Medicare Moves to Replace Modifier 59

Effective for dates of service beginning Jan. 1, 2015, CMS will require four new modifiers for Medicare claims, to be appended in lieu of 59 distinct procedural service under defined circumstances.

CMS describes the new modifiers, announced in CMS Transmittal 1422, Change Request 8863,as “subsets of distinct procedural services (-59 modifier),” to include:

• XE – Separate Encounter. Used to describe services that are separate because they take place during separate encounters.

• XS – Separate Structure. Used to describe services that are separate because they are performed on different anatomic organs, structures or sites.;

• XP – Separate Practitioner. Used to describe services that are distinct because they are performed by different practitioners.

• XU – Unusual Non-overlapping Service. Used to describe services that are distinct because they do not overlap the usual components of the main service.

Modifier 59 may be used to override National Correct Coding Initiative (NCCI) edits, or otherwise to gain separate reimbursement by indicating that a code represents a service that is separate and distinct from another service with which it is usually bundled. For example, excision of skin lesions include simple repair at the same location; however, if a repair occurs at a separate location from the lesion excision, you may report it separately by appending modifier 59 to the CPT code describing the repair.

Endemic, ongoing misuse and abuse of modifier 59 is well documented. A 2005 report by the Office of Inspector General (OIG), “Use of Modifier 59 to Bypass Medicare’s National Correct Coding Initiative Edits,”  found that 40 percent of modifier 59 claims failed to meet CMS program requirements, resulting in an estimated $59 million in incorrect payments in 2003. More recently, 2013 CERT Report data projected a one-year error of $770 Million in incorrect modifier 59 payments. As a result, modifier 59 is a frequent target of payer audits, and it has appeared on the OIG’s annual work plan, every year for a decade.

“The primary issue associated with the -59 modifier,” according to CMS, “is that it is defined for use in a wide variety of circumstances.” In other words, the broad, “catch-all” applicability of the modifier - it is often called the “modifier of last resort”- invites misuse and abuse. The intent of the four, newly-introduced modifiers, collectively referred to as -X{EPSU} modifiers, is to require providers to specify the circumstances that call for separate reimbursement of the reported services, which generally would not be reported together. For instance, returning to the example above of the lesion excision and separate repair at a different location, you would append modifier XS to the repair code to indicate “separate structure.”

Per CR8863, “CMS will not stop recognizing the -59 modifier but notes that CPT instructions state that the -59 modifier should not be used when a more descriptive modifier is available. CMS … may selectively require a more specific - X{EPSU} modifier for billing certain codes at high risk for incorrect billing. For example, a particular NCCI PTP code pair may be identified as payable only with the -XE separate encounter modifier but not the -59 or other -X{EPSU} modifiers.”

More information about the new modifiers is sure to come, but CMS is already encouraging their use. CR8863 states, “Contractors are not prohibited from requiring the use of selective modifiers in lieu of the general -59 modifier when necessitated by local program integrity and compliance needs.” Not only should you prepare to use the -X{EPSU} by Jan. 1, you might also expect even greater scrutiny of future modifier 59 claims.