Form CMS-1500, the referring/ordering physician’s CMS-assigned UPIN must be en-
tered in block 17a and the name of the referring physician in block 17. When filing electronically, the
same information is required in the equivalent fields. Multiple referring and/or ordering physicians
require a separate claim for each ordering/referring physician’s service.
Ordering/Referring Physician Without a UPIN
A surrogate UPIN is used temporarily if a UPIN has been requested, but no UPIN has been assigned
to the ordering/referring physician. A surrogate UPIN has three alpha characters followed by three
zeros. All surrogate UPINs, except those of retired physicians (RET000) may be used only until an
individual UPIN is assigned. Carriers monitor all surrogate UPINs for misuse. Surrogate UPINs re-
quire the physician’s name and address. Ordering/referring physicians who may require a surrogate
UPIN are:
· RES000 – intern, resident, and fellow
· VAD000 – physicians serving on active duty in the United States military and those employed by
the Department of Veterans Affairs
· PHS000 – physicians in the Public Health Service, including the Indian Health Service
· RET000 – retired physician (Retired physicians who were assigned a UPIN must use their as-
signed UPIN)
· OTH000 – ordering/referring physicians who have not received a UPIN and do not meet the cri-
teria for one of the other surrogate UPINs; used until an individual UPIN is assigned
If a Referring Physician Does Not Exist
When services requiring a UPIN are performed, and no referring physician exists, the UPIN and
name of the performing physician are to be reported.

Participation Program
Participation in the Medicare Program means a physician voluntarily enters into an agreement to ac-
cept assignment for all services provided to Medicare patients and becomes a participating physician.
Participating physicians and suppliers must accept assignment of Medicare benefits for all covered
services for all patients. A nonparticipating physician (one who chooses not to participate) may ac-
cept assignment of Medicare claims on a case-by-case basis.
Deciding Whether to Participate
Physicians have only one opportunity each year to change their participation status for the following
calendar year. This occurs during the carrier open enrollment period, usually in November.
Each active Medicare physician receives a participation package during the open enrollment period.
This package normally contains information about:
· Advantages of participation
· Medicare physician fee schedule allowances for the next calendar year
· Proposed legislative changes that could impact the participation decision
· Physician’s current participation status and year of practice for new physicians (if applicable)

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· Form CMS 460 – Medicare Participating Physician or Supplier Agreement form which does not
need to be completed or returned to Medicare if there is no change in participation status for the
following year
Changing Participation Status
The participation period is one year (from January 1 to December 31). Once a physician signs a par-
ticipation agreement, Medicare rarely honors a decision to change participation status during the
year. However, a physician wishing to change participation status during the year must notify the lo-
cal carrier’s provider enrollment department and state the reason for the change. The carrier will then
consider the request. A participating physician who wishes to continue participating need not sign
another participation agreement. The current agreement will remain in effect until the physician noti-
fies the carrier otherwise.
Benefits of Participation
Benefits of becoming a participating physician include the following:
· Eligibility access: Participating physicians submitting electronic claims may review beneficiary
eligibility files via vendor access. Please refer to Chapter 3, Electronic Media Claims, for more
information.
· Financial: Medicare fee schedule allowances are five percent higher for participating physicians.
In addition, physicians who participate are not subject to limits on actual charges.
· Medigap: Claims with Medigap information will automatically crossover to the beneficiary’s
supplemental insurer. Please refer to the topic later in this chapter, Medigap, for more informa-
tion.
· MEDPARD Directory: Contains a listing of all participating physicians. Carriers maintain a toll-
free telephone line that allows Medicare beneficiaries to request information about local partici-
pating physicians. Some carriers maintain MEDPARD directories on their Web site.
The local carrier can provide physicians with information about the Participation Program.
The Nonparticipating Physician
· Is held to a limiting charge when submitting nonassigned claims
· Must file all claims for potentially reimbursable services on behalf of his or her Medicare pa-
tients
· May collect up to the limiting charge at the time the services are rendered
· Is reimbursed a Medicare fee schedule allowance that is five percent lower than that of a partici-
pating physician

Reimbursement
Medicare Part A Reimbursement
Medicare Part A claim reimbursement is based on the provider’s cost, as negotiated with the fiscal
intermediary (FI). Reimbursement includes services provided by:
· Home health agencies
· Rural health clinics
· Hospitals

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· Skilled nursing facilities

· Nursing homes
Part A inpatient hospital care is reimbursed at a predetermined rate per discharge, in accordance with
the Diagnosis Related Group (DRG) and at a federally standardized payment amount that is payment
in full for inpatient operating and capital costs. The provider may collect reimbursement from the
beneficiary for excluded services, unmet deductible, and coinsurance amounts.
Medicare Part B Reimbursement
Medicare Part B claim reimbursement is based on an established “fee-for-service” schedule for ser-
vices filed to the carrier. These services are:
· Physician services
· Clinical laboratory
· Injectables
· Durable Medical Equipment (DME)
Medicare Part B physicians are reimbursed at 80% of the lower of the established fee schedule, rea-
sonable or customary charge (depending on the type of physician), or the billed charge for the
following services:
· Physician services
· Ambulance
· DME
· Diagnostic tests
Some services are reimbursed at 100% of the lower of either the established fee schedule or their
billed charge. These services are:
· Clinical laboratory
· Influenza or pneumococcal vaccinations
· Other exceptions as defined by CMS

Facility Fee Pricing Schedule

Services primarily performed in the following settings are subject to a payment limit:
· An inpatient or outpatient hospital setting
· A hospital emergency room
· A Skilled Nursing Facility (SNF)
· A comprehensive inpatient or outpatient rehabilitation facility
· An inpatient psychiatric facility
· An Ambulatory Surgical Center (ASC)
Medicare pays less because the physician’s overhead and other related expenses are lower than in the
standard office setting. Physicians are not permitted to bill the beneficiary for the difference between
the actual charges and the reduced allowed amount based on the location of the service.
Note: For the above situations, the allowed amount will be the lower of the actual charge or the re-
duced fee schedule amount. Carriers are required to publish facility fee pricing schedules.

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The Medicare Part B Physician Fee Schedule

Physician services are paid through a fixed fee schedule, charges for which are based on three key
Resource-Based Relative Value Units (RBRVUs). The RBRVU system fixes a national value for
each procedure code, based on the sum of the RBRVUs associated with:
· The physician’s time, intensity, and technical skill required to render a service
· The practice’s overhead expenses, such as rent, office staff salaries, and office supplies
· Malpractice insurance premiums
RBRVUs are established locally to allow for variations in practice costs among geographic areas,
and each pricing locality for a given state has a Geographic Practice Cost Index (GPCI) for each
RBRVU.
Physician fee schedules for all Medicare Part B carriers are calculated using one national Conversion
Factor (CF). Congress determines the CF each year, considering the projected inflation rate, pro-
jected vs. actual claims volumes, Medicare enrollment changes, and other factors potentially impact-
ing the Medicare Part B budget.
Capitation Rate
A capitation rate is a fixed amount CMS pays a participating managed care plan that is selected by
an enrolled Medicare beneficiary. CMS pays the plan, which then reimburses the physician for ser-
vices provided within the terms of the agreement/plan, regardless of the cost or amount of care pro-
vided to each Medicare beneficiary enrolled in the managed care plan.
Physician Collection from Patients
On assigned claims, the Medicare beneficiary is responsible for:
· Unmet deductibles
· Excluded services
· Applicable coinsurance amounts
On nonassigned claims, the Medicare beneficiary is responsible for the entire bill up to, but not ex-
ceeding, the limiting charge for most services provided by a nonparticipating physician. Physicians
may obtain current year fee schedule amounts, including limiting charge information from the local
Medicare carrier.
Medicare Deductibles
Like most insurance plans, Medicare Parts A & B have deductibles, applicable to covered services
and supplies, that must be satisfied before the carrier or intermediary pays.
Physicians must collect the unmet deductible from the beneficiary. Consistently waiving the deducti-
ble may be interpreted as program abuse. If a beneficiary is unable to pay the deductible, the physi-
cian should ask him or her to sign a waiver that explains the financial hardship. If no waiver is
signed, the beneficiary’s medical record should reflect normal and reasonable attempts to collect,
before the charge is written off.
Medicare Coinsurance
Coinsurance is the amount that Medicare will not pay; the beneficiary or the beneficiary’s supple-
mental insurance company is responsible for paying coinsurance to the physician.
Coinsurance amounts are generally 20% of the Medicare fee schedule. Physicians must collect the
unmet coinsurance from the beneficiary. Consistently waiving the coinsurance may be interpreted as
program abuse. If a beneficiary is unable to pay the coinsurance, the physician should ask him or her

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to sign a waiver that explains the financial hardship. If no waiver is signed, the beneficiary’s medical
record should reflect normal and reasonable attempts to collect, before the charge is written off.
Note: Normal and reasonable means applying normal collection processes to Medicare as well as
non-Medicare patients. For example, if a physician normally telephones non-Medicare patients and
sends two written notices before writing off charges or referring them to a collection agency, Medi-
care patients must receive the same treatment.
Medicare Premium Amounts for 2003
The Medicare premium is the amount a beneficiary regularly pays to Medicare for healthcare cover-
age.
Part A (Hospital Insurance)
· Deductible: $840.00 (per benefit period)
· Coinsurance: $210.00 a day for days 61-90 each benefit period; $420.00 a day for days 91-150
for each lifetime reserve day used (total of 60 lifetime nonrenewable reserve days)
· Premium: $316.00 a month (This premium is paid only by individuals who are not otherwise eli-
gible for premium-free hospital insurance and have less than 30 quarters of Medicare-covered
employment.) The premium is $174.00 for those individuals having 30-39 quarters of Medicare
covered employment.
· Skilled Nursing Facility Coinsurance: $105.00 a day for days 21-100 each benefit period
Part B (Medical Insurance)
· Deductible: $100.00 per year (The beneficiary is responsible for 20% of the Medicare approved
amount for services after the $100.00 deductible is met.)
· Premium: $58.70 a month
Note: Premium amounts for Medicare Parts A & B are available at www.medicare.gov on the Inter-
net.
Supplemental Insurance
Supplemental insurance or coverage is a policy purchased by a beneficiary to help pay for expenses
not paid by Medicare, such as deductibles, coinsurance, and excluded services.
Supplemental insurers may arrange for Medicare to file supplemental claims automatically. In cases
where supplemental insurers do not have this arrangement with Medicare, beneficiaries must file
their own supplemental claims. Traditional supplemental insurance policies directly reimburse pa-
tients who are in turn responsible for reimbursing the healthcare provider.
Exclusions include:
· Date(s) of service outside the patient’s eligibility period
· Claims paid at 100 percent of Medicare approved amount
· Medicare claims containing totally denied services
Medigap
Medigap is privately offered Medicare supplemental health insurance specifically designed to sup-
plement Medicare benefits.
A Medigap plan is a health insurance plan that helps bridge gaps in Medicare plan coverage. In all
states, there are basic standardized Medigap plans. Each plan has a different set of benefits and pro-

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vides payment for some expenses not paid by Medicare such as deductibles, coinsurance, or other
limitations imposed by Medicare.
Under the Omnibus Budget Reconciliation Act of 1987 (OBRA 87) Medigap provision, a Medicare
beneficiary with a Medigap policy may authorize the participating supplier of services to file a claim
on his or her behalf and to receive payment directly from the Medigap insurer, instead of through the
beneficiary. The Medicare carrier is required to “crossover” any Medicare claim for services ren-
dered by a participating provider (physician or supplier) when the beneficiary has reassigned these
benefits. The Medigap insurer is then required to pay any supplemental benefits directly to the pro-
vider. The reassignment of these benefits is made on a per claim basis and requires signed authoriza-
tion from the beneficiary.
Medigap is an added benefit to the participating physician. This crossover process eliminates the
need for the beneficiary or provider to file a separate claim to the beneficiary’s supplemental insurer.
By submitting a single Medicare claim that includes accurate Medigap insurer policy information
and the beneficiary’s signed authorization, the provider receives both the Medicare and coinsurance
amounts.
The following guidelines apply when providers submit Medigap claims:
· Medigap policy information must be accurately reported on the Medicare claim
· The reassignment of supplemental Medigap benefits may be made only to participating Medicare
providers
· The beneficiary must sign authorization for the reassignment of Medigap benefits
· Crossover occurs on a per claim basis
Financial Incentive
Medicare has a special financial incentive for additional reimbursement, to ensure that Medicare
beneficiaries located in rural areas have healthcare access. This special incentive is available in
Health Professional Shortage Areas located throughout the United States.
Medicare Part B Health Professional Shortage Area (HPSA)
A HPSA is an area of a state designated as a medically under-served area. A HPSA may cover an
entire county or only a portion of a county or city and is designated as a rural or an urban HPSA.
Census tracts define portions of counties eligible for incentive payments. Physicians should contact
the local Medicare carrier to locate HPSAs in a particular state.
Incentive payment for services rendered in a HPSA is determined and issued on a quarterly basis for
assigned and nonassigned claims for physician-designated services. The HPSA incentive payment is
10% of the amount Medicare paid to the physician in the previous quarter. A summary explanation
accompanies each quarterly incentive check.
Physicians should indicate one of the following modifiers (two-digit alphanumeric code that affects
reimbursement, used in conjunction with a procedure code) on the claim form to identify services
rendered in a HPSA:
· QB - Physician service rendered in a rural HPSA
· QU - Physician service rendered in an urban HPSA
For the purpose of this provision of the law, only physician services are eligible for HPSA payments
and are further defined as the following physician types: Medical Doctor (M.D.), Doctor of Osteopa-
thy (D.O.), Doctor of Chiropractic Medicine (D.C.), Doctor of Podiatric Medicine (D.P.M.), Doctor
of Dental Surgery (D.D.S.), and Doctor of Optometry (O.D.).

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Limits on What Medicare Patients May Be Charged

The limiting charge represents the maximum amount that a nonparticipating physician may legally
charge a Medicare beneficiary for services billed on nonassigned claims.
Such limits are not applicable to charges made by participating physicians, nor for any services
billed on an assigned basis by nonparticipating physicians. Limiting charges are not used to deter-
mine the payment allowance, but are intended to minimize beneficiary liability on nonassigned
claims.
Calculation of Limiting Charges
The limiting charge may be no higher than 15 percent above the fee schedule amount for nonpartici-
pating physicians (e.g., 115 percent). The limiting charge may be rounded to the nearest dollar if
done so consistently for all services. The following formula is used in rounding:
· $.01 - $.49 – round down
· $.50 - $.99 – round up
Fee Schedule Allowances
Fee schedule allowances of each procedure code for participating and nonparticipating physicians,
including limiting charges for nonassigned claims, may be obtained from the local Medicare carrier.
Exceptions to Limiting Charge Rules
Generally, all services reimbursed under the physician's fee schedule are subject to the limiting
charge. Some common exceptions are:
· Services that are never covered by Medicare
· Durable Medical Equipment (DME)
· Prosthetics/orthotics
· Technical components of diagnostic tests
· Portable X-ray services
· Independent laboratories
· Ambulance services
· Injectable drugs/biologicals
Notifying Beneficiaries of Limiting Charges
Beneficiaries receive an Explanation of Medicare Benefits (EOMB) or Medicare Summary Notice
(MSN) for each service that is rendered. The EOMB or MSN:
· Notifies patients of their liability
· Alerts them to excess billed amounts that must be refunded to them

Medicare Part B Reimbursement of Physician Services

The following examples show how basic reimbursement by Medicare Part B is calculated, depending
on a physician’s participation status and whether or not assignment is accepted:
Participating Physician Must Always Accept Assignment
1. Submitted charge = $125.00
2. Medicare allowed (participating fee schedule) amount = $100.00
3. Medicare pays physician 80% = $80.00
4. Patient is billed for 20% coinsurance = $20.00

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5. Physician may collect the 20% coinsurance amount from the patient = $20.00
Nonparticipating Physician Who Does Not Accept Assignment
1. Submitted charge (Medicare limiting charge) = $109.25
2. Medicare allowed (nonparticipating fee schedule) amount = $95.00
3. Medicare pays patient 80% of fee schedule = $76.00
4. Physician may collect from patient up to the limiting charge ($109.25) = $33.25
Note: This is the difference between the limiting charge ($109.25) and 80% of Medicare’s nonpar-
ticipating fee schedule allowed amount ($76.00).
Nonparticipating Physician Who Accepts Assignment
1. Submitted charge = $125.00
2. Medicare allowed (nonparticipating fee schedule) amount = $95.00
3. Medicare pays physician 80% of fee schedule = $76.00
4. Patient is billed for 20% coinsurance = $19.00
5. Physician may collect the 20% coinsurance amount from the patient = $19.00
Note: A physician may bill the beneficiary for all services that are excluded by Medicare, any unmet
deductible, and the 20 percent coinsurance provided the claim is not subject to Medigap provisions
for assigned claims.

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Chapter 3 Claims and Filing Methods

Chapter 3 - CLAIMS AND FILING METHODS

This chapter introduces some of the various types of Medicare claims that may be filed. Specific
electronic field claim requirements, as well as instructions for completion of Form CMS-1500, may
be obtained from the local Medicare Part B carrier. Additionally, physicians may obtain these in-
structions from at www.cms.hhs.gov/providers/edi/edi5.asp on the CMS Web site.
Types of Claims
A claim or request for Medicare payment may be assigned or nonassigned. Regardless of the type of
claim, physicians may never charge Medicare patients for completing or filing a claim. Proper com-
pletion and submission of a “clean” Medicare claim is the first step in accurate claims processing.
Clean claims are claims that successfully process without system-generated requests for additional
information.
Assigned Claims
A participating or nonparticipating physician may file an assigned claim. Participating physicians
are required to accept assignment for all Medicare claims. A nonparticipating physician is held to the
assignment agreement for that claim only and agrees to accept the Medicare fee schedule amount as
payment in full for all covered services. The physician is reimbursed directly. To accept assignment
of Medicare benefits for a claim, the physician must select the appropriate block (27) of Form CMS-
1500 or the applicable electronic claim field. Physicians may collect reimbursement for excluded
services, unmet deductible, and coinsurance, from the beneficiary.
Certain services may be paid only on an assigned basis:
· Clinical diagnostic laboratory services
· Physician services to individuals dually entitled to Medicare and Medicaid
· Services of physician assistants, advanced registered nurse practitioners, clinical nurse special-
ists, nurse midwives, certified registered nurse anesthetists, clinical psychologists, and clinical
social workers
· Ambulatory Surgical Center (ASC) facility charges
· Home dialysis supplies and equipment paid under Method II
· All drugs and biologicals covered under Medicare
Nonassigned Claims
Only a nonparticipating Medicare physician may file nonassigned. A nonparticipating physician
does not agree to accept Medicare’s allowed amount as payment in full and may charge the benefici-
ary, up to the limiting charge, for the service(s).
When a nonparticipating physician files a Part B nonassigned claim, the beneficiary is reimbursed
directly. To refuse assignment of Medicare benefits for a claim, the physician must select the appro-
priate block (27) of Form CMS-1500 or the applicable electronic claim field.
How to Submit Claims
Claims may be filed to the Medicare Part B carrier in one of two ways:
· Electronic transmission from the physician’s office or from a billing service contracting with the
physician

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Types of Claims and Filing Methods Chapter 3

· Paper claim (Form CMS-1500) where not prohibited under the mandatory Medicare electronic
filing requirements October 16, 2003 and later
Claims may be electronically submitted to Medicare from a physician’s office using a computer with
software that meets electronic filing requirements. A sender number is issued, and claims are trans-
mitted directly from the physician’s office, giving the physician control over timeliness and accuracy
of claims. Medicare carriers offer free or low-cost billing software that allows electronic transmis-
sion directly to the Medicare carrier. Commercial software is also available that can be used to bill
multiple health plans, including Medicare, as well as perform other practice management services. If
the physician does not have a computer system meeting the requirements, a billing service may be
used to submit claims. Either way, specific processing requirements–and benefits–are associated
with filing claims electronically.
Electronic Data Interchange (EDI)
EDI, electronic submission of Medicare Part B claims eliminates mailroom processing and manual
data entry. The Medicare claims processing system can usually pay electronic claims faster than pa-
per claims. Generally, electronic claims can be paid on the 14th day after submissions, but paper
claims cannot be paid earlier than the 27th day after submission.
EDI saves the physician time and money through more accurate, faster processing of claims and re-
duced postage costs. Physicians should contact the local Medicare carrier for information about EDI.
How EDI Works
The claim is electronically transmitted in data “packets” from the physician’s computer modem to
the carrier’s modem over a telephone line. The carrier checks (“edits”) the data for required informa-
tion. Claims that pass these initial edits, commonly known as front-end edits or pre-edits, are then
processed according to Medicare policy and guidelines. Claims with inadequate or incorrect informa-
tion do not pass the initial edits. They are rejected and are not paid because they lack sufficient in-
formation to make a payment decision.
After successful transmission, an acknowledgement report is generated and is either transmitted back
to the physician or placed in an electronic mailbox for the physician to download. This report con-
firms that the file was received and lacks format errors. Once the claims are processed another report
is generated that indicates the number of claims accepted and the total dollar amount transmitted.
Additionally, this report lists claims that were rejected, as well as, the reason(s) for being rejected.
The physician should review this report carefully. At this point, the physician can make necessary
corrections to the rejected claim(s) and resubmit them.
Additional Information Requests
Occasionally, claims require additional information before they can be processed. A development
letter, requesting the missing information, is sent to the physician and/or beneficiary. When the in-
formation is received, the claim is processed for payment consideration. Failure to respond to a re-
quest for additional development may result in denial of a physician’s claim.
Certificates of Medical Necessity (CMN)
Physicians who submit claims electronically may also submit CMNs electronically along with the
electronic claim. CMNs are used by the physician to electronically submit claims for services that
require additional information, such as, ambulance, chiropractor, Durable Medical Equipment
(DME), and oxygen services.
Note: The local carrier can provide additional information on when a CMN is required with the
claim.

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Additional EDI Benefits

In addition to the day-to-day benefits of electronic claims filing, other electronic transactions are also
available:
· Eligibility Query: The physician can determine electronically if a patient is eligible for Medicare
benefits, has met the Medicare deductible, or is enrolled in a Health Maintenance Organization.
· Electronic Remittance Advice (ERA): Physicians can receive paid and/or denied claims informa-
tion electronically from the Medicare Part B system. ERA may be used to automatically update
physician accounts receivable files or the patient billing system. The ERA is the equivalent of the
Medicare standard paper remittance (SPR) form.
· Electronic Claims Status: Physicians obtain a status report for each Medicare Part B pending
claims.
· Electronic Funds Transfer (EFT): With EFT, Medicare Part B can send payments directly to a
physician’s financial institution whether claims are filed through EMC or on paper. All registered
Medicare providers may apply for EFT.
Advantages of Electronic Funds Transfer (EFT)
EFT is similar to other direct deposit operations such as paycheck deposits, and it offers a safe mod-
ern alternative to paper checks. Providers who use EFT may notice the following benefits:
· Reduction to the amount of paper in the office
· Valuable time savings for staff and avoidance of hassle associated with going to the bank to de-
posit Medicare checks
· Elimination of the risk of Medicare paper checks being lost or stolen in the mail
· Faster access to funds; many banks credit direct deposits faster than paper checks.
How to Enroll in EFT
All Medicare contractors include an EFT authorization form in the Medicare enrollment package.
Complete the form and mail it to the Medicare contractor. Be sure to include a voided blank check so
account information may be verified. If eligible, Medicare payments will be made directly to the fi-
nancial institution through EFT, in as little as two weeks.
Note: Contact the Medicare contractor for additional qualifications and terms. If for some reason the
form is not received with the enrollment package, simply contact the Medicare contractor and re-
quest a form.

Filing Form CMS-1500

Medicare Part B physicians may use the red-printed Form CMS-1500 to file various health insurance
claims to private insurers and government programs. However, payment for paper claims takes sub-
stantially longer than payment for electronically submitted claims. Generally, electronic claims can
be paid 14 days after submission, as opposed to paper claims that process in about four weeks.
How Paper Claim Submission Works
When filing paper claims, physicians must type or machine-print all mandated claim fields on the
red-printed Form CMS-1500 and mail it to the local carrier. Some carriers may be able to accept a
black and white copy of Form CMS-1500. Other carriers may not accept black and white copies of
the form if they are using Optical Character Recognition (OCR) equipment to process the form.

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Types of Claims and Filing Methods Chapter 3

Optical Character Recognition

Carriers that process claims with OCR, use an automated scanning process similar to scanners that
read price labels in grocery stores. OCR claims processing is faster and more accurate than systems
requiring manual input. However, to work properly, OCR must accurately read and interpret the
characters entered in each field. It reads only typed or machine-printed data. Only an original, red
and white Form CMS-1500 may be submitted. Black and white photocopies cannot be machine read
and will be returned.
After claims information is scanned, it is transmitted to the claims processing system, where it is
validated.
To ensure accurate, quick claim processing, the following guidelines must be followed:
· Do not staple, clip, or tape anything to Form CMS-1500
· Place all necessary documentation in the envelope with Form CMS-1500
· Put the patient’s name and Medicare number on each piece of documentation submitted
· Use dark ink
· Use only upper-case (CAPITAL) letters
· Use 10 or 12 pitch (pica) characters and standard dot matrix fonts
· Do not mix character fonts on the same form
· Do not use italics or script
· Avoid using old or worn print bands or ribbons
· Do not use dollar signs, decimals, or punctuation
· Enter all information on the same horizontal plane within the designated field
· Do not print, hand-write, or stamp any extraneous data on the form
· Use only lift-off correction tape to make corrections
· Ensure data is in the appropriate field and does not overlap into other fields
· Remove pin-fed edges at side perforations
· Use only an original red-ink-on-white-paper Form CMS-1500
The Form CMS-1500 is available in various formats from the U.S. Government Printing Office
(GPO). The GPO may also provide negatives of the form. For purchasing information, contact the
GPO at http://bookstore.gpo.gov on the Internet, by phone at 1-866-512-1800, or by writing to the
following address:
Superintendent of Documents
P.O. Box 371954
Pittsburgh, Pennsylvania 15250-7954

Remittance Notices
After Medicare processes a claim, a remittance advice, with final claim information, goes to the phy-
sician. Each service is shown with an explanation of Medicare allowances and payments as well as
appropriate deductible or denial information. In addition to this notice, Medicare notifies the benefi-
ciary with a Medicare Summary Notice, Explanation of Medicare Benefits, or Notice of Utilization.

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The type of notification that the beneficiary receives depends on the carrier or intermediary process-
ing the claim.

Unprocessable Claims
The term return as unprocessable refers to the Medicare process for notifying a physician that his or
her claim cannot be processed, due to certain incomplete or incorrect information. Once the errors
are corrected, the claim may be resubmitted and considered for payment. A physician is required to
submit a Medicare claim for beneficiaries who have received services regardless of whether or not
the physician accepts assignment. Therefore, a physician who has not accepted assignment on a
claim is required to correct claims returned as unprocessable so that a determination can be made on
the claim. Unlike denied claims, claims returned as unprocessable do not have appeal rights.

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Types of Claims and Filing Methods Chapter 3

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Chapter 4 Medicare Secondary Payer

Chapter 4 - MEDICARE SECONDARY PAYER

Medicare secondary payer (MSP) refers to situations where the Medicare program does not have
primary responsibility for paying a beneficiary's health care expenses, i.e., where the Medicare bene-
ficiary has other health insurance or coverage that is required to pay primary health benefits.
Until 1980, the Medicare program was the primary payer in all situations except those involving
Workers’ Compensation (including Black Lung) benefits. Since 1980, changes in the Medicare law
have resulted in Medicare being the secondary payer in other situations. The MSP Program protects
Medicare funds and ensures that Medicare does not pay for services reimbursable under private in-
surance plans or other government programs. Medicare may not pay if payment has been made, or
can be reasonably expected to be made, with respect to an item or service that is covered under other
health insurance or coverage.

Medicare Coordination of Benefits (COB)

The Centers for Medicare & Medicaid Services (CMS) implemented a new initiative on January 8,
2001, to centralize Medicare’s COB activities. This is one of many CMS initiatives designed to fur-
ther expand the campaign against Medicare fraud, waste, and abuse under the Medicare Integrity
Program (MIP). CMS awarded the COB contract to consolidate activities that support the collection,
management, and reporting of other insurance coverage of Medicare beneficiaries.
The purpose of the COB Program is to identify health benefits available to a Medicare beneficiary
and to coordinate the payment process to prevent the mistaken payment of Medicare benefits. Infor-
mation regarding other payers is obtained from the Common Working File (CWF) and is used by
Medicare carriers to facilitate accurate payment.
The Medicare COB Contractor (COBC) provides many benefits for employers, physicians, suppliers,
third-party payers, attorneys, beneficiaries, and federal and state programs. All MSP claim investiga-
tions will be initiated and researched by the COBC, not by the local Medicare intermediary or carrier.
This one-step approach greatly minimizes the amount of duplicate MSP investigations. It also offers
a centralized one-stop customer service approach for all MSP-related inquiries, including those for
general MSP information (but not related to specific claims or recoveries that serve to protect the
Medicare trust fund). The COB contractor will provide customer service to all callers from any
source, including, but not limited to beneficiaries, attorneys, or other beneficiary representatives,
employers, insurers, physicians, and suppliers.
A variety of methods and programs are used by the COBC to identify situations in which Medicare
beneficiaries have other health insurance that is primary to Medicare. Intermediaries and carriers
continue to process claims submitted for primary or secondary payment. The processing of Medicare
claims to adjudication is not a function of the COBC.
For all MSP inquiries, contact the COB contractor at: 1-800-999-1118 or TDD/TYY 1-800-318-
8782. For claims-related and recovery questions, call your local intermediary and/or carrier.
Note: All possible insurers must be identified. There may be situations in which more than one in-
surer pays primary to Medicare (e.g., automobile insurer, group health plan [GHP]). The definition of
a GHP is: A health plan that provides health coverage to employees, former employees, and their
families, and is supported by an employer or employee organization.

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Medicare Secondary Payer Chapter 4

Benefits of the MSP Program

The successful implementation of the MSP Program has resulted in positive benefits for Medicare,
the physician, and the patient. Benefits include the following:
· National program savings - Claims are paid by insurers that are primary to Medicare, resulting in
a national program savings in excess of 4.5 billion dollars annually.
· Increased revenue - A physician that bills insurance that is primary to Medicare is entitled to bill
full charges; receiving more favorable reimbursement is an advantage to physicians. In many in-
stances, insurance companies that are primary will pay more than the amount authorized under
Medicare.
· Lower out-of-pocket expenses - Multiple insurance coverage often reduces the amount a patient
is obligated to pay, which includes satisfying deductible amounts and preserving Medicare cov-
erage limits.

When is Medicare Considered Secondary?

Medicare may be considered the secondary payer under certain conditions when services are paid
first by:
· Group Health Plans · Federal Black Lung Program
· Workers’ Compensation · No-fault or Liability Insurance
Health insurance or coverage may change during a course of treatment. Physicians should verify and
update insurance eligibility for their Medicare patients to determine if any of these MSP conditions
apply.
Determining When Medicare is the Secondary Payer
All healthcare providers and suppliers are required to determine if Medicare is the secondary payer.
Medicare becomes a beneficiary’s secondary payer when information suggests that other primary in-
surance may exist. This information may come from claims submitted to Medicare indicating other
health insurance or coverage. It may also come from employers or insurers that notify Medicare of
other health insurance or coverage. In these instances, the beneficiary’s MSP records will show that
other insurance is primary to Medicare. Claims are then processed according to MSP guidelines.
Request for MSP Information
To determine if Medicare is a beneficiary’s secondary payer, physician offices must screen all pa-
tients for other primary insurance information. A suggested method for obtaining this information is
to incorporate an MSP questionnaire into all patient health records.
Updating Medicare as Primary Payer
Carriers and the COBC require the beneficiary to furnish information about his or her primary insur-
ance. Beneficiaries restoring Medicare as the primary payer may seek assistance from their physi-
cian’s billing office or current/former employer in obtaining information needed by the carrier or the
COBC.
Some information must be documented in writing before Medicare or the COBC can update the pa-
tient’s records. The local Medicare carrier or the COBC can determine if the beneficiary’s informa-
tion can be updated via telephone or must be documented in writing.

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Chapter 4 Medicare Secondary Payer

Updating Beneficiary MSP Records

Evidence of a beneficiary’s lack of current employment status or a determination of noncoverage
through other health insurance or coverage, establishing Medicare as the primary payer, will result in
the following:
· A Medicare carrier or the COBC will terminate corresponding MSP records, making Medicare
the primary payer
· Pending claims awaiting MSP information will be released for processing
· All claims denied based on suspected MSP involvement will be reprocessed
Medicare Deductibles and MSP Claims
Medicare deductibles are based on Medicare allowable charges, not the amount paid by the primary
insurer. If the primary insurer pays the entire amount of a claim but the beneficiary has not satisfied
his or her Medicare deductible, then the amounts paid by the primary payer may be credited to the
beneficiary’s unmet Medicare deductible.
Limiting Charges and MSP Claims
Nonparticipating physicians who do not accept assignment are prohibited from billing or collecting
amounts above the applicable limiting charge whether Medicare is primary or secondary and regard-
less of who pays the claim. For this reason, physicians are encouraged not to exceed Medicare’s lim-
iting charge when billing nonassigned claims to another insurer as primary payer and to Medicare
Part B as secondary payer.
Note: The mandatory assignment rules for drugs, biologicals, and clinical laboratory services apply
when sending a claim to Medicare whether the claim is filed to Medicare as primary or secondary
payer.
Filing MSP If Primary Insurer Pays More Than Medicare Allows
Primary insurers sometimes pay more than Medicare allows. Carriers encourage physicians to submit
claims for secondary benefits to Medicare in these situations, to allow for proper crediting of any
unmet deductibles and to capture savings realized by the presence of MSP records.
Benefits of Submitting Claims to Medicare for Consideration of Secondary Payment:
Because secondary payment is based on the higher of the primary insurer’s or Medicare’s allowed
amount, Medicare may make a secondary payment in addition to the primary insurer’s payment.
Amounts may be posted to the beneficiary’s unmet Medicare deductible, although no secondary
payment is made to the physician.
Conditional Payments
Conditional payments by Medicare generally occur in liability, no-fault, and workers’ compensation
(WC) cases. If the liability, no-fault, or WC insurer will not pay “promptly,” Medicare may process
the claim with the condition that when the case is resolved, Medicare will recover from the proceeds
of the settlement judgment or award.
Duplicate Billing
In liability cases, during the 120-day promptly period, providers and suppliers must bill only the li-
ability insurer unless they have evidence that the liability insurance will not pay within the 120-day
promptly period. If they have such evidence, they may bill Medicare for conditional payment. After
the 120-day promptly period has ended, they may, but are not required, to bill Medicare for condi-
tional payment if the liability insurance claim is not finally resolved. If they choose to bill Medicare,

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Medicare Secondary Payer Chapter 4

they must withdraw claims against the liability insurer or a lien placed on the Medicare beneficiary’s
settlement. If they choose to continue their claim against the liability settlement, they may not also
bill Medicare. This is duplicate billing and is not permissible.
Telling Medicare About MSP Mistaken Payments/Refunds
If Medicare processes and mistakenly makes primary payment and the physician receives primary
payment from other insurance primary to Medicare, a refund of the mistaken payment must be made
to the carrier. This may be accomplished through submittal of an adjustment claim.
Reprocessing Claims Denied as MSP
Claims denied by Medicare due to other insurance involvement may be reprocessed if no other insur-
ance is primary to Medicare. The physician should first instruct the beneficiary to contact the COBC
if there are questions regarding whether an MSP record has been updated. The COBC will then make
any necessary updates to the beneficiary’s file. The beneficiary should then contact the Medicare car-
rier to have any denied claims resulting from the former MSP situations reprocessed. The benefici-
ary may either telephone or write the Medicare carrier to have claims previously denied due to MSP
involvement reprocessed. Once a beneficiary’s file has been updated to reflect Medicare as the pri-
mary payer, all claims that were previously denied due to MSP may be reopened by the Medicare
carrier, assuming the request has been made within the requisite time periods. However, until this
information is updated in the beneficiary’s file, payment may continue to be denied for subsequent
claims. Some information must be documented in writing before Medicare can update the patient’s
records. The local Medicare carrier or the COBC can determine if the beneficiary’s information can
be updated via telephone or must be documented in writing.
Potential Penalties for Noncompliance
Noncompliance with the MSP Program may result in penalties for the physician and/or private insur-
ers.
· Medicare requires physicians to identify payers primary to Medicare on all claims.
· Physicians can be assessed with civil penalties of up to $2,000 each for knowingly, willfully, and
repeatedly providing inaccurate information relating to the existence of other benefit plans.

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Chapter 5 Part B Policies

Chapter 5 - PART B POLICIES

This section introduces covered and excluded services processed by Medicare Part B, as well as leg-
islative regulations that affect claims filed to the Medicare Part B Program.
Overview
Generally, Medicare pays for services that are considered medically reasonable and necessary to the
overall diagnosis and treatment of a patient’s condition. Services or supplies are considered medi-
cally necessary if they:
· Are proper and needed for the diagnosis or treatment of the patient’s medical condition
· Are provided for the diagnosis, direct care, and treatment of the patient’s medical condition
· Meet the standards of good medical practice
· Are not mainly for the convenience of the patient or the physician
For every service billed, the physician must indicate the specific sign, symptom, or patient complaint
necessitating the service.
Although a service or test may be considered good medical practice, Medicare prohibits payment for
services without symptoms or complaints. Services that are considered screening services or rou-
tine/preventive in nature are usually excluded. However, Medicare does pay for specific routine
screenings, such as Pap tests, screening mammogram services, and colorectal cancer screening ser-
vices. See the “Preventive Services” section of this chapter for more information.
Medicare Part B Physician Services
Medicare covers a physician’s professional services when rendered in the United States and per-
formed in the home, office, institution, or scene of an accident. A patient’s home is considered to be
anywhere he or she resides (e.g., a home for the aged, a nursing home, or a relative’s home).
Covered physician services include but are not limited to:
· Physician’s services, including surgery, consultation, office, institutional calls, and services and
supplies furnished incident to a physician’s professional service
· Outpatient hospital services furnished incident to physician services
· Outpatient diagnostic services furnished by a hospital
· Outpatient physical therapy and outpatient speech pathology
· Diagnostic X-ray tests, laboratory tests, and other diagnostic tests
· X-ray, radium, and radioactive isotope therapy
· Surgical dressings and splints, casts, and other devices used for reduction of fractures and dislo-
cations
· Rental or purchase of durable medical equipment for use in the patient’s home
· Ambulance services
· Prosthetic devices that replace all or part of an internal body organ
· Leg, arm, back, and neck braces, artificial legs, arms, and eyes
· Certain medical supplies used in connection with home dialysis delivery systems

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Part B Policies Chapter 5

· Rural health clinic services

· Ambulatory surgical center services

“Incident to” Provision

Medicare Part B covers services rendered by physicians or auxiliary personnel under the physician’s
direct supervision. Auxiliary personnel are known as individuals who act under the supervision of a
physician, regardless of whether the individual is an employee, leased employee, or independent con-
tractor of the physician, or of the legal entity that employs or contracts with the physician. Likewise,
the supervising physician may be an employee, leased employee, or independent contractor of the
legal entity billing and receiving payment for the services or supplies. Certain conditions must be
met:
· These services and supplies are those commonly furnished in an office setting. The services are
furnished as an integral, although incidental, part of the physician’s professional services in the
course of the diagnosis or treatment of an injury or illness and require direct personal physician
supervision.
· A valid employment arrangement must exist between the physician/clinic and the employee, by
employing a full-time, part-time, or leased employee of the supervising physician or physician
group practice, or of the legal entity employing the physician.
Office Setting or Physician-Directed Clinic
“Incident to” services in an office setting or physician-directed clinic must be rendered under direct
supervision of the physician. This does not mean that the physician must be present in the same room
with his or her auxiliary personnel. However, the physician must be in the office suite and immedi-
ately available to provide assistance and direction throughout the time the auxiliary personnel is per-
forming services.
Institution or Other Facility Setting
Medicare cannot assume the physician and nonphysician practitioner will be in close proximity to
one another. Therefore, “incident to” services can be covered only if the physician accompanies him
or her to treat the patient and directly supervises the services (“over-the-shoulder” supervision).
“Incident to” services provided by the physician’s auxiliary staff in the hospital setting are covered as
part of the Part A hospital stay; therefore, Medicare Part B does not reimburse the physician.
Home Care
“Incident to” rules that apply in an office setting apply to the patient’s personal residence, if the phy-
sician is present. However, certain rules apply if the physician is not present at the patient’s home.
Medicare may reimburse services provided “incident to” a physician’s professional service(s) in the
patient’s home, when certain conditions are met.
· The patient is homebound and unable to travel for routine medical services.
· The patient resides in a medically under-served area (a list of medically under-served areas is
available through the local Medicare contractor).
· The patient lives in an area not readily accessible to a home health agency.
· The employee is under general supervision of the physician. The physician is immediately avail-
able by telephone to collaborate with the employee providing the service.
· Only limited, defined services may be provided in the patient’s home:

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Chapter 5 Part B Policies

o Injections
o Venipuncture
o Electrocardiogram (EKG)
o Therapeutic exercises
o Insertion and sterile irrigation of a catheter
o Changing of catheters and collection of catheterized specimen for urinalysis and culture
o Dressing changes (e.g., the most common chronic conditions which may need dressing
changes are decubitus care and gangrene)
o Replacement and/or insertion of nasogastric tubes
o Removal of fecal impaction, including enemas
o Sputum collection for gram stain and culture, and possible acid-fast and/or fungal stain
and culture
o Paraffin bath therapy for hands and/or feet in rheumatoid arthritis or osteoarthritis
o Teaching and training the patient for:
§ The care of colostomy and ileostomy
§ The care of permanent tracheostomy
§ Testing urine and care of the feet (diabetic patients only)
§ Blood pressure monitoring
Services By Nonphysician Practitioners
Medicare law covers services furnished by nonphysician practitioners (e.g., nurse practitioners, phy-
sician assistants, licensed clinical social workers, etc.), without the direct supervision of a physician.
When a nonphysician practitioner renders services not under direct supervision, specific coverage
restrictions and/or billing requirements may apply. Reimbursement is based on a reduced percentage
of the physician fee schedule amount, or the scope of coverage may be limited, based on licensure
and state requirements (e.g., diagnostic tests).
However, if nonphysician practitioner services are to be reported and covered under the “incident to”
provision, the direct physician supervision requirement applies, as well as all other “incident to” re-
quirements.
Common Physician Services
Consultations
A consultation is the advice or opinion of one physician to another. A consultation is primarily per-
formed at the request of a referring physician. The consultant examines the patient and prepares a
report of his or her findings, which is provided to the referring physician for use in treating the pa-
tient. If the intent of the visit is to see the patient and provide the referring physician with advice or
an opinion, then consultation procedure codes are used.
Documentation requirements for consultations include:
· History, examination, and medical decision making components to support the level of care
billed;

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· A written report, provided to the attending/referring physician for inclusion in the patient’s per-
manent medical record; and
· A statement in the requesting physician’s record on advice or opinion being sought.
The request and the need for advice or opinion must be documented in the patient’s medical record.
The consultant’s opinion/advice and any services or tests performed should also be documented and
communicated to the referring physician.
A consultant may initiate diagnostic treatments and/or therapeutic services. However, if the consult-
ant assumes responsibility for the patient, he or she should then use appropriate procedure codes for
established or subsequent patient visits, based on the place of service, rather than consultation proce-
dure codes.
· All consultation codes billed to Medicare must contain the referring physician’s name and
Unique Physician/Practitioner Identification Number (UPIN).
· Not all consultations are initiated by a referring physician. The patient and/or family member
may initiate a confirmatory consultation, to obtain a second or third opinion. The physician per-
forming the service should use his or her name and UPIN in the appropriate areas on the claim.
· Any identifiable procedure or service performed on or subsequent to the date of the initial con-
sultation should be reported separately.
Concurrent Care
Concurrent care exists when certain evaluation and management (E/M) services are rendered by
more than one physician with the same or similar specialty on the same date of service.
Reasonable and necessary services of each physician rendering concurrent care could be covered
when each is required to play an active role in the patient’s treatment -- for example, due to the exis-
tence of medical conditions requiring diverse specialized medical services.
To find concurrent physicians’ services reasonable and necessary, the carrier must determine:
· If the patient’s condition warrants the services of more than one physician, with the same or simi-
lar specialty, on an attending (rather than consultative) basis; and
· If the individual services provided by each physician are reasonable and necessary.
Before determining payment, carriers consider the physician’s specialty, as well as the patient’s di-
agnosis.
Physician specialties indicate the necessity for concurrent services, but the carrier’s medical staff
must also consider the patient’s condition and the inherent reasonableness and necessity of the ser-
vices. For example, although cardiology is a subspecialty of internal medicine, the treatment of both
diabetes and a serious heart condition might require the concurrent services of two physicians, each
practicing in internal medicine but specializing in different subspecialties.
A patient may occasionally require the services of two physicians with the same specialty or subspe-
cialty, if one physician has limited his or her practice to a unique aspect of that specialty. If the medi-
cal documentation does not substantiate the need for more than one physician’s service, payment will
not be made for the other physician’s services.
Telehealth Services
Section 223 of the Benefits Improvement and Protection Act (BIPA) of 2000 provides coverage and
payment for Medicare telehealth, which includes consultations, office visits, individual psychother-
apy, and pharmacologic management delivered via a telecommunications system. Eligible geo-

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Chapter 5 Part B Policies

graphic areas include rural Health Professional Shortage Areas (HPSA), counties not in a Metropoli-
tan Statistical Area (MSA), and Federal telemedicine demonstration projects approved by or receiv-
ing funding from the Secretary of Health and Human Services as of December 31, 2000, regardless
of their location.
An interactive telecommunications system is required as a condition of payment. However, BIPA
allows the use of asynchronous “store and forward” technology in delivering these services when the
originating site is a Federal telemedicine demonstration program in Alaska or Hawaii and does not
require that the patient be present.
The term interactive telecommunications system means multimedia communications equipment that
permits real-time communication between the distant site practitioner (i.e., where the expert physi-
cian or practitioner is located at the time the service is provided) and the patient.
“Store and forward” is the asynchronous transmission of medical information to be reviewed at a
later time by a physician or practitioner at the distant site. A patient’s medical information may in-
clude, but is not limited to: video clips, still images, X-rays, Magnetic Resonance Imaging (MRI),
electrocardiogram (EKG), electroencephalogram (EEG), laboratory results, audio clips, and text. The
physician or practitioner at the distant site reviews the case without the patient being present. Store
and forward substitutes for an interactive encounter with the patient present; the patient is not present
in real-time.
Note: Asynchronous telecommunications system in single media format does not include telephone
calls, images transmitted via facsimile machines, and text messages without visualization of the pa-
tient (electronic mail). Photographs must be specific to the patient’s condition and adequate for ren-
dering or confirming a diagnosis and/or treatment plan.
An originating site is the location of an eligible Medicare beneficiary at the time the service is pro-
vided via a telecommunications system. Originating sites authorized by law are:
· Office of a physician or practitioner
· Hospital
· Critical access hospital
· Rural health clinic
· Federally qualified health center
Patients are eligible for telehealth services only if they are presented from an originating site located
in either a rural HPSA or in a county outside of a MSA.
As a condition of Medicare Part B payment for telehealth services, the physician or practitioner at the
distant site must be licensed to provide the service under state law. Medicare practitioners who may
bill for covered telehealth services are:
· Physician
· Nurse practitioner
· Physician assistant
· Nurse midwife
· Clinical nurse specialist
· Clinical psychologist
· Clinical social worker

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Part B Policies Chapter 5

Note: Clinical psychologists and clinical social workers cannot bill for psychotherapy services that
include medical E/M services under Medicare.
Medicare payment for telehealth services is equal to the current fee schedule allowance for the ser-
vice provided (the same amount that would be allowed if the services were furnished without the use
of a telecommunications system). The patient is responsible for any unmet deductible amount and
coinsurance.
Modifier (two-digit alpha/numeric code that affects reimbursement used in conjunction with a pro-
cedure code) GT (via interactive audio and video telecommunication systems) should be used when
reporting these services. By using modifier GT to bill for the telehealth service, the distant site practi-
tioner verifies that the patient was located at an eligible originating site at the time of the telehealth
service.
Modifier GQ (via asynchronous telecommunications system) should be used when reporting these
services. By using modifier GQ, the distant site practitioner verifies that the asynchronous medical
file was collected and transmitted to the physician or practitioner at the distant site from a Federal
telemedicine demonstration project conducted in Alaska or Hawaii.
Diagnostic Tests – Personally Performed or Purchased
Diagnostic tests assist in identifying the nature and underlying cause of illness. They include services
such as X-ray, EEG, cardiac monitoring, and ultrasound. The physician may personally perform
these tests, or his or her employee may perform them under the physician’s direct supervision, or
they may be purchased.
Purchased tests are not rendered personally by the physician or by his or her employee under the
physician’s direct supervision. Tests administered by supplier personnel, at the physician’s office or
at another location, are considered purchased tests. A physician’s financial interest in the supplier,
perhaps as a limited partner or stockholder, does not change the consideration that these are pur-
chased tests.
Diagnostic tests may be billed in one of five ways:
· Global billing
· Technical component only
· Professional component only
· Purchased technical component
· Purchased professional component
Global Billing
These diagnostic tests include situations where the same physician performs the test and interprets
the results. When billing globally, the physician must have either:
· Personally performed both the professional and the technical components, or
· Personally performed the professional component and supervised his or her own employee(s)
who performed the technical component.
Technical Component Only
These diagnostic tests include situations where the physician performs the test but does not interpret
the results. Physicians should indicate modifier TC (technical component) on the claim form to iden-
tify these services.

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Professional Component Only

These diagnostic tests include situations when the physician interprets but does not perform the test.
Physicians should indicate modifier 26 (professional component) on the claim form to identify these
services.
Purchased Technical Component
A technical component purchased from an outside supplier should be submitted as a separate item on
a claim. Claims for purchased technical services must include modifier WU (purchased test) and the
name, address, and Medicare provider number of the supplier rendering the test. The amount paid to
the supplier for the test must also be indicated on the claim in block 20 of Form CMS-1500 or the
designated electronic field. Failure to provide all required information will cause denial of the claim.
If more than one supplier is used or more than one test purchased, separate claims must be submitted.
Purchased Professional Component
A professional component (interpretation) of a diagnostic test purchased from an independent physi-
cian or medical group will be reimbursed only if:
· The tests are initiated by a physician or medical group that is independent of the person or entity
providing the tests/interpretations;
· The person or entity requesting payment submits a claim;
· The physician or medical group providing the interpretation does not see the patient; and
· The purchaser (employee, partner, or owner of the purchaser) performs the technical component
of the test. The interpreting physician must be enrolled in the Medicare Program.
The supplier must identify, in the appropriate claim fields, the name, address, and Medicare provider
number for the physician providing the interpretation.
For all purchased services, the acquisition cost (the amount paid for the service) must be provided to
the carrier, in block 20 of Form CMS-1500 or the designated electronic field. Failure to provide this
information will cause denial of the claim.
The purchaser must keep on file the name, the provider identification number, and address of the in-
terpreting physician.
Note: The ordering physician’s name and UPIN must be shown on all diagnostic test claims.
EKG and X-Ray Interpretations
When a need exists to provide a medically necessary X-ray or EKG to an emergency room patient,
the following guidelines apply:
· Payment will be made for the interpretation and report that directly contributed to the diagnosis
and treatment of the patient.
· Hospitals are encouraged to work with medical staff to ensure that only one interpretation charge
is submitted per service. If the hospital physician’s repeat reading is for quality control and/or li-
ability purposes only, such services are included in the Part A reimbursement and are not sepa-
rately reimbursed.
Injections/Drugs/Biologicals
Medicare Part B processes claims for injections based on the type of drug injected. Excluding influ-
enza, pneumococcal, and hepatitis B vaccines, three types of injection claims exist:
· Covered injections provided as the only service to the patient

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Part B Policies Chapter 5

· Covered injections provided during the course of an E/M service

· Excluded injections provided to the patient
When a covered injection is the only service provided, the physician should bill:
· The procedure code for the administration; and
· The procedure code for the drug (when provided by the physician).
If the injection is administered during the course of a covered E/M service, the physician should bill:
· The procedure code for an E/M service; and
· The procedure code for the drug (when provided by the physician).
Note: If an excluded injection is provided to a patient, both the drug and the administration of the
drug are excluded items.
Effective for claims processed on or after February 1, 2001, under section 114 of BIPA of 2000,
payment for any drug or biological covered under Medicare Part B may be made only on an assign-
ment-related basis. This means the physician or supplier agrees to accept the Medicare fee schedule
allowance as payment in full for all covered services. Physicians may collect reimbursement for ex-
cluded services, unmet deductible, and coinsurance, from the patient. Additionally, Medicare carri-
ers are required to change the assignment of any nonassigned claim received on or after February 1,
2001. In the event that a nonassigned claim is received that includes services that are subject to man-
datory assignment in addition to those that are not, the services subject to mandatory assignment will
be separated and processed as if assignment had been accepted.
Psychiatric Services
Psychiatric services and/or E/M services rendered in an office or outpatient setting, with Interna-
tional Classification of Diseases, 9th revision, Clinical Management (ICD-9-CM) diagnosis codes
(290-310), are reimbursed at 62.5 percent of the 80 percent Medicare physician fee schedule allowed
amount for the service provided. Inpatient psychiatric services are reimbursed at 80 percent of the
Medicare physician fee schedule allowed amount.

Preventive Services
Preventive medicine has been addressed by:
· Congress, to insure patient health, thereby reducing Medicare Program expenditures; and
· CMS, to involve physicians in patient care and to enlist their help in educating the public about
benefits and coverage policies for preventive immunizations and screenings.
Physicians and healthcare professionals play an important role in utilization of preventive services. A
recommendation by a physician is an important influence in determining whether or not beneficiaries
decide to be screened. In particular, primary care physicians play a very important role in facilitating
compliance with healthcare screenings. Generally, when primary care physicians recommend a
screening procedure to patients, patients follow through. Beneficiaries may be unaware of the bene-
fits of screening unless their healthcare professionals discuss them and encourage compliance. Phy-
sicians should offer screenings according to currently accepted guidelines and should take advantage
of every opportunity to recommend preventive care to patients. Reminders should be given at every
visit.

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Chapter 5 Part B Policies

Bone Mass Measurements

The Balanced Budget Act (BBA) of 1997, Section 4106, standardized coverage of bone mass meas-
urements by providing for uniform coverage for services provided on or after July 1, 1998. Bone
mass measurement is a radiologic or radioisotopic procedure or other procedure that:
· Is performed with a bone densitometer other than Dual Photon Absorptiometry (DPA) or a bone
sonometer (e.g., ultrasound) device that has been approved or cleared for marketing by the Food
and Drug Administration (FDA);
· Is performed on a qualified individual to identify bone mass, detect bone loss, or determine bone
quality; and
· Includes a physician’s interpretation of the results of the procedure.
A qualified individual is an individual meeting the medical indications for at least one of the five
categories below:
· A woman determined by the physician or qualified nonphysician practitioner treating her to be
estrogen-deficient and at clinical risk for osteoporosis, based on her medical history and other
findings.
· An individual with vertebral abnormalities as demonstrated by X-ray to be indicative of osteopo-
rosis, osteopenia (low bone mass), or vertebral fracture.
· An individual receiving (or expecting to receive) glucocorticoid (steroid) therapy equivalent to
7.5 mg or greater of prednisone per day, for more than three months.
· An individual with primary hyperparathyroidism.
· An individual being monitored to assess response to or efficacy of an FDA-approved osteoporo-
sis drug therapy.
Coverage criteria for bone mass measurements are as follows:
· There must be an order by the individual’s physician or qualified nonphysician practitioner treat-
ing the patient following an evaluation of the need for a measurement, including a determination
as to the medically appropriate measurement to be used for the individual.
· The service must be furnished by a qualified supplier or physician of such services under at least
the general level of supervision of a physician.
· The service must be reasonable and necessary for diagnosing, treating, or monitoring a qualified
individual as defined above.
· The service must be performed with a bone densitometer or a bone sonometer device approved or
cleared for marketing by the FDA for bone measurement purposes, with the exception of DPA
devices.
Medicare may cover a bone mass measurement for a patient once every two years (if at least 23
months have passed since the last bone mass measurement was performed). However, if medically
necessary, Medicare may cover a bone mass measurement for a patient more frequently.
To determine the 23-month period, the count begins with the month after the month in which a pre-
vious test or procedure was performed.
For example, the patient received a bone mass measurement test in January 2003. The count starts
with February 2003. The patient is eligible to receive another bone mass measurement test in January
2005 (the month after 23 full months have passed).

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Part B Policies Chapter 5

Examples where more frequent bone mass measurements may be medically necessary include, but
are not limited to, the following:
· To monitor patients on long-term glucocorticoid (steroid) therapy
· To allow confirmatory baseline bone mass measurements (central or peripheral) to permit future
monitoring of the patient, if the initial test was performed with a technique that is different from
the proposed monitoring method. For example, if the initial test was performed with bone sono-
metry, and monitoring is anticipated using bone densitometry, Medicare will allow coverage of
baseline measurement with bone densitometry.
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for bone
mass measurement procedures. Deductible and coinsurance apply. Claims from physicians, other
practitioners, or suppliers where assignment was not accepted are subject to the Medicare limiting
charge.
Diabetes Self-Management Services
The BBA of 1997, Section 4105, permits coverage of diabetes outpatient self-management and train-
ing services when a certified provider who meets certain quality standards performs these services.
This coverage is effective for services rendered on or after July 1, 1998.
Providers that bill for diabetes outpatient self-management and training services must be certified by
the American Diabetes Association (ADA), the Indian Health Service (IHS), or have a Certificate of
Recognition from a CMS-approved entity. CMS will accept recognition of the ADA as meeting the
National Standards for Diabetes Self-Management Training Programs.
A diabetes self-management and training service is a program that educates patients in the success-
ful self-management of diabetes. The program includes education for self-monitoring of blood glu-
cose, diet, exercise, and an insulin treatment plan developed specifically for the insulin-dependent
patient. The program also motivates patients toward self-management of the diabetic condition.
Medicare may cover outpatient self-management training services under specific situations:
· If the physician managing the patient’s diabetic condition certifies that such services are needed
under a comprehensive plan of care to ensure therapy compliance with the patient’s diabetic con-
dition.
· To provide the patient with necessary skills and knowledge in managing his or her condition.
This includes skills related to self-administration of injectable drugs.
A Medicare-certified provider is a physician, other individual, or entity meeting certain quality stan-
dards that provides outpatient self-management training services and other Medicare-covered items
and services. For purposes of this benefit, services provided by the following may be covered, if all
coverage criteria are met: physicians, physician assistants, nurse midwives, clinical psychologists,
clinical social workers, hospital outpatient departments, renal dialysis facilities, and durable medical
equipment suppliers.
The accreditation organizations, the ADA or IHS, will determine if the program can qualify to have a
single-member team. The program may also include a program coordinator, physician advisor, and
other trainers. However, only one person or entity from the program bills Medicare for the whole
program. The benefit provided by the program may not be subdivided for the purposes of billing
Medicare.
Note: On or after January 1, 2002, registered dietitians are eligible to bill on behalf of an entire dia-
betes self-management training program, as long as the provider has obtained a Medicare provider
number. A dietitian may not be the sole provider of the diabetes self-management training service

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unless they are performing the service in a rural area as defined in 42 Code of Federal Regulation,
section 410.144. Dietitians can be part of a multi-disciplinary team in the diabetes self-management
training program.
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for diabetes
self-management services. Deductible and coinsurance apply. Claims from physicians, other practi-
tioners, or suppliers where assignment was not accepted are subject to the Medicare limiting charge.
Vaccinations
Pneumococcal (PPV) and Influenza Vaccinations
Medicare began providing coverage for pneumococcal vaccinations (PPV) on July 1, 1981, and in-
fluenza vaccinations on May 1, 1993.
Medicare does not require that a doctor of medicine or osteopathy order the PPV or flu vaccine and
its administration. Therefore, the patient may receive the vaccine upon request without a physician’s
order and without physician supervision. However, for PPV, the physician should still determine the
patient’s age, health and vaccination status, and obtain a signed consent.
All Medicare patients are eligible to receive an initial PPV vaccination. However, PPV vaccines are
typically administered once in a lifetime to persons at high risk of pneumonia infection. Considered
at risk are:
· Persons 65 years of age or older;
· Immunocompetent adults who are at increased risk of pneumonia infection or its complications
because of chronic illness (e.g., cardiovascular disease, pulmonary disease, diabetes mellitus, al-
coholism, cirrhosis, or cerebrospinal fluid leaks); and/or
· Individuals with compromised immune systems (e.g., splenic dysfunction or anatomic asplenia,
Hodgkins disease, lymphoma, multiple myeloma, chronic renal failure, HIV infection, nephritic
syndrome, sickle cell disease, or organ transplantation).
Reimbursement is made for patients who are at high risk of pneumonia infection and have not re-
ceived PPV within the last five years or are re-vaccinated because they are unsure of their vaccina-
tion status.
Medicare generally pays for influenza (flu) vaccine once per season. Based on various flu seasons,
this could mean more than one vaccination per year. If a patient is vaccinated twice within the flu
season, but for a different strain, Medicare will pay for the second vaccination when supporting
documentation proves medical necessity. Medicare does not require a physician be present for the flu
vaccination, however individual states may require physician involvement and/or a physician order.
An individual or entity furnishing and administering PPV or flu vaccine to Part B patients may qual-
ify for payment if state licensing and Medicare requirements are met.
The cost of the PPV and flu vaccine and their administration are reimbursed. Medicare pays 100 per-
cent of the lower of the approved amount or the submitted charge for the vaccine and its administra-
tion. Deductible and coinsurance do not apply. Claims from physicians, other practitioners, or
suppliers where assignment was not accepted are subject to the Medicare limiting charge.
Note: PPV and flu immunizations may be filed to Medicare using traditional billing methods. How-
ever, if mass immunizations are furnished to a large number of Medicare beneficiaries, a simplified
“roster billing” may be used. Contact the local Medicare carrier for further details regarding “roster
billing.”

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Part B Policies Chapter 5

Hepatitis B Vaccinations
Medicare began providing coverage of hepatitis B vaccine on September 1, 1984. The vaccine and
its administration are covered for Medicare patients at high or intermediate risk of contracting hepa-
titis B, when ordered by a doctor of medicine or osteopathy.
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for the hepa-
titis vaccine and its administration. Deductible and coinsurance apply. Claims from physicians, other
practitioners, or suppliers where assignment was not accepted are subject to the Medicare limiting
charge.
Screening Mammography Services
The BBA of 1997, Section 4101, states screening mammographies are regular, routine radiological
examinations for early detection of breast cancer. They include a physician’s interpretation of the
results. They are conducted as preventive services, when no clinical indications or symptoms exist. A
physician’s prescription or referral is not required to cover a screening mammogram.
As of January 1, 1991, Medicare covers screening mammography services based on age and fre-
quency of coverage limitations. Starting October 1, 1994, the Mammography Quality Standards Act
(MQSA) requires all mammography centers that bill Medicare to be certified by the Food and Drug
Administration (FDA). The FDA sends certification information to CMS, which forwards it to indi-
vidual carriers.
CMS urges carriers to notify physicians under their jurisdiction, at least once a year, about certified
mammography centers and, when requested, to provide a list of local covered centers.
The name and number of the mammography center is required in block 32 of Form CMS-1500 or the
equivalent electronic claim field.
Requirements for screening mammography services are:
· Women 35-39 are covered for one screening mammogram during that five-year period
· Women 40 and over are covered for one screening mammogram per 12-month period
For women 40 and over, the 12-month time frame is determined as:
· Twelve months have elapsed since the last screening. Counting begins with the month after the
last exam. For example, if a woman had an exam on February 25, 2003, counting would begin in
March 2003. She would then be eligible for her next screening mammogram on or after February
1, 2004.
Medicare allows a radiologist who interprets screening mammographies to order and interpret addi-
tional films based on the results of the screening mammogram while a patient is still at the facility
for the screening exam. This can be performed without an additional order from the treating physi-
cian. Where a radiologist’s interpretation results in additional films, the mammography is no longer
considered a screening exam for application of age and frequency standards or payment purposes.
When a screening mammogram is changed to a diagnostic mammogram, based on the interpretation
of the radiologist, modifier GG (performance and payment of a screening mammogram and diagnos-
tic mammogram on the same patient, same day) should be added to the diagnostic procedure code in
block 24f of Form CMS-1500 or the designated electronic field. This modifier is used for statistical
purposes in tracking the frequency of this situation. When a screening mammography and a diagnos-
tic mammography are performed for the same patient on the same day, both services will be reim-
bursed by Medicare.
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for screening
mammography services. The Medicare Part B deductible does not apply. However, coinsurance does

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Chapter 5 Part B Policies

apply. Claims from physicians, other practitioners, or suppliers where assignment was not accepted
are subject to the Medicare limiting charge.
Screening Pap Tests
The BBA of 1997, Section 4102, provides coverage every three years for screening Pap tests. High
risk women are eligible for a Pap test or pelvic exam once every twelve months if they are at high
risk for cervical or vaginal cancer or if they are of childbearing age and have had an abnormal Pap
test in the preceding 36 months.
Effective July 1, 2001, the Consolidated Appropriations Act of 2001 (P.L. 106-554) modified section
§1861(nn) of the Social Security Act (the Act) (42 USC 1395X(nn)) to state that every woman with
Medicare coverage is eligible for a screening Pap test once every two years.
Under the following conditions, screening Pap tests are covered when ordered and collected by a
doctor of medicine or osteopathy, or other authorized practitioner (i.e., a certified nurse midwife,
physician assistant, nurse practitioner, or clinical nurse specialist authorized under state law to per-
form the examination):
· The patient has not had a screening Pap test during the preceding two years and is at low risk for
developing cervical or vaginal cancer.
· Evidence exits, on the basis of medical history or other findings, that she is of childbearing age
and has had an examination indicating the presence of cervical or vaginal cancer or other abnor-
malities during any of the preceding three years; or that she is at high risk of developing cervical
or vaginal cancer.

Cervical Cancer High Risk Factors

· Early onset of sexual activity (under 16 years of age)
· Multiple sexual partners (five or more in a lifetime)
· Sexual partners who have multiple sexual partners
· History of a sexually transmitted disease (including HIV infection)
· Fewer than three negative Pap tests within the previous seven years

Vaginal Cancer High Risk Factors

· DES (diethylstilbestrol) - exposed daughters of women who received DES during pregnancy
· Women (under age 65) who have not had a Pap test in 5 years or more
Medicare pays 100 percent of the lower of the approved amount or the submitted charge for screen-
ing Pap test lab tests. Deductible and coinsurance do not apply.
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for Pap test
collection procedures. The Medicare Part B deductible does not apply. However, coinsurance does
apply.
Claims from physicians, other practitioners, or suppliers where assignment was not accepted are sub-
ject to the Medicare limiting charge.
Screening Pelvic Examination
The BBA of 1997, Section 4102, provides for coverage of screening pelvic examinations (including
a clinical breast examination) for all female patients, effective January 1, 1998, subject to certain
coverage, frequency, and payment limitations. Effective July 1, 2001, the Consolidated Appropria-

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Part B Policies Chapter 5

tions Act of 2001 (P.L. 106-554) modified section §1861(nn) of the Social Security Act (the Act) (42
U.S.C. 1395X(nn)) to provide Medicare coverage for screening pelvic examinations every two years.
A screening pelvic examination should include at least seven of the following eleven elements:
· Inspection and palpation of breasts for masses or lumps, tenderness, symmetry, or nipple dis-
charge
· Digital rectal examination, including sphincter tone, presence of hemorrhoids, and rectal masses
· Pelvic examination (with or without specimen collection for smears and culture) including:
o External genitalia (e.g., general appearance, hair distribution, or lesions)
o Urethral meatus (e.g., size, location, lesions, or prolapse)
o Urethra (e.g., masses, tenderness, or scarring)
o Bladder (e.g., fullness, masses, or tenderness)
o Vagina (e.g., general appearance, estrogen effect, discharge, lesions, pelvic support, cys-
tocele, or rectocele)
o Cervix (e.g., general appearance, lesions, or discharge)
o Uterus (e.g., size, contour, position, mobility, tenderness, consistency, descent, or sup-
port)
o Adnexa/parametria (e.g., masses, tenderness, organomegaly, or nodularity)
o Anus and perineum
Medicare Part B pays for a screening pelvic examination if performed by a medical doctor, doctor of
osteopathy, clinical nurse midwife, physician assistant, nurse practitioner, or clinical nurse specialist
authorized under state law to perform the examination. The examination does not have to be ordered
by a physician or other authorized practitioner. Payment may be made for a screening pelvic exami-
nation performed on an a-symptomatic woman once every two years.
Medicare may pay for a screening pelvic examination more often than once every two years:
· If evidence exists that she is at high risk (on the basis of her medical history or other findings) of
developing cervical cancer or vaginal cancer
· For a woman of childbearing age, who had an examination during any of the preceding two years
indicating the presence of cervical or vaginal cancer or other abnormality
Medicare does not pay for a screening pelvic examination for women at high risk or who qualify for
coverage under the childbearing provision more often than once every 11 months after the month of
the last Medicare-covered screening pelvic examination.
The 11- and 23-month periods start with the month after the month in which the previous test or pro-
cedure was performed.
Example: A high risk patient received a screening pelvic examination in January 2003. The count
starts with February 2003. She is eligible to receive another pelvic exam in January 2004 (the month
after 11 full months have passed).
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for screening
pelvic examination procedures. The Medicare Part B deductible does not apply. However, coinsur-
ance does apply. Claims from physicians, other practitioners, or suppliers where assignment was not
accepted are subject to the Medicare limiting charge.

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Chapter 5 Part B Policies

Screening for Colorectal Cancer

The BBA of 1997, Section 4104, provided for coverage of various colorectal screening examinations
subject to coverage, frequency, and payment limitations. Effective January 1, 1998, Medicare covers
colorectal cancer screening tests or procedures for the early detection of colorectal cancer. Effective
for services rendered on or after July 1, 2001, the colorectal cancer screening benefit has been ex-
panded to include colonoscopies for Medicare patients who are not at high risk for developing colo-
rectal cancer.
Coverage of colorectal cancer screening includes the following tests/procedures:
· Screening fecal occult blood test
· Screening flexible sigmoidoscopy
· Screening colonoscopy
· Screening barium enema as an alternative to a screening flexible sigmoidoscopy or screening
colonoscopy
Following are the coverage criteria for these screenings:
· Screening fecal occult blood tests are covered once every 12 months (i.e., at least 11 months have
passed following the month in which the last covered screening fecal occult blood test was per-
formed) for beneficiaries who have attained age 50.
A screening fecal occult blood test is a guaiac-based test for peroxidase activity that the patient com-
pletes by taking samples from two different sites of three consecutive stools. This screening requires
a written order from the patient’s attending physician (a doctor of medicine or osteopathy who is
fully knowledgeable about the patient’s medical condition, and who would be responsible for using
the results of any examination [test] performed in the overall management of the patient’s specific
medical problem).
Screening flexible sigmoidoscopies are covered at the following frequencies, for patients who have
attained age 50:
· Once every 48 months unless the patient does not meet the criteria for high risk of developing
colorectal cancer and he or she has had a screening colonoscopy within the preceding 10 years. If
a patient has had a screening colonoscopy within the preceding 10 years, then he or she may have
covered a screening flexible sigmoidoscopy only after at least 119 months have passed following
the month that he or she received the screening colonoscopy.
Note: If, during the course of a screening flexible sigmoidoscopy, a lesion or growth is detected that
results in a biopsy or removal of the growth, the appropriate diagnostic procedure classified as a
flexible sigmoidoscopy with biopsy or removal should be billed rather than a screening flexible sig-
moidoscopy. A doctor of medicine or osteopathy, physician assistant, nurse practitioner, or clinical
nurse specialist must perform this screening.
Screening colonoscopies are covered for an individual of any age. They are covered once every 24
months (i.e., at least 23 months have passed since the month in which the last covered screening
colonoscopy was performed) for patients at high risk for colorectal cancer. High risk for colorectal
cancer means an individual who meets one or more of the following criteria:
· Close relative (sibling, parent, or child) who has had colorectal cancer or an adenomatous poly-
posis;
· Family history of familial adenomatous polyposis;

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Part B Policies Chapter 5

· Family history of hereditary nonpolyposis colorectal cancer;

· Personal history of adenomatous polyps;
· Personal history of colorectal cancer; and/or
· Inflammatory bowel disease, including Crohn’s Disease and ulcerative colitis.
Effective for services furnished on or after July 1, 2001, screening colonoscopies for individuals not
meeting the criteria for being at high risk for developing colorectal cancer are covered when per-
formed under the following conditions:
· At a frequency of once every 10 years (i.e., at least 119 months have passed following the month
in which the last covered screening colonoscopy was performed)
· If the individual would otherwise qualify to have a covered screening colonoscopy, but has had a
covered screening flexible sigmoidoscopy, then he or she may have a covered screening colono-
scopy only after at least 47 months have passed following the month in which the last covered
flexible sigmoidoscopy was performed.
Note: If, during the course of a screening colonoscopy, a lesion or growth is detected that results in a
biopsy or removal of the growth, the appropriate diagnostic procedure classified as a colonoscopy
with biopsy or removal should be billed rather than a screening colonoscopy. A doctor of medicine
or osteopathy must perform this screening.
Screening barium enema examinations are covered as an alternative to either a screening sigmoido-
scopy or a screening colonoscopy examination. The same frequency parameters specified in the law
for screening sigmoidoscopy and screening colonoscopy apply.
For an individual, age 50 or over, who is not at high risk of colorectal cancer, payment may be made
for a screening barium enema examination performed after at least 47 months have passed following
the month in which the last screening barium enema or screening flexible sigmoidoscopy was per-
formed.
For an individual at high risk for colorectal cancer, payment may be made for a screening barium en-
ema examination performed after at least 23 months have passed following the month the last
screening barium enema or the last screening colonoscopy was performed.
The screening barium enema must be ordered in writing after determining that the test is the appro-
priate screening test. This means that the attending physician must determine for an individual that
the estimated screening potential for the barium enema is equal to, or greater than, the screening po-
tential estimated for a screening flexible sigmoidoscopy or a screening colonoscopy. Screening sin-
gle contrast and double contrast barium enema examinations require a written order from the
attending physician.
To determine the 11-, 23-, 47-, and 119-month periods, the count should start with the month after
the month in which a previous test or procedure was performed.
For example, the patient received a fecal occult blood test in January 2003. The count should start
with February 2003. The patient is eligible to receive another blood test in January 2004 (the month
after 11 full months have passed).
Medicare pays 100 percent of the lower of the approved amount or the submitted charge for fecal
occult blood tests. Deductible and coinsurance do not apply.
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for all other
colorectal cancer screening procedures. Deductible and coinsurance apply.

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Chapter 5 Part B Policies

Claims from physicians, other practitioners, or suppliers where assignment was not accepted are sub-
ject to the Medicare limiting charge.
Prostate Cancer Screening Tests and Procedures
The BBA, Section 4103, provides for coverage of certain prostate cancer screening tests and proce-
dures subject to certain coverage, frequency, and payment limitations. Effective for services fur-
nished on or after January 1, 2000, Medicare covers prostate cancer screening tests and procedures
for the early detection of prostate cancer, including the following:
· Screening digital rectal examination (DRE) – a clinical examination of an individual’s prostate
for nodules or other abnormalities of the prostate
· Screening prostate specific antigen (PSA) blood test – a test that detects the marker for
adenocarcinoma of the prostate
Following are the coverage criteria for these screenings:
· DRE is covered if all the following criteria are met:
o It is performed on a male patient age 50 or older (e.g., services are performed at least one
day after the patient attained age 50)
o It is performed by an doctor of medicine or osteopathy, qualified physician assistant,
qualified nurse practitioner, qualified clinical nurse specialist, or qualified certified nurse
midwife
o It is performed no more than once every 12 months (i.e., the month after 11 full months
have passed)
· PSA test is covered if all of the following criteria are met:
o It is performed on a male patient age 50 or older (e.g., services are performed at least one
day after the patient attained age 50)
o It is ordered by the patient’s attending physician (doctor of medicine or osteopathy),
qualified physician assistant, qualified nurse practitioner, qualified clinical nurse special-
ist, or qualified certified nurse midwife
o It is performed no more than once every 12 months (i.e., the month after 11 full months
have passed)
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for the DRE.
Deductible and coinsurance apply.
Medicare pays 100 percent of the lower of the approved amount or the submitted charge for the PSA
test. Deductible and coinsurance do not apply.
Claims from physicians, other practitioners, or suppliers where assignment was not accepted are sub-
ject to the Medicare limiting charge.
Screening Glaucoma Services
Section 102 of the BIPA of 2000, provides annual coverage for glaucoma screening for patients in
the following risk categories:
· Individuals with diabetes mellitus
· Individuals with a family history of glaucoma
· African-Americans age 50 and over

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Part B Policies Chapter 5

Effective for services rendered on or after January 1, 2002, Medicare will pay for glaucoma screen-
ing examinations when they are furnished by or under the direct supervision in the office setting of
an ophthalmologist or optometrist who is legally authorized to perform the services under state law.
Screening for glaucoma is defined to include: (1) a dilated eye examination with an intraocular pres-
sure measurement; and (2) a direct ophthalmoscopy examination, or a slit-lamp biomicroscopic ex-
amination. Payment may be made for a glaucoma screening examination that is performed on an
eligible patient after at least 11 months have passed following the month in which the last covered
glaucoma screening examination was performed.
Medicare pays 80 percent of the lower of the approved amount or the submitted charge for glaucoma
screening services. Deductible and coinsurance apply. Claims from physicians, other practitioners, or
suppliers where assignment was not accepted are subject to the Medicare limiting charge.

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Chapter 5
Quick Reference Chart – Medicare Preventive Services
Covered Service
Bone Mass Measurements
Once every 24 months for qualified
individuals and more frequently if
medically necessary.
Colorectal Cancer Screening
· Fecal occult Blood Test -Once
every 12 months.
· Flexible Sigmoidoscopy -Once
every 48 months.
· Colonoscopy –Once every 24
months if at high risk for colon
cancer. If not at high risk for co-
lon cancer, once every 10 years,
but not within 48 months of a
screening flexible sigmoido-
scopy.
· Barium Enema –May be used
instead of a sigmoidoscopy or
colonoscopy.
Diabetes Services
· Coverage for glucose monitors,
test strips, and lancets.
· Diabetes self-management train-
ing.
Mammogram Screening
Once every 12 months. Medicare also
covers new digital technologies for
mammogram screenings.
Pap Test and Pelvic Examination
(includes a clinical breast exam)
Once every 24 months. Once every
12 months if at high risk for cervical
or vaginal cancer, or if childbearing
age and have had an abnormal Pap
test in the past 36 months.
Prostate Cancer Screening
· Digital Rectal Examination -
Once every 12 months.
· Prostate Specific Antigen
(PSA) test - Once every 12
months.
Vaccinations
· Influenza Vaccine –Annually.
· Pneumococcal Pneumonia
Vaccine (PPV) –Once in a life-
time.
· Hepatitis B Vaccine –Physician
recommendation only.
Glaucoma Screening
Once every 12 months.
Medicare Resident & New Physician Guide
Who is Covered
Certain people with Medicare who
are at risk for losing bone mass.
All people with Medicare age 50 and
older, except colonoscopy for which
there is no minimum age require-
ment.
· All people with Medicare who
have diabetes (insulin and non-
insulin dependent).
· Certain people with Medicare
who are at risk for complica-
tions from diabetes. Must be
ordered by a physician.
All women with Medicare age 40
and older. A baseline mammogram
is recommended for women between
ages 35 and 39.
All women with Medicare.
All men with Medicare age 50 and
older (coverage begins the day after
the 50th birthday).
All people with Medicare.
People with Medicare who are at
high risk for glaucoma, including
people with diabetes, a family his-
tory of glaucoma, or African-
Americans who are age 50 and older.
Part B Policies
Patient Liability
20% of the Medicare-approved amount (or a set
coinsurance amount) after the yearly Part B de-
ductible.
· Nothing for the fecal occult blood test.
· For all other tests, 20% of the Medicare-
approved amount after the yearly Part B de-
ductible.
· For flexible sigmoidoscopy or colonoscopy,
patient pays 20% of the Medicare-approved
amount after the yearly Part B deductible if the
test is done in a hospital outpatient depart-
ment.
20% of the Medicare-approved amount after the
yearly Part B deductible.
20% of the Medicare-approved amount with no
Part B deductible.
· Nothing for the Pap lab test.
· For Pap test collection and pelvic and breast
exams, 20% of the Medicare-approved amount
(or a set coinsurance amount) with no Part B
deductible.
Generally, 20% of the Medicare-approved amount
for the digital rectal exam after the yearly Part B
deductible. No coinsurance and no Part B deducti-
ble for the PSA test.
Nothing for flu and PPV if the physician accepts
assignment. For Hepatitis B vaccine, 20% of the
Medicare-approved amount after the yearly Part B
deductible.
20% of the Medicare-approved amount after the
yearly Part B deductible.
Page 51
Part B Policies Chapter 5

Surgery Policies
This section addresses Medicare payment policies applicable to surgical procedures.
Preoperative Services
Section 1862(a)(1)(A) of the Social Security Act requires that in order to qualify for Medicare cover-
age, a service must be reasonable and necessary for the diagnosis and treatment of illness or injury,
or to improve the functioning of a malformed body member. A preoperative service performed due
to hospital or malpractice protocol cannot supercede this guideline for Medicare coverage purposes.
Medicare will pay for preoperative evaluation and management services, and diagnostic tests if they
are medically necessary and meet the documentation requirements of the service rendered.
Global Surgery Policy
Global surgery includes all necessary services normally furnished by a surgeon before, during, and
after the procedure. Payment for the surgical procedure includes the preoperative, intraoperative, and
postoperative services routinely performed by the surgeon. The global surgery concept is defined as a
nationwide equitable payment under the Medicare fee schedule to uniformly administer payment for
surgical and related services.
Surgeries are classified into two different categories: major and minor. The global surgery policy ap-
plies to both major and minor surgical procedures as defined by their postoperative periods. The
global surgery policy applies to surgical procedures for which there are postoperative periods of 0,
10, and 90 days.
Minor surgery is a relatively simple surgical service that involves a readily identifiable surgical pro-
cedure and includes variable intraoperative and postoperative services. Minor surgeries have a post-
operative period of either 0 or 10 days.
Major surgery is a relatively intense surgical service that involves a readily identifiable surgical pro-
cedure and includes variable preoperative, intraoperative, and postoperative services. Major surgeries
are further identified by their postoperative period. All major surgical procedures have a 90-day
postoperative period that begins immediately following the day of surgery and a 1-day preoperative
period. The global period for major surgeries includes the pre- and postoperative periods and the day
of surgery.
The approved amount for procedures subject to the global surgery policy includes payment for the
following services related to the surgery and provided by the surgeon. The physician must not sepa-
rately bill the following services to Medicare or the patient:
· Preoperative visits rendered after the decision is made to operate, starting one day prior to sur-
gery for major surgical procedures and the day of surgery for minor procedures;
· Intraoperative services that are usual and necessary parts of the surgical procedure;
· All additional medical or surgical services required of the surgeon during the postoperative pe-
riod due to complications not requiring a return to the operating room;
· Postsurgical pain management by the surgeon;
· Certain supplies that are a normal part of the surgical procedure;
· Miscellaneous services, such as dressing changes; incision care; removal of operative pack or
cutaneous sutures, staples, lines, wires, tubes, drains, casts, and splints; insertion, irrigation, and
removal of urinary catheters; routine peripheral intravenous lines, nasogastric, and rectal tubes;
changes/removal of tracheostomy tubes; or

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· Postoperative visits related to the recovery of the surgery, during the postoperative period of the
surgery.
Services not included in the global surgery reimbursement that may be billed separately include:
· Initial evaluation or consultation by the surgeon to determine the need for the surgery;
· Treatment for postoperative complications requiring a return trip to the operating room;
· Visits during the postoperative period that are unrelated to the surgical procedure, unless due to
complications from the surgery;
· Treatment for the underlying condition or an added course of treatment not part of the normal
recovery from surgery;
· Services of other physicians, except when the surgeon and other physician(s) agree on the trans-
fer of care;
· Clearly distinct surgical procedures during the postoperative period that are not repeat operations
or treatment for complications;
· Diagnostic tests and radiological procedures;
· Performance of a more extensive procedure if a less extensive procedure fails;
· Immunosuppressive therapy for organ transplants; or
· Critical care services unrelated to the surgery where a seriously injured or burned patient is criti-
cally ill and requires constant attendance of the physician.

Global Surgery Modifiers

Modifier 57
E/M services furnished by the surgeon on the day before or on the day of major surgery, that result in
the initial decision to perform the surgery, may be covered separately from the surgery. The E/M ser-
vice should include modifier 57.

Modifier 25
E/M services furnished on the same day as a minor surgical procedure may be covered separately
only if the patient’s condition required a significant, separately identifiable E/M service above and
beyond the usual pre- and postoperative care associated with the procedure. The E/M service should
include modifier 25.
Note: When utilizing modifier 25, the medical record must clearly reflect why the visit was unrelated
to the surgical procedure.

Modifier 24
Unrelated E/M services furnished by the same physician in the postoperative period of a major surgi-
cal procedure may be covered. The E/M service should include modifier 24.
Note: When utilizing modifier 24, the medical record must clearly reflect why the visit was unrelated
to the surgical procedure.

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Modifier 58
Modifier 58 supports the billing of staged or related surgical procedures performed during the post-
operative period of the first procedure. Modifier 58 is not used to report the treatment of a problem
that requires a return to the operating room.
It may be necessary for the physician to add modifier 58 to a surgical procedure performed during the
postoperative period if it:
· Was planned prospectively or at the time of the original procedure;
· Was more extensive than the original procedure; or
· Is used for therapy following a diagnostic surgical procedure.
A new postoperative period begins when the next procedure in the series is billed.

Modifier 78
When treatment for complications requires a return trip to the operating room, separate payment may
be made for the procedure (whether it is the same or a different procedure). The procedure should
include modifier 78.

Modifier 79
Separate payment may be made when a surgical procedure furnished during the postoperative period
is unrelated to the previous procedure. The procedure should include modifier 79. A new postopera-
tive period begins when the unrelated procedure is billed.
Note: When utilizing modifier 79, the medical record must clearly reflect why the surgery was unre-
lated to the previous surgical procedure.
Multiple Surgery
The term multiple surgery refers to a situation in which the same physician bills multiple covered
surgical procedures on the same day. The Medicare allowance is based on 100 percent of the fee
schedule amount for the procedure with the highest fee schedule allowance, and 50 percent of the fee
scheduled amount for the second, third, fourth, and fifth procedures. When the same physician per-
forms more than five procedures subject to multiple surgery rules on the same day, medical docu-
mentation (e.g., the operative report) must be submitted with the claim.
Bilateral Procedures
A bilateral procedure is one performed on both sides of the body during the same session. The pay-
ment rules for bilateral procedures are as follows:

Procedures that are Bilateral in Nature

The fee schedule determines certain procedures to be bilateral in nature, when the:
· Procedure code description specifically states that the procedure is bilateral;
· Procedure code description states that the procedure may be performed either bilaterally or uni-
laterally; or
· Procedure is typically performed as a bilateral procedure.
It is not necessary to use bilateral surgery modifiers when billing procedure codes that are bilateral in
nature, regardless of whether or not the procedure was performed unilaterally or bilaterally.

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Procedures Allowed at 150 percent of the Fee Schedule

When procedures that are usually performed on one side of the body are performed bilaterally, pay-
ment will be made at the lower of the billed amount or 150 percent of the fee schedule allowance.
Claims for these procedures should be billed on a separate line of the claim with modifier 50 (bilat-
eral procedure). This modifier indicates the procedure was performed on both sides of the body.

Procedures Allowed at 100 Percent of the Fee Schedule (Each Procedure)

Certain procedures, when performed bilaterally, are allowed at 100 percent of the fee schedule for
each side of the body.

To report these services, either of the following methods may be used:

· The procedure may be billed on a single line of the claim with modifier 50 (bilateral procedure)
and the billed amount doubled. The allowance is 200 percent of the fee schedule.
· The procedure may be billed on two separate lines of the claim with modifier LT (left) on one
line and modifier RT (right) on the other. The allowance is 100 percent of the fee schedule for
each procedure.
Note: These services may not be billed with both modifier 50 and LT or RT.
All carriers publish lists of procedure codes applicable to the above bilateral rules and may be con-
tacted for further information regarding bilateral procedures.
Assistant Surgeon
An assistant surgeon is a physician who actively assists the physician, in charge of a case, in per-
forming a surgical procedure. Not all surgical procedures are deemed by Medicare to require an as-
sistant surgeon. When one is required, the reimbursement for the surgical procedure may be no more
than 16 percent of the fee schedule allowance. These services require the use of modifier 80 (assis-
tant surgeon). A list of services that permit an assistant surgeon may be obtained from the local
Medicare carrier.
Note: Assistant surgeon reimbursement for multiple procedures is allowed at eight percent of the
scheduled allowance for the second through fifth additional covered procedures and on a “by report”
basis for additional surgical services (over five) provided to the patient on the same day. Medical
documentation (e.g., the operative report) must be submitted with the claim.
Medicare does not cover assistant surgeon charges for procedures where, based on a national aver-
age, assistant surgeons are used in fewer than five percent of the cases. The physician may not charge
the patient for these services.

Co-Surgeons and Surgical Teams

Co-Surgeons
Under some circumstances, the individual skills of two or more surgeons are required to perform
surgery on the same patient during the same operative session. This may be required because of the
complex nature of the procedure and/or the patient’s condition. In these cases, the physicians are act-
ing as co-surgeons.
All carriers publish lists of procedures applicable to co-surgery requirements. Since the services of a
co-surgeon could be considered not medically necessary, advance notice of Medicare’s possible de-
nial must be provided to the patient when the surgeons do not wish to accept financial responsibility
for the service.

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· If two surgeons (each in a different specialty) are required to perform a specific procedure, each
surgeon bills for the procedure with modifier 62 (two surgeons). Co-surgery also refers to surgi-
cal procedures involving two surgeons performing the parts of the procedure simultaneously, i.e.,
heart transplant or bilateral knee replacement. Documentation of the medical necessity for two
surgeons is required for certain services.
Note: If surgeons of different specialties are each performing different procedures, neither co-
surgery nor multiple surgery rules apply (even if the procedures are performed through the same inci-
sion). If one of the surgeons performs multiple procedures, the multiple procedure rules apply to that
surgeon’s services.
Surgical Teams
Surgical teams include several physicians and personnel equipped to perform highly complex proce-
dures. If a team of surgeons (more than two surgeons of different specialties) is required to perform a
specific procedure, each surgeon should bill for the procedure with modifier 66 (surgical team).
Documentation of the medical necessity for the surgical team is required.
Dermatological Surgery
For certain dermatological services, the procedure code descriptor indicates that multiple surgical
procedures have been performed (e.g., removal of skin tags, up to and including 15 lesions). Multiple
surgical procedure reimbursement rules do not apply.
For certain other dermatological services, where the procedure code descriptors do not specify that
multiple procedures have been performed, reimbursement is based on multiple surgery guidelines.
Therefore, Medicare covers certain surgical procedures performed incidental to other surgical proce-
dures by the surgeon or his or her assistant; however, reimbursement is included in the allowance for
the major procedure. Physicians may not charge patients for procedures included in the basic allow-
ance of the major procedure.

Reporting Split Care for Surgery

Physicians Who Furnish the Global Package

In situations where one physician performs a surgical procedure and furnishes all the usual pre- and
postoperative services, only the surgical procedure should be billed. Visits or other services included
in the global package should not be billed separately.

Physicians Who Furnish Part of the Global Package

In situations where physicians agree on the transfer of care during the global period, each physician
will report his or her services by indicating one of the following modifiers on the claim:
· Modifier 54 (Surgical Care Only) should be reported for the surgery only
· Modifier 55 (Postoperative Management Only) should be reported for postoperative care only
Claims for surgical-care-only and postoperative-care-only should indicate the same date of surgery
and the same surgical procedure code with the appropriate modifiers. The date(s) on which care was
relinquished by one physician and assumed by another physician must be indicated in block 19 of
Form CMS-1500 or the designated electronic field.

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Services Medicare Does Not Pay For

Medicare does not pay for:
· Services Medicare never covers (services considered excluded);
· Services considered not medically necessary;
· Services denied as bundled or included in the basic allowance of another service; or
· Claims denied as unprocessable.
Excluded Services
The following services are excluded. Medicare never pays for these services, and there is no Medi-
care fee schedule associated with them. Therefore, the patient may be charged the physician’s usual
or customary fee for the service, with no Advance Beneficiary Notice required. Please refer to Chap-
ter 8, Waiver of Liability, for more information.
These services include, but are not limited to:
· Acupuncture
· Dental care
· Cosmetic surgery
· Custodial care at home or in a nursing home (assistance with bathing, dressing, etc.)
· Hearing examinations
· Orthopedic shoes
· Outpatient prescription drugs (with only a few exceptions)
· Routine foot care (except for certain people with diabetes)
· Routine eye care
· Routine or annual physical examinations
· Screening tests with no symptoms or documented conditions (exception: preventive screening
tests, such as Pap tests, mammograms, and colorectal cancer screening). Please refer to the earlier
topic in this chapter, Preventive Services, for more information.
· Vaccinations (with only a few exceptions). Please refer to the earlier topic in this chapter, Pre-
ventive Services, for more information.
· Care provided in facilities located outside the United States (except in limited cases) Refer to the
note in this section.
Additionally, Medicare does not cover services related to excluded services. These include services
related to follow-up care and complications of excluded services requiring treatment during a hospi-
tal stay in which excluded services were performed. For example, Medicare does not cover routine
physical exams and, therefore, does not cover lab tests, or other services related to a routine physical
exam.
Physicians should use modifier GY to indicate that an item or service is not a Medicare benefit.
Note: The term United States means the 50 states, the District of Columbia, the Commonwealth of
Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa. For

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Part B Policies Chapter 5

purposes of services furnished on a ship, this includes territorial waters adjoining the land areas of
the United States.

Not Medically Necessary Services

Medicare does not pay for services that are not considered reasonable and necessary for the diagnosis
or treatment of an illness or injury. When such services are planned, physicians should ask the pa-
tient to sign an Advance Beneficiary Notice. Please refer to Chapter 8, Waiver of Liability, for more
information.
Services that are not medically necessary include but are not limited to:
· Services provided in a hospital or Skilled Nursing Facility (SNF) that, based on the patient’s
condition, could have been provided elsewhere (e.g., the patient’s home or a nursing home);
· Hospital or SNF services exceeding Medicare limitations regarding length of stay;
· E/M services in excess of those considered medically reasonable and necessary;
· Therapy or diagnostic procedures in excess of Medicare usage limits; or
· Services not warranted based on the diagnosis of the patient.
Bundled or Basic Allowance Services
Services included in the basic allowance of another procedure are considered bundled services and
may not be charged to the patient. These services include but are not limited to:
· Fragmented services included in the basic allowance of the initial service;
· Prolonged care (indirect);
· Physician standby services;
· Case management services (such as telephone calls to and from patients); and
· Supplies included in the basic allowance of a procedure.
Correct Coding Initiative (CCI)
CMS developed the National Correct Coding Initiative (CCI) to promote national correct coding
methodologies and to eliminate improper coding. CCI edits are developed based on coding conven-
tions defined in the American Medical Association’s Current Procedural Terminology (CPT) Man-
ual, current standards of medical and surgical coding practice, input from specialty societies, and
analysis of current coding practice.
AdminaStar Federal, a CMS contractor, develops and refines the CCI, coordinates the receipt of
comments, the prioritization of issues, the review and research of previous actions, and discussions
with CMS about concerns.
The CCI identifies code pairs based on procedure code descriptions or standard medical practice.
These code pairs represent the following:
· Comprehensive code – the major procedure or service when reported with another code. The
comprehensive code represents greater work, effort, and time as compared to the other code re-
ported.
· Component code – the lesser procedure or service when reported with another code. The compo-
nent code is part of a major procedure or service and is often represented by a lower work rela-
tive value unit under the Medicare fee schedule as compared to the other code reported.

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The volume of edits in each version update is too large to be produced by Medicare carrier or fiscal
intermediaries (FIs) through a Medicare bulletin. Therefore, CMS has designated the National Tech-
nical Information Services (NTIS) as the sole distributor of the CCI edits. Subscriptions and single
issues are available in various formats, including CD-ROM.
For purchasing information, contact NTIS at www.ntis.gov/products/families/cci on the Internet, by
phone at 1-800-363-2068 (DC area: 703-605-6000), or by writing to the following address:
NTIS Subscriptions Department
5285 Port Royal Road
Springfield, Virginia 22161
Commercial Edits
On October 1, 1998, CMS required contractors to implement commercial procedure-to-procedure
edits, to detect additional inappropriate procedure code combinations including the following:
· Mutually exclusive procedure - two or more procedures not usually performed during the same
patient encounter on the same date of service; and
· Incidental procedure - procedure that requires little additional physician work and/or is not clini-
cally integral to the performance of the more complex primary procedure being performed at the
same time.
These commercial edits are not part of CCI. In addition, because they are proprietary, they are not
available to the public through NTIS or in any other format. Physicians may contact the local Medi-
care contractor for information about these commercial edits.

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Chapter 6 E&M Documentation

Chapter 6 - EVALUATION AND MANAGEMENT

DOCUMENTATION
This chapter contains the 1995 and 1997 Documentation Guidelines (DGs) for Evaluation and Man-
agement (E/M) services. Physicians can choose to use either the 1995 or the 1997 guidelines and
carriers must review and adjudicate claims using both the 1995 and the 1997 guidelines.

1995 Documentation Guidelines for E/M Services

I. Introduction
What Is Documentation and Why Is It Important?
Medical record documentation is required to record pertinent facts, findings, and observations about
an individual's health history including past and present illnesses, examinations, tests, treatments,
and outcomes. The medical record chronologically documents the care of the patient and is an impor-
tant element contributing to high quality care. The medical record facilitates:
· the ability of the physician and other healthcare professionals to evaluate and plan the patient's
immediate treatment, and to monitor his/her healthcare over time;
· communication and continuity of care among physicians and other healthcare professionals in-
volved in the patient's care;
· accurate and timely claims review and payment;
· appropriate utilization review and quality of care evaluations; and
· collection of data that may be useful for research and education.
An appropriately documented medical record can reduce many of the "hassles" associated with
claims processing and may serve as a legal document to verify the care provided, if necessary.
What Do Payers Want and Why?
Because payers have a contractual obligation to enrollees, they may require reasonable documenta-
tion that services are consistent with the insurance coverage provided. They may request information
to validate:
· the site of service;
· the medical necessity and appropriateness of the diagnostic and/or therapeutic services provided;
and/or
· that services provided have been accurately reported.

II. General Principles of Medical Record Documentation

The principles of documentation listed below are applicable to all types of medical and surgical ser-
vices in all settings. For Evaluation and Management (E/M) services, the nature and amount of phy-
sician work and documentation varies by type of service, place of service and the patient's status.
The general principles listed below may be modified to account for these variable circumstances in
providing E/M services.
1. The medical record should be complete and legible.
2. The documentation of each patient encounter should include:

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· reason for the encounter and relevant history, physical examination findings, and prior di-
agnostic test results;
· assessment, clinical impression, or diagnosis;
· plan for care; and
· date and legible identity of the observer.
3. If not documented, the rationale for ordering diagnostic and other ancillary services should be
easily inferred.
4. Past and present diagnoses should be accessible to the treating and/or consulting physician.
5. Appropriate health risk factors should be identified.
6. The patient's progress, response to and changes in treatment, and revision of diagnosis should be
documented.
7. The CPT and ICD-9-CM codes reported on the health insurance claim form or billing statement
should be supported by the documentation in the medical record.

III. Documentation of E/M Services

This publication provides definitions and documentation guidelines for the three key components of
E/M services and for visits which consist predominately of counseling or coordination of care. The
three key components--history, examination, and medical decision making--appear in the descriptors
for office and other outpatient services, hospital observation services, hospital inpatient services,
consultations, emergency department services, nursing facility services, domiciliary care services,
and home services. While some of the text of CPT has been repeated in this publication, the reader
should refer to CPT for the complete descriptors for E/M services and instructions for selecting a
level of service. Documentation guidelines are identified by the symbol •DG.
The descriptors for the levels of E/M services recognize seven components which are used in defin-
ing the levels of E/M services. These components are:
· history
· examination
· medical decision making
· counseling
· coordination of care
· nature of presenting problem
· time
The first three of these components (history, examination, and medical decision making) are the key
components in selecting the level of E/M services. An exception to this rule is the case of visits
which consist predominantly of counseling or coordination of care; for these services time is the key
or controlling factor to qualify for a particular level of E/M service.
For certain groups of patients, the recorded information may vary slightly from that described here.
Specifically, the medical records of infants, children, adolescents, and pregnant women may have
additional or modified information recorded in each history and examination area.
As an example, newborn records may include under history of the present illness (HPI) the details of
mother's pregnancy and the infant's status at birth; social history will focus on family structure; fam-
ily history will focus on congenital anomalies and hereditary disorders in the family. In addition, in-
formation on growth and development and/or nutrition will be recorded. Although not specifically
defined in these documentation guidelines, these patient group variations on history and examination
are appropriate.

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A. DOCUMENTATION OF HISTORY
The levels of E/M services are based on four types of history (Problem Focused, Expanded Problem
Focused, Detailed, and Comprehensive). Each type of history includes some or all of the following
elements:
· Chief complaint (CC);
· History of present illness (HPI);
· Review of systems (ROS); and
· Past, family and/or social history (PFSH).
The extent of history of present illness, review of systems, and past, family and/or social history that
is obtained and documented is dependent upon clinical judgment and the nature of the presenting
problem(s).
The chart below shows the progression of the elements required for each type of history. To qualify
for a given type of history, all three elements in the table must be met. (A chief complaint is indi-
cated at all levels.)

History of Present Review of Systems Past, Family, and/or Type of History

Illness (HPI) (ROS) Social History (PFSH)
Brief N/A N/A Problem Focused
Brief Problem Pertinent N/A Expanded Problem Focused
Extended Extended Pertinent Detailed
Extended Complete Complete Comprehensive

•DG: The CC, ROS, and PFSH may be listed as separate elements of history, or they may be in-
cluded in the description of the history of the present illness.
•DG: A ROS and/or a PFSH obtained during an earlier encounter does not need to be re-recorded if
there is evidence that the physician reviewed and updated the previous information. This may
occur when a physician updates his/her own record or in an institutional setting or group
practice where many physicians use a common record. The review and update may be docu-
mented by:
o describing any new ROS and/or PFSH information or noting there has been no change in
the information; and
o noting the date and location of the earlier ROS and/or PFSH.
•DG: The ROS and/or PFSH may be recorded by ancillary staff or on a form completed by the pa-
tient. To document that the physician reviewed the information, there must be a notation sup-
plementing or confirming the information recorded by others.
•DG: If the physician is unable to obtain a history from the patient or other source, the record
should describe the patient's condition or other circumstance which precludes obtaining a his-
tory.
Definitions and specific documentation guidelines for each of the elements of history are listed be-
low.

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CHIEF COMPLAINT (CC)

The CC is a concise statement describing the symptom, problem, condition, diagnosis, physician
recommended return, or other factor that is the reason for the encounter.
•DG: The medical record should clearly reflect the chief complaint.

HISTORY OF PRESENT ILLNESS (HPI)

The HPI is a chronological description of the development of the patient's present illness from the
first sign and/or symptom or from the previous encounter to the present. It includes the following
elements:
· location;
· quality;
· severity;
· duration;
· timing;
· context;
· modifying factors; and
· associated signs and symptoms.

Brief and extended HPIs are distinguished by the amount of detail needed to accurately characterize
the clinical problem(s).
A brief HPI consists of one to three elements of the HPI.
•DG: The medical record should describe one to three elements of the present illness (HPI).
An extended HPI consists of four or more elements of the HPI.
•DG: The medical record should describe four or more elements of the present illness (HPI) or asso-
ciated comorbidities.

REVIEW OF SYSTEMS (ROS)

A ROS is an inventory of body systems obtained through a series of questions seeking to identify
signs and/or symptoms which the patient may be experiencing or has experienced.
For purposes of ROS, the following systems are recognized:
· Constitutional symptoms (e.g., fever, weight loss)
· Eyes
· Ears, Nose, Mouth, Throat
· Cardiovascular
· Respiratory
· Gastrointestinal
· Genitourinary
· Musculoskeletal
· Integumentary (skin and/or breast)
· Neurological
· Psychiatric
· Endocrine
· Hematologic/Lymphatic
· Allergic/Immunologic

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A problem pertinent ROS inquires about the system directly related to the problem(s) identified in
the HPI.
•DG: The patient's positive responses and pertinent negatives for the system related to the problem
should be documented.
An extended ROS inquires about the system directly related to the problem(s) identified in the HPI
and a limited number of additional systems.
•DG: The patient's positive responses and pertinent negatives for two to nine systems should be
documented.
A complete ROS inquires about the system(s) directly related to the problem(s) identified in the HPI
plus all additional body systems.
•DG: At least ten organ systems must be reviewed. Those systems with positive or pertinent negative
responses must be individually documented. For the remaining systems, a notation indicating
all other systems are negative is permissible. In the absence of such a notation, at least ten
systems must be individually documented.

PAST, FAMILY, AND/OR SOCIAL HISTORY (PFSH)

The PFSH consists of a review of three areas:
· past history (the patient's past experiences with illnesses, operations, injuries and treatments);
· family history (a review of medical events in the patient's family, including diseases which may
be hereditary or place the patient at risk); and
· social history (an age appropriate review of past and current activities).
For the categories of subsequent hospital care, follow-up inpatient consultations and subsequent
nursing facility care, CPT requires only an "interval" history. It is not necessary to record information
about the PFSH.
A pertinent PFSH is a review of the history area(s) directly related to the problem(s) identified in
the HPI.
•DG: At least one specific item from any of the three history areas must be documented for a perti-
nent PFSH.
A complete PFSH is of a review of two or all three of the PFSH history areas, depending on the
category of the E/M service. A review of all three history areas is required for services that by their
nature include a comprehensive assessment or reassessment of the patient. A review of two of the
three history areas is sufficient for other services.
•DG: At least one specific item from two of the three history areas must be documented for a com-
plete PFSH for the following categories of E/M services: office or other outpatient services,
established patient; emergency department; subsequent nursing facility care; domiciliary care,
established patient; and home care, established patient.
•DG: At least one specific item from each of the three history areas must be documented for a com-
plete PFSH for the following categories of E/M services: office or other outpatient services,
new patient; hospital observation services; hospital inpatient services, initial care; consulta-
tions; comprehensive nursing facility assessments; domiciliary care, new patient; and home
care, new patient.
B. DOCUMENTATION OF EXAMINATION
The levels of E/M services are based on four types of examination that are defined as follows:

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· Problem Focused -- a limited examination of the affected body area or organ system.
· Expanded Problem Focused -- a limited examination of the affected body area or organ system
and other symptomatic or related organ system(s).
· Detailed -- an extended examination of the affected body area(s) and other symptomatic or re-
lated organ system(s).
· Comprehensive -- a general multi-system examination or complete examination of a single organ
system.
For purposes of examination, the following body areas are recognized:
· Head, including the face
· Neck
· Chest, including breasts and axillae
· Abdomen
· Genitalia, groin, buttocks
· Back, including spine
· Each extremity
For purposes of examination, the following organ systems are recognized:
· Constitutional (e.g., vital signs, general appearance)
· Eyes
· Ears, nose, mouth, and throat
· Cardiovascular
· Respiratory
· Gastrointestinal
· Genitourinary
· Musculoskeletal
· Skin
· Neurologic
· Psychiatric
· Hematologic/lymphatic/immunologic
The extent of examinations performed and documented is dependent upon clinical judgment and the
nature of the presenting problem(s). They range from limited examinations of single body areas to
general multi-system or complete single organ system examinations.
•DG: Specific abnormal and relevant negative findings of the examination of the affected or symp-
tomatic body area(s) or organ system(s) should be documented. A notation of "abnormal"
without elaboration is insufficient.
•DG: Abnormal or unexpected findings of the examination of the unaffected or asymptomatic body
area(s) or organ system(s) should be described.
•DG: A brief statement or notation indicating "negative" or "normal" is sufficient to document nor-
mal findings related to unaffected area(s) or asymptomatic organ system(s).
•DG: The medical record for a general multi-system examination should include findings about 8 or
more of the 12 organ systems.

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C. DOCUMENTATION OF THE COMPLEXITY OF MEDICAL DECISION MAKING

The levels of E/M services recognize four types of medical decision making (straightforward, low
complexity, moderate complexity, and high complexity). Medical decision making refers to the
complexity of establishing a diagnosis and/or selecting a management option as measured by:
· the number of possible diagnoses and/or the number of management options that must be consid-
ered;
· the amount and/or complexity of medical records, diagnostic tests, and/or other information that
must be obtained, reviewed, and analyzed; and
· the risk of significant complications, morbidity, and/or mortality, as well as comorbidities associ-
ated with the patient's presenting problem(s), the diagnostic procedure(s), and/or the possible
management options.
The chart below shows the progression of the elements required for each level of medical decision
making. To qualify for a given type of decision making, two of the three elements in the table
must be either met or exceeded.

Number of diagno- Amount and/or Risk of complications Type of decision

ses or management complexity of data to and/or morbidity or making
options be reviewed mortality
Minimal Minimal or None Minimal Straightforward
Limited Limited Low Low Complexity
Multiple Moderate Moderate Moderate Complexity
Extensive Extensive High High Complexity

Each of the elements of medical decision making is described on the following page.

NUMBER OF DIAGNOSES OR MANAGEMENT OPTIONS

The number of possible diagnoses and/or the number of management options that must be consid-
ered is based on the number and types of problems addressed during the encounter, the complexity of
establishing a diagnosis, and the management decisions that are made by the physician.
Generally, decision making with respect to a diagnosed problem is easier than that for an identified
but undiagnosed problem. The number and type of diagnostic tests employed may be an indicator of
the number of possible diagnoses. Problems which are improving or resolving are less complex than
those which are worsening or failing to change as expected. The need to seek advice from others is
another indicator of complexity of diagnostic or management problems.
•DG: For each encounter, an assessment, clinical impression, or diagnosis should be documented. It
may be explicitly stated or implied in documented decisions regarding management plans
and/or further evaluation.
o For a presenting problem with an established diagnosis the record should reflect whether
the problem is: a) improved, well controlled, resolving, or resolved; or, b) inadequately
controlled, worsening, or failing to change as expected.
o For a presenting problem without an established diagnosis, the assessment or clinical
impression may be stated in the form of a differential diagnoses or as "possible,” "prob-
able,” or "rule out” (R/O) diagnoses.

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E&M Documentation Chapter 6

•DG: The initiation of, or changes in, treatment should be documented. Treatment includes a wide
range of management options including patient instructions, nursing instructions, therapies,
and medications.
•DG: If referrals are made, consultations requested, or advice sought, the record should indicate to
whom or where the referral or consultation is made or from whom the advice is requested.

AMOUNT AND/OR COMPLEXITY OF DATA TO BE REVIEWED

The amount and complexity of data to be reviewed is based on the types of diagnostic testing ordered
or reviewed. A decision to obtain and review old medical records and/or obtain history from sources
other than the patient increases the amount and complexity of data to be reviewed.
Discussion of contradictory or unexpected test results with the physician who performed or inter-
preted the test is an indication of the complexity of data being reviewed. On occasion the physician
who ordered a test may personally review the image, tracing, or specimen to supplement information
from the physician who prepared the test report or interpretation; this is another indication of the
complexity of data being reviewed.
•DG: If a diagnostic service (test or procedure) is ordered, planned, scheduled, or performed at the
time of the E/M encounter, the type of service, e.g., lab or x-ray, should be documented.
•DG: The review of lab, radiology and/or other diagnostic tests should be documented. An entry in a
progress note such as "WBC elevated" or "chest x-ray unremarkable" is acceptable. Alterna-
tively, the review may be documented by initialing and dating the report containing the test re-
sults.
•DG: A decision to obtain old records or decision to obtain additional history from the family, care-
taker, or other source to supplement that obtained from the patient should be documented.
•DG: Relevant finding from the review of old records, and/or the receipt of additional history from
the family, caretaker, or other source should be documented. If there is no relevant informa-
tion beyond that already obtained, that fact should be documented. A notation of "old records
reviewed” or "additional history obtained from family” without elaboration is insufficient.
•DG: The results of discussion of laboratory, radiology, or other diagnostic tests with the physician
who performed or interpreted the study should be documented.
•DG: The direct visualization and independent interpretation of an image, tracing, or specimen pre-
viously or subsequently interpreted by another physician should be documented.

RISK OF SIGNIFICANT COMPLICATIONS, MORBIDITY, AND/OR MORTALITY

The risk of significant complications, morbidity, and/or mortality is based on the risks associated
with the presenting problem(s), the diagnostic procedure(s), and the possible management options.
•DG: Comorbidities/underlying diseases or other factors that increase the complexity of medical de-
cision making by increasing the risk of complications, morbidity, and/or mortality should be
documented.

•DG: If a surgical or invasive diagnostic procedure is ordered, planned, or scheduled at the time of
the E/M encounter, the type of procedure (e.g., laparoscopy), should be documented.
•DG: If a surgical or invasive diagnostic procedure is performed at the time of the E/M encounter,
the specific procedure should be documented.

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•DG: The referral for or decision to perform a surgical or invasive diagnostic procedure on an ur-
gent basis should be documented or implied.
The following table may be used to help determine whether the risk of significant complications,
morbidity, and/or mortality is minimal, low, moderate, or high. Because the determination of risk is
complex and not readily quantifiable, the table includes common clinical examples rather than abso-
lute measures of risk. The assessment of risk of the presenting problem(s) is based on the risk related
to the disease process anticipated between the present encounter and the next one. The assessment of
risk of selecting diagnostic procedures and management options is based on the risk during and im-
mediately following any procedures or treatment. The highest level of risk in any one category (pre-
senting problem(s), diagnostic procedure(s), or management options) determines the overall risk.

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E&M Documentation
TABLE OF RISK
Level of Presenting Problem(s)
Risk
· One self-limited or minor prob-
lem, e.g., cold, insect bite, tinea
corporis
Minimal
· Two or more self-limited or minor · Physiologic tests not under stress,
problems
· One stable chronic illness, e.g.,
well controlled hypertension or
non-insulin dependent diabetes,
Low cataract, BPH
· Acute uncomplicated illness or
injury, e.g., cystitis, allergic rhini-
tis, simple sprain
· One or more chronic illnesses
with mild exacerbation, progres-
sion, or side effects of treatment
· Two or more stable chronic ill-
nesses
· Undiagnosed new problem with
uncertain prognosis, e.g., lump in
Moderate breast
· Acute illness with systemic symp-
toms, e.g., pyelonephritis, pneu-
monitis, colitis
· Acute complicated injury, e.g.
head injury with brief loss of con-
sciousness
· One or more chronic illnesses
with severe exacerbation, progres-
sion, or side effects of treatment
· Acute or chronic illnesses or inju- · Cardiac electrophysiological tests
ries that pose a threat to life or
bodily function, e.g., multiple
trauma, acute MI, pulmonary em-
bolus, severe rheumatoid arthritis,
High psychiatric illness with potential
threat to self or others, peritonitis,
acute renal failure
· An abrupt change in neurologic
status, e.g., seizure, TIA, weak-
ness, or sensory loss
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Diagnostic Procedure(s) Or-
dered
· Laboratory tests requiring
venipuncture
· Chest x-rays
· EKG/EEG
· Urinalysis
· Ultrasound, e.g., echocardiogra-
phy
· KOH prep
e.g., pulmonary function tests
· Non-cardiovascular imaging stud-
ies with contrast, e.g., barium en-
ema
· Superficial needle biopsies
· Clinical laboratory tests requiring
arterial puncture
· Skin biopsies
· Physiologic tests under stress,
e.g., cardiac stress test, fetal con-
traction stress test
· Diagnostic endoscopies with no
identified risk factors
· Deep needle or incisional biopsy
· Cardiovascular imaging studies
with contrast and no identified
risk factors, e.g., arteriogram, car-
diac catheterization
· Obtain fluid from body cavity,
e.g., lumbar puncture, thoracente-
sis, culdocentesis
· Cardiovascular imaging studies
with contrast with identified risk
factors
· Diagnostic endoscopies with iden-
tified risk factors
· Discography
Medicare Resident & New Physician Guide
Chapter 6
Management Options
Selected
· Rest
· Gargles
· Elastic bandages
· Superficial dressings
· Over-the-counter drugs
· Minor surgery with no
identified risk factors
· Physical therapy
· Occupational therapy
· IV fluids without addi-
tives
· Minor surgery with
identified risk factors
· Elective major surgery
(open, percutaneous, or
endoscopic) with no
identified risk factors
· Prescription drug man-
agement
· Therapeutic nuclear
medicine
· IV fluids with additives
· Closed treatment of
fracture or dislocation
without manipulation
· Elective major surgery
(open, percutaneous, or
endoscopic) with identi-
fied risk factors
· Emergency major sur-
gery (open, percutane-
ous, or endoscopic)
· Parenteral controlled
substances
· Drug therapy requiring
intensive monitoring for
toxicity
· Decision not to resusci-
tate or to de-escalate
care because of poor
prognosis
Chapter 6 E&M Documentation

D. DOCUMENTATION OF AN ENCOUNTER DOMINATED BY COUNSELING OR

COORDINATION OF CARE
In the case where counseling and/or coordination of care dominates (more than 50%) of the physi-
cian/patient and/or family encounter (face-to-face time in the office or other outpatient setting or
floor/unit time in the hospital or nursing facility), time is considered the key or controlling factor to
qualify for a particular level of E/M services.
•DG: If the physician elects to report the level of service based on counseling and/or coordination of
care, the total length of time of the encounter (face-to-face or floor time, as appropriate)
should be documented and the record should describe the counseling and/or activities to coor-
dinate care.

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1997 Documentation Guidelines for E/M Services

Changes and additions, as they appear in the 1997 guidelines, include the following:
· the contents of general multi-system examinations have been defined with greater clinical speci-
ficity;
· documentation requirements for general multi-system examinations have been changed;
· content and documentation requirements have been defined for examinations pertaining to ten
organ systems;
· several editorial changes have been made in the definitions of the four types of exams; and
· the definitions of an extended history of present illness have been expanded to include chronic or
inactive conditions.
These criteria are used to review medical records for E/M services and to provide documentation re-
quired to support a given level of service. The Centers for Medicare & Medicaid Services’ goal is to
provide physicians and claims reviewers with advice about preparing or reviewing documentation for
E/M services. In developing and testing the validity of these guidelines, special emphasis was placed
on assuring that they:
· are consistent with the clinical descriptors and definitions contained in Current Procedural Ter-
minology (CPT);
· would be widely accepted by clinicians and would minimize any changes in record-keeping prac-
tices; and
· would be interpreted and applied uniformly by users across the country.
Some information and examples have been added for clarity.

I. Introduction
What Is Documentation And Why Is It Important?
Medical record documentation is required to record pertinent facts, findings, and observations about
an individual’s health history including past and present illnesses, examinations, tests, treatments,
and outcomes. The medical record chronologically documents the care of the patient and is an impor-
tant element contributing to high quality care. The medical record facilitates:
· the ability of the physician and other healthcare professionals to evaluate and plan the patient’s
immediate treatment, and to monitor his/her healthcare over time.
· communication and continuity of care among physicians and other healthcare professionals in-
volved in the patient’s care;
· accurate and timely claims review and payment;
· appropriate utilization review and quality of care evaluations; and
· collection of data that may be useful for research and education.
An appropriately documented medical record can reduce many of the hassles associated with claims
processing and may serve as a legal document to verify the care provided, if necessary.

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What Do Payers Want and Why?

Because payers have a contractual obligation to enrollees, they may require reasonable documenta-
tion that services are consistent with the insurance coverage provided. They may request information
to validate:
· the site of service;
· the medical necessity and appropriateness of the diagnostic and/or therapeutic services provided;
and/or
· that services provided have been accurately reported.

II. General Principles of Medical Record Documentation

The principles of documentation listed below are applicable to all types of medical and surgical ser-
vices in all settings. For E/M services, the nature and amount of physician work and documentation
varies by type of service, place of service, and the patient’s status. The general principles listed be-
low may be modified to account for these variable circumstances in providing E/M services.
1. The medical record should be complete and legible.
2. The documentation of each patient encounter should include:
· reason for encounter and relevant history, physical examination findings, and prior diag-
nostic test results;
· assessment, clinical impression, or diagnosis;
· plan for care; and
· date and legible identity of the observer.
3. If not documented, the rationale for ordering diagnostic and other ancillary services should be
easily inferred.
4. Past and present diagnoses should be accessible to the treating and/or consulting physician.
5. Appropriate health risk factors should be identified.
6. The patient’s progress, response to and changes in treatment, and revision of diagnosis should be
documented.
7. The CPT and International Classification of Diseases 9th Revision Clinical Modification (ICD-9-
CM) codes reported on the health insurance claim form should be supported by the documenta-
tion in the medical record.

III. Documentation of E/M Services

This section provides definitions and documentation guidelines for the three key components of E/M
services and for visits that consist predominately of counseling and coordination of care. Documen-
tation guidelines are identified by the symbol •DG.
Seven components are used in defining the levels of E/M services:
· History
· Examination
· Medical decision making
· Counseling

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E&M Documentation Chapter 6

· Coordination of care
· Nature of presenting problem
· Time
The first three components (history, examination, and medical decision making) are the key compo-
nents in selecting the level of E/M services. When visits consist predominantly of counseling or co-
ordination of care, time is the key or controlling factor to qualify for a particular level of E/M
service.
Because the level of E/M service is dependent on two or three key components, performance and
documentation of one component (e.g., examination) at the highest level does not necessarily mean
that the encounter in its entirety qualifies for the highest level of E/M service.
A. DOCUMENTATION OF HISTORY
The levels of E/M services are based on four levels of history (problem focused, expanded problem
focused, detailed, and comprehensive). Each type of history includes some or all of the following
elements:
· Chief complaint (CC)
· History of present illness (HPI)
· Review of systems (ROS) and
· Past, family, and/or social history (PFSH)
The extent of the history of present illness, review of systems, and past, family and/or social history
that is obtained and documented is dependent upon clinical judgment and the nature of the present-
ing problem(s).
The chart on the following page shows the progression of the elements required for each type of his-
tory. To qualify for a given type of history, all three elements in the table must be met. (A chief
complaint is indicated at all levels.)
•DG: The CC, ROS and PFSH may be listed as separate elements of history, or they may be included
in the description of the history of the present illness.
•DG: A ROS and/or a PFSH obtained during an earlier encounter does not need to be re-recorded if
there is evidence that the physician reviewed and updated the previous information. This may
occur when a physician updates his/her own record or in an institutional setting or group
practice where many physicians use a common record. The review and update may be docu-
mented by:
o Describing any new ROS and/or PFSH information or noting there has been no change in
the information
o Noting the date and location of the earlier ROS and/or PFSH
•DG: The ROS and/or PFSH may be recorded by ancillary staff or on a form completed by the pa-
tient. To document that the physician reviewed the information, there must be a notation sup-
plementing or confirming the information recorded by others.
•DG: If the physician is unable to obtain a history from the patient or other source, the record should
describe the patient’s condition or other circumstance that precludes obtaining a history.

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HISTORY
(all 3 elements must be met to select a level of history)
History of Present Review of Systems (ROS) Past, Family and/or Type of
Illness (HPI) Social History History
(PFSH)
Brief: * 1 - 3 elements (be- N/A N/A Problem Focused
low) must be documented

Brief: * 1 - 3 elements (be- Problem Pertinent – System directly N/A Expanded Prob-
low) must be documented related to problem identified in HPI lem Focused

Extended: * 4 or more ele- Extended - System directly related to Pertinent - At least one Detailed
ments (below) must be docu- problem identified in HPI and a lim- specific item from any of
mented ited number (2 to 9) of additional the 3 history areas must be
systems documented

Extended: * 4 or more ele- Complete - System directly related to Complete - 2 or 3 * spe- Comprehensive
ments (below) must be docu- problem identified in HPI plus at least cific items from any of the
mented 10 additional systems must be re- 3 history areas must be
viewed documented
Note: Always use the lower
of the type of HPI chosen, Note: If initial encounter,
i.e., the 2nd Brief or the 2nd all 3 (PFSH) must be docu-
Extended mented
Elements ROS PFSH Areas
*Location *Quality *Constitutional *Eyes *Past History
*Severity *Duration symptoms *Cardiovascular *Family History
*Timing *Context *Ears, Nose, *Gastrointestinal *Social History
Mouth, Throat
*Modifying *Associated *Musculoskeletal
Factors Signs and *Respiratory
*Neurological
Symptoms *Genitourinary
*Endocrine
*Integumentary
*Allergic/
(skin and/or
Immunologic
breast)
*Psychiatric
*Hematologic/
Lymphatic

Definitions and specific documentation guidelines for each of the elements of history are listed be-
low.

CHIEF COMPLAINT (CC)

The CC is a concise statement describing the symptom, problem, condition, diagnosis, physician-
recommended return, or other factor that is the reason for the encounter, usually stated in the pa-
tient’s own words.
•DG: The medical record should clearly reflect the chief complaint.

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HISTORY OF PRESENT ILLNESS (HPI)

The HPI is a chronological description of the development of the patient’s present illness from the
first sign and/or symptom or from the previous encounter to the present. It includes the following
elements: (Examples are provided for clarity.)
· Location (e.g., where the problem is located)
· Quality (e.g., sharp, dull, stabbing pain)
· Severity (e.g., measured on a scale of 1 - 10)
· Duration (e.g., how long has this problem existed?)
· Timing (e.g., how long does it last, when does it occur?)
· Context (e.g., it hurts when I swallow)
· Modifying factors (e.g., it feels better when I gargle with salt water)
· Associated signs and symptoms (e.g., swelling, redness)
Brief and extended HPIs are distinguished by the amount of detail needed to accurately characterize
the clinical problem(s).
A brief HPI consists of one to three elements of the HPI.
•DG: The medical record should describe one to three elements of the present illness (HPI).
An extended HPI consists of at least four elements of the HPI or the status of at least three chronic or
inactive conditions.
•DG: The medical record should describe at least four elements of the present illness (HPI), or the
status of at least three chronic or inactive conditions.

REVIEW OF SYSTEMS (ROS)

A ROS is an inventory of body systems obtained through a series of questions seeking to identify
signs and/or symptoms that the patient may be experiencing or has experienced.
For purposes of ROS, the following systems are recognized:
· Constitutional Symptoms (e.g., fever, weight loss)
· Eyes
· Ears, Nose, Mouth, and Throat
· Cardiovascular
· Respiratory
· Gastrointestinal
· Genitourinary
· Musculoskeletal
· Integumentary (skin and/or breast)
· Neurological
· Psychiatric
· Endocrine
· Hematologic/Lymphatic

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· Allergic/Immunologic
A problem pertinent ROS inquires about the system directly related to the problem(s) identified in
the HPI.
•DG: The patient’s positive responses and pertinent negatives for the system related to the problem
should be documented.
An extended ROS inquires about the system directly related to the problem(s) identified in the HPI
and a limited number of additional systems.
•DG: The patient’s positive responses and pertinent negatives for two to nine systems should be
documented.
A complete ROS inquires about the system(s) directly related to the problem(s) identified in the HPI,
plus all additional body systems.
•DG: At least ten organ systems must be reviewed. Those systems with positive or pertinent negative
responses must be individually documented. For the remaining systems, a notation indicating
all other systems are negative is permissible. In the absence of such a notation, at least ten
systems must be individually documented.

PAST, FAMILY, AND/OR SOCIAL HISTORY (PFSH)

The PFSH consists of a review of three areas:
· Past history (the patient’s past experiences with illnesses, operations, injuries, and treatments);
· Family history (a review of medical events in the patient’s family, including diseases which may
be hereditary or place the patient at risk); and
· Social history (an age appropriate review of past and current activities).
For certain categories of E/M services that include only an interval history, it is not necessary to re-
cord information about the PFSH. Those categories are subsequent hospital care, follow-up inpatient
consultations, and subsequent nursing facility care.
A pertinent PFSH is a review of the history area(s) directly related to the problem(s) identified in the
HPI.
•DG: At least one specific item from any of the three history areas must be documented for a perti-
nent PFSH.
A complete PFSH is a review of two or all three of the PFSH history areas, depending on the cate-
gory of the E/M service. A review of all three history areas is required for services that by their na-
ture include a comprehensive assessment or reassessment of the patient. A review of two of the three
history areas is sufficient for other services.
•DG: At least one specific item from two of the three history areas must be documented for a com-
plete PFSH for the following categories of E/M services:
o Office or Other Outpatient Services – Established Patient
o Emergency Department
o Domiciliary Care – Established Patient
o Home Care – Established Patient
•DG: At least one specific item from each of the three history areas must be documented for a com-
plete PFSH for the following categories of E/M services:

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o Office or Other Outpatient Services – New Patient

o Hospital Observation Services
o Hospital Inpatient Services – Initial Care
o Consultations
o Comprehensive Nursing Facility Assessments
o Domiciliary Care – New Patient
o Home Care – New Patient
B. DOCUMENTATION OF EXAMINATIONS
The levels of E/M services are based on four types of examinations:
· Problem Focused – Limited examination of the affected body area or organ system
· Expanded Problem Focused – Limited examination of the affected body area or organ system
and any other symptomatic or related body area(s) or organ system(s)
· Detailed – Extended examination of the affected body area(s) or organ system(s) and any other
symptomatic or related body area(s) or organ system(s)
· Comprehensive – General multi-system examination, or complete examination of a single organ
system and other symptomatic or related body area(s) or organ system(s)
These types of examinations have been defined for general multi-system and the following single
organ systems:
· Cardiovascular
· Ears, Nose, Mouth, and Throat
· Eyes
· Genitourinary (Female)
· Genitourinary (Male)
· Hematologic/Lymphatic/Immunologic
· Musculoskeletal
· Neurological
· Psychiatric
· Respiratory
· Skin
A general multi-system examination or a single organ system examination may be performed by any
physician, regardless of specialty. The type (general multi-system or single organ system) and con-
tent of examination are selected by the examining physician and are based upon clinical judgment,
the patient’s history, and the nature of the presenting problem(s).
The content and documentation requirements for each type and level of examination are summarized
below and described in detail in the following tables. In the tables, organ systems and body areas
recognized by CPT for purposes of describing examinations are shown in the left column. The con-
tent, or individual elements, of the examination pertaining to that body area or organ system are iden-
tified by bullets (•) in the right column.

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Parenthetical examples “(e.g.,…)” have been used for clarification and to provide guidance regarding
documentation. Documentation for each element must satisfy any numeric requirements (such as
“Measurement of any three of the following seven...”) included in the description of the element.
Elements with multiple components but with no specific numeric requirement (such as “Examination
of liver and spleen”) require documentation of at least one component. It is possible for a given ex-
amination to be expanded beyond what is defined here. When that occurs, findings related to the ad-
ditional systems and/or areas should be documented.
•DG: Specific abnormal and relevant negative findings of the examination of the affected or symp-
tomatic body area(s) or organ system(s) should be documented. A notation of “abnormal”
without elaboration is insufficient.
•DG: Abnormal or unexpected findings of the examination of any asymptomatic body area(s) or or-
gan system(s) should be described.
•DG: A brief statement or notation indicating “negative” or “normal” is sufficient to document nor-
mal findings related to unaffected area(s) or asymptomatic organ system(s).

GENERAL MULTI-SYSTEM EXAMINATIONS

General multi-system examinations are described in detail in the table on the following page. To
qualify for a given level of multi-system examination, the following content and documentation re-
quirements should be met:
· Problem Focused Examination should include performance and documentation of one to five
elements identified by a bullet (•) in one or more organ system(s) or body area(s).
· Expanded Problem Focused Examination should include performance and documentation of at
least six elements identified by a bullet (•) in one or more organ system(s) or body area(s).
· Detailed Examination should include at least six organ systems or body areas. For each sys-
tem/area selected, performance and documentation of at least two elements identified by a bullet
(•) is expected. Alternatively, a detailed examination may include performance and documenta-
tion of at least twelve elements identified by a bullet (•) in two or more organ systems or body
areas.
· Comprehensive Examination should include at least nine organ systems or body areas. For
each system/area selected, all elements of the examination identified by a bullet (•) should be
performed, unless specific directions limit the content of the examination. For each area/system,
documentation of at least two elements identified by a bullet is expected.

SINGLE ORGAN SYSTEM EXAMINATIONS

The single organ system examinations recognized by CPT are described in detail in the tables on the
following pages. Variations among these examinations in the organ systems and body areas identi-
fied in the left columns and in the elements of the examinations described in the right columns re-
flect differing emphases among specialties.
To qualify for a given level of single organ system examination, the following content and
documentation requirements should be met:
· Problem focused examinations should include performance and documentation of one to five
elements identified by a bullet (•), whether in a shaded or unshaded box.

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· Expanded problem focused examinations should include performance and documentation of at

least six elements identified by a bullet (•), whether in a shaded or unshaded box.
· Detailed examinations are examinations other than the eye and psychiatric examinations and,
should include performance and documentation of at least twelve elements identified by a bullet
(•), whether in a shaded or unshaded box.
o Eye and psychiatric examinations should include the performance and documentation of
at least nine elements identified by a bullet (•), whether in a shaded or an unshaded box.
· Comprehensive examinations should include performance of all elements identified by a bullet
(•), whether in a shaded or unshaded box. Documentation of every element in a shaded box and
at least one element in an unshaded box is expected.

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GENERAL MULTI-SYSTEM EXAMINATION

System/Body Elements of Examination
Area
Constitutional · Measurement of any three of the following seven vital signs:
1) sitting or standing blood pressure
2) supine blood pressure
3) pulse rate and regularity
4) respiration
5) temperature
6) height
7) weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, atten-
tion to grooming)
Eyes · Inspection of conjunctivae and lids
· Examination of pupils and irises (e.g., reaction to light and accommodation, size and symme-
try)
· Ophthalmoscopic examination of optic discs (e.g., size, C/D ratio, appearance) and posterior
segments (e.g., vessel changes, exudates, hemorrhages)
Ears, Nose, Mouth, · External inspection of ears and nose (e.g., overall appearance, scars, lesions, masses)
and Throat · Otoscopic examination of external auditory canals and tympanic membranes
· Assessment of hearing (e.g., whispered voice, finger rub, tuning fork)
· Inspection of nasal mucosa, septum, and turbinates
· Inspection of lips, teeth, and gums
· Examination of oropharynx: oral mucosa, salivary glands, hard and soft palates, tongue, ton-
sils, and posterior pharynx
Neck · Examination of neck (e.g., masses, overall appearance, symmetry, tracheal position, crepitus)
· Examination of thyroid (e.g., enlargement, tenderness, mass)
Respiratory · Assessment of respiratory effort (e.g., intercostal retractions, use of accessory muscles,
diaphragmatic movement)
· Percussion of chest (e.g., dullness, flatness, hyperresonance)
· Palpation of chest (e.g., tactile fremitus)
· Auscultation of lungs (e.g., breath sounds, adventitious sounds, rubs)
Cardiovascular · Palpation of heart (e.g., location, size, thrills)
· Auscultation of heart with notation of abnormal sounds and murmurs
Examination of:
· carotid arteries (e.g., pulse amplitude, bruits)
· abdominal aorta (e.g., size, bruits)
· femoral arteries (e.g., pulse amplitude, bruits)
· pedal pulses (e.g., pulse amplitude)
· extremities for edema and/or varicosities
Chest (breasts) · Inspection of breasts (e.g., symmetry, nipple discharge)
· Palpation of breasts and axillae (e.g., masses or lumps, tenderness)
Gastrointestinal · Examination of abdomen with notation of presence of masses or tenderness
(abdomen) · Examination of liver and spleen
· Examination for presence or absence of hernia
· Examination (when indicated) of anus, perineum and rectum, including sphincter tone, pres-
ence of hemorrhoids, rectal masses
· Obtain stool sample for occult blood test when indicated
Genitourinary – · Examination of the scrotal contents (e.g., hydrocele, spermatocele, tenderness of cord, tes-
Male: ticular mass)
· Examination of the penis
· Digital rectal examination of prostate gland (e.g., size, symmetry, nodularity, tenderness)

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Genitourinary – Pelvic examination (with or without specimen collection for smears and cultures), including:
Female: · Examination of external genitalia (e.g., general appearance, hair distribution, lesions) and
vagina (e.g., general appearance, estrogen effect, discharge, lesions, pelvic support, cystocele,
rectocele)
· Examination of urethra (e.g., masses, tenderness, scarring)
· Examination of bladder (e.g., fullness, masses, tenderness)
· Cervix (e.g., general appearance, lesions, discharge)
· Uterus (e.g., size, contour, position, mobility, tenderness, consistency, descent, or support)
· Adnexa/parametria (e.g., masses, tenderness, organomegaly, nodularity)
Lymphatic Palpation of lymph nodes in two or more areas:
· neck
· axillae
· groin
· other
Musculoskeletal · Examination of gait and station
· Inspection and/or palpation of digits and nails (e.g., clubbing, cyanosis, inflammatory condi-
tions, petechiae, ischemia, infections, nodes)
Examination of joints, bones, and muscles of one or more of the following six areas: 1) head and
neck; 2) spine, ribs, and pelvis; 3) right upper extremity; 4) left upper extremity; 5) right lower
extremity; and 6) left lower extremity. The examination of a given area includes:
· Inspection and/or palpation with notation of presence of any misalignment, asymmetry,
crepitation, defects, tenderness, masses, effusions
· Assessment of range of motion with notation of any pain, crepitation, or contracture
· Assessment of stability with notation of any dislocation (luxation), subluxation, or laxity
· Assessment of muscle strength and tone (e.g., flaccid, cog wheel, spastic) with notation
of any atrophy or abnormal movements
Skin · Inspection of skin and subcutaneous tissue (e.g., rashes, lesions, ulcers)
· Palpation of skin and subcutaneous tissue (e.g., induration, subcutaneous nodules, tightening)
Neurologic · Test cranial nerves with notation of any deficits
· Examination of deep tendon reflexes with notation of pathological reflexes (e.g., Babinski)
· Examination of sensation (e.g., by touch, pin, vibration, proprioception)
Psychiatric · Description of patient’s judgment and insight
Brief assessment of mental status including:
· orientation to time, place, and person
· recent and remote memory
· mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR GENERAL MULTI-SYSTEM EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least two elements identified by a bullet from each of six areas/systems or at least
twelve elements identified by a bullet in two or more areas/systems
Comprehensive Perform all elements identified by a bullet in at least nine organ systems or body areas
and document at least two elements identified by a bullet from each of the nine ar-
eas/systems

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CARDIOVASCULAR EXAMINATION
System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs:
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, atten-
tion to grooming)
Eyes · Inspection of conjunctivae and lids (e.g., xanthelasma)
Ears, Nose, Mouth, and · Inspection of teeth, gums, and palate
Throat · Inspection of oral mucosa with notation of presence of pallor or cyanosis
Neck · Examination of jugular veins (e.g., distension; a, v, or cannon a waves)
· Examination of thyroid (e.g., enlargement, tenderness, mass)
Respiratory · Assessment of respiratory effort (e.g., intercostal retractions, use of accessory muscles, dia-
phragmatic movement)
· Auscultation of lungs (e.g., breath sounds, adventitious sounds, rubs)
Cardiovascular · Palpation of heart (e.g., location, size and forcefulness of the point of maximal impact;
thrills; lifts; palpable S3 or S4)
· Auscultation of heart including sounds, abnormal sounds, and murmurs
· Measurement of blood pressure in two or more extremities when indicated (e.g., aortic dis-
section, coarctation)
Examination of:
· Carotid arteries (e.g., waveform, pulse amplitude, bruits, apical-carotid delay)
· Abdominal aorta (e.g., size, bruits)
· Femoral arteries (e.g., pulse amplitude, bruits)
· Pedal pulses (e.g., pulse amplitude)
· Extremities for peripheral edema and/or varicosities
Gastrointestinal (abdo- · Examination of abdomen with notation of presence of masses or tenderness
men)· · Examination of liver and spleen
· Obtain stool sample for occult blood from patients who are being considered for throm-
bolytic or anticoagulant therapy
Musculoskeletal · Examination of the back with notation of kyphosis or scoliosis
· Examination of gait with notation of ability to undergo exercise testing and/or participation
in exercise programs
· Assessment of muscle strength and tone (e.g., flaccid, cog wheel, spastic) with notation of
any atrophy and abnormal movements
Extremities · Inspection and palpation of digits and nails (e.g., clubbing, cyanosis, inflammation, pete-
chiae, ischemia, infections, Osler’s nodes)
Skin · Inspection and/or palpation of skin and subcutaneous tissue (e.g., stasis dermatitis, ulcers,
scars, xanthomas)
Neurological/Psychiatric Brief assessment of mental status, including:
· Orientation to time, place, and person
· Mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR CARDIOVASCULAR EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least twelve elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box
and at least one element in each unshaded box

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EAR, NOSE AND THROAT EXAMINATION

System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, attention to
grooming)
· Assessment of ability to communicate (e.g., use of sign language or other communication aids) and
quality of voice
Head and Face · Inspection of head and face (e.g., overall appearance, scars, lesions, and masses)
· Palpation and/or percussion of face with notation of presence or absence of sinus tenderness
· Examination of salivary glands
· Assessment of facial strength
Eyes · Test ocular motility, including primary gaze alignment
Ears, Nose, Mouth, and · Otoscopic examination of external auditory canals and tympanic membranes including pneumo-
Throat otoscopy with notation of mobility of membranes
· Assessment of hearing with tuning forks and clinical speech reception thresholds (e.g., whispered
voice, finger rub)
· External inspection of ears and nose (e.g., overall appearance, scars, lesions, and masses)
· Inspection of nasal mucosa, septum, and turbinates
· Inspection of lips, teeth, and gums
· Examination of oropharynx: oral mucosa, hard and soft palates, tongue, tonsils, and posterior
pharynx (e.g., asymmetry, lesions, hydration of mucosal surfaces
· Inspection of pharyngeal walls and pyriform sinuses (e.g., pooling of saliva, asymmetry, lesions)
· Examination by mirror of larynx including the condition of the epiglottis, false vocal cords, true
vocal cords, and mobility of larynx (use of mirror not required in children)
· Examination by mirror of nasopharynx including appearance of the mucosa, adenoids, posterior
choanae, and eustachian tubes (use of mirror not required in children)
Neck · Examination of neck (e.g., masses, overall appearance, symmetry, tracheal position, crepitus)
· Examination of thyroid (e.g., enlargement, tenderness, mass)
Respiratory · Inspection of chest including symmetry, expansion, and/or assessment of respiratory effort (e.g.,
intercostal retractions, use of accessory muscles, diaphragmatic movement)
· Auscultation of lungs (e.g., breath sounds, adventitious sounds, rubs)
Cardiovascular · Auscultation of heart with notation of abnormal sounds and murmurs
· Examination of peripheral vascular system by observation (e.g., swelling, varicosities) and palpa-
tion (e.g., pulses, temperature, edema, tenderness)
Lymphatic · Palpation of lymph nodes in neck, axillae, groin, and/or other location
Neurological/Psychiatric · Test cranial nerves with notation of any deficits
Brief assessment of mental status, including:
· Orientation to time, place, and person
· Mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR EAR, NOSE AND THROAT EXAMINATION
Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least twelve elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at least
one element in each unshaded box

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EYE EXAMINATION
System/Body Area Elements of Examination
Eyes · Test visual acuity (does not include determination of refractive error)
· Gross visual field testing by confrontation
· Test ocular motility including primary gaze alignment
· Inspection of bulbar and palpebral conjunctivae
· Examination of ocular adnexae including lids (e.g., ptosis or lagophthalmos), lacrimal
glands, lacrimal drainage, orbits, and preauricular lymph nodes
· Examination of pupils and irises including shape, direct and consensual reaction (afferent
pupil), size (e.g., anisocoria), and morphology
· Slit lamp examination of the corneas including epithelium, stroma, endothelium, and tear
film
· Slit lamp examination of the anterior chambers including depth, cells, and flare
· Slit lamp examination of the lenses including clarity, anterior and posterior capsule, cor-
tex, and nucleus
· Measurement of intraocular pressures (except in children and patients with trauma or in-
fectious disease)
Ophthalmoscopic examination through dilated pupils (unless contraindicated) of:
· Optic discs including size, C/D ratio, appearance, (e.g., atrophy, cupping, tumor ele-
vation) and nerve fiber layer
· Posterior segments including retina and vessels (e.g., exudates and hemorrhages)
Neurological/Psychiatric Brief assessment of mental status, including:
· Orientation to time, place, and person
· Mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR EYE EXAMINATION

Level of Examina- Perform and Document
tion
Problem Focused One to five elements identified by a bullet
Expanded Problem Fo- At least six elements identified by a bullet
cused
Detailed At least nine elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at
least one element in each unshaded box

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GENITOURINARY EXAMINATION (MALE OR FEMALE)

System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs:
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, attention to
grooming)
Neck · Examination of neck (e.g., masses, overall appearance, symmetry, tracheal position, crepitus)
· Examination of thyroid (e.g., enlargement, tenderness, mass)
Respiratory · Assessment of respiratory effort (e.g., intercostal retractions, use of accessory muscles, diaphrag-
matic movement)
· Auscultation of lungs (e.g., breath sounds, adventitious sounds, rubs)
Cardiovascular · Auscultation of heart with notation of abnormal sounds and murmurs
· Examination of peripheral vascular system by observation (e.g., swelling, varicosities) and palpa-
tion (e.g., pulses, temperature, edema, tenderness)
Chest (breasts) See Genitourinary – FEMALE
Gastrointestinal (abdo- · Examination of abdomen with notation of presence of masses or tenderness
men) · Examination for presence or absence of hernia
· Examination of liver and spleen
· Obtain stool sample for occult blood test when indicated
Genitourinary - MALE · Inspection of anus and perineum
Examination (with or without specimen collection for smears and cultures) of genitalia, including:
· Scrotum (e.g., lesions, cysts, rashes)
· Epididymides (e.g., size, symmetry, masses)
· Testes (e.g., size, symmetry, masses)
· Urethral meatus (e.g., size, location, lesions, discharge)
· Penis (e.g., lesions, presence or absence of foreskin, foreskin retractability, plaque, masses,
scarring, deformities)
Digital rectal examination including:
· Prostate gland (e.g., size, symmetry, nodularity, tenderness)
· Seminal vesicles (e.g., symmetry, tenderness, masses, enlargement)
· Sphincter tone, presence of hemorrhoids, rectal masses
Genitourinary - FEMALE Includes at least seven of the following eleven elements identified by bullets:
· Inspection and palpation of breasts (e.g., masses or lumps, tenderness, symmetry, nipple dis-
charge)
· Digital rectal examination including sphincter tone, presence of hemorrhoids, rectal masses
Pelvic examination (with or without specimen collection for smears and cultures) including:
· External genitalia (e.g., general appearance, hair distribution, lesions)
· Urethral meatus (e.g., size, location, lesions, prolapse)
· Urethra (e.g., masses, tenderness, scarring)
· Bladder (e.g., fullness, masses, tenderness)
· Vagina (e.g., general appearance, estrogen effect, discharge, lesions, pelvic support, cystocele,
rectocele)
· Cervix (e.g., general appearance, lesions, discharge)
· Uterus (e.g., size, contour, position, mobility, tenderness, consistency, descent, or support)
· Adnexa/parametria (e.g., masses, tenderness, organomegaly, nodularity)
· Anus and perineum
Lymphatic · Palpation of lymph nodes in neck, axillae, groin, and/or other location
Skin · Inspection and/or palpation of skin and subcutaneous tissue (e.g., rashes, lesions, ulcers)
Neurological/Psychiatric Brief assessment of mental status, including
· Orientation (e.g., time, place, and person)
· Mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR GENITOURINARY EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least twelve elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at least
one element in each unshaded box

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HEMATOLOGIC/LYMPHATIC/IMMUNOLOGIC EXAMINATION
System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs:
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, atten-
tion to grooming)
Head and Face · Palpation and/or percussion of face with notation of presence or absence of sinus tenderness
Eyes · Inspection of conjunctivae and lids
Ears, Nose, Mouth, and · Otoscopic examination of external auditory canals and tympanic membranes
Throat · Inspection of nasal mucosa, septum, and turbinates
· Inspection of teeth and gums
· Examination of oropharynx (e.g., oral mucosa, hard and soft palates, tongue, tonsils, poste-
rior pharynx)
Neck · Examination of neck (e.g., masses, overall appearance, symmetry, tracheal position, crepi-
tus)
· Examination of thyroid (e.g., enlargement, tenderness, mass)
Respiratory · Assessment of respiratory effort (e.g., intercostal retractions, use of accessory muscles, dia-
phragmatic movement)
· Auscultation of lungs (e.g., breath sounds, adventitious sounds, rubs)
Cardiovascular · Auscultation of heart with notation of abnormal sounds and murmurs
· Examination of peripheral vascular system by observation (e.g., swelling, varicosities) and
palpation (e.g., pulses, temperature, edema, tenderness)
Gastrointestinal (abdo- · Examination of abdomen with notation of presence of masses or tenderness
men) · Examination of liver and spleen
Lymphatic · Palpation of lymph nodes in neck, axillae, groin, and/or other location
Extremities · Inspection and palpation of digits and nails (e.g., clubbing, cyanosis, inflammation, pete-
chiae, ischemia, infections, nodes)
Skin · Inspection and/or palpation of skin and subcutaneous tissue (e.g., rashes, lesions, ulcers,
ecchymoses, bruises)
Neurological/Psychiatric Brief assessment of mental status, including:
· Orientation to time, place, and person
· Mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR HEMATOLOGIC/LYMPHATIC/IMMUNOLOGIC EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused
At least six elements identified by a bullet
Detailed At least twelve elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at
least one element in each unshaded box

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MUSCULOSKELETAL EXAMINATION
System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs:
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, attention to
grooming)
Cardiovascular · Examination of peripheral vascular system by observation (e.g., swelling, varicosities) and palpation
(e.g., pulses, temperature, edema, tenderness)
Lymphatic · Palpation of lymph nodes in neck, axillae, groin, and/or other location
Musculoskeletal · Examination of gait and station
Examination of joint(s), bone(s) and muscle(s)/ tendon(s) of four of the following six areas:
1. head and neck
2. spine, ribs, and pelvis
3. right upper extremity
4. left upper extremity
5. right lower extremity
6. left lower extremity
The examination of a given area includes:
· Inspection, percussion and/or palpation with notation of any misalignment, asymmetry, crepita-
tion, defects, tenderness, masses, or effusions
· Assessment of range of motion with notation of any pain (e.g., straight leg raising), crepitation,
or contracture
· Assessment of stability with notation of any dislocation (luxation), subluxation, or laxity
· Assessment of muscle strength and tone (e.g., flaccid, cog wheel, spastic) with notation of any
atrophy or abnormal movements
Note: For the comprehensive level of examination, all four of the elements identified by a bullet must be
performed and documented for each of four anatomic areas. For the three lower levels of examination,
each element is counted separately for each body area. For example, assessing range of motion in two
extremities constitutes two elements.
Extremities (See musculoskeletal and skin)
Skin · Inspection and/or palpation of skin and subcutaneous tissue (e.g., scars, rashes, lesions, café-au-lait
spots, ulcers) in four of the following six areas:
1. head and neck
2. trunk
3. right upper extremity
4. left upper extremity
5. right lower extremity
6. left lower extremity
Note: For the comprehensive level, the examination of all four anatomic areas must be performed and
documented. For the three lower levels of examination, each body area is counted separately. For exam-
ple, inspection and/or palpation of the skin and subcutaneous tissue of two extremities constitute two
elements.
Neurological/Psychiatric · Test coordination (e.g., finger/nose, heel/ knee/shin, rapid alternating movements in the upper and
lower extremities, evaluation of fine motor coordination in young children)
· Examination of deep tendon reflexes and/or nerve stretch test with notation of pathological reflexes
(e.g., Babinski)
· Examination of sensation (e.g., by touch, pin, vibration, proprioception)
Brief assessment of mental status including:
· Orientation to time, place, and person
· Mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR MUSCULOSKELETAL EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least twelve elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at least
one element in each unshaded box

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NEUROLOGICAL EXAMINATION
System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs:
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, atten-
tion to grooming)
Eyes · Ophthalmoscopic examination of optic discs (e.g., size, C/D ratio, appearance) and posterior
segments (e.g., vessel changes, exudates, hemorrhages)
Cardiovascular · Examination of carotid arteries (e.g., pulse amplitude, bruits)
· Auscultation of heart with notation of abnormal sounds and murmurs
· Examination of peripheral vascular system by observation (e.g., swelling, varicosities) and
palpation (e.g., pulses, temperature, edema, tenderness)
Musculoskeletal · Examination of gait and station
Assessment of motor function including:
· Muscle strength in upper and lower extremities
· Muscle tone in upper and lower extremities (e.g., flaccid, cog wheel, spastic) with nota-
tion of any atrophy or abnormal movements (e.g., fasciculation, tardive dyskinesia)
Extremities (See musculoskeletal)
Neurological Evaluation of higher integrative functions including:
· Orientation to time, place, and person
· Recent and remote memory
· Attention span and concentration
· Language (e.g., naming objects, repeating phrases, spontaneous speech)
· Fund of knowledge (e.g., awareness of current events, past history, vocabulary)
Test the following cranial nerves:
· 2nd cranial nerve (e.g., visual acuity, visual fields, fundi)
· 3rd, 4th and 6th cranial nerves (e.g., pupils, eye movements)
· 5th cranial nerve (e.g., facial sensation, corneal reflexes)
· 7th cranial nerve (e.g., facial symmetry, strength)
· 8th cranial nerve (e.g., hearing with tuning fork, whispered voice, and/or finger rub)
· 9th cranial nerve (e.g., spontaneous or reflex palate movement)
· 11th cranial nerve (e.g., shoulder shrug strength)
· 12th cranial nerve (e.g., tongue protrusion)
· Examination of sensation (e.g., by touch, pin, vibration, proprioception)
· Examination of deep tendon reflexes in upper and lower extremities with notation of patho-
logical reflexes (e.g., Babinski)
· Test coordination (e.g., finger/nose, heel/knee/shin, rapid alternating movements in the upper
and lower extremities, evaluation of fine motor coordination in young children)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR NEUROLOGICAL EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least twelve elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at
least one element in each unshaded box

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PSYCHIATRIC EXAMINATION
System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs:
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities,
attention to grooming)
Musculoskeletal · Assessment of muscle strength and tone (e.g., flaccid, cog wheel, spastic) with notation of
any atrophy and abnormal movements
· Examination of gait and station
Psychiatric · Description of speech including: rate; volume; articulation; coherence; and spontaneity
with notation of abnormalities (e.g., perseveration, paucity of language)
· Description of thought processes including: rate of thoughts; content of thoughts (e.g.,
logical vs. illogical, tangential); abstract reasoning; and computation
· Description of associations (e.g., loose, tangential, circumstantial, intact)
· Description of abnormal or psychotic thoughts including: hallucinations; delusions; pre-
occupation with violence; homicidal or suicidal ideation; and obsessions
· Description of the patient’s judgment (e.g., concerning everyday activities and social
situations) and insight (e.g., concerning psychiatric condition)
Complete mental status examination including:
· Orientation to time, place, and person
· Recent and remote memory
· Attention span and concentration
· Language (e.g., naming objects, repeating phrases)
· Fund of knowledge (e.g., awareness of current events, past history, vocabulary)
· Mood and affect (e.g., depression, anxiety, agitation, hypomania, lability)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR PSYCHIATRIC EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least nine elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at
least one element in each unshaded box

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RESPIRATORY EXAMINATION
System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs:
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, atten-
tion to grooming)
Ears, Nose, Mouth, and · Inspection of nasal mucosa, septum, and turbinates
Throat · Inspection of teeth and gums
· Examination of oropharynx (e.g., oral mucosa, hard and soft palates, tongue, tonsils, and pos-
terior pharynx)
Neck · Examination of neck (e.g., masses, overall appearance, symmetry, tracheal position, crepitus)
· Examination of thyroid (e.g., enlargement, tenderness, mass)
· Examination of jugular veins (e.g., distension; a, v, or cannon a waves)
Respiratory · Inspection of chest with notation of symmetry and expansion
· Assessment of respiratory effort (e.g., intercostal retractions, use of accessory muscles, dia-
phragmatic movement)
· Percussion of chest (e.g., dullness, flatness, hyperresonance)
· Palpation of chest (e.g., tactile fremitus)
· Auscultation of lungs (e.g., breath sounds, adventitious sounds, rubs)
Cardiovascular · Auscultation of heart including sounds, abnormal sounds and murmurs
· Examination of peripheral vascular system by observation (e.g., swelling, varicosities) and
palpation (e.g., pulses, temperature, edema, tenderness)
Gastrointestinal (abdo- · Examination of abdomen with notation of presence of masses or tenderness
men) · Examination of liver and spleen
Lymphatic · Palpation of lymph nodes in neck, axillae, groin and/or other location
Musculoskeletal · Assessment of muscle strength and tone (e.g., flaccid, cog wheel, spastic) with notation of
any atrophy and abnormal movements
· Examination of gait and station
Extremities · Inspection and palpation of digits and nails (e.g., clubbing, cyanosis, inflammation, petechiae,
ischemia, infections, nodes)
Skin · Inspection and/or palpation of skin and subcutaneous tissue (e.g., rashes, lesions, ulcers)
Neurological/Psychiatric Brief assessment of mental status including:
· Orientation to time, place, and person
· Mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR RESPIRATORY EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least twelve elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at
least one element in each unshaded box

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E&M Documentation Chapter 6

SKIN EXAMINATION
System/Body Area Elements of Examination
Constitutional · Measurement of any three of the following seven vital signs:
1. sitting or standing blood pressure
2. supine blood pressure
3. pulse rate and regularity
4. respiration
5. temperature
6. height
7. weight (may be measured and recorded by ancillary staff)
· General appearance of patient (e.g., development, nutrition, body habitus, deformities, attention to
grooming)
Eyes · Inspection of conjunctivae and lids
Ears, Nose, Mouth and Throat · Inspection of lips, teeth, and gums
· Examination of oropharynx (e.g., oral mucosa, hard and soft palates, tongue, tonsils, posterior phar-
ynx)
Neck · Examination of thyroid (e.g., enlargement, tenderness, mass)
Cardiovascular · Examination of peripheral vascular system by observation (e.g., swelling, varicosities) and palpation
(e.g., pulses, temperature, edema, tenderness)
Gastrointestinal (abdomen) · Examination of liver and spleen
· Examination of anus for condyloma and other lesions
Lymphatic · Palpation of lymph nodes in neck, axillae, groin, and/or other location
Extremities · Inspection and palpation of digits and nails (e.g., clubbing, cyanosis, inflammation, petechiae, ische-
mia, infections, nodes)
Skin · Palpation of scalp and inspection of hair of scalp, eyebrows, face, chest, pubic area, (when indicated)
and extremities
· Inspection and/or palpation of skin and subcutaneous tissue (e.g., rashes, lesions, ulcers, susceptibility
to and presence of photo damage) in eight of the following ten areas:
· Head, including the face
· Neck
· Chest, including breasts and axillae
· Abdomen
· Genitalia, groin, buttocks
· Back
· Right upper extremity
· Left upper extremity
· Right lower extremity
· Left lower extremity
Note: For the comprehensive level, the examination of at least eight anatomic areas must be performed and
documented. For the three lower levels of examination, each body area is counted separately. For example,
inspection and/or palpation of the skin and subcutaneous tissue of the right upper extremity and the left
upper extremity constitute two elements.
· Inspection of eccrine and apocrine glands of skin and subcutaneous tissue with identification and
location of any hyperhidrosis, chromhidroses, or bromhidrosis
Neurological/Psychiatric Brief assessment of mental status including:
· Orientation to time, place, and person
· Mood and affect (e.g., depression, anxiety, agitation)

CONTENT AND DOCUMENTATION REQUIREMENTS FOR SKIN EXAMINATION

Level of Examination Perform and Document
Problem Focused One to five elements identified by a bullet
Expanded Problem Focused At least six elements identified by a bullet
Detailed At least twelve elements identified by a bullet
Comprehensive Perform all elements identified by a bullet; document every element in each shaded box and at least
one element in each unshaded box

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C. DOCUMENTING THE COMPLEXITY OF MEDICAL DECISION MAKING

The levels of E/M services recognize four levels of medical decision making:
· Straightforward
· Low complexity
· Moderate complexity
· High complexity
Medical decision making refers to the complexity of establishing a diagnosis and/or selecting a man-
agement option as measured by the:
· Number of possible diagnoses and/or the number of management options that must be consid-
ered;
· Amount and/or complexity of medical records, diagnostic tests, and/or other information that
must be obtained, reviewed, and analyzed; and
· Risk of significant complications, morbidity and/or mortality, as well as co-morbidities, associ-
ated with the patient’s presenting problem(s), the diagnostic procedure(s), and/or the possible
management options.
The table below shows the progression of the elements required for each level of medical decision
making. To qualify for a given type of decision making, two of the three elements in the table
must be either met or exceeded.

Number of diagnoses Amount and/or Risk of complica- Type of medical

or management op- complexity of data to tions and/or morbid- decision making
tions be reviewed ity or mortality

Minimal Minimal or None Minimal Straightforward

Limited Limited Low Low Complexity
Multiple Moderate Moderate Moderate Complexity
Extensive Extensive High High Complexity

The following sections describe each of the elements of medical decision making.

NUMBER OF DIAGNOSES OR MANAGEMENT OPTIONS

The number of possible diagnoses and/or the number of management options that must be consid-
ered is based on the number and types of problems addressed during the encounter, the complexity of
establishing a diagnosis, and the management decisions that are made by the physician.
Generally, decision making with respect to a diagnosed problem is easier than that for an identified
but undiagnosed problem. The number and type of diagnostic tests employed may be an indicator of
the number of possible diagnoses. Problems that are improving or resolving are less complex than
those that are worsening or failing to change as expected. The need to seek advice from others is an-
other indicator of complexity of diagnostic or management problems.
•DG: For each encounter, an assessment, clinical impression, or diagnosis should be documented. It
may be explicitly stated or implied in documented decisions regarding management plans
and/or further evaluation.

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o For a presenting problem with an established diagnosis, the record should reflect
whether the problem is: a) improved, well controlled, resolving, or resolved; or, b) in-
adequately controlled, worsening, or failing to change as expected.
o For a presenting problem without an established diagnosis, the assessment or clinical
impression may be stated in the form of differential diagnoses or as a “possible,” “prob-
able,” or “rule out” (R/O) diagnosis.
•DG: The initiation of, or changes in, treatment should be documented. Treatment includes a wide
range of management options including patient instructions, nursing instructions, therapies,
and medications.
•DG: If referrals are made, consultations requested, or advice sought, the record should indicate to
whom or where the referral or consultation is made or from whom the advice is requested.

AMOUNT AND/OR COMPLEXITY OF DATA TO BE REVIEWED

The amount and complexity of data to be reviewed is based on the types of diagnostic testing ordered
or reviewed. A decision to obtain and review old medical records and/or obtain history from sources
other than the patient increases the amount and complexity of data to be reviewed.
Discussion of contradictory or unexpected test results with the physician who performed or inter-
preted the test is an indication of the complexity of data being reviewed. On occasion the physician
who ordered a test may personally review the image, tracing or specimen to supplement information
from the physician who prepared the test report or interpretation; this is another indication of the
complexity of data being reviewed.
•DG: If a diagnostic service (test or procedure) is ordered, planned, scheduled, or performed at the
time of the E/M encounter, the type of service, e.g., lab or X-ray, should be documented.
•DG: The review of lab, radiology, and/or other diagnostic tests should be documented. A simple
notation such as “WBC elevated” or “chest X-ray unremarkable” is acceptable. Alternatively,
the review may be documented by initialing and dating the report containing the test results.
•DG: A decision to obtain old records or decision to obtain additional history from the family, care-
taker, or other source to supplement that obtained from the patient should be documented.
•DG: Relevant findings from the review of old records, and/or the receipt of additional history from
the family, caretaker, or other source to supplement that obtained from the patient should be
documented. If there is no relevant information beyond that already obtained, that fact should
be documented. A notation of “old records reviewed” or “additional history obtained from
family” without elaboration is insufficient.
•DG: The results of discussion of laboratory, radiology, or other diagnostic tests with the physician
who performed or interpreted the study should be documented.
•DG: The direct visualization and independent interpretation of an image, tracing, or specimen pre-
viously or subsequently interpreted by another physician should be documented.

RISK OF SIGNIFICANT COMPLICATIONS, MORBIDITY, AND/OR MORTALITY

The risk of significant complications, morbidity, and/or mortality is based on the risks associated
with the presenting problem(s), the diagnostic procedure(s), and the possible management options.

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•DG: Co-morbidities/underlying diseases or other factors that increase the complexity of medical
decision making by increasing the risk of complications, morbidity, and/or mortality should be
documented.
•DG: If a surgical or invasive diagnostic procedure is ordered, planned, or scheduled at the time of
the E/M encounter, the type of procedure, (e.g., laparoscopy), should be documented.
•DG: If a surgical or invasive diagnostic procedure is performed at the time of the E/M encounter,
the specific procedure should be documented.
•DG: The referral for or decision to perform a surgical or invasive diagnostic procedure on an ur-
gent basis should be documented or implied.
The Table of Risk on the following page may be used to help determine whether the risk of signifi-
cant complications, morbidity, and/or mortality is minimal, low, moderate, or high. Because the de-
termination of risk is complex and not readily quantifiable, the table includes common clinical
examples rather than absolute measures of risk. The assessment of risk of the presenting problem(s)
is based on the risk related to the disease process anticipated between the present encounter and the
next one. The assessment of risk of selecting diagnostic procedures and management options is based
on the risk during and immediately following any procedures or treatment. The highest level of risk
in any one category—presenting problem(s), diagnostic procedure(s), or management op-
tion(s)—determines the overall risk.

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E&M Documentation
Level of Presenting Problem(s)
Risk
· One self-limited or minor
problem (e.g., cold, insect
bite, tinea corporis)
Minimal
· Two or more self-limited or
minor problems
· One stable chronic illness
(e.g., well controlled hyper-
Low tension, noninsulin depend-
ent diabetes, cataract, BPH)
· Acute uncomplicated illness
or injury (e.g., cystitis, aller-
gic rhinitis, simple sprain)
· One or more chronic ill-
nesses with mild exacerba-
tion, progression, or side
effects of treatment
· Two or more stable chronic
illnesses
· Undiagnosed new problem
Moderate with uncertain prognosis
(e.g., lump in breast)
· Acute illness with systemic
symptoms (e.g., pyelonephri-
tis, pneumonitis, colitis)
· Acute complicated injury
(e.g., head injury with brief
loss of consciousness)
· One or more chronic ill-
nesses with severe exacerba-
tion, progression, or side
effects of treatment
· Acute or chronic illnesses or
injuries that pose a threat to
life or bodily function (e.g.,
multiple trauma, acute MI,
pulmonary embolus, severe
High
respiratory distress, progres-
sive severe rheumatoid ar-
thritis, psychiatric illness
with potential threat to self
or others, peritonitis, acute
renal failure)
· An abrupt change in neu-
rologic status (e.g., seizure,
TIA, weakness, sensory loss)
Page 96
Chapter 6
TABLE OF RISK
Diagnostic Procedure(s) Or- Management Op-
dered tions Selected
· Laboratory tests requiring venipuncture · Rest
· Chest X-rays · Gargles
· EKG/EEG · Elastic bandages
· Urinalysis · Superficial dressings
· Ultrasound (e.g., echocardiography)
· KOH prep
· Physiologic tests not under stress (e.g., · Over-the-counter drugs
pulmonary function tests) · Minor surgery with no
· Noncardiovascular imaging studies with identified risk factors
contrast (e.g., barium enema) · Physical therapy
· Superficial needle biopsies · Occupational therapy
· Clinical laboratory tests requiring arte- · IV fluids without addi-
rial puncture tives
· Skin biopsies
· Physiologic tests under stress (e.g., car- · Minor surgery with iden-
diac stress test, fetal contraction stress tified risk factors
test) · Elective major surgery
· Diagnostic endoscopies with no identi- (open, percutaneous, or
fied risk factors endoscopic) with no
· Deep needle or incisional biopsy identified risk factors
· Cardiovascular imaging studies with · Prescription drug man-
contrast and no identified risk factors agement
(e.g., arteriogram, cardiac catheteriza- · Therapeutic nuclear
tion) medicine
· Obtain fluid from body cavity (e.g. lum- · IV fluids with additives
bar puncture, thoracentesis, culdocente- · Closed treatment of frac-
sis) ture or dislocation with-
out manipulation
· Cardiovascular imaging studies with · Elective major surgery
contrast with identified risk factors (open, percutaneous, or
· Cardiac electrophysiological tests endoscopic) with identi-
· Diagnostic endoscopies with identified fied risk factors
risk factors · Emergency major sur-
· Discography gery (open, percutane-
ous, or endoscopic)
· Parenteral controlled
substances
· Drug therapy requiring
intensive monitoring for
toxicity
· Decision not to resusci-
tate or to de-escalate care
because of poor progno-
sis
Medicare Resident & New Physician Guide
Chapter 6 E&M Documentation

D. DOCUMENTATION OF AN ENCOUNTER DOMINATED BY COUNSELING OR

COORDINATION OF CARE
In the case where counseling and/or coordination of care dominates (more than 50%) of the physi-
cian/patient and/or family encounter (face-to-face time in the office or other outpatient setting,
floor/unit time in the hospital or nursing facility), time is considered the key or controlling factor to
qualify for a particular level of E/M services.
•DG: If the physician elects to report the level of service based on counseling and/or coordination of
care, the total length of time of the encounter (face-to-face or floor time, as appropriate)
should be documented and the record should describe the counseling and/or activities to coor-
dinate care.

PROGRESSION OF LEVELS
Progression of Elements Required for Each Level of Medical Decision Making
(two of the three elements in the table must be either met or exceeded)
Number of Diagnoses Amount And/Or Com- Risk of Complications Type of Decision
or Management Op- plexity of Data to be And/Or Morbidity or Making
tions Reviewed Mortality
Minimal Minimal or none Minimal Straightforward
Limited Limited Low Low complexity
Multiple Moderate Moderate Moderate complexity
Extensive Extensive High High complexity

EXAMPLES
The following tables reflect an initial and an established office encounter. Use the information pro-
vided in this chapter to select the appropriate level of coding for the following three key components
of the service:
· History — Expanded problem focused
· Examination — Detailed
· Medical decision making — Moderate complexity

INITIAL PATIENT — OFFICE OR OTHER OUTPATIENT VISIT

(3 of 3 elements must be met or exceeded)
Level History Examination Medical Decision
Making
I Problem focused Problem focused Straightforward

II Expanded problem focused Expanded problem focused Straightforward

III Detailed Detailed Low complexity

IV Comprehensive Comprehensive Moderate complexity

V Comprehensive Comprehensive High complexity

LEVEL II is the correct selection. All three key components must be met or exceeded to select a
given level.

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The following is an example of an established patient encounter using the following three key com-
ponents:
· History — Problem focused
· Examination — Expanded problem focused
· Medical decision making — Moderate complexity

ESTABLISHED PATIENT — OFFICE OR OTHER OUTPATIENT CONSULTATION

(2 of 3 elements must be met or exceeded)
Level History Examination Medical Decision
Making
I N/A N/A N/A

II Problem focused Problem focused Straightforward

III Expanded problem focused Expanded problem focused Low complexity

IV Detailed Detailed Moderate complexity

V Comprehensive Comprehensive High complexity

LEVEL III is the correct selection. Only two of the three key components must be met or exceeded.

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Chapter 7 Medical Review

Chapter 7 - MEDICAL REVIEW

This chapter discusses the process used by Medicare contractors to identify and prevent inappropriate
billing. It explains how Medicare contractors use data to identify inappropriate billing and how they
develop medical review (MR) interventions to correct the problem.
Overview
All Medicare contractors are required to ensure that reimbursement is made only for those services
that are reasonable and necessary. To ensure that payment is made only for reasonable and necessary
services, each Medicare contractor is required to perform extensive analysis of data to identify aber-
rant billing. Contractors must verify that billing problems exist through the use of limited scope
“probe” reviews before taking any corrective action. Further, corrective actions must include educat-
ing providers, and must be commensurate with the scope of the verified error. For instance, an error
affecting a limited number of claims will result in an educational intervention; whereas, an error af-
fecting a large number of claims will result in an educational intervention combined with added
medical review.
Mission and Objectives of the Medical Review Process
The mission of the medical review process is to reduce the claim payment error rate. The educational
processes provided by Medicare ensure that a physician knows what to expect when a claim is sub-
mitted to the program.
The specific objectives of the medical review process include:
· Identification and prevention of inappropriate Medicare payments
· Utilization of national and local data, to assure only those areas that present the most risk to the
program, are subjected to medical review
· Increasing effectiveness of newly developed Local Medical Review Policies (LMRPs)
· Education of physicians on appropriate billing practices
· Ensuring the appropriate reimbursement of Medicare-covered services

Benefits to Medicare Physicians

Medical review initiatives are designed to apply national payment criteria, to define Medicare cover-
age of medical care through the development of medical policy, and to ensure that LMRPs and re-
view guidelines are consistent with accepted standards of medical practice. The medical review
process provides the following benefits:
· Decreased denials. Knowledge of appropriate claims guidelines may result in a reduction in
filing errors and an increase in more timely payments.
· Improvement in the way Medicare reviews cases. Development of LMRPs provide guidelines for
the decision making process.
· Reduced claim reviews. Because physicians have a better understanding of when and what Medi-
care needs to support a service as it relates to claim documentation, the claim filing process is
smoother and faster.

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· Predictability in claim decisions. Because local contractor policies are made available to all eli-
gible physicians through contractor publications and Web sites, there is less “guess work” on the
behalf of the physician when furnishing information to support medical necessity.
· Emphasis on education. Medicare offers educational opportunities through comprehensive arti-
cles and contractor-sponsored educational training events.
· Increased program integrity. The Medicare Integrity Program, established in 1996, ensures that
Medicare pays claims correctly.

Progressive Corrective Action (PCA)

What It Is
Medical Review PCA is a concept designed by the Centers for Medicare & Medicaid Services
(CMS) for Medicare contractors to use when deploying resources and tools to conduct medical re-
views. PCA ensures that medical review activities are targeted at identified problem areas and that
corrective actions imposed are appropriate for the severity of the infraction of Medicare rules and
regulations. There are four types of corrective actions that may result from medical review evalua-
tions: education, policy development, prepayment review, and postpayment review.
How It Works
The decision to conduct medical review is driven by data analysis. Data analysis is the starting point
for contractors to determine unusual or unexpected billing patterns that might suggest improper bill-
ing or payment. The data analysis may be general surveillance, or may be specific in response to
complaints or reports from various agencies.
Validating the hypothesis of the data analysis is the next step. Before assigning significant resources
to examine claims identified as potential problems, probe reviews are conducted. A probe review
generally does not exceed 20-40 claims per physician for physician-specific problems, and does not
exceed 100 claims distributed among the identified physician community for general, widespread
problems. All physicians subject to a probe review are notified in writing that a probe review is being
conducted, and are also notified in writing of review results. Physicians or facilities are asked to pro-
vide any and all medical documentation applicable to the claims in question.
What It Accomplishes
Once a probe review validates that an error exists, the contractors classify the severity of the error.
Errors are classified as minor, moderate, or major. Physician-specific error rate (number of claims
paid in error), dollar amounts improperly paid, and past billing history are examples of items used to
determine classification level.
If a minor problem is detected, the Medicare contractor will educate the physician on appropriate
billing procedures, will collect the money on claims paid in error, and will conduct further analysis at
a later date to ensure the problem was corrected.
If a moderate problem is detected, the contractor will educate the physician on appropriate billing
procedures, will collect the money on claims paid in error, and will initiate some level of medical
review until the physician has demonstrated correction of his or her billing procedures.
If a major problem is detected, the contractor will educate the physician on appropriate billing proce-
dures, will collect the money on claims paid in error, will initiate a high level of prepayment medical
review and/or a statistically valid random sample, suspend payments, and/or refer the case to the con-
tractor's Benefit Integrity department (if and when appropriate).

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Physician Education and Feedback

Along with the planned medical review activities, physician feedback and education regarding the
review findings is an essential part of all corrective actions. When individual reviews are conducted,
focused physician education is provided. This means direct contact between the Medicare contractor
and the physician through telephone contact, letter and/or face-to-face meeting. The overall goal of
providing feedback and education is to ensure proper billing practices so claims will be submitted
and paid correctly.
Types of Corrective Action
Local Medical Review Policy (LMRP) Development
Medical review decisions are made in accordance with both national and local policies. These poli-
cies are the foundation of the review process. LMRP is a formal statement developed through a spe-
cific process that:
· Defines the service
· Provides information about when a service is considered reasonable and necessary
· Outlines any coverage criteria and/or specific documentation requirements
· Provides specific coding and/or modifier information
· Provides references upon which the policy is based
Once developed and implemented, LMRPs provide the decision-making criteria for claim review and
payment decisions. LMRPs are developed using input provided through an advisory committee of
medical professionals both within the Medicare Program and the medical community. This process
also allows for other medical professionals throughout the state to comment on proposed policies
prior to finalization, thus assuring an objective review of the policy.
LMRPs are developed through the following process:
· Carriers develop LMRP in response to:
1. The absence of a national policy
2. The need to apply a national (CMS) policy
3. The advent of new technology
4. Data analysis indicating the need for LMRP
· Draft LMRP is presented and reviewed at meetings by the Carrier Advisory Committee (CAC),
which is a committee of beneficiaries, physicians who have been nominated by their respective
specialty associations, the carrier’s medical director, and other staff representatives of Medicare.
· Draft LMRPs are available on the carrier’s Web site. The physician community has an opportu-
nity to provide input to the contractor’s Medical Policy Department regarding the drafted LMRP.
· Draft LMRPs are published and after a 45-day comment period, Carriers review comments and
develop the final LMRP.
· Final LMRP is published on the carriers’ Web site, at www.lmrp.net on the Internet, and is avail-
able in hardcopy by request.
· Implementation occurs at least 30 days after physician notification

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Physicians are responsible for reading and knowing the information in LMRP. Physicians should
keep and use LMRPs as ongoing references and instructional guides when billing Medicare. If the
contractor can determine that the physician knew, or should have known, the proper way to bill or
utilize coding techniques, etc., the improper billing may be determined to be a willful or fraudulent
act.
Edit Development
Contractors develop “edits” in the claims processing system in order to select claims for review, ap-
ply medical review logic, and screen claims for possible aberrancy. Edits can take the following
forms.
Prepayment Edits
Prepayment edits are designed by contractor staff and put in place to prevent payment for noncovered
and/or incorrectly coded services and to select targeted claims for review prior to payment. MR edit
development is the creation of logic (the edit) that is used during claim processing prior to payment
that validates and/or compares data elements on the claim.
Service Specific Edits
These are edits that select claims containing specific services for review. They may compare two or
more data elements present on the same claim (e.g., diagnosis to procedure code), or they may com-
pare one or more data elements on a claim with data from the beneficiary’s history file (e.g., proce-
dure code compared to history file to determine frequency in past 12 months).
Provider Specific Edits
These are edits that select claims from specific providers flagged for review. These providers are se-
lected due to unusual practice patterns, knowledge of service area abuses, and/or utilization com-
plaints received from beneficiaries or others. These edits may suspend all claims from a particular
provider or focus on claims for selected services, place of service, etc. from a selected provider.
Prepayment Review
Prepayment review consists of medical review of a claim prior to payment. This type of review may
require submission of medical records and includes automated, routine, and complex activities. Pre-
payment review may affect any physician.
Automated Prepayment Review
When prepayment review is automated, decisions are made at the system level, using available elec-
tronic information, without the intervention of contractor personnel. Automated editing allows the
contractor to review information submitted on the claim regarding particular procedure codes. This
may consist of the following:
· Diagnosis to procedure code
· Frequency to time
· Place of service to procedure code
· Specialty to procedure code
Routine Prepayment Review
Routine prepayment review is limited to rule-based determinations performed by specially trained
MR staff. An intervention can occur at any point in the review process. For example, a claim may be

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suspended for routine review because an MR determination cannot be automated. Routine review
requires hands-on review of the claim and/or any attachment submitted by the provider (other than
medical records) and/or claims history file and/or internal MR guidelines.
Complex Prepayment Review
Complex medical review involves evaluating medical records or other documentation, by a licensed
medical professional. Complex medical review determinations require the reviewer to make a judg-
ment about whether a service is covered and is reasonable and necessary. Nurses (RN/LPN) or phy-
sicians must conduct this type of review, unless delegated to other licensed healthcare professionals.
If delegated, other healthcare professionals may only review services within their scope of practice
and expertise (e.g., speech therapy, physical therapy).
Provider Specific Review
A provider specific review may include certain procedures performed by a particular provider or all
claims from a particular physician and requires documentation submission, and results in either an
educational intervention by the contractor or further corrective actions. Physicians are notified that
documentation submission is required. Contractors will only review claims for procedure codes
where aberrant billing is suspected.
Postpayment Review
Postpayment review involves medical review of a claim after payment has been made. This type of
review often requires submission of medical records and includes both routine and complex review
activities. Postpayment medical review may affect any physician.
Provider Specific Postpayment Probe Review
When an individual physician is identified as being statistically different from their peers, a probe
review is conducted. A small number of claims (20-40) are identified and a letter is sent to the physi-
cian requesting medical documentation to support those claims. Once the documentation is received,
it is reviewed to determine if the claims were documented as having been performed, coded cor-
rectly, reasonable and necessary, and a covered Medicare benefit. The physician will be notified in
writing of the results of the review. The next steps in the process are dependent upon the results of
the review and may include physician education, collection of money paid in error, continued medi-
cal review, or a review of a statistically valid random sample (SVRS) of provider claims.
Widespread Probe Review
If a widespread problem is identified, approximately 100 claims are reviewed. An example of such a
problem would be an overall spike in billing for a procedure or diagnosis code. A few claims (5-10)
will be requested from several individual physicians who have been billing the code in question. The
results of this review will determine whether: 1.) widespread physician education is appropriate, 2.)
money paid in error needs to be collected, 3.) a policy needs to be developed, 4.) an existing policy
needs to be revised, or 5.) system prepayment edits or audits need to be implemented.
Statistically Valid Random Sample (SVRS)
SVRS is an in-depth audit of a physician’s utilization, coding, and documentation practices. It is
used after problems with a physician’s utilization pattern have been validated through a probe review
and only when the validated problem is of the most extreme scope. This type of review will result in
one or more of the following actions: physician education, overpayment request (possibly projected
to the universe of claims submitted by that physician), or prepayment medical review. If continued

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noncompliance is demonstrated, despite documented educational interventions, a referral may be

made to the Benefit Integrity department for investigation and possible suspension.
Proactive Measures Related to Local Medical Review Policy
General
The purpose of the Medical Review process is to ensure that claims are paid correctly. The following
are some measures physicians can take to help avoid any negative impact associated with the Medi-
cal Review process:
· Review and read all carrier physician publications and LMRPs and become knowledgeable
about the coverage requirements
· Ensure that office staff and billing vendors are familiar with claim filing rules associated with
any LMRP
· Check records against claims billed
· Create an educational awareness campaign for Medicare patients that helps them understand
any specific coverage limitations or medical necessity requirements for those services pro-
vided
· Work with claim submission vendors to incorporate LMRP edits
· Perform mock record audits to ensure that documentation reflects the requirements outlined
in the LMRP
Documentation
In order for the contractors to perform an effective medical review of services, it may be necessary
for the physician to furnish documentation to support the services being reviewed. The following
points about submitting documentation should be kept in mind:
· Every service billed must be documented. There must be clear evidence in the patient’s record
that the service, procedure, or supply was actually performed or supplied.
· The medical necessity for choosing the procedure, service, or medical supply must be substanti-
ated.
· Every service must be coded correctly. Diagnoses must be coded to the highest level of specific-
ity, and procedure codes must be current.
· The documentation must clearly indicate who performed the procedure or supplied the equip-
ment.
· Although it may be dictated and transcribed, legible documentation is required. Existing
documentation may not be embellished (e.g., adding what was omitted in the initial
documentation); however, additional documentation that supports a claim may be submitted.
· Voluntary disclosure of information by the physician is encouraged. When an error is discovered,
it is always preferable to return any overpayments to Medicare.
Occasionally, documentation is requested through the contractor’s Additional Development Request
(ADR) letter. The Contractor may request documentation either during a data driven review or when
the physician contests a denial determination (by requesting a review of the claim). Examples of
documentation needed for medical review of physician services could include, but are not limited to:

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· Office records including progress notes, a current history and physical, and a treatment plan
· Documentation of the identity and professional status of the physician
· Laboratory and radiology reports
· A comprehensive problem list
· A current list of prescribed medications
· Progress notes for each visit that demonstrates the patient’s response to prescribed treatment

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Chapter 8 Inquiry, Appeal, Waiver, and Overpayment

Chapter 8 - INQUIRY, APPEAL, WAIVER, AND OVERPAYMENT

This chapter discusses ways to get claims information and appeal claim denials. Medicare offers sev-
eral options to assist physicians, suppliers, and others who work with the Part B Program.
Inquiry
Inquiries are requests for information about claims or coverage and reimbursement guidelines. An
inquiry may be made to the local Medicare carrier by telephone or in writing.
Customer Service Representatives (CSR)
Medicare contractor CSRs are available to answer questions and assist with inquiries and can help
with most billing issues. The toll-free telephone numbers for most contractors are available at
www.cms.hhs.gov/medlearn/tollnums.asp on the Internet.
Automated Response System (ARS)
Some Medicare carrier sites have an ARS that provides physicians with information usually provided
by CSRs.
Information available through the ARS may include:
· Claim status (complete information on assigned claims, limited status on nonassigned claims,
and denial information)
· Number of pending and finalized claims
· Date and check number of physician’s most recent check
· Year-to-date dollar amount paid to physician
· Educational messages about hot topics
The ARS is usually accessible 24 hours a day. There is usually no limit on the length of time or
number of requests and responses per call. Time is saved because the user can “speed dial” through
information menus.
Note: The local Medicare contractor can furnish physicians with specific information regarding
ARS.
Appealing Medicare Decisions
There are several levels in the appeals process. Each level of appeal is described in detail in the sub-
sequent sections. Once an initial claim determination (sometimes referred to as an "initial determina-
tion") has been made, physicians may have appeal rights depending upon, in most instances, whether
the claim is assigned or unassigned. Each level, after the initial determination, has procedural steps
that must be followed by the appellant before an appeal may proceed to the next level. The appellant
may exercise his or her right to appeal any determination/decision to the next higher level until all
appeal rights are exhausted. Although there are five distinct levels in the appeals process, the Hear-
ing Officer (HO) hearing, level two, is the last level in the appeals process performed by the carrier.
Assigned Claims
· The physician may request a review of an assigned claim.

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Nonassigned Claims
· Typically, only the patient or the patient’s representative can request a review of a nonassigned
claim. However, a physician may request a review only if services were denied or reduced, based
on medical necessity guidelines, and the physician is liable for the denial or reduction. The phy-
sician may also request a review of a nonassigned claim if the beneficiary authorizes it in writing.
The review request must include the beneficiary’s signed authorization.
Review – 1st Level of Appeal
The first level of appeal is called a review. A review is an independent, critical examination of a
claim made by carrier personnel not involved in the initial claim determination. A request for a re-
view may be made to the local Medicare carrier by telephone or in writing. Physicians may request a
review. The appellant (an individual who appeals a claim decision) must begin the appeals process at
the first level after receiving an initial claim determination. The appellant has 120 days from the date
of the initial claim determination to file an appeal.
Certain claim denials may be resubmitted with corrected information without requesting a review.
For example:
· Claims denied due to insufficient information
· Claims returned as “unprocessable” due to incomplete or incorrect information
· Claims where the diagnosis was not coded to the highest level of specificity

Requesting a Review in Writing

A request for a review can be filed on Form CMS-1964 (available electronically at
www.cms.hhs.gov/forms on the Internet) or in any other format that includes the following informa-
tion:
· Beneficiary name;
· Medicare health insurance claim (HIC) number;
· Name and address of provider/supplier of item/service;
· Date of initial determination;
· Date(s) of service for which the initial determination was issued;
· Which item(s), if any, and/or service(s) are at issue in the appeal; and
· Signature of the appellant.
When requesting a review in writing, the appellant should attach any supporting documentation.

Requesting a Review by Telephone

Requests for review of claim denials may be made by telephone. When requesting a review by tele-
phone, the appellant should be prepared with the following information: beneficiary name; benefici-
ary date of birth, Medicare health insurance (HIC) number; name and address of physician/supplier
of item/service; date of initial determination; date of service for which the initial determination was
issued, which item(s) if any, and/or service(s) are at issue in the appeal. For more information about
this process, contact the Customer Service toll-free inquiries line of the local Medicare contractor.
Please note that when a review is requested by telephone, this does not ensure that the request will be
resolved during the telephone call. Some claim denials are typically resolved after the telephone re-

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quest through a written process. If this happens, the appellant will be notified of the results of his/her
request through a written decision letter or through a Remittance Advice (RA).
Examples of issues that are typically not resolved over the telephone include:
· Utilization limit denials
· Services denied because the diagnosis did not warrant the procedure, and the correct diagnosis
was initially submitted on the claim form
When a review is requested, medical documentation justifying the procedure may be needed. The
local carrier informs the physician of the specific documentation needed to conduct the review.
Review Decision Notification
When the review request is received, a written response, which varies with the action taken, will be
sent:
· If the original claim decision is upheld, a detailed letter will be sent explaining why additional
payment cannot be allowed.
· If the original claim decision can be changed and payment is due, a new beneficiary notice and
check will be issued.
· If the original claim decision is changed but no further payment is due, a detailed letter will be
sent explaining why no payment is forthcoming. A new beneficiary notice indicating the revised
decision will be issued.
· If a portion of the claim can be allowed, a check will be issued for the allowed service(s), with a
corrected beneficiary notice. A separate, detailed letter will be sent, explaining the adjustment
and why additional payment cannot be allowed on the other service(s).
Review letters also explain the procedure for a Medicare Part B hearing, which is the 2nd level of the
appeals process.
Please see the section below entitled "Liability and Appeal Decisions" for information on when any
previously collected monies must be refunded to the patient.
Hearing Officer (HO) Hearing – 2nd Level of Appeal
A Medicare-appointed HO, whose role is to determine whether the carrier has followed Medicare
guidelines in making its decision, conducts the hearings.
If, after a review, the appellant is still dissatisfied, and the amount in controversy (the difference be-
tween the billed amount and the Medicare allowed amount, less any outstanding deductible) is $100
or more, a hearing may be requested. The claim(s) can be added (sometimes called aggregation) to
previous or subsequent claims with which the appellant is dissatisfied to meet the requirement, as
long as, the appeal is filed timely for all claims at issue and the claims are properly at the level of ap-
peal requested.
Hearing Request Deadline
A hearing request must be filed within six months from the date of the review determination. The
carrier may, upon request by the party affected, extend the period for filing the request for hearing.
Filing a Request for Hearing
A request for a hearing should be submitted in writing, clearly explaining why the review determina-
tion was unsatisfactory. It should indicate the type of hearing being requested. The request, a copy of

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the review notice, and any additional useful documentation should be sent to the local Medicare car-
rier’s HO address.
On-the-Record (OTR) Hearing
Regardless of the type of hearing requested, the HO prepares and sends to the beneficiary, physician
or supplier, or his or her representative a decision based on the facts in the record, including any ad-
ditional information obtained by, or furnished to, the HO. This includes all evidence submitted with
the written request for a hearing unless, one of the following apply:
· The on-the-record hearing would significantly delay the hearing;
· The issue is medical necessity;
· Oral testimony and cross-examination are necessary to clarify the facts; or
· The Medicare carrier cannot provide a different HO for the requested hearing.
If an on-the-record hearing is not performed, the appellant will be notified of the date and time of the
telephone or in-person hearing.
Telephone Hearing
A telephone hearing offers a convenient and less costly alternative to the “in-person” hearing, since
there is no need to appear. Oral testimony and oral challenges may be conducted via telephone. The
appellant and/or his or her representative may also submit additional evidence by facsimile.
In-person Hearing
Appellants and/or representatives may present oral testimony (as with telephone hearings) and writ-
ten evidence supporting the claim and refuting or challenging the information the carrier used to
deny it.

HO Decision Notification
Regardless of the type of hearing requested, the hearing officer will notify the claimant, in writing, of
the determination. The written response will include the date and time of the in-person or telephone
hearing and the option to notify Medicare if the appellant wishes to cancel the hearing based on the
results of the on-the-record decision.
Administrative Law Judge – 3rd Level of Appeal
If at least $100 remains in controversy following the HO’s decision, further consideration may be
made by an Administrative Law Judge (ALJ). The hearing decision will include instructions for ob-
taining an ALJ hearing. The request must be made within 60 days of receipt of the hearing determi-
nation. The ALJ will define hearing preparation procedures.
Departmental Appeal Board Review – 4th Level of Appeal
If a beneficiary, provider, or supplier is dissatisfied with the ALJ’s decision, he or she may request a
review by the Departmental Appeals Board (DAB). The DAB is the appeal level that reviews cases
that have been previously adjudicated by the ALJs. There is no minimum amount remaining in con-
troversy at the DAB level. The DAB review must be requested within 60 days of receipt of the ALJ’s
decision. The written request should specify the issues and findings of fact and conclusion of law
made by the ALJ with which the physician disagrees.
Judicial Review in Federal Court – 5th Level of Appeal
If at least $1,000 remains in controversy following the DAB’s decision, judicial review before a fed-
eral district court judge can be considered.

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Liability
The financial liability protections provisions of the Social Security Act, Sections 1834(a)(18),
1834(j)(4), 1842(1), and 1879(h), Refund Requirements (RR), and Section 1879(a)-(g), Limitation
on Liability (LOL), may protect the patient and/or the physician from financial liability when Medi-
care denies or reduces payment for a service or item based on it being considered as “not reasonable
and necessary” (or for medical equipment or supplies denied for one of three other specific reasons).
Under these financial liability protections provisions, the patient may not be required to pay the phy-
sician for a service, unless certain conditions are met.
Reasonable and Necessary Services
Section 1862(a)(1) of the Medicare law prohibits payment for services and items not medically rea-
sonable and necessary for the diagnosis or treatment of an illness or injury or to improve the func-
tioning of a malformed body member or which are otherwise excluded under that section. A service
or item may be considered not reasonable and necessary for reasons including, but not limited to:
· The service/item is not covered based on the diagnosis/condition of the patient.
· The frequency/duration of the service was provided beyond the accepted standards of medical
practice.
· The medical documentation did not justify the medical necessity of the service/item.
The physician is generally expected to know that a service/item may be denied or reduced payment
as not medically reasonable and necessary in the following situations:
· The contractor published the specific medical necessity requirements.
· The physician has received a previous review, hearing decision, or other notice for the ser-
vice/item that informed him or her of medical necessity requirements.
· The physician could reasonably be expected to know the requirement based on standard medical
practice within the community.
· The physician has received a denial or reduction of payment on the same or similar service/item.
Note: The remittance notice showing the denial/reduction of payment serves as formal notice of the
medical necessity requirements.
Providing an Acceptable Advance Beneficiary Notice (ABN)
The ABN protects both the physician and patient from unexpected financial liability. When the phy-
sician believes that the service/item may not be covered as medically reasonable and necessary, an
acceptable notice of Medicare’s possible denial of payment must be given to the patient. If the physi-
cian does not give an ABN to the patient, the physician usually cannot hold the patient financially
liable for the service/item. Patients must be notified before the service is rendered that payment
might be denied or reduced. The patient may then decide if he or she wants the service and is willing
to pay for it.
If the physician properly notifies the patient in advance that payment for the service may be denied or
reduced, the physician is not held financially liable for the services and may seek payment from the
patient.
Specific Criteria for the ABN
An acceptable ABN of the denial or reduction of payment must meet the following criteria:

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· The notice must be given in writing on the approved Form CMS-R-131, in advance of providing
the service/item.
· The notice must include the patient’s name, date and description of service/item, and reason(s)
the service/item may be denied or a reduction in payment could occur.
· The patient must sign and date the ABN, indicating that the patient assumes financial liability for
the service/item if payment is denied or reduced for the reasons indicated on the ABN.
ABN for Services Rendered on Referral or Order of Another Physician
Despite the limited contact with patients that some physicians have, for services provided on referral
or order of another physician, they must be aware of the medical necessity requirements for the ser-
vices they provide (if they have been made available). In most cases, the availability of the medical
necessity requirements indicates that the physician knew, or should have known, when payment for
the item/service might be denied or reduced as not medically necessary.
If, after considering the medical necessity requirements for a service/item, the physician believes a
likelihood exists that payment may be denied or reduced as not medically necessary, an acceptable
ABN of the denial/reduction of payment should be provided to the patient.
For services ordered by another physician (e.g., diagnostic tests), the physician who ordered the ser-
vices may provide the ABN. However, the physician rendering the services will be held financially
liable for the services if payment is denied/reduced and, therefore, is responsible for ensuring that an
ABN is provided. Also, the rendering physician may be required to produce a copy of the ABN even
if originally given by the ordering physician. Additionally, if the ABN is found to be defective, it is
the rendering physician who will be financially liable for the services.
For services rendered on the referral of another physician, the physician rendering the service is in
the best position to determine the likelihood of a denial/reduction in payment and, therefore, should
provide an acceptable ABN to the patient.
ABN Modifiers
Assigned or nonassigned claims billed to Medicare Part B must contain modifier GA next to each
applicable service for which a proper ABN has been given to and signed by the patient. While the
ABN form need not be submitted with the claim, a copy of the signed document must be maintained
with the physician’s records.
Modifier GZ may be used to indicate a physician expects Medicare will deny an item or service as
not reasonable and necessary and the beneficiary has not signed an ABN.
Liability and Appeal Decisions

Original Claim Decision Upheld On Review

For assigned and nonassigned claims, if the original claim determination is upheld on a review and
the physician knew, or could have been expected to know, that payment for the service might be de-
nied or reduced, the physician is held liable and must refund any monies previously collected from
the patient for the service within 30 days from the date of the review decision.
Original Claim Decision Revised On Review
Assigned Claims
If the original claim determination is upheld on a review and it is found that the physician and bene-
ficary could not have been expected to know that payment for the service might be denied or re-
duced, Medicare Program payment is made to the physician.

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Nonassigned Claims
If the original claim determination is upheld on a review and it is found that the physician could not
have been expected to know that payment for the service might be denied or reduced, the physician
is notified that he or she may collect payment from the patient. A letter is sent to the patient indicat-
ing that he or she is responsible for payment.
Refund of Monies to the Patient
Where the patient is not responsible for the payment of a service, the physician must refund any
monies previously collected from the patient. If the physician does not refund the monies within the
specified time limits, the following actions may occur:
· Assigned claims – The patient may submit a request to Medicare for indemnification from pay-
ment. A letter is sent to the physician stating that a refund must be made within 15 days. The re-
fund must be for the amount actually paid to the physician, including any amounts applied to the
deductible or coinsurance. If a refund is not made within 15 days, Medicare will pay the patient
and request a refund from the physician for the amount paid.
· Nonassigned claims – The patient may notify Medicare that the physician did not refund the
amount due. Medicare contacts the physician to explain that a refund is due to the patient. If a re-
fund is not made within 15 days, the physician may be subject to civil monetary penalties and
sanctions.

Overpayments
An overpayment occurs when Medicare pays more than the correct amount, often due to the follow-
ing:
· Duplicate submission of the same service
· Payment to the incorrect payee
· Payment for excluded or medically unnecessary services
· Payment made as primary insurer when Medicare should have paid as secondary insurer
All Medicare payments, correct and incorrect, are transmitted to the Internal Revenue Service (IRS).
If the payee is incorrect, Medicare must request return of the monies and reprocess the services cor-
rectly. Physicians must also take specific steps when overpaid by Medicare.
Physician Responsibilities in an Overpayment Situation
If Medicare pays more than the correct amount in error, the overpayment should be refunded as soon
as possible, without waiting for notification. The local carrier can provide information regarding
where to mail the refund. The following must be included with the refund:
· The provider number (and that of the provider who should be paid, if applicable)
· The Medicare number of the patient(s) in question, date of service, and amount overpaid
· A brief description of the reason for the refund
· A copy of the remittance notice, highlighting the claim(s) at issue
· A check for the overpaid amount
If Medicare Discovers an Overpayment Before Refund is Made
Medicare will send a letter listing the service(s) at issue, why the overpayment occurred, and the
amount being requested. The physician will have 30 days from the date of the letter to mail a refund

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to the address in the letter. If the refund is not received within 30 days from the date of the first letter,
a second letter will be sent and the balance due will be satisfied by withholding future claim pay-
ments until the overpayment is paid in full (otherwise known as “offset”). When Medicare notifies
the physician of an overpayment, and multiple claims are involved, the letter will describe all over-
paid claims.
Physician Disagreement with the Overpayment
The physician has the right to appeal the decision if he or she disagrees with the overpayment. How-
ever, submitting an appeal does not prevent an offset. An explanation of why he or she believes the
overpayment to be incorrect should be included with the appeal.
Medicare Collects Interest on Unpaid Overpayments
Medicare is required to collect interest on overpayments not satisfied within 30 days from the date of
the initial refund request letter.
Questions
The physician should contact the local Medicare contractor with questions about the overpayment
process or steps to take when there is a potential overpayment.

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Chapter 9 Business Relations and Payment Accuracy

Chapter 9 – BUSINESS RELATIONS AND PAYMENT ACCURACY

Congress assigned the Centers for Medicare & Medicaid Services (CMS) the fiduciary duty to ensure
beneficiaries receive the maximum value for their invested dollars in the taxpayer-funded Medicare
Program. Establishing and maintaining solid business relations between physicians and the Medicare
Program is critical to delivery of effective healthcare and essential to protect these invested dollars or
what is more commonly referred to as the Medicare trust fund. As in any business relationship, un-
derstanding each other’s expectations and capabilities is important. To accomplish this, physicians,
CMS, Congress, and local Medicare contractors must work together.
Physicians should create and maintain sound business relations by reviewing and becoming familiar
with requirements published by the Medicare contractor, CMS, or the Social Security Administration
prior to entering into contractual arrangements with others (e.g., hospitals, other physicians, laborato-
ries, billing services, consultants, and billing staff). Additionally, physicians who enter into contrac-
tual arrangements must self-monitor within their organization to ensure the propriety of interactions
with Medicare, as well as with other entities with which the physician conducts business.
CMS has improved business relations by significantly increasing its staff of physicians who actively
consult with their peers to address healthcare issues. Another CMS initiative is the Physician’s Regu-
latory Issues Team (PRIT). The PRIT continually reviews and encourages streamlining, simplifying,
and clarifying policies and procedures that affect practicing physicians. The Medicare Program’s
overall goal is to be supportive of physicians as they provide care to people with Medicare.
Since the smallest error percentage may result in billions of dollars in losses to the Medicare trust
fund, Congress established the Medicare Integrity Program (MIP) in 1996 to ensure that Medicare
pays claims correctly. This means paying the correct amount, for a covered service, provided to an
eligible beneficiary by an enrolled physician. The emphasis is on making accurate payments when
claims are first submitted because increased accuracy and efficiency benefit everyone involved in the
system.
In 1996, the Office of Inspector General (OIG) office estimated that 14 percent of all Medicare pay-
ments were made improperly. Since then, the payment error rate has been significantly reduced to 6.3
percent in 2002. The credit for such improvement in payment accuracy goes to physicians, providers,
beneficiaries, Department of Health and Human Services, Department of Justice, OIG, state agen-
cies, Congress, and the President’s administration. CMS’ goal for 2003 is to reduce the payment er-
ror rate to 5 percent or less.
Helping Medicare “Pay It Right”
Education
Most errors are addressed administratively when they are first encountered, by collecting overpay-
ments identified in specific cases or claims and by engaging in education. Physicians, providers, and
other suppliers should understand Medicare Program requirements pertaining to their business, so
they can correctly bill for services and items.
The Medicare Learning Network at www.cms.gov/medlearn on the Internet, assists with proper sub-
mission of Medicare claims through a variety of free educational materials and resources including:
· Information about the basics of coding and claims payment
· Quick reference guides

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· Web-based training modules

· Resident training information, including a manual of Medicare basics useful to physicians at all
stages of practice
· Educational product ordering
Additional contractor resources available to assist physicians with problem solving or to assist with
determining the proper way to code and bill for specific services include:
· Local Medicare Carrier Web sites which contain announcements about educational events, an-
swers to frequently asked questions, and on-line versions of bulletins or newsletters
· Local Medicare Carrier toll-free phone numbers where customer service representatives can pro-
vide clear answers to billing questions. A listing of the toll-free numbers is available at
www.cms.gov/medlearn/tollnums.asp on the Internet.
Local Medical Review Policy
Local Medical Review Policy (LMRP) is an educational and administrative tool to assist physicians,
providers, and suppliers in submitting correct claims for payment. Contractor medical directors and
staff develop LMRPs with input from the public. LMRPs outline how contractors will review claims
to determine if Medicare coverage requirements have been met. CMS requires local policies be con-
sistent with national guidance (they may be more detailed or specific), developed with input from
medical professionals (through advisory committees), and created cognizant of scientific evidence
and clinical practice.
The use of LMRPs helps avoid situations in which claims are paid or denied without a full under-
standing of the basis for payment and denial. Medicare contractors make many case-by-case deci-
sions. LMRPs encourage consistency and allow contractors to clarify and publish their decisions.
Physicians can also request national coverage determinations, if there is sufficient medical evidence
to support the appropriate conditions and indications for payment of a given service, procedure, or
technology.

LMRPs
· May be obtained from the local Medicare Carrier Web site, the toll-free customer service phone
number, or on the LMRP national database at www.lmrp.net on the Internet.

National Coverage Determinations

· Are located in the Medicare Coverage Issues Manual available at www.cms.hhs.gov/manuals on
the Internet. They are also available through the CMS Web site at www.cms.hhs.gov/ncd on the
Internet.

Ensuring Payment Accuracy

Documentation
Medicare strives to minimize its documentation requirements for most services and place no addi-
tional paperwork burden on physicians. Sometimes, as with Certificates of Medical Necessity, extra
documentation is required. Many situations may cause Medicare to request documentation for ser-
vices or items furnished. Physicians should document the service or item at or as close as possible to
the time it was furnished, since late entries increase the likelihood of inaccuracies, and may raise
questions regarding the cause of the delay.

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Honest mistakes may happen when submitting claims to Medicare. Physicians who make uninten-
tional coding errors do not commit fraud, and CMS does not impose fines for unintentional coding
errors. However, when overpayments are identified, CMS is required by law to recover them.
Procedure Code Selection
Providers should choose billing and revenue codes carefully, based on medical necessity as sup-
ported in the documentation. If this responsibility is delegated, providers must ensure their staff un-
derstands coding principles, as providers are responsible for all claims submitted on their behalf.
Contractual arrangements do not relieve physicians of this responsibility. Additionally, providers
should conduct quality checks to ensure agreement with selected codes, and review coding manuals
carefully to ensure proper code selection.
Duplicate Claims
Approximately six percent of all claims filed to Medicare are denied as duplicate claims. Wherever
possible, Medicare works with physicians to eliminate duplicate claims.
Duplicate claims submission can occur from time to time; however, Medicare expects this rate to be
less than one percent of all claims processed for a particular physician. Physicians submitting large
volumes of duplicate claims are identified to work with the Medicare contractor, to learn about alter-
natives to duplicate filing.
Medicare may remove physicians who repeatedly submit duplicate claims from the electronic billing
network. This is determined on a case-by-case basis.
Overpayments
Overpayments are Medicare funds a physician, supplier or beneficiary has received in excess of
amounts due and payable under Medicare statute and regulations. Once it has been determined an
overpayment has been made, the amount of the overpayment is a debt owed to the United States
Government. Statutory law strictly requires CMS to seek recovery of overpayments regardless of
how an overpayment is identified or caused, including when an overpayment is a mistake made by
CMS.
Medicare strives to ensure payment accuracy however, mistakes occasionally occur. Physicians are
responsible for making voluntary refunds to Medicare when they identify an overpayment. Addition-
ally, physicians are responsible for timely repayment when Medicare notifies them of an overpay-
ment. If a timely repayment is not made after proper notice, interest will accrue at an annual rate
specified by law on the outstanding balance. Finally, penalties may be imposed on overpaid monies,
depending on the circumstances involved in the case.
Part A and Part B manage overpayments in different ways:
· Part A overpayments for provider services not performed or incorrectly paid for any other reason
are resolved through credit balance reports.
· Part B overpayments must be returned to the local Medicare carrier; physicians must not keep
incorrect payments. These overpayments may often require refund of copayments made by or on
behalf of beneficiaries.
Physicians who may have questions related to a Medicare overpayment and/or other Medicare debt
collection should contact the local Medicare carrier for assistance.

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Lost or Stolen Medicare Cards

Every year, Medicare receives thousands of calls and letters from beneficiaries stating their Medicare
cards have been lost or stolen and used by others. Identity fraud, in the form of beneficiary imper-
sonation, is a serious problem.
Physicians should consider photocopying each beneficiary’s driver license or some other form of
valid picture identification. With this type of identification on file, office staff can quickly look at the
picture on record to ensure that the patient receiving the service is actually the beneficiary named on
the Medicare card.
The physician is responsible for verifying the identity of all patients receiving services. Physicians
should be cautious of receiving false addresses, telephone numbers, or Medicare cards from their pa-
tients. If services are rendered to a beneficiary impersonator, the physician may be liable for an over-
payment.
In the case of suspected identity fraud, physicians are encouraged to contact their Medicare contrac-
tor or call the national Department of Health and Human Services/Office of Inspector General
(DHHS/OIG) hotline directly at: 1-800-HHS-TIPS.
Offers of Free or Discounted Services
If a physician advertises services or a portion of services for free, he or she must not bill the services
to Medicare or any supplemental policy.
Medicare requires that beneficiaries pay coinsurance on most services. Providing such services at no
charge to the beneficiary and billing Medicare (or both Medicare and the patient’s supplemental in-
surer) constitutes a routine waiver of coinsurance and is unlawful, subjecting a physician to Civil
Monetary Penalties (CMPs) or other penalties. However, the waiver of coinsurance or deductibles
would not be considered unlawful, if the beneficiary was unable to pay (e.g., indigence or poverty),
and this information is documented in the patient’s medical record.
Protecting Your Practice
Obtaining a Medicare Billing Number
To bill Medicare, physicians and other suppliers must first obtain a Medicare billing number referred
to as a Provider Identification Number (PIN). To obtain a PIN physicians and other suppliers must
complete the appropriate CMS 855 form (provider/supplier enrollment application) and submit it to
the Medicare contractor. The PIN is used to bill Medicare for services or items furnished. Physi-
cian/suppliers should protect their PIN like a credit card number and ensure that others do not use it
to bill Medicare without their knowledge. Any misuse of the PIN should be reported immediately.
Please refer to Chapter 2, Medicare Part B Physician Enrollment, for more information.
Closing, Relocating, Change In Status, or Changes In Members
Physicians and other suppliers are required to contact Medicare to update records. Additional infor-
mation regarding application for billing numbers, adding/deleting group members, or changes to ad-
dresses is available through the CMS Web site at www.cms.gov/providers/enrollment on the
Internet.
Medicare Part A Providers
Providers wishing to obtain application information or to make changes to an existing application or
file must contact the fiscal intermediary responsible for their enrollment.

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Medicare Part B Physicians/Suppliers

Physicians or other suppliers must inform their Medicare contractor if they decide to close or move
their practice or change members of a group. PINs must be updated in Medicare’s database so that
another physician or entity cannot use it. Please refer to Chapter 2, Medicare Part B Physician En-
rollment, for more information.
Reassignment of Benefits
Generally speaking, Medicare pays the physician who performed the service. In limited situations,
however, Medicare may allow the performing physician to reassign Medicare payments to another
physician or entity. This is called reassignment of benefits and requires that various forms be com-
pleted, signed, and returned to the Medicare contractor.
A fully executed Reassignment of Benefits form (CMS 855R) is powerful because it allows another
person or entity to bill Medicare on the physician’s behalf and receive payment that otherwise would
have been sent directly to the physician. If a physician has authorized someone else to bill and be
paid by Medicare for services that he or she renders, the physician retains responsibility for ensuring
that such billings are appropriate and reflect services actually performed.
Revoking Reassignment Agreements
Physicians should notify Medicare as soon as reassignment agreements become outdated or are no
longer valid, since failure to do so allows the previous entity to continue billing Medicare. Physicians
and suppliers may formally revoke reassignment agreements by completing and submitting the ap-
propriate CMS 855 form to the Medicare contractor.
Hiring Someone to Prepare Claims
Some physicians and suppliers find it helpful to obtain the assistance of a billing service or consult-
ant to submit their Medicare claims. While such entities can provide valuable services, physi-
cians/suppliers must clearly understand that delegating this process does not relieve them from
responsibility for overpayments received due to claims filed on their behalf. Therefore, physi-
cians/suppliers should get involved and oversee their billing service or staff. Additionally, before hir-
ing a service or consultant, physicians/suppliers should carefully check references and ensure that the
service or consultant:
· Provides periodic reports of claims billed on the physician’s behalf and, if the billing service re-
ceives the Medicare payments, it should be able to provide data regarding how much Medicare
paid
· Protects the physician’s PIN and any other information used to act on the physician’s behalf
· Does not change procedure codes, diagnosis codes, or other information furnished by the physi-
cian without the physician’s knowledge and consent
· Keeps the physician informed of all correspondence received from Medicare
Physicians should review information submitted by a billing service or consultant regularly to ensure
consistency with their records. They should also keep complete administrative records for the claims
a billing service files on the their behalf.
Hiring Employees
The physician is responsible for the actions of his or her billing staff. Therefore, physicians should
perform background checks before hiring new employees and conduct periodic quality checks of
sensitive processes, such as the posting of account receivables.

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Contractual Arrangements
Numerous legal and compliance factors must be considered when contracting with individuals, other
entities, billing services, or consultants. The following questions should be considered when plan-
ning contractual arrangements:
· What types of agreements and paperwork must be executed between the physician and the other
parties?
· Are any agreements/paperwork required between the physician and the insurance companies?
· Do the agreements made between the physician and the other parties conform to ethical standards
of conduct as well as state and federal regulations?
Contracts must be examined in light of confidentiality obligations, including those defined in the
Health Insurance Portability and Accountability Act of 1996. Therefore, physicians should consult
with a healthcare attorney when considering a contractual arrangement. Additionally, physicians may
obtain information on contractual arrangements by reviewing requirements published by the Medi-
care contractor, CMS, or the Social Security Administration.
Referral of Patients and Ordering of Services/Items
Physicians sometimes need to refer patients for specialized medical care or to receive certain diag-
nostic tests or supplies. In such cases, physicians should consider the following:
· Implement a process to ensure that only the ordered services or tests were rendered. For example,
when reviewing the results of diagnostic tests, note whether the other provider performed addi-
tional or more complex tests than those ordered. The ordering physician’s PIN must be protected
against misuse.
· Whenever possible, specify the reason for ordering the services. If diagnostic tests are ordered as
part of a routine physical exam, include that fact with the referral. Physicians should not em-
power the other provider who files the Medicare claim to determine why the tests were needed.
· Never sign blank certification forms that are used by other providers to justify Medicare payment
for oxygen, home health services, wheelchairs, hospital beds, prosthetic devices, etc. Be sure to
personally complete all medical information on such forms. Demographic information, such as
patient name and address should be fully completed by the supplier or physician.
· Medical services, supplies, and devices are sometimes aggressively marketed to beneficiaries,
with little regard for the medical condition, examples include: transcutaneous electrical nerve
stimulator devices and power operated scooters. While these devices are helpful for some benefi-
ciaries, physicians should use extreme caution when prescribing or ordering them, due to the
creative ways they are sometimes marketed. Medicare can pay for items or services that are
medically necessary. Certification forms include helpful information about eligibility for the ser-
vice or product being prescribed.
· Where applicable, specify the quantity of medical supplies or the duration of services needed for
a patient. An open-ended certification is like giving someone a blank check. Recent cases show
Medicare being billed by suppliers providing items that were, in fact, certified by a physician but
delivered in staggering quantities.
· Be suspicious of offers, discounts, free services, or cash to order services. If a deal sounds too
good to be true, it probably is. Physicians should contact the OIG or a healthcare attorney if they

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believe a business arrangement places them at risk. The penalties for violating Medicare’s Anti-
Kickback Statutes can be severe.
· Never certify the need for medical services or supplies for patients who have not been seen and
examined.

Compliance Programs
To ensure Medicare claims are submitted and paid accurately, the OIG issues guidance on compli-
ance programs. A compliance program is a tool that allows physicians to be confident their practices
are lawful and compliant with Medicare requirements. The OIG works closely with CMS, the De-
partment of Justice, and affected sectors of the healthcare industry to formulate this guidance. The
OIG has identified seven fundamental elements to an effective compliance program:
· Implement written policies, procedures, and standards of conduct
· Designate a compliance officer and compliance committee (e.g., a billing clerk and physician in a
small practice)
· Conduct effective training and education
· Develop effective lines of communication
· Enforce standards through well-publicized disciplinary guidelines
· Conduct internal monitoring and auditing
· Respond promptly to detected offenses and develop corrective action plans
Although compliance programs are voluntary, adopting one could be beneficial to a healthcare pro-
vider or any entity involved in the healthcare industry. Implementing a compliance program may as-
sist in establishing a culture that promotes prevention, detection, and resolution of situations that do
not conform to program requirements.
Those interested in implementing a compliance program based on the OIG’s published guidance
must understand the guidance in itself is NOT a compliance program. Rather, it is a set of guidelines
to consider in implementing such a program. Detailed policies and procedures of a compliance pro-
gram are left to the discretion of each provider/entity. In this way, implementation of a compliance
program is flexible to account for the nature of the business, its size and resources.
A compliance program should be tailored to the organization. It should effectively articulate and
demonstrate the commitment of the physician or entity to legal and ethical conduct. Eventually, a
compliance program should become part of the routine operation of an organization.
A compliance program does not grant the healthcare provider or other organization immunity from
scrutiny and/or corrective action by the government or any federal, state, or private payer healthcare
program. However, the OIG has committed itself to take such plans into consideration in any inves-
tigation.
Criminal Liability
Criminal liability for false claims submission can occur for knowingly and willfully making a false
statement when billing for services. The healthcare entity and individual physicians can be criminally
liable for the actions of employees when their conduct is carried out within the scope of employment,
even if their conduct is a violation of the organization’s policy. For example, a hospital discovered,
months after the acquisition of a physician practice, ongoing miscoding of an excluded service into a
covered service. Under the federal definition, this may be considered fraud, and the hospital may be

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liable for the physician’s and billing clerk’s activities. Sometimes, the law holds people responsible
for what they “should have known.”
When a healthcare provider is convicted of criminal activity, federal sentencing guidelines determine
the extent of the penalty. These guidelines are mandatory and must be applied by the court upon
conviction of the provider. The guidelines provide a complicated and elaborate point system to arrive
at the appropriate range of punishment, adding points for “bad” factors and subtracting points for
“good” factors.
One factor that may reduce the point calculation is the existence of an effective compliance program.
Although the likelihood of criminal prosecution is low, a compliance program may not only be effec-
tive in mitigating the sentence, should such prosecution occur, but may also detect potential criminal
violations before they occur.
Implementing a Compliance Program
There are several steps in implementing and operating an effective compliance program. Of course,
the compliance program must be customized to meet the needs of the organization and must be ca-
pable of practical implementation with as little interruption to daily operations as possible. The fol-
lowing steps may be considered when implementing a compliance program:
· Making initial organizational decisions
· Obtaining board approval to implement a program
· Forming a compliance team
· Developing compliance standards
· Implementing the program
· Monitoring and auditing
· Enforcing and correcting
· Responding and preventing
· Updating the program
The documents issued by the OIG on compliance program guidance are published in the Federal
Register and are available through the OIG Web site at:
http://oig.hhs.gov/fraud/complianceguidance.html on the Internet.
The purpose of all compliance programs is to:
· Recognize real and unavoidable responsibilities of practicing physicians
· Increase self-awareness of inappropriate business relations or practices
Compliance programs are designed to protect the integrity of the healthcare system, and physicians
are encouraged to partner with local Medicare carriers in this endeavor.

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Chapter 10 – PROTECTING THE MEDICARE TRUST FUND

Physicians, providers, and other suppliers have an obligation, under law, to conform to the require-
ments of the Medicare Program. While most individuals or organizations are honest and make every
effort to adhere to the guidelines set forth in the Medicare Program, there are a few that are dishon-
est. Further, the high monetary amount billed to the Medicare Program makes it vulnerable to indi-
viduals who may inappropriately administer medical and healthcare services or bill for services never
rendered. The Centers for Medicare & Medicaid Services (CMS) must take strong action to combat
fraud and protect the Medicare trust fund. The goal is to make sure Medicare only does business with
legitimate physicians and suppliers who provide Medicare beneficiaries with needed high quality
services.
The effort to prevent and detect fraud is a cooperative one that involves:
· CMS
· Medicare beneficiaries
· Medicare contractors
· Physicians
· Quality Improvement Organizations (QIO)
· State and Federal Law Enforcement Agencies such as, the Office of Inspector General (OIG) of
the Department of Health and Human Services (HHS), the Federal Bureau of Investigation (FBI),
and the Department of Justice (DOJ)
The primary role of each of these individuals/agencies is to:
· Identify cases of suspected fraud
· Investigate suspected fraud cases thoroughly and in a timely manner
· Take immediate action to ensure that Medicare trust fund dollars are not inappropriately paid out
and that any payments made in error are recouped
Suspension and denial of payments and the recoupment of overpayments are some of the actions that
may be taken. When appropriate, cases are referred to the OIG, Office of Investigations Field Office,
for consideration and initiation of criminal actions, civil monetary penalties, or administrative sanc-
tion.
The most frequent kind of fraud arises from a false statement or misrepresentation made, or caused
to be made, that is material to entitlement or payment under the Medicare Program. The violator may
be a provider, a beneficiary, a physician or other practitioner, supplier of Durable Medical Equip-
ment (DME), an employee of a physician or practitioner, or some other person or business entity in-
cluding a billing service or a contractor employee.
Fraud committed against the program may be prosecuted under various provisions of the United
States Code and could result in the imposition of restitution, fines, and, in some instances, impris-
onment. In addition, there is also a range of administrative sanctions (i.e., exclusion from participa-
tion in the program) and civil monetary penalties that may be imposed when facts and circumstances
warrant such action.
Individuals or organizations identified as engaging in potentially inappropriate activities are not sub-
ject to automatic prosecution. Stewards of the Medicare Program (i.e., the federal government, its

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agencies, and its contractors) must be prudent and treat physicians or other providers fairly when
making decisions that will affect them or their organizations.
Investigation and prosecution of healthcare fraud are reserved for willful and intentional acts of
wrongdoing, substantiated through documented inappropriate billing patterns. To address other inap-
propriate activities or payments, safeguard measures, rather than punitive measures, may be taken.
To ask questions about fraud and abuse or to report suspected fraudulent or abusive activities, pro-
viders are encouraged to contact their Medicare contractor or call the national Department of Health
and Human Services/Office of Inspector General (DHHS/OIG) hotline directly at: 1-800-HHS-TIPS.
Medicare Fraud and Abuse Defined
What Is Fraud?
Fraud is the intentional deception or misrepresentation that an individual knows to be false or does
not believe to be true and makes, knowing that the deception could result in some unauthorized
benefit to himself/herself or some other person.
Examples of Fraud
The following are examples of fraud:
· Billing for services that were not furnished and/or supplies that were not provided
· Billing for services as if performed by a particular entity when they were, in fact, performed by
another entity not eligible to be paid by Medicare
· Using an incorrect or inappropriate provider number in order to be paid (e.g., using a deceased
provider’s number to defraud Medicare)
· Signing blank records or certification forms or falsifying information on records or certification
forms to obtain Medicare payment
· Selling or sharing patients’ Medicare numbers so false claims can be filed
· Offering incentives to Medicare patients that are not offered to non-Medicare patients (e.g., rou-
tinely waiving or discounting the Medicare deductible and/or coinsurance amounts)
· Offering, soliciting, or accepting bribes, kickbacks, or discounts for the referral of patients or or-
der of services or items
· Falsely representing the nature of the services furnished which encompasses describing an ex-
cluded service in a misleading way that makes it appear as if a covered service was actually fur-
nished (e.g., billing routine foot care as a more involved form of foot care or billing for physical
therapy when acupuncture was actually performed)
· Falsifying information on applications, medical records, billing statements, and/or cost reports or
any statement filed with the government
· Misrepresenting excluded services as medically necessary by using inappropriate procedure or
diagnosis codes
What Is Abuse?
Abuse describes practices that either directly or indirectly, results in unnecessary costs to the Medi-
care Program. Many times abuse appears quite similar to fraud except that it is not possible to estab-
lish that abusive acts were committed knowingly, willfully, and intentionally. Although these types
of practices may initially be categorized as abusive in nature, under certain circumstances they may

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develop into fraud if there is evidence the subject was knowingly and willfully conducting an abusive
practice.

Examples of Abuse
The following are examples of abuse:
· Charging in excess for services or supplies
· Providing medically unnecessary services
· Providing services that do not meet professionally recognized standards
· Billing Medicare based on a higher fee schedule than for patients not on Medicare
· Submitting bills to Medicare that are the responsibility of other insurers under Medicare Secon-
dary Payer regulations
· Violating the participating physician/supplier agreement with Medicare or Medicaid
· Breaches in the assignment agreement
· Violating the Maximum Allowable Actual Charge limits or limitation amount
Fraud and Abuse Case Examples
The following are some actions the government took in actual cases involving Medicare providers:
· An unlicensed physician utilized provider numbers of other physicians, without their knowledge,
to bill Medicare for services not rendered. The doctor pled guilty in Federal court to money laun-
dering and filing false claims. He was sentenced to 18 months in prison and required to reim-
burse the government in excess of $750,000.
· An unlicensed doctor cheated the government for three years by billing Medicare for visits to
homebound patients using other physicians’ Medicare provider numbers. He pled guilty to
money laundering and, as a result, had to forfeit his home, many acres of undeveloped property, a
late-model luxury car, and a year-old cabin cruiser. This property was worth an estimated
$750,000 (about half the amount he was accused of receiving from Medicare). He also faces up
to ten years in prison.
· Institutional providers separately billed Medicare for nonphysician outpatient services provided
in conjunction with inpatient admissions. These providers were collectively cited for possible es-
timated damages in excess of $30 million, including recovery of duplicate payments, liability for
penalties, and triple damages of not less than $5,000 per claim.
· An independent clinical laboratory chain billed Medicare for laboratory tests that were not or-
dered by a physician and were not medically necessary. The laboratory entered into a civil set-
tlement with the government and agreed to reimburse over $46 million to the Medicare Program.

Identification and Prevention of Fraud

Whistle Blower Cases
The “Whistle Blower,” or the “qui tam” provision, as it is formally called, allows any person having
knowledge of a false claim against the government to bring an action against the suspected wrong-
doer on behalf of the United States Government. A person who files a qui tam suit on behalf of the
government is known as a “relator” and may share a percentage of the recovery realized from a suc-
cessful action. A “relator” can be a patient, disgruntled former employee, or other business contact.

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Incentive Reward Program

Section 203(b)(1) of the Health Insurance Portability and Accountability Act (HIPAA) of 1996 (Pub-
lic Law 104-191), established a program to encourage individuals to report information on individu-
als and entities that are engaged in or have engaged in acts or omissions that constitute grounds for
the imposition of a sanction under sections 1128, 1128A, or 1128B of the Social Security Act (the
Act), or who have otherwise engaged in sanctionable fraud and abuse against the Medicare Program
under title XVIII of the Act.
The Medicare Incentive Reward Program (IRP) was established to pay an incentive reward to indi-
viduals who provide information on Medicare fraud and abuse or other sanctionable activities.
The Medicare Program will make a monetary reward only for information that leads to a minimum
recovery of $100 of Medicare funds from individuals and entities determined by CMS to have com-
mitted sanctionable offenses. Only referrals from intermediaries and carriers to the OIG, made pur-
suant to the criteria set forth in the Program Integrity Manual (PIM), Chapter 3, section 10ff are
considered sanctionable for the purpose of the Incentive Reward Program.
The amount of the reward will not exceed 10 percent of the overpayment recovered in the case, or
$1,000, whichever is less. Collected fines and penalties are not included as part of the recovered
money for purposes of calculating the reward amount.
Additional information regarding the IRP may be obtained from Chapter 2 of the Medicare Program
Integrity Manual, available at www.cms.hhs.gov/manuals/108_pim/pim83toc.asp on the Internet.
Pre- and Postpayment Review
Medicare contractors have a responsibility to ensure that claim payments are made appropriately.
One way to do this is to review claims and medical records on either a prepayment or postpayment
basis. Medicare may ask the physician to submit documentation for a detailed review of his or her
claims. After the review, payment may be allowed, denied, reduced, or recovered.
If fraud is suspected or continued noncompliance with Medicare requirements is demonstrated, de-
spite documented educational interventions, a referral may be made to the Benefit Integrity Depart-
ment of the Medicare contractor for investigation and possible payment suspension.
Overpayments
Overpayments are Medicare funds a physician, provider, supplier, or beneficiary has received in ex-
cess of amounts due and payable under the Medicare statute and regulations. Once it has been deter-
mined an overpayment has been made, the amount of the overpayment is a debt owed to the United
States Government. Statutory law strictly requires CMS to seek recovery of overpayments regardless
of how an overpayment is identified or caused, including when an overpayment is a mistake made by
CMS.
Medicare strives to ensure payment accuracy however, mistakes occasionally occur. Physicians are
responsible for making voluntary refunds to Medicare when they identify an overpayment. Addition-
ally, physicians are also responsible for timely repayment when Medicare notifies them of an over-
payment. If a timely repayment is not made after proper notice, interest will accrue at an annual rate
specified by law on the outstanding balance. Finally, penalties may be imposed on overpaid monies,
depending on the circumstances involved in the case.
Medicare Part A and Part B manage overpayments in different ways:
· Part A overpayments for provider services not performed or incorrectly paid for any other reason
are resolved through credit balance reports.

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· Part B overpayments must be returned to the local Medicare carrier; physicians must not keep
incorrect payments. These overpayments may often require the refund of copayments made by or
on behalf of beneficiaries.
Physicians who have questions related to a Medicare overpayment and/or other Medicare debt
collection should contact the local Medicare carrier’s toll free customer service number for
assistance.

Administrative Sanctions
Denial or Revocation of Application
CMS has the authority to deny or revoke an individual or organization’s application for a Medicare
provider number if there is evidence of impropriety (e.g., previous convictions, false information on
the application) or if the physician does not meet state/federal licensure or certification requirements.
If changes have occurred to information on original applications for Medicare provider numbers, in-
dividual physicians or organizations must notify the applicable Medicare contractor or state agency.
Examples of such changes may include address change, change of ownership, change in the name of
the business, or change in the tax identification number. Failure to notify Medicare of changes may
result in revocation of provider billing privileges, thereby preventing payments from Medicare.
Additional information regarding application for provider numbers, adding/deleting group members,
or changes to addresses is available at www.cms.gov/providers/enrollment on the Internet.
Suspension of Payments
CMS has the authority to suspend payment to a physician if fraud is suspected or if a potential over-
payment exists. This action may be necessary in order to protect the Medicare Program against fi-
nancial loss. Payment suspensions may last up to 180 days and, in certain cases, an additional 180-
day payment suspension may be imposed or the payment suspension may be imposed for an indefi-
nite period.
Claims submitted by a physician during a payment suspension will continue to be processed, and the
physician will continue to be notified of claim determinations. In addition, appeal rights are available
for the processed claims. However, Medicare withholds the actual payment(s) for the claims. The
withheld payment(s) may be used to recoup overpaid funds identified by Medicare.
There are no appeal rights to the decision to suspend payments. However, physicians may submit
written rebuttals addressing why a payment suspension should not be imposed. A payment suspen-
sion may be lifted once the overpaid funds are recovered or if sufficient information is in the physi-
cian’s rebuttal statement to demonstrate that the payment suspension is not necessary.
Civil Monetary Penalties
Section 1128A(a) of the Social Security Act authorizes the imposition of Civil Monetary Penalties
(CMP) when it is determined that a person or entity has violated Medicare rules and regulations. The
following are some examples of violations for which CMPs and additional assessments may be im-
posed (and in some instances, exclusion from the program may apply):
· Violation of the Medicare assignment provisions
· Violation of the Medicare physician or supplier agreement
· False or misleading information expected to influence a discharge decision
· Violation of assignment requirement for certain diagnostic clinical laboratory tests
· Violation of requirement of assignment for nurse-anesthetist services

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· Supplier refusal to supply rental DME supplies without charge after rental payments may no
longer be made
· Physician billing for assistants at cataract surgery without prior approval of PRO
· Hospital unbundling of outpatient surgery costs
· Hospital/responsible physician “dumping” of patients based upon their inability to pay or lack of
resources
Typically, penalties involve assessments of significant damages such as CMPs up to $10,000 per vio-
lation and exclusion from the Medicare Program.
Investigations
In cases of substantiated allegations of fraud or suspected inappropriate activities, Medicare contrac-
tors and/or federal law enforcement may investigate individuals or providers for subsequent prosecu-
tion.
Criminal Prosecutions and Penalties
Because it is a federal crime to defraud the United States Government or any of its programs, indi-
viduals who commit fraud may be imprisoned, fined, or both. Criminal convictions usually include
restitution and significant fines. In some states, providers and healthcare organizations may also lose
their licenses. Convictions may also result in exclusion from Medicare for a specific length of time.
Depending on the case, the United States (U.S.) Attorney’s Office may invoke one or more federal
statutes, including the examples below, to indict and prosecute individuals and/or entities involved:
· 18 U.S.C. Section 201, Bribery
· 18 U.S.C. Section 287, False claims
· 18 U.S.C. Section 371, Conspiracy to commit fraud
· 18 U.S.C. Section 669, Theft or embezzlement in connection with healthcare
· 18 U.S.C. Section 1001, False statements
· 18 U.S.C. Section 1035, False statements relating to healthcare
· 42 U.S.C. Section 1320, Kickbacks
· 18 U.S.C. Section 1341, Mail fraud
· 18 U.S.C. Section 1343, Wire fraud
· 18 U.S.C. Section 1347, Healthcare fraud
· 18 U.S.C. Section 1518, Obstruction of a federal healthcare fraud investigation
· 18 U.S.C. Sections 1956-57, Money laundering
· 18 U.S.C. Section 1962, Racketeer Influenced and Corrupt Organizations Act
Civil Prosecutions and Penalties
The U.S. attorney may file a civil suit or decide the interest of the Medicare Program is best served
by settling a case. In these situations, the amount of damages plus additional money may be paid to
the government in the form of penalties and fines. Depending on the severity of the case, the civil
suit or settlement may include the following:

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· CMP to the government for no more than $10,000 for each item or service in noncompliance (or
higher amounts where applicable by statute)
· Penalty assessment payment to the government for up to three times the amount claimed for each
item or service in lieu of damages sustained by the government
· Exclusion from Medicare or any other federally funded program for a specified number of years
· Imposition of a corporate integrity agreement with the federal government. In these instances, the
physician or entity is required to accomplish specific goals (e.g., educational plan, corrective ac-
tion plan, reorganization) and is also subject to periodic audits by the government.
Exclusion Authority
The OIG has the authority to exclude (sanction) physicians who have been convicted of healthcare
related offenses. A mandatory exclusion exists if a fraud conviction exists. In the absence of a con-
viction, the OIG may permissively exclude physicians if certain conditions and requirements have
been met. Even when the U.S. Attorney’s Office declines to prosecute a case, the OIG may act to ex-
clude the physician from the Medicare Program. The term exclusion means that, for a designated pe-
riod, Medicare, Medicaid, and other government programs will not pay the physician for services
performed or for services ordered by the excluded party.
In addition, under Section 1128A(a) of the Social Security Act, many of the penalties imposed under
this section may also cause exclusion from the Medicare Program. The authority to exclude physi-
cians under this statute is delegated to CMS or the OIG depending on which agency was delegated
authority for the specific violation from the Secretary.
Mandatory Exclusions
A mandatory exclusion exists if there is a conviction of fraud. Listed below are a few examples of
mandatory exclusions, which can be found in the following sections of the Social Security Act:
Section 1128(a)(1) – Program-related conviction
The OIG is required to exclude individuals and entities that have been convicted of a crime related to
Medicare or other State healthcare programs. The minimum mandatory period of exclusion for these
types of convictions is five years.
Section 1128(a)(2) – Conviction for patient abuse or neglect
The OIG is required to exclude individuals and entities that have been convicted of a crime relating
to the abuse or neglect of a patient. The minimum mandatory period of exclusion for these types of
convictions is five years.
Section 1128(a)(3) – Felony conviction related to healthcare fraud
The OIG is required to exclude individuals and entities that have been convicted of an offense in
connection with the delivery of a healthcare item or service or with respect to any act or omission in
a healthcare program operated by or financed in whole or in part by any federal, State, or local gov-
ernment agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial misconduct.
Section 1128(a)(4) – Felony conviction related to controlled substances
The OIG is required to exclude individuals and entities that have been convicted of a criminal of-
fense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dis-
pensing of a controlled substance.

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Permissive Exclusions
A permissive exclusion exists when there is no conviction of fraud, however, certain conditions and
requirements have been met. Listed below are a few examples of permissive exclusions, which can
be found in the following sections of the Social Security Act:
Section 1128(b)(1) – Conviction related to fraud
The OIG may exclude individuals and entities that have been convicted of certain types of crimes
that are not directly related to the delivery of items or services under Medicare or other State health-
care programs. This section covers convictions for fraud, theft, embezzlement, breach of fiduciary
responsibility, and other financial misconduct.
Section 1128(b)(2) – Conviction related to obstruction of an investigation
The OIG may exclude any individual or entity convicted under federal or State law of interference
with, or obstruction of, any investigation into a criminal offense involving program-related convic-
tions. Some of the types of convictions covered by this section are perjury, witness tampering, and
obstruction of justice.
Section 1128(b)(3) – Misdemeanor conviction related to controlled substances
The OIG may exclude any individual or entity convicted of a criminal offense relating to the unlaw-
ful manufacture, distribution, prescription, or dispensing of a controlled substance. The OIG limits
sanctions under this authority to those individuals or entities that have a relationship to any health-
care activity.
Section 1128(b)(4) – License revocation or suspension
The OIG may impose an exclusion that will prevent a physician who has lost a license in any state
from being reimbursed for treating program beneficiaries in every state, even if he has a license in
another State. This section refers to licenses that have been revoked, suspended, or otherwise lost for
reasons bearing on the individual’s integrity. The term otherwise lost is intended to cover any situa-
tion where the effectiveness of the person’s license to provide healthcare has been interrupted or pre-
cluded, regardless of the term used in a particular jurisdiction.
Payment Denials Due to Exclusion
Denial of Payment to an Excluded Party
Medicare will not pay an excluded individual or entity that has accepted assignment. Nor will Medi-
care pay a beneficiary submitting claims for items and services furnished on or after the effective
date of a sanction. In addition, Medicare will not pay for services/items furnished on the order or re-
ferral of an excluded individual or entity.
Denial of Payment to a Supplier
A supplier (e.g., DME supplier or laboratory) that is wholly owned by an excluded party will not be
paid by Medicare for items and services furnished on or after the effective date of the sanction.
Denial of Payment to a Provider of Service
A provider of service that is wholly owned by an excluded party will not be paid by Medicare for
services performed or items received (including services performed under contract) by an excluded
party on or after the effective date of the sanction.
Denial of Payment to Beneficiaries
If a beneficiary submits claims for items or services furnished by an excluded party or by a supplier
that is wholly owned by an excluded party on or after the effective date of the sanction:

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· Medicare may pay for the first claim submitted by the beneficiary, and Medicare will immedi-
ately give the beneficiary notice of the sanction.
· Medicare will not pay the beneficiary for items or services furnished more than 15 days after the
date of the notice to the beneficiary.
Exceptions to Payment Denials
Payment is available for services or items provided up to 30 days after the effective date of the sanc-
tion for:
· Inpatient hospital services or post-hospital skilled nursing facility services or items furnished to a
beneficiary who was admitted to a hospital or skilled nursing facility before the effective date of
the sanction
· Home health services or items furnished under a plan of treatment established before the effec-
tive date of the sanction
The Medicare and Medicaid Patient and Program Protection Act of 1987 (P. L. 100-93) permits
payment for an emergency item or service furnished by an excluded individual or entity.
Reinstatement
At the conclusion of the designated period of sanction, an individual and/or entity may be eligible for
reinstatement to the Medicare Program and may apply to the OIG, or where applicable CMS, for re-
instatement.
OIG Sanctioned and Reinstated Provider Lists
The OIG’s sanctioned provider list identifies individuals and entities that are excluded from Medi-
care reimbursement. In addition, the list includes the provider’s specialty, notice date, and the end of
the sanction period. The OIG also lists individuals and entities that have been reinstated to the Medi-
care Program. The OIG sanctioned provider list is available at www.oig.hhs.gov on the Internet.
Once at this address, click on “Exclusions Database.”
Government Services Administration (GSA) List of Excluded Providers
The GSA was established by the Federal Property and Administrative Services Act. Its role is to ex-
amine ways to improve the administrative services of the Federal Government. The GSA debarment,
exclusion, and suspension lists for all Federal agencies are available at http://epls.arnet.gov on the
Internet. This Web site assists Medicare and Medicaid contractors in verifying the eligibility of
healthcare providers and/or entities seeking to participate in the Medicare and Medicaid Programs.
CMS encourages individuals and entities to research the information on this Web site before adding
a provider to a physician group or medical staff, purchasing or considering involvement in a medical
facility or other entity that may seek payment from the Medicare Program.
Corporate Integrity Agreements
Healthcare providers are not required by law to have a formal compliance program in place. How-
ever, as part of their sentencing in a criminal prosecution or as part of a settlement agreement or civil
prosecution, a healthcare provider may be required to enter into a corporate integrity agreement with
the federal government. These agreements essentially mirror the structure of a compliance program,
but may be more stringent. In addition, corporate integrity agreements are developed, imposed and
monitored by the Federal Government (i.e., law enforcement). Healthcare providers who enter into

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corporate integrity agreements with the federal government may also be subject to further review or
investigation; consequences for not complying with a corporate integrity agreement may result in
punitive actions such as prosecution or sanctions.

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Chapter 11 - LEGISLATIVE ISSUES AFFECTING MEDICARE

This chapter discusses various federal laws that affect Medicare coverage and requirements for phy-
sicians, and other providers or suppliers who do business with Medicare.

Clinical Laboratory Improvement Amendments

The Clinical Laboratory Improvement Amendments (CLIA), passed by Congress in 1988, estab-
lished quality standards for all laboratory testing. CLIA ensures the accuracy, reliability, and timeli-
ness of patient test results, wherever a test is performed. A laboratory is defined as any facility that
performs laboratory testing on specimens derived from humans for the purpose of providing
information for the diagnosis, prevention, treatment of disease, or impairment of, or assessment of
health. CLIA is user-fee funded; therefore, all costs of administering the program are covered by the
regulated facilities.
CLIA standards are national and are not Medicare-exclusive. CLIA applies to all providers rendering
clinical laboratory and certain other diagnostic services, whether or not claims are filed to Medicare.
CLIA Quality Standards
CLIA defines quality standards for proficiency testing (PT), patient test management, quality control,
personnel qualifications, and quality assurance, as well as specific cytology provisions.
The Centers for Medicare & Medicaid Services (CMS) administers CLIA, including laboratory regis-
tration, fee collection, surveys, surveyor guidelines and training, enforcement, approvals of PT pro-
viders, accrediting organizations, and exempt states. The Centers for Disease Control and Prevention
(CDC) are responsible for test categorization and CLIA studies.
CLIA Certificates
Five types of certificates may be issued to providers, who perform waived, moderate, or high com-
plexity tests and procedures:
· Certificate of waiver – Issued to a laboratory to perform only waived tests (i.e., simple examina-
tions or procedures that use methodologies that are so simple and accurate that the likelihood of
erroneous results is negligible and poses no reasonable risk of harm to the patient if the test is
performed incorrectly).
· Certificate for Provider-Performed Microscopy Procedures (PPMP) – Issued to a laboratory in
which a physician, midlevel practitioner or dentist performs no tests other than the microscopy
procedure (a procedure categorized as moderately complex where the primary instrument for per-
forming the test is a microscope). This certificate permits the laboratory to also perform waived
tests.
· Certificate of registration – Issued to a laboratory that enables the entity to conduct moderate or
high complexity laboratory testing or both until the entity is determined by survey to be in com-
pliance with the CLIA regulations.
· Certificate of compliance – Issued to a laboratory after an inspection that finds the laboratory to
be in compliance with all applicable CLIA requirements.
· Certificate of accreditation – Issued to a laboratory on the basis of the laboratory’s accreditation
organization approved by CMS.

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CLIA Number
Upon certification, each laboratory is assigned an individual and unique CLIA number. Each CLIA
number consists of ten alphanumeric positions.
The CLIA number must be on all claims for laboratory services, or the claim will be returned as un-
processable. The CLIA number must be entered in block 23 of Form CMS-1500 or the applicable
electronic field.

Guidelines for Teaching Physicians

Effective November 22, 2002, CMS implemented revised guidelines for teaching physicians and
nonresident physicians who involve residents in patient care.
The guidelines require the presence of a teaching physician during the key portion of the service in
which a resident is involved and for which contractor payment will be sought. These services must
be identified using the GC modifier. Using this modifier certifies the teaching physician was present
during the key portion of the service, and was immediately available during other parts of the ser-
vice.
Medicare will pay for physician services furnished in teaching settings under the physician fee
schedule only if:
· The services are personally furnished by a physician who is not a resident.
· A teaching physician was physically present during the critical or key portion(s) of the service
that a resident performs, and the teaching physician participated in the management of the pa-
tient.
· A teaching physician provides care with a graduate medical education (GME) program that has
been granted a primary care exception.
Any billable service performed by a student (other than the review of systems and/or past, family, or
social history which are taken as part of an evaluation and management [E/M] service) must be per-
formed in the physical presence of a teaching physician or a resident in a service meeting the re-
quirements for teaching physician billing, as set forth in section 15016 of the Medicare Carriers
Manual.
Students may document services in the medical record. However, the documentation of an E/M ser-
vice by a student, to which a teaching physician may refer, is limited to documentation related to the
review of systems and/or past, family, or social history. The teaching physician may not refer to a
student’s documentation of physical examination findings or medical decision making in his or her
personal note. If the medical student documents E/M services, the teaching physician must verify and
repeat documentation of the physical examination and medical decision making activities of the ser-
vice.
Following are three common scenarios for teaching physicians providing E/M services:
1. The teaching physician personally performs all the required elements of an E/M service with-
out a resident. In this scenario, the resident may or may not have performed the E/M service
independently.
o In the absence of a note by a resident, the teaching physician must document the E/M
service as if in a non-teaching setting.
o Where a resident has written notes, the teaching physician’s note may reference the
resident’s note. The teaching physician must document that he or she performed the

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critical or key portion(s) of the service and that he or she was directly involved in the
management of the patient. The composite of the teaching physician’s entry and the
resident’s entry together must support the medical necessity and level of service billed
by the teaching physician.
2. The resident performs the elements required for an E/M service in the presence of, or jointly
with, the teaching physician and the resident documents the service. In this case, the teaching
physician must document that he or she was present during the performance of the critical or
key portion(s) of the service and that he or she was directly involved in the management of
the patient. The teaching physician’s note should reference the resident’s note. The compos-
ite of the teaching physician’s entry and the resident’s entry together must support the medi-
cal necessity and level of service billed by the teaching physician.
3. The resident performs some or all of the elements of the service in the absence of the teach-
ing physician and documents his or her service. The teaching physician independently per-
forms the critical or key portion(s) of the service with or without the resident present and, as
appropriate, discusses the case with the resident. In this instance, the teaching physician must
document that he or she personally saw the patient, personally performed critical or key por-
tion(s) of the service, and participated in the management of the patient. The teaching physi-
cian’s note should reference the resident’s note. The composite of the teaching physician’s
entry and the resident’s entry together must support the medical necessity of the billed service
and the level of the service billed by the teaching physician.
Note: Documentation by the resident of the presence and participation of the teaching physician is
not sufficient to establish the presence and participation of the teaching physician.
Exception for Certain Primary Care Centers
In certain situations, Medicare will pay teaching physician claims for services furnished by residents
without the presence of a teaching physician. When a GME program of a primary care center is
granted this exception, it applies to the following lower and mid-level evaluation and management
services:
New Patient Established Patient
99201 99211
99202 99212
99203 99213

For this exception to apply, GME programs must attest in writing that all of the conditions outlined
in section 15016 of the Medicare Carriers Manual are met for a particular residency program. Cen-
ters exercising the primary care exception must maintain records demonstrating they qualify for the
exception. Services billed under this exception must be identified using the GE modifier.

Mandatory Claims Filing Requirements

The Omnibus Budget Reconciliation Act of 1989 (OBRA) requires providers to submit claims for all
services rendered to Medicare patients on or after September 1, 1990. This mandate applies to all
physicians and suppliers who provide covered services to Medicare beneficiaries. However, it does
not require providers to accept assignment. Also, providers may not charge patients for preparing or
filing Medicare claims.

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Medicare carriers monitor compliance with the mandatory claims filing requirement. Offenders may
be subject to a civil monetary penalty of up to $10,000 for each violation.
Exceptions to Mandatory Filing
Providers are not required to file claims on behalf of Medicare beneficiaries for:
· Used durable medical equipment (DME) purchased from a private source
· Services for which Medicare is secondary payer, but not enough information is available to proc-
ess the claim
· Claims for services rendered outside the United States
· Services billed to third-party insurers (indirect payment provisions)
· Other unusual services, on a case-by-case basis
A physician is not required to file claims on behalf of a Medicare beneficiary when the physician has
opted out of the Medicare Program by signing a private contract with the beneficiary.
Note: Providers are not required to file claims for excluded Medicare services; however, they are en-
couraged to do so, since many Medicare supplemental insurance policies pay for services that Medi-
care does not cover. These companies usually require a denial notice from Medicare prior to
providing reimbursement.
If a provider does not accept assignment on a Medicare claim, the Privacy Act prohibits the carrier
from releasing any claim information to the provider, except the following:
· Whether the claim has been received,
· Whether the claim has been paid, and/or
· The claim’s status in the Medicare processing system.
More specific information may not be released, unless the patient authorizes its release. Limited
status of nonassigned claims and complete status of assigned claims may be obtained through the
local Medicare carrier.

Private Contracting with Medicare Beneficiaries

The Balanced Budget Act (BBA), Section 4507, allows certain physicians and practitioners (under a
limited definition for this purpose) to privately contract with Medicare beneficiaries. To validate the
contract, the physician or practitioner files an affidavit with Medicare, opting out of Medicare for
two years.
These provisions allow physicians or practitioners to sign private contracts with Medicare beneficiar-
ies. The physician must agree not to file claims to Medicare or any other organization that receives
reimbursement from Medicare, unless the service is for emergency or urgent care. This situation re-
quires the use of modifier GJ ("OPT-OUT" physician or practitioner emergency or urgent service).
Contracts written by the physician must be signed by the beneficiary before any item or service is
provided (pursuant to the contract), and the contract must clearly indicate to the beneficiary that by
signing the contract he or she:
· Agrees not to submit a claim to Medicare.
· Agrees to pay the physician for the service.
· Agrees to pay the “full-fee” for the service with no limits on amount.

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· Acknowledges that supplemental insurance may not make payment because Medicare will not
make payment.
· Acknowledges that they may go to another physician whom Medicare will reimburse for the ser-
vices.
The contract must clearly indicate whether the physician is excluded from Medicare. The physician
must file an affidavit with the Medicare contractor acknowledging that he or she will not file any
claims with Medicare for two years, beginning on the date the affidavit was signed.
Physicians who violate any provision will not be allowed to enter into additional private contracts
during the two-year period, nor may they anticipate reimbursement from Medicare for their services.

Anti-Fraud Provisions
False Claims Act
The False Claims Act prohibits the following:
· Knowingly filing a false or fraudulent claim to the government for payment
· Knowingly using a false record or statement to obtain payment on a false or fraudulent claim
paid by the government
· Conspiring to defraud the government by getting a false or fraudulent claim allowed or paid
Note: Additional information may be found in 31 United States Code (U.S.C.) section 3729(a) of the
Act.
Anti-Kickback Statute
The anti-kickback statute prohibits offering, soliciting, paying, or receiving remuneration for refer-
rals of Medicare or Medicaid patients, or for referrals for services or items paid for, in whole or in
part, by Medicare or Medicaid.
Additionally, the Anti-Kickback Statute prohibits offering, soliciting, paying, or receiving remunera-
tion in return for purchasing, leasing, ordering, arranging for, or recommending purchasing, leas-
ing, or ordering any goods, facility, service, or item for which payment may be made in whole or in
part, by Medicare or Medicaid.
Discounts, rebates, or other reductions in price may violate the anti-kickback statute because such
arrangements induce the purchase of items or services payable by Medicare or Medicaid. However,
certain arrangements are permissible if they fall under a safe harbor provision.
Physician Self-Referral (Stark II) Laws
Since January 1995, the Social Security Act, Section 1877 (42 U.S.C. section 1395nn) prohibits phy-
sicians from making self-referrals for certain designated health services (DHS) involving the Medi-
care and Medicaid Programs. DHS includes the following items and services:
· Clinical laboratory services
· Physical therapy services
· Occupational therapy services
· Radiology services
· Radiation therapy services and supplies

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· Durable medical equipment and supplies

· Parenteral and enteral nutrients, equipment, and supplies
· Prosthetic and orthotic devices and supplies
· Home health services
· Outpatient prescription drugs
· Inpatient/outpatient hospital services
The law also prohibits a physician or his or her immediate family from having a financial relation-
ship with an entity to which Medicare patients are referred to receive a designated health service. A
financial relationship may exist in the form of an ownership, investment interest, or compensation
arrangement.

Penalties for Violations of the Law

The civil monetary penalty is a maximum of $15,000 for each service billed or furnished as the result
of a prohibited referral. A total maximum penalty of $100,000 can be applied for each scheme to
evade the requirement.
Safe Harbors
The Department of Health and Human Services (DHHS) established Safe Harbors for Protecting
Health Plans as part of the Medicare and Medicaid Patient and Program Protection Act of 1987.
Safe harbors protect certain individuals, providers, or entities from criminal prosecution and/or civil
sanctions (when certain requirements are met) for actions that appear to be unlawful or inappropriate
according to Medicare law. They include:
· Protection to enrollees for certain incentives (including waiver of coinsurance and deductible
amounts) paid by healthcare plans.
· Protection for certain negotiated price reduction agreements between healthcare plans and con-
tract healthcare providers.
Safe harbors are updated annually to consider changes to medical delivery systems and new financial
relationships.

Health Insurance Portability and Accountability Act

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) also known as the Ken-
nedy-Kasselbaum bill, was enacted on August 21, 1996. Among other provisions, the Act is de-
signed to protect health insurance coverage for workers and their families when they change or lose
their jobs. The Act also imposes significant changes to anti-fraud and abuse activities.
HIPAA includes provisions designed to save money for healthcare businesses by encouraging elec-
tronic transactions, but it also requires new safeguards to protect the security and confidentiality of
that information. The law gave Congress until August 21, 1999, to pass comprehensive health pri-
vacy legislation. When Congress did not enact such legislation after three years, the law required the
DHHS to craft such protections by regulation.
The HIPAA Privacy Rule, Standards for Privacy of Individually Identifiable Health Information,
took effect on April 14, 2001. As required by law, covered entities (health plans, healthcare clearing-
houses, and healthcare providers who conduct certain financial and administrative transactions elec-
tronically) have until April 14, 2003, to comply with the final rule’s provisions, except for small
health plans that have until April 14, 2004, to comply. All medical records and other individually

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identifiable health information used or disclosed by a covered entity in any form, whether electroni-
cally, on paper, or orally, are covered by the final rule.
Under the final rule, patients will have significant new rights to understand and control how their
health information is used. As required by the HIPAA law itself, stronger state laws continue to ap-
ply. These confidentiality protections are cumulative; the final rule will set a national “floor” of pri-
vacy standards, but in some states individuals will have additional protections.
The final rule will be enforced by the DHHS Office for Civil Rights (OCR). OCR will provide assis-
tance and guidance to covered entities in meeting the requirements of the HIPAA Privacy Rule. Ad-
ditional information is available at www.hhs.gov/ocr/hipaa on the Internet.

Balanced Budget Act of 1997

The BBA of 1997 changed various aspects of the Social Security Act, including anti-fraud and abuse
provisions and improvements to protect program integrity.
Permanent Exclusions
Medicare and state healthcare programs will exclude for at least 10 years an individual convicted on
one previous occasion of one or more healthcare related crimes for which a mandatory exclusion
could be imposed. Examples of such offenses are Medicare and state healthcare program-related
crimes, patient abuse, or felonies related to healthcare fraud or controlled substances. Individuals
who have been convicted on two or more previous occasions of such crimes are permanently ex-
cluded.
Authority to Refuse to Enter Into Agreements
The DHHS is authorized to:
· Refuse to enter into or renew an agreement.
· Terminate an agreement with a provider, if the provider has been convicted of a felony under
federal or State law for an offense that DHHS determines is inconsistent with the best interests of
the program or program beneficiaries.
Exclusion of Entity Controlled by Family Member
The DHHS is authorized to exclude from Medicare or any State healthcare program entities where a
person transfers ownership or control to an immediate family member or household member, in an-
ticipation of or following a conviction, assessment, or exclusion.
Imposition of Civil Monetary Penalties
Civil monetary penalties of up to $10,000 are enforced when a person arranges or contracts for the
provision of items or services with an individual or entity he or she knows or should know is ex-
cluded from a federal healthcare program. The individual or entity is also subject to an assessment of
up to three times the amount claimed and to exclusion from federal healthcare programs.
A civil monetary penalty of up to $50,000 plus up to three times the amount of remuneration offered,
paid, solicited, or received can be levied for each violation of the anti-kickback statute.
Anti-Fraud Message in Medicare Handbook
The Medicare & You Handbook for beneficiaries contains the following:
· A statement indicating that errors occur and that Medicare fraud, waste, and abuse are a signifi-
cant problem.

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· A statement encouraging beneficiaries to review their Medicare summary notices or statements

for accuracy and to report any errors or questionable charges.
· A description of the beneficiary’s right to request an itemized statement from his or her provider
for Medicare items and services.
· A description of the beneficiary Incentive Reward Program established under HIPAA.
· A DHHS OIG toll-free hotline number for fraud, waste, and abuse complaints and information.
Disclosure of Information and Surety Bonds
Durable medical equipment (DME) suppliers are required to disclose the identity of each person with
an ownership or controlling interest in the supplier or any subcontractor in which the supplier has a
direct or indirect ownership interest of five percent or more.
DME suppliers, home health agencies (HHAs), comprehensive outpatient rehabilitation facilities
(CORFs), and rehabilitation agencies are required to post a surety bond of at least $50,000.
Beneficiary Right to Itemized Statements
Medicare beneficiaries have the right to submit a written request to a physician or supplier for an
itemized statement of any Medicare item or service received. The physician or supplier must furnish
the itemized statement within 30 days of the request. Failure to provide the statement on time can
result in a civil monetary penalty of up to $100.00 for each occurrence. Medicare prohibits providers
from charging beneficiaries for itemized statements.

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Appendix Acknowledgements

APPENDIX
ACKNOWLEDGEMENTS

CMS acknowledges the excerpts provided by the following published resource materials:

PUBLISHED REFERENCE MATERIALS

American Medical Association, Current Procedural Terminology CPT 2003, Chicago, Ill., 2003
American Medical Association, International Classification of Diseases 9th Revision Clinical Modi-
fication ICD-9-CM Professional Code Book 2003, Chicago, Ill., 2003
U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Medi-
care Carriers Manual, Part III
U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Medi-
care Coverage Issues Manual
U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Medi-
care Part A Intermediary Manual
U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Medi-
care & You 2003, U.S. Government Printing Office, 2003

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Acknowledgements Appendix

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Appendix Resources

RESOURCES
The following resources are available to physicians by mail order, telephone, and the Internet.
Publications
The Current Procedural Terminology (CPT) book is a listing of descriptive terms and identifying
codes for recording medical services and procedures performed by physicians and is effective for the
current year.

Level I – CPT Book

American Medical Association
1-800-621-8335
www.amapress.org
The Healthcare Common Procedure Coding System (HCPCS) book contains national codes for re-
cording medical services and procedures performed by physicians and is effective for the current
year.

Level II – HCPCS Book

American Medical Association
1-800-621-8335
www.amapress.org
The International Classification of Diseases, 9th Revision, Clinical Management (ICD-9-CM) book
contains diagnosis codes effective for the current year.

ICD-9-CM Diagnosis Coding Book

American Medical Association
1-800-621-8335
www.amapress.org
Note: Medicare carriers annually update CPT and HCPCS codes within the Medicare processing
system. These changes are effective each year on January 1, and have a 90-day grace period (through
March 30). ICD-9-CM codes are also updated annually and become effective October 1 each year.

Correct Coding Initiative (CCI)

The Centers for Medicare & Medicaid Services (CMS) has designated National Technical Informa-
tion Services (NTIS) to publish CCI information. Subscriptions and single issues in various formats,
including CD-ROM, are available. Contact NTIS for subscription or purchase information at:
Web site www.ntis.gov/products/families/cci
Email helpdesk@fedworld.gov
Telephone 1-800-363-2068 (or 703-605-6060 in Washington, D.C. area)
Mailing address NTIS Subscriptions Department
5285 Port Royal Road
Springfield, VA 22161

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Resources Appendix

Medicare Part A and B Publications

All contractors are required to publish Medicare changes, local policy, and fee schedule updates on a
regular basis. All of these publications may be obtained by contacting your local Medicare Carrier.
· Local Medicare Carrier toll-free customer service phone numbers offer service representa-
tives that can provide clear answers to billing questions. A complete listing may be found at
www.cms.hhs.gov/medlearn/tollnums.asp on the Internet.

The Commerce Clearing House Guide to Medicare and Medicaid (CCH)

The CCH, Medicare and Medicaid Guide, is a complete resource for healthcare professionals and
suppliers of health services. It provides researchers with shortcuts to key information and quick ac-
cess to research tools such as Rapid Finder for Health Law. This publication is available on CD-
ROM and may be downloaded from the Internet. More information is available at:
Web site www.cch.com
Telephone 1-800-835-5224
Mailing address Commerce Clearing House, Inc
4025 West Peterson Ave.
Chicago, IL 60646
Web Sites

Free Medicare Education

CMS offers Medicare education for all Medicare physicians and staff. Free, downloadable, Web-
based courses are available at www.cms.gov/medlearn/cbts.asp on the Internet. Other free educa-
tional items such as VHS tapes and CD-ROMs are available at www.cms.hhs.gov/medlearn on the
Internet.
Additionally, education is available by satellite broadcast. For a list of available topics, times, and
host site locations, go to www.cms.hhs.gov/medlearn/broadcast.asp on the Internet.

Provider Enrollment
Enrollment information for suppliers and providers of Medicare services including forms and in-
structions on how to complete the forms are available at www.cms.hhs.gov/providers/enrollment on
the Internet.

Quality of Care
CMS is committed to improving the health and satisfaction of all beneficiaries through an integrated
quality improvement program. Information on many quality improvement initiatives is available at
www.cms.hhs.gov/quality on the Internet.

Medicare Premium Amounts for 2003

This information is available at the Medicare Web site at www.medicare.gov on the Internet.

DME Claims
Claims for supplies, orthotics, prosthetics, equipment, and certain injectables are submitted to the
Durable Medical Equipment Regional Carrier (DMERC). A list of DMERCs can be found at the fol-
lowing Web site at www.cms.hhs.gov/contacts/incardir.asp on the Internet.

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Appendix Resources

Form CMS-1500
Form CMS-1500 (for physician and supplier services) and other forms are available in various for-
mats from the U.S. Government Printing Office (GPO). The GPO may be contacted for purchase in-
formation at:
Web site http://bookstore.gpo.gov
Telephone 1-866-512-1800
Mailing address Superintendent of Documents
P.O. Box 371954
Pittsburgh, PA 15250-7954
Reporting Fraud and Abuse
To ask questions about fraud and abuse or to report suspected fraudulent or abusive activities, physi-
cians are encouraged to contact their Medicare contractor or the national Office of the Inspector
General (OIG) at the Department of Health and Human Services (DHHS):
Web site http://oig.hhs.gov/
Email HHTips@oig.dhhs.gov
Telephone 1-800-HHS-TIPS (1-800-447-8477) TTY (for the deaf): 1-800-377-4950
Facsimile 1-800-223-8164
Mailing address Office of Inspector General
Department of Health and Human Services
Attn: HOTLINE
330 Independence Ave., SW
Washington, D.C. 20201
Sanction Provider Lists
The Government Services Administration (GSA) debarment, exclusion, and suspension lists for all
federal agencies are available on the Internet. Go to: http://epls.arnet.gov and click on “EPLS Re-
ports Menu." This Web site will assist Medicare and Medicaid contractors in verifying the eligibility
of healthcare providers and entities seeking to participate in the Medicare and Medicaid Programs.
The DHHS/OIG sanctioned provider list is at http://exclusions.oig.hhs.gov on the Internet.
The documents issued by the OIG on compliance program guidance are published in the Federal
Register and are at http://oig.hhs.gov/modcomp/index.htm on the Internet.

Medicare Resident & New Physician Guide Page 145

Resources Appendix

Page 146 Medicare Resident & New Physician Guide

Appendix Forms

FORMS
Form CMS-1500 – Medicare Part B claim form (Page 149)
Form CMS-1450 (UB-92) – Medicare Part A claim form (Page 151)
Form CMS-460 – Medicare Participating Physician or Supplier Agreement (Page 153)
Form CMS-R-131-G – Advance Beneficiary Notice (Page 155)

Note: The following forms are provided as samples only and should not be reproduced or used as
originals. More information on the above listed forms can be obtained from the CMS Web site at
www.cms.hhs.gov/forms on the Internet.

Medicare Resident & New Physician Guide Page 147

Forms Appendix

Page 148 Medicare Resident & New Physician Guide

 Appendix Forms

PLEASE
DO NOT

CARRIER
STAPLE
IN THIS
AREA

PICA HEALTH INSURANCE CLAIM FORM PICA

1. MEDICARE MEDICAID CHAMPUS CHAMPVA GROUP FECA OTHER 1a. INSURED’S I.D. NUMBER (FOR PROGRAM IN ITEM 1)
HEALTH PLAN BLK LUNG
■ (Medicare #)
■ (Medicaid #) ■ (Sponsor’s SSN) ■ (VA File #) ■
2. PATIENT’S NAME (Last Name, First Name, Middle Initial)
(SSN or ID)
■ (SSN)
■ (ID) 4. INSURED’S NAME (Last Name, First Name, Middle Initial)
3. PATIENT’S BIRTH DATE
MM DD YY SEX
M ■ F ■
5. PATIENT’S ADDRESS (No., Street) 6. PATIENT RELATIONSHIP TO INSURED 7. INSURED’S ADDRESS (No., Street)

Self
■ Spouse
■ Child
■ Other
■
CITY STATE 8. PATIENT STATUS CITY STATE

PATIENT AND INSURED INFORMATION

ZIP CODE TELEPHONE (Include Area Code)
Single ■ Married ■ Other
■ ZIP CODE TELEPHONE (INCLUDE AREA CODE)

( ) Employed
■ Full-Time
Student ■
Part-Time
Student ■ ( )
9. OTHER INSURED’S NAME (Last Name, First Name, Middle Initial) 10. IS PATIENT’S CONDITION RELATED TO: 11. INSURED’S POLICY GROUP OR FECA NUMBER

a. OTHER INSURED’S POLICY OR GROUP NUMBER a. EMPLOYMENT? (CURRENT OR PREVIOUS) a. INSURED’S DATE OF BIRTH SEX
MM DD YY
■ YES ■ NO M
■ F
■
b. OTHER INSURED’S DATE OF BIRTH SEX b. AUTO ACCIDENT? PLACE (State) b. EMPLOYER’S NAME OR SCHOOL NAME
MM DD YY
M ■ F
■ ■ YES ■ NO
c. EMPLOYER’S NAME OR SCHOOL NAME c. OTHER ACCIDENT? c. INSURANCE PLAN NAME OR PROGRAM NAME

■ YES ■ NO
d. INSURANCE PLAN NAME OR PROGRAM NAME 10d. RESERVED FOR LOCAL USE d. IS THERE ANOTHER HEALTH BENEFIT PLAN?

READ BACK OF FORM BEFORE COMPLETING & SIGNING THIS FORM.

■ YES ■ NO If yes, return to and complete item 9 a-d.
13. INSURED’S OR AUTHORIZED PERSON’S SIGNATURE I authorize
12. PATIENT’S OR AUTHORIZED PERSON’S SIGNATURE I authorize the release of any medical or other information necessary payment of medical benefits to the undersigned physician or supplier for
to process this claim. I also request payment of government benefits either to myself or to the party who accepts assignment services described below.
below.

SIGNED DATE SIGNED

14. DATE OF CURRENT: ILLNESS (First symptom) OR 15. IF PATIENT HAS HAD SAME OR SIMILAR ILLNESS. 16. DATES PATIENT UNABLE TO WORK IN CURRENT OCCUPATION
MM DD YY INJURY (Accident) OR GIVE FIRST DATE MM DD YY MM DD YY MM DD YY
PREGNANCY(LMP) FROM TO
17. NAME OF REFERRING PHYSICIAN OR OTHER SOURCE 17a. I.D. NUMBER OF REFERRING PHYSICIAN 18. HOSPITALIZATION DATES RELATED TO CURRENT SERVICES
MM DD YY MM DD YY
FROM TO
19. RESERVED FOR LOCAL USE 20. OUTSIDE LAB? $ CHARGES

■ YES ■ NO
21. DIAGNOSIS OR NATURE OF ILLNESS OR INJURY. (RELATE ITEMS 1,2,3 OR 4 TO ITEM 24E BY LINE) 22. MEDICAID RESUBMISSION
CODE ORIGINAL REF. NO.

1. 3.
23. PRIOR AUTHORIZATION NUMBER

2. 4.
24. A B C D E F G H I J K

PHYSICIAN OR SUPPLIER INFORMATION

DATE(S) OF SERVICE Place Type PROCEDURES, SERVICES, OR SUPPLIES DAYS EPSDT RESERVED FOR
From To DIAGNOSIS OR Family EMG
of of (Explain Unusual Circumstances) CODE $ CHARGES COB LOCAL USE
MM DD YY MM DD YY Service Service CPT/HCPCS MODIFIER UNITS Plan

6
25. FEDERAL TAX I.D. NUMBER SSN EIN 26. PATIENT’S ACCOUNT NO. 27. ACCEPT ASSIGNMENT? 28. TOTAL CHARGE 29. AMOUNT PAID 30. BALANCE DUE
(For govt. claims, see back)
■■ ■ YES
■ NO $ $ $
31. SIGNATURE OF PHYSICIAN OR SUPPLIER 32. NAME AND ADDRESS OF FACILITY WHERE SERVICES WERE 33. PHYSICIAN’S, SUPPLIER’S BILLING NAME, ADDRESS, ZIP CODE
INCLUDING DEGREES OR CREDENTIALS RENDERED (If other than home or office) & PHONE #
(I certify that the statements on the reverse
apply to this bill and are made a part thereof.)

SIGNED DATE PIN# GRP#

(APPROVED BY AMA COUNCIL ON MEDICAL SERVICE 8/88) PLEASE PRINT OR TYPE APPROVED OMB-0938-0008 FORM CMS-1500 (12-90), FORM RRB-1500,
APPROVED OMB-1215-0055 FORM OWCP-1500, APPROVED OMB-0720-0001 (CHAMPUS)

Medicare Resident & New Physician Guide Page 149

Forms Appendix

BECAUSE THIS FORM IS USED BY VARIOUS GOVERNMENT AND PRIVATE HEALTH PROGRAMS, SEE SEPARATE INSTRUCTIONS ISSUED BY
APPLICABLE PROGRAMS.

NOTICE: Any person who knowingly files a statement of claim containing any misrepresentation or any false, incomplete or misleading information may
be guilty of a criminal act punishable under law and may be subject to civil penalties.

REFERS TO GOVERNMENT PROGRAMS ONLY

MEDICARE AND CHAMPUS PAYMENTS: A patient’s signature requests that payment be made and authorizes release of any information necessary to process
the claim and certifies that the information provided in Blocks 1 through 12 is true, accurate and complete. In the case of a Medicare claim, the patient’s signature
authorizes any entity to release to Medicare medical and nonmedical information, including employment status, and whether the person has employer group health
insurance, liability, no-fault, worker’s compensation or other insurance which is responsible to pay for the services for which the Medicare claim is made. See 42
CFR 411.24(a). If item 9 is completed, the patient’s signature authorizes release of the information to the health plan or agency shown. In Medicare assigned or
CHAMPUS participation cases, the physician agrees to accept the charge determination of the Medicare carrier or CHAMPUS fiscal intermediary as the full charge,
and the patient is responsible only for the deductible, coinsurance and noncovered services. Coinsurance and the deductible are based upon the charge
determination of the Medicare carrier or CHAMPUS fiscal intermediary if this is less than the charge submitted. CHAMPUS is not a health insurance program but
makes payment for health benefits provided through certain affiliations with the Uniformed Services. Information on the patient’s sponsor should be provided in those
items captioned in “Insured”; i.e., items 1a, 4, 6, 7, 9, and 11.
BLACK LUNG AND FECA CLAIMS
The provider agrees to accept the amount paid by the Government as payment in full. See Black Lung and FECA instructions regarding required procedure and
diagnosis coding systems.
SIGNATURE OF PHYSICIAN OR SUPPLIER (MEDICARE, CHAMPUS, FECA AND BLACK LUNG)
I certify that the services shown on this form were medically indicated and necessary for the health of the patient and were personally furnished by me or were furnished
incident to my professional service by my employee under my immediate personal supervision, except as otherwise expressly permitted by Medicare or CHAMPUS
regulations.
For services to be considered as “incident” to a physician’s professional service, 1) they must be rendered under the physician’s immediate personal supervision
by his/her employee, 2) they must be an integral, although incidental part of a covered physician’s service, 3) they must be of kinds commonly furnished in physician’s
offices, and 4) the services of nonphysicians must be included on the physician’s bills.
For CHAMPUS claims, I further certify that I (or any employee) who rendered services am not an active duty member of the Uniformed Services or a civilian employee
of the United States Government or a contract employee of the United States Government, either civilian or military (refer to 5 USC 5536). For Black-Lung claims,
I further certify that the services performed were for a Black Lung-related disorder.
No Part B Medicare benefits may be paid unless this form is received as required by existing law and regulations (42 CFR 424.32).
NOTICE: Any one who misrepresents or falsifies essential information to receive payment from Federal funds requested by this form may upon conviction be subject
to fine and imprisonment under applicable Federal laws.
NOTICE TO PATIENT ABOUT THE COLLECTION AND USE OF MEDICARE, CHAMPUS, FECA, AND BLACK LUNG INFORMATION
(PRIVACY ACT STATEMENT)
We are authorized by CMS, CHAMPUS and OWCP to ask you for information needed in the administration of the Medicare, CHAMPUS, FECA, and Black Lung
programs. Authority to collect information is in section 205(a), 1862, 1872 and 1874 of the Social Security Act as amended, 42 CFR 411.24(a) and 424.5(a) (6), and
44 USC 3101;41 CFR 101 et seq and 10 USC 1079 and 1086; 5 USC 8101 et seq; and 30 USC 901 et seq; 38 USC 613; E.O. 9397.
The information we obtain to complete claims under these programs is used to identify you and to determine your eligibility. It is also used to decide if the services
and supplies you received are covered by these programs and to insure that proper payment is made.
The information may also be given to other providers of services, carriers, intermediaries, medical review boards, health plans, and other organizations or Federal
agencies, for the effective administration of Federal provisions that require other third parties payers to pay primary to Federal program, and as otherwise necessary
to administer these programs. For example, it may be necessary to disclose information about the benefits you have used to a hospital or doctor. Additional disclosures
are made through routine uses for information contained in systems of records.
FOR MEDICARE CLAIMS: See the notice modifying system No. 09-70-0501, titled, ‘Carrier Medicare Claims Record,’ published in the Federal Register, Vol. 55
No. 177, page 37549, Wed. Sept. 12, 1990, or as updated and republished.
FOR OWCP CLAIMS: Department of Labor, Privacy Act of 1974, “Republication of Notice of Systems of Records,” Federal Register Vol. 55 No. 40, Wed Feb. 28,
1990, See ESA-5, ESA-6, ESA-12, ESA-13, ESA-30, or as updated and republished.
FOR CHAMPUS CLAIMS: PRINCIPLE PURPOSE(S): To evaluate eligibility for medical care provided by civilian sources and to issue payment upon establishment
of eligibility and determination that the services/supplies received are authorized by law.
ROUTINE USE(S): Information from claims and related documents may be given to the Dept. of Veterans Affairs, the Dept. of Health and Human Services and/or
the Dept. of Transportation consistent with their statutory administrative responsibilities under CHAMPUS/CHAMPVA; to the Dept. of Justice for representation of
the Secretary of Defense in civil actions; to the Internal Revenue Service, private collection agencies, and consumer reporting agencies in connection with recoupment
claims; and to Congressional Offices in response to inquiries made at the request of the person to whom a record pertains. Appropriate disclosures may be made
to other federal, state, local, foreign government agencies, private business entities, and individual providers of care, on matters relating to entitlement, claims
adjudication, fraud, program abuse, utilization review, quality assurance, peer review, program integrity, third-party liability, coordination of benefits, and civil and
criminal litigation related to the operation of CHAMPUS.
DISCLOSURES: Voluntary; however, failure to provide information will result in delay in payment or may result in denial of claim. With the one exception discussed
below, there are no penalties under these programs for refusing to supply information. However, failure to furnish information regarding the medical services rendered
or the amount charged would prevent payment of claims under these programs. Failure to furnish any other information, such as name or claim number, would delay
payment of the claim. Failure to provide medical information under FECA could be deemed an obstruction.
It is mandatory that you tell us if you know that another party is responsible for paying for your treatment. Section 1128B of the Social Security Act and 31 USC 3801-
3812 provide penalties for withholding this information.
You should be aware that P.L. 100-503, the “Computer Matching and Privacy Protection Act of 1988”, permits the government to verify information by way of computer
matches.
MEDICAID PAYMENTS (PROVIDER CERTIFICATION)
I hereby agree to keep such records as are necessary to disclose fully the extent of services provided to individuals under the State’s Title XIX plan and to furnish
information regarding any payments claimed for providing such services as the State Agency or Dept. of Health and Humans Services may request.
I further agree to accept, as payment in full, the amount paid by the Medicaid program for those claims submitted for payment under that program, with the exception
of authorized deductible, coinsurance, co-payment or similar cost-sharing charge.
SIGNATURE OF PHYSICIAN (OR SUPPLIER): I certify that the services listed above were medically indicated and necessary to the health of this patient and were
personally furnished by me or my employee under my personal direction.
NOTICE: This is to certify that the foregoing information is true, accurate and complete. I understand that payment and satisfaction of this claim will be from Federal and State
funds, and that any false claims, statements, or documents, or concealment of a material fact, may be prosecuted under applicable Federal or State laws.
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number.
The valid OMB control number for this information collection is 0938-0008. The time required to complete this information collection is estimated to average 10
minutes per response, including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information
collection. If you have any comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, N2-14-26, 7500
Security Boulevard, Baltimore, Maryland 21244-1850.

Page 150 Medicare Resident & New Physician Guide

 Appendix Forms

APPROVED OMB NO. 0938-0279

1
2 4 TYPE
ST11843 1PLY UB-92

3 PATIENT CONTROL NO.

OF BILL

5 FED. TAX NO. 6 STATEMENT COVERS PERIOD 7 COV D. 8 N-C D. 9 C-I D. 10 L-R D. 11
FROM THROUGH

12 PATIENT NAME 13 PATIENT ADDRESS

ADMISSION CONDITION CODES 31

14 BIRTHDATE 15 SEX 16 MS 17 DATE 18 HR 19 TYPE 20 SRC 21 D HR 22 STAT 23 MEDICAL RECORD NO. 24 25 26 27 28 29 30

32 OCCURRENCE 33 OCCURRENCE 34 OCCURRENCE 35 OCCURRENCE 36 OCCURRENCE SPAN 37

CODE DATE CODE DATE CODE DATE CODE DATE CODE FROM THROUGH A A
a B B
b C C
38 39 VALUE CODES 40 VALUE CODES 41 VALUE CODES
CODE AMOUNT CODE AMOUNT CODE AMOUNT
a a
b b
c c
d d
42 REV. CD. 43 DESCRIPTION 44 HCPCS / RATES 45 SERV. DATE 46 SERV. UNITS 47 TOTAL CHARGES 48 NON-COVERED CHARGES 49

1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 22
23 23
52 REL 53 ASG
50 PAYER 51 PROVIDER NO. INFO BEN 54 PRIOR PAYMENTS 55 EST. AMOUNT DUE 56

A
B
C
57 DUE FROM PATIENT
58 INSURED’S NAME 59 P. REL 60 CERT. - SSN - HIC. - ID NO. 61 GROUP NAME 62 INSURANCE GR OUP NO.
A A
B B
C C
63 TREATMENT AUTHORIZATION CODES 64 ESC 65 EMPLOYER NAME 66 EMPLOYER LOCATION

A A
B B
C C
OTHER DIAG. CODES
67 PRIN. DIAG. CD. 68 CODE 69 CODE 70 CODE 71 CODE 72 CODE 73 CODE 74 CODE 75 CODE 76 ADM. DIAG. CD. 77 E-CODE 78

79 P.C. 80 PRINCIPAL PROCEDURE 81 OTHER PROCEDURE OTHER PROCEDURE 82 ATTENDING PHYS. ID

CODE DATE CODE DATE CODE DATE

A B
OTHER PROCEDURE OTHER PROCEDURE OTHER PROCEDURE
A
CODE DATE CODE DATE CODE DATE
83 OTHER PHYS. ID a
C D E b
OTHER PHYS. ID
B
a 84 REMARKS a
b b
c 85 PROVIDER REPRESENTATIVE 86 DATE
d x
UB-92 HCFA-1450 OCR/ORIGINAL I CERTIFY THE CERTIFICATIONS ON THE REVERSE APPLY TO THIS BILL AND ARE MADE A PART HEREOF.

Medicare Resident & New Physician Guide Page 151

Forms
UNIFORM BILL: NOTICE: ANYONE WHO MISREPRESENTS OR FALSIFIES ESSENTIAL
INFORMATION REQUESTED BY THIS FORM MAY UPON CONVICTION BE
SUBJECT TO FINE AND IMPRISONMENT UNDER FEDERAL AND/OR STATE LAW.
Certifications relevant to the Bill and Information Shown on the Face
Hereof: Signatures on the face hereof incorporate the following
certifications or verifications where pertinent to this Bill:
1. If third party benefits are indicated as being assigned or in participation
status, on the face thereof, appropriate assignments by the insured/
beneficiary and signature of patient or parent or legal guardian
covering authorization to release information are on file.
Determinations as to the release of medical and financial information
should be guided by the particular terms of the release forms that
were executed by the patient or the patient’s legal representative.
The hospital agrees to save harmless, indemnify and defend any
insurer who makes payment in reliance upon this certification, from
and against any claim to the insurance proceeds when in fact no
valid assignment of benefits to the hospital was made.
2. If patient occupied a private room or required private nursing for
medical necessity, any required certifications are on file.
3. Physician’s certifications and re-certifications, if required by contract
or Federal regulations, are on file.
4. For Christian Science Sanitoriums, verifications and if necessary re-
verifications of the patient’s need for sanitorium services are on file.
5. Signature of patient or his/her representative on certifications,
authorization to release information, and payment request, as required
be Federal law and regulations (42 USC 1935f, 42 CFR 424.36, 10
USC 1071 thru 1086, 32 CFR 199) and, any other applicable contract
regulations, is on file.
6. This claim, to the best of my knowledge, is correct and complete and
is in conformance with the Civil Rights Act of 1964 as amended.
Records adequately disclosing services will be maintained and
necessary information will be furnished to such governmental
agencies as required by applicable law.
7. For Medicare purposes:
If the patient has indicated that other health insurance or a state
medical assistance agency will pay part of his/her medical expenses
and he/she wants information about his/her claim released to them
upon their request, necessary authorization is on file. The patient’s
signature on the provider’s request to bill Medicare authorizes any
holder of medical and non-medical information, including employment
status, and whether the person has employer group health insurance,
liability, no-fault, workers’ compensation, or other insurance which is
responsible to pay for the services for which this Medicare claim is
made.
8. For Medicaid purposes:
This is to certify that the foregoing information is true, accurate, and
complete.
I understand that payment and satisfaction of this claim will be
from Federal and State funds, and that any false claims, statements,
or documents, or concealment of a material fact, may be prosecuted
under applicable Federal or State Laws.
ESTIMATED CONTRACT BENEFITS
Page 152
Appendix
9.For CHAMPUS purposes:
This is to certify that:
(a) the information submitted as part of this claim is true, accurate and
complete, and, the services shown on this form were medically
indicated and necessary for the health of the patient;
(b) the patient has represented that by a reported residential address
outside a military treatment center catchment area he or she does not
live within a catchment area of a U.S. military or U.S. Public Health
Service medical facility, or if the patient resides within a catchment
area of such a facility, a copy of a Non-Availability Statement (DD
Form 1251) is on file, or the physician has certified to a medical
emergency in any assistance where a copy of a Non-Availability
Statement is not on file;
(c) the patient or the patient’s parent or guardian has responded directly
to the provider’s request to identify all health insurance coverages,
and that all such coverages are identified on the face the claim except
those that are exclusively supplemental payments to CHAMPUS-
determined benefits;
(d) the amount billed to CHAMPUS has been billed after all such coverages
have been billed and paid, excluding Medicaid, and the amount billed
to CHAMPUS is that remaining claimed against CHAMPUS benefits;
(e) the beneficiary’s cost share has not been waived by consent or failure
to exercise generally accepted billing and collection efforts; and,
(f) any hospital-based physician under contract, the cost of whose
services are allocated in the charges included in this bill, is not an
employee or member of the Uniformed Services. For purposes of this
certification, an employee of the Uniformed Services is an employee,
appointed in civil service (refer to 5 USC 2105), including part-time or
intermittent but excluding contract surgeons or other personnel
employed by the Uniformed Services through personal service
contracts. Similarly, member of the Uniformed Services does not apply
to reserve members of the Uniformed Services not on active duty.
(g) based on the Consolidated Omnibus Budget Reconciliation Act of
1986, all providers participating in Medicare must also participate in
CHAMPUS for inpatient hospital services provided pursuant to
admissions to hospitals occurring on or after January 1, 1987.
(h) if CHAMPUS benefits are to be paid in a participating status, I agree
to submit this claim to the appropriate CHAMPUS claims processor
as a participating provider. I agree to accept the CHAMPUS-
determined reasonable charge as the total charge for the medical
services or supplies listed on the claim form. I will accept the
CHAMPUS-determined reasonable charge even if it is less than the
billed amount, and also agree to accept the amount paid by CHAMPUS,
combined with the cost-share amount and deductible amount, if any,
paid by or on behalf of the patient as full payment for the listed medical
services or supplies. I will make no attempt to collect from the patient
(or his or her parent or guardian) amounts over the CHAMPUS-
determined reasonable charge. CHAMPUS will make any benefits
payable directly to me, if I submit this claim as a participating provider.
Medicare Resident & New Physician Guide
Appendix Forms

OMB No. 0938-0373

MEDICARE
PARTICIPATING PHYSICIAN OR SUPPLIER AGREEMENT
Physician or Supplier
Name(s) and Address of Participant* Identification Code(s)*

The above named person or organization, called "the participant," hereby enters into an agreement
with the Medicare program to accept assignment of the Medicare Part B payment for all services for
which the participant is eligible to accept assignment under the Medicare law and regulations and
which are furnished while this agreement is in effect.
1. Meaning of Assignment - For purposes of this agreement, accepting assignment of the
Medicare Part B payment means requesting direct Part B payment from the Medicare program.
Under an assignment, the approved charge, determined by the Medicare carrier, shall be the full
charge for the service covered under Part B. The participant shall not collect from the beneficiary or
other person or organization for covered services more than the applicable deductible and
coinsurance.
2. Effective Date - If the participant files the agreement with any Medicare carrier during the
enrollment period, the agreement becomes effective __________________.
3. Term and Termination of Agreement - This agreement shall continue in effect through
December 31 following the date the agreement becomes effective and shall be renewed
automatically for each 12-month period January 1 through December 31 thereafter unless one of the
following occurs:
a. During the enrollment period provided near the end of any calendar year, the
participant notifies in writing every Medicare carrier with whom the participant has filed the
agreement or a copy of the agreement that the participant wishes to terminate the agreement at the
end of the current term. In the event such notification is mailed or delivered during the enrollment
period provided near the end of any calendar year, the agreement shall end on December 31 of that
year.
b. The Centers for Medicare & Medicaid Services may find, after notice to and
opportunity for a hearing for the participant, that the participant has substantially failed to comply
with the agreement. In the event such a finding is made, the Centers for Medicare & Medicaid
Services will notify the participant in writing that the agreement will be terminated at a time
designated in the notice. Civil and criminal penalties may also be imposed for violation of the
agreement.

_________________________ ________________________ ___________

Signature of participant Title Date
(or authorized representative (if signer is authorized
of participating organization) representative of organization)

(including area code)

Office phone number

*List all names and identification codes under which the participant files claims with the carrier with
whom this agreement is being filed.
CMS-460 (10/02)
Medicare Resident & New Physician Guide Page 153
Forms Appendix

2
Received by
(name of carrier)
Effective date
Initials of carrier official

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0373. The time
required to complete this information collection is estimated to average 15 minutes per response, including the time to review
instructions, search existing data resources, gather the data needed and complete and review the information collection. If you have
any comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Baltimore, Maryland 21244-1850.

Page 154 Medicare Resident & New Physician Guide

Appendix Forms

Patient’s Name: Medicare # (HICN):

ADVANCE BENEFICIARY NOTICE (ABN)

NOTE: You need to make a choice about receiving these health care items or services.
We expect that Medicare will not pay for the item(s) or service(s) that are described below.
Medicare does not pay for all of your health care costs. Medicare only pays for covered items
and services when Medicare rules are met. The fact that Medicare may not pay for a particular
item or service does not mean that you should not receive it. There may be a good reason your
doctor recommended it. Right now, in your case, Medicare probably will not pay for –
Items or Services:

Because:

The purpose of this form is to help you make an informed choice about whether or not you
want to receive these items or services, knowing that you might have to pay for them yourself.
Before you make a decision about your options, you should read this entire notice carefully.
• Ask us to explain, if you don’t understand why Medicare probably won’t pay.
• Ask us how much these items or services will cost you (Estimated Cost: $_________________),
in case you have to pay for them yourself or through other insurance.

PLEASE CHOOSE ONE OPTION. CHECK ONE BOX. SIGN & DATE YOUR CHOICE.
… Option 1. YES.
I want to receive these items or services.
I understand that Medicare will not decide whether to pay unless I receive these items
or services. Please submit my claim to Medicare. I understand that you may bill me for
items or services and that I may have to pay the bill while Medicare is making its decision.
If Medicare does pay, you will refund to me any payments I made to you that are due to me.
If Medicare denies payment, I agree to be personally and fully responsible for payment.
That is, I will pay personally, either out of pocket or through any other insurance that I have.
I understand I can appeal Medicare’s decision.

… Option 2. NO. I have decided not to receive these items or services.

I will not receive these items or services. I understand that you will not be able to submit a
claim to Medicare and that I will not be able to appeal your opinion that Medicare won’t pay.

_____________ _ _________________________________________
Date Signature of patient or person acting on patient’s behalf

NOTE: Your health information will be kept confidential. Any information that we collect about you on this
form will be kept confidential in our offices. If a claim is submitted to Medicare, your health information on this form
may be shared with Medicare. Your health information which Medicare sees will be kept confidential by Medicare.
OMB Approval No. 0938-0566 Form No. CMS-R-131-G (June 2002)

Medicare Resident & New Physician Guide Page 155

Forms Appendix

Page 156 Medicare Resident & New Physician Guide

Appendix Glossary

GLOSSARY
A
Aberrancy – medical services that deviate from what is considered normal or typical when com-
pared to the national average
ABN – advance beneficiary notice
abuse – abuse describes practices that either directly or indirectly, result in unnecessary costs to the
Medicare Program. Many times abuse appears quite similar to fraud except that it is not possible to
establish that abusive acts were committed knowingly, willfully, and intentionally. Although these
types of practices may initially be categorized as abusive in nature, under certain circumstances they
may develop into fraud if there is evidence the subject was knowingly and willfully conducting an
abusive practice.
Act – usually refers to the Social Security Act
adjudication – process of determining whether a Medicare claim is paid
adjustment – additional payment or correction of records on a previously processed claim
administrative law judge (ALJ) – hears appeals of denied claims, as well as appeals from proposed
OIG exclusions
admission – entry to a hospital or other healthcare institution as an inpatient
advance beneficiary notice (ABN) – written notification to a patient, before a service is rendered,
that payment may be denied or reduced because the service may not be covered as medically reason-
able and necessary
advanced registered nurse practitioner (ARNP) – registered nurse who has advanced education
and clinical training in a health care specialty area
ALJ – administrative law judge
AMA – American Medical Association
ambulatory surgical center (ASC) – a freestanding facility, other than a hospital or physician’s of-
fice, where outpatient surgical and diagnostic services are provided.
ancillary services – professional services provided by a hospital or other inpatient health program,
other than room, board, and surgery (e.g., laboratory, X-ray, drugs)
American Medical Association (AMA) – a national association that develops and promotes medi-
cal practice, research, and education on behalf of patients and physicians.
appeal – an independent, critical examination of a claim made by carrier personnel not involved in
the initial claim determination. A request for a review may be made to the local Medicare carrier by
telephone or in writing. Physicians, beneficiaries or their representatives, providers or other suppli-
ers, may request appeals or reviews.
appellant – individual who appeals a claim decision
approved charge – allowed amount based on the Medicare fee schedule or its transition rules; non-
participating physician charges are subject to the limiting charge
ASC – ambulatory surgical center
assignment – physician, provider, or supplier agrees to accept the Medicare fee schedule amount as
payment in full for all covered services and the beneficiary agrees to have services paid directly to
the physician, provider, or supplier

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audit – process to ensure that Medicare reimburses providers based only on costs associated with
patient care

B
balance billing, excess charge – difference between billed amount and amount allowed by Medicare
Balanced Budget Act of 1997 (BBA) – law that changes sections of the Social Security Act, includ-
ing several anti-fraud and abuse provisions and improvements to protect program integrity
barium enema – suspension of barium sulfate injected into the lower bowel to render it radiopaque,
usually followed by injection of air to inflate the bowel and increase definition for the purposes of
identifying disorders or early signs of cancer
BBA – Balanced Budget Act of 1997
BCBSA – Blue Cross Blue Shield Association
beneficiary – person eligible to receive Medicare or Medicaid payment and/or services
beneficiary impersonation – use of lost, stolen, or otherwise obtained Medicare identification to
unlawfully procure Medicare benefits
benefit period – the measure of a Medicare beneficiary’s use of hospital and skilled nursing facility
services
billing service – company that, for a fee, furnishes billing, collection, and/or claim filing services for
physicians and/or suppliers
Blue Cross Blue Shield Association (BCBSA) – nonprofit corporation representing the Blue Cross
and Blue Shield plans on a national level as a coordinating agency in marketing, government rela-
tions, and other system wide initiatives; owns the Blue Cross Blue Shield mark and sets approval
standards
bone mass measurements – radiologic or radioisotopic procedure or other procedure that identifies
bone mass, detects bone loss, or determines bone quality

C
CAC – Carrier Advisory Committee
Carrier Advisory Committee (CAC) – a formal mechanism for physicians to be informed of and
participate in the development of a Local Medical Review Process in an advisory capacity. This
group also discusses ways to improve administrative policies that are within carrier discretion.
CAH – critical access hospital
calendar year (CY) – January 1 through December 31
capitation rate – fixed amount CMS pays to an approved managed care plan selected by an enrolled
Medicare beneficiary
carrier – CMS contractor that determines reasonable charges, accuracy, and coverage for Medicare
Part B services and processes Part B claims and payments
case management – arrangement of services needed to give proper healthcare to a beneficiary;
tracking of beneficiary’s use of facilities and resources
certified provider – physician, other individual, or entity meeting certain quality standards that pro-
vides outpatient self-management training services and other Medicare covered items and services
Centers for Medicare & Medicaid Services (CMS) – federal agency, part of DHHS; administers
and oversees the Medicare Program and a portion of the state Medicaid Program. Responsibilities
include managing contractor claims payment, fiscal audit and/or overpayment prevention and recov-

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ery, and developing and monitoring payment safeguards necessary to detect and respond to payment
errors or abusive patterns of service delivery.
CHAMPUS (TRICARE) – the healthcare program for active duty members of the military, military
retirees, and their eligible dependents. TRICARE was formerly known as CHAMPUS (Civilian
Health and Medical Program of the Uniformed Services).
claim – request for payment of Medicare benefits or services rendered by a provider or received by a
beneficiary
clearinghouse – an organization, usually national, that, for a fee, receives and sorts provider claims
and forwards them to the correct Medicare contractor or commercial insurer.
CLIA – Clinical Laboratory Improvement Amendments
Clinical Laboratory Improvement Amendments (CLIA) – 1988 legislation that set quality and
performance standards for all laboratory testing. CLIA standards are national and are not Medicare-
exclusive. CLIA applies to all providers rendering clinical laboratory and certain other diagnostic
services, whether or not claims are filed to Medicare.
CMHC – community mental health center
CMS – Centers for Medicare & Medicaid Services
coinsurance, copayment – amount that Medicare will not pay; the beneficiary or the beneficiary’s
supplemental insurance company is responsible for paying coinsurance to the physician
colonoscopy – endoscopic examination of the colon to identify disorders or early signs of cancer
colorectal cancer screening – various medical procedures or tests (see fecal occult blood test, sig-
moidoscopy, colonoscopy, or barium enema) to identify disorders or early signs of cancer of the gas-
trointestinal tract
community mental health center (CMHC) – facility that provides outpatient mental health services
to individuals residing within a specific geographic area
concurrent care – certain E/M services that are rendered by more than one physician with the same
or similar specialty on the same date of service
consultation – examination by an additional physician or specialist, at the request of a referring phy-
sician, the patient, or the patient’s family
contractor – state or private health insurer that processes Medicare claims and makes payments to
providers of services and to beneficiaries. See also carrier, durable medical equipment regional con-
tractor (DMERC), and intermediary
copayment – see coinsurance
covered services – reasonable and medically necessary services, rendered to Medicare or Medicaid
patients, and reimbursable to the provider or beneficiary
CPT – Current Procedural Terminology
critical access hospital (CAH) – established as part of the BBA Medicare Rural Hospital Flexibility
Program to replace the Essential Access Community and Rural Primary Care Hospital Programs
crossover claims – Medicare claims that are also covered by other insurance (e.g., Medigap, private
insurance)
Current Procedural Terminology (CPT) – system of uniform medical procedure codes to identify
specific healthcare services performed; developed by the AMA and used by most insurers and pro-
viders for billing purposes
CY – calendar year

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D
date of service – date a service was actually performed
deductible – amount a beneficiary must pay before Medicare begins to pay for covered services and
supplies
Department of Health and Human Services (DHHS) – administers many of the federal “social”
programs dealing with the health and welfare of citizens of the United States; parent agency of the
Centers for Medicare & Medicaid Services (CMS)
DG – documentation guidelines
DHHS – Department of Health and Human Services
Diabetes self-management training – program that educates patients in the successful self-
management of diabetes including education about treatment, diet, and exercise
diagnosis – identification of the patient’s condition, cause, or disease
diagnosis related group (DRG) – system that groups patients according to principal diagnosis, pres-
ence of a surgical procedure, age, presence or absence of significant complications, etc.
diagnostic examination – procedures used to discover the nature and underlying cause of an illness
digital rectal examination (DRE) – a clinical examination of an individual’s prostate for nodules or
other abnormalities
DME – durable medical equipment
DMERC – durable medical equipment regional contractor
documentation guidelines (DG) – criteria used when preparing or reviewing documentation for an
Evaluation and Management (E/M) service
DRG – diagnosis related group
duplicate claims – billing for the same service more than once; Medicare may remove physicians
who repeatedly submit duplicate claims from the electronic billing network
durable medical equipment (DME) – reusable medical equipment ordered by a physician for use in
a beneficiary’s home (e.g., walker, wheelchair, hospital bed)
durable medical equipment regional contractor (DMERC) – CMS contractor that provides
Medicare claims processing and payment of DME, prosthetics, orthotics, and supplies for a desig-
nated region of the country

E
EFT – electronic funds transfer
electronic funds transfer (EFT) – electronic transfer of Medicare payments directly to a provider’s
financial institution
electronic media claims (EMC) – transmission of claims via modem to the contractor, eliminating
mailroom processing and manual data entry; payment is released when CMS time requirements are
satisfied, resulting in a faster cash flow turnaround for providers
electronic remittance notice (ERN) – electronic summarized statement for providers, including
payment information for one or more beneficiaries; equivalent to the Medicare remittance notice
(MRN); see also Medicare remittance notice
eligible – qualified to receive benefits
eligibility date – starting date that benefits are available
EMC – electronic media claims
emergency – a situation in which a patient requires immediate medical intervention as a result of
severe, life-threatening, or potentially disabling conditions

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end-stage renal disease (ESRD) – kidney failure that is severe enough to require lifetime dialysis or
a kidney transplant; ESRD patients are eligible for Social Security payments if found to be disabled
enrollment – the means by which a person establishes membership in a program or group
entitlement – state of meeting all of the requirements for a particular Medicare benefit; the date of
entitlement begins at age 65 for most beneficiaries
ERN – electronic remittance notice
ESRD – end-stage renal disease
excess charge – see balance billing
exclusion – situation or condition where coverage is disallowed by a subscriber’s contract;
DHHS/OIG penalty imposed on a provider, prohibiting the individual from billing Medicare or other
government programs
exclusion list, sanctioned provider list – OIG list of providers, individuals, and entities that are ex-
cluded from Medicare reimbursement; includes identifying information about the sanctioned party,
specialty, notice date, sanction period, and sections of the Social Security Act used in arriving at the
determination to impose a sanction
experimental, investigative – any treatment, procedure, equipment, drug, drug usage, device, or
supply not generally recognized as accepted medical practice; includes services or supplies requiring
federal or other government approval not granted at the time services were rendered

F
False Claims Act – federal legislation that prohibits knowingly filing a false or fraudulent claim to
the government for payment, knowingly using a false record or statement to obtain payment on a
false or fraudulent claim paid by the government, and conspiring to defraud the government by get-
ting a false or fraudulent claim allowed or paid
fecal occult blood test – a guaiac-based test for peroxidase activity that the patient completes by tak-
ing samples from two different sites of three consecutive stools
Federal Employees Health Benefits (FEHB) Program – the largest private employer-sponsored
healthcare program in the country, with about 300 participating health insurance plans and over 8.7
million federal employees, retirees, and dependents.
FEHB – Federal Employees Health Benefits Program
fee-for-service – payment system where providers are paid a specific amount for each service ren-
dered
fee schedule, Medicare fee schedule (MFS) – complete list of medical procedure codes and the
maximum dollar amounts Medicare will allow for each service rendered for a beneficiary. MFS is
based on the calculation of several components, including relative value unit (RVU), which is based
on three factors: the physician’s work, overhead expenses, and malpractice insurance.
FI – fiscal intermediary
fiscal intermediary (FI) – CMS contractor that determines reasonable charges, accuracy, and cover-
age for Medicare Part A services and processes Part A claims and payments
fiscal year (FY) – October 1 through September 30, for Medicare Part A and B
fraud – Fraud is the intentional deception or misrepresentation that an individual knows to be false
or does not believe to be true and makes, knowing that the deception could result in some unauthor-
ized benefit to himself/herself or some other person.
FY – fiscal year

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G
gaps, Medicare gaps – costs or services that are not covered under the Medicare plan
global fee – combined technical (equipment) and professional (physician) charges or payment
glaucoma screening –dilated eye examination with an intraocular pressure measurement and a direct
ophthalmoscopy examination, or a slit-lamp biomicroscopic examination, to identify eye disorders or
early signs of glaucoma

H
HCPCS – Healthcare Common Procedure Coding System
Healthcare Common Procedure Coding System (HCPCS) – uniform method for providers and
suppliers to report professional services, procedures, and supplies. HCPCS includes CPT codes
(Level I), national alphanumeric codes (Level II), and local codes (Level III) assigned and maintained
by local Medicare contractors.
health insurance claim number (HIC/HICN) – unique alphanumeric Medicare entitlement number
assigned to a Medicare beneficiary; appears on the Medicare card
Health Insurance Portability and Accountability Act of 1996 (HIPAA) – also known as the Ken-
nedy-Kasselbaum bill enacted on August 21, 1996; designed to protect health insurance coverage for
workers and their families when they change or lose their jobs; imposes significant changes to anti-
fraud and abuse activities; includes provisions designed to save money for healthcare businesses by
encouraging electronic transactions and requiring new safeguards to protect the security and confi-
dentiality of patient health information.
health maintenance organization (HMO) – a form of health insurance combining a range of cov-
erage on a group basis; a group of doctors and other medical professionals offer care through the
HMO for a flat monthly rate with no deductibles; only visits to professionals within the HMO net-
work are covered by the policy, all visits; prescriptions and other care must be cleared by the HMO
in order to be covered.
health professional shortage area (HPSA) – medically under-served area of a state where physi-
cians receive a ten percent bonus payment for all professional physician services (i.e., services sub-
ject to the Medicare physician fee schedule)
Hearing Officer hearing – independent determination related to claims where a party has appealed
a review decision within six months of the date of notice of the decision; hearing is rendered by a
hearing officer assigned by the contractor; amount in controversy must be at least $100, which can
include more than one claim
Hepatitis B vaccine – preparation of killed microorganisms, living attenuated organisms, or living
fully virulent organisms that is administered to produce or artificially increase immunity to Hepatitis
B
HHA – home health agency
HI – Medicare Part A; see Hospital Insurance
HICN – health insurance claim number
HIPAA – Health Insurance Portability and Accountability Act of 1996
HMO – health maintenance organization
HPSA – health professional shortage area
home health agency (HHA) – public or private organization that specializes in giving in-home
skilled nursing and other therapeutic services, such as physical therapy

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homebound – normally unable to leave home; leaving home takes considerable and taxing effort;
patient may leave home for medical treatment or short, infrequent absences for nonmedical reasons,
like a trip to the barber
home healthcare – part-time healthcare services provided in the home for the treatment of an illness
or injury. Medicare pays for home care only if the type of care needed is skilled and required on an
intermittent basis and is intended to help people recover or improve from an illness, not to provide
unskilled services over a long period of time.
hospice – facility providing pain relief, symptom management, and supportive services to terminally
ill people and their families; eligible beneficiary must have a life expectancy of six months or less
hospital – institution with organized medical staff, permanent facilities that include inpatient beds,
medical services including physician services and continuous nursing services, to provide diagnosis
and treatment for patients with a variety of medical conditions, both surgical and nonsurgical
hospital based physician – doctor of medicine or osteopathy, salaried or unsalaried, under contract
or arrangement to provide services in a hospital setting, who renders treatment or services in the hos-
pital environment
hospital, special – institution with organized medical staff, permanent facilities that include inpa-
tient beds, medical services including physician services and continuous nursing services, to provide
definitive diagnosis and treatment for patients with specific needs, including obstetrics, tuberculosis,
psychiatry, physical medicine, rehabilitation, and similar specialized treatment
Hospital Insurance (HI) – also known as Medicare Part A under Title XVIII of the Social Security
Act, coverage is generally provided automatically, and free of premiums, to persons age 65 or over
who are eligible for Social Security or Railroad Retirement benefits, whether they have claimed the
monthly cash benefits or not, also certain government employees and certain disabled individuals
hotline – providers and the public are encouraged to ask questions or to report suspected fraudulent
or abusive activities; contact the local Medicare contractor or call the national DHHS/OIG hotline
directly at: 1-800-HHS-TIPS

I
ICD-9-CM – International Classification of Diseases, 9th Revision, Clinical Modification; a national
coding method to enable providers to effectively document the medical condition, symptom, or com-
plaint that is the basis for rendering a specific service.
“incident to” services – services rendered by employees of physicians or physician-directed clinics,
when the services provided are integral, though incidental, to the physician’s professional service
and are performed under direct supervision of the physician
influenza vaccine – a preparation of killed microorganisms, living attenuated organisms, or living
fully virulent organisms that is administered to produce or artificially increase immunity to influenza.
inpatient – individual who has been admitted at least overnight to a hospital or other health facility
for the purpose of receiving a diagnosis, treatment, or other health service
interactive telecommunication systems – multimedia communications equipment that permits real-
time communication between the distant site practitioner (i.e., where the expert physician or practi-
tioner is located at the time the service is provided) and the patient
intermediary, fiscal intermediary (FI) – CMS contractor that determines reasonable charges, accu-
racy, and coverage for Medicare Part A services and processes Part A claims and payments
inquiry – written request for information, usually pertaining to claim status or general information,
such as deductible or entitlement

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investigative, experimental – any treatment, procedure, equipment, drug, drug usage, device, or
supply not generally recognized as accepted medical practice; includes services or supplies requiring
federal or other government approval not granted at the time services were rendered

J
judicial review – part of the Medicare appeal process; if at least $1,000 remains in controversy fol-
lowing the Departmental Appeals Board decision, judicial review before a federal district court judge
can be considered

K
kickback – offering, soliciting, paying, or receiving remuneration for referrals of Medicare or Medi-
caid patients, or for referrals for services or items paid for, in whole or in part, by Medicare or Medi-
caid; prohibited by Anti-Kickback Statue

L
licensed physician – physician who is authorized to perform services within limitations imposed by
the state on the scope of practice; issuance by a state of a license to practice medicine constitutes le-
gal authorization; see also physician
lifetime reserve days – the nonrenewable, one-time bank of 60 days that a Medicare patient is given
to use when the covered days of a spell of illness are exhausted
limiting charge – maximum amount a nonparticipating physician may legally charge a Medicare
patient for services billed on nonassigned claims
LMRP – local medical review policy
local medical review policy (LMRP) – formal statement developed through a specific process that
defines a procedure or service and provides decision-making criteria for claim review and payment
decisions
long-term care – custodial care given at home or in a nursing home for people with chronic disabili-
ties and lengthy illnesses; not covered by Medicare

M
mammography screening – x-ray of examination of the breasts for early detection of cancer
managed care – system of providing healthcare that is designed to control costs through managed
care programs in which the physician accepts constraints on the amount charged for medical care and
the patient is limited in the choice of a physician (e.g., HMO, PPO)
Medicaid – Federal/State entitlement program under Title XIX of the Social Security Act that pays
for medical assistance for certain individuals and families with low incomes and resources; policies
for eligibility, services, and payment are complex and vary considerably, even among States of simi-
lar size or geographic proximity.
medical insurance, supplemental medical insurance (SMI) – also known as Medicare Part B un-
der Title XVIII of the Social Security Act, provides insurance coverage for services by physicians
and medical suppliers to persons age 65 or over who are eligible for Social Security or Railroad Re-
tirement benefits, whether they have claimed the monthly cash benefits or not, also certain govern-
ment employees and certain disabled individuals
MR – medical review

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medical nutrition therapy – refers to specific nutritional procedures including assessment and in-
terventions in the treatment of an illness, injury, or disease condition
medical review (MR) – review of services by contractor medical personnel; includes analysis of
claims data to identify potential billing problems resulting in inappropriate utilization situations; in-
cludes various plans of action to correct the problem
medically necessary services – services or supplies that are proper and needed for the diagnosis or
treatment of an illness or injury, meet standards of good medical practice, and are not provided for
the convenience of the patient or the doctor
Medicare – a federal health insurance program established by Congress through Title XVIII of the
Social Security Act (July 1, 1966) that provides medical coverage for people 65 or older, certain dis-
abled individuals, and most individuals with end-stage renal disease (ESRD)
Medicare-certified provider – physician, other individual, or entity meeting certain quality stan-
dards that provides outpatient self-management training services and other Medicare covered items
and services
Medicare + Choice – Part C of the Medicare Program; set of heath care options created by BBA;
“managed care” plan; includes HMO, POS, PSO, PPO, MSA, religious fraternal benefit society plan
(RFP), private fee-for-service plan
Medicare Part A – also known as Hospital Insurance (HI); coverage that is generally provided
automatically, and free of premiums, to persons age 65 or over who are eligible for Social Security or
Railroad Retirement benefits, whether they have claimed the monthly cash benefits or not, also cer-
tain government employees and certain disabled individuals
Medicare Part B – also known as medical insurance or supplemental medical insurance (SMI); pro-
vides insurance coverage for services by physicians and medical suppliers to persons age 65 or over
who are eligible for Social Security or Railroad Retirement benefits, whether they have claimed the
monthly cash benefits or not, also certain government employees and certain disabled individuals
Medicare Part C – Part C of the Medicare Program; set of heath care options created by BBA;
“managed care” plan; includes HMO, POS, PSO, PPO, MSA, religious fraternal benefit society plan
(RFP), private fee-for-service plan
Medicare remittance notice (MRN) – paper summarized statement for providers, including pay-
ment information for one or more beneficiaries; equivalent to the electronic remittance notice (ERN);
see also electronic remittance notice (ERN)
Medicare Secondary Payer (MSP) – the term used when Medicare is not responsible for paying
first on a claim; some individuals have other insurance or coverage that must pay before Medicare
pays (e.g., Employer Group Health Plan)
Medicare Summary Notice (MSN) – statement sent to a Medicare beneficiary that indicates how
Medicare processed the claim
Medicare trust funds – U.S. Department of Treasury accounts established by the Social Security
Act for the receipt of revenues, maintenance of reserves, and disbursement of payments for Medicare
Programs
Medigap – Medicare supplemental health insurance policies sold by private insurance companies
and designed to supplement, or fill “gaps” in, Medicare coverage; such policies usually, but not al-
ways, feature coverage of copayments and deductibles
MEDPARD Directory – state and county directory that contains names, addresses, and specialties
of Medicare participating physicians who have agreed to accept assignment on all Medicare claims
and covered services

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modifier – two-digit alphanumeric code used in conjunction with a procedure code to provide addi-
tional information about the service, may affect reimbursement of services
MRN – Medicare remittance notice
MSN – Medicare summary notice
MSP – Medicare Secondary Payer

N
nonassigned claim – type of claim that may only be filed by a nonparticipating Medicare physician;
when a claim is filed nonassigned the beneficiary is reimbursed directly
nonparticipating physician – physician who does not agree to accept Medicare’s allowed amount
as payment in full and may charge the beneficiary, up to the limiting charge, for the service(s); may
accept assignment of Medicare claims on a case-by-case basis
nonphysician practitioner – healthcare provider who meets state licensing requirements to provide
specific medical services. Medicare allows payment for services furnished by nonphysician practitio-
ners, including but not limited to advance registered nurse practitioners (ARNP), clinical nurse spe-
cialists (CNS), licensed clinical social workers (LCSW), physician assistants (PA), nurse midwives,
physical therapists, and audiologists
normal/reasonable – applying normal collection processes to Medicare as well as non-Medicare
patients

O
occupational therapy – various services and treatments provided to help a patient return to his or
her usual activities of daily living (e.g., bathing, preparing meals, and housekeeping) after an illness
or injury, either on an inpatient or outpatient basis
OCR – optical character recognition
Office of the Inspector General (OIG) – an organizational component of the Office of the Secre-
tary, DHHS; responsible for conducting and supervising audits, investigations, and inspections relat-
ing to the programs and operations of DHHS, including Medicare and Medicaid. OIG provides
leadership and coordination, recommends policies and corrective actions, prevents and detects fraud
and abuse in DHHS programs and operations, and is responsible for all DHHS criminal investiga-
tions, including Medicare fraud, whether committed by contractors, grantees, beneficiaries, or pro-
viders of service.
OIG – Office of the Inspector General
open enrollment period – the one opportunity each year when physicians may change participation
status for the following calendar year, usually in November
optical character recognition (OCR) – automated scanning process similar to scanners that read
price labels in grocery stores; some contractors use OCR to scan claims information for further proc-
essing
outpatient – patient who receives care at a hospital or other health facility without being admitted to
the facility; outpatient care also refers to care given in organized programs, such as outpatient clinics
overpayment – Medicare funds a physician, supplier or beneficiary has received in excess of
amounts due and payable under Medicare statute and regulations; the amount of the overpayment is a
debt owed to the United States Government

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P
PA – physician assistant
Pap smear, Papanicolaou test – used for early detection of cancer and precancerous cellular
changes
Part A – also known as hospital insurance (HI); coverage that is generally provided automatically,
and free of premiums, to persons age 65 or over who are eligible for Social Security or Railroad Re-
tirement benefits, whether they have claimed the monthly cash benefits or not, also certain govern-
ment employees and certain disabled individuals
Part B – also known as medical insurance or supplemental medical insurance (SMI); provides insur-
ance coverage for services by physicians and medical suppliers to persons age 65 or over who are
eligible for Social Security or Railroad Retirement benefits, whether they have claimed the monthly
cash benefits or not, also certain government employees and certain disabled individuals
Part C – Part C of the Medicare Program; set of heath care options created by BBA; “managed care”
plan; includes HMO, POS, PSO, PPO, MSA, religious fraternal benefit society plan (RFP), private
fee-for-service plan
Participation Program – Medicare Program in which a physician voluntarily enters into an agree-
ment to accept assignment for all services provided to Medicare patients
participating physician – physician who signs a participation agreement to accept assignment on all
claims submitted to Medicare
patient – person under treatment or care, by a physician or surgeon, or in a hospital
physical therapy – treatment of injury and disease by mechanical means (e.g., heat, light, exercise,
massage)
physician – individual licensed under state law to practice medicine or osteopathy
physician assistant (PA) – a specially trained and licensed individual who performs tasks usually
done by physicians and works under the direction of a supervising physician.
physician associate (PA) group – partnership, association, or corporation composed of two or more
physicians and/or nonphysician practitioners who wish to bill Medicare as a unit
PIN – provider identification number
place of service (POS) – where a service is performed, such as a hospital (inpatient or outpatient),
doctor’s office, or skilled nursing facility
plan of care – a physician’s written plan stating the kind(s) of service(s) and care a beneficiary needs
for his or her health problem
pneumococcal vaccine – a preparation of killed microorganisms, living attenuated organisms, or
living fully virulent organisms that is administered to produce or artificially increase immunity to
pneumonia
POS – place of service; point of service (Medicare + Choice option)
PPO – preferred provider organization
PPS – prospective payment system
preferred provider organization (PPO) – managed care plan in which the patient uses physicians,
hospitals, and providers that belong to a network
premium – the amount a beneficiary regularly pays to Medicare, an insurance company, or a health-
care plan for healthcare coverage
preventive care – services to keep a beneficiary healthy or to prevent illness, such as Pap smears,
mammograms, prostate and colorectal cancer screenings, and influenza and pneumonia vaccinations
primary payer – insurer (private or governmental) that pays first on a claim for medical care

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procedure – an established series of steps used to eliminate a health problem or to learn more about
it, such as surgery, tests, and inserting an intravenous line
procedure code – see Current Procedural Terminology (CPT)
professional component – diagnostic test situation where the physician interprets but does not per-
form the test
prognosis – prediction of a probable course of a disease and the chances of recovery
prosecute – to submit a charging document to a court; seek a grand jury indictment against person(s)
accused of committing criminal offenses
prospective payment system (PPS) – mandated by the Balanced Budget Act of 1997 (BBA);
changes Medicare payments from cost-based to prospective, based on national average capital costs
per case. PPS helps Medicare control its spending by encouraging providers to furnish care that is
efficient, appropriate, and typical of practice expenses for providers. Patients and resource needs are
statistically grouped, and the system is adjusted for patient characteristics that affect the cost of pro-
viding care. A unit of service is then established, with a fixed, predetermined amount for payment.
Prostate cancer screening tests – procedures or tests (e.g., digital rectal exam, prostate specific an-
tigen blood test) for the early detection of prostate cancer
Prostate Specific Antigen (PSA) – blood test, detects marker for adenocarcinoma of the prostate
provider – physician, healthcare professional, hospital, or healthcare facility approved to furnish
care to Medicare beneficiaries and to receive payment from Medicare
provider identification number (PIN) – unique individual billing number issued to a provider by
the local Medicare contractor, allowing the physician or patient to receive reimbursement for claims
filed to the contractor
PSA – prostate specific antigen
purchased diagnostic test – test, such as an EKG, X-ray, or ultrasound, purchased from an outside
supplier; the physician does not personally perform or supervise the test

Q
QIO – Quality Improvement Organization
Quality Improvement Organization (QIO) – organization contracting with CMS to review medi-
cal necessity and quality of care provided to Medicare beneficiaries
quality assurance – process of looking at how well a medical service is provided; may include for-
mally reviewing healthcare given, locating and correcting the problem, and checking to see if the
changes worked
qui tam – the “Whistle Blower,” or “qui tam” provision, allows any person having knowledge of a
false claim against the government to bring an action against the suspected wrongdoer on behalf of
the United States Government. A person who files a qui tam suit on behalf of the government is
known as a “relator” and may share a percentage of the recovery realized from a successful action.

R
referral – specialty, inpatient, outpatient, or laboratory services that are ordered or arranged, but not
furnished directly; approval from a beneficiary’s primary or other physician to see a specialist or get
certain services
remittance notice – summarized statement for providers, including payment information for one or
more beneficiaries

Page 168 Medicare Resident & New Physician Guide

Appendix Glossary

review of systems (ROS) – inventory of body systems obtained through a series of questions seek-
ing to identify signs and/or symptoms that the patient may be experiencing or has experienced
regional home health intermediary (RHHI) – organization that contracts with Medicare to pay
home health bills and to audit home health physicians
relator – person who files a qui tam suit on behalf of the government; see qui tam or Whistle Blower
reserve days – the nonrenewable, one-time bank of 60 days that a Medicare patient is given to use
when the covered days of a spell of illness are exhausted
resident – for Medicare purposes, a physician who is participating in an approved Graduate Medical
Education (GME) training program or one who is not in an approved program but who is authorized
to practice only in a hospital setting
restitution – court-ordered giving or returning of funds
review – an independent, critical examination of a claim made by carrier personnel not involved in
the initial claim determination; the request for a review may be made to the local Medicare carrier by
telephone or in writing
RHHI – regional home health intermediary
ROS – review of systems

S
sanction – situation or condition where coverage is disallowed by a subscriber’s contract;
DHHS/OIG penalty imposed on a provider, prohibiting the individual from billing Medicare or other
government programs
sanctioned provider list – OIG list of providers, individuals, and entities that are excluded from
Medicare reimbursement; includes identifying information about the sanctioned party, specialty, no-
tice date, sanction period, and sections of the Social Security Act used in arriving at the determina-
tion to impose a sanction
screening test – examination for early detection of a specific disease; Medicare pays for specific
routine screenings, such as Pap smears, mammograms, prostate cancer screenings, and colorectal
cancer screenings
sigmoidoscopy – process of using a sigmoidoscope to examine the sigmoid colon to identify disor-
ders or early signs of cancer
skilled nursing facility (SNF) – institution or distinct part of an institution having a transfer agree-
ment with one or more hospitals; primarily engaged in providing inpatient skilled nursing care or re-
habilitation services
SMI – supplemental medical insurance; Medicare Part B; see medical insurance
Social Security Administration (SSA) – federal agency that administers various programs funded
under the Social Security Act; determines eligibility for Medicare benefits
supplier – entity that provides medical items or equipment, such as a wheelchair or portable X-ray
supplemental insurance – policy purchased by a beneficiary to help pay charges, such as deducti-
bles, coinsurance, and excluded services, that Medicare does not pay
surrogate UPIN – used if no UPIN has been assigned to the ordering/referring physician; temporary,
except those of retired physicians; may be used only until an individual UPIN is assigned

T
technical component – diagnostic test situation where the physician performs the test but does not
interpret the results

Medicare Resident & New Physician Guide Page 169

Glossary Appendix

Title XVIII of the Social Security Act – statutory authority for the Medicare Program
Title XIX of the Social Security Act – statutory authority for the Medicaid Program
treatment – action taken to address or prevent a health problem
TRICARE – the healthcare program for active duty members of the military, military retirees, and
their eligible dependents. TRICARE was formerly known as CHAMPUS (Civilian Health and
Medical Program of the Uniformed Services).

U
Unique Physician/Practitioner Identification Number (UPIN) – six-character alphanumeric code,
assigned by CMS to each Medicare provider and used to identify a referring physician
United States, U.S. – for Medicare coverage purposes, the term United States means the 50 states,
the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa. For purposes of services furnished on a ship, it includes the
territorial waters adjoining the land areas of the United States.
unprocessable claim – claim that cannot be processed due to certain incomplete or incorrect infor-
mation
UPIN – Unique Physician/Practitioner Identification Number
utilization review – process of verifying medical necessity of services furnished or ordered by a
physician or other provider

V
vendor – individual or entity that provides hardware, software, and/or ongoing support services for
providers to file claims electronically to Medicare

W
certificate of waiver – issued to a laboratory to perform only waived tests (i.e., simple examinations
or procedures that use methodologies that are so simple and accurate that the likelihood of erroneous
results is negligible and poses no reasonable risk of harm to the patient if the test is performed incor-
rectly)
waiver of liability – provision of the Social Security Act, Sections 1842(1) and 1879, that protects
the patient from financial liability when Medicare denies or reduces payment for a service or item
based on it being considered as “not reasonable and necessary”; under this provision, the patient may
not be required to pay the provider for a service, if certain conditions are met
Whistle Blower – the “Whistle Blower,” or “qui tam” provision, allows any person having knowl-
edge of a false claim against the government to bring an action against the suspected wrongdoer on
behalf of the United States Government. A person who files a qui tam suit on behalf of the govern-
ment is known as a “relator” and may share a percentage of the recovery realized from a successful
action.

Page 170 Medicare Resident & New Physician Guide

Appendix
INDEX
A certificate, registration ..............................133
ABN for referrals or orders .......................112
ABN, modifiers.........................................112
ABN, specific criteria ...............................111
abuse .........................................................124
Administrative Law Judge (ALJ)..............110
advance notice to patient...........................111
aged insured ..................................................3
allowances, fee schedule .............................21
anti-fraud message in Medicare Handbook139
anti-fraud provisions .................................137
Anti-Kickback Statute...............................137
appeal, 1st level, review............................108
appeal, 2nd level, HO hearing ....................109
appeal, 3rd level, ALJ ................................110
appeal, 4th level, DAB...............................110
appeal, 5th level, federal judicial review ...110
appealing Medicare decisions ...................107
assigned claims .........................................107
assignment, examples .................................21
assistant surgeon .........................................55
Automated Response System (ARS) ........107
B compliance programs ................................121
Balanced Budget Act of 1997 ...................139
beneficiaries ..................................................3
beneficiary right to itemized statements ...140
Beneficiary rights ..........................................5
billing, duplicate .........................................31
billing, global ..............................................38
bone mass measurements ............................41
business relations and payment accuracy..115
C Correct Coding Initiative (CCI) ..................58
capitation rate..............................................18
Centers for Medicare & Medicaid Services
(CMS)........................................................9
Certificate of Medical Necessity (CMN) ....24
certificate, accreditation ............................133
certificate, compliance ..............................133
Medicare Resident & New Physician Guide
Index
certificate, PPMP ......................................133
certificate, waiver......................................133
certification forms .....................................120
certification, open-ended...........................120
chief complaint (CC).............................64, 75
Civil Monetary Penalties (CMP).......127, 139
civil prosecutions and penalties ................128
claims and filing methods ...........................23
claims, assigned ..........................................23
claims, duplicate .......................................117
claims, hiring someone to prepare ............119
claims, how to submit .................................23
claims, mandatory filing ...........................135
claims, nonassigned ....................................23
claims, processing .........................................7
CLIA certificates.......................................133
CLIA number ............................................134
CLIA quality standards .............................133
Clinical Laboratory Improvement
Amendments (CLIA).............................133
closing, relocating, change in status, or
changes in members ..............................118
compliance program, implementing .........122
concurrent care............................................36
conditional payments ..................................31
Congress........................................................8
consultations ...............................................35
contracting, private, with Medicare
beneficiaries ..........................................136
Contractors....................................................v
contractual arrangements ..........................120
corporate integrity agreements ..................131
corrective action, types of .........................101
co-surgeons .................................................55
counseling or coordination of care,
documentation .........................................71
criminal prosecutions and penalties ..........128
Customer Service Representative (CSR) ..107
Page 171
Index
D examination, cardiovascular .......................83
deductibles, Medicare and MSP claims ......31
denial of payment to a provider of service 130
denial of payment to a supplier .................130
denial of payment to an excluded party ....130
denial of payment to beneficiaries ............130
denial or revocation of application............127
Department of Health and Human Services
(DHHS) .....................................................9
Departmental Appeal Board (DAB)..........110
diabetes self-management services .............42
diagnoses or management options, number of
.................................................................67
diagnoses or management options, number of
.................................................................93
diagnostic tests, personally performed or
purchased.................................................38
diagnostic tests, professional component....39
diagnostic tests, purchased professional .....39
diagnostic tests, purchased technical ..........39
diagnostic tests, technical component.........38
disabled insured ............................................4
disclosure of information and surety bonds140
documentation guidelines-1995 ..................61
documentation guidelines-1997 ..................72
documentation, evaluation and management61
documentation, general principles-1995 .....61
documentation, general principles-1997 .....73
Durable Medical Equipment Regional Carrier
(DMERC) ..................................................7
E Government Services Administration (GSA)
E/M documentation, established patient .....98
E/M documentation, initial patient .............97
E/M service, components-1995 ..................62
E/M service, components-1997 ..................73
education ...................................................115
EKG and X-Ray interpretations ..................39
Electronic Claims Status (ECS) ..................25
Electronic Data Interchange (EDI)..............24
Electronic Funds Transfer (EFT) ................25
Electronic Remittance Advice (ERA).........25
eligibility, verifying.......................................6
End-Stage Renal Disease (ESRD) ................4
examination eye ..........................................85
Page 172
Appendix
examination, ear, nose, and throat ..............84
examination, general multi-system .............81
examination, genitourinary .........................86
examination,
hematologic/lymphatic/immunologic......87
examination, musculoskeletal .....................88
examination, neurological...........................89
examination, psychiatric .............................90
examination, respiratory..............................91
examination, skin ........................................92
examinations, documentation ...............65, 78
examinations, general multi-system............79
examinations, single organ system..............79
exclusion authority....................................129
exclusions, mandatory...............................129
exclusions, permanent...............................139
exclusions, permissive ..............................130
F
False Claims Act .......................................137
federal crime .............................................128
federal government .......................................8
fee schedule.................................................18
Form CMS-1500, filing ..............................25
fraud ..........................................................124
fraud and abuse, case examples ................125
G
global package.............................................56
global package, partial ................................56
...............................................................131
guidelines, teaching physicians.................134
H
Health Insurance Portability and
Accountability Act (HIPAA).................138
Health Professional Shortage Area (HPSA)20
Hearing Officer (HO) hearing, 2nd level ...109
hearing, filing a request.............................109
hearing, in-person......................................110
hearing, telephone .....................................110
hepatitis B vaccinations ..............................44
Medicare Resident & New Physician Guide
Appendix Index

hiring employees .......................................119 medical review, documentation ................104

history of present illness (HPI) .............64, 76 Medicare .......................................................v
history, documentation of .....................63, 74 Medicare + Choice........................................2
HO hearing, in-person...............................110 Medicare beneficiaries, identification...........6
HO hearing, telephone ..............................110 Medicare billing number, obtaining..........118
home care ....................................................34 Medicare cards ..............................................6
Hospital Insurance (HI).................................1 Medicare cards, lost or stolen ...................118
House of Representatives..............................8 Medicare eligibility.......................................3
how paper claim submission works ............25 Medicare managed care plan.........................7
Medicare numbers, RRB-issued ...................6
I Medicare Part A ............................................1
Incentive Reward Program (IRP)..............126 Medicare Part B ............................................2
incentives, financial ....................................20 Medicare Part B Physician Enrollment .......13
incident to....................................................34 Medicare Part C ............................................2
individual healthcare practitioners ..............13 Medicare physician, becoming....................11
influenza vaccinations, pneumococcal........43 Medicare premium amounts for 2003.........19
injections/drugs/biologicals ........................39 Medicare Secondary Payer (MSP) ..............29
inquiry .......................................................107 Medicare, overview of ..................................1
inquiry, appeal, waiver, and overpayment 107 Medigap ......................................................19
institution or other facility setting...............34 MEDPARD Directory.................................16
investigations ............................................128 modifier 24..................................................53
modifier 25..................................................53
J modifier 57..................................................53
modifier 58..................................................54
judicial review in federal court, 5th level ..110
modifier 78..................................................54
L modifier 79..................................................54

laboratory testing.......................................133 N
legislative issues affecting Medicare ........133
National Technical Information Services
liability, law ..............................................111
(NTIS) .....................................................59
limiting charge rules, exceptions ................21
nonassigned claims ...................................108
limiting charges and MSP claims ...............31
nonphysician practitioners ..........................12
limiting charges, calculating .......................21
limiting charges, notifying beneficiaries.....21 O
limits on charges .........................................21
Local Medical Review Policy (LMRP).....116 offers, free or discounted services.............118
Office of the Inspector General (OIG) ..........9
M On-the-Record (OTR) hearing ..................110
Optical Character Recognition (OCR)........26
mammogram. ..............................................44
opting out ..................................................136
managed care.................................................7
overpayment, interest collection ...............114
mandatory filing, claims ...........................135
overpayment, Medicare discovers.............113
mandatory filing, exceptions.....................136
overpayment, physician disagrees.............114
Medicaid ..................................................vi, 7
overpayment, physician responsibilities ...113
medical decision making, complexity of67, 93
overpayment, questions.............................114
medical review ............................................99
overpayments ............................113, 117, 126

Medicare Resident & New Physician Guide Page 173

Index Appendix

P Regional Home Health Intermediary (RHHI)7

reimbursement.............................................16
Pap tests ......................................................45
reimbursement, Medicare Part A ................16
Part A (hospital insurance)..........................19
reimbursement, Medicare Part B ................17
Part B (medical insurance)..........................19
reimbursement, Medicare Part B physician
Participation Program .................................15
services ....................................................21
participation status, changing......................16
reimbursement, when Medicare managed care
participation, benefits..................................16
plan doesn’t pay.........................................8
past, family and/or social history (PFSH) ...65,
reinstatement .............................................131
77
relator ........................................................125
physician collection from patients ..............18
remittance advice ........................................26
physician identification ...............................13
requests for additional information.............24
physician self-referral, Stark II laws .........137
residents and interns....................................11
physician services, Medicare Part B ...........33
review decision notification......................109
physician-directed group/clinic practice .....13
review of systems (ROS) ......................64, 76
physicians/suppliers ....................................12
Review, 1st level, appeal ..........................108
PIN, group member, change of address ......14
review, amount and/or complexity of data..68,
pneumococcal/influenza vaccinations.........43
94
policies, Part B ............................................33
review, automated prepayment .................102
preoperative services...................................52
review, complex........................................103
prepayment review ....................................102
review, postpayment .................................103
preventive services......................................40
review, pre- and postpayment ...................126
pricing schedule, facility fee .......................17
review, routine ..........................................102
primary care centers, exception.................135
risk of significant complications, morbidity,
procedure code selection...........................117
and/or mortality .................................68, 94
procedure, bilateral......................................54
Progressive Corrective Action (PCA).......100
S
prostate cancer screening tests and procedures
.................................................................49 safe harbors ...............................................138
protecting the Medicare trust fund ............123 sanctioned and reinstated provider lists ....131
Provider Identification Number (PIN) ........13 sanctions, exceptions.................................131
psychiatric services .....................................40 screening for colorectal cancer....................47
screening glaucoma services .......................49
Q screening mammography services ..............44
screening Pap tests ......................................45
Quality Improvement Organizations............vi
screening pelvic examination......................45
Quality Improvement Organizations (QIO) 10
Senate............................................................8
qui tam provision ......................................125
services Medicare does not pay for.............57
R services, bundled or basic allowance ..........58
services, common physician .......................35
railroad retirement beneficiaries ...................7 services, excluded .......................................57
reassignment of benefits......................14, 119 services, nonphysician practitioners............35
rectal examination, digital...........................49 services, not medically necessary................58
referral of patients and order of services...120 services, reasonable and necessary............111
referring physician, none.............................15 setting, office or physician-directed clinic ..34
refund of monies to patient .......................113 Social Security Administration (SSA) ..........9

Page 174 Medicare Resident & New Physician Guide

Appendix
specialties, physician/supplier.....................13
Stark II Laws, physician self-referral ........137
state government ...........................................9
statements, itemized..................................140
supplemental insurance (SI)........................19
supplemental medical insurance ...................2
surety bonds ..............................................140
surgery policies ...........................................52
surgery, dermatological...............................56
surgery, global, modifiers ...........................53
surgery, global, policy.................................52
surgery, multiple .........................................54
surgery, split care for...................................56
surgical teams..............................................56
surrogate, UPIN ..........................................15
suspension of payments ..........................127
T
table of risk ...........................................70, 96
telehealth services .......................................36
Medicare Resident & New Physician Guide
Index
the Medicare-Medicaid relationship ............vi
training program, approved, intern and
resident services furnished outside..........12
training program, outside approved, intern and
residents...................................................11
U
Unique Physician/Practitioner Identification
Number (UPIN).......................................14
United Mine Workers of America (UMWA)7
unprocessable claims ..................................27
updating beneficiary eligibility records.......31
UPIN, surrogate ..........................................15
W
whistle blower cases .................................125
X
X-Ray and EKG interpretations ..................39
Page 175
Article ID A22210
Number
Article
Article
Type
Key Article No

Article Title Teaching Physician Services

Primary Vermont
Geographic
Jurisdiction
Article 06/01/2004
Start Date
Article 06/01/2004
Revision
Effective
Date
Article Text Medical Review identified instances in which the documentation reflected
that the resident performed the services however; the teaching physician
did not document his/her presence and participation of the services, as
required by CMS. A teaching physician means a physician (other than
another resident) who involves residents in the care of his or her patients. A
teaching physician must personally document that they performed the
service or were physically present during the key or critical portions of the
service when performed by the resident and the participation of the
teaching physician in the management of the patient. A reference by the
resident that the teaching physician was present is not sufficient
documentation to indicate the presence, participation, or personal
performance of the teaching physician during an encounter. Claims for
teaching physician services involving the use of a resident must be
identified with a “GC” modifier. The modifier “GC” is used to indicate that
the service has been performed in part by a resident under the direction of
a teaching physician. For complete details regarding supervised physicians
in a teaching setting, view page 19-24 of the March 2003 Medicare B
Resource
http://www.medicarenhic.com/news/provider_news/ne_mbr/nemar03.pdf
Medicare Department of Health &
Human Services (DHHS)
Carriers Manual Centers for Medicare
Medicaid Services (CMS)
&

Part 3 - Claims Process

Transmittal 1780 Date: NOVEMBER 22, 2002

CHANGE REQUEST 2290

HEADER SECTION NUMBERS PAGES TO INSERT PAGES TO DELETE

15016 - 15018 15-9 - 15-12.6 (10 pp.) 15-9 - 15-12.5 (9 pp.)

NEW/REVISED MATERIAL--EFFECTIVE DATE: November 22, 2002

IMPLEMENTATION DATE: November 22, 2002

Section 15016, Supervising Physicians in Teaching Settings, is revised to clarify the documentation
requirements for evaluation and management (E/M) services billed by teaching physicians. The
revised language makes it clear that for E/M services, teaching physicians need not repeat
documentation already provided by a resident. In addition, the revisions clarify policies for services
involving students and other issues and update regulatory references.

DISCLAIMER: The revision date and transmittal number only apply to the redlined
material. All other material was previously published in the manual and is
only being reprinted.

These instructions should be implemented within your current operating budget.

CMS-Pub. 14-3
11-02 FEE SCHEDULE FOR PHYSICIANS’ SERVICES 15016

o Make fee schedule payments only for physicians' services to individual patients as
defined in §15014.C.1;
o The physician (or other entity) must make its books and records available to the
provider and the intermediary, as necessary, to verify the nature and extent of the costs of the
services furnished by the physician (or other entity); and
o The lessee's costs associated with producing these services, including overhead,
supplies, equipment, and the costs of employing nonphysician personnel are payable by the
intermediary as provider services. However, in the case of certain leasing arrangements involving
hospital radiology departments, see §15022.B.3.
15016 SUPERVISING PHYSICIANS IN TEACHING SETTINGS
A. Definitions.--For purposes of this section, the following definitions apply:
1. Resident means an individual who participates in an approved graduate medical
education (GME) program or a physician who is not in an approved GME program but who is
authorized to practice only in a hospital setting. The term includes interns and fellows in GME
programs recognized as approved for purposes of direct GME payments made by the fiscal
intermediary. Receiving a staff or faculty appointment or participating in a fellowship does not by
itself alter the status of “resident”. Additionally, this status remains unaffected regardless of whether
a hospital includes the physician in its full time equivalency count of residents.
2. A student means an individual who participates in an accredited educational program
(e.g., a medical school) that is not an approved GME program. A student is never considered to be
an intern or a resident. Medicare does not pay for any service furnished by a student. See Section C.
2 for a discussion concerning E/M service documentation performed by students.
3. Teaching physician means a physician (other than another resident) who involves
residents in the care of his or her patients.
4. Direct medical and surgical services mean services to individual patients that are
either personally furnished by a physician or furnished by a resident under the supervision of a
physician in a teaching hospital making the reasonable cost election for physician services furnished
in teaching hospitals. All payments for such services are made by the fiscal intermediary for the
hospital.
5. Teaching hospital means a hospital engaged in an approved GME residency program
in medicine, osteopathy, dentistry, or podiatry.
6. Teaching setting means any provider, hospital-based provider, or nonprovider setting
in which Medicare payment for the services of residents is made by the fiscal intermediary under the
direct graduate medical education payment methodology or freestanding SNF or HHA in which such
payments are made on a reasonable cost basis.
7. Critical or key portion means that part (or parts) of a service that the teaching
physician determines is (are) a critical or key portion(s). For purposes of this section, these terms are
interchangeable.
8. Documentation means notes recorded in the patient’s medical records by a resident,
and/or teaching physician or others as outlined in specific situations (section C) regarding the service
furnished. Documentation may be dictated and typed, hand-written or computer-generated, and
typed or handwritten. Documentation must be dated and include a legible signature or identity.
Pursuant to 42 CFR 415.172(b), documentation must identify, at a minimum, the service furnished,

Rev. 1780 15-9

15016 (Cont.) FEE SCHEDULE FOR PHYSICIANS' SERVICES 11-02

the participation of the teaching physician in providing the service, and whether the teaching
physician was physically present.
9. Physically present means that the teaching physician is located in the same room (or
partitioned or curtained area, if the room is subdivided to accommodate multiple patients) as the
patient and/or performs a face-to-face service.
B. Payment for Teaching Physicians.--Pursuant to 42 CFR 415.170, pay for physician
services provided in teaching settings using the physician fee schedule only if:
1. Services are personally furnished by a physician who is not a resident;
2. A teaching physician was physically present during the critical or key portions of the
service that a resident performs subject to the exceptions as provided below in Section C; or
3. A teaching physician provides care under the conditions contained in Section C. 3.
which follows.
In all situations, the services of the resident are payable through either the direct GME payment or
reasonable cost payments made by the fiscal intermediary.
C. General Documentation Instructions and Common Scenarios.--
1. Evaluation and Management (E/M) Services.--For a given encounter, the selection of
the appropriate level of E/M service should be determined according to the code definitions in the
American Medical Association’s Current Procedural Terminology (CPT) and any applicable
documentation guidelines.
For purposes of payment, E/M services billed by teaching physicians require that they personally
document at least the following:
a. That they performed the service or were physically present during the key or
critical portions of the service when performed by the resident; and
b. The participation of the teaching physician in the management of the patient.
When assigning codes to services billed by teaching physicians, reviewers will combine the
documentation of both the resident and the teaching physician.
Documentation by the resident of the presence and participation of the teaching physician is not
sufficient to establish the presence and participation of the teaching physician.
On medical review, the combined entries into the medical record by the teaching physician and the
resident constitute the documentation for the service and together must support the medical necessity
of the service.
Following are three common scenarios for teaching physicians providing E/M services:
Scenario 1.--
The teaching physician personally performs all the required elements of an E/M service without a
resident. In this scenario the resident may or may not have performed the E/M service
independently.
• In the absence of a note by a resident, the teaching physician must document as he or she
would document an E/M service in a non-teaching setting.

15-10 Rev. 1780

11-02 FEE SCHEDULE FOR PHYSICIANS’ SERVICES 15016 (Cont.)

• Where a resident has written notes, the teaching physician’s note may reference the
resident’s note. The teaching physician must document that he or she performed the critical or key
portion(s) of the service and that he or she was directly involved in the management of the patient.
For payment, the composite of the teaching physician’s entry and the resident’s entry together must
support the medical necessity of the billed service and the level of the service billed by the teaching
physician.
Scenario 2.--
The resident performs the elements required for an E/M service in the presence of, or jointly with,
the teaching physician and the resident documents the service. In this case, the teaching physician
must document that he or she was present during the performance of the critical or key portion(s) of
the service and that he or she was directly involved in the management of the patient. The teaching
physician’s note should reference the resident’s note. For payment, the composite of the teaching
physician’s entry and the resident’s entry together must support the medical necessity and the level
of the service billed by the teaching physician.
Scenario 3.--
The resident performs some or all of the required elements of the service in the absence of the
teaching physician and documents his/her service. The teaching physician independently performs
the critical or key portion(s) of the service with or without the resident present and, as appropriate,
discusses the case with the resident. In this instance, the teaching physician must document that he
or she personally saw the patient, personally performed critical or key portions of the service, and
participated in the management of the patient. The teaching physician’s note should reference the
resident’s note. For payment, the composite of the teaching physician’s entry and the resident’s
entry together must support the medical necessity of the billed service and the level of the service
billed by the teaching physician.
Following are examples of minimally acceptable documentation for each of these scenarios:
Scenario 1.--
Admitting Note: “I performed a history and physical examination of the patient and discussed his
management with the resident. I reviewed the resident’s note and agree with the documented
findings and plan of care.”
Follow-up Visit: “Hospital Day #3. I saw and evaluated the patient. I agree with the findings
and the plan of care as documented in the resident’s note.”
Follow-up Visit: “Hospital Day #5. I saw and examined the patient. I agree with the resident’s
note except the heart murmur is louder, so I will obtain an echo to evaluate.”
(NOTE: In this scenario if there are no resident notes, the teaching physician must document as
he/she would document an E/M service in a non-teaching setting.)
Scenario 2.--
Initial or Follow-up Visit: “I was present with resident during the history and exam. I discussed the
case with the resident and agree with the findings and plan as documented in the resident’s note.”
Follow-up Visit: “I saw the patient with the resident and agree with the resident’s findings and
plan.”

Rev. 1780 15-11

15016 (Cont.) FEE SCHEDULE FOR PHYSICIANS’ SERVICES 11-02
Scenario 3.--
Initial Visit: “I saw and evaluated the patient. I reviewed the resident’s note and agree, except that
picture is more consistent with pericarditis than myocardial ischemia. Will begin NSAIDs.”
Initial or Follow-up Visit: “I saw and evaluated the patient. Discussed with resident and agree
with resident’s findings and plan as documented in the resident’s note.”
Follow-up Visit: “See resident’s note for details. I saw and evaluated the patient and agree with
the resident’s finding and plans as written.”
Follow-up Visit: “I saw and evaluated the patient. Agree with resident’s note but lower extremities
are weaker, now 3/5; MRI of L/S Spine today.”
Following are examples of unacceptable documentation:
• “Agree with above.”, followed by legible countersignature or identity;
• “Rounded, Reviewed, Agree.”, followed by legible countersignature or identity;
• “Discussed with resident. Agree.”, followed by legible countersignature or identity;
• “Seen and agree.”, followed by legible countersignature or identity;
• “Patient seen and evaluated.”, followed by legible countersignature or identity; and
• A legible countersignature or identity alone.
Such documentation is not acceptable, because the documentation does not make it possible to
determine whether the teaching physician was present, evaluated the patient, and/or had any
involvement with the plan of care.
2. E/M Service Documentation Provided By Students.--Any contribution and
participation of a student to the performance of a billable service (other than the review of systems
and/or past family/social history which are not separately billable, but are taken as part of an E/M
service) must be performed in the physical presence of a teaching physician or physical presence of a
resident in a service meeting the requirements set forth in this section for teaching physician billing.
Students may document services in the medical record. However, the documentation of an E/M
service by a student that may be referred to by the teaching physician is limited to documentation
related to the review of systems and/or past family/social history. The teaching physician may not
refer to a student’s documentation of physical exam findings or medical decision making in his or
her personal note. If the medical student documents E/M services, the teaching physician must
verify and redocument the history of present illness as well as perform and redocument the physical
exam and medical decision making activities of the service.
3. Exception for E/M Services Furnished in Certain Primary Care Centers.--Teaching
physicians providing E/M services with a GME program granted a primary care exception may bill
Medicare for lower and mid-level E/M services provided by residents. For the E/M codes listed
below, teaching physicians may submit claims for services furnished by residents in the absence of a
teaching physician:
New Patient Established Patient
99201 99211
99202 99212
99203 99213

15-12 Rev. 1780

11-02 FEE SCHEDULE FOR PHYSICIANS' SERVICES 15016 (Cont.)

If a service other than those listed above needs to be furnished, then the general teaching physician
policy set forth in section B applies. For this exception to apply, a center must attest in writing that
all the following conditions are met for a particular residency program. Prior approval is not
necessary, but centers exercising the primary care exception must maintain records demonstrating
that they qualify for the exception.
The services must be furnished in a center located in the outpatient department of a hospital or
another ambulatory care entity in which the time spent by residents in patient care activities is
included in determining direct GME payments to a teaching hospital by the hospital’s fiscal
intermediary. This requirement is not met when the resident is assigned to a physician’s office away
from the center or makes home visits. In the case of a nonhospital entity, verify with the fiscal
intermediary that the entity meets the requirements of a written agreement between the hospital and
the entity set forth in 42 CFR 413.86(f)(4) (ii).
Under this exception, residents providing the billable patient care service without the physical
presence of a teaching physician must have completed at least 6 months of a GME approved
residency program. Centers must maintain information under the provisions at 42 CFR 413.86(i).
Teaching physicians submitting claims under this exception may not supervise more than four
residents at any given time and must direct the care from such proximity as to constitute immediate
availability. The teaching physician must:
o Not have other responsibilities (including the supervision of other personnel) at the time
the service was provided by the resident;
o Have the primary medical responsibility for patients cared for by the residents;
o Ensure that the care provided was reasonable and necessary;
o Review the care provided by the resident during or immediately after each visit. This
must include a review of the patient’s medical history, the resident’s findings on physical
examination, the patient’s diagnosis, and treatment plan (i.e., record of tests and therapies) and
o Document the extent of his/her own participation in the review and direction of the
services furnished to each patient.
Patients under this exception should consider the center to be their primary location for health care
services. The residents must be expected to generally provide care to the same group of established
patients during their residency training. The types of services furnished by residents under this
exception include:
o Acute care for undifferentiated problems or chronic care for ongoing conditions including
chronic mental illness;
o Coordination of care furnished by other physicians and providers; and
o Comprehensive care not limited by organ system or diagnosis.
Residency programs most likely qualifying for this exception include family practice, general
internal medicine, geriatric medicine, pediatrics, and obstetrics/gynecology.
Certain GME programs in psychiatry may qualify in special situations such as when the program
furnishes comprehensive care for chronically mentally ill patients. These would be centers in which
the range of services the residents are trained to furnish, and actually do furnish, include
comprehensive medical care as well as psychiatric care. For example, antibiotics are being
prescribed as well as psychotropic drugs.

Rev. 1780 15-12.1

15016 (Cont.) FEE SCHEDULE FOR PHYSICIANS’ SERVICES 11-02
4. Procedures.--In order to bill for surgical, high-risk, or other complex procedures, the
teaching physician must be present during all critical and key portions of the procedure and be
immediately available to furnish services during the entire procedure.
a. Surgery (Including Endoscopic Operations).--The teaching surgeon is
responsible for the preoperative, operative, and post-operative care of the beneficiary. The teaching
physician’s presence is not required during the opening and closing of the surgical field unless these
activities are considered to be critical or key portions of the procedure. The teaching surgeon
determines which post-operative visits are considered key or critical and require his or her presence.
If the post-operative period extends beyond the patient’s discharge and the teaching surgeon is not
providing the patient’s follow-up care, then instructions on billing for less than the global package in
§4824.B apply. During non-critical or non-key portions of the surgery, if the teaching surgeon is not
physically present, he or she must be immediately available to return to the procedure, i.e., he or she
cannot be performing another procedure. If circumstances prevent a teaching physician from being
immediately available, then he/she must arrange for another qualified surgeon to be immediately
available to assist with the procedure, if needed.
(1) Single Surgery.--When the teaching surgeon is present for the entire
surgery, his or her presence may be demonstrated by notes in the medical records made by the
physician, resident, or operating room nurse. For purposes of this teaching physician policy, there is
no required information that the teaching surgeon must enter into the medical records.
(2) Two Overlapping Surgeries.--In order to bill Medicare for two overlapping
surgeries, the teaching surgeon must be present during the critical or key portions of both operations.
Therefore, the critical or key portions may not take place at the same time. When all of the key
portions of the initial procedure have been completed, the teaching surgeon may begin to become
involved in a second procedure. The teaching surgeon must personally document in the medical
record that he/she was physically present during the critical or key portion(s) of both procedures
When a teaching physician is not present during non-critical or non-key portions of the procedure
and is participating in another surgical procedure, he or she must arrange for another qualified
surgeon to immediately assist the resident in the other case should the need arise. In the case of
three concurrent surgical procedures, the role of the teaching surgeon (but not anesthesiologist) in
each of the cases is classified as a supervisory service to the hospital rather than a physician service
to an individual patient and is not payable under the physician fee schedule.
(3) Minor Procedures.--For procedures that take only a few minutes (5 minutes
or less) to complete, e.g., simple suture, and involve relatively little decision making once the need
for the operation is determined, the teaching surgeon must be present for the entire procedure in
order to bill for the procedure.
b. Anesthesia.--Pay an unreduced fee schedule payment if a teaching
anesthesiologist is involved in a single procedure with one resident. The teaching physician must
document in the medical records that he or she was present during all critical (or key) portions of the
procedure. The teaching physician’s physical presence during only the preoperative or post-
operative visits with the beneficiary is not sufficient to receive Medicare payment. If an
anesthesiologist is involved in concurrent procedures with more than one resident or with a resident
and a nonphysician anesthetist, pay for the anesthesiologist’s services as medical direction.
c. Endoscopy Procedures.--To bill Medicare for endoscopic procedures (excluding
endoscopic surgery that follows the surgery policy in subsection a), the teaching physician must be
present during the entire viewing. The entire viewing starts at the time of insertion of the endoscope
and ends at the time of removal of the endoscope. Viewing of the entire procedure through a
monitor in another room does not meet the teaching physician presence requirement.
5. Interpretation of Diagnostic Radiology and Other Diagnostic Tests.--Medicare pays
for the interpretation of diagnostic radiology and other diagnostic tests if the interpretation is
performed by or reviewed with a teaching physician.
15-12.2 Rev. 1780
11-02 FEE SCHEDULE FOR PHYSICIANS' SERVICES 15016 (Cont.)
If the teaching physician’s signature is the only signature on the interpretation, Medicare assumes
that he or she is indicating that he or she personally performed the interpretation. If a resident
prepares and signs the interpretation, the teaching physician must indicate that he or she has
personally reviewed the image and the resident’s interpretation and either agrees with it or edits the
findings. Medicare does not pay for an interpretation if the teaching physician only countersigns the
resident’s interpretation.
6. Psychiatry.--The general teaching physician policy set forth in section B applies to
psychiatric services. For certain psychiatric services, the requirement for the presence of the
teaching physician during the service may be met by concurrent observation of the service through
the use of a one-way mirror or video equipment. Audio-only equipment does not satisfy to the
physical presence requirement. In the case of time-based services, such as individual medical
psychotherapy, see subsection 8 below.
Further, the teaching physician supervising the resident must be a physician, i.e., the Medicare
teaching physician policy does not apply to psychologists who supervise psychiatry residents in
approved GME programs.
7. Time-Based Codes.--For procedure codes determined on the basis of time, the
teaching physician must be present for the period of time for which the claim is made. For example,
pay for a code that specifically describes a service of from 20 to 30 minutes only if the teaching
physician is present for 20 to 30 minutes. Do not add time spent by the resident in the absence of the
teaching physician to time spent by the resident and teaching physician with the beneficiary or time
spent by the teaching physician alone with the beneficiary. Examples of codes falling into this
category include:
o Individual medical psychotherapy (CPT codes 90804- 90829);
o Critical care services (CPT codes 99291-99292);
o Hospital discharge day management (CPT codes 99238-99239);
o E/M codes in which counseling and/or coordination of care dominates (more
than 50 percent) of the encounter, and time is considered the key or controlling factor to qualify for a
particular level of E/M service;
o Prolonged services (CPT codes 99358-99359), and
o Care plan oversight (HCPCS codes G0181 - G0182).
8. Other Complex or High-Risk Procedures.--In the case of complex or high-risk
procedures for which national Medicare policy, local policy, or the CPT description indicate that the
procedure requires personal (in person) supervision of its performance by a physician, pay for the
physician services associated with the procedure only when the teaching physician is present with
the resident. The presence of the resident alone would not establish a basis for fee schedule payment
for such services. These procedures include interventional radiologic and cardiologic supervision
and interpretation codes, cardiac catheterization, cardiovascular stress tests, and transesophageal
echocardiography.
9. Miscellaneous.--In the case of maternity services furnished to Medicare eligible
women, apply the physician presence requirement for both types of delivery as you would for
surgery. In order to bill Medicare for the procedure, the teaching physician must be present for the
delivery. These procedure codes are somewhat different from other surgery codes in that there are
separate codes for global obstetrical care (prepartum, delivery, and postpartum) and for deliveries
only.

Rev. 1780 15-12.3

15016 (Cont.) FEE SCHEDULE FOR PHYSICIANS’ SERVICES 11-02
In situations in which the teaching physician’s only involvement was at the time of delivery, the
teaching physician should bill the delivery only code. In order to bill for the global procedures, the
teaching physician must be present for the minimum indicated number of visits when such a number
is specified in the description of the code. This policy differs from the policy on general surgical
procedures under which the teaching physician is not required to be present for a specified number
of visits.
Do not apply the physician presence policy to renal dialysis services of physicians who are paid
under the physician monthly capitation payment method.
D. Election of Costs for Services of Physicians in Teaching Hospital.--A teaching hospital
may elect to receive payment on a reasonable cost basis for the direct medical and surgical services
of its physicians in lieu of fee schedule payments for such services. A teaching hospital may make
this election to receive cost payment only when all physicians who render covered Medicare services
in the hospital agree in writing not to bill charges for such services or when all the physicians are
employees of the hospital and, as a condition of employment, they are precluded from billing for
such services. When this election is made, Medicare payments are made exclusively by the
hospital’s intermediary, and fee schedule payment is precluded.
When the cost election is made for a current or future period, each physician who provides services
to Medicare beneficiaries must agree in writing (except when the employment restriction discussed
above exists) not to bill charges for services provided to Medicare beneficiaries. However, when
each physician agrees in writing to abide by all the rules and regulations of the medical staff of the
hospital (or of the fund that is qualified to receive payment for the imputed cost of donated
physician’s services), such an agreement suffices if required as a condition of staff privileges and
the rules and regulations of the hospital, medical staff, or fund clearly preclude physician billing for
the services for which costs benefits are payable. The intermediary must advise the carrier when a
hospital elects cost payment for physicians’ direct medical and surgical services and supply the
carrier with a list of all physicians who provide services in the facility. You must ensure that billings
received from these physicians or hospitals are denied.
Ask the intermediaries in your service area for listings of teaching hospitals that have elected cost
payment and for listings of physicians whose services are payable to hospitals on a cost basis. Flag
your system to deny claims for physicians services furnished in listed hospitals and to reject claims
for the services of listed physicians when hospitals are not identified on the claim form. For rejected
claims, determine the hospitals where the physicians provided the services, denying those performed
in listed hospitals, and paying those performed in hospitals that have not elected to receive cost
payment. (For more information about the teaching hospital cost election, see §2148 of the Provider
Reimbursement Manual, Part 1.)
E. Services of Assistants at Surgery Furnished in Teaching Hospitals.--
1. General.--Do not pay for the services of assistants at surgery furnished in a teaching
hospital which has a training program related to the medical specialty required for the surgical
procedure and has a qualified resident available to perform the service unless the requirements of
subsections 3, 4, or 5 are met. Each teaching hospital has a different situation concerning numbers
of residents, qualifications of residents, duties of residents, and types of surgeries performed.
Contact those affected by these instructions to learn the circumstances in individual teaching
hospitals. There may be some teaching hospitals in which you can apply a presumption about the
availability of a qualified resident in a training program related to the medical specialty required for
the surgical procedures, but there are other teaching hospitals in which there are often no qualified
residents available. This may be due to their involvement in other activities, complexity of the
surgery, numbers of residents in the program, or other valid reasons. Process assistant at surgery
claims for services furnished in teaching hospitals on the basis of the following certification by the
assistant, or through the use of modifier -82 which indicates that a qualified resident surgeon was not
available. This certification is for use only when the basis for payment is the unavailability of
qualified residents.
15-12.4 Rev. 1780
11-02 FEE SCHEDULE FOR PHYSICIANS' SERVICES 15016 (Cont.)

“I understand that section 1842(b)(7)(D) of the Social Security Act generally prohibits
Medicare physician fee schedule payment for the services of assistants at surgery in teaching
hospitals when qualified residents are available to furnish such services. I certify that the
services for which payment is claimed were medically necessary and that no qualified resident
was available to perform the services. I further understand that these services are subject to
post-payment review by the Medicare carrier.”
Retain the claim and certification for four years and conduct post-payment reviews as necessary.
For example, investigate situations in which it is certified that there are never any qualified residents
available, and undertake recovery if warranted.
Assistant at surgery claims denied on the basis of these instructions do not qualify for payment under
the waiver of liability provision.
2. Definition.--An assistant at surgery is a physician who actively assists the physician in
charge of a case in performing a surgical procedure. (Note that a nurse practitioner, physician
assistant or clinical nurse specialist who is authorized to provide such services under State law can
also serve as an assistant at surgery.) The conditions for coverage of such services in teaching
hospitals are more restrictive than those in other settings because of the availability of residents who
are qualified to perform this type of service.
3. Exceptional Circumstances.--Payment may be made for the services of assistants at
surgery in teaching hospitals, subject to the special limitation in §15044, not withstanding the
availability of a qualified resident to furnish the services. There may be exceptional medical
circumstances, e.g., emergency, life-threatening situations such as multiple traumatic injuries which
require immediate treatment. There may be other situations in which your medical staff may find
that exceptional medical circumstances justify the services of a physician assistant at surgery even
though a qualified resident is available.
4. Physicians Who Do Not Involve Residents in Patient Care.--Payment may be made
for the services of assistants at surgery in teaching hospitals, subject to the special limitation in
§15044, if the primary surgeon has an across-the-board policy of never involving residents in the
preoperative, operative, or postoperative care of his or her patients. Generally, this exception is
applied to community physicians who have no involvement in the hospital’s GME program. In such
situations, payment may be made for reasonable and necessary services on the same basis as would
be the case in a nonteaching hospital. However, if the assistant is not a physician primarily engaged
in the field of surgery, no payment be made unless either of the criteria of subsection 5 is met.
5. Multiple Physician Specialties Involved in Surgery.--Complex medical procedures,
including multistage transplant surgery and coronary bypass, may require a team of physicians. In
these situations, each of the physicians performs a unique, discrete function requiring special skills
integral to the total procedure. Each physician is engaged in a level of activity different from
assisting the surgeon in charge of the case. The special payment limitation in §15044 is not applied.
If payment is made on the basis of a single team fee, deny additional claims. Determine which
procedures performed in your service area require a team approach to surgery. Team surgery is paid
for on a “By Report” basis.
The services of physicians of different specialties may be necessary during surgery when each
specialist is required to play an active role in the patient’s treatment because of the existence of more
than one medical condition requiring diverse, specialized medical services. For example, a patient’s
cardiac condition may require the a cardiologist be present to monitor the patient’s condition during
abdominal surgery. In this type of situation, the physician furnishing the concurrent care is
functioning at a different level than that of an assistant at surgery, and payment is made on a regular
fee schedule basis.

Rev. 1780 15-12.5

15018 FEE SCHEDULE FOR PHYSICIANS' SERVICES 11-02

15018 PAYMENT CONDITIONS FOR ANESTHESIOLOGY SERVICES.

A. General Payment Rule.--The fee schedule amount for physician anesthesia services
furnished on or after January 1, 1992 is, with the exceptions noted, based on allowable base and time
units multiplied by an anesthesia conversion factor specific to that locality. The base unit for each
anesthesia procedure is listed in subsection K, Exhibit 1. The way in which time units are calculated
is described in subsection G. Do not allow separate payment for the anesthesia service performed by
the physician who also furnishes the medical or surgical service. In that case, payment for the
anesthesia service is made through the payment for the medical or surgical service. For example, do
not allow separate payment for the surgeon’s performance of a local or surgical

15-2.6 Rev. 1780

MedicareB Resource
NHIC Medicare Part B

MARCH 2003
Table of Contents
Medicare Directives
Advanced Beneficiary Notice and DMEPOS
Refund Requirements – CMS Corrections ........3
Ambulance Fee Schedule – CMS Additional
Clarification of Policy ........................................3
Ambulance Fee Schedule – CMS Update ...........7
Hearing Aid Exclusion – CMS Update ................8
Heart Transplants – CMS Update .......................8
FOCUSED INFORMATION for MEDICARE B PROVIDERS in MAINE, MASSACHUSETTS, NEW HAMPSHIRE, and VERMONT
MPFSDB 2003 Administration and
HCPCS Codes – CMS Update ........................ 31
MSP and Multiple Primary Payer ...................... 39
R0070 – Allowance Update ............................... 39
Remark Codes – CMS Update ........................... 40
RRB, UMWA, IHS, and Disposition of
Misdirected Claims ......................................... 43
Sacral Nerve Stimulation –

CMS Reminder ................................................ 43

Hyperbaric Oxygen (HBO) Therapy for the
Treatment of Diabetic Wounds of the Lower
Extremities .........................................................9
Medicare Beneficiaries in State or Local
Custody Under a Penal Authority .................. 11
Noncoverage of Multiple Electroconvulsive
Therapy (MECT) ............................................. 11
Ordering Diagnostic Tests and Payment
Conditions for Radiology Services ................. 12
Outpatient Rehabilitation Services – Financial
Limitation ........................................................ 15
Single Drug Pricer (SDP) and Drug Code
Update ............................................................ 17
Supervised Physicians in a Teaching
Setting – CMS Revision .................................. 19
Coverage & Reimbursement
ASC Multiple Surgical Procedures in the Same
Operative Session – Reminder ........................ 25
Chiropractic, Clinical Psychologist, LICSW –
2003 Pricing Updates ...................................... 25
DMEPOS 2003 Quarterly Update and
Reasonable Charges ....................................... 25
Electrical Stimulation for the Treatment of
Wounds – CMS Revision ............................... 28
Foot and Nail Care ............................................ 28
HCPCS Codes for Home Health
Consolidated Billing Enforcement –
CMS Quarterly Update ................................... 30
Hepatitis B Vaccine – Reactivation of
CPT Codes and Deletion of Q Codes .............. 30
Home Prothrombin Time International
Normalized Ratio (INR) Monitoring for
Anticoagulation Management –
CMS Update ................................................... 30
Skilled Nursing Facility – Consolidated
Billing – CMS Revision ................................... 44
General Information
Ask To See Your Patient’s Medicare Card ........ 45
DMERC Articles Available ............................... 45
Electronic Data Interchange .............................. 45
Interest Rate – Overpayment &
Underpayment ................................................ 46
Medical Review ................................................. 46
Medicare Managed Care Market Penetration
Survey ............................................................. 48
Medicare Seminars ............................................ 48
New Waived Tests – CMS Update ................... 49
Reimbursement for Relatives or Household
Members ......................................................... 49
Local Medical Review Policies
Local Medical Review Policy Changes ............. 51
ATTACHMENTS
ATTACHMENT A – Advance Beneficiary
Notice Poster .................................................. 53
ATTACHMENT B – Ambulance Prevailing
Rates by Locality ............................................ 54
ATTACHMENT C – HCPCS Drug Pricing
File Effective January 2003 .............................. 56
ATTACHMENT D - DMEPOS Instructions
for Gap-fill, 2003 HCPCS Codes, and
Jurisdiction List ............................................... 61

Alphabetical Listing for Table of Contents is Located on Page 2

This bulletin should be shared with all healthcare practitioners and managerial members of the provider/supplier staff.
Bulletins issued after October 1, 1999, are available at no cost from our website at w w w.medicar
w.medicarenhic.com;
.medicarenhic.com;
also see the CMS/Medicare websites at www .cms.gov and w w w
www.cms.gov .medicar
w.medicar e.gov
.medicare.gov
e.gov.

The CPT codes, descriptors and 2-digit numeric modifiers used in this publication are copyright 2002 by the American Medical
Association. All rights reserved. The ICD-9-CM codes and their descriptors used in this publication are copyright 2002
under the Uniform Copyright Convention. All rights reserved.

NATIONAL HERITAGE INSURANCE COMPANY • P.O. BOX 3333 • HINGHAM, MA 02044

Message From the Editor
As part of our continuing effort to bring new Medicare law,
changes, and updates to our provider communities in Maine,
Massachusetts, New Hampshire, and Vermont in the Medicare
B Resource, this issue contains:
• CMS-updated Advanced Beneficiary Notice (ABN);
• Ambulance fee schedule information and update;
• Ordering diagnostic tests and payment conditions for
radiology services;
• Single drug pricer;
• Supervised physicians in a teaching setting update;
• MPFSDB 2003 – administration and code updates;
• DMEPOS 2003 updates;
• Drug code updates; and
• EDI updates.
We also offer another important venue to attain current Medicare
information – the NHIC website. The website is updated at least
once per week. Every two weeks a general mailing is sent via
email, listing all the new updates to the website. You may subscribe
at http://www.medicarenhic.com/maillist.htm.
March is Colorectal Cancer Awareness Month
Alphabetical Listing
Advanced Beneficiary Notice and DMEPOS Refund
Requirements – CMS Corrections ............................................... 3
Ambulance Fee Schedule – CMS Additional Clarification
of Policy ....................................................................................... 3
Ambulance Fee Schedule – CMS Update ....................................... 7
ASC Multiple Surgical Procedures in the Same Operative
Session – Reminder .................................................................... 25
Ask To See Your Patient’s Medicare Card .................................... 45
ATTACHMENT A – Advance Beneficiary Notice Poster ........... 53
ATTACHMENT B – Ambulance Prevailing Rates by Locality ... 54
ATTACHMENT C – HCPCS Drug Pricing File Effective
January 2003 .............................................................................. 56
ATTACHMENT D - DMEPOS Instructions for Gap-fill,
2003 HCPCS Codes, and Jurisdiction List ................................ 61
Chiropractic, Clinical Psychologist, LICSW – 2003 Pricing
Updates ...................................................................................... 25
DMEPOS 2003 Quarterly Update and Reasonable Charges ........ 25
DMERC Articles Available .......................................................... 45
Electrical Stimulation for the Treatment of Wounds –
CMS Revision ............................................................................ 28
Electronic Data Interchange .......................................................... 45
Foot and Nail Care ........................................................................ 28
HCPCS Codes for Home Health Consolidated Billing
Enforcement – CMS Quarterly Update ..................................... 30
Hearing Aid Exclusion – CMS Update ........................................... 8
Heart Transplants – CMS Update ................................................. 8
Hepatitis B Vaccine – Reactivation of CPT Codes and Deletion
of Q Codes ................................................................................. 30
2 NHIC MARCH 2003
MPFSDB Reminder - the 2003 codes and fees listed in the
Physician Fee Schedules become effective March 1st for service
dates March 1 and after. The fees are calculated at 4.4% as
discussed in the December 31, 2002 Federal Register. See the
MPFSDB articles in this Resource.
We also want to share information about our former medical
director, Charlotte Yeh, MD. Dr. Yeh is now serving as the Region
1 Regional Administrator for the Centers for Medicare & Medicaid
Services in Boston. It is with great pleasure that we support her
as our new Regional Administrator, and NHIC – New England
wishes Dr. Yeh much success in her new position.
If you have any questions regarding this Resource issue, you
may call your local Provider Services at:
Maine 1.877.567.3129
Massachusetts 1.877.567.3130
New Hampshire 1.866.539.5595
Vermont 1.866.539.5595
Home Prothrombin Time International Normalized Ratio (INR)
Monitoring for Anticoagulation Management – CMS Update .. 30
Hyperbaric Oxygen (HBO) Therapy for the Treatment of
Diabetic Wounds of the Lower Extremities .................................. 9
Interest Rate – Overpayment & Underpayment .......................... 46
Local Medical Review Policy Changes ......................................... 51
Medical Review ............................................................................ 46
Medicare Beneficiaries in State or Local Custody Under a
Penal Authority .......................................................................... 11
Medicare Managed Care Market Penetration Survey ................... 48
Medicare Seminars ........................................................................ 48
MPFSDB 2003 Administration and HCPCS Codes –
CMS Update .............................................................................. 31
MSP and Multiple Primary Payer ................................................ 39
New Waived Tests – CMS Update ............................................... 49
Noncoverage of Multiple Electroconvulsive Therapy (MECT) .. 11
Ordering Diagnostic Tests and Payment Conditions for
Radiology Services ..................................................................... 12
Outpatient Rehabilitation Services – Financial Limitation ........... 15
R0070 – Allowance Update .......................................................... 39
Reimbursement for Relatives or Household Members ................. 49
Remark Codes – CMS Update ..................................................... 40
RRB, UMWA, IHS, and Disposition of Misdirected Claims ...... 43
Sacral Nerve Stimulation – CMS Reminder .................................. 43
Single Drug Pricer (SDP) and Drug Code Update ......................... 17
Skilled Nursing Facility – Consolidated Billing –
CMS Revision ............................................................................ 44
Supervised Physicians in a Teaching Setting – CMS Revision ..... 19
 MEDICARE DIRECTIVES
Advanced Beneficiary Notice and DMEPOS Refund Requirements –
CMS Corrections
Centers for Medicare & Medicaid Services issued corrected guidelines for implementation of Advance Beneficiary Notice (ABN), and
of Limits on Beneficiary Liability for Medical Equipment and Supplies. For complete details, view the CMS instructions at:
www.cms.hhs.gov/manuals/pm_trans/AB02168.pdf Please see ATTACHMENT A for a poster pertaining to the ABN notice for your
office waiting area. We encourage you to post it for your Medicare patients.

Ambulance Fee Schedule – CMS Additional Clarification of Policy

During the implementation of the ambulance fee schedule, issues concerning the interpretation of Medicare policy arose that required
clarification from Centers of Medicare & Medicaid Services. Below is additional guidance on these issues, and supplements previously-
issued instructions regarding the implementation of the ambulance fee schedule. Please make note for your files.
“Policy
The following clarifications, organized by category, reflect Medicare’s policy regarding the implementation of the ambulance fee
schedule.
Business Requirements
1. Issues Addressed:
a. Change in Medicare Policy Concerning Bed-Confinement;
b. Mandatory Assignment Rules;
c. Claims Jurisdiction for Air Ambulance Suppliers During the Transition Period;
d. Payment for Services Performed Under Standing Orders;
e. Transport of Persons Other than the Beneficiary;
f. Effect of Beneficiary Death on Medicare Payment for Ground and Air Ambulance Transports;
g. Payment for Air Ambulance Transports Canceled Due to Weather or Other Circumstance Beyond the Pilot’s Control;
h. Payment when More than One Ambulance Arrives at the Scene;
i. Billing for Ground-to-Air Ambulance Transports;
j. Resident and Non-Resident Billing;
k. Reasonable Charge Amount for Mileage During the Transition Period; and
l. Physician Certification Statement (PCS) Requirements.
2. Policy Clarifications
a. Change in Medicare Policy Concerning Bed-Confinement
The final rule published in the Federal Register on February 27, 2002 (67 FR 9100) supersedes earlier Medicare policy on
the issue of bed-confinement. The preamble of the final rule states that the beneficiary is bed-confined if he/she is:
unable to get up from bed without assistance; unable to ambulate; and unable to sit in a chair or wheelchair. As defined
in the preamble, the term “bed confined” is not synonymous with “bed rest” or “nonambulatory.” Medicare’s current
policy is that bed-confinement, by itself, is neither sufficient nor is it necessary to determine the coverage for Medicare
ambulance benefits. It is simply one element of the beneficiary’s condition that may be taken into account in the
intermediary’s/carrier’s determination. Therefore, the current regulations (42 CFR §410.40(d)) provide that a Medicare
ambulance transport may only be payable if other forms of transportation are contraindicated by the beneficiary’s
condition. This policy is effective with the implementation of the Medicare Fee Schedule on April 1, 2002.
b. Mandatory Assignment Rules
i. Mandatory Assignment and Claim Submittal Requirements
When an ambulance provider/supplier, or a third party under contract with the provider/supplier, furnishes a Medicare-
covered ambulance service to a Medicare beneficiary and the service is not statutorily excluded under the particular
circumstances, the provider/supplier must submit a claim to Medicare and accept assignment of the beneficiary’s
right to payment from Medicare.
ii. Mandatory Assignment for Managed Care Providers/Suppliers
Mandatory assignment for ambulance services, in effect with the implementation of the ambulance fee schedule on
April 1, 2002, applies to ambulance providers/suppliers under managed care as well as under fee-for-service. (The
ambulance fee schedule is effective for claims with a date of service on or after April 1, 2002.) During the fee schedule
transition period, Medicare payment for ambulance services is a blend of the reasonable cost/charge and fee
schedule amount (80 percent reasonable cost/charge amount, and 20 percent fee schedule amount for services
furnished in 2002).
Per 42 CFR §422.214, any provider or supplier without a contract establishing payment amounts for services provided
to a beneficiary enrolled in a Medicare + Choice (M+C) coordinated care plan or M+C private fee-for-service plan
must accept, as payment in full, the amounts that they could collect if the beneficiary were enrolled in original
Medicare. The provider or supplier can collect from the M+C plan enrollee the cost-sharing amount required under
the M+C plan, and collect the remainder from the M+C organization.

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MEDICARE DIRECTIVES
Ambulance Fee Schedule – CMS Additional Clarification of Policy (Continued)
iii. Mandatory Assignment and Beneficiary Signature Requirements
Medicare requires the signature of the beneficiary, or that of his or her representative, for both the purpose of
accepting assignment and submitting a claim to Medicare. If the beneficiary is unable to sign because of a mental or
physical condition, a representative payee, relative, friend, representative of the institution providing care, or a
government agency providing assistance may sign on his/her behalf. A provider/supplier (or his/her employee)
cannot request payment for services furnished except under circumstances fully documented to show that the
beneficiary is unable to sign and that there is no other person who could sign.
Medicare does not require that the signature to authorize claim submission be obtained at the time of transport for
the purpose of accepting assignment of Medicare payment for ambulance benefits. When a provider/supplier is
unable to obtain the signature of the beneficiary, or that of his or her representative, at the time of transport, it may
obtain this signature any time prior to submitting the claim to Medicare for payment. (Per 42 CFR §424.44, there is a
15 to 27 month period for filing a Medicare claim.)
If the beneficiary/representative refuses to authorize the submission of a claim, including a refusal to furnish an
authorizing signature, then the ambulance provider/supplier may not bill Medicare, but may bill the beneficiary (or
his or her estate) for the full charge of the ambulance items and services furnished. If, after seeing this bill, the
beneficiary/representative decides to have Medicare pay for these items and services, then a beneficiary/representative
signature is required and the ambulance provider/supplier must afford the beneficiary/representative this option
within the claims filing period.
c. Claims Jurisdiction for Air Ambulance Suppliers During the Transition Period
During the transition period, air ambulance suppliers must continue to submit claims to the carrier that has jurisdiction for
the locality in which its air ambulance is based (i.e., garaged or hangared), per MCM §§3102.C.1 and 2. Payment of a claim
during the transition period is determined in part by the reasonable charge amount established in the carrier jurisdiction
where the ambulance is based (i.e., garaged or hangared) and in part by the fee schedule amount in the jurisdiction of the
point-of-pickup, as represented by its zip code.
For suppliers that provide services in multiple states, no additional enrollment is necessary for claims submission until
the end of the transition period unless the supplier has established a base in another state. (Only if the supplier has
established a base/hangar in another state, must it then also enroll with the carrier for the other state.) The carrier with
jurisdiction for the claim has the supplier’s reasonable charge amount and also the fee schedule amounts for all states in
which the ambulance supplier provides services to determine the blended payment.
d. Payment for Services Performed Under Standing Orders
Under the Medicare Ambulance Fee Schedule, payment for the transport includes payment for all medically necessary
services and supplies. However, during the transition period, a supplier that had previously billed separately for medically
necessary services may continue to do so. In situations where a supplier provides a service under a standing order (e.g.,
a standing order for performing a rhythm strip, placing oxygen, and starting an intravenous line when an Advanced Life
Support [ALS] ambulance is called), Medicare payment for such a service depends on whether it is medically necessary.
Under Medicare rules, whether a particular separately-billable service is medically necessary is dependent on the particular
circumstances of the beneficiary’s condition at the time of the transport. For the purpose of Medicare payment, services
furnished pursuant to a standing order requiring that something be done regardless of the patient’s needs are not
recognized as being medically necessary on the basis of such an order. Services furnished by licensed personnel based
on recognition of patient need and authorized by standing order, such as in an algorithm, or that are consistent with EMT
protocols established in that state, can be paid for, provided the services are reasonable and necessary based on the
patient’s condition at the time they are furnished.
e. Transport of Persons Other than the Beneficiary
Medicare payment policy remains unchanged with respect to the transport of persons other than the beneficiary. That is,
no payment may be made for the transport of ambulance staff or other personnel when the beneficiary is not onboard the
ambulance (e.g., an ambulance transport to pick up a specialty care unit from one hospital to provide services to a
beneficiary at another hospital). This policy applies to both ground and air ambulance transports.
f. Effect of Beneficiary Death on Medicare Payment for Ground and Air Ambulance Transports
Because the Medicare ambulance benefit is a transport benefit, if no transport of a Medicare beneficiary occurs, then
there is no Medicare-covered service. In general, if the beneficiary dies before being transported, then no Medicare
payment may be made. Thus, in a situation where the beneficiary dies, whether any payment under the Medicare
ambulance benefit may be made depends on the time at which the beneficiary is pronounced dead by an individual
authorized by the State to make such pronouncements.

Failure to update practice information could result in

incorrect claims data or processing for Medicare benefits.

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 MEDICARE DIRECTIVES
Ambulance Fee Schedule – CMS Additional Clarification of Policy (Continued)
The chart below shows the Medicare payment determination for various ground ambulance scenarios in which the
beneficiary dies. In each case, the assumption is that the ambulance transport would have otherwise been medically
necessary.

Ground Ambulance Scenarios: Beneficiary Death

Time of Death Pronouncement Medicare Payment Determination
Before dispatch. None.
After dispatch, before beneficiary is loaded The provider’s/supplier’s BLS base rate,
onboard ambulance (before or after arrival no mileage or rural adjustment; use the QL
at the point-of-pickup). modifier when submitting the claim.
After pickup, prior to or upon arrival at the Medically necessary level of service
receiving facility. furnished.

The chart below shows the Medicare payment determination for various air ambulance scenarios in which the beneficiary
dies. In each case, the assumption is that the ambulance transport would have otherwise been medically necessary. If the
flight is aborted for other reasons, such as bad weather, the Medicare payment determination is based on whether the
beneficiary was onboard the air ambulance. (See item g below.)

Air Ambulance Scenarios: Beneficiary Death

Time of Death Pronouncement Medicare Payment Determination
Prior to takeoff to point-of-pickup with None.
notice to dispatcher and time to abort the
flight.
NOTE: This scenario includes situations
in which the air ambulance has taxied to
the runway, and/or has been cleared for
takeoff, but has not actually taken off.)

After takeoff to point-of-pickup, but before
the beneficiary is loaded.
After the beneficiary is loaded onboard, but
prior to or upon arrival at the receiving
facility.
Appropriate air base rate with no mileage
or rural adjustment; use the QL modifier
when submitting the claim.
As if the beneficiary had not died.

g. Payment for Air Ambulance Transports Canceled Due to Weather or Other Circumstance Beyond the Pilot’s Control
The chart below shows the Medicare payment determination for various air ambulance scenarios in which the flight is
aborted due to bad weather, or other circumstance beyond the pilot’s control.

Air Ambulance Scenarios: Aborted Flights

Aborted Flight Scenario
Any time before the beneficiary is
loaded onboard (i.e., prior to or after
take-off to point-of-pickup.)
Transport after the beneficiary is
loaded onboard.
Medicare Payment Determination
None.
Appropriate air base rate, mileage, and rural
adjustment.

h. Payment When More than One Ambulance Arrives at the Scene

The general Medicare program rule is that the Medicare ambulance benefit is a transportation benefit and without a
transport there is no payable service. When multiple ground and/or air ambulance providers/suppliers respond, payment
may be made only to the ambulance provider/supplier that actually furnishes the transport. Ambulance providers/
suppliers that arrive on the scene but do not furnish a transport are not due payment from Medicare.
i. Billing for Ground-to-Air Ambulance Transports
For situations in which a beneficiary is transported by ground ambulance to or from an air ambulance, the ground and air
ambulance providers/suppliers providing the transports must bill Medicare independently. Under these circumstances,
Medicare pays each provider/supplier individually for its respective services and mileage. Each provider/supplier must
submit a claim for its respective services/mileage to the intermediary/carrier that has jurisdiction for the locality in which
its ambulance is based. (See item c above.)

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MEDICARE DIRECTIVES
Ambulance Fee Schedule – CMS Additional Clarification of Policy (Continued)
j. Resident and Non-Resident Billing
The ambulance fee schedule has no effect on Medicare’s longstanding policy concerning resident versus non-resident
billing. In areas that distinguish between residents and non-residents, Medicare beneficiaries must be charged the same
rate as all others in the same category. That is, all residents of a particular jurisdiction must be charged the same
“resident” rate and all non-residents of that city and state must be charged the same “non-resident” rate.
k. Reasonable Charge Amount for ALS Mileage During the Transition Period
During the transition period, the HCPCS ground mileage code A0425 reasonable charge amount for the blended payment
is calculated using a simple average (not a weighted average) of the 2001 reasonable charge allowances for HCPCS codes
A0380 and A0390, updated by the Ambulance Inflation Factor. (HCPCS codes A0380 and A0390 are invalid for dates of
service on or after April 1, 2002).
If a supplier has established a customary charge for only ALS mileage or only BLS mileage, then that customary charge,
subject to the inflation indexed charge (IIC) rules, is used to establish the supplier-specific customary charge amount for
the reasonable charge portion of the blended payment for A0425 during the transition period. However, the program’s
payment allowance for the reasonable charge portion of the blended transition rate for A0425 is based on the lower of the
supplier’s customary charge (subject to the IIC rules), the prevailing charge, or the prevailing IIC. Therefore, the payment
allowance under the reasonable charge portion of the blended payment for A0425 during the transition period will not
exceed the prevailing charge or prevailing IIC that includes both BLS mileage and ALS mileage charge data for the locality
in which the charge data was accumulated. The program’s payment allowance for A0425 is then based on the lower of the
blended rate and the actual charge on the claim.
l. Physician Certification Statement (PCS) Requirements
The current regulations governing PCS requirements are specified at 42 CFR §410.40(d). A PCS is required for the
following ambulance services:
• Nonemergency, scheduled, repetitive ambulance services; and
• Unscheduled, nonemergency ambulance services or nonemergency ambulance services scheduled on a
nonrepetitive basis for a resident of a facility who is under the care of a physician.
NOTE: For nonemergency, scheduled, repetitive ambulance services, the physician’s order must be dated no earlier
than 60 days before the date that the service is furnished.
A PCS is not required for the following ambulance services:
• Emergency; and
• Nonemergency, unscheduled ambulance services for a beneficiary who, at the time of the transport, was residing
either at home or in a facility and who was not under the direct care of a physician.
If unable to obtain the physician’s signature, it is acceptable to obtain a signed certification statement from the physician
assistant, nurse practitioner, or clinical nurse specialist (where all applicable State licensure or certification requirements
are met), or discharge planner, who has personal knowledge of the beneficiary’s condition at the time that the ambulance
transport is ordered or the service is furnished. This individual must be employed by the beneficiary’s attending physician
or by the hospital or facility where the beneficiary is being treated and from which the beneficiary is transported. (See the
Medicare Ambulance Fee Schedule Final Rule published in the Federal Register on February 27, 2002.)
For nonemergency ambulance services that are either unscheduled or that are scheduled on a nonrepetitive basis,
providers/suppliers must obtain a written order from the beneficiary’s attending physician, within 48 hours after the
transport, per 42 CFR §410.40(d)(3). If unable to obtain a written order from the attending physician within 48 hours,
providers/suppliers may submit a claim for the service if a PCS or certification from an acceptable alternative person as
described in 42 CFR §410.40(d)(3)(iii) has been obtained, or after 21 days if acceptable documentation of attempts to
obtain the certification has been obtained. This policy also applies in a situation where a provider/supplier responds to
a nonemergency call and, upon arrival at the point-of-pickup, the condition of the beneficiary requires emergency care.
(NOTE: Although the condition of the beneficiary in this scenario would require the provider/supplier to concentrate on
the emergent treatment of the patient upon arrival at the scene, the claim for this service would not qualify as an
“emergency transport,” as defined in program memorandum AB-02-130.)
When a PCS cannot be obtained in accordance with §410.40(d)(3)(iv), a provider/supplier may send a letter via U.S. Postal
Service (USPS) Certified Mail with a return receipt proof of mailing or other similar commercial service demonstrating
delivery of the letter as evidence of the attempt to obtain the PCS.
Until the 2002 compilation of Title 42 of the CFR is published (it is updated each October 1st and usually becomes
available in January of the following year), intermediaries and carriers should consult the final rule published in the
Federal Register on February 27, 2002 for additional guidance on PCS requirements. (See 67 Federal Register 9100.)”

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Ambulance Fee Schedule – CMS Update
The following article contains a few components to the Medicare ambulance laws and regulations regarding the fee schedule. Please
read and retain for your files.
NOTE: On page 3 of the December 2002 Medicare B Resource, we stated April 1, 2003 as the effective date for the Medicare ambulance
policy and law changes – that date is incorrect – please disregard.
2003 Ambulance Fee Schedule
The ambulance final rule published on February 27, 2002, establishes a fee schedule for the payment of ambulance services under the
Medicare Program, thereby implementing §1834(1) of the Social Security Act. The ambulance fee schedule is effective for claims with
dates of service on and after April 1, 2002. The final rule established a 5-year transition period, during which time payments will be
based on a blended amount, based in part on the ambulance fee schedule and in part on reasonable charge.
During the transition period, the fee schedule amount, blended with a supplier’s reasonable charge portion of the payment, will
determine the ambulance fee blended rate for each transition year.
The percentages for the blended rate during the transition period are:

Transition Year Reasonable Fee Schedule

Charge/Cost Percent Percent
Year One (04/01/2002 – 12/31/2002 80 20
Year Two (CY 2003) 60 40
Year Three (CY 2004) 40 60
Year Four (CY2005) 20 80
Year Five (CY 2006) 0 100

2003 Ambulance Inflation Factor (AIF)

Section 1834(l)(3)(A) of the Act provides the basis for updating payment limits for ambulance services. Specifically, it provides for an
update in payments for 2003 that is equal to the percentage increase in the consumer price index for all urban consumers (CPI-U), for
the 12-month period ending with June of the previous year. The resulting percentage is referred to as the AIF.
During the transition period, the AIF is applied to both the fee schedule portion of the blended payment amount (incorporated in the
ambulance fee schedule file) and to the reasonable charge portion of the blended payment amount separately for each ambulance
supplier. Then, these two amounts are added together to determine the total payment amount for each supplier. The blending percentages
used to combine these two components of the payment amounts for ambulance services for CY 2003 are 60 percent of the reasonable
charge and 40 percent of the ambulance fee schedule.
The AIF for calendar year 2003 is 1.1 percent. The blending percentages used to combine the two components of the payment amounts
for ambulance services for CY 2003 are 60 percent of the reasonable charge and 40 percent of the ambulance fee schedule. Part B
coinsurance and deductible requirements apply.
2003 Ambulance Fee Schedule
MA 01 – Middlesex, Norfolk, Suffolk Counties ME 99 – Rest of State
MA 99 – Rest of State NH 40 – Entire State
ME 03 – Cumberland and York Counties VT 50 – Entire State
Procedure MA Locality 01 MA Locality 99 ME Locality 03 ME Locality 99 NH Locality 40 VT Locality 50
Code
Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural

A0425 $5.53 N/A $5.53 N/A $5.53 N/A $5.53 N/A $5.53 N/A $5.53 N/A

A0426 $241.52 $241.52 $225.59 $225.59 $206.76 $206.76 $193.87 $193.87 $211.25 $211.25 $204.88 $204.88

A0427 $382.41 $382.41 $357.18 $357.18 $327.37 $327.37 $306.96 $306.96 $334.48 $334.48 $324.39 $324.39

A0428 $201.27 $201.27 $187.99 $187.99 $172.30 $172.30 $161.56 $161.56 $176.04 $176.04 $170.73 $170.73

A0429 $322.03 $322.03 $300.78 $300.78 $275.68 $275.68 $258.49 $258.49 $281.67 $281.67 $273.17 $273.17

A0430 $2,619.60 $3,929.39 $2,490.90 $3,736.35 $2,338.80 $3,508.20 $2,234.67 $3,352.01 $2,375.07 $3,562.60 $2,323.59 $3,485.39

A0431 $3,045.67 $4,568.50 $2,896.04 $4,344.05 $2,719.20 $4,078.80 $2,598.13 $3,897.20 $2,761.37 $4,142.05 $2,701.52 $4,052.27

A0432 $352.22 $352.22 $328.98 $328.98 $301.52 $301.52 $282.73 $282.73 $308.07 $308.07 $298.78 $298.78

A0433 $553.48 $553.48 $516.97 $516.97 $473.82 $473.82 $444.28 $444.28 $484.11 $484.11 $469.51 $469.51

A0434 $654.11 $654.11 $610.97 $610.97 $559.97 $559.97 $525.06 $525.06 $572.13 $572.13 $554.87 $554.87

A0435 $6.64 $9.96 $6.64 $9.96 $6.64 $9.96 $6.64 $9.96 $6.64 $9.96 $6.64 $9.96

A0436 $17.70 $26.55 $17.70 $26.55 $17.70 $26.55 $17.70 $26.55 $17.70 $26.55 $17.70 $26.55

Q3019 $322.03 $322.03 $300.78 $300.78 $275.68 $275.68 $258.49 $258.49 $281.67 $281.67 $273.17 $273.17

Q3020 $201.27 $201.27 $187.99 $187.99 $172.30 $172.30 $161.56 $161.56 $176.04 $176.04 $170.73 $170.73

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MEDICARE DIRECTIVES
Ambulance Fee Schedule – CMS Update (Continued)
2003 Prevailing Rates by Locality
See ATTACHMENT B for the 2003 prevailing rates by locality, effective for services rendered on and after January 1, 2003.
Centers for Medicare & Medicaid Services will issue a yearly ambulance fee schedule, located on their web site –
www.cms.hhs.gov/medlearn. Beginning this year through 2005, NHIC will disclose to each individual ambulance supplier the reasonable
charge allowances for the forthcoming year.
If you have any questions, please call your local Provider Services:
Maine 1.877.567.3129
Massachusetts 1.877.567.3130
New Hampshire 1.866.539.5595
Vermont 1.866.539.5595

Hearing Aid Exclusion – CMS Update

Effective January 1, 2003, the hearing aid exclusion is added to clarify which devices are considered to be hearing aids and, are
therefore, excluded from coverage. Please note the following for your files.
“Section 1862(a)(7) of the Social Security Act states that no payment may be made under Part A or Part B for any expenses incurred for
items or services “where such expenses are for. . . hearing aids or examinations therefore. . .” This policy is further reiterated at 42 CFR
411.15(d) which specifically states that “hearing aids or examination for the purpose of prescribing, fitting, or changing hearing aids”
are excluded from coverage.
At the time of passage of the hearing aid exclusion, all hearing aids utilized functional air and/or bone conduction pathways to facilitate
hearing. We are clarifying that any device that does not produce as its output an electrical signal that directly stimulates the auditory
nerve is a hearing aid for the purposes of Medicare payment policy. Examples of hearing aids are devices that produce air-conducted
sound into the external auditory canal, devices that produce sound by mechanically vibrating bone, or devices that produce sound by
vibrating the cochlear fluid through stimulation of the round window. Devices such as cochlear implants, which produce as their output
an electrical signal that directly stimulates the auditory nerve, are not considered to be hearing aids for purposes of Medicare payment
policy. (See Coverage Issues Manual §65-14).
Medicare contractors are to deny payment for an item or service that is associated with any hearing aid as defined above. This
clarification is not meant to change policy for the medically necessary treatment of complications of implantable hearing aids, such as
medically necessary removals of implantable hearing aids due to infection. See §2300.1 of Part 3 of the Medicare Carrier Manual.”

Heart Transplants – CMS Update

Effective for services rendered on and after April 1, 2003, Centers for Medicare & Medicaid Services updated the following policy.
Please note the updated information in bold text. Editor’s Note: all HCFA references should read as CMS.
“HEART TRANSPLANTS—(Effective for services rendered on or after October 17, 1986.)
A. General.—Cardiac transplantation is covered under Medicare when performed in a facility which is approved by Medicare as
meeting institutional coverage criteria. (See HCFA Ruling 87-1.)
B. Exceptions.—In certain limited cases, exceptions to the criteria may be warranted if there is justification and if the facility
ensures our objectives of safety and efficacy. Under no circumstances will exceptions be made for facilities whose transplant
programs have been in existence for less than two years, and applications from consortia will not be approved.
Although consortium arrangements will not be approved for payment of Medicare heart transplants, consideration will be given to
applications from heart transplant facilities that consist of more than one hospital where all of the following conditions exist:
• The hospitals are under the common control or have a formal affiliation arrangement with each other under the auspices
of an organization such as a university or a legally-constituted medical research institute; and
• The hospitals share resources by routinely using the same personnel or services in their transplant programs. The
sharing of resources must be supported by the submission of operative notes or other information that documents the
routine use of the same personnel and services in all of the individual hospitals. At a minimum, shared resources means:
- The individual members of the transplant team, consisting of the cardiac transplant surgeons, cardiologists and
pathologists, must practice in all the hospitals and it can be documented that they otherwise function as members of
the transplant team; and
- The same organ procurement organization, immunology, and tissue-typing services must be used by all the hospitals;
and
• The hospitals submit, in the manner required (Kaplan-Meier method) their individual and pooled experience and survival
data; and
• The hospitals otherwise meet the remaining Medicare criteria for heart transplant facilities; that is, the criteria regarding
patient selection, patient management, program commitment, etc.

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Heart Transplants – CMS Update (Continued)
C. Pediatric Hospitals.—Cardiac transplantation is covered for Medicare beneficiaries when performed in a pediatric hospital
that performs pediatric heart transplants if the hospital submits an application which HCFA approves as documenting that:
• The hospital’s pediatric heart transplant program is operated jointly by the hospital and another facility that has been
found by HCFA to meet the institutional coverage criteria in HCFA Ruling 87-1;
• The unified program shares the same transplant surgeons and quality assurance program (including oversight committee,
patient protocol, and patient selection criteria); and
• The hospital is able to provide the specialized facilities, services, and personnel that are required by pediatric heart
transplant patients.
D. Follow-up Care.—Follow-up care required as a result of a covered heart transplant is covered, provided such services are
otherwise reasonable and necessary. Follow-up care is also covered for patients who have been discharged from a hospital
after receiving a noncovered heart transplant. Coverage for follow-up care would be for items and services that are reasonable
and necessary, as determined by Medicare guidelines. (See Intermediary Manual §3101.l4 and Carriers Manual §2300.1.)
E. Immunosuppressive Drugs.—(See Intermediary Manual §3660.8 and Carriers Manual §§2050.5, 4471 and 5249.)
F. Artificial Hearts.—Medicare does not cover the use of artificial hearts as a permanent replacement for a human heart or as
a temporary life-support system until a human heart becomes available for transplant (often referred to as a “bridge to
transplant”). Medicare does cover a ventricular assist device (VAD) when used in conjunction with specific criteria listed in
CIM §65-15.”

Hyperbaric Oxygen (HBO) Therapy for the Treatment of Diabetic

Wounds of the Lower Extremities
Centers of Medicare & Medicaid Services revises the text listed below in §35-10 of the Coverage Issues Manual regarding Hyperbaric
Oxygen (HBO) Therapy. Please note the changes in bold text:
“Conditions of Coverage
Hyperbaric oxygen therapy is a modality in which the entire body is exposed to oxygen under increased atmospheric pressure.
Effective April 1, 2003, a National Coverage Decision expanded the use of Hyperbaric Oxygen (HBO) therapy to include coverage for
the treatment of diabetic wounds of the lower extremities in patients who meet the following criteria:
(1) Patient has type I or type II diabetes and has a lower extremity wound that is due to diabetes; (ICD-9-CM diagnosis 250.7,
250.8, 707, 707.1, 707.10, 707.12, 707.13, 707.14, and 707.19).
(2) Patient has a wound classified as Wagner grade III or higher; and
(3) Patient has failed an adequate course of standard wound therapy.
The use of HBO therapy will be covered as adjunctive therapy only after there are no measurable signs of healing for at least 30 days
of treatment with standard wound therapy and must be used in addition to standard wound care. Standard wound care in patients with
diabetic wounds includes: assessment of a patient’s vascular status and correction of any vascular problems in the affected limb if
possible, optimization of nutritional status, optimization of glucose control, debridement by any means to remove devitalized tissue,
maintenance of clean, moist bed of granulation tissue with appropriate moist dressings, appropriate off-loading, and necessary
treatment to resolve any infection that might be present. Failure to respond to standard wound care occurs when there are no
measurable signs of healing for at least 30 consecutive days. Wounds must be evaluated at least every 30 days during administration
of HBO therapy. Continued treatment with HBO treatment is not covered if measurable signs of healing have not been demonstrated
within any 30-day period of treatment.
This also clarifies that CMS has concluded that special supervision and credentialing requirements should not be imposed on
physicians who perform HBO therapy. You may not impose a higher level of supervision than direct supervision as is required for all
“incident to” therapies. CMS encourages physicians who perform HBO therapy to obtain adequate training in the use of HBO therapy
and in advanced cardiac life support.
NOTE: Topical application of oxygen does not meet the definition of HBO therapy as stated above. Also, its clinical efficacy had not
been established. Therefore, no Medicare reimbursement may be made for the topical application of oxygen.
The following HCPCS Code applies:
• 99183 - Physician attendance and supervision of hyperbaric oxygen therapy, per session”
CMS Definition
“HYPERBARIC OXYGEN THERAPY
For purposes of coverage under Medicare, hyperbaric oxygen (HBO) therapy is a modality in which the entire body is exposed to
oxygen under increased atmospheric pressure.
A. Covered Conditions.—Program reimbursement for HBO therapy will be limited to that which is administered in a chamber
(including the one man unit) and is limited to the following conditions:
l. Acute carbon monoxide intoxication, (ICD-9 -CM diagnosis 986).
2. Decompression illness, (ICD-9-CM diagnosis 993.2, 993.3).

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MEDICARE DIRECTIVES
Hyperbaric Oxygen (HBO) Therapy for the Treatment of Diabetic Wounds of the Lower
Extremities (Continued)
3. Gas embolism, (ICD-9-CM diagnosis 958.0, 999.1).
4. Gas gangrene, (ICD-9-CM diagnosis 040.0).
5. Acute traumatic peripheral ischemia. HBO therapy is an adjunctive treatment to be used in combination with accepted
standard therapeutic measures when loss of function, limb, or life is threatened. (ICD-9-CM diagnosis 902.53, 903.01,
903.1, 904.0, 904.41.)
6. Crush injuries and suturing of severed limbs. As in the previous conditions, HBO therapy would be an adjunctive
treatment when loss of function, limb, or life is threatened. (ICD-9-CM diagnosis 927.00-927.03, 927.09-927.11,
927.20-927.21, 927.8-927.9, 928.00-928.01, 928.10-928.11, 928.20-928.21, 928.3, 928.8-928.9, 929.0, 929.9, 996.90-996.99.)
7. Progressive necrotizing infections (necrotizing fasciitis), (ICD-9-CM diagnosis 728.86).
8. Acute peripheral arterial insufficiency, (ICD-9-CM diagnosis 444.21, 444.22, 444.81).
9. Preparation and preservation of compromised skin grafts (not for primary management of wounds), (ICD-9CM diagnosis
996.52; excludes artificial skin graft).
10. Chronic refractory osteomyelitis, unresponsive to conventional medical and surgical management, (ICD-9-CM diagnosis
730.10-730.19).
11. Osteoradionecrosis as an adjunct to conventional treatment, (ICD-9-CM diagnosis 526.89).
12. Soft tissue radionecrosis as an adjunct to conventional treatment, (ICD-9-CM diagnosis 990).
13. Cyanide poisoning, (ICD-9-CM diagnosis 987.7, 989.0).
14. Actinomycosis, only as an adjunct to conventional therapy when the disease process is refractory to antibiotics and
surgical treatment, (ICD-9-CM diagnosis 039.0-039.4, 039.8, 039.9).
15. Diabetic wounds of the lower extremities in patients who meet the following three criteria:
a. Patient has type I or type II diabetes and has a lower extremity wound that is due to diabetes;
b. Patient has a wound classified as Wagner grade III or higher; and
c. Patient has failed an adequate course of standard wound therapy.
The use of HBO therapy is covered as adjunctive therapy only after there are no measurable signs of healing for at least
30–days of treatment with standard wound therapy and must be used in addition to standard wound care. Standard wound
care in patients with diabetic wounds includes: assessment of a patient’s vascular status and correction of any vascular
problems in the affected limb if possible, optimization of nutritional status, optimization of glucose control, debridement
by any means to remove devitalized tissue, maintenance of a clean, moist bed of granulation tissue with appropriate
moist dressings, appropriate off-loading, and necessary treatment to resolve any infection that might be present.
Failure to respond to standard wound care occurs when there are no measurable signs of healing for at least 30
consecutive days. Wounds must be evaluated at least every 30 days during administration of HBO therapy. Continued
treatment with HBO therapy is not covered if measurable signs of healing have not been demonstrated within any
30-day period of treatment.
B. Noncovered Conditions.—All other indications not specified under §35-10 (A) are not covered under the Medicare program.
No program payment may be made for any conditions other than those listed in §35-10(A).
No program payment may be made for HBO in the treatment of the following conditions:
1. Cutaneous, decubitus, and stasis ulcers.
2. Chronic peripheral vascular insufficiency.
3. Anaerobic septicemia and infection other than clostridial.
4. Skin burns (thermal).
5. Senility.
6. Myocardial infarction.
7. Cardiogenic shock.
8. Sickle cell anemia.
9. Acute thermal and chemical pulmonary damage, i.e., smoke inhalation with pulmonary insufficiency.
10. Acute or chronic cerebral vascular insufficiency.
11. Hepatic necrosis.
12. Aerobic septicemia.
13. Nonvascular causes of chronic brain syndrome (Pick’s disease, Alzheimer’s disease, Korsakoff’s disease).
14. Tetanus.
15. Systemic aerobic infection.
16. Organ transplantation.
17. Organ storage.
18. Pulmonary emphysema.
19. Exceptional blood loss anemia.
20. Multiple Sclerosis.
21. Arthritic Diseases.
22. Acute cerebral edema.

10 NHIC MARCH 2003

 MEDICARE DIRECTIVES
Hyperbaric Oxygen (HBO) Therapy for the Treatment of Diabetic Wounds of the Lower
Extremities (Continued)
C. Topical Application of Oxygen.—This method of administering oxygen does not meet the definition of HBO therapy as stated
above. Also, its clinical efficacy has not been established. Therefore, no Medicare reimbursement may be made for the topical
application of oxygen. (Cross refer: §35-31.)”

Medicare Beneficiaries in State or Local Custody Under a Penal

Authority
Effective April 1, 2003, under Sections 1862(a)(2) and (3) of the Social Security Act, the Medicare program does not pay for services if
the beneficiary has no legal obligation to pay for the services and if the services are paid for directly or indirectly by a governmental
entity. These provisions are implemented via regulations: 42 CFR § 411.4(a), and 411.4 (b), respectively.
Regulations at 42 CFR 411.4(b) state that “Payment may be made for services furnished to individuals or groups of individuals who are
in the custody of the police or other penal authorities or in the custody of a government agency under a penal statute only if the
following conditions are met: (1) State or local law requires those individuals or groups of individuals to repay the cost of medical
services they receive while in custody and (2) The State or local government entity enforces the requirement to pay by billing all such
individuals, whether or not covered by Medicare or any other health insurance, and by pursuing the collection of the amounts they
owe in the same way and with the same vigor that it pursues the collection of other debts.”
Exclusion from Coverage
Medicare excludes from coverage items and services furnished to beneficiaries in State or local government custody under a penal
statute, unless, it is determined that the State or local government enforces a legal requirement that all prisoners/patients repay the cost
of all healthcare items and services rendered while in such custody and also pursues collection efforts against such individuals in the
same way, and with the same vigor, as it pursues other debts. CMS presumes that a State or local government that has custody of a
Medicare beneficiary under a penal statute has a financial obligation to pay for the cost of healthcare items and services. Therefore,
Medicare denies payment for items and services furnished to beneficiaries in State or local government custody.
However, providers and suppliers that render services or items to a prisoner or patient in a jurisdiction that meets the conditions of 42
CFR 411.4(b) should indicate this fact with the use of a modifier QJ.
Appeals
A party to a claim denied in whole or in part under this policy may appeal the initial determination on the basis that, on the date of
service, (1) the conditions of § 411.4(b) were met, or (2) the beneficiary was not, in fact, in the custody of a State or local government
under authority of a penal statute.
Government Meets the Regulatory Standard
Providers that render services to a prisoner or patient in a jurisdiction that meets the conditions of 42 CFR 411.4(b) should indicate this
fact on the claim. Providers should use the QJ modifier. Language approved for the QJ modifier reads: “Services/items provided to a
prisoner or patient in State or local custody, however, the State or local government, as applicable, meets the requirements in 42 CFR
411.4(b).” This modifier indicates that the provider has been instructed by the state or local government agency that requested the
healthcare items or services provided to the patient that State or local law makes the prisoner or patient responsible to repay the cost
of Medical services and that it pursues collection of debts incurred for furnishing such items or services with the same vigor and in the
same manner as any other debt.

Noncoverage of Multiple Electroconvulsive Therapy (MECT)

Per §35-103 of the Medicare Coverage Issuances Manual, the clinical effectiveness of multiple-seizure electroconvulsive therapy has
not been verified by scientifically controlled studies. Additionally, studies demonstrated an increased risk of adverse effect with
multiple seizures. Accordingly, MECT cannot be considered reasonable and necessary and is non-covered.
Effective for dates of service on and after April 1, 2003, NHIC will not to pay for this therapy in any setting or under any code. The
following HCPCS code will be non-covered effective April 1, 2003.
• 90871 - Electroconvulsive therapy (includes necessary monitoring); multiple seizures, per day
Please note the following changes to the CIM in bold text and make note for your files:
“Multiple Electroconvulsive Therapy (MECT) (Effective for services provided on or after April 1, 2003.)
The clinical effectiveness of the multiple-seizure electroconvulsive therapy has not been verified by scientifically controlled studies.
In addition, studies have demonstrated an increased risk of adverse effects with multiple seizures. Accordingly, MECT cannot be
considered reasonable and necessary and is not covered by the Medicare program.”

MARCH 2003 NHIC 11

MEDICARE DIRECTIVES
Ordering Diagnostic Tests and Payment Conditions for Radiology
Services
Effective January 1, 2003, Centers for Medicare & Medicaid Services revised Ordering Diagnostic Tests to include additional physicians
as interpreting physicians (§15021); and revised Payment Conditions for Radiology Services in §15022 to remove weekly radiation
therapy management codes 77419 – 77430 that were deleted and replaced with code 77427.
Please note changes in bold text:
“15021. ORDERING DIAGNOSTIC TESTS
A. Definitions.—
1. A “diagnostic test” includes all diagnostic x-ray tests, all diagnostic laboratory tests, and other diagnostic tests furnished
to a beneficiary.
2. A “treating physician” is a physician, as defined in §1861(r) of the Social Security Act (the Act), who furnishes a
consultation or treats a beneficiary for a specific medical problem, and who uses the results of a diagnostic test in the
management of the beneficiary’s specific medical problem.
NOTE: A radiologist performing a therapeutic interventional procedure is considered a treating physician. A radiologist performing
a diagnostic interventional or diagnostic procedure is not considered a treating physician.
3. A “treating practitioner” is a nurse practitioner, clinical nurse specialist, or physician assistant, as defined in §1861(s)(2)(K)
of the Act, who furnishes, pursuant to State law, a consultation or treats a beneficiary for a specific medical problem, and
who uses the result of a diagnostic test in the management of the beneficiary’s specific medical problem.
4. A “testing facility” is a Medicare provider or supplier that furnishes diagnostic tests. A testing facility may include a
physician or a group of physicians (e.g., radiologist, pathologist), a laboratory, or an independent diagnostic testing
facility (IDTF).
5. An “order” is a communication from the treating physician/practitioner requesting that a diagnostic test be performed for
a beneficiary. The order may conditionally request an additional diagnostic test for a particular beneficiary if the result of
the initial diagnostic test ordered yields to a certain value determined by the treating physician/practitioner (e.g., if test
X is negative, then perform test Y). An order may include the following forms of communication:
a. A written document signed by the treating physician/practitioner, which is hand-delivered, mailed, or faxed to the
testing facility; NOTE: No signature is required on orders for clinical diagnostic tests paid on the basis of the
physician fee schedule or for physician pathology services.
b. A telephone call by the treating physician/practitioner or his/her office to the testing facility; and
c. An electronic mail by the treating physician/practitioner or his/her office to the testing facility.
NOTE: If the order is communicated via telephone, both the treating physician/practitioner or his/her office, and the testing facility
must document the telephone call in their respective copies of the beneficiary’s medical records.
B. Treating Physician/Practitioner Ordering of Diagnostic Tests.—The treating physician/practitioner must order all diagnostic
tests furnished to a beneficiary who is not an institutional inpatient or outpatient. A testing facility that furnishes a diagnostic
test ordered by the treating physician/practitioner may not change the diagnostic test or perform an additional diagnostic test
without a new order. This policy is intended to prevent the practice of some testing facilities to routinely apply protocols
which require performance of sequential tests.
C. Different Diagnostic Test.—When an interpreting physician, e.g., radiologist, cardiologist, family practitioner, general
internist, neurologist, obstetrician, gynecologist, ophthalmologist, thoracic surgeon, vascular surgeon, at a testing facility
determines that an ordered diagnostic radiology test is clinically inappropriate or suboptimal, and that a different diagnostic
test should be performed (e.g., an MRI should be performed instead of a CT scan because of the clinical indication), the
interpreting physician/testing facility may not perform the unordered test until a new order from the treating physician/
practitioner has been received. Similarly, if the result of an ordered diagnostic test is normal and the interpreting physician
believes that another diagnostic test should be performed (e.g., a renal sonogram was normal and based on the clinical
indication, the interpreting physician believes an MRI will reveal the diagnosis), an order from the treating physician must be
received prior to performing the unordered diagnostic test.
D. Additional Diagnostic Test Exception.—If the testing facility cannot reach the treating physician/practitioner to change the
order or obtain a new order and documents this in the medical record, then the testing facility may furnish the additional
diagnostic test if all of the following criteria apply:
1. The testing center performs the diagnostic test ordered by the treating physician/practitioner;
2. The interpreting physician at the testing facility determines and documents that, because of the abnormal result of the
diagnostic test performed, an additional diagnostic test is medically necessary;
3. Delaying the performance of the additional diagnostic test would have an adverse effect on the care of the beneficiary;
4. The result of the test is communicated to and is used by the treating physician/practitioner in the treatment of the
beneficiary; and
5. The interpreting physician at the testing facility documents in his/her report why additional testing was done.
EXAMPLE: (a) The last cut of an abdominal CT scan with contrast shows a mass requiring a pelvic CT scan to further
delineate the mass; (b) a bone scan reveals a lesion on the femur requiring plain films to make a diagnosis.
12 NHIC MARCH 2003
 MEDICARE DIRECTIVES
Ordering Diagnostic Tests and Payment Conditions for Radiology Services (Continued)
E. Interpreting Physician Exception.—This exception applies to an interpreting physician of a testing facility who furnishes a
diagnostic test to a beneficiary who is not a hospital inpatient or outpatient. The interpreting physician must document
accordingly in his/her report to the treating physician/practitioner.
1. Test Design.—Unless specified in the order, the interpreting physician may determine, without notifying the treating
physician/practitioner, the parameters of the diagnostic test (e.g., number of radiographic views obtained, thickness of
tomographic sections acquired, use or non-use of contrast media).
2. Clear Error.—The interpreting physician may modify, without notifying the treating physician/practitioner, an order with
clear and obvious errors that would be apparent to a reasonable layperson, such as the patient receiving the test (e.g., x-
ray of wrong foot ordered).
3. Patient Condition.—The interpreting physician may cancel, without notifying the treating physician/practitioner, an
order because the beneficiary’s physical condition at the time of diagnostic testing will not permit performance of the test
(e.g., a barium enema cannot be performed because of residual stool in colon on scout KUB; PA/LAT of the chest cannot
be performed because the patient is unable to stand). When an ordered diagnostic test is cancelled, any medically
necessary preliminary or scout testing performed is payable.
F. Surgical/Cytopathology Exception.—This exception applies to an independent laboratory’s pathologist or a hospital pathologist
who furnishes a pathology service to a beneficiary who is not a hospital inpatient or outpatient, and where the treating
physician/practitioner does not specifically request additional tests the pathologist may need to perform. When a surgical or
cytopathology specimen is sent to the pathology laboratory, it typically comes in a labeled container with a requisition form
that reveals the patient demographics, the name of the physician/practitioner, and a clinical impression and/or brief history.
There is no specific order from the surgeon or the treating physician/practitioner for a certain type of pathology service. While
the pathologist will generally perform some type of examination or interpretation on the cells or tissue, there may be additional
tests, such as special stains, that the pathologist may need to perform, even though they have not been specifically requested
by the treating physician/practitioner. The pathologist may perform such additional tests under the following circumstances:
1. These services are medically necessary so that a complete and accurate diagnosis can be reported to the treating
physician/practitioner;
2. The results of the tests are communicated to and are used by the treating physician/practitioner in the treatment of the
beneficiary; and
3. The pathologist documents in his/her report why additional testing was done.
EXAMPLE: A lung biopsy is sent by the surgeon to the pathology department, and the pathologist finds a granuloma which is
suspicious for tuberculosis. The pathologist cultures the granuloma, sends it to bacteriology, and requests smears
for acid fast bacilli (tuberculosis). The pathologist is expected to determine the need for these studies so that the
surgical pathology examination and interpretation can be completed and the definitive diagnosis reported to the
treating physician for use in treating the beneficiary.
15021.1 ICD-9-CM Coding for Diagnostic Tests.—
As required by the Health Insurance Portability and Accountability Act (HIPAA), the Secretary published a rule designating the ICD-
9-CM and its Official ICD-9-CM Guidelines for Coding and Reporting as one of the approved code sets for use in reporting diagnoses
and inpatient procedures. This final rule requires the use of ICD-9-CM and its official coding and reporting guidelines by most health
plans (including Medicare) by October 16, 2002. The Administrative Simplification Act of 2001, however, permits plans and providers
to apply for an extension until October 16, 2003. HHS anticipates that most plans and providers will obtain this extension.
The Official ICD-9-CM Guidelines for Coding and Reporting provides guidance on coding. The ICD-9-CM Coding Guidelines for
Outpatient Services, which is part of the Official ICD-9-CM Guidelines for Coding and Reporting, provides guidance on diagnosis
coding specific to outpatient facilities and physician offices.
The ICD-9-CM Coding Guidelines for Outpatient Services (hospital-based and physician office) have instructed physicians to report
diagnoses based on test results. The Coding Clinic for ICD-9-CM confirms this longstanding coding guideline. CMS conforms with
these longstanding official coding and reporting guidelines.
The following are instructions and examples for coding specialists, contractors, physicians, hospitals, and other health care providers
to use in determining the use of ICD-9-CM codes for coding diagnostic test results. The instructions below provide guidance on the
appropriate assignment of ICD-9-CM diagnosis codes to simplify coding for diagnostic tests consistent with the ICD-9-CM Guidelines
for Outpatient Services (hospital-based and physician office). Note that physicians are responsible for the accuracy of the information
submitted on a bill.
Additional examples of using ICD-9-CM codes consistently with ICD-9-CM Coding Guidelines for Outpatient Services are provided at
the end of this section.
A. Determining the Appropriate Primary ICD-9-CM Diagnosis Code For Diagnostic Tests Ordered Due to Signs and/or Symptoms.—
1. If the physician has confirmed a diagnosis based on the results of the diagnostic test, the physician interpreting the test
should code that diagnosis. The signs and/or symptoms that prompted ordering the test may be reported as additional
diagnoses if they are not fully explained or related to the confirmed diagnosis.
EXAMPLE 1: A surgical specimen is sent to a pathologist with a diagnosis of “mole.” The pathologist personally reviews the
slides made from the specimen and makes a diagnosis of “malignant melanoma”. The pathologist should report a
diagnosis of “malignant melanoma” as the primary diagnosis.

MARCH 2003 NHIC 13

MEDICARE DIRECTIVES
Ordering Diagnostic Tests and Payment Conditions for Radiology Services (Continued)
EXAMPLE 2: A patient is referred to a radiologist for an abdominal CT scan with a diagnosis of abdominal pain. The CT scan
reveals the presence of an abscess. The radiologist should report a diagnosis of “intra-abdominal abscess.”
EXAMPLE 3: A patient is referred to a radiologist for a chest x-ray with a diagnosis of “cough”. The chest x-ray reveals a 3 cm
peripheral pulmonary nodule. The radiologist should report a diagnosis of “pulmonary nodule” and may sequence
“cough” as an additional diagnosis.
2. If the diagnostic test did not provide a definitive diagnosis or was normal, the testing facility or the interpreting physician
should code the sign(s) or symptom(s) that prompted the treating physician to order the study.
EXAMPLE 1: A patient is referred to a radiologist for a spine x-ray due to complaints of “back pain”. The radiologist performs the
x-ray, and the results are normal. The radiologist should report a diagnosis of “back pain” since this was the reason
for performing the spine x-ray.
EXAMPLE 2: A patient is seen in the ER for chest pain. An EKG is normal, and the final diagnosis is chest pain due to suspected
gastroesophageal reflux disease (GERD). The patient was told to follow-up with his primary care physician for
further evaluation of the suspected GERD. The primary diagnosis code for the EKG should be chest pain. Although
the EKG was normal, a definitive cause for the chest pain was not determined.
3. No CMS changes.
4. Positron Emission Tomography (PET) Scans (HCPCS Codes G0030 -G0047).—For procedures furnished on or after
March 14, 1995, pay for PET procedure of the heart under the limited coverage policy set forth in §50-36 of the Coverage
Issues Manual (CMS Pub. 6) using the billing instructions in §4173 of the Medicare Carriers Manual.”
Centers for Medicare & Medicaid Services released only the revised portion of §15022. Please note revisions in bold text. If you would
like the entire section 15022, please go to www.cms.hhs.gov/manuals/14_car/3b15000.asp#_15022_0
“§15022 D. Radiation Oncology (Therapeutic Radiology) (CPT 77261-77799).—
1. Weekly Radiation Therapy Management (CPT 77427).—Pay for a physician’s weekly treatment management services
under code 77427. Billing entities must indicate on each claim the number of fractions for which payment is sought.
A weekly unit of treatment management is equal to five fractions or treatment sessions. A week for the purpose of making payments
under these codes is comprised of five fractions regardless of the actual time period in which the services are furnished. It is not
necessary that the radiation therapist personally examine the patient during each fraction for the weekly treatment management code
to be payable. Multiple fractions representing two or more treatment sessions furnished on the same day may be counted as long as
there has been a distinct break in therapy sessions, and the fractions are of the character usually furnished on different days. Code
77427 is also reported if there are three or four fractions beyond a multiple of five at the end of a course of treatment; one or two
fractions beyond a multiple of five at the end of a course of treatment are not reported separately. The professional services furnished
during treatment management typically consist of: Review of port films; review of dosimetry, dose delivery, and treatment parameters;
review of patient treatment set-ups; examination of patient for medical evaluation and management, (e.g., assessment of the patient’s
response to treatment, coordination of care and treatment, review of imaging and/or lab test results).
EXAMPLE: 18 fractions = 4 weekly services
62 fractions = 12 weekly services
8 fractions = 2 weekly services
6 fractions = 1 weekly service
If billings have occurred which indicate that the treatment course has ended (and, therefore, the number of residual fractions has been
determined), but treatments resume, adjust your payments for the additional services consistent with the above policy.
EXAMPLE: 8 fractions = payment for 2 weeks
2 additional fractions are furnished by the same physician. No additional Medicare payment is made for the 2
additional fractions.
There are situations in which beneficiaries receive a mixture of simple (code 77420), intermediate (code 77425), and complex (code 77430)
treatment management services during a course of treatment. In such cases, pay under the weekly treatment management code that
represents the more frequent of the fractions furnished during the five-fraction week. For example, an intermediate weekly treatment
management service is payable when, in a grouping of five fractions, a beneficiary receives three intermediate and two simple fractions.
2. Services Bundled Into Treatment Management Codes.—Make no separate payment for any of the following services
rendered by the radiation oncologists or in conjunction with radiation therapy:
11920 Tattooing, intradermal introduction of insoluble opaque pigments to correct color defects of skin; 6.0 sq. cm or
less
11921 6.1 to 20.0 sq. cm
11922 each additional 20.0 sq. cm
16000 Initial treatment, first degree burn, when no more than local treatment is required
16010 Dressings and/or debridement, initial or subsequent; under anesthesia, small
16015 under anesthesia, medium or large, or with major debridement
16020 without anesthesia, office or hospital, small
16025 without anesthesia, medium (e.g., whole face or whole extremity)
16030 without anesthesia, large (e.g., more than one extremity)
36425 Venipuncture, cut down age 1 or over
14 NHIC MARCH 2003
 MEDICARE DIRECTIVES
Ordering Diagnostic Tests and Payment Conditions for Radiology Services (Continued)
53670 Catheterization, urethra; simple
53675 complicated (may include difficult removal of balloon catheter)
99211 Office or other outpatient visit, established patient; Level I
99212 Level II
99213 Level III
99214 Level IV
99215 Level V
99238 Hospital discharge day management
99281 Emergency department visit, new or established patient; Level I
99282 Level II
99283 Level III
99284 Level IV
99285 Level V
90780 IV infusion therapy, administered by physician or under direct supervision of physician; up to one hour
90781 each additional hour, up to eight (8) hours
90841 Individual medical psychotherapy by a physician, with continuing medical diagnostic evaluation, and drug
management when indicated, including psychoanalysis, insight oriented, behavior modifying or supportive
psychotherapy; time unspecified
90843 approximately 20 to 30 minutes
90844 approximately 45 to 50 minutes
90847 Family medical psychotherapy (conjoint psychotherapy) by a physician, with continuing medical diagnostic
evaluation, and drug management when indicated
99050 Services requested after office hours in addition to basic service
99052 Services requested between 10:00 PM and 8:00 AM in addition to basic service
99054 Services requested on Sundays and holidays in addition to basic service
99058 Office services provided on an emergency basis
99071 Educational supplies, such as books, tapes, and pamphlets, provided by the physician for the patient’s
education at cost to physician
99090 Analysis of information data stored in computers (e.g., ECG, blood pressures, hematologic data)
99150 Prolonged physician attendance requiring physician detention beyond usual service (e.g., operative standby,
monitoring ECG, EEG, intrathoracic pressures, intravascular pressures, blood gases during surgery, standby
for newborn care following caesarean section); 30 minutes to one hour”

Outpatient Rehabilitation Services – Financial Limitation

Section 4541(a)(2) of the Balanced Budget Act (BBA) (P.L. 105-33) of 1997, which added §1834(k)(5) to the Social Security Act (the Act),
required payment under a prospective payment system for outpatient rehabilitation services. Outpatient rehabilitation services include
the following services:
• Physical therapy (PT) (which includes outpatient speech-language pathology); and
• Occupational therapy (OT).
Section 4541(c) of the BBA required application of a financial limitation to all outpatient rehabilitation services (with the exception of
outpatient departments of a hospital) of an annual per beneficiary limit of $1500 for all outpatient PT services (including speech-
language pathology services) and a separate $1500 limit for all OT services. The $1500 limit is based on incurred expenses and includes
applicable deductible ($100) and coinsurance (20 percent). The annual limitation does not apply to services furnished directly or under
arrangement by a hospital to an outpatient, or to a hospital inpatient who is not in a covered Part A stay. The BBA provided that the
$1500 limits be indexed by the Medicare Economic Index (MEI) each year beginning in 2002. This indexed amount is $1590 for 2003.
The limitation is based on the services the Medicare beneficiary receives, not the type of practitioner who provides the service.
Therefore, physical therapists, speech-language pathologists, occupational therapists as well as physicians and non-physicians
practitioners could render a therapy service.
As a transitional measure, effective January 1, 1999, providers were instructed to keep track of the allowed incurred expenses. This
process was put in place to assure providers did not bill Medicare for patients who exceeded the annual $1500 limitations for PT and
for OT services rendered by individual providers.
Moratorium on Therapy Claims
Section 211 of the Balanced Budget Refinement Act of 1999 placed a 2-year moratorium on the application of the financial limitation for
claims for therapy services with dates of service January 1, 2000 through December 31, 2001. Section 421 of the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, extended the moratorium on application of the financial limitation to
claims for outpatient rehabilitation services with dates of service January 1, 2002, through December 31, 2002. Therefore, the moratorium
was for a 3-year period and applied to outpatient rehabilitation claims with dates of service January 1, 2000, through December 31, 2002.
Application of Financial Limitation
The moratorium on the application of the financial limitation is no longer in effect. Beginning with claims submitted for dates of service
on and after July 1, 2003, NHIC will apply the financial limitation for OT and PT (including speech-language pathology) services in a
prospective manner through December 31, 2003. For CY 2003, the financial limitation could not be implemented prior to July 1, 2003
because of systems limitations. For each subsequent calendar year the financial limitations will be effective for the entire calendar year.

MARCH 2003 NHIC 15

MEDICARE DIRECTIVES
Outpatient Rehabilitation Services – Financial Limitation (Continued)
There are two separate $1590 limitations: one for PT (including speech-language pathology) services and the other for OT services.
Effective July 1, 2003, for claims with dates of service on or after July 1, 2003, the Common Working File (CWF) will track the $1590 PT
(which includes speech language pathology services) and the $1590 OT financial limitation for outpatient rehabilitation services.
NOTE: Medicare carriers will not be responsible for tracking the dollar amounts of incurred expenses of rehabilitation services for each
therapy limitation.
This financial limitation is an annual per beneficiary limitation. The $1590 limitation is on the allowed incurred expenses, which are
defined as the Medicare Physician Fee Schedule (MPFS) amount prior to any application of deductible ($100) and co-insurance (20
percent). If the beneficiary has already satisfied the Medicare Part B deductible, the maximum amount payable by the Medicare program
is $1272; that is 80 percent of the $1590 for PT (including speech language pathology) and 80 percent of the $1590 for OT. The
beneficiary is responsible for paying the remaining 20 percent co-insurance.
See the following examples:
EXAMPLE I - Part B Deductible Previously Met:
$1590 (MPFS allowed amount) x 80 percent = $1272 (Medicare reimbursement).
The amount applied to the limitation in this example is $1590. The Medicare program pays $1272 and the beneficiary is responsible for
$318 co-insurance.
EXAMPLE II - Part B Deductible Not Met:
$1590 (MPFS allowed amount) - $100 (Part B deductible) = $1490 x 80 percent = $1192 (Medicare reimbursement).
The amount applied to the limitation in this example is $1590. The Medicare program pays $1192 and the beneficiary is responsible for
$398, ($100 Part B deductible and $298 co-insurance).
EXAMPLE III - Part B Deductible Previously Met:
$800 (MPFS allowed amount) x 80 percent = $640 (Medicare reimbursement).
The amount applied to the limitation in this example is $800. The Medicare program pays $640 and the beneficiary is responsible for
$160 co-insurance.
EXAMPLE IV - Part B Deductible Not Met:
$800 (MPFS allowed amount) - $100 (Part B deductible) = $700 x 80 percent = $560 (Medicare reimbursement).
The amount applied to the limitation in this example is $800. The Medicare program pays $560 and the beneficiary is responsible for
$240, ($100 Part B Deductible and $140 co-insurance).
NOTE: In the above examples the MPFS allowed amount is the lower of charges or the MPFS rate times the unit.
The CWF will be tracking the financial limitation based on presence of therapy modifiers GN, GO, and GP; therefore, providers/
physicians/suppliers must continue to report one of these modifiers for any therapy service that is provided. The definitions of the
therapy modifiers have been changed effective January 1, 2003; they are as follows:
GN Services delivered under an outpatient speech-language pathology plan of care.
GO Services delivered under an outpatient OT plan of care.
GP Services delivered under an outpatient PT plan of care.
These modifiers do not allow a provider to deliver services that they are not recognized by Medicare to perform.
If an audiology procedure (HCPCS) code is performed by an audiologist (specialty code 64), the above modifiers should not be
reported, as these procedures are not subject to the financial limitation.
Provider Billing Instructions
All claims containing any of the following list of “Applicable Outpatient Rehabilitation HCPCS Codes” should contain one of the
therapy modifiers (GN, GO, GP), except as follows: Claims from physicians (all specialty codes) and non-physician practitioners,
including specialty codes 50, 89, and 97 do not have to contain modifiers for the HCPCS codes for casts and splints as noted with a “+”
sign below.
For all other claims submitted by physicians or non-physician practitioners (as previously noted above) containing these applicable
HCPCS codes without therapy modifiers, NHIC will return the claim to the provider.
If specialty codes 65, 67, 73, or 74 are present on the claim and an applicable HCPCS code is without one of the therapy modifiers (GN,
GO, or GP) NHIC will return the claim to the provider.
Once the financial limitation has been reached, beneficiaries may receive outpatient rehabilitation services furnished directly by or
under arrangement with a hospital.

Call NHIC Customer Service in your state to

verify and/or obtain information to update
practice information
16 NHIC MARCH 2003
 MEDICARE DIRECTIVES
Outpatient Rehabilitation Services – Financial Limitation (Continued)
Applicable Outpatient Rehabilitation HCPCS Codes
The following codes apply to each financial limitation except as noted below. NOTE: The following codes do not imply that services are
covered.
29065+ 29075+ 29085+ 29086+ 29105+ 29125+ 29126+ 29130+ 29131+ 29200
29220 29240 29260 29280 29345+ 29355+ 29365+ 29405+ 29425+ 29445+
29505+ 29515+ 29520 29530 29540 29550 29580 29590 64550 90901
90911 92506 92507 92508 92526 92601++ 92602++ 92603++ 92604++ 92607
92608 92609 92610 92611 92612 92614 92616 95831 95832 95833
95834 95851 95852 96000 96001 96002 96003 96105 96110 96111
96115 97001 97002 97003 97004 97012 97016 97018 97020 97022
97024 97026 97028 97032 97033 97034 97035 97036 97039 97110
97112 97113 97116 97124 97139 97140 97150 97504** 97520 97530
97532 97533 97535 97537 97542 97601+ 97703 97750 97799* V5362*
V5363* V5364* G0279*** G0280*** G0281 G0283 0020T*** 0029T***
* The physician fee schedule abstract file described below does not contain a price for codes 97799, V5362, V5363, and V5364 since
they are priced by the carrier. Therefore, contact the carrier to obtain the appropriate fee schedule amount in order to make proper
payment for these codes.
** Code 97504 should not be reported with code 97116. However, if code 97504 was performed on an upper extremity and code 97116
(gait training) was also performed, both codes may be billed with modifier 59 to denote a separate anatomic site.
*** The physician fee schedule abstract file described below does not contain a price for codes G0279, G0280, 0020T, or 0029T, and
coverage is determined by the carrier. Therefore, contact the carrier to determine if this code is covered, and, if so, obtain the
appropriate fee schedule amount in order to make proper payment for this code.
+ These codes for casts and splints will not apply to the financial limitations when billed by physicians and non-physician
practitioners, as appropriate. When these codes are billed by other providers (bill types 22X, 23X, 34X, 74X, and 75X) or physical
therapists or occupational therapists in private practice, specialty codes “65”, “67”, “73”, or “74” they must be billed with a GO,
or GP modifier.
++ If an audiology procedure (HCPCS) code is performed by an audiologist, the above modifiers should not be reported as these
procedures are not subject to the financial limitation. When these HCPCS codes are billed under a speech language pathology
plan of care, they should be accompanied with a GN modifier and applied to the financial limitation.
Provider Responsibility
Providers must notify their Medicare beneficiaries of the therapy financial limitations and that these limits are applied in all settings
except hospital outpatient departments. Advanced Beneficiary Notices cannot be used because of the statutory nature of the financial
limitations. Therefore, providers should inform beneficiaries that beneficiaries are responsible for 100% of the costs of therapy services
above each respective therapy $1590 limit, unless this outpatient care is furnished directly or under arrangement by a hospital. It is the
provider’s responsibility to present each beneficiary with accurate information about the therapy limits and that, where necessary,
appropriate care above the $1590 limit can be obtained at a hospital outpatient therapy department.
Providers should use the Notice of Exclusion from Medicare Benefits (NEMB) form to inform beneficiaries of the therapy financial
limitation at their first therapy encounter with the beneficiary. When using the NEMB form, the practitioner checks box #1 and writes
the reason for denial in the space provided at the top of the form.
The NEMB form can be found at: http://www.cms.hhs.gov/medlearn/refABN.asp.

Single Drug Pricer (SDP) and Drug Code Update

Centers for Medicare & Medicaid Services clarifies its instructions listed below for the single drug pricer by describing a procedure for
identifying uniform, consistent payment allowances that are based on 95% of the average wholesale price (AWP) for Medicare-
covered drugs and biologicals. Please note the following information for your files.
“Standardizing Prices for Medicare Covered Drugs
On January 1, 2003, the Centers for Medicare & Medicaid Services (CMS) will be implementing a single drug pricer (SDP) for drugs and
biologicals (hereinafter “drugs”) with respect to drugs covered under Medicare Part B and priced by local carriers.
In the past, CMS has received much criticism concerning excessive expenditures related to the payment rates for the approximately 400
drugs that are currently paid based on 95% average wholesale price (AWP); i.e., physicians’ offices, outpatient hospitals, dialysis
centers, etc. Currently, this payment rate is set at 95 percent of the drug’s AWP; however, these payments have sometimes varied
depending upon the individual local carrier’s application of the payment methodology. Accordingly, CMS is establishing the SDP to
correct identified differences amongst its local carriers and is establishing a uniform Medicare payment allowance as contemplated by
the regulation (42 C.F.R. 405.517). Drug prices will be established centrally and will be more closely monitored. As a result, physicians
and other practitioners will each receive the same payment for the same drug regardless of where their claim for the drug is submitted.

MARCH 2003 NHIC 17

MEDICARE DIRECTIVES
Single Drug Pricer (SDP) and Drug Code Update (Continued)
CMS will continue, in accordance with its longstanding practice, to set a price for each drug based on 95% of AWP, and will continue
to rely on published compilations (e.g., RedBook and First Data Bank) to identify wholesale drug prices. Carriers, with the exception
of DMERCs, and fiscal intermediaries will be furnished with drug pricing files from CMS and will begin processing claims they receive,
for each drug identified on the file, on the basis of the prices shown on these files.
CMS believes that this initiative reflects an innovative approach to resolving some of the problems relating to the pricing of Medicare-
covered drugs.”
The presence or absence of a particular drug on the SDP file does not represent a determination that the Medicare program either
covers or does not cover that drug. The amounts shown on the SDP file indicate the maximum Medicare payment allowance, if the
Medicare contractor determines that the drug meets the program’s requirements for coverage. Similarly, the absence of a particular
drug from the SDP file means that if the Medicare contractor determines that the drug is covered by Medicare, the local contractor
must then determine the program’s payment allowance by applying the program’s standard drug payment policy rules. Medicare
contractors separately determine whether a particular drug meets the program’s general requirements for coverage and, if so,
whether payment may be made for the drug in the particular circumstance under which it was furnished. Examples of this latter
determination include but are not limited to determinations as to whether a particular drug and route of administration are reasonable
and necessary to treat the beneficiary’s condition, whether a drug may be excluded from payment because it is usually self-administered,
and whether a least costly alternative to the drug exists.
ATTACHMENT C contains the HCPCS drug pricing file effective January 1, 2003. Please note: the correct allowance for Code J2352 is
$88.69. J2352 may be used only to report the LAR (long acting release, usually a 3-month dose) depot form of this drug. Please retain
for your files.
Drug Code Updates
Centers for Medicare & Medicaid Services updated the following drugs. Please make note for your files.

Description Procedure Current Brand Name(s) Updated Effective

Code Price Price Date
INFLUENZA VIRUS VACCINE, SPLIT VIRUS, 6-35 MONTHS DOSAGE 90657 $7.32 Flushield, Fluvirin, $8.02 07/01/02
Fluzone
INFLUENZA VIRUS VACCINE, SPLIT VIRUS, 3 YEARS AND ABOVE 90658 $7.32 Flushield, Fluvirin, $8.02 07/01/02
DOSAGE Fluzone
INFLUENZA VIRUS VACCINE, WHOLE VIRUS, FOR 90659 $7.32 Flushield, Fluvirin, $8.02 07/01/02
INTRAMUSCULAR OR JET INJECTION USE Fluzone
TACROLIMUS, PARENTERAL, 5 MG J7525 $113.15 Prograf $118.80 01/01/03
MYCOPHENOLATE MOFETIL, ORAL, 250 MG J7517 $2.53 Cellcept $2.68 01/01/03
INJECTION, APROTININ, 10,000 KIU Q2003 $2.27 Trasylol $13.64 01/01/03
INJECTION, FOMEPIZOLE, 1.5 MG Q2008 $1.09 Antizol $1.15 01/01/03

Pricing is based on the most recent available editions of Red Book.

Please check NHIC’s website periodically for additional drug pricing updates and/or corrections.
* Correction to a previously published price or effective date.
Flu, Pneumococcal Pneumonia, and hepatitis B – 2003 Administration Pricing Updates
Listed below are the 2003 Medicare Physicians Fee Schedule updates for flu (G0008), pneumococcal pneumonia (G0009), and hepatitis
B (G0010) administration services effective March 1, 2003. Please note fees based by Locality.

G0008 G0009 G0010

MA 01 $8.84 $8.84 $8.84
MA 99 $8.08 $8.08 $8.08
ME 03 $7.14 $7.14 $7.14
ME 99 $6.53 $6.53 $6.53
NH 40 $7.41 $7.41 $7.41
VT 50 $7.01 $7.01 $7.01

MA 01 – Middlesex, Norfolk, Suffolk Counties

MA 99 – Rest of State
ME 03 – Cumberland and York Counties
ME 99 – Rest of State
NH 40 – Entire State
VT 50 – Entire State

18 NHIC MARCH 2003

 MEDICARE DIRECTIVES
Supervised Physicians in a Teaching Setting – CMS Revision
Centers for Medicare & Medicaid Services revised the documentation requirements for evaluation and management (E/M) services
billed by teaching physicians, effective November 22, 2002. The revised language, indicated in bold text, makes it clear that for E/M
services, teaching physicians need not repeat documentation already provided by a resident. Additionally, the revisions clarify
policies for services involving students and other issues and update regulatory references.
“SUPERVISING PHYSICIANS IN TEACHING SETTINGS
A. Definitions.—For purposes of this section, the following definitions apply:
1. Resident means an individual who participates in an approved graduate medical education (GME) program or a physician
who is not in an approved GME program but who is authorized to practice only in a hospital setting. The term includes
interns and fellows in GME programs recognized as approved for purposes of direct GME payments made by the fiscal
intermediary. Receiving a staff or faculty appointment or participating in a fellowship does not by itself alter the status
of “resident”. Additionally, this status remains unaffected regardless of whether a hospital includes the physician in
its full time equivalency count of residents.
2. A student means an individual who participates in an accredited educational program (e.g., a medical school) that is not
an approved GME program. A student is never considered to be an intern or a resident. Medicare does not pay for any
service furnished by a student. See Section C. 2 for a discussion concerning E/M service documentation performed by
students.
3. Teaching physician means a physician (other than another resident) who involves residents in the care of his or her
patients.
4. Direct medical and surgical services mean services to individual patients that are either personally furnished by a
physician or furnished by a resident under the supervision of a physician in a teaching hospital making the reasonable
cost election for physician services furnished in teaching hospitals. All payments for such services are made by the fiscal
intermediary for the hospital.
5. Teaching hospital means a hospital engaged in an approved GME residency program in medicine, osteopathy, dentistry,
or podiatry.
6. Teaching setting means any provider, hospital-based provider, or nonprovider setting in which Medicare payment for the
services of residents is made by the fiscal intermediary under the direct graduate medical education payment methodology
or freestanding SNF or HHA in which such payments are made on a reasonable cost basis.
7. Critical or key portion means that part (or parts) of a service that the teaching physician determines is (are) a critical or key
portion(s). For purposes of this section, these terms are interchangeable.
8. Documentation means notes recorded in the patient’s medical records by a resident, and/or teaching physician or
others as outlined in specific situations (section C) regarding the service furnished. Documentation may be dictated
and typed, hand-written or computer-generated, and typed or handwritten. Documentation must be dated and include a
legible signature or identity.
Pursuant to 42 CFR 415.172(b), documentation must identify, at a minimum, the service furnished, the participation of the teaching
physician in providing the service, and whether the teaching physician was physically present.
9. Physically present means that the teaching physician is located in the same room (or partitioned or curtained area, if
the room is subdivided to accommodate multiple patients) as the patient and/or performs a face-to-face service.
B. Payment for Teaching Physicians.—Pursuant to 42 CFR 415.170, pay for physician services provided in teaching settings
using the physician fee schedule only if:
1. Services are personally furnished by a physician who is not a resident;
2. A teaching physician was physically present during the critical or key portions of the service that a resident performs
subject to the exceptions as provided below in Section C; or
3. A teaching physician provides care under the conditions contained in Section C. 3. which follows.
In all situations, the services of the resident are payable through either the direct GME payment or reasonable cost payments made by
the fiscal intermediary.
C. General Documentation Instructions and Common Scenarios.—
1. Evaluation and Management (E/M) Services.—For a given encounter, the selection of the appropriate level of E/M
service should be determined according to the code definitions in the American Medical Association’s Current Procedural
Terminology (CPT) and any applicable documentation guidelines.
For purposes of payment, E/M services billed by teaching physicians require that they personally document at least the following:
a. That they performed the service or were physically present during the key or critical portions of the service when
performed by the resident; and
b. The participation of the teaching physician in the management of the patient.
When assigning codes to services billed by teaching physicians, reviewers will combine the documentation of both the resident and
the teaching physician.

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MEDICARE DIRECTIVES
Supervised Physicians in a Teaching Setting – CMS Revision (Continued)
Documentation by the resident of the presence and participation of the teaching physician is not sufficient to establish the presence
and participation of the teaching physician.
On medical review, the combined entries into the medical record by the teaching physician and the resident constitute the documentation
for the service and together must support the medical necessity of the service.
Following are three common scenarios for teaching physicians providing E/M services:
Scenario 1.—
The teaching physician personally performs all the required elements of an E/M service without a resident. In this scenario the
resident may or may not have performed the E/M service independently.
• In the absence of a note by a resident, the teaching physician must document as he or she would document an E/M service
in a non-teaching setting.
• Where a resident has written notes, the teaching physician’s note may reference the resident’s note. The teaching physician
must document that he or she performed the critical or key portion(s) of the service and that he or she was directly involved
in the management of the patient. For payment, the composite of the teaching physician’s entry and the resident’s entry
together must support the medical necessity of the billed service and the level of the service billed by the teaching physician.
Scenario 2.—
The resident performs the elements required for an E/M service in the presence of, or jointly with, the teaching physician and the
resident documents the service. In this case, the teaching physician must document that he or she was present during the performance
of the critical or key portion(s) of the service and that he or she was directly involved in the management of the patient. The teaching
physician’s note should reference the resident’s note. For payment, the composite of the teaching physician’s entry and the resident’s
entry together must support the medical necessity and the level of the service billed by the teaching physician.
Scenario 3.—
The resident performs some or all of the required elements of the service in the absence of the teaching physician and documents his/
her service. The teaching physician independently performs the critical or key portion(s) of the service with or without the resident
present and, as appropriate, discusses the case with the resident. In this instance, the teaching physician must document that he or
she personally saw the patient, personally performed critical or key portions of the service, and participated in the management of the
patient. The teaching physician’s note should reference the resident’s note. For payment, the composite of the teaching physician’s
entry and the resident’s entry together must support the medical necessity of the billed service and the level of the service billed by
the teaching physician.
Following are examples of minimally acceptable documentation for each of these scenarios:
Scenario 1.—
Admitting Note: “I performed a history and physical examination of the patient and discussed his management with the resident. I
reviewed the resident’s note and agree with the documented findings and plan of care.”
Follow-up Visit: “Hospital Day #3. I saw and evaluated the patient. I agree with the findings and the plan of care as documented in the
resident’s note.”
Follow-up Visit: “Hospital Day #5. I saw and examined the patient. I agree with the resident’s note except the heart murmur is louder,
so I will obtain an echo to evaluate.”
(NOTE: In this scenario if there are no resident notes, the teaching physician must document as he/she would document an E/M
service in a non-teaching setting.)
Scenario 2.—
Initial or Follow-up Visit: “I was present with resident during the history and exam. I discussed the case with the resident and agree
with the findings and plan as documented in the resident’s note.”
Follow-up Visit: “I saw the patient with the resident and agree with the resident’s findings and plan.”
Scenario 3.—
Initial Visit: “I saw and evaluated the patient. I reviewed the resident’s note and agree, except that picture is more consistent with
pericarditis than myocardial ischemia. Will begin NSAIDs.”
Initial or Follow-up Visit: “I saw and evaluated the patient. Discussed with resident and agree with resident’s findings and plan as
documented in the resident’s note.”
Follow-up Visit: “See resident’s note for details. I saw and evaluated the patient and agree with the resident’s finding and plans as
written.”
Follow-up Visit: “I saw and evaluated the patient. Agree with resident’s note but lower extremities are weaker, now 3/5; MRI of L/S
Spine today.”
Following are examples of unacceptable documentation:
• “Agree with above.”, followed by legible countersignature or identity;
• “Rounded, Reviewed, Agree.”, followed by legible countersignature or identity;
• “Discussed with resident. Agree.”, followed by legible countersignature or identity;

20 NHIC MARCH 2003

 MEDICARE DIRECTIVES
Supervised Physicians in a Teaching Setting – CMS Revision (Continued)
• “Seen and agree.”, followed by legible countersignature or identity;
• “Patient seen and evaluated.”, followed by legible countersignature or identity; and
• A legible countersignature or identity alone.
Such documentation is not acceptable, because the documentation does not make it possible to determine whether the teaching
physician was present, evaluated the patient, and/or had any involvement with the plan of care.
2. E/M Service Documentation Provided By Students.—Any contribution and participation of a student to the performance
of a billable service (other than the review of systems and/or past family/social history which are not separately billable,
but are taken as part of an E/M service) must be performed in the physical presence of a teaching physician or physical
presence of a resident in a service meeting the requirements set forth in this section for teaching physician billing.
Students may document services in the medical record. However, the documentation of an E/M service by a student that may be
referred to by the teaching physician is limited to documentation related to the review of systems and/or past family/social history. The
teaching physician may not refer to a student’s documentation of physical exam findings or medical decision making in his or her
personal note. If the medical student documents E/M services, the teaching physician must verify and redocument the history of
present illness as well as perform and redocument the physical exam and medical decision making activities of the service.
3. Exception for E/M Services Furnished in Certain Primary Care Centers.—Teaching physicians providing E/M services
with a GME program granted a primary care exception may bill Medicare for lower and mid-level E/M services provided
by residents. For the E/M codes listed below, teaching physicians may submit claims for services furnished by residents
in the absence of a teaching physician:
New Patient Established Patient
99201 99211
99202 99212
99203 99213
If a service other than those listed above needs to be furnished, then the general teaching physician policy set forth in section B
applies. For this exception to apply, a center must attest in writing that all the following conditions are met for a particular residency
program. Prior approval is not necessary, but centers exercising the primary care exception must maintain records demonstrating that
they qualify for the exception.
The services must be furnished in a center located in the outpatient department of a hospital or another ambulatory care entity in which
the time spent by residents in patient care activities is included in determining direct GME payments to a teaching hospital by the
hospital’s fiscal intermediary. This requirement is not met when the resident is assigned to a physician’s office away from the center or
makes home visits. In the case of a nonhospital entity, verify with the fiscal intermediary that the entity meets the requirements of a
written agreement between the hospital and the entity set forth in 42 CFR 413.86(f)(4) (ii).
Under this exception, residents providing the billable patient care service without the physical presence of a teaching physician must
have completed at least 6 months of a GME approved residency program. Centers must maintain information under the provisions at
42 CFR 413.86(i).
Teaching physicians submitting claims under this exception may not supervise more than four residents at any given time and must
direct the care from such proximity as to constitute immediate availability. The teaching physician must:
• Not have other responsibilities (including the supervision of other personnel) at the time the service was provided by the
resident;
• Have the primary medical responsibility for patients cared for by the residents;
• Ensure that the care provided was reasonable and necessary;
• Review the care provided by the resident during or immediately after each visit. This must include a review of the patient’s
medical history, the resident’s findings on physical examination, the patient’s diagnosis, and treatment plan (i.e., record of
tests and therapies); and
• Document the extent of his/her own participation in the review and direction of the services furnished to each patient.
Patients under this exception should consider the center to be their primary location for health care services. The residents must be
expected to generally provide care to the same group of established patients during their residency training. The types of services
furnished by residents under this exception include:
• Acute care for undifferentiated problems or chronic care for ongoing conditions including chronic mental illness;
• Coordination of care furnished by other physicians and providers; and
• Comprehensive care not limited by organ system or diagnosis.
Residency programs most likely qualifying for this exception include family practice, general internal medicine, geriatric medicine,
pediatrics, and obstetrics/gynecology.
Certain GME programs in psychiatry may qualify in special situations such as when the program furnishes comprehensive care for
chronically mentally ill patients. These would be centers in which the range of services the residents are trained to furnish, and actually
do furnish, include comprehensive medical care as well as psychiatric care. For example, antibiotics are being prescribed as well as
psychotropic drugs.

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MEDICARE DIRECTIVES
Supervised Physicians in a Teaching Setting – CMS Revision (Continued)
4. Procedures.—In order to bill for surgical, high-risk, or other complex procedures, the teaching physician must be present
during all critical and key portions of the procedure and be immediately available to furnish services during the entire
procedure.
a. Surgery (Including Endoscopic Operations).—The teaching surgeon is responsible for the preoperative, operative,
and post-operative care of the beneficiary. The teaching physician’s presence is not required during the opening and
closing of the surgical field unless these activities are considered to be critical or key portions of the procedure. The
teaching surgeon determines which post-operative visits are considered key or critical and require his or her
presence. If the post-operative period extends beyond the patient’s discharge and the teaching surgeon is not
providing the patient’s follow-up care, then instructions on billing for less than the global package in §4824.B apply.
During non-critical or non-key portions of the surgery, if the teaching surgeon is not physically present, he or she
must be immediately available to return to the procedure, i.e., he or she cannot be performing another procedure.
If circumstances prevent a teaching physician from being immediately available, then he/she must arrange for
another qualified surgeon to be immediately available to assist with the procedure, if needed.
(1) Single Surgery.—When the teaching surgeon is present for the entire surgery, his or her presence may be
demonstrated by notes in the medical records made by the physician, resident, or operating room nurse. For
purposes of this teaching physician policy, there is no required information that the teaching surgeon must
enter into the medical records.
(2) Two Overlapping Surgeries.—In order to bill Medicare for two overlapping surgeries, the teaching surgeon
must be present during the critical or key portions of both operations. Therefore, the critical or key portions
may not take place at the same time. When all of the key portions of the initial procedure have been completed,
the teaching surgeon may begin to become involved in a second procedure. The teaching surgeon must
personally document in the medical record that he/she was physically present during the critical or key
portion(s) of both procedures. When a teaching physician is not present during non-critical or non-key
portions of the procedure and is participating in another surgical procedure, he or she must arrange for
another qualified surgeon to immediately assist the resident in the other case should the need arise. In the
case of three concurrent surgical procedures, the role of the teaching surgeon (but not anesthesiologist) in each
of the cases is classified as a supervisory service to the hospital rather than a physician service to an individual
patient and is not payable under the physician fee schedule.
(3) Minor Procedures.—For procedures that take only a few minutes (5 minutes or less) to complete, e.g., simple
suture, and involve relatively little decision making once the need for the operation is determined, the teaching
surgeon must be present for the entire procedure in order to bill for the procedure.
b. Anesthesia.—Pay an unreduced fee schedule payment if a teaching anesthesiologist is involved in a single procedure
with one resident. The teaching physician must document in the medical records that he or she was present during
all critical (or key) portions of the procedure. The teaching physician’s physical presence during only the preoperative
or post-operative visits with the beneficiary is not sufficient to receive Medicare payment.If an anesthesiologist is
involved in concurrent procedures with more than one resident or with a resident and a nonphysician anesthetist,
pay for the anesthesiologist’s services as medical direction.
c. Endoscopy Procedures.—To bill Medicare for endoscopic procedures (excluding endoscopic surgery that follows
the surgery policy in subsection a), the teaching physician must be present during the entire viewing. The entire
viewing starts at the time of insertion of the endoscope and ends at the time of removal of the endoscope. Viewing of
the entire procedure through a monitor in another room does not meet the teaching physician presence requirement.
5. Interpretation of Diagnostic Radiology and Other Diagnostic Tests.—Medicare pays for the interpretation of diagnostic
radiology and other diagnostic tests if the interpretation is performed by or reviewed with a teaching physician.
If the teaching physician’s signature is the only signature on the interpretation, Medicare assumes that he or she is
indicating that he or she personally performed the interpretation. If a resident prepares and signs the interpretation, the
teaching physician must indicate that he or she has personally reviewed the image and the resident’s interpretation and
either agrees with it or edits the findings. Medicare does not pay for an interpretation if the teaching physician only
countersigns the resident’s interpretation.
6. Psychiatry.—The general teaching physician policy set forth in section B applies to psychiatric services. For certain
psychiatric services, the requirement for the presence of the teaching physician during the service may be met by
concurrent observation of the service through the use of a one-way mirror or video equipment. Audio-only equipment
does not satisfy to the physical presence requirement. In the case of time-based services, such as individual medical
psychotherapy, see subsection 8 below.
Further, the teaching physician supervising the resident must be a physician, i.e., the Medicare teaching physician policy
does not apply to psychologists who supervise psychiatry residents in approved GME programs.
7. Time-Based Codes.—For procedure codes determined on the basis of time, the teaching physician must be present for
the period of time for which the claim is made. For example, pay for a code that specifically describes a service of from 20
to 30 minutes only if the teaching physician is present for 20 to 30 minutes. Do not add time spent by the resident in the
absence of the teaching physician to time spent by the resident and teaching physician with the beneficiary or time spent
by the teaching physician alone with the beneficiary. Examples of codes falling into this category include:
• Individual medical psychotherapy (CPT codes 90804- 90829);
• Critical care services (CPT codes 99291-99292);
22 NHIC MARCH 2003
 MEDICARE DIRECTIVES
Supervised Physicians in a Teaching Setting – CMS Revision (Continued)
• Hospital discharge day management (CPT codes 99238-99239);
• E/M codes in which counseling and/or coordination of care dominates (more than 50 percent) of the encounter, and
time is considered the key or controlling factor to qualify for a particular level of E/M service;
• Prolonged services (CPT codes 99358-99359), and
• Care plan oversight (HCPCS codes G0181 - G0182).
8. Other Complex or High-Risk Procedures.—In the case of complex or high-risk procedures for which national Medicare
policy, local policy, or the CPT description indicate that the procedure requires personal (in person) supervision of its
performance by a physician, pay for the physician services associated with the procedure only when the teaching
physician is present with the resident. The presence of the resident alone would not establish a basis for fee schedule
payment for such services. These procedures include interventional radiologic and cardiologic supervision and
interpretation codes, cardiac catheterization, cardiovascular stress tests, and transesophageal echocardiography.
9. Miscellaneous.—In the case of maternity services furnished to Medicare eligible women, apply the physician presence
requirement for both types of delivery as you would for surgery. In order to bill Medicare for the procedure, the teaching
physician must be present for the delivery. These procedure codes are somewhat different from other surgery codes in
that there are separate codes for global obstetrical care (prepartum, delivery, and postpartum) and for deliveries only.
In situations in which the teaching physician’s only involvement was at the time of delivery, the teaching physician
should bill the delivery only code. In order to bill for the global procedures, the teaching physician must be present for
the minimum indicated number of visits when such a number is specified in the description of the code. This policy differs
from the policy on general surgical procedures under which the teaching physician is not required to be present for a
specified number of visits.
Do not apply the physician presence policy to renal dialysis services of physicians who are paid under the physician
monthly capitation payment method.
D. Election of Costs for Services of Physicians in Teaching Hospital.—A teaching hospital may elect to receive payment on a
reasonable cost basis for the direct medical and surgical services of its physicians in lieu of fee schedule payments for such
services. A teaching hospital may make this election to receive cost payment only when all physicians who render covered
Medicare services in the hospital agree in writing not to bill charges for such services or when all the physicians are
employees of the hospital and, as a condition of employment, they are precluded from billing for such services. When this
election is made, Medicare payments are made exclusively by the hospital’s intermediary, and fee schedule payment is
precluded.
When the cost election is made for a current or future period, each physician who provides services to Medicare beneficiaries
must agree in writing (except when the employment restriction discussed above exists) not to bill charges for services
provided to Medicare beneficiaries. However, when each physician agrees in writing to abide by all the rules and regulations
of the medical staff of the hospital (or of the fund that is qualified to receive payment for the imputed cost of donated
physician’s services), such an agreement suffices if required as a condition of staff privileges and the rules and regulations of
the hospital, medical staff, or fund clearly preclude physician billing for the services for which costs benefits are payable. The
intermediary must advise the carrier when a hospital elects cost payment for physicians’ direct medical and surgical services
and supply the carrier with a list of all physicians who provide services in the facility. You [NHIC] must ensure that billings
received from these physicians or hospitals are denied.
E. Services of Assistants at Surgery Furnished in Teaching Hospitals.—
1. General.—Do not pay for the services of assistants at surgery furnished in a teaching hospital which has a training
program related to the medical specialty required for the surgical procedure and has a qualified resident available to
perform the service unless the requirements of subsections 3, 4, or 5 are met. Each teaching hospital has a different
situation concerning numbers of residents, qualifications of residents, duties of residents, and types of surgeries performed.
Contact those affected by these instructions to learn the circumstances in individual teaching hospitals. There may be
some teaching hospitals in which you can apply a presumption about the availability of a qualified resident in a training
program related to the medical specialty required for the surgical procedures, but there are other teaching hospitals in
which there are often no qualified residents available. This may be due to their involvement in other activities, complexity
of the surgery, numbers of residents in the program, or other valid reasons. Process assistant at surgery claims for
services furnished in teaching hospitals on the basis of the following certification by the assistant, or through the use of
modifier -82 which indicates that a qualified resident surgeon was not available. This certification is for use only when the
basis for payment is the unavailability of qualified residents.
“I understand that section 1842(b)(7)(D) of the Social Security Act generally prohibits Medicare physician fee schedule
payment for the services of assistants at surgery in teaching hospitals when qualified residents are available to furnish
such services. I certify that the services for which payment is claimed were medically necessary and that no qualified
resident was available to perform the services. I further understand that these services are subject to post-payment
review by the Medicare carrier.”
Assistant at surgery claims denied on the basis of these instructions do not qualify for payment under the waiver of
liability provision.

MARCH 2003 NHIC 23

MEDICARE DIRECTIVES
Supervised Physicians in a Teaching Setting – CMS Revision (Continued)
2. Definition.—An assistant at surgery is a physician who actively assists the physician in charge of a case in performing
a surgical procedure. (Note that a nurse practitioner, physician assistant or clinical nurse specialist who is authorized
to provide such services under State law can also serve as an assistant at surgery.) The conditions for coverage of such
services in teaching hospitals are more restrictive than those in other settings because of the availability of residents who
are qualified to perform this type of service.
3. Exceptional Circumstances.—Payment may be made for the services of assistants at surgery in teaching hospitals,
subject to the special limitation in §15044, not withstanding the availability of a qualified resident to furnish the services.
There may be exceptional medical circumstances, e.g., emergency, life-threatening situations such as multiple traumatic
injuries which require immediate treatment. There may be other situations in which your medical staff may find that
exceptional medical circumstances justify the services of a physician assistant at surgery even though a qualified
resident is available.
4. Physicians Who Do Not Involve Residents in Patient Care.—Payment may be made for the services of assistants at
surgery in teaching hospitals, subject to the special limitation in §15044, if the primary surgeon has an across-the-board
policy of never involving residents in the preoperative, operative, or postoperative care of his or her patients. Generally,
this exception is applied to community physicians who have no involvement in the hospital’s GME program. In such
situations, payment may be made for reasonable and necessary services on the same basis as would be the case in a
nonteaching hospital. However, if the assistant is not a physician primarily engaged in the field of surgery, no payment
be made unless either of the criteria of subsection 5 is met.
5. Multiple Physician Specialties Involved in Surgery.—Complex medical procedures, including multistage transplant surgery
and coronary bypass, may require a team of physicians. In these situations, each of the physicians performs a unique,
discrete function requiring special skills integral to the total procedure. Each physician is engaged in a level of activity
different from assisting the surgeon in charge of the case. The special payment limitation in §15044 is not applied. If
payment is made on the basis of a single team fee, deny additional claims. Determine which procedures performed in your
service area require a team approach to surgery. Team surgery is paid for on a “By Report” basis.
The services of physicians of different specialties may be necessary during surgery when each specialist is required to
play an active role in the patient’s treatment because of the existence of more than one medical condition requiring
diverse, specialized medical services. For example, a patient’s cardiac condition may require the cardiologist be present
to monitor the patient’s condition during abdominal surgery. In this type of situation, the physician furnishing the
concurrent care is functioning at a different level than that of an assistant at surgery, and payment is made on a regular
fee schedule basis.”

Billing services – please forward the original

copy of Medicare B Resource to your medical
clients and retain photocopies for your files.
Medicare B Resource serves as legal notice to
physicians and all other Medicare providers.

24 NHIC MARCH 2003

 COVERAGE & REIMBURSEMENT
ASC Multiple Surgical Procedures in the Same Operative Session –
Reminder
Ambulatory surgical centers, are encouraged to include all surgical procedures performed during the same operative session on the
same claim. Regulations require when multiple services are billed, only the highest-paying procedure is reimbursable at the full payment
rate. The remaining covered services are reimbursable at 50% of the normal payment rate. Billing for services on separate claims may
cause a delay in, or incorrect payment.

Chiropractic, Clinical Psychologist, LICSW – 2003 Pricing Updates

The 2003 pricing updates for Chiropractic (specialty 35), Clinical Psychologist (specialty 68), and LICSW (specialty 80) are available on
our website at: http://www.medicarenhic.com/physician/ne/nePricing.htm

DMEPOS 2003 Quarterly Update and Reasonable Charges

The Durable Medical Equipment, Prosthetic Orthotics Supplies fee schedules are updated on a quarterly basis in order to implement fee
schedule amounts for new codes and to revise any fee schedule amounts for existing codes that were calculated in error.
Effective for items furnished on or after April 1, 2003, code K0560 is added to local carrier jurisdiction – Maine, Massachusetts, and
Vermont = $1,439.17; New Hampshire = $1,370.64. (K0560 - Metacarpel phalangeal joint replacement, two pieces, metal, (e.g., pyrocarbon),
for surgical implantation (all sizes, includes entire system)).
2003 Reasonable Charges
Centers for Medicare & Medicaid Services provides specific instructions regarding the calculation of reasonable charges for payment
of claims for splints, casts, dialysis supplies, dialysis equipment, therapeutic shoes, and intraocular lenses furnished in calendar year
2003. They delayed implementation of the 2003 reasonable charges for splints and casts due to problems associated with the charge
data necessary for the reasonable charge calculations.
Following on the next page are the customary and prevailing charges for the splint and cast codes using actual charge data from
July 1, 2001 through June 30, 2002.
A4565 Q4001 Q4002 Q4003 Q4004 Q4005 Q4006 Q4007 Q4008 Q4009 Q4010 Q4011 Q4012 Q4013 Q4014 Q4015 Q4016 Q4017 Q4018
Q4019 Q4020 Q4021 Q4022 Q4023 Q4024 Q4025 Q4026 Q4027 Q4028 Q4029 Q4030 Q4031 Q4032 Q4033 Q4034 Q4035 Q4036 Q4037
Q4038 Q4039 Q4040 Q4041 Q4042 Q4043 Q4044 Q4045 Q4046 Q4047 Q4048 Q4049
For 2001 and 2002, the Medicare payment amounts for splints and casts were based on retail price data. These gap-filled payment
amounts were established due to the lack of charge data for the Q codes, which were added to the HCPCS on July 1, 2001.
Due to problems associated with the charge data necessary for the reasonable charge calculations, implementation of the 2003
reasonable charges for splints and casts will be delayed until further notice. Meantime, NHIC will gap-fill the payment amounts for 2003
using the gap-filled payment amounts for 2002, increased by 1.1 percent, the percentage change in the consumer price index for all
urban consumers for the 12-month period ending June 30, 2002.

When a provider has offices in two states (e.g.,

one office in New Hampshire, one in
Massachusetts), and he treats a Medicare patient
in one of the offices, he must submit the claim
for services in the state where rendered.

MARCH 2003 NHIC 25

COVERAGE & REIMBURSEMENT
DMEPOS 2003 Quarterly Update and Reasonable Charges (Continued)
2003 Fee Schedule for Splints and Casts
CODE MA ME NH VT CODE MA ME NH VT
A4565 $6.37 $6.37 $6.37 $6.37 Q4025 $28.02 $28.02 $28.02 $28.02
Q4001 $36.28 $36.28 $36.28 $36.28 Q4026 $87.48 $87.48 $87.48 $87.48
Q4002 $137.14 $137.14 $137.14 $137.14 Q4027 $14.01 $14.01 $14.01 $14.01
Q4003 $26.06 $26.06 $26.06 $26.06 Q4028 $43.75 $43.75 $43.75 $43.75
Q4004 $90.23 $90.23 $90.23 $90.23 Q4029 $21.42 $21.42 $21.42 $21.42
Q4005 $9.60 $9.60 $9.60 $9.60 Q4030 $56.39 $56.39 $56.39 $56.39
Q4006 $21.66 $21.66 $21.66 $21.66 Q4031 $10.72 $10.72 $10.72 $10.72
Q4007 $4.81 $4.81 $4.81 $4.81 Q4032 $28.20 $28.20 $28.20 $28.20
Q4008 $10.83 $10.83 $10.83 $10.83 Q4033 $19.98 $19.98 $19.98 $19.98
Q4009 $6.41 $6.41 $6.41 $6.41 Q4034 $49.71 $49.71 $49.71 $49.71
Q4010 $14.44 $14.44 $14.44 $14.44 Q4035 $10.00 $10.00 $10.00 $10.00
Q4011 $3.20 $3.20 $3.20 $3.20 Q4036 $24.86 $24.86 $24.86 $24.86
Q4012 $7.22 $7.22 $7.22 $7.22 Q4037 $12.19 $12.19 $12.19 $12.19
Q4013 $11.67 $11.67 $11.67 $11.67 Q4038 $30.54 $30.54 $30.54 $30.54
Q4014 $19.69 $19.69 $19.69 $19.69 Q4039 $6.11 $6.11 $6.11 $6.11
Q4015 $5.83 $5.83 $5.83 $5.83 Q4040 $15.28 $15.28 $15.28 $15.28
Q4016 $9.85 $9.85 $9.85 $9.85 Q4041 $14.82 $14.82 $14.82 $14.82
Q4017 $6.75 $6.75 $6.75 $6.75 Q4042 $25.31 $25.31 $25.31 $25.31
Q4018 $10.77 $10.77 $10.77 $10.77 Q4043 $7.41 $7.41 $7.41 $7.41
Q4019 $3.38 $3.38 $3.38 $3.38 Q4044 $12.66 $12.66 $12.66 $12.66
Q4020 $5.39 $5.39 $5.39 $5.39 Q4045 $8.60 $8.60 $8.60 $8.60
Q4021 $4.99 $4.99 $4.99 $4.99 Q4046 $13.84 $13.84 $13.84 $13.84
Q4022 $9.02 $9.02 $9.02 $9.02 Q4047 $4.30 $4.30 $4.30 $4.30
Q4023 $2.51 $2.51 $2.51 $2.51 Q4048 $6.93 $6.93 $6.93 $6.93
Q4024 $4.51 $4.51 $4.51 $4.51 Q4049 $1.57 $1.57 $1.57 $1.57

Ambulance suppliers who are ALS certified should

provide NHIC with copies of their renewed certification
or license renewals upon receipt. Failure to provide this
information may result in denial of ALS services.
Recertifications and renewals should be sent to:

NHIC
Medicare Certification Unit
PO Box 3434
Hingham, MA 02044

26 NHIC MARCH 2003

 COVERAGE & REIMBURSEMENT
DMEPOS 2003 Quarterly Update and Reasonable Charges (Continued)

DMEPOS Fee Schedule for 2003

CODE MA ME NH VT CODE MA ME NH VT
A4290 $104.86 $104.86 $104.86 $104.86 A6253 $6.34 $6.34 $6.34 $6.34
A4561 $18.63 $18.63 $18.63 $18.63 A6254 $1.21 $1.21 $1.21 $1.21
A4562 $46.38 $46.38 $46.38 $46.38 A6255 $3.03 $3.03 $3.03 $3.03
A6021 $21.02 $21.02 $21.02 $21.02 A6257 $1.53 $1.53 $1.53 $1.53
A6022 $21.02 $21.02 $21.02 $21.02 A6258 $4.30 $4.30 $4.30 $4.30
A6023 $190.30 $190.30 $190.30 $190.30 A6259 $10.94 $10.94 $10.94 $10.94
A6024 $6.19 $6.19 $6.19 $6.19 A6263 $0.29 $0.29 $0.29 $0.29
A6154 $14.38 $14.38 $14.38 $14.38 A6264 $0.49 $0.49 $0.49 $0.49
A6196 $7.35 $7.35 $7.35 $7.35 A6265 $0.12 $0.12 $0.12 $0.12
A6197 $16.44 $16.44 $16.44 $16.44 A6266 $1.92 $1.92 $1.92 $1.92
A6199 $5.29 $5.29 $5.29 $5.29 A6402 $0.12 $0.12 $0.12 $0.12
A6200 $9.50 $9.50 $9.50 $9.50 A6403 $0.43 $0.43 $0.43 $0.43
A6201 $20.80 $20.80 $20.80 $20.80 A6405 $0.33 $0.33 $0.33 $0.33
A6202 $34.88 $34.88 $34.88 $34.88 A6406 $0.80 $0.80 $0.80 $0.80
A6203 $3.35 $3.35 $3.35 $3.35 A7042 $165.63 $165.63 $165.63 $165.63
A6204 $6.23 $6.23 $6.23 $6.23 A7043 $23.50 $23.50 $23.50 $23.50
A6207 $7.34 $7.34 $7.34 $7.34 E0749 Z6 $256.13 $256.13 $241.88 $252.84
A6209 $7.48 $7.48 $7.48 $7.48 E0752 $361.63 $361.63 $361.63 $361.63
A6210 $19.92 $19.92 $19.92 $19.92 E0754 $865.16 $865.16 $865.16 $865.16
A6211 $29.37 $29.37 $29.37 $29.37 E0756 $6,569.18 $6,569.18 $6,569.18 $6,569.18
A6212 $9.70 $9.70 $9.70 $9.70 E0757 $4,693.57 $4,693.57 $4,693.57 $4,693.57
A6214 $10.29 $10.29 $10.29 $10.29 E0758 $4,131.42 $4,131.42 $4,131.42 $4,131.42
A6216 $0.05 $0.05 $0.05 $0.05 E0759 $546.09 $546.09 $546.09 $546.09
A6219 $0.95 $0.95 $0.95 $0.95 E0781 Z6 $225.14 $225.14 $225.14 $225.14
A6220 $2.58 $2.58 $2.58 $2.58 E0782 Z6 $328.71 $328.71 $328.71 $328.71
A6222 $2.13 $2.13 $2.13 $2.13 E0782 Z7 $3,287.02 $3,287.02 $3,287.02 $3,287.02
A6223 $2.42 $2.42 $2.42 $2.42 E0782 ZA/ZC $2,465.26 $2,465.26 $2,465.26 $2,465.26
A6224 $3.61 $3.61 $3.61 $3.61 E0783 Z6 $737.40 $737.40 $737.40 $737.40
A6229 $3.61 $3.61 $3.61 $3.61 E0783 Z7 $7,373.94 $7,373.94 $7,373.94 $7,373.94
A6231 $4.66 $4.66 $4.66 $4.66 E0783 ZA/ZC $5,530.46 $5,530.46 $5,530.46 $5,530.46
A6232 $6.88 $6.88 $6.88 $6.88 E0785 $425.58 $425.58 $425.58 $425.58
A6233 $19.19 $19.19 $19.19 $19.19 E0786 Z6 $693.32 $693.32 $693.32 $693.32
A6234 $6.54 $6.54 $6.54 $6.54 E0786 Z7 $6,933.22 $6,933.22 $6,933.22 $6,933.22
A6235 $16.82 $16.82 $16.82 $16.82 E0786 ZA/ZC $5,199.93 $5,199.93 $5,199.93 $5,199.93
A6236 $27.25 $27.25 $27.25 $27.25 L8600 $505.14 $505.14 $505.14 $505.14
A6237 $7.91 $7.91 $7.91 $7.91 L8603 $351.17 $351.17 $351.17 $351.17
A6238 $22.79 $22.79 $22.79 $22.79 L8606 $172.59 $172.59 $172.59 $172.59
A6240 $12.24 $12.24 $12.24 $12.24 L8610 $469.40 $469.40 $469.40 $469.40
A6241 $2.57 $2.57 $2.57 $2.57 L8612 $575.41 $575.41 $575.41 $575.41
A6242 $6.07 $6.07 $6.07 $6.07 L8613 $250.55 $250.55 $250.55 $250.55
A6243 $12.31 $12.31 $12.31 $12.31 L8614 $15,354.57 $15,354.57 $15,354.57 $15,354.57
A6244 $39.28 $39.28 $39.28 $39.28 L8619 $6,591.62 $6,591.62 $6,591.62 $6,591.62
A6245 $7.27 $7.27 $7.27 $7.27 L8630 $360.25 $360.25 $360.25 $360.25
A6246 $9.92 $9.92 $9.92 $9.92 L8641 $374.30 $374.30 $374.30 $374.30
A6247 $23.78 $23.78 $23.78 $23.78 L8642 $227.70 $227.70 $227.70 $227.70
A6248 $16.24 $16.24 $16.24 $16.24 L8658 $326.35 $326.35 $326.35 $326.35
A6251 $1.99 $1.99 $1.99 $1.99 L8670 $446.41 $446.41 $446.41 $446.41
A6252 $3.25 $3.25 $3.25 $3.25
See Attachment D for the 2003 DMEPOS fee schedule instructions for gap fill, new HCPCS modifiers, 2003 Jurisdiction List. Please
retain for your files.

MARCH 2003 NHIC 27

COVERAGE & REIMBURSEMENT
Electrical Stimulation for the Treatment of Wounds – CMS Revision
Effective for services rendered on and after April 1, 2003, the following CMS revision applies for electrical stimulation for the treatment
of wounds:
“Electrical stimulation for the treatment of wounds is the application of electrical current through electrodes placed directly on the skin
in close proximity to the wound. Based on evidence that we have reviewed, we are issuing a coverage decision on the use of electrical
stimulation only for chronic Stage III and Stage IV pressure ulcers, arterial ulcers, diabetic ulcers and venous stasis ulcers. Electrical
stimulation will not be covered as an initial treatment modality. The use of electrical stimulation will be covered only after standard
wound therapy has been tried for at least 30-days and there are no measurable signs of healing. Medicare will not cover any form of
electromagnetic therapy for the treatment of chronic wounds.”

Foot and Nail Care

The following information from Centers of Medicare & Medicaid Services instructs you about Medicare’s requirements for payment of
services for foot and nail care claims.
“Requirements for Payment of Medicare Claims for Foot and Nail Care Services
The Office of Inspector General (OIG) recently studied the appropriateness of Medicare nail debridement payments, which is the single
largest paid podiatric service. The OIG found that about one in every four claims did not include documentation of medical need for nail
debridement in beneficiaries’ medical records and that more than half of these inappropriate payments included other related inappropriate
payments. This article explains the requirements for payment of Medicare claims for foot and nail services including information about
routine foot care exclusion, exceptions to routine foot care exclusion, Class Findings, billing instructions, required claim information,
and documentation on file.
Routine Foot Care Exclusion
Except as noted in “Exceptions to Routine Foot Care Exclusion” section, routine foot care is excluded from coverage. Services that are
normally considered routine and not covered by Medicare include:
• The cutting or removal of corns and calluses;
• The trimming, cutting, clipping, or debriding of nails; and
• Other hygienic and preventive maintenance care such as cleaning and soaking the foot, use of skin creams to maintain skin
tone of either ambulatory or bedfast patients, and any other service performed in the absence of localized illness, injury, or
symptoms involving the foot.
Exceptions to Routine Foot Care Exclusion
• Services performed as a necessary and integral part of otherwise covered services such as diagnosis and treatment of ulcers,
wounds, infections, and fractures.
• The presence of a systemic condition such as metabolic, neurologic, or peripheral vascular disease that may require scrupulous
foot care by a professional. Certain procedures that are otherwise considered routine may be covered when systemic
condition(s), demonstrated through physical and/or clinical findings, result in severe circulatory embarrassment or areas of
diminished sensation in the legs or feet and may pose a hazard if performed by a nonprofessional person on patients with such
systemic conditions. In the case of patients with systemic conditions such as diabetes mellitus, chronic thrombophlebitis,
and peripheral neuropathies involving the feet associated with malnutrition and vitamin deficiency, carcinoma, diabetes
mellitus, drugs and toxins, multiple sclerosis, and uremia, they must also be under the active care of a doctor of medicine or
doctor of osteopathy and who documents the condition in the patient’s medical record.
• Services performed for diabetic patients with a documented diagnosis of peripheral neuropathy and loss of protective
sensation (LOPS) and no other physical and/or clinical findings sufficient to allow a presumption of coverage as noted in the
Medicare Carriers Manual. This class of patients can receive an evaluation and treatment of the feet no more often than every
six months as long as they have not seen a foot care specialist for some other reason in the interim. LOPS shall be diagnosed
through sensory testing with the 5.07 monofilament using established guidelines, such as those developed by the National
Institute of Diabetes and Digestive and Kidney Diseases (NIDDK) guidelines. Five sites should be tested on the plantar
surface of each foot, according to NIDDK guidelines.
• Treatment of warts, including plantar warts, may be covered. Coverage is to the same extent as services provided for in
treatment of warts located elsewhere on the body.
• Treatment of mycotic nails for an ambulatory patient is covered only when the physician attending a patient’s mycotic
condition documents in the medical record that (1) there is clinical evidence of mycosis of the toenail and (2) the patient has
marked limitation of ambulation, pain, or secondary infection resulting from the thickening and dystrophy of the infected
toenail plate. Treatment of mycotic nails for a nonambulatory patient is covered only when the physician attending a patient’s
mycotic condition documents in the medical record that (1) there is clinical evidence of mycosis of the toenail and (2) the
patient suffers from pain or secondary infection resulting from the thickening and dystrophy of the infected toenail plate.
NOTE: Active care is defined as treatment and/or evaluation of the complicating disease process during the six-month period prior
to rendition of the routine care or had come under such care shortly after the services were furnished, usually as a result of a
referral.

28 NHIC MARCH 2003

 COVERAGE & REIMBURSEMENT
Foot and Nail Care (Continued)
Class Findings
A presumption of coverage may be made by Medicare where the claim or other evidence available discloses certain physical and/or
clinical findings consistent with the diagnosis and indicative of severe peripheral involvement. For the purposes of applying this
presumption, the following findings are pertinent:
• Class A Findings
Nontraumatic amputation of foot or integral skeleton portion thereof
• Class B Findings
Absent posterior tibial pulse
Advanced trophic changes; three of the following are required: hair growth (decrease or absence), nail changes (thickening),
pigmentary changes (discoloration), skin texture (thin, shiny), skin color (rubor or redness)
Absent dorsalis pedis pulse
• Class C Findings
Claudication
Temperature changes
Edema
Paresthesia
Burning
Billing Instructions
The following are the main HCPCS/CPT codes for billing of foot and nail care services (additional codes can be found in the HCPCS/
CPT code book):
11719 – Trimming of nondystrophic nails, any number
11720 – Debridement of nail(s) by any method(s); one to five
11721 – Debridement of nail(s) by any method(s); six or more
11730 – Avulsion of nail plate, partial or complete, simple; single
11732 – Avulsion of nail plate, partial or complete, simple; each additional nail plate (list separately in addition to code for primary
procedure)
Required Claim Information
NOTE: Program Memorandums AB-02-096 dated July 17, 2002 and AB-02-109 dated July 31, 2002 contain claim and billing instructions
for peripheral neuropathy. For information on completing the CMS-1500 form, see the “Medicare Made Easy” publication (or other
carrier-specific guides) at www.medicarenhic.com. You may also contact your local Provider Services at:
Maine 1.877.567.3129
Massachusetts 1.877.567.3130
New Hampshire 1.866.539.5595
Vermont 1.866.539.5595
The following requirements are of particular importance to podiatrists
Item 17. Enter the name of the referring or ordering physician if the service or item was ordered or referred by a physician. A referring
physician is a physician who requests an item or service for the patient for which payment may be made under the Medicare program.
Item 17a. Enter the CMS assigned UPIN of the referring/ordering physician listed in item 17.
Item 19. Enter the 6-digit (MM|DD|YY) or 8-digit (MM|DD|CCYY) date patient was last seen and the UPIN of his/her attending physician
when an independent physical or occupational therapist or physician providing routine foot care submits claims.
Item 21. Enter the patient’s diagnosis/condition. All physician specialties must use an ICD-9-CM code number and code to the highest
level of specificity. Enter up to 4 codes in priority order (primary, secondary condition). An independent laboratory must enter a
diagnosis only for limited coverage procedures.
All narrative diagnoses for non-physician specialties must be submitted on an attachment.
Item 24d. Enter the procedures, services, or supplies using the HCPCS/CPT code. When applicable, show HCPCS modifiers with the
HCPCS code. Enter the Q7 – One Class A finding; Q8 – Two Class B findings; or Q9 – One Class B and two Class C findings as
appropriate.
Enter the specific procedure code without a narrative description.
Item 24e. Enter the diagnosis code reference number as shown in item 21 to relate the date of service and the procedures performed to
the primary diagnosis. Enter only one reference number per line item. When multiple services are performed, enter the primary reference
number for each service; enter either a 1, or a 2, or a 3, or a 4.
If a situation arises where two or more diagnoses are required for a procedure code, you must reference only one of the diagnoses in
item 21.
Documentation on File
Podiatrists may submit claims using the Q7, Q8, or Q9 modifiers to indicate to the carriers the findings they have made on the patient’s
condition. This does not relieve them of the responsibility of maintaining documentation on file. This documentation must be maintained
and made available to the carriers at their request. Failure to produce appropriate documentation may result in denial of the claim.
Podiatrists should consult their carriers to verify that they are meeting the documentation requirements for Medicare claims.”

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COVERAGE & REIMBURSEMENT
HCPCS Codes for Home Health Consolidated Billing Enforcement –
CMS Quarterly Update
In April 2001, Centers for Medicare & Medicaid Services established the process of periodically updating the lists of Healthcare
Common Procedure Coding System (HCPCS) codes subject to the consolidated billing provision of the Home Health Prospective
Payment System (HH PPS). Services appearing on this list submitted on claims to both Medicare fiscal intermediaries (FIs) and carriers,
including durable medical equipment regional carriers (DMERCs), will not be paid on dates when a beneficiary for whom such a service
is being billed is in a home health episode (i.e., under a home health plan of care administered by a home health agency). Medicare will
only directly reimburse the primary home health agencies that have opened such episodes during the episode periods. Note that items
incidental to physician services, as well as supplies used in institutional settings, are not subject to HH consolidated billing.
In July 2, 2002, CMS established that updates of the HH consolidated billing code list would occur as frequently as quarterly to reflect
the creation of temporary HCPCS codes (e.g., ‘K’ codes). These temporary codes may describe services subject to consolidated billing
in addition to the permanent list of HCPCS codes that is updated annually.
The second quarterly HH consolidated billing update for calendar year 2003 adds a single non-routine supply code to the list of codes
subject to consolidated billing. This code was identified through additional review of the annual HCPCS update that was reflected in
the first quarterly update. However, it was identified too late for inclusion in Medicare systems changes for the January quarter. Other
updates for the remaining quarters of the calendar year will occur as needed due to the creation of new temporary codes representing
services subject to HH consolidated billing prior to the next annual update.
Effective April 1, 2003, the new code added will be: A6440: Zinc Paste >=3" <5" w/roll. The complete list of codes subject to Home
Health Consolidated Billing is located cms.hhs.gov/medlearn/refhha.asp

Hepatitis B Vaccine – Reactivation of CPT Codes and

Deletion of Q Codes
Centers for Medicare & Medicaid Services issued the following instruction for claims billed for hepatitis B vaccine effective
January 1, 2003. Please make note for your files.
Q codes for hepatitis B vaccine – Q3021, Q3022, Q3023 will not be established as new codes for Medicare purposes as published on
page 27 of the December 2002 Medicare B Resource.
CPT-4 codes – 90740, 90743, 90744, 90746, and 90747 are reactivated effective January 1, 2003.

Home Prothrombin Time International Normalized Ratio (INR)

Monitoring for Anticoagulation Management – CMS Update
Centers for Medicare & Medicaid Services issued the following update to INR Monitoring for anticoagulation management. Please
retain for your files.
“. . .the INR allows physicians to determine the level of anticoagulation in a patient independent of the laboratory reagents used. The
INR is the ratio of the patient’s prothrombin time compared to the mean prothrombin time for a group of normal individuals.
For services furnished on or after July 1, 2002, Medicare will cover the use of home prothrombin time INR monitoring for anticoagulation
management for patients with mechanical heart valves on warfarin. Porcine valves are not covered so Medicare will not make payment
on Home INR Monitoring for patients with porcine valves. The monitor and the home testing must be prescribed by a physician and
the following patient requirements must be met:
• Must have been anticoagulated for at least three months prior to use of the home INR device;
• Must undergo an educational program on anticoagulation management and the use of the device prior to its use in the home; and
• Self testing with the device is limited to a frequency of once per week.
Applicable HCPCS Codes for Home Prothrombin Time INR Monitoring
G0248: Demonstration, at initial use, of home INR monitoring for patient with mechanical heart valve(s) who meets Medicare coverage
criteria, under the direction of a physician; includes: demonstration use and care of the INR monitor, obtaining at least one blood
sample, provision of instructions for reporting home INR test results and documentation of a patient’s ability to perform testing.
G0249: Provision of test materials and equipment for home INR monitoring to patient with mechanical heart valve(s) who meets
Medicare coverage criteria; includes provision of materials for use in the home and reporting of test results to physician; per four tests.
G0250: Physician review, interpretation and patient management of home INR testing for a patient with mechanical heart valve(s) who
meets other coverage criteria; per four tests.
Applicable ICD-9-CM Code for Home Prothrombin Time INR Monitoring
ICD-9 V43.3, Organ or tissue replaced by other means; heart valve, applies.”
The cost of the devices and supplies are included in the payment for G0249 and therefore, not separately billed to Medicare. Additionally,
for G0250, since the code descriptor is per 4 tests, this code should only be billed no more than once every four weeks.

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MPFSDB 2003 Administration and HCPCS Codes – CMS Update
The following was issued by Centers for Medicare & Medicaid Services regarding their update to the 2003 MPFSDB:
Medicare Physician Fee Schedule Data Base Administration
“The Physician Fee Schedule (PFS) regulation was published on or about December 31, 2002, with a March 1, 2003, effective date.
Unfortunately, under current law, the 2003 fee schedule includes a negative update. This negative update reflects a defect in the
statutory formula for computing the sustainable growth rate, which has been affected by unanticipated changes in economic conditions.
Regrettably, the Centers for Medicare & Medicaid Services does not have the legal authority to correct this flaw. The Administration
has worked with Congress throughout 2002 to correct the provision of law, which results in the reduction in physician payments. The
Administration will continue to work with Congress to make changes that could have a positive impact on physician payments in the
coming years. Given this commitment, we hope that physicians/practitioners will choose to participate in the Medicare program in 2003,
and into the future.
Since the publication of the final regulation was delayed past November 1, 2002, implementation plans for the CY 2003 PFS have been
modified. Specifically:
• The participation enrollment period will commence on January 9, 2003, and run through February 28, 2003. The material will be
released by the Part B carriers on or about January 2, 2003 to ensure delivery by January 9. Physicians/practitioners will have until
February 28, 2003 to make their participation decision. Please note that this enrollment period differs from what you will see in
mailed materials. This is because the enrollment materials were printed before this change.
• The CY 2003 payment rates for physician/practitioner services will be effective March 1, 2003.
• Claims for physician/practitioner services in January and February 2003 that are processed before March 1, 2003 will be paid at the
CY 2002 payment rates.
• Claims for physician/practitioner services in January and February 2003 that cannot be processed before February 28, 2003, will be
paid at the CY 2003 payment rates. Therefore, physicians/practitioners are encouraged to submit January and February claims to
their carriers as quickly as possible.
• MPFS services with January and February 2003 dates of service and with 2002 HCPCS will be processed and paid at the 2002 rates.
MPFS services for January and February 2003 services paid at the 2003 rates (because they were processed March 1, 2003 or later),
will be automatically adjusted by Medicare carriers in July 2003. These automatic adjustments will pay the difference between what
was paid and what should have been paid for January and February 2003 MPFS services based on the 2002 rates. Physicians/
practitioners will be reminded about this change for July 2003 in a subsequent announcement. Further information on adjustments
for changes in participation status will be forthcoming.
• Physicians/practitioners are encouraged not to use the new CY 2003 HCPCS codes for MPFS services performed during the
months of January and February 2003. Those services should be submitted with the HCPCS codes used to bill them during CY
2002. If the new HCPCS codes are submitted before March 1, 2003, carriers will hold claims until March 1, 2003 and then pay the
code at the 2003 rate.
• Physicians/practitioners should bill January and February 2003 services separately from services for other time periods. In
addition, if a January or February 2003 service must be billed with a new HCPCS, it should be billed on a separate claim so that other
services, with 2002 HCPCS, will not be held.
• The CY 2003 payment amounts for all other services (i.e., services not paid under the physician fee schedule) are effective
January 1, 2003.
Frequently Asked Questions
Q. When was the Physician Fee Schedule Regulation published in final?
A. The regulation was published on or about December 31, 2002.
Q. Will the participation enrollment period be extended for the physicians?
A. Yes. The participation enrollment period will be extended. The period will start on January 9, 2003 and run through February
28, 2003. The effective date of the agreement will be January 1, 2003.
Q. When will the new rates be effective for physician services?
A. The new rates for services paid on the physician fee schedule will be effective on March 1, 2003.
Q. If new rates are effective March 1, 2003, why will January and February services processed after February 28 be paid at lower
2003 rates?
A. It is CMS’ objective to pay claims accurately, at the appropriate rate based upon the final rule published on or about December
31, 2002. To meet this objective in the short time frames before us, it is essential that we have sufficient time to program and
test Medicare systems. Using the “date processed” versus “date of service” for January and February 2003 services enables
Medicare to succeed in paying claims accurately with minimal disruption to the processing and payment of ALL Medicare
provider claims. This is why we encourage physicians/practitioners to submit their claims for January and February 2003
services as quickly as possible. We are hopeful that most January and February 2003 services will be submitted and processed
before March 1, 2003.
Q. When will the new 2003 HCPCS be implemented?
A. For 2003 HCPCS paid on the physician fee schedule the effective date is March 1, 2003. The 2003 HCPCS will be implemented
on January 1, 2003, for services not paid on the physician fee schedule.

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COVERAGE & REIMBURSEMENT
MPFSDB 2003 Administration and HCPCS Codes – CMS Update (Continued)
Q. How should physicians bill for services if the 2003 physician fee schedule HCPCS are not effective until March 1, 2003?
A. Any claims received for January or February 2003 services paid on the physician fee schedule that contain a new 2003 HCPCS
physician service code will be held by Medicare carriers and processed on March 1, 2003. Physicians can either submit their
claim and it will be held or hold the claims and submit on or after March 1, 2003. (Note that fiscal intermediaries will return
claims to providers for services performed in January or February 2003 that contain new HCPCS codes that are payable on the
physician fee schedule. Providers are encouraged to bill the HCPCS code used during CY 2002 for January and February 2003
services.)
Q. Are January and February 2003 anesthesia services also affected?
A. Yes, 2003 anesthesia services are affected. Any new 2003 anesthesia codes submitted for January or February dates of service
will be held until March 1, 2003. Anesthesia claims (not containing new anesthesia codes) for January or February 2003 dates
of service will be priced at the 2002 payment rates if processed before March 1, 2003.
Q. Will Congress correct the defect in the formula for future years?
A. The Administration will continue to work with Congress to make changes that could have a positive impact on physician
payments in the future years
HCPCS Codes
Centers for Medicare & Medicaid Services identified several inconsistencies in the 2003 Medicare Physician Fee Schedule Database
(MPFSDB). The changes listed below are effective for claims processed on and after March 1, 2003. Please review and retain for your
files.
The following legend of MPFSDB explanations apply to the 2003 MPFSDB – CMS Update:
AsstSurg – Assistant at Surgery
0 = Payment restriction for assistants at surgery applies to this procedure unless supporting documentation is submitted to establish
medical necessity.
1 = Statutory payment restriction for assistants at surgery applies to this procedure. Assistant at surgery may not be paid.
2 = Payment restriction for assistants at surgery does not apply to this procedure. Assistant at surgery may be paid.
9 = Concept does not apply.
BillMed – Billable Medical Supplies
0 = Cannot be separately billed with this service.
1 = Code in related procedure code field can be paid separately when billed with these codes when service is performed in the
physician’s office.
9 = Concept does not apply.
BiltSurg – Bilateral Surgery (Modifier 50)
0 = 150% payment adjustment for bilateral procedures does not apply. If procedure is reported with modifier 50 or with the modifiers RT
and LT, payment for the two sides will be based on the lower of: (a) the total actual charge for both sides or (b) 100% of the fee schedule
amount for a single code.
1 = 150% payment adjustment for bilateral procedures applies. If code is billed with the bilateral modifier or is reported twice on the same
day by any other means, payment for these codes when reported as bilateral procedures is based on the lower of (a) the total actual
charge for both sides or (b) 150% of the fee schedule amount for a single code
9 = Concept does not apply.
CoSurg – Co-Surgeons (Modifier 62)
0 = Co-surgeons not permitted for this procedure.
2 = Co-surgeons permitted; no documentation required if two specialty requirements are met.
9 = Concept does not apply.
DiagSupv – Physician Supervision of Diagnostic Procedures
P = Decision pending.
Global – Global Surgery
XXX = Global concept does not apply. Pre-Op (preoperative percentage), Intra-Op (Intraoperative percentage) and Post-Op
(Postoperative percentage) do not apply.
090 – Major surgery with a 1-day pre-operative period and 90-day postoperative period included in the fee schedule payment amount.
MultSurg – Multiple Procedure
0 = No payment adjustment rules for multiple procedures apply. If the procedure is reported on the same day as another procedure
payment is based on the lower of (a) the actual charge or (b) the fee schedule amount for the procedure.
2 = Standard payment adjustment rules for multiple procedures apply. If a procedure is reported on the same day as another procedure
with an indicator of 1, 2, or 3, the procedures will be ranked by fee schedule amount and applied the appropriate reduction to the code
(100%, 50%, 50%50%, 50%, and by report). Payment will be based on the lower of (a) the actual charge or (b) the fee schedule amount
reduced by the appropriate percentage.
9 = Concept does not apply.

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MPFSDB 2003 Administration and HCPCS Codes – CMS Update (Continued)
No Rel Code – Number of Related Codes
This field defines the number of related procedure codes. See Related Procedure Codes (Rel Code)
PC/TC – Professional Component (PC)/Technical Component (TC)
0 = Physician service code: This indicator identifies codes that describe physician services. The concept of PC/TC does not apply
since physician services cannot be split into professional and technical components. Modifier 26 and TC cannot be used with these
codes.
1 = Diagnostic tests or radiology services: This indicator identifies codes that describe diagnostic tests. These codes generally have
both a professional and technical component. Modifiers 26 and TC can be used with these codes.
2 = Professional component only codes: This indicator identifies stand alone codes that describe the physician work portion of
selected diagnostic tests for which there is an associated code that describes the technical component of the diagnostic test only and
another associated code that describes the global test.
9 = Concept of a professional/technical component does not apply.
ProcStat – MPFSDB Status Indicators
A = Active code. These codes are separately payable under the physician fee schedule if covered. There will be RVUs and payment
amounts for codes with this status. The presence of an ‘A’ indicator does not mean that Medicare has made a national coverage
determination regarding the service; carriers remain responsible for coverage decisions in the absence of a national Medicare policy.
C = Carriers price the code. Carriers will establish RVUs and payment amounts for these services, generally on an individual case basis
following review of documentation such as an operative report.
F = Deleted/discontinued codes. Code not subject to a 90-day grace period.
H= Deleted modifier. The TC or PC component shown for the code has been deleted and the deleted component is shown in the
database with an H status.
I = Not valid for Medicare purposes. Medicare uses another code for reporting of, and payment for, these services. Code not subject
to a 90-day grace period.
P = Bundled or excluded code. There are no RVUs for these services. No separate payment should be made for them under the
physician fee schedule.
R = Restricted coverage. Special coverage instructions apply.
X = Statutory exclusion. These codes represent an item or service that is not in the statutory definition of ‘physician services’ for fee
schedule payment purposes. No RVUs or payment amounts are shown for these codes and no payment may be made under the
physician fee schedule. Examples are ambulance services and clinical diagnostic laboratory services.
Rel Code – Related Procedure Code
This field identifies the number of times that a related procedure code occurs.
SOS – Site of Service Differential
1 = Facility pricing applies.
TeamSurg – Team Surgeons (Modifier 66)
0 = Team surgeons not permitted for this procedure.
9 = Concept does not apply.
Changes included in the CMS-issued Emergency Update to the 2003 Medicare Physician Fee Schedule Database are:

CPT/HCPCS ACTION CPT/HCPCS ACTION

00540 Base Units = 12.0 units G0009 Currently, carriers link the payment for
01829 Base Units = 3.0 units HCPCS code G0009 to the payment
01963 Base Units = 8.0 units associated with CPT code 90782. Effective
01991 Base Units = 3.0 units March 1, 2003, carriers [will] link the
01992 Base Units = 5.0 units payment for HCPCS code G0009 to CPT
code 90471.
NOTE: The aforementioned anesthesia services are not included
on the MPFSDB, but are included on the HCPCS File. G0010 Procedure Status = X
G0010 PC/TC Indicator = 9
G0008 Procedure Status = X G0010 Currently, carriers link the payment for
G0008 PC/TC Indicator = 9 HCPCS code G0010 to the payment
G0008 Currently, carriers link the payment for associated with CPT code 90782. Effective
HCPCS code G0008 to the payment March 1, 2003, carriers [must] link the
associated with CPT code 90782. Effective payment for HCPCS code G0010 to CPT
March 1, 2003, carriers [will] link the code 90471.
payment for HCPCS code G0008 to CPT G0275 Facility PE RVU = 0.10
code 90471.
G0278 Facility PE RVU = 0.10
G0009 Procedure Status = X
G0009 PC/TC Indicator = 9 G0279 Facility PE RVU = 0.02
G0280 Facility PE RVU = 0.02

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COVERAGE & REIMBURSEMENT
MPFSDB 2003 Administration and HCPCS Codes – CMS Update (Continued)
CPT/HCPCS ACTION CPT/HCPCS ACTION
G0281 Effective Date: April 1, 2003 50955 Non-Facility PE RVU = 17.98
G0282 Effective Date: April 1, 2003 50957 Non-Facility PE RVU = 13.79
G0295 Effective Date: April 1, 2003
50961 Non-Facility PE RVU = 17.61
NOTE: The aforementioned services were inappropriately iden-
tified as effective January 1, 2003. The corrected effec- 51010 Non-Facility PE RVU = 5.71
tive date is April 1, 2003. 51010 Facility PE RVU = 2.08
G0289 Facility PE RVU = 0.58 51605 Non-Facility PE RVU = 13.63
Multiple Procedure Indicator = 0 51610 Non-Facility PE RVU = 13.41
Pre-Operative Percentage = 0.00
Intra-Operative Percentage = 0.00 51710 Non-Facility PE RVU = 3.90
Post-Operative Percentage = 0.00 51710 Facility PE RVU = 1.30
51726 Non-Facility PE RVU = 6.97
HCPCS Code: J2675 51726 Facility PE RVU = 6.97
Short Desc: Inj progesterone per 50 MG 51726-TC Non-Facility PE RVU = 6.39
Proc Stat: E 51726-TC Facility PE RVU = 6.39
RVU Work: 0.00
Non-Fac PE RVU: 0.00 51772 Non-Facility PE RVU = 6.32
Fac PE RVU: 0.00 51772 Facility PE RVU = 6.32
Malpractice RVU: 0.00 51772-TC Non-Facility PE RVU = 5.75
PC/TC: 9 51772-TC Facility PE RVU = 5.75
SOS: 9
Global: XXX 51784 Non-Facility PE RVU = 5.25
Pre-Op: 0.00 51784 Facility PE RVU = 5.25
Intra-Op: 0.00 51784-TC Non-Facility PE RVU = 4.73
Post-Op: 0.00 51784-TC Facility PE RVU = 4.73
Mult Surg: 9 51785 Non-Facility PE RVU = 5.27
Bilt Surg: 9 51785 Facility PE RVU = 5.27
Asst Surg: 9
Co Surg: 9 51785-TC Non-Facility PE RVU = 4.75
Team Surg: 9 51785-TC Facility PE RVU = 4.75
Diag Supv: 09 51792 Non-Facility PE RVU = 5.44
J7308 Procedure Status = P 51792 Facility PE RVU = 5.44
Q3017 Procedure Status = F 51792-TC Non-Facility PE RVU = 5.01
Q3021 Procedure Status = I 51792-TC Facility PE RVU = 5.01
Q3022 Procedure Status = I
Q3023 Procedure Status = I 51795 Non-Facility PE RVU = 6.70
Q3030 Procedure Status = F 51795 Facility PE RVU = 6.70
10021 Facility PE RVU = 0.53 51795-TC Non-Facility PE RVU = 6.18
51795-TC Facility PE RVU = 6.18
10022 Facility PE RVU = 0.44
52000 Non-Facility PE RVU = 4.57
17304 Bilateral Surgery Indicator = 1
52001 Work RVU = 5.45
26587 Facility PE RVU = 4.76 52001 Non-Facility PE RVU = 7.89
29999 Assistant at Surgery Indicator = 0 52001 Facility PE RVU = 2.33
50080 Non-Facility PE RVU = 10.16 52005 Non-Facility PE RVU = 6.38
50080 Facility PE RVU = 10.16 52010 Non-Facility PE RVU = 7.77
50081 Non-Facility PE RVU = 12.23 52010 Facility PE RVU = 1.15
50081 Facility PE RVU = 12.23 52204 Non-Facility PE RVU = 5.44
50236 Non-Facility PE RVU = 13.21 52214 Non-Facility PE RVU = 7.24
50236 Facility PE RVU = 13.21
52224 Non-Facility PE RVU = 6.12
50240 Non-Facility PE RVU = 12.33
50240 Facility PE RVU = 12.33 52265 Non-Facility PE RVU = 5.67
50553 Non-Facility PE RVU = 14.02 52270 Non-Facility PE RVU = 6.41
52270 Facility PE RVU = 1.34
50555 Non-Facility PE RVU = 16.01
52275 Non-Facility PE RVU = 7.11
50557 Non-Facility PE RVU = 14.80 52275 Facility PE RVU = 1.78
50561 Non-Facility PE RVU = 14.09 52276 Non-Facility PE RVU = 8.01
50684 Non-Facility PE RVU = 12.61 52276 Facility PE RVU = 1.90
50690 Non-Facility PE RVU = 12.77 52281 Non-Facility PE RVU = 8.05
50953 Non-Facility PE RVU = 13.95 52282 Non-Facility PE RVU = 13.08

34 NHIC MARCH 2003

 COVERAGE & REIMBURSEMENT
MPFSDB 2003 Administration and HCPCS Codes – CMS Update (Continued)
CPT/HCPCS ACTION CPT/HCPCS ACTION
52283 Non-Facility PE RVU = 5.86 54160 Non-Facility PE RVU = 4.97
52285 Non-Facility PE RVU = 6.31 54160 Facility PE RVU = 1.75
52310 Non-Facility PE RVU = 4.73 54205 Non-Facility PE RVU = 6.47
54205 Facility PE RVU = 6.47
52315 Non-Facility PE RVU = 5.75
54300 Non-Facility PE RVU = 8.04
52317 Non-Facility PE RVU = 7.82 54300 Facility PE RVU = 8.04
52330 Non-Facility PE RVU = 17.40 54304 Non-Facility PE RVU = 9.25
52330 Facility PE RVU = 1.80 54304 Facility PE RVU = 9.25
52332 Non-Facility PE RVU = 16.40 54308 Non-Facility PE RVU = 8.82
52647 Non-Facility PE RVU = 42.87 54308 Facility PE RVU = 8.82
52647 Facility PE RVU = 4.57 54312 Non-Facility PE RVU = 9.87
53025 Non-Facility PE RVU = 3.69 54312 Facility PE RVU = 9.87
53040 Non-Facility PE RVU = 11.86 54322 Non-Facility PE RVU = 8.56
53040 Facility PE RVU = 7.17 54322 Facility PE RVU = 8.56
53080 Non-Facility PE RVU = 7.22 54324 Non-Facility PE RVU = 11.06
53080 Facility PE RVU = 7.22 54324 Facility PE RVU = 11.06
53085 Non-Facility PE RVU = 8.63 54328 Non-Facility PE RVU = 10.09
53085 Facility PE RVU = 8.63 54328 Facility PE RVU = 10.09
53200 Non-Facility PE RVU = 4.76 54332 Non-Facility PE RVU = 10.56
54332 Facility PE RVU = 10.56
53265 Non-Facility PE RVU = 5.77
53265 Facility PE RVU = 2.28 54344 Non-Facility PE RVU = 10.34
54344 Facility PE RVU = 10.34
53270 Non-Facility PE RVU = 5.58
53270 Facility PE RVU = 2.52 54360 Non-Facility PE RVU = 7.85
54360 Facility PE RVU = 7.85
53850 Non-Facility PE RVU = 63.30
53850 Facility PE RVU = 4.25 54430 Non-Facility PE RVU = 7.27
54430 Facility PE RVU = 7.27
53852 Non-Facility PE RVU = 52.42
53852 Facility PE RVU = 4.43 54500 Non-Facility PE RVU = 5.46
53853 Non-Facility PE RVU = 38.58 54700 Non-Facility PE RVU = 7.02
53853 Facility PE RVU = 3.30 54700 Facility PE RVU = 3.06
54000 Non-Facility PE RVU = 4.77 55100 Non-Facility PE RVU = 7.87
54000 Facility PE RVU = 1.40 55100 Facility PE RVU = 3.22
54001 Non-Facility PE RVU = 5.36 55250 Non-Facility PE RVU = 7.70
54001 Facility PE RVU = 2.01 55250 Facility PE RVU = 2.92
54015 Non-Facility PE RVU = 6.51 55450 Non-Facility PE RVU = 5.98
54015 Facility PE RVU = 3.05 55450 Facility PE RVU = 2.43
54055 Non-Facility PE RVU = 5.59 55700 Non-Facility PE RVU = 3.50
54055 Facility PE RVU = 1.39 55873 Non-Facility PE RVU = 9.46
54060 Non-Facility PE RVU = 4.89 55873 Facility PE RVU = 9.46
54060 Facility PE RVU = 1.56 58340 Non-Facility PE RVU = 12.74
54105 Non-Facility PE RVU = 5.55 58340 Facility PE RVU = 0.32
54105 Facility PE RVU = 2.07 66710 Non-Facility PE RVU = 5.14
54111 Non-Facility PE RVU = 8.38 66710 Facility PE RVU = 3.81
54111 Facility PE RVU = 8.38 66720 Facility PE RVU = 4.49
54115 Non-Facility PE RVU = 9.53 66740 Facility PE RVU = 4.84
54115 Facility PE RVU = 6.06 66740 Non-Facility PE RVU = 4.84
54120 Non-Facility PE RVU = 7.23 66761 Non-Facility PE RVU = 5.25
54120 Facility PE RVU = 7.23 66761 Facility PE RVU = 3.98
54125 Non-Facility PE RVU = 8.43 66762 Non-Facility PE RVU = 5.33
54125 Facility PE RVU = 8.43 66762 Facility PE RVU = 3.97
54130 Non-Facility PE RVU = 10.94 66770 Non-Facility PE RVU = 5.76
54130 Facility PE RVU = 10.94 66770 Facility PE RVU = 4.48
54135 Facility PE RVU = 13.00 76802 - 26 Global Period = ZZZ
54135 Facility PE RVU = 13.00

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COVERAGE & REIMBURSEMENT
MPFSDB 2003 Administration and HCPCS Codes – CMS Update (Continued)
CPT/HCPCS ACTION CPT/HCPCS ACTION
90740 Procedure Status = X 92136 – 26 Bilateral Indicator = 3
90743 Procedure Status = X 93268 Non-Facility PE RVU = 7.41
90744 Procedure Status = X 93268 Facility PE RVU = 7.41
90746 Procedure Status = X
90747 Procedure Status = X 93271 Non-Facility PE RVU = 5.99
93271 Facility PE RVU = 5.99
90748 Procedure Status = I
99289 Work RVU = 4.80
91122 Non-Facility PE RVU = 4.55 99290 Work RVU = 2.40
91122 Facility PE RVU = 4.55
91122-TC Non-Facility PE RVU = 3.93
91122-TC Facility PE RVU = 3.93
Add-On Global Surgery Indicator (ZZZ)
The ZZZ global surgery indicator allows payment only when the code is billed in conjunction with another base service. Alternatively,
a ZZZ global period service may never be billed alone.
Independent Laboratories Billing For the Technical Component of Physician Pathology Services
Section 542 of the Benefits Improvement and Protection Act (BIPA) of 2000 provides that the Medicare carrier can continue to pay for
the technical component of physician pathology services when an independent laboratory furnishes this service to an inpatient or
outpatient of a covered hospital. This provision applies to TC services furnished during the 2-year period beginning on
January 1, 2001.
Financial Limitation for Outpatient Rehabilitation Services
Section 4541(c) of the Balanced Budget Act (BBA) required application of a financial limitation to all outpatient rehabilitation services
with the exception of those provided by outpatient departments of hospitals. Actions of the Balanced Budget Refinement Act (BBRA)
Section 221(a)(1)(B) and the Benefits Improvement and Protection Act (BIPA) Section 421(a) placed a moratorium on this limitation
through December 31, 2002.
CMS is currently in the process of developing instructions to implement the financial limitation. CMS expects to implement the
provision in a prospective manner. Until further instructions are received, NHIC will continue to process claims for services delivered
on or after January 1, 2003, in the same manner we process claims for services prior to January 1, 2003.
Observation Care Codes (G0263 & G0264)
The descriptors associated with HCPCS codes G0263 and G0264 have been revised to read:
HCPCS Code Descriptor
G0263 Direct admission of patient with diagnosis of congestive heart failure, chest pain or asthma for observation
services that meet all criteria for G0244
HCPCS Code Descriptor
G0264 Initial nursing assessment of patient directly admitted to observation with diagnosis other than CHF, chest
pain or asthma or patient directly admitted to observation with diagnosis of CHF, chest pain or asthma
when the observation stay does not qualify for G0244.
Centers for Medicare & Medicaid Services updated the 2003 MPFSDB effective March 1, 2003. Please review and retain for your files.
Proc. MA Locality 01 MA Locality 99 ME Locality 03 ME Locality 99 NH Locality 40 VT Locality 50
Code
Non- Facility Non- Facility Non- Facility Non- Facility Non- Facility Non- Facility
Facility Facility Facility Facility Facility Facility
G0008 $8.84 $8.84 $8.08 $8.08 $7.14 $7.14 $6.53 $6.53 $7.41 $7.41 $7.01 $7.01
G0009 $8.84 $8.84 $8.08 $8.08 $7.14 $7.14 $6.53 $6.53 $7.41 $7.41 $7.01 $7.01
G0010 $8.84 $8.84 $8.08 $8.08 $7.14 $7.14 $6.53 $6.53 $7.41 $7.41 $7.01 $7.01
G0275 $13.56 $13.56 $12.91 $12.91 $12.15 $12.15 $11.69 $11.69 $12.38 $12.38 $12.01 $12.01
G0278 $13.56 $13.56 $12.91 $12.91 $12.15 $12.15 $11.69 $11.69 $12.38 $12.38 $12.01 $12.01
G0279 $65.01 $3.29 $59.39 $3.15 $52.72 $2.95 $48.18 $2.85 $54.35 $3.04 $52.00 $2.89
G0280 $65.01 $3.29 $59.39 $3.15 $52.72 $2.95 $48.18 $2.85 $54.35 $3.04 $52.00 $2.89
G0289 $85.48 $85.48 $81.68 $81.68 $76.38 $76.38 $73.68 $73.68 $78.85 $78.85 $74.63 $74.63
J2675 $3.68 N/A $3.68 N/A $3.68 N/A $3.68 N/A $3.68 N/A $3.68 N/A
10021 $149.21 $70.35 $138.83 $66.97 $126.52 $62.94 $118.44 $60.51 $129.76 $64.20 $124.89 $62.13
10022 $161.10 $65.95 $149.61 $62.91 $136.08 $59.37 $127.10 $57.22 $139.52 $60.42 $134.40 $58.69
26587 $808.91 $740.33 $769.64 $707.15 $721.40 $666.11 $693.07 $642.70 $737.78 $680.77 $710.70 $656.13
50080 $988.49 $988.49 $934.05 $934.05 $869.08 $869.08 $828.64 $828.64 $888.27 $888.27 $857.68 $857.68
50081 $1,344.45 $1,344.45 $1,274.54 $1,274.54 $1,190.86 $1,190.86 $1,139.63 $1,139.63 $1,216.40 $1,216.40 $1,175.12 $1,175.12
50236 $1,502.07 $1,502.07 $1,425.15 $1,425.15 $1,332.96 $1,332.96 $1,276.81 $1,276.81 $1,361.39 $1,361.39 $1,315.27 $1,315.27
50240 $1,357.57 $1,357.57 $1,287.06 $1,287.06 $1,202.47 $1,202.47 $1,150.81 $1,150.81 $1,228.50 $1,228.50 $1,186.38 $1,186.38

36 NHIC MARCH 2003

 COVERAGE & REIMBURSEMENT
MPFSDB 2003 Administration and HCPCS Codes – CMS Update (Continued)
Proc. MA Locality 01 MA Locality 99 ME Locality 03 ME Locality 99 NH Locality 40 VT Locality 50
Code
Non- Facility Non- Facility Non- Facility Non- Facility Non- Facility Non- Facility
Facility Facility Facility Facility Facility Facility
50553 $826.08 $310.91 $766.31 $296.88 $695.41 $280.03 $648.52 $270.15 $713.82 $285.55 $686.33 $276.35
50555 $931.63 $338.46 $863.71 $323.20 $783.16 $304.89 $729.81 $294.14 $804.00 $310.88 $772.94 $300.89
50557 $883.29 $342.40 $819.87 $327.00 $744.62 $308.51 $694.94 $297.68 $764.24 $314.60 $734.88 $304.44
50561 $889.14 $392.83 $827.39 $375.14 $754.09 $353.92 $705.99 $341.46 $773.46 $360.87 $744.25 $349.28
50684 $568.91 $39.17 $520.11 $37.40 $462.43 $35.30 $423.13 $34.06 $476.35 $35.97 $456.42 $34.85
50690 $590.71 $60.11 $540.88 $57.39 $481.96 $54.14 $441.93 $52.22 $496.27 $55.17 $475.72 $53.46
50953 $832.63 $323.03 $772.86 $308.50 $701.92 $291.03 $655.09 $280.81 $720.43 $296.79 $692.73 $287.19
50955 $1,023.99 $350.24 $948.33 $334.40 $858.69 $315.45 $799.13 $304.29 $881.69 $321.59 $847.53 $311.36
50957 $846.39 $351.36 $786.64 $335.56 $715.71 $316.57 $669.03 $305.45 $734.34 $322.82 $706.34 $312.40
50961 $982.11 $312.64 $908.61 $298.58 $821.51 $281.72 $763.52 $271.83 $843.78 $287.24 $810.79 $278.03
51010 $378.08 $222.50 $352.57 $210.80 $322.17 $196.72 $302.39 $188.12 $330.41 $201.07 $317.86 $194.05
51605 $608.31 $33.56 $555.76 $32.04 $493.61 $30.20 $451.25 $29.12 $508.60 $30.81 $487.18 $29.79
51610 $613.91 $54.17 $561.76 $51.71 $500.13 $48.81 $458.19 $47.07 $515.04 $49.71 $493.66 $48.21
51710 $223.25 $111.81 $206.81 $105.27 $187.31 $97.46 $174.37 $92.53 $192.35 $99.71 $184.85 $96.17
51726 $364.38 $364.38 $336.02 $336.02 $302.23 $302.23 $279.71 $279.71 $310.94 $310.94 $298.08 $298.08
51726 TC $274.96 $274.96 $250.64 $250.64 $221.74 $221.74 $202.07 $202.07 $228.82 $228.82 $218.69 $218.69
51772 $333.19 $333.19 $307.41 $307.41 $276.61 $276.61 $256.15 $256.15 $284.66 $284.66 $272.73 $272.73
51772 TC $247.53 $247.53 $225.65 $225.65 $199.63 $199.63 $181.92 $181.92 $206.01 $206.01 $196.87 $196.87
51784 $283.63 $283.63 $262.02 $262.02 $236.24 $236.24 $219.12 $219.12 $242.95 $242.95 $232.99 $232.99
51784 TC $203.54 $203.54 $185.54 $185.54 $164.15 $164.15 $149.59 $149.59 $169.38 $169.38 $161.89 $161.89
51785 $284.22 $284.22 $262.53 $262.53 $236.70 $236.70 $219.52 $219.52 $243.38 $243.38 $233.48 $233.48
51785 TC $204.40 $204.40 $186.32 $186.32 $164.84 $164.84 $150.22 $150.22 $170.10 $170.10 $162.57 $162.57
51792 $278.19 $278.19 $256.31 $256.31 $229.85 $229.85 $212.42 $212.42 $237.05 $237.05 $226.30 $226.30
51792 TC $217.71 $217.71 $198.65 $198.65 $175.67 $175.67 $160.24 $160.24 $181.64 $181.64 $172.93 $172.93
51795 $347.14 $347.14 $320.00 $320.00 $287.50 $287.50 $265.92 $265.92 $296.04 $296.04 $283.37 $283.37
51795 TC $267.04 $267.04 $243.53 $243.53 $215.41 $215.41 $196.38 $196.38 $222.47 $222.47 $212.28 $212.28
52000 $271.50 $109.07 $251.96 $103.94 $228.76 $97.79 $213.44 $94.14 $234.81 $99.77 $225.76 $96.49
52001 $543.10 $304.80 $507.23 $290.09 $464.60 $272.46 $436.91 $261.89 $476.14 $278.04 $458.51 $268.87
52005 $362.86 $128.84 $336.04 $122.80 $304.19 $115.51 $283.08 $111.20 $312.43 $117.90 $300.17 $113.95
52010 $446.65 $162.92 $413.85 $155.31 $374.93 $146.16 $349.13 $140.74 $384.99 $149.12 $370.02 $144.23
52204 $322.57 $129.27 $299.33 $123.19 $271.71 $115.86 $253.49 $111.52 $278.94 $118.25 $268.11 $114.29
52214 $449.87 $197.85 $418.34 $188.70 $380.91 $177.71 $356.31 $171.21 $390.78 $181.27 $375.91 $175.36
52224 $380.25 $168.53 $353.60 $160.67 $321.98 $151.26 $301.18 $145.67 $330.29 $154.28 $317.78 $149.29
52265 $353.77 $159.61 $329.04 $152.12 $299.65 $143.11 $280.37 $137.77 $307.43 $146.03 $295.70 $141.19
52270 $401.51 $184.21 $373.50 $175.50 $340.25 $165.04 $318.41 $158.82 $349.04 $168.39 $335.79 $162.86
52275 $481.57 $253.13 $449.48 $241.32 $411.32 $227.13 $386.51 $218.72 $421.62 $231.72 $405.92 $224.13
52276 $531.49 $269.62 $495.65 $257.03 $453.04 $241.90 $425.27 $232.94 $464.49 $246.80 $447.09 $238.69
52281 $450.46 $152.58 $416.82 $145.40 $376.93 $136.75 $350.40 $131.62 $387.17 $139.55 $371.98 $134.93
52282 $801.37 $338.92 $744.74 $323.34 $677.51 $304.63 $633.25 $293.60 $695.17 $310.73 $668.63 $300.60
52283 $391.80 $201.08 $365.49 $191.70 $334.23 $180.45 $313.86 $173.78 $342.63 $184.08 $329.85 $178.07
52285 $406.41 $194.68 $378.53 $185.60 $345.38 $174.67 $323.71 $168.20 $354.23 $178.22 $340.83 $172.33
52310 $308.52 $150.80 $287.51 $143.79 $262.54 $135.36 $246.22 $130.38 $269.22 $138.11 $259.08 $133.56
52315 $442.46 $276.60 $415.00 $263.86 $382.29 $248.55 $361.34 $239.52 $391.42 $253.53 $377.26 $245.26
52317 $588.00 $353.13 $551.04 $337.02 $507.03 $317.66 $478.77 $306.27 $519.24 $323.99 $500.36 $313.45
52330 $935.38 $266.77 $863.77 $254.52 $778.89 $239.80 $722.19 $231.12 $800.42 $244.60 $768.70 $236.62
52332 $809.42 $152.38 $743.98 $145.27 $666.50 $136.73 $614.24 $131.68 $685.70 $139.50 $657.79 $134.92
52647 $2,227.00 $585.48 $2,052.76 $556.98 $1,846.38 $522.83 $1,707.94 $502.31 $1,898.21 $533.59 $1,822.27 $515.94
53025 $200.74 $61.88 $185.49 $58.95 $167.40 $55.43 $155.33 $53.34 $172.01 $56.57 $165.20 $54.69
53040 $749.90 $548.89 $697.91 $514.74 $636.04 $473.96 $595.54 $447.90 $652.56 $485.46 $627.57 $467.61
53080 $547.34 $547.34 $513.12 $513.12 $472.19 $472.19 $446.05 $446.05 $483.77 $483.77 $465.80 $465.80
53085 $757.87 $757.87 $714.02 $714.02 $661.47 $661.47 $628.50 $628.50 $676.89 $676.89 $652.51 $652.51
53200 $301.89 $138.59 $281.00 $132.20 $256.12 $124.46 $239.85 $119.92 $262.79 $127.04 $252.70 $122.75
53265 $365.08 $215.50 $339.77 $203.47 $309.66 $189.06 $289.96 $180.10 $317.71 $193.36 $305.54 $186.51

MARCH 2003 NHIC 37

COVERAGE & REIMBURSEMENT
MPFSDB 2003 Administration and HCPCS Codes – CMS Update (Continued)
Proc. MA Locality 01 MA Locality 99 ME Locality 03 ME Locality 99 NH Locality 40 VT Locality 50
Code
Non- Facility Non- Facility Non- Facility Non- Facility Non- Facility Non- Facility
Facility Facility Facility Facility Facility Facility
53270 $356.12 $224.97 $331.58 $212.07 $302.31 $196.57 $283.21 $186.89 $310.20 $201.17 $298.24 $193.87
53850 $3,068.49 $537.64 $2,817.49 $511.33 $2,520.41 $479.80 $2,319.65 $460.83 $2,593.66 $489.73 $2,487.53 $473.47
53852 $2,618.21 $561.38 $2,408.15 $533.93 $2,159.45 $501.04 $1,991.92 $481.25 $2,221.25 $511.38 $2,131.28 $494.45
53853 $1,809.92 $297.84 $1,658.68 $280.84 $1,479.65 $260.46 $1,358.30 $247.73 $1,523.51 $266.49 $1,460.25 $256.93
54000 $262.61 $118.17 $242.81 $111.19 $219.30 $102.84 $203.65 $97.57 $225.33 $105.26 $216.39 $101.45
54001 $312.39 $168.81 $289.64 $158.81 $262.62 $146.85 $244.75 $139.30 $269.67 $150.31 $259.14 $144.88
54015 $479.54 $331.25 $449.06 $313.94 $412.74 $293.17 $389.38 $280.47 $422.82 $299.54 $407.25 $289.24
54055 $285.42 $105.41 $262.84 $98.81 $236.10 $90.96 $218.14 $85.92 $242.78 $93.13 $233.03 $89.78
54060 $282.34 $139.62 $261.66 $131.61 $237.11 $122.03 $220.85 $116.03 $243.48 $124.83 $233.98 $120.41
54105 $369.60 $220.45 $344.73 $208.82 $315.16 $194.90 $295.90 $186.35 $323.12 $199.12 $311.02 $192.32
54111 $869.25 $869.25 $822.81 $822.81 $767.35 $767.35 $733.10 $733.10 $783.96 $783.96 $757.29 $757.29
54115 $640.49 $491.77 $597.63 $462.11 $546.59 $426.68 $513.42 $404.19 $560.44 $436.81 $539.31 $420.96
54120 $685.17 $685.17 $646.97 $646.97 $601.31 $601.31 $572.85 $572.85 $614.78 $614.78 $593.36 $593.36
54125 $870.49 $870.49 $823.91 $823.91 $768.18 $768.18 $733.80 $733.80 $784.95 $784.95 $758.02 $758.02
54130 $1,226.40 $1,226.40 $1,163.18 $1,163.18 $1,087.53 $1,087.53 $1,041.30 $1,041.30 $1,110.68 $1,110.68 $1,073.20 $1,073.20
54135 $1,549.25 $1,549.25 $1,471.52 $1,471.52 $1,378.34 $1,378.34 $1,321.91 $1,321.91 $1,407.36 $1,407.36 $1,360.08 $1,360.08
54160 $306.66 $168.65 $285.09 $159.33 $259.42 $148.15 $242.58 $141.22 $266.23 $151.51 $255.97 $146.14
54205 $575.61 $575.61 $542.49 $542.49 $502.97 $502.97 $478.11 $478.11 $514.41 $514.41 $496.35 $496.35
54300 $736.81 $736.81 $695.06 $695.06 $645.13 $645.13 $613.89 $613.89 $659.79 $659.79 $636.54 $636.54
54304 $866.29 $866.29 $817.70 $817.70 $759.69 $759.69 $723.43 $723.43 $776.70 $776.70 $749.68 $749.68
54308 $823.01 $823.01 $776.76 $776.76 $721.55 $721.55 $687.03 $687.03 $737.73 $737.73 $712.06 $712.06
54312 $933.65 $933.65 $881.54 $881.54 $819.30 $819.30 $780.46 $780.46 $837.62 $837.62 $808.48 $808.48
54322 $856.25 $856.25 $809.73 $809.73 $754.14 $754.14 $719.69 $719.69 $770.71 $770.71 $744.21 $744.21
54324 $1,089.29 $1,089.29 $1,029.71 $1,029.71 $958.28 $958.28 $914.08 $914.08 $979.76 $979.76 $945.40 $945.40
54328 $1,020.96 $1,020.96 $965.79 $965.79 $899.88 $899.88 $859.07 $859.07 $919.55 $919.55 $888.05 $888.05
54332 $1,095.04 $1,095.04 $1,036.55 $1,036.55 $966.62 $966.62 $923.47 $923.47 $987.63 $987.63 $953.89 $953.89
54344 $1,047.00 $1,047.00 $990.56 $990.56 $922.48 $922.48 $880.72 $880.72 $943.48 $943.48 $909.69 $909.69
54360 $785.58 $785.58 $742.91 $742.91 $691.88 $691.88 $660.28 $660.28 $707.15 $707.15 $682.71 $682.71
54430 $693.36 $693.36 $654.82 $654.82 $608.79 $608.79 $580.09 $580.09 $622.34 $622.34 $600.78 $600.78
54500 $283.36 $68.20 $261.18 $65.12 $234.89 $61.41 $217.27 $59.24 $241.50 $62.64 $231.81 $60.59
54700 $430.63 $260.90 $400.24 $245.58 $364.05 $227.20 $340.30 $215.65 $373.67 $232.58 $359.17 $224.10
55100 $418.07 $218.78 $385.84 $204.24 $347.56 $186.86 $322.00 $175.62 $357.34 $191.66 $342.92 $184.32
55250 $454.19 $249.32 $421.36 $234.68 $382.35 $217.16 $356.59 $206.13 $392.56 $222.25 $377.28 $214.24
55450 $411.17 $259.02 $384.00 $245.36 $351.71 $229.03 $330.73 $218.98 $360.44 $233.95 $347.11 $226.03
55700 $209.26 $90.54 $194.25 $86.07 $176.42 $80.70 $164.67 $77.47 $181.11 $82.41 $174.08 $79.61
55873 $1,134.23 $1,134.23 $1,077.36 $1,077.36 $1,009.77 $1,009.77 $968.53 $968.53 $1,030.24 $1,030.24 $997.00 $997.00
58340 $579.89 $47.57 $530.47 $45.41 $471.91 $42.70 $432.14 $41.17 $486.22 $43.70 $465.64 $42.03
66710 $397.31 $340.31 $372.62 $320.68 $343.65 $297.69 $324.85 $282.98 $351.31 $303.92 $339.56 $294.19
66720 $410.87 $369.72 $385.00 $347.51 $354.59 $321.42 $334.84 $304.62 $362.64 $328.43 $350.31 $317.57
66740 $384.45 $384.45 $360.91 $360.91 $333.28 $333.28 $315.41 $315.41 $340.62 $340.62 $329.32 $329.32
66761 $375.91 $321.48 $351.57 $301.97 $322.95 $279.06 $304.25 $264.27 $330.44 $285.19 $319.04 $275.72
66762 $398.25 $339.96 $373.06 $319.94 $343.44 $296.44 $324.18 $281.37 $351.26 $302.80 $339.30 $292.92
66770 $438.83 $383.97 $411.36 $361.37 $379.08 $334.85 $358.12 $317.83 $387.61 $342.01 $374.54 $330.88
91122 $263.36 $263.36 $244.15 $244.15 $221.09 $221.09 $205.98 $205.98 $227.34 $227.34 $217.93 $217.93
91122 TC $170.34 $170.34 $155.38 $155.38 $137.42 $137.42 $125.32 $125.32 $142.02 $142.02 $135.35 $135.35
93268 $342.82 $342.82 $314.07 $314.07 $279.21 $279.21 $256.07 $256.07 $288.60 $288.60 $274.72 $274.72
93271 $260.80 $260.80 $238.00 $238.00 $210.45 $210.45 $192.01 $192.01 $217.70 $217.70 $207.10 $207.10
99289 $256.79 $256.79 $244.53 $244.53 $230.40 $230.40 $221.66 $221.66 $234.34 $234.34 $227.95 $227.95
99290 $128.61 $128.61 $122.46 $122.46 $115.37 $115.37 $110.99 $110.99 $117.35 $117.35 $114.15 $114.15

MA 01 – Middlesex, Norfolk, Suffolk Counties

MA 99 – Rest of State
ME 03 – Cumberland and York Counties
ME 99 – Rest of State
NH 40 – Entire State
VT 50 – Entire State
38 NHIC MARCH 2003
 COVERAGE & REIMBURSEMENT
MSP and Multiple Primary Payer
Centers for Medicare & Medicaid Services revised the Medicare Secondary Payer (MSP) electronic claims when there are multiple
primary payers. The billing instructions, effective July 1, 2003, are below:
“There are situations where more than one primary payer pays on a Medicare Part B claim and Medicare may still make a secondary
payment on the claim. Physician and suppliers must comply with Section 1.4.2, titled “Coordination of Benefits,” found in the 837
version 4010 Professional Implementation Guide regarding the submission of Medicare beneficiary claims to multiple payers for
payment. Providers must follow model 1 in section 1.4.2.1 that discusses the provider to payer to provider methodology of submitting
electronic claims. When there are multiple primary payers to Medicare you must follow the instructions cited below when sending the
claim to Medicare for secondary payment.
Submission of Electronic MSP Claims With Multiple Primary Payers, but With Only One Insurance Type Code
Where there is more than one primary payer on a MSP claim and the primary payers identify the same insurance type code (e.g., the
claims show two employer group health plans made payment on the claim which is identified as insurance type code 12), physicians
and suppliers can send these claims electronically using the 837 version 4010 claim submission format. When sending these types of
claims, you must do the following:
Primary Payer Paid Amounts: For line level services claims, physicians and suppliers must add all primary payer paid amounts for
that service line and put the total amount in loop ID 2430 SVD02 of the 837. If only claim level information is sent to Medicare,
providers and suppliers must add all other payer paid amounts for that claim and place the total amount in loop ID 2320 AMT02
AMT01=D of the 837.
Primary Payer Allowed Amount: For line level services, physicians and suppliers must take the higher of the allowed amount for
that service line, or the total of the other payer paid amounts, whichever is higher, and put the amount in loop ID 2400 AMT02
segment with AAE as the qualifier in the 2400 AMT01 segment of the 837. If only claim level information is sent to Medicare, take
the higher of the claim level allowed amount, or the total of the other payer paid amounts, whichever is higher, and put the amount
in Loop ID 2320 AMT02 AMT01 = B6.
Obligated to Accept as Payment in Full Amount (OTAF): For line level services, physicians and suppliers must take the lowest
OTAF amount for that service line, which must be greater than zero, and put the amount in loop 2400 CN102 CN 101 = 09. If only
claim level information is sent to Medicare, take the lowest claim level OTAF amount, which must be greater than zero, and put this
information in loop 2300 CN102 CN101 = 9.
Submission of Hardcopy MSP Claims With Multiple Primary Payers, but With More Than One Insurance Type Involvement
There may be situations where two or more insurer types make payment on a claim; for example, an auto insurer makes a primary
payment on a line of service and, subsequently, a group health plan also makes a primary payment for the same line of service. Claims
with more than one insurance type involvement cannot be sent electronically to Medicare. A hardcopy claim must be submitted. Use
the current Form CMS-1500 when submitting Part B hard copy claims. Physicians and suppliers must attach the other payers EOB, or
remittance advice, to the incoming claim when sending it to Medicare for processing.

R0070 – Allowance Update

Effective for dates of service on and after March 1, 2003 the following allowances apply for HCPCS code R0070 – Transportation of
portable xray equipment and personnel to home or nursing home, per trip to facility or location, one patient seen. Any dates of service
prior to March 1, 2003 will pay at the previous rate.
Maine $134.65
Massachusetts $152.37
New Hampshire $105.41
Vermont $105.41
R0075 – Transportation of portable xray equipment and personnel to home or nursing home, per trip to facility or location, more than
one patient seen, per patient. Reimbursement for this code is based on a proration of R0070 depending on the number of patients who
receive xrays on that date at that same location
Please make note for your files.

Payment for clinical laboratory tests subject to the clinical

laboratory fee schedules may be made to the person or entity
performing or supervising the performance of the tests. MCM
§6300.4.” Therefore, if a pathologist is rendering a service, he
must bill for his service under his own ID number, not under
the laboratory ID number.

MARCH 2003 NHIC 39

COVERAGE & REIMBURSEMENT
Remark Codes – CMS Update
CMS is the national maintainer of the remittance advice remark code list that is one of the code lists mentioned in ASC X12 transaction
835 (Health Care Claim Payment/Advice) version 4010 Implementation Guide (IG). Under the Insurance Portability and Accountability
Act (HIPAA), all payers have to use reason and remark codes approved by X-12 recognized maintainers instead of proprietary codes
to explain any adjustment in the payment.
The list of remark codes is available at http://www.cms.hhs.gov/providers/edi/hipaadoc.asp and http://www.wpc-edi.com/hipaa/, and
the list is updated each March, July, and November.
The following list summarizes changes made through October 31, 2002.
New Remark Codes
Code Current Narrative
N117 This service is paid only once in a lifetime per beneficiary.
N118 This service is not paid if billed more than once every 28 days.
N119 This service is not paid if billed once every 28 days, and the patient has spent 5 or more consecutive days in any inpatient
or SNF (Part B) facility within those 28 days.
N120 Payment is subject to home health prospective payment system partial episode payment adjustment. Beneficiary transferred
or was discharged/readmitted during payment episode.
N121 Medicare Part B does not pay for items or services provided by this type of practitioner for beneficiaries in a Medicare
Part A covered skilled nursing facility stay.
N122 Mammography add-on code can not be billed by itself.
N123 This is a split service and represents a portion of the units from the originally submitted service.
N124 Payment has been denied for the/made only for a less extensive service/item because the information furnished
does not substantiate the need for the (more extensive) service/item. The patient is liable for the charges for this
service/item as you informed the patient in writing before the service/item was furnished that we would not pay for it, and
the patient agreed to pay.
N125 Payment has been (denied for the/made only for a less extensive) service/item because the information furnished does
not substantiate the need for the (more extensive) service/item. If you have collected any amount from the patient, you
must refund that amount to the patient within 30 days of receiving this notice.
The law permits exceptions to this refund requirement in two cases:
• If you did not know, and could not have reasonably been expected to know, that Medicare would not pay for this
service/item; or
• If you notified the beneficiary in writing before providing it that Medicare likely would deny the service/item, and the
beneficiary signed a statement agreeing to pay.
If an exception applies to you, or you believe the carrier was wrong in denying payment, you should request review of
this determination by the carrier within 30 days of receiving this notice. Your request for review should include any
additional information necessary to support your position.
If you request review within 30 days, you may delay refunding to the beneficiary until you receive the results of the
review.
If the review determination is favorable to you, you do not have to make any refund. If the review is unfavorable, you
must make the refund within 15 days of receiving the unfavorable review decision.
You may request review of the determination at any time within 120 days of receiving this notice. A review requested after
the 30-day period does not permit you to delay making the refund. Regardless of when a review is requested, the patient
will be notified that you have requested one, and will receive a copy of the determination.
The patient has received a separate notice of this denial decision. The notice advises that he or she may be entitled to a
refund of any amounts paid, if you should have known that Medicare would not pay and did not tell him or her. It also
instructs the patient to contact your office if he or she does not hear anything about a refund within 30 days.
The requirements for refund are in §1834(a)(18) of the Social Security Act (and in §§1834(j)(4) and 1879(h) by cross-
reference to §1834(a)(18)). Section 1834(a)(18)(B) specifies that suppliers which knowingly and willfully fail to make
appropriate refunds may be subject to civil money penalties and/or exclusion from the Medicare program. If you have any
questions about this notice, please contact this office.
N126 Social Security Records indicate that this individual has been deported. This payer does not cover items
and services furnished to individuals who have been deported.
N127 This is a misdirected claim/service for a United Mine Workers of America beneficiary. Submit paper claims
to: UMWA Health and Retirement Funds, PO Box 389, Ephraim, UT 84627-0361. Call Envoy at
1-800-215-4730 for information on electronic claims submission.
N128 This amount represents the prior to coverage portion of the allowance.
N129 This amount represents the dollar amount not eligible due to the patient’s age.
N130 Consult plan benefit documents for information about restrictions for this service.
N131 Total payments under multiple contracts cannot exceed the allowance for this service.
N132 Payments will cease for services rendered by this US Government debarred or excluded provider after the 30 day grace
period as previously notified.
N133 Services for predetermination and services requesting payment are being processed separately.

40 NHIC MARCH 2003

 COVERAGE & REIMBURSEMENT
Remark Codes – CMS Update (Continued)
N134 This represents your scheduled payment for this service. If treatment has been discontinued, please contact Customer
Service.
N135 Record fees are the patient’s responsibility and limited to the specified co-payment.
N136 To obtain information on the process to file an Appeal in Arizona, call the Department’s Consumer Assistance Office at
(602) 912-8444 or (800) 325-2548.
N137 You, the provider, acting on the Member’s behalf, may file an appeal with our Company. You, the provider, acting on the
Member’s behalf, may file a complaint with the Commissioner in the state of Maryland without first first filing an appeal,
if the coverage decision involves an urgent condition for which care has not been rendered. The Commissioner’s
address:
Commissioner Steven B. Larsen,
Maryland Insurance Administration,
525 St. Paul Place, Baltimore, MD 21202 - (410) 468-2000.
N138 In the event you disagree with the Dental Advisor’s opinion and have additional information relative to the case, you may
submit radiographs to the Dental Advisor Unit at the subscriber’s dental insurance
carrier for a second Independent Dental Advisor Review.
N139 Under the Code of Federal Regulations, Chapter 32, Section 199.13 a non-participating provider is not an appropriate
appealing party. Therefore, if you disagree with the Dental Advisor’s opinion, you may appeal the determination if
appointed in writing, by the beneficiary, to act as his/her representative. Should you be appointed as a representative,
submit a copy of this letter, a signed statement explaining the matter in which you disagree, and any radiographs and
relevant information to the subscriber’s Dental insurance carrier within 90 days from the date of this letter.
N140 You have not been designated as an authorized OCONUS provider, therefore, are not considered an appropriate appealing
party. If the beneficiary has appointed you, in writing, to act as his/her representative and you disagree
with the Dental Advisor’s opinion, you may appeal by submitting a copy of this letter, a signed statement explaining the
matter in which you disagree, and any relevant information to the subscriber’s Dental insurance carrier within 90 days
from the date of this letter.
N141 The patient was not residing in a long-term care facility during all or part of the service dates billed.
N142 The original claim was denied. Resubmit a new claim, not a replacement claim.
N143 The patient was not in a hospice program during all or part of the service dates billed.
N144 The rate changed during the dates of service billed.
N145 Missing/incomplete/invalid provider identifier for this place of service.
N146 Missing/incomplete/invalid/not approved screening document.
N147 Long term care case mix or per diem rate cannot be determined because the patient ID number is missing, incomplete, or
invalid on the assignment request.
N148 Missing/incomplete/invalid date of last menstrual period.
N149 Rebill all applicable services on a single claim.
N150 Missing/incomplete/invalid model number.
N151 Telephone contact services will not be paid until the face-to-face contact requirement has been met.
N152 Missing/incomplete/invalid replacement claim information.
N153 Missing/incomplete/invalid room and board rate.
N154 This payment was delayed for correction of provider’s mailing address.
N155 Our records do not indicate that other insurance is on file. Please submit other insurance information for our records.
N156 The patient is responsible for the difference between the approved treatment and the elective treatment.
Modified Remark Codes
M25 Payment has been (denied for the/made only for a less extensive) service because the information furnished does not
substantiate the need for the (more extensive) service. If you believe the service should have been fully covered as billed,
or if you did not know and could not reasonably have been expected to know that we would not pay for this (more
extensive) service, or if you notified the patient in writing in advance that we would not pay for this (more extensive)
service and he/she agreed in writing to pay, ask us to review your claim within 120 days of the date of this notice. If you
do not request a review, we will, upon application from the patient, reimburse him/her for the amount you have collected
from him/her (for the/in excess of any deductible and coinsurance amounts applicable to the less extensive) service. We
will recover the reimbursement from you as an overpayment.
M26 Payment has been (denied for the/made only for a less extensive) service because the information furnished does not
substantiate the need for the (more extensive) service. If you have collected (any amount from the patient/any amount
that exceeds the limiting charge for the less extensive service), the law requires you to refund that amount to the patient
within 30 days of receiving this notice.
The law permits exceptions to the refund requirement in two cases:
• If you did not know, and could not have reasonably been expected to know, that we would not pay for this service;
or
• If you notified the patient in writing before providing the service that you believed that we were likely to deny the
service, and the patient signed a statement agreeing to pay for the service.

MARCH 2003 NHIC 41

COVERAGE & REIMBURSEMENT
Remark Codes – CMS Update (Continued)
If you come within either exception, or if you believe the carrier was wrong in its determination that we do not pay for this
service, you should request review of this determination within 30 days of the date of this notice. Your request for review
should include any additional information necessary to support your position.
If you request review within 30 days of receiving this notice, you may delay refunding the amount to the patient until you
receive the results of the review. If the review decision is favorable to you, you do not need to make any refund. If,
however, the review is unfavorable, the law specifies that you must make the refund within 15 days of receiving the
unfavorable review decision.
The law also permits you to request review at any time within 120 days of the date of this notice. However, a review
request that is received more than 30 days after the date of this notice, does not permit you to delay making the refund.
Regardless of when a review is requested, the patient will be notified that you have requested one, and will receive a copy
of the determination.
The patient has received a separate notice of this denial decision. The notice advises that he/she may be entitled to a
refund of any amounts paid, if you should have known that we would not pay and did not tell him/her. It also instructs the
patient to contact your office if he/she does not hear anything about a refund within 30 days.
The requirements for refund are in 1842(l) of the Social Security Act and 42CFR411.408. The section specifies that
physicians who knowingly and willfully fail to make appropriate refunds may be subject to civil monetary penalties and/
or exclusion from the program. Please contact this office if you have any questions about this notice.
M27 The patient has been relieved of liability of payment of these items and services under the limitation of liability provision
of the law. You, the provider, are ultimately liable for the patient’s waived charges, including any charges for coinsurance,
since the items or services were not reasonable and necessary or constituted custodial care, and you knew or could
reasonably have been expected to know, that they were not covered.
You may appeal this determination provided that the patient does not exercise his/her appeal rights. If the beneficiary
appeals the initial determination, you are automatically made a party to the appeals determination. If, however, the patient
or his/her representative has stated in writing that he/she does not intend to request a reconsideration, or the patient’s
liability was entirely waived in the initial determination, you may initiate an appeal.
You may ask for a reconsideration for hospital insurance (or a review for medical insurance) regarding both the coverage
determination and the issue of whether you exercised due care. The request for reconsideration must be filed within 120
days of the date of this notice (or, for a medical insurance review, within 120 days of the date of this notice). You may make
the request through any Social Security office or through this office.
M80 Not covered when performed during the same session/date as a previously processed service for the patient.
MA01 (Initial Part B determination, Medicare carrier or intermediary).
If you do not agree with what we approved for these services, you may appeal our decision. To make sure that we are fair
to you, we require another individual that did not process your initial claim to conduct the review. However, in order to be
eligible for a review, you must write to us within 120 days of the date of this notice, unless you have a good reason for
being late.
An institutional provider, e.g., hospital, SNF, HHA or hospice may appeal only if the claim involves a reasonable and
necessary denial, a SNF recertified bed denial, or a home health denial because the patient was not homebound or was not
in need of intermittent skilled nursing services, or a hospice care denial because the patient was not terminally ill, and
either the patient or the provider is liable under Section 1879 of the Social Security Act, and the patient chooses not to
appeal.
If your carrier issues telephone review decisions, a professional provider should phone the carrier’s office for a telephone
review if the criteria for a telephone review are met.
MA02 (Initial Medicare Part A determination) .
If you do not agree with this determination, you have the right to appeal. You must file a written request for reconsideration
within 120 days of the date of this notice. Decisions made by a Quality Improvement Organization (QIO) must be
appealed to that QIO within 60 days.
An institutional provider, e.g., hospital, SNF, HHA or a hospice may appeal only if the claim involves a reasonable and
necessary denial, a SNF non-certified bed denial, or a home health denial because the patient was not homebound or was
not in need of intermittent skilled nursing services, or a hospice care denial because the patient was not terminally ill, and
either the patient or the provider is liable under Section1879 of the Social Security Act, and the patient chooses not to
appeal.
MA03 (Medicare Hearing)
If you do not agree with the approved amounts and $100 or more is in dispute (less deductible and coinsurance), you may
ask for a hearing. You must request a hearing within 6 months of the date of this notice. To meet the $100, you may
combine amounts on other claims that have been denied. This includes reopened reviews if you received a revised
decision. You must appeal each claim on time. At the hearing, you may present any new evidence which could affect our
decision.

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 COVERAGE & REIMBURSEMENT
Remark Codes – CMS Update (Continued)
An institutional provider, e.g., hospital, SNF, HHA or a hospice may appeal only if the claim involves a reasonable and
necessary denial, a SNF noncertified bed denial, or a home health denial because the patient was not homebound or was not
in need of intermittent skilled nursing services, or a hospice care denial because the patient was not terminally ill, and either
the patient or the provider is liable under Section1879 of the Social Security Act, and the patient chooses not to appeal
N22 This procedure code was changed because it more accurately describes the services rendered.
N104 This claim/service is not payable under our claims jurisdiction area. You can identify the correct Medicare contractor to
process this claim/service through the CMS website at www.cms.hhs.gov
X12 N 835 Health Care Claim Adjustment Reason Codes
The Health Care Code Maintenance Committee maintains the health care claim adjustment reason codes. The Committee meets at the
beginning of each X12 trimester meeting (February, June and October) and makes decisions about additions, modifications, and
retirement of existing reason codes. The updated list is posted 3 times a year after each X12 trimester meeting at http://www.wpc-
edi.com/hipaa/. All reason code changes from July 2002 to October 2002, are listed here.
A reason code may be retired if it is no longer applicable or a similar code exists. Retirements are effective for a specified future and
succeeding versions, but contractors also can discontinue use of retired codes in prior versions.
The committee approved the following reason code changes in October 2002:
New Reason Codes
Code Current Narrative
149 Lifetime benefit maximum has been reached for this service/benefit category.
150 Payment adjusted because the payer deems the information submitted does not support this level of service.
151 Payment adjusted because the payer deems the information submitted does not support this many services.
152 Payment adjusted because the payer deems the information submitted does not support this length of service.
153 Payment adjusted because the payer deems the information submitted does not support this dosage.
154 Payment adjusted because the payer deems the information submitted does not support this day’s supply.
Modified Reason Codes
35 Lifetime benefit maximum has been reached
Retired Reason Codes
57 Payment denied/reduced because the payer deems the information submitted does not support this level of service, this
many services, this length of service, this dosage, or this day’s supply. (Inactive for version 4050)
88 Adjustment amount represents collection against receivable created in prior overpayment. (Inactive for version 4050)

RRB, UMWA, IHS, and Disposition of Misdirected Claims

Centers for Medicare & Medicaid Services revised Sections 3103 – 3110 of the Medicare Carriers Manual regarding Railroad Retirement
Board (RRB), United Mine Workers of America (UMWA), Indian Health Services (IHS), and Disposition of Misdirected Claims
effective July 1, 2003. Please refer to our website www.medicarenhic.com/articles/revisions_0203.htm for the text revisions.
Palmetto GBA is the RRB carrier. Please refer to their website: www.palmettogba.com for information on their new claims processing
system.

Sacral Nerve Stimulation – CMS Reminder

Effective January 1, 2002, sacral nerve stimulation is covered for the treatment of urinary urge incontinence, urgency-frequency
syndrome and urinary retention. Sacral nerve stimulation involves both a temporary test stimulation to determine if an implantable
stimulator would be effective and a permanent implantation in appropriate candidates. Both the test and the permanent implantation are
covered.
“The following limitations for coverage apply to all indications:
• Patient must be refractory to conventional therapy (documented behavioral, pharmacologic and/or surgical corrective therapy)
and be an appropriate surgical candidate such that implantation with anesthesia can occur.
• Patients with stress incontinence, urinary obstruction, and specific neurologic diseases (e.g., diabetes with peripheral nerve
involvement) that are associated with secondary manifestations of the above three indications are excluded.
• Patient must have had a successful test stimulation in order to support subsequent implantation. Before a patient is eligible
for permanent implantation, he/she must demonstrate a 50% or greater improvement through test stimulation. Improvement
is measured through voiding diaries.
• Patient must be able to demonstrate adequate ability to record voiding diary data such that clinical results of the implant
procedure can be properly evaluated.

MARCH 2003 NHIC 43

COVERAGE & REIMBURSEMENT
Sacral Nerve Stimulation – CMS Reminder (Continued)
HCPCS Coding
• 64555 - Percutaneous implantation of neurostimulator electrodes; peripheral nerve (excludes sacral nerve). This code applies to
services performed prior to January 1, 2002
• 64561 - Percutaneous implantation of neurostimulator electrodes; sacral nerve (transforaminal placement). This code applies to
services performed on or after January 1, 2002
• 64575 - Incision for implantantion of neurostimulator electrodes; peripheral nerve (excludes sacral nerve). This code applies to
services performed prior to January 1, 2002
• 64581- Incision for implantation of neurostimulator electrodes; sacral nerve (transforaminal placement).This code applies to
services performed on or after January 1, 2002
• 64585 - Revision or removal of peripheral neurostimulator electrodes
• 64590 - Incision and subcutaneous placement of peripheral neurostimulator pulse generator or receiver, direct or inductive
coupling
• 64595 - Revision or removal of peripheral neurostimulator pulse generator or receiver
• A4290 – Sacral nerve stimulation test lead, each
• E0752 - Implantable neurostimulator electrodes
• E0756 - Implantable neurostimulator pulse generator”

Skilled Nursing Facility – Consolidated Billing – CMS Revision

Centers for Medicare & Medicaid Services will implement changes to the SNF CB editing on April 1, 2003 for certain diagnostic services
furnished to ESRD beneficiaries receiving dialysis at an independent or provider-based dialysis facility.
The SNF CB provision requires a SNF to include on its Part A bill almost all of the services that its residents receive during the course
of a Part A covered stay. However, there are several categories of services that the law (§1888(e)(2)(A)(ii) of the Social Security Act)
specifically excludes from this provision, and these excluded services remain separately billable under Part B by the outside supplier
that furnishes them. One of the excluded categories encompasses those items and services that fall within the scope of the Part B
benefit that covers chronic dialysis for beneficiaries with ESRD (§1861(s)(2)(F) of the Act). In addition to covering the ESRD-related
dialysis services themselves, the Part B benefit also covers any associated diagnostic tests (see regulations at 42 CFR 410.50(b) - (c)
and 410.52(a)(3)).
The SNF CB applies to diagnostic tests that are not ESRD-related. As such, SNF CB applies to diagnostic tests for beneficiaries that
do not have ESRD. This would include tests related to “acute dialysis” (that is, dialysis for a beneficiary who is not an ESRD
beneficiary), because non-ESRD dialysis services and associated diagnostic tests do not fall within the scope of the Part B dialysis
benefit. In addition, SNF CB applies to a diagnostic test for an ESRD beneficiary if the test is unrelated to the beneficiary’s ESRD.
The SNF CB does not apply to diagnostic tests that are ESRD dialysis-related. “ESRD-related” means that: (1) the beneficiary must be
an ESRD beneficiary; (2) the test must have been ordered by an ESRD facility; and (3) the test must relate directly to the dialysis
treatment of the beneficiary’s ESRD.
A supplier or provider may bill the carrier or intermediary, respectively, for an ESRD dialysis-related diagnostic test, provided the test
is outside the ESRD-facility composite rate, notwithstanding that the beneficiary is a SNF Part A resident.
A supplier or provider may not bill Medicare separately for a diagnostic test for a SNF Part A resident if the test is either: (1) within the
ESRD facility composite rate or (2) not an ESRD dialysis-related diagnostic test.
Modifier Effective Date and Submission:
The modifier “CB – services ordered by a dialysis facility physician as part of the ESRD beneficiary’s dialysis benefit, is not part of the
composite rate, and is separately reimbursable” is effective April 1, 2003, for dates of service on or after April 1, 2001. CMS is not
requiring a provider or supplier report the modifier for every service rendered to a ESRD beneficiary; however, the provider or supplier
must be aware that SNF CB editing will be applied if the line item does not contain the modifier. Indeed, the provider or supplier may use
the modifier only when it has determined that: (a) the beneficiary has ESRD entitlement, (b) the test is related to the dialysis treatment
for ESRD, (c) the test is ordered by a dialysis facility, (d) the test is not included in the dialysis facility’s composite rate payment, and
(e) the beneficiary is in a Part A stay. A provider or supplier must secure this information from the dialysis facility and use the modifier
for only those line items for which all these factors are present.
Denied Claims:
Providers that have had claims denied due to SNF CB and provided a diagnostic service to a beneficiary who has ESRD in an
Independent or Provider-Based Dialysis Facility for dates of service April 1, 2001 and later should resubmit these claims with the CB
modifier for each line item. For claims with dates of service beyond the timely filing deadline, the claim(s) may be reopened by the carrier
or intermediary or appealed for payment.
To reiterate this CMS update, please note: that use of the CB modifier is inappropriate unless you exercised due diligence to confirm
that: (i) the beneficiary is a resident in a SNF Part A stay, (ii) the beneficiary has ESRD entitlement, (iii) the test has been ordered by a
dialysis facility, (iv) the test is not included in the dialysis facility’s composite rate payment, and (v) the test is related to the dialysis
treatment of the beneficiary’s ESRD; and that unless you received this information from the dialysis facility, or have otherwise
confirmed this information through other credible sources, it is improper to submit a claim to Medicare with the CB modifier and that
doing so without good faith belief in the legitimacy of using the CB modifier may constitute a false claim.
44 NHIC MARCH 2003
 GENERAL INFORMATION
Ask To See Your Patient’s Medicare Card
It is necessary to submit all Medicare claims with the correct name and Medicare patient identification number. If your Medicare
patient’s name and/or Health Insurance Claim (HIC) number is incorrect, claims processing is delayed and administrative costs
increase.
Medicare’s records are based on the information printed on a Medicare beneficiary’s red, white, and blue Medicare identification card.
Claims submitted to Medicare should indicate the patient’s name and HIC number exactly as it appears on the beneficiary’s Medicare
card.
A helpful hint is to frequently ask your Medicare patients to show you all of the insurance cards they may have. Often, this is how many
providers and suppliers discover the patient’s Medicare identification number, coverage status, and/or name change. When a Medicare
beneficiary enrolls in a Medicare HMO, he will have a separate card issued by that HMO. Therefore, verifying the beneficiary’s
insurance cards to determine he is covered under Original Medicare, or a Medicare managed care plan is suggested. MCM3301

DMERC Articles Available

Health Now New York Inc, the Region A DMERC lists the following articles available on their website:
Changes to DMERC A Publications for Fiscal Year 2003
Establishment of New PO Boxes
The Region A DMERC Provider Communications (PCOM) Advisory Group (formerly PETAG)
These articles are available via the DMERC A Web site at: www.umd.nycpic.com/dmerc.html. Click on the “Newsletters” link, and once
you accept the CPT License Agreement, you can access the entire online collection of bulletins, which includes May 1993 to the
present.
If you have any questions for the DMERC, please call them at 1.866.419.9458

Electronic Data Interchange

April 16, 2003 For those who submitted a ‘compliance extension plan’ and received a 1-year extension for complying with the
electronic transactions and code sets standards, you should begin testing your software (or make sure your third party billers/
clearinghouses do so) no later than this date to ensure you will be able to move the healthcare data in the new standardized format by
October 16, 2003.
If you have questions regarding HIPAA Privacy, please call the Office for Civil Rights at 1-866-627-7748.
The Department of Health and Human Services announced CMS is responsible for enforcing HIPAA standards including transactions,
code sets, security, and identifiers for providers, insurers and employers for use in electronic transactions.
Medicare Electronic Claims Submission To Be Required
The HIPAA Administrative Simplification Compliance Act (ASCA) will prohibit the Department of Health and Human Services from
paying Medicare claims that are not submitted electronically after October 16, 2003, unless the Secretary grants a waiver from this
requirement.
The application of this rule shall be waived for:
• A provider of services with fewer than 25 full-time equivalent employees, or
• A physician, practitioner, facility, or supplier (other than provider of services) with fewer than 10 full time equivalent employees,
or
• An entity that has no method available for the submission of claims in an electronic form.
Beneficiaries will also be able to continue to file paper claims if they need to file a claim on their own behalf. The Secretary may grant
a waiver in other circumstances.
Correct Coding for Anesthesia Claims
During a recent analysis of anesthesia claims, NHIC determined that some providers are incorrectly coding the time for anesthesia
services, possibly resulting in underpayments. Anesthesia time should be coded as follows:
• ANSI X12N 837 version 4010 – For submitters transmitting in this format, the total minutes are to be entered in the SV104 field.
Units do not need to be calculated. Qualifier MJ should be used in the SV103 field.
• Other ANSI X12 837 versions – For submitters transmitting in this format, the number of minutes should be entered in the 2-325-
SV607 field. Units do not need to be calculated.
• National Standard Format (NSF) – For submitters transmitting in this format, the total minutes are to be entered in the FA0.19, and
should be right justified.
Please contact your software vendor if you have questions about correct formatting instructions.

MARCH 2003 NHIC 45

GENERAL INFORMATION
Electronic Data Interchange (Continued)
Would you like to receive your Medicare payments in half the time?
• The key to receiving your Medicare payments in half the time is electronic submission of claims!
• Your claim information is received by NHIC in minutes instead of days!
• A transmission log (‘receipt’) for your claims is available within minutes of NHIC receiving your file!
• Electronic remittance information is available weekly to check claims’ status and posting of accounts!
• NHIC offers FREE HIPAA compliant Medicare B billing software and FREE support!
You can submit claims on your own, or we can provide you with a list of HIPAA compliant billing services from which to choose. Please
contact EDI Support at 781.749.7745 for more information.

Interest Rate – Overpayment & Underpayment

Period Interest Rate
April 24, 1997 – July 24, 1997 13.50%
July 25, 1997 – October 23, 1997 13.75%
October 24, 1997 – January 27, 1998 13.875%
January 28, 1998 – May 12, 1998 14.50%
May 13, 1998 – July 30, 1998 14.00 %
July 31, 1998 – October 22, 1998 13.75%
October 23, 1998 – January 31, 1999 13.50%
February 01, 1999 – May 04. 1999 13.75%
May 05, 1999 – August 03, 1999 13.375%
August 04, 1999 – October 27,1999 13.25%
October 28, 1999 – February 1, 2000 13.375%
February 2, 2000 – May 2, 2000 13.5%
May 3, 2000 – July 31, 2000 13.75%
August 1, 2000 – October 23, 2000 13.875%
October 24, 2000 – February 6, 2001 13.875%
February 7, 2001 – April 25, 2001 14.125%
April 26, 2001 – August 6, 2001 13.75%
August 7, 2001 – October 30, 2001 13.25%
October 31, 2001 – January 31, 2002 13.25%
February 1, 2002 – May 7, 2002 12.625%
May 8, 2002 – August 7, 2002 11.75%
August 8, 2002 – November 18, 2002 12.625%
November 19, 2002 – February 10, 2003 11.25%
February 11, 2003 10.75%

Medical Review
National Heritage Insurance Company’s Medical Review (MR) team is comprised of clinical nursing staff, physicians, data and
business analysts. MR’s team functions are diverse and support the Medicare program in many ways.
To understand New England MR goals, functions and initiatives, we developed a webpage dedicated to these functions and initiatives
available at www.medicarenhic.com.
The MR webpage will provide accurate and updated information, and will continue to add articles and indexes based upon your
questions, comments and issues received. We hope you find the following information helpful: ·
• Goal of the Medical Review Program
• Primary Activities of Medical Review
Prepayment Claims Review
Post-payment Review
• MR Provider Corrective Action Plans and monitoring
• Medical Review Provider Education and Training
• Frequently Asked Questions
Webpage Highlight – FAQ – Medical Record Request
1. What information is needed for probe review?
Answer: Medical Review staff evaluates all services reported on claims within the probe review sample. Documentation for all services
reported on claims should be submitted (e.g., consult requests, injection services, laboratory and radiology reports etc.)
2. I noticed some of the records you requested are illegible. Can I have someone type the description above the notes?
Answer: Do not alter the original notes. You may have someone type the details of the illegible note on your office letterhead and have
them sent along with the handwritten notes.

46 NHIC MARCH 2003

 GENERAL INFORMATION
Medical Review (Continued)
3. I am concerned about privacy of information and HIPAA regulations.
Answer: Providing this information is not in violation of HIPAA. Providers who receive reimbursement from the Medicare program
must obtain authorization from the beneficiary to release medical information prior to the submission of claims for reimbursement.
Probe Review/Medical Review Findings
Home - Evaluation and Management
Medicare payment is allowed to physicians/qualified non-physician practitioners when medically necessary services are rendered to
a patient in their home. Services rendered in the patient’s home should be reported with place of service 12 and the appropriate CPT
code (99341- 99350) reflecting the level of evaluation and management service provided.
Telephone Calls
Probe reviews identified providers who misrepresented services by reporting patient telephone discussion under CPT codes that
describe and require face-to-face patient interaction.
CMS issued the following guidelines pertaining to telephone calls in section 2020b. of the Medicare Carriers Manual. These guidelines
clearly indicate carriers cannot allow payment for telephone calls as CMS considers them an integral part of the prework and postwork
of other physician services, and will not be allowed separate reimbursement.
“Telephone Services - Services by means of a telephone call between a physician and a beneficiary, or between a physician and a
member of a beneficiary’s family, are covered under Medicare, but carriers may not make separate payment for these services under the
program. The physician work resulting from telephone calls is considered to be an integral part of the prework and postwork of other
physician services, and program payment for the latter services already includes payment for the telephone calls.”
Obtaining Copies of Patient Medical Records - All Locations
Obtaining copies of Medical Records is the responsibility of the provider that billed the Medicare program for services, regardless of
where the services were rendered.
Obtaining Copies of Inpatient Medical Records
Providers rendering services to facility inpatients should be aware of the facility’s Medical Record department policies and procedures
obtaining copies of records.
To avoid delays, denials or issues obtaining inpatient medical records, many providers maintain copies of documentation for services
rendered to facility inpatients in their office. This enables providers to quickly respond to requests for medical records without delay.
Incorrect Modifier Alert
MR identified reporting issues with the following modifiers. Please review and ensure your services are being reported correctly.
Modifier Description Issue
51 Multiple Procedures Not Required for Medicare Claims
79 Unrelated Procedure or Service by the Modifier routinely reported on claims.
same physician during the post operative
period. Submit when a procedure or service was provided
during the post-operative period was unrelated to the
original procedure.
Bone Density Studies - Unnecessary Denials
Feedback from our appeals staff indicates frequent claim denials for patients who received more than one (1) bone density study in two
years. To avoid claim denials for patients who require such services, providers should report CPT codes: G0130, G0131, G0132, 76075,
76076, 76078, 76977, 78350) with modifier 22, and attach supporting medical record documentation to the claim. MR will then be able to
evaluate upon receipt of initial claim.
Have you verified/updated your practice Information lately?
Failure to update practice information could result in incorrect claims data or processing of claims for Medicare benefits. Call your local
Provider Services to validate provider specialty, mailing address etc.
Maine 1.877.567.3129
Massachusetts 1.877.567.3130
New Hampshire 1.866.539.5595
Vermont 1.866.539.5595

Document your patient services legibly and sufficiently, whether

it is handwritten, typed, or transcribed. Legible records will help
you avoid a refund request.

MARCH 2003 NHIC 47

GENERAL INFORMATION
Medicare Managed Care Market Penetration Survey
Centers for Medicare & Medicaid Services releases an updated market penetration status for Medicare beneficiaries enrolled in
managed care plans across the country. Listed below are states in Region 1, plus New York, New Jersey, Delaware, Pennsylvania,
Maryland & DC as prepared by the CMS - Boston Regional Office.
December 1996 - December 2001; and March 2002
March 2002
# % Percent of Medicare Beneficiaries
Medicare in in Enrolled in Managed Care Organizations (MCOs)
State Beneficiaries MCOs MCOs 12/01 12/00 12/99 12/98 12/97 12/96
CT 530,412 32,715 6.17% 13.60% 18.66% 20.08% 19.68% 13.81% 5.08%
MA 991,467 216,213 21.81% 22.23% 23.97% 24.03% 23.54% 20.62% 16.29%
ME 227,452 190 0.08% 0.10% 0.86% 0.77% 0.42% 0.15% 0.11%
NH 179,353 1,500 0.84% 0.81% 1.28% 2.08% 9.45% 7.10% 1.36%
RI 176,215 57,479 32.62% 32.85% 32.44% 32.83% 31.96% 19.37% 11.01%
VT 93,554 54 0.06% 0.08% 0.14% 0.18% 2.02% 1.79% 1.47%

DC 77,779 4,721 6.07% 5.97% 7.89% 9.86% 9.58% 10.56% 9.29%

DE 118,894 950 0.80% 1.94% 4.05% 4.28% 3.00% 8.02% 6.31%
MD 678,256 20,395 3.01% 3.05% 9.59% 11.94% 12.75% 13.31% 8.48%
NJ 1,243,709 110,277 8.87% 11.53% 13.02% 15.07% 15.43% 12.85% 8.80%
NY 2,814,074 464,777 16.52% 16.43% 17.74% 17.88% 17.36% 15.86% 12.23%
PA 2,150,393 500,022 23.25% 23.57% 27.56% 27.41% 25.71% 21.88% 16.64%

U.S. 41,551,497 5,574,962 13.42% 14.47% 16.72% 17.09% 16.80% 15.26% 12.59%

Source: CMS Medicare Managed Care Market Penetration Survey, Quarterly State/County Data Files.
Prepared by: CMS, Boston RO, 5/02

Medicare Seminars
Disclaimer: The following is published to notify you of methods used by some private seminar companies inviting providers to attend
their seminars regarding the Medicare program. This is published for informational purposes only.
NHIC holds general seminars or workshops once annually for newly-enrolled providers. We also hold specialty-specific seminars from
time-to-time. Invitations and notices announcing these workshops are mailed to providers on NHIC, Medicare Part B Contractor
letterhead. These workshops are free to all providers in Maine, Massachusetts, New Hampshire, and Vermont.
Recently, representatives from private seminar companies contacted providers about Medicare billing and HIPAA compliance
information. Some may have indicated or implied they contract with the Medicare program to provide these seminars. These representatives
do not contract with Centers for Medicare & Medicaid Services or NHIC to provide billing seminars on billing, HIPAA, or coverage
guidelines.
We provide this information so you can make informed decisions and recognize that some statements and information offered by these
private organizations may be untrue.
If an individual or entity solicits you via questionable methods or statements, please call your local Provider Services at:
Maine 1.877.567.3129
Massachusetts 1.877.567.3130
New Hampshire 1.866.539.5595
Vermont 1.866.539.5595
If you would like an NHIC-sponsored Medicare Part B workshop, please call your local Provider Services number listed above.

NHIC-EDI Support Team

781.749.7745

48 NHIC MARCH 2003

 GENERAL INFORMATION
New Waived Tests – CMS Update
Listed below are the latest tests approved by the Food and Drug Administration as waived tests under the Clinical Laboratory
Improvement Amendments of 1988 (CLIA). The Current Procedural Terminology (CPT) codes for these new tests must have the
modifier QW to be recognized as a waived test. The complete list of waived tests is available at:
www.medicarenhic.com/download/htm/cliawaived_0203.htm
Meridian BioScience ImmunoCard STAT! H.pylori Whole Blood Test,
Effective: August 9, 2002, CPT code: 86318QW;
Matritech, Inc. NMP22® BladderCheck™ Test for Professional and Prescription Home Use, Effective: August 12, 2002, CPT code:
86294QW;
Phamatech QuickScreen One Step Amphetamine Test, Effective: August 23, 2002, CPT code: 80101QW;
Phamatech QuickScreen One Step Cocaine Screening Test, Effective: August 23, 2002, CPT code: 80101QW;
Phamatech QuickScreen One Step Methamphetamine Test, Effective: August 23, 2002, CPT code: 80101QW;
Phamatech QuickScreen One Step Opiate Screening Test, Effective: August 23, 2002, CPT code: 80101QW;
Phamatech QuickScreen One Step PCP Screening Test, Effective: August 23, 2002, CPT code: 80101QW;
DE Healthcare Products, TruView Strep A Test, Effective: October 23, 2002, CPT code: 87880QW;
Henry Schein Inc, One Step+ Strep A Test, Effective: October 23, 2002, CPT code: 87880QW;
Polymer Technology Systems CardioChek PA Analyzer {PTS Panels Lipid Panel Test Strips}, Effective: November 21, 2002, CPT codes:
82465QW, 83718QW, 84478QW and 80061QW;
Lifescan Harmony™ INR Monitoring System — Prescription Home Use and Professional Use, Effective: December 2, 2002, CPT code:
85610QW; and
ThermoBiostar™ PocketChem™ UA, Effective: December 6, 2002, CPT code: 81003QW.
The attached list of tests granted waived status under CLIA has been reorganized so that the column mentioning the CPT code is listed
first. The following changes to this list have been made:
• Approved waived tests are listed under their appropriate CPT code;
• The list is sorted primarily by CPT code;
• Page one lists those waived tests that have a unique CPT code for the waived test that does not require a QW modifier; and
• Two tests that had a CPT code of “Pending” in previous lists [i.e., Micro Diagnostics Spuncrit Model DRC-40 Infrared Analyzer
for hematocrit and Chemtrak AccuMeter H. pylori Test (for whole blood)] have been deleted.

Reimbursement for Relatives or Household Members

NHIC, a contracted Medicare Part B carrier with Centers for Medicare & Medicaid Services is required to maintain the integrity of the
Medicare Part B program and protect the Medicare Trust Fund.
We remind our provider communities in Maine, Massachusetts, New Hampshire, and Vermont that reimbursement cannot be made for
charges submitted by a physician or other provider for his/her immediate relatives or members of his/her household.
Section 2332 of the Medicare Carriers Manual states: “Do not pay under Part A or Part B of Medicare for expenses which constitute
charges by immediate relatives of the beneficiary or by members of his/her household.” The reason for this exclusion is to bar payment
for personal services of physicians, or other providers who would ordinarily be furnished gratuitously.
The following relatives of the provider are included on the definition of ‘immediate relative’:
• Husband and wife;
• Natural or adoptive parent, child, and sibling;
• Stepparent, stepchild, stepbrother, and stepsister;
• Father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law;
• Grandparent and grandchild; and
• Spouse of grandparent and grandchild.
Members of a physician’s household are persons sharing a common abode with the patient as part of a single family, including those
related by blood, marriage or adoption, domestic employees and others who live together as part of a single family unit. A mere roomer
or boarder is not included.
When inappropriate billing for immediate family relatives or household member is identified, the carrier will request these inappropriate
payments be refunded to the Medicare Program.

MARCH 2003 NHIC 49

NOTES
 LOCAL MEDICAL REVIEW POLICIES
Local Medical Review Policy (LMRP) Changes Page 1 of 1
This page alerts readers to changes to previously published Local Medical Policies, provides short descriptions of new policies, and
lists retired policies. Please make corrections to your appropriate policy.
Revised LMRPs
q Scanning Ophthalmic Diagnostic Imaging (effective for services performed on or after March 1, 2003)
Added diagnosis code 363.61
Revised language to include “vitreo-retinal” in the sixth bullet under indications of coverage
q Flow Cytometry (effective for services performed on or after March 1, 2003)
Reformatted to meet CMS requirements.
Added the following diagnoses:
075, 078.3, 079.99, 135, 142.0, 142.1, 150.9, 151.9, 152.9, 153.1, 153.8, 153.9, 154.0, 155.2, 157.9, 158.8, 159.1, 161.9, 162.9, 163.9, 164.9,
170.9, 171.3, 171.4, 171.9, 173.4, 173.5, 173.7, 174.8, 174.9, 183.0, 188.9, 189.0, 191.9, 195.0, 195.5, 196.9, 197.2, 197.6, 197.8, 198.81, 199.1,
211.3, 211.9, 212.3, 215.9, 229.0, 235.0, 235.2, 235.3, 235.6, 235.7, 236.2, 238.0, 238.1, 238.4, 238.5, 238.6, 238.7, 273.1, 273.2, 273.3, 277.3,
277.8, 277.9, 279.10, 279.2, 279.3, 279.4, 281.9, 283.0, 283.9, 284.0, 284.8, 284.9, 285.0, 285.8, 285.9, 287.3, 287.4, 287.5, 288.0, 288.2, 288.3,
288.8, 288.9, 289.2, 289.3, 289.4, 289.50, 289.51, 289.59, 289.8, 289.9, 348.9, 349.9, 356.9, 374.9, 379.29, 379.92, 423.8, 474.2, 478.1, 511.8,
511.9, 519.9, 568.82, 710.0, 729.9, 780.6, 782.2, 785.6, 786.6, 789.2, 789.30, 789.39, 789.5, 790.91, 790.99, 792.0, 795.1, 865.00, 865.02,
V10.79

q Epoetin alfa (effective for services performed on or after March 1, 2003)

Revised the hematocrit level, required for the initiation of Epoetin alfa, to 33% from 30%, for CRF patients, not on dialysis, based
on the National Kidney Foundation Dialysis Outcomes Initiative Clinical Practice Guideline.
Revised the Reasons For Denial And Utilization Guidelines sections to reflect the change made in the Indications Of Coverage.
Added sources of information.

q Electroconvulsive Therapy (effective for services on or after April 1,2003)

Removed: CPT code 90871 from the LMRP because, based on Program Memorandum AB-03-003, the clinical effectiveness of
multiple seizure electroconvulsive therapy has not been verified by scientifically-controlled studies.

q Apolipoprotein (effective for services performed on or after April 14, 2003)

Removed: The following language in the Iindications of Coverage section: “any established risk factor”. (Please access the
complete LMRP via www.medicarenhic.com)

q Computerized Axial Tomography/ Magnetic Resonance Imaging (effective for services performed on or after March 1, 2003)
Deleted CPT codes 72159 and 72198 from the policy because these procedures are Magnetic Resonance Angiographies, and
these CPT codes are not covered.
Deleted the following CPT codes that are MRAs, not MRIs: 70544, 70545, 70546, 70547, 70548, 70549

New LMRP
q Medical Review of Medicare Part B Services Performed by or Under the Supervision of Physical Therapists or Physicians
(effective for services performed on or after April 14, 2003)
This comprehensive Local Medical Review Policy serves to describe the services that may be furnished under the Medicare Part
B benefit by or under the supervision of physical therapists or physicians. This policy applies to all services furnished by physical
therapists, physical therapist assistants, physicians, and physician employees. (Please access the complete LMRP via
www.medicarenhic.com)
Retired LMRPS
The following LMRPs are retired effective for services performed on or after March 1, 2003:
q Corneal Topography
q Corneal Relaxing Incision and Wedge Resection
q Blepharoplasty
q Eye and Brow Surgical Procedures
q Telephonic/telemetric transmission of ECG Rhythm Strip
q Signal-averaged Electrocardiography
q Holter Monitors-Long Term ECG Monitoring
q Electronic Analysis Dual Chamber Internal Pacemaker
q Cardiac Event Monitoring
q Echocardiography (Transthoracic, transesophageal, and Doppler)
The following LMRPs are retired effective for services performed on or after April 14, 2003:
q Application of Modality to One or More Areas
q Guidelines for Physical Therapy Services Physical Medicine Treatment to One Area; Massage
q Physical Medicine Treatment to One Area; Massage
q Therapeutic Activities, Dynamic, each 15 minutes
q Therapeutic Procedure; exercises
q Therapeutic Procedure; Neuromuscular Re-education of Movement
MARCH 2003 NHIC 51
NOTES
 ATTACHMENT A

Advance Beneficiary Notice (ABN)

You have the right to know whether Medicare will pay for services
that are usually covered.

Your doctor, provider, or supplier must let you know about Medicare-
covered services or items by giving you a written notice before he or
she provides either the service or item.

This notice is called Advance Beneficiary Notice, or ABN. It helps you

make an informed decision about whether you want to obtain the service
or item and be responsible for payment if Medicare won’t cover it.

Centers for Medicare & Medicaid Services – the federal agency that
oversees and administers the Medicare Program - recently designed a
new form providers can use when giving you advance notice. The notice
must identify the service and inform you of the reason it may be denied.
It also states you may ask the provider how much the service or item
will cost you.

If Medicare denies payment for the service or item, you will be expected
to pay up to the provider’s usual charge – not the Medicare allowed
amount. If you have health insurance supplementing Original Medicare,
that insurance may help to pay for the service or item.

The ABN only applies to services that Medicare usually covers. There
are some services Medicare never covers – routine physical
examinations; hearing aids; dental services; orthopedic shoes; and
routine eye examinations - your doctor, provider, or supplier does not
have to supply an ABN for these services.

National Heritage Insurance Co. – Medicare Part B Carrier, PO Box 3333, Hingham, Massachusetts 02043

Note: Unless otherwise indicated, all information applies to Maine, Massachusetts, New Hampshire, and Vermont
© All current procedural terminology (CPT) codes and descriptors copyrighted by the American Medical Association.

MARCH 2003 NHIC 53

ATTACHMENT B

Ambulance Prevailing Rates by Locality

The rates below comprise the 60% blended portion of the 2003 charges:
AREA 01 URBAN MASSACHUSETTS – MIDDLESEX, NORFOLK, SUFFOLK COUNTIES
SPEC 59 AMBULANCE
TYPE OF SERVICE 9

CPT-4 CPT-4
PROC MOD EFF DATE CUST/50TH PREVAILING IIC PROC MOD EFF DATE CUST/50TH PREVAILING IIC
A0384 20030101 123.19 123.19 96.71 A0392 20030101 0.00 0.00 96.71
A0394 20030101 160.68 160.68 96.71 A0396 20030101 139.26 139.26 109.64
A0422 20030101 69.64 69.64 45.14 A0425 20030101 12.59 13.40 11.61
A0426 20030101 364.21 364.21 322.43 A0427 20030101 364.21 369.57 322.43
A0428 20030101 267.80 273.16 245.04 A0429 20030101 267.80 299.94 245.04
A0430 20030101 4135.05 4135.05 0.00 A0431 20030101 4135.05 4135.05 0.00
A0433 20030101 364.21 369.57 322.43 A0434 20030101 364.21 369.57 22.43
Y9212 20030101 0.00 0.00 64.49 Y9214 20030101 160.68 160.68 135.43

AREA 99 SUBURBAN MASSACHUSETTS – REST OF STATE

SPEC 59 AMBULANCE
TYPE OF SERVICE 9

CPT-4 CPT-4
PROC MOD EFF DATE CUST/50TH PREVAILING IIC PROC MOD EFF DATE CUST/50TH PREVAILING IIC
A0384 20030101 94.82 116.76 96.71 A0392 20030101 0.00 0.00 96.71
A0394 20030101 107.13 123.19 96.71 A0396 20030101 107.13 129.62 109.26
A0422 20030101 48.21 53.56 45.14 A0425 20030101 12.60 13.12 11.61
A0426 20030101 333.15 333.15 322.43 A0427 20030101 321.37 344.93 322.43
A0428 20030101 276.38 294.60 245.04 A0429 20030101 246.38 267.80 245.04
A0433 20030101 321.37 344.93 322.43 A0434 20030101 321.37 344.93 322.43
Y9212 20030101 0.00 0.00 64.49 Y9214 20030101 144.62 149.97 135.43

AREA 03 NORTHERN MAINE – AROSTOOK, HANCOCK, PENOBSCOT, PISCATAQUIS, SOMERSET, WALDO,

WASHINGTON COUNTIES
SPEC 59 AMBULANCE
TYPE OF SERVICE 9

CPT-4 CPT-4
PROC MOD EFF DATE CUST/50TH PREVAILING IIC PROC MOD EFF DATE CUST/50TH PREVAILING IIC
A0384 20030101 85.70 85.70 62.53 A0392 20030101 64.81 107.13 62.53
A0394 20030101 69.64 85.70 75.06 A0396 20030101 77.12 85.70 56.29
A0422 20030101 42.85 48.21 37.53 A0425 20030101 9.64 11.25 5.40
A0426 20030101 187.47 187.47 191.21 A0427 20030101 204.61 257.10 201.41
A0428 20030101 214.24 214.24 174.11 A0429 20030101 176.75 212.11 174.11
A0430 20030101 2609.96 2609.96 0.00 A0431 20030101 4135.05 4135.05 0.00
A0433 20030101 204.61 257.10 201.41 A0434 20030101 204.61 257.10 201.41
Y9212 20030101 0.00 0.00 28.28 Y9214 20030101 72.78 85.70 75.06

AREA 04 CENTRAL MAINE – ANDROSCOGGIN, KENNEBEC, KNOX, LINCOLN, OXFORD, SAGADAHOC COUNTIES
SPEC 59 AMBULANCE
TYPE OF SERVICE 9

CPT-4 CPT-4
PROC MOD EFF DATE CUST/50TH PREVAILING IIC PROC MOD EFF DATE CUST/50TH PREVAILING IIC
A0384 20030101 85.70 85.70 62.53 A0392 20030101 64.81 107.13 62.53
A0394 20030101 77.77 80.34 75.06 A0396 20030101 58.32 58.32 56.29
A0422 20030101 38.89 42.85 35.64 A0425 20030101 10.18 10.99 5.40
A0426 20030101 219.61 219.61 201.41 A0427 20030101 195.30 208.89 201.41
A0428 20030101 208.89 208.89 174.11 A0429 20030101 208.89 212.11 174.11
A0430 20030101 4134.68 4134.68 0.00 A0431 20030101 4134.68 4134.68 0.00
A0433 20030101 195.30 208.89 201.41 A0434 20030101 195.30 208.89 201.41
Y9212 20030101 0.00 0.00 28.28 Y9214 20030101 77.77 77.77 75.06

54 NHIC MARCH 2003

 ATTACHMENT B
Ambulance Prevailing Rates by Locality (Continued)
AREA 05 SOUTHERN MAINE – CUMBERLAND, YORK COUNTIES
SPEC 59 AMBULANCE
TYPE OF SERVICE 9

CPT-4 CPT-4
PROC MOD EFF DATE CUST/50TH PREVAILING IIC PROC MOD EFF DATE CUST/50TH PREVAILING IIC
A0384 20030101 85.70 85.70 62.53 A0392 20030101 69.64 107.13 62.53
A0394 20030101 80.34 117.83 75.06 A0396 20030101 55.99 96.41 56.29
A0422 20030101 42.85 69.64 36.44 A0425 20030101 9.64 12.05 5.40
A0426 20030101 219.61 241.03 201.41 A0427 20030101 208.89 267.80 201.41
A0428 20030101 267.80 267.80 174.11 A0429 20030101 212.11 214.24 174.11
A0430 20030101 2716.21 2716.21 0.00 A0431 20030101 2716.21 2716.21 0.00
A0433 20030101 208.89 267.80 201.41 A0434 20030101 208.89 267.80 201.41
Y9212 20030101 0.00 0.00 28.28 Y9214 20030101 74.99 107.13 75.06

AREA 07 NEW HAMPSHIRE

SPEC 59 AMBULANCE
TYPE OF SERVICE 9

CPT-4 CPT-4
PROC MOD EFF DATE CUST/50TH PREVAILING IIC PROC MOD EFF DATE CUST/50TH PREVAILING IIC
A0384 20030101 85.70 106.93 69.93 A0392 20030101 80.34 91.06 70.69
A0394 20030101 96.41 101.77 89.50 A0396 20030101 50.88 67.68 70.69
A0422 20030101 37.50 43.93 38.70 A0425 20030101 8.85 12.59 6.60
A0426 20030101 364.21 364.21 225.70 A0427 20030101 235.66 266.73 225.70
A0428 20030101 267.80 267.80 156.75 A0429 20030101 203.53 266.73 161.21
A0433 20030101 235.66 266.73 225.70 A0434 20030101 235.66 266.73 225.70
Y9212 20030101 0.00 0.00 49.49 Y9214 20030101 119.04 147.83 121.52

AREA 08 VERMONT
SPEC 59 AMBULANCE
TYPE OF SERVICE 9

CPT-4 CPT-4
PROC MOD EFF DATE CUST/50TH PREVAILING IIC PROC MOD EFF DATE CUST/50TH PREVAILING IIC
A0384 20030101 69.64 74.99 60.72 A0392 20030101 80.34 85.70 60.72
A0394 20030101 42.85 53.56 37.53 A0396 20030101 58.92 64.27 60.72
A0422 20030101 42.85 53.56 38.70 A0425 20030101 6.97 8.04 6.44
A0426 20030101 321.37 321.37 193.46 A0427 20030101 241.03 321.37 193.46
A0428 20030101 214.24 214.24 141.85 A0429 20030101 214.24 219.61 161.21
A0433 20030101 241.03 321.37 193.46 A0434 20030101 241.03 321.37 193.46
Y9212 20030101 0.00 0.00 49.49 Y9214 20030101 44.99 58.92 37.18

MARCH 2003 NHIC 55

ATTACHMENT C
HCPCS Drug Pricing File
Effective January 2003
HCPCS Unit of Measure 95% of HCPCS Unit of Measure 95% of
AWP AWP
90371 Per dose $649.80 J0285 50 mg 11.06
90375 Per dose 72.85 J0286 50 mg 88.66
90376 Per dose 75.84 J0287 10 mg 21.85
90379 Per dose 16.55 J0288 10 mg 15.20
90385 Per dose 51.21 J0289 10 mg 35.80
90389 Per dose 114.00 J0290 500 mg 1.65
90585 Per dose 174.63 J0295 1.5 g 7.42
90632 Per dose 61.05 J0300 Up to 125 mg 2.39
90633 Per dose 29.80 J0330 Up to 20 mg 0.13
90634 Per dose 29.80 J0360 Up to 20 mg 17.81
90645 Per dose 24.32 J0380 10 mg 1.27
90675 Per dose 139.76 J0390 Up to 250 mg 19.68
90691 Per dose 40.77 J0395 1 mg 182.40
90700 Per dose 22.41 J0456 500 mg 24.68
90703 Per dose 8.32 J0460 Up to 0.3 mg 0.83
90704 Per dose 17.85 J0470 100 mg 23.67
90705 Per dose J0475 10 mg 215.41
13.82
90706 Per dose J0476 50 mcg 79.80
16.05
90707 Per dose J0500 Up to 20 mg 15.90
36.03
90713 Per dose 23.65 J0515 Per 1 mg 3.90
90716 Per dose J0520 Up to 5 mg 5.34
61.91
90717 Per dose J0530 Up to 600,000 units 10.64
57.44
90718 Per dose J0540 Up to 1,200,000 units 20.89
9.03
90720 Per dose 37.59 J0550 Up to 2,400,000 units 44.75
90721 Per dose J0560 Up to 600,000 units 5.65
44.66
90732 Per dose J0570 Up to 1,200,000 units 5.65
13.10
90733 Per dose J0580 Up to 2,400,000 units 11.31
65.56
90735 Per dose 77.44 J0585 Per unit 4.66
J0587 Per 100 units 8.79
90740 Per dose 110.92
90743 Per dose J0592 0.1 mg 0.97
24.36
90744 Per dose J0600 Up to 1000 mg 40.09
24.36
90746 Per dose 55.46 J0610 Per 10 ml 1.12
90747 Per dose J0620 Per 10 ml 5.99
110.92
J0130 10 mg J0630 Up to 400 units 38.41
513.02
J0150 6 mg J0635 1 mcg 13.82
37.76
J0151 90 mg 223.19 J0636 0.1 mg 1.38
J0170 Up to 1 ml J0637 5 mg 31.47
2.08
J0200 100 mg J0640 50 mg 17.52
19.04
J0205 Per 10 units J0670 10 ml 1.99
37.53
J0207 500 mg 427.34 J0690 500 mg 1.74
J0210 Up to 250 mg J0692 500 mg 8.13
11.88
J0256 10 mg J0694 1g 10.69
2.09
J0280 Up to 250 mg J0696 250 mg 14.92
1.05
J0282 30 mg 20.08 J0697 750 mg 6.42

56 NHIC MARCH 2003

 ATTACHMENT C
HCPCS Drug Pricing File (Continued)

HCPCS Unit of Measure 95% of HCPCS Unit of Measure 95% of

AWP AWP
J0698 Per g 10.45 J1205 Per 500 mg 10.49
J0702 3 mg 3.89 J1212 50%, 50 ml 41.75
J0704 4 mg 2.26 J1230 Up to 10 mg 0.75
J0706 5 mg 3.24 J1240 Up to 50 mg 0.39
J0713 500 mg 6.75 J1245 Per 10 mg 21.89
J0715 500 mg 4.96 J1250 Per 250 mg 3.86
J0720 Up to 1 g 6.81 J1260 10 mg 14.24
J0725 Per 1,000 USP units 1.62 J1270 1 mcg 4.58
J0735 1 mg 55.16 J1320 Up to 20 mg 2.40
J0740 375 mg 803.70 J1325 0.5 mg 18.06
J0743 Per 250 mg 15.87 J1327 5 mg 12.83
J0744 200 mg 14.83 J1364 Per 500 mg 3.51
J0745 Per 30 mg 0.48 J1380 Up to 10 mg 0.48
J0760 1 mg 7.07 J1390 Up to 20 mg 0.95
J0770 Up to 150 mg 54.15 J1410 Per 25 mg 56.75
J0780 Up to 10 mg 2.45 J1435 Per 1 mg 0.19
J0835 0.25 mg 16.76 J1436 Per 300 mg 70.30
J0850 Per vial 702.33 J1438 25 mg 147.92
J0880 5 mcg 23.69 J1440 300 mcg 185.90
J0895 500 mg 14.81 J1441 480 mcg 314.07
J0900 Up to 1 cc 1.63 J1450 200 mg 92.68
J0945 Per 10 mg 0.87 J1452 1.65 mg 950.00
J0970 Up to 40 mg 1.62 J1455 Per 1000 mg 12.08
J1000 Up to 5 mg 0.81 J1460 1 cc 11.40
J1020 20 mg 2.55 J1470 2 cc 22.80
J1030 40 mg 5.09 J1480 3 cc 34.20
J1040 80 mg 10.17 J1490 4 cc 45.60
J1050 100 mg 9.96 J1500 5 cc 57.00
J1051 50 mg 4.98 J1510 6 cc 68.40
J1056 5 mg/25 mg 25.64 J1520 7 cc 79.80
J1060 Up to 1 ml 4.43 J1530 8 cc 91.20
J1070 Up to 100 mg 5.15 J1540 9 cc 102.60
J1080 1 cc, 200 mg 8.94 J1550 10 cc 114.00
J1094 1 mg 0.29 J1561 500 mg 42.75
J1095 8 mg 2.31 J1563 1g 55.20
J1100 Per 1 mg 0.10 J1564 10 mg 0.86
J1110 1 mg 30.29 J1565 50 mg 16.55
J1120 Up to 500 mg 29.64 J1570 500 mg 35.25
J1160 Up to 0.5 mg 1.79 J1580 Up to 80 mg 1.95
J1165 Per 50 mg 0.86 J1590 10 mg 0.91
J1170 Up to 4 mg 1.55 J1600 Up to 50 mg 13.52
J1180 Up to 500 mg 9.02 J1610 Per 1 mg 43.32
J1190 Per 250 mg 226.08 J1620 Per 100 mcg 201.98
J1200 Up to 50 mg 1.61 J1626 100 mcg 18.54

MARCH 2003 NHIC 57

ATTACHMENT C
HCPCS Drug Pricing File (Continued)
HCPCS Unit of Measure 95% of HCPCS Unit of Measure 95% of
AWP AWP
J1630 Up to 5 mg 7.32 J2180 Up to 50 mg 4.61
J1631 Per 50 mg 24.94 J2210 Up to 0.2 mg 3.88
J1642 Per 10 units 0.06 J2250 Per 1 mg 1.41
J1644 Per 1000 units 0.35 J2260 Per 5 ml 51.58
J1645 Per 2500 IU 15.44 J2270 Up to 10 mg 0.72
J1650 10 mg 5.53 J2271 100 mg 13.85
J1652 0.5 mg 8.27 J2275 Per 10 mg 2.38
J1655 1000 IU 3.83 J2300 Per 10 mg 1.44
J1670 Up to 250 units 114.00 J2310 Per 1 mg 2.26
J1700 Up to 25 mg 0.34 J2320 Up to 50 mg 5.21
J1710 Up to 50 mg 5.57 J2321 Up to 100 mg 10.40
J1720 Up to 100 mg 1.73 J2322 Up to 200 mg 12.64
J1730 Up to 300 mg 122.95 J2324 0.5 mg 144.40
J1742 1 mg 261.82 J2352 1 mg 88.69
J1745 10 mg 65.70 J2355 5 mg 256.63
J1750 50 mg 17.91 J2360 Up to 60 mg 5.42
J1755 20 mg 13.07 J2370 Up to 1 ml 2.13
J1756 1 mg 0.66 J2400 30 ml 6.39
J1785 Per unit 3.75 J2405 Per 1 mg 6.09
J1790 Up to 5 mg 1.58 J2410 Up to 1 mg 2.80
J1800 Up to 1 mg 11.63 J2430 30 mg 275.50
J1810 Up to 2 ml 9.44 J2440 Up to 60 mg 5.93
J1815 Per 5 units 0.10 J2460 Up to 50 mg 0.98
J1820 Up to 100 units 1.81 J2500 5 mcg 25.09
J1825 33 mcg 233.99 J2501 1 mcg 5.02
J1835 50 mg 35.12 J2510 Up to 600,000 units 9.05
J1840 Up to 500 mg 3.30 J2515 Per 50 mg 0.55
J1850 Up to 75 mg 0.49 J2540 Up to 600,000 units 3.76
J1885 Per 15 mg 5.75 J2543 1 g/0.125 g 4.87
J1890 Up to 1 g 10.26 J2545 Per 300 mg 93.81
J1910 Up to 2 ml 14.92 J2550 Up to 50 mg 2.24
J1940 Up to 20 mg 1.01 J2560 Up to 120 mg 1.62
J1950 3.75 mg 508.48 J2590 Up to 10 units 1.16
J1955 Per 1 g 34.20 J2597 Per 1 mcg 4.12
J1956 250 mg 19.66 J2650 Up to 1 ml 0.31
J1960 Up to 2 mg 3.76 J2670 Up to 25 mg 3.92
J1980 Up to 0.25 mg 8.23 J2680 Up to 25 mg 13.89
J1990 Up to 100 mg 24.99 J2690 Up to 1 g 11.03
J2000 50 cc 4.12 J2700 Up to 250 mg 0.80
J2010 Up to 300 mg 3.32 J2710 Up to 0.5 mg 2.32
J2020 200 mg 38.33 J2720 Per 10 mg 0.76
J2060 2 mg 3.14 J2725 250 mcg 24.40
J2150 25% in 50 ml 5.23 J2730 Up to 1 g 102.96
J2175 Per 100 mg 0.56 J2760 Up to 5 mg 32.59

58 NHIC MARCH 2003

 ATTACHMENT C
HCPCS Drug Pricing File (Continued)
HCPCS Unit of Measure 95% of HCPCS Unit of Measure 95% of
AWP AWP
J2765 Up to 10 mg 1.90 J3360 Up to 5 g 3.77
J2770 500 mg 105.12 J3364 5,000 IU vial 56.61
J2780 25 mg 1.43 J3365 250,000 IU vial 511.50
J2788 50 mcg 35.91 J3370 500 mg 7.41
J2790 One dose package 105.45 J3395 15 mg 1458.25
J2792 100 IU 20.55 J3410 Up to 25 mg 0.83
J2795 1 mg 0.07 J3420 Up to 1,000 mcg 1.26
J2800 Up to 10 ml 3.80 J3430 Per 1 mg 2.45
J2820 50 mcg 29.06 J3475 Per 500 mg 0.13
J2910 50 mg 15.93 J3480 Per 2 mEq 0.08
J2912 0.9% per 2 ml 0.49 J3485 10 mg 1.02
J2915 62.5 mg 40.85 J3487 1 mg 217.43
J2916 12.5 mg 8.17 J7030 1000 cc 10.77
J2920 Up to 40 mg 1.58 J7040 500 ml = 1 unit 5.39
J2930 Up to 125 mg 1.92 J7042 5%, 500 ml = 1 unit 9.44
J2940 1 mg 45.56 J7050 250 cc 2.70
J2941 1 mg 45.56 J7051 Up to 5 cc 0.76
J2950 Up to 25 mg 0.46 J7060 5%, 500 ml = 1 unit 7.51
J2993 18.1 mg 1306.25 J7070 1000 cc 11.45
J2995 250,000 IU 126.67 J7100 500 ml 25.11
J2997 1 mg 35.63 J7110 500 ml 14.21
J3000 Up to 1 g 6.35 J7120 1000 cc 12.45
J3010 0.1 mg 1.97 J7130 50 or 100 mEq, 20 cc vial 0.52
J3030 6 mg 26.56 J7190 Per IU 0.87
J3070 Up to 30 mg 5.23 J7191 Per IU 2.04
J3100 50 mg 2612.50 J7192 Per IU 1.26
J3105 Up to 1 mg 29.39 J7193 Per IU 1.12
J3120 Up to 100 mg 0.57 J7194 Per IU 0.37
J3130 Up to 200 mg 16.25 J7195 Per IU 1.12
J3140 Up to 50 mg 0.40 J7197 Per IU 1.05
J3150 Up to 100 mg 0.94 J7198 Per IU 1.43
J3230 Up to 50 mg 3.97 J7310 4.5 mg 4750.00
J3240 0.9 mg 566.68 J7317 20 to 25 mg 142.27
J3245 12.5 mg 462.16 J7320 16 mg 223.25
J3250 Up to 200 mg 1.55 J7330 implant 15162.00
J3260 Up to 80 mg 6.38 J7340 Per sq. cm. 29.30
J3265 10 mg/ml 1.42 J7342 Per sq. cm. 14.92
J3280 Up to 10 mg 4.34 J7501 100 mg 59.84
J3301 Per 10 mg 1.52 J7504 250 mg 290.31
J3302 Per 5 mg 0.20 J7511 25 mg 325.09
J3303 Per 5 mg 1.01 J7513 25 mg 425.11
J3305 Per 25 mg 142.50 J9000 10 mg 50.96
J3315 3.75 mg 415.24 J9001 10 mg 378.34
J3320 Up to 2 g 26.80 J9010 10 mg 511.22

MARCH 2003 NHIC 59

ATTACHMENT C
HCPCS Drug Pricing File (Continued)
HCPCS Unit of Measure 95% of HCPCS Unit of Measure 95% of
AWP AWP
J9015 Per single use vial 699.20 J9214 1 million units 13.50
J9017 1 mg 31.35 J9215 250,000 IU 7.86
J9020 10,000 units 62.61 J9216 3 million units 204.72
J9031 Per installation 174.63 J9217 7.5 mg 611.56
J9040 15 units 289.37 J9218 1 mg 24.93
J9045 50 mg 135.97 J9219 65 mg 5399.80
J9050 100 mg 127.26 J9230 10 mg 12.01
J9060 Per 10 mg 42.74 J9245 50 mg 416.77
J9062 50 mg 213.73 J9250 5 mg 0.46
J9065 Per 1 mg 53.39 J9260 50 mg 5.51
J9070 100 mg 5.98 J9265 30 mg 162.17
J9080 200 mg 11.34 J9266 Per single dose vial 1427.38
J9090 500 mg 23.81 J9268 10 mg 1926.60
J9091 1g 47.64 J9270 2.5 mg 93.80
J9092 2g 95.27 J9280 5 mg 96.96
J9093 100 mg 5.98 J9290 20 mg 413.72
J9094 200 mg 11.64 J9291 40 mg 869.34
J9095 500 mg 24.42 J9293 Per 5 mg 266.18
J9096 1g 48.86 J9300 5 mg 2101.88
J9097 2g 97.75 J9310 100 mg 475.00
J9100 100 mg 5.94 J9320 1g 136.71
J9110 500 mg 23.75 J9340 15 mg 116.97
J9120 0.5 mg 13.87 J9350 4 mg 729.76
J9130 100 mg 12.68 J9355 10 mg 54.95
J9140 200 mg 22.56 J9357 200 mg 526.68
J9150 10 mg 80.04 J9360 1 mg 4.10
J9151 10 mg 64.60 J9370 1 mg 33.98
J9160 300 mcg 1210.30 J9375 2 mg 52.16
J9165 250 mg 14.41 J9380 5 mg 160.36
J9170 20 mg 328.36 J9390 10 mg 99.28
J9180 50 mg 719.78 J9600 75 mg 2603.67
J9181 10 mg 10.45 K0548 Up to 50 units 2.57
J9182 100 mg 104.50 P9041 5%, 50 ml 27.74
J9185 50 mg 326.69 P9043 5%, 50 ml 29.69
J9190 500 mg 2.82 P9045 5%, 250 ml 55.10
J9200 500 mg 129.57 P9046 25%, 20 ml 24.04
J9201 200 mg 121.01 P9047 25%, 50 ml 55.10
J9202 Per 3.6 mg 446.49 P9048 5%, 250 ml 83.13
J9206 20 mg 151.81 Q0136 Per 1000 units 12.69
J9208 Per 1 g 150.38 Q0183 Per sq. cm. 14.92
J9209 200 mg 36.48 Q0184 Per sq. cm. 14.92
J9211 5 mg 466.59 Q0187 Per 1.2 mg 1596.00
J9212 1 mcg 4.09 Q3025 11 mcg 78.00
J9213 3 million units 34.88 Q3030 Per 20 to 25 mg 142.27

60 NHIC MARCH 2003

 ATTACHMENT D
DMEPOS Instructions for Gap-fill, 2003 HCPCS Codes, and Jurisdiction
List
Effective January 1, 2003
Gap-filling Instructions
Below is a tentative list of new HCPCS codes that will be subject to the DMEPOS fee schedules in 2003 for which carriers must gap-fill
base fee schedule amounts. Please note that these new codes are not yet final, are subject to change, and are not to be used for billing
purposes until they are implemented on January 1, 2003.
Code Description of Item
A6011 Collagen based wound filler, gel/paste, per gram of collagen
A6410 Eye pad, sterile, each
A6411 Eye pad, non-sterile, each
A7042 Implanted pleural catheter, each
A7043 Vacuum drainage bottle and tubing for use with implanted catheter
The local carriers are to gap-fill base fee schedule amounts for each carrier service area for code A7042 (pleural catheter) and A7043
(vacuum drainage bottle). Claims for the pleural catheter, vacuum drainage bottle, dressings (codes A6259 and A6402) and all other
accessories or supplies for the pleural catheter (code L9900) are to be processed by the local carrier that serves the area in which the
supplier is located.
Billing and Payment for the Left Ventricular Assist System (LVAS)
The LVAS is only implanted in an inpatient setting; therefore, Medicare payment is made for the LVAS under Part A on the basis of the
prospective payment system for hospital inpatient services. Payment for supplies and accessories for the LVAS provided in the
inpatient setting are included in the Part A payment. This includes all the accessories necessary for the LVAS to function. If additional
supplies are required or accessories need to be replaced after the patient is discharged from the hospital, Medicare payment, under Part
B, can be made for the medically necessary supplies and replacement accessories. Claims for replacement of supplies and accessories
used with the LVAS that are furnished by suppliers should be billed to the local carriers. Claims for replacement of supplies and
accessories that are furnished by hospitals should be billed to the intermediary. It is the responsibility of the local carrier or intermediary
to determine whether the replacement supplies and accessories can be covered and to provide instructions, as needed, on how often
these items can be replaced.
2003 Jurisdiction List
Following is an updated list of the HCPCS codes for DMERC and local carrier jurisdictions. An indicator of “D” means the DMERCs
have primary jurisdiction over the codes, while an indicator of “L” means that the local carriers have jurisdiction over the codes. Some
codes with a D indicator may also be billed to the local carriers if they are furnished incident to a physician’s service. An indicator of
“J” means the claims are processed and paid by both DMERCs and local carriers. Claims for immunosuppressive drugs, inhalation
drugs, oral anticancer drugs, oral antiemetic drugs or drugs administered in the patient’s home through external infusion pumps should
be submitted to the DMERCs. All other claims for drugs should be submitted to the local carriers. Claims for supplies (including
dressings), accessories, and replacement parts for implanted DME or implanted prosthetic devices should be submitted to the local
carriers. In addition, claims for repair of implanted DME or implanted prosthetic devices should be submitted to the local carriers.
LOCAL CARRIERS DMERCS JOINT
A0021-A0999 L A4206-A4211 D
A4212 L A4213-A4215 D
A4220 L A4221-A4259 D
A4260-A4263 L A4265 D
A4270 L A4280 D
A4290-A4301 L A4305-A4465 D
A4470-A4480 L A4481-A4510 D
A4550 L A4554-A4558 D
A4561-A4570 L A4575 D
A4580-A4590 L A4595-A4640 D
A4641-A4647 L A4649-A6010 D A6021-A6406* J
A7000-A7509 D
A9150-A9170 L A9190-A9270 J
A9300 D
A9500-A9700 L A9900* J
A9901-B9999 D
D0120-D9999 L E0100-E0615 D
E0616 L E0617-E0745 D
E0746 L E0747-E0748 D
E0749-E0754 L E0755 D
E0756-E0759 L E0760-E0780 D E0781** J
E0782-E0783 L E0784 D
E0785-E0786 L E0791-E1310 D E1340* J
E1353-E1390 D E1399* J
E1405-E2101 D

MARCH 2003 NHIC 61

ATTACHMENT D
DMEPOS Instructions for Gap-fill, 2003 HCPCS Codes, and Jurisdiction List (Continued)
LOCAL CARRIERS DMERCS JOINT
G0001-G9016 L K0001-L7499 D L7500-L7520* J
L7900-L8490 D L8499* J
L8500-L8510 D
L8600-L8699 L L9900* J
M0064-Q0115 L Q0136 J
Q0163-Q0184 D
Q0183-Q4051 L Q9920-Q9940*** J
R0070-R0076 L V2020-V2629 D
V2630-V2632 L V2700-V2780 D
V2790 L V2781 D
V2785 L V2799 D
V5008-V5299 L V5336 D
V5362-V5364 L

* Local carrier has jurisdiction over claim if it is a supply or accessory for an implanted prosthetic device (e.g., pleural catheter or
LVAS) or implanted DME (e.g., infusion pump) or repair of an implanted prosthetic device or implanted DME.
** Local carrier has jurisdiction over the claim if the infusion is performed in the physician’s office or if the infusion is initiated and
completed in the physician’s office on the same day.
*** DMERC has jurisdiction over the claim when the item is self-administered or used by Method II ESRD patients.

62 NHIC MARCH 2003

 Medicare B Resource
FOCUSED INFORMATION for MEDICARE B PROVIDERS in MAINE, MASSACHUSETTS, NEW HAMPSHIRE, and VERMONT
Publication Information
National Heritage Insurance Company is the Part B Medicare
carrier serving all of Maine, Massachusetts, New
Hampshire, and Vermont.
One copy of each publication, excluding September 2002,
is provided free of charge to the individual physicians,
suppliers, and physician groups whom we serve as the Part
B carrier; distribution to most other parties is on a
subscription basis. The cost for a year’s subscription is
$75. To subscribe, send a $75 check (payable to NHIC-
Medicare Part B), with your name (or your practice or
business name) and complete mailing address to:
National Heritage Insurance Company,
Medicare Publications,
PO Box 3333, Hingham, MA 02044-9194
Visit our website at www.medicarenhic.com for recent
Medicare updates, Local Medical Review Policies (LMRPs),
Draft Local Medical Review Policies (LMRPs), Billing Guides
and other helpful information.
Manager: Richard Hoover Coordinator: C.A. Cipolla
NHIC
NATIONAL HERITAGE INSURANCE COMPANY
an EDS Company
A CMS CONTRACTED CARRIER
PO Box 3333
Hingham, MA 02044
MARCH 2003
Medicare B Resource, together with occasional special
releases, serves as legal notice to physicians and suppliers
concerning responsibilities and requirements imposed upon
them by Medicare law, regulations, and guidelines.
Toll-Free General Inquiry Telephone Numbers:
Maine ....................... 1.877.567.3129
Massachusetts ......... 1.877.567.3130
New Hampshire ........ 1.866.539.5595
Vermont .................... 1.866.539.5595
If you have any comments about Medicare B Resource or
would like to make suggestions, please write to:
Medicare B Resource Coordinator
Publications
PO Box 3333
Hingham, MA 02044-9194
PRSRT STD
U.S. POSTAGE
PAID
AMSTERDAM, NY
PERMIT NO. 37