When physicians provide an evaluation and management (E/M) service on the same day as a procedure or test, they need to use modifier -25 to indicate that the E/M was for a separate identifiable service. However, claims submitted for E/M services on the same day as skin testing or spirometry are frequently denied by commercial payers – even when billed with modifier -25. These denials are often driven by black box algorithms and may seem arbitrary and unreasonable. We recently learned how one large insurance carrier addresses modifier -25 claims and want to share it, since it may impact the way you deal with claims denials in the future.
Although this insurer relies on a computer algorithm to flag modifier -25 claims, those claims are then sent for review by a nurse/certified coder who looks at the claim and considers it in light of the physician’s history of denials and appeals (but without access to medical records). If the physician has a significant number of denials and a low appeal rate, it weighs against approval of the claim since it creates an inference that the physician is billing inappropriately. On the other hand, if the physician has appealed a high percentage of denials, and a high percentage were overturned and paid, it is likely the claim will be approved for payment. According to this insurer, about 60% of claims flagged by the algorithm end up being paid upon review by nurse/coders.
The lesson here is that allergists should make sure their medical records support use of modifier -25 and should appeal denials they believe are unwarranted. Not only is it a chance to get reimbursed, but failure to do so could count against you both in future denials and in having your claims flagged for review.