Modifier 25 Requirements for Avoiding Potential Billing Fraud

By: Dave Davidson

On February 4, 2020, the Department of Justice announced a $1.5 million settlement with Southeastern Retina Associates, a 17 physician practice, with offices in Tennessee, Georgia and Virginia.  The sole basis of the claim was the alleged misuse of the Modifier 25 billing code and charging for exams at higher levels than warranted.  The claim was initiated by a whistleblower, who will receive $270,000 from the settlement.

Use and potential abuse of Modifier 25 is obviously not unique to retina surgeons.  In fact, the modifier can be very beneficial to providers, since it allows for payment for those patient visits when the care provided exceeds the scope of the scheduled appointment.  However, given the potential for abuse and the many watchful eyes of the government (the Southeastern Retina case was investigated by the U.S. Attorney’s Office, the HHS Office of Inspector General, the U.S. Office of Personnel Management, the FBI, and the Tennessee Attorney General’s Office) and wannabe whistleblowers, a periodic review of a provider’s billing practices is always a good idea.

CMS defines Modifier 25 as a significant, separately-identifiable Evaluation and Management (E/M) service performed by the same physician (or other qualified healthcare provider) on the same day of a patient’s procedure or other service.  The use of Modifier 25 indicates that on the billed day, the patient’s condition required service above and beyond the usual care associated with the scheduled services.  This therefore allows for increased reimbursement for a single day’s visit, rather than having to schedule the patient for another day to address a separate, significant problem, and can lead to increased patient – and provider – satisfaction.

However, as the Southeastern Retina settlement demonstrates, care must be taken when Modifier 25 is being considered.  The primary requirements must be met in every case in which the modifier is used:

1. The E/M service must be significant. The additional problem must require medically necessary physician/provider work. For example, this could be a problem that requires treatment with a prescription or that would otherwise require another visit.
2. The E/M service must be separate. The problem must be distinct from the other E/M service or procedure being done. Separate documentation is recommended to support the use of the modifier.
3. The service justifying use of the modifier must be provided on the same day as the other procedure or E/M service.
4. The modifier should be attached to the E/M code and the documentation must justify the code selected.

By keeping those basic requirements in mind, providers can take advantage of the benefits of Modifier 25, while maintaining full compliance in their billing practices.