Department of Health and Human Servces

OFFICE OF

INSPECTOR GENERAL

LIVER BIOPSIES

12-8

AUGUST 199 OEI- EXECUTIVE 
SUMMAR 

PUROSE 
The Office of Inspector General (OIG) conducted this study to review the
performance, coding, and financing of liver biopsies paid for by the Medicare program. 
BACKGROUN 
Liver biopsies are used to diagnose liver disorders, such as cancer, hepatitis, and 
cirrhosis. Physicians can biopsy livers in a number of ways: 
A needle may be inserted through the skin and between the ribs to draw a 
sample (a closed needle biopsy); 
A surgical incision may be made into the abdomen, and a needle used to obtain 
a specimen (an open needle biopsy); 
Following a surgical incision into the abdomen, a wedge of tissue may be 
excised (an open wedge biopsy). 
Physicians and hospitals use two different coding systems to submit claims to Medicare
for these procedures. Hospitals
, using the  International Classification of Diseases. 9th

Revision. Clinical Modification (ICD- CM), describe the biopsies as "open (wedge)"
or "closed (needle)," while physicians Physicians' Current 
, using a version of 
Procedural Terminology (CPT-4) describe them as "needle" or "wedge." Neither 
system fully describes an open needle procedure. Coding instructions for physicians
instruct them not to bil for open 
biopsies unless they are "separate procedures " not 
performed incident to another procedure. 
Only open procedures contribute to determining payment to 
hospitals. Knowing that
this is a potential area for abuse, the Health Care Financing Administration (HCFA)
requires Medicare s fiscal intermediaries to review operative reports for each open 
biopsy claim submitted.

MElHODS 
The OIG randomly selected 329 physician claims for liver biopsies
, representing a 1 
percent sample of 1986 claims. We obtained hospital records for 88 percent of these 
claims, and subjected them to medical review and coding validation. 
FIINGS 
Liver biopsies in which the abdomen is opened but only a needle 
sample is
taken cannot be described correctly under the current coding 
systems. These
procedures represent 14 percent of all 
liver biopsies.  Thirteen percent of physician claims for liver biopsies were miscoded. 
Thirty-one percent of payments to physicians should not have been made 
either because they did not perform the procedure as biled ($256), or because 
it was performed in the course of a more major procedure ($12 
618). This 
generalizes to $1 287 400 in overpayments to physicians for liver biopsies in 
1986. 
In only one case was payment made incorrectly to a hospital, indicating that the 
fiscal intermediary review of operative reports is successful. 
RECOMMATIONS 
The HCF A should ensure that payment for all biopsies can be made 
correctly, by: 
Recommending that the coding structures be changed so that all 
biopsies, particularly open needle biopsies, can be properly classified. 
Ensuring that carriers adjust payment for open biopsies performed in the 
course of more major procedures. 
In commenting on the draft version of this report, HCFA indicated that codes have 
been created to indicate biopsies performed in the course of more major surgery, with 
a reduction in payment. They do not believe that carriers should adhere to CPT 
guidelines, since HCF A can issue guidelines which supercede CPT guidelines. HCF A' 
comments are attached in their entirety.  . . . . . . . . . . . ..  ..  .. .  ..  ..  ..  ....  
. . . . . . . . . . . . ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  . . . . . ..  ..  ..  ..  . ..  ..  . . . . . . . .. 
TABLE OF CONTENTS

EXECUTIVE SUMMAY 
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
FINDINGS 
RECOMMENDATIONS 
............................................. 7

APPENDIX: HCFA's COMMENTS  INTRODUCTION

PUROSE 
The Office of Inspector General (OIG) conducted this 
study to review the 
performance, coding, and financing of liver biopsy procedures for patients covered 
under Medicare. This inspection analyzed a random sample of liver biopsies to 
determine: 
the accuracy of procedural codes assigned to liver biopsies, by physicians and by 
hospitals 
the medical necessity of biopsies, and 
the accuracy of Diagnosis-Related Groups (DRGs) assigned to hospital stays in 
which a liver biopsy was performed. 
BACKGROUN 
The Health Care Financing Administration (HCFA), recognizing the potential for 
misrepresentation of the procedure performed, requires Medicare fiscal intermediaries 
(Fls) to review the hospital operative report for each claim for an open (i.  , surgical)
biopsy. Only open biopsies increase the payment a hospital 
receives for a patient 
care. 
Liver biopsy is a common procedure used to diagnose various medical conditions 
including liver cancer, hepatitis, and alcoholic and bilary cirrhosis. Physicians and 
surgeons employ three distinct methods for performing a liver 
biopsy: 
A needle may be inserted the skin and between the ribs to draw a 
sample; 
A surgical incision may be made into the abdomen, and a needle used to obtain 
a specimen; 
A wedge of tissue may be excised, through a surgical incision into the abdomen. 
If a biopsy is incidental to the primary reason for opening the abdomen
, Medicare
would not normally pay separately for it. The guidelines given to surgeons in 
Physicians' Current Procedural Terminology (CPT-4), issued by the American Medical 
Association, discuss when a procedure may be considered a "
separate procedure" for 
biling purposes. A wedge biopsy, when performed independently of, and not 
immediately related to, other servces, may be listed as a separate service. The 
guidelines do not address open needle biopsies. The "separate procedure" guidelines  also apply to laparotomies, or incisions into the abdomen, which may be biled for only
when it is performed independently of other 
surgery. 
All three biopsy methods involve the risk of internal bleeding, and both open 
biopsy
methods involve the additional risks of general anesthesia and surgery. Open biopsies
always require general anesthesia and sometimes require the 
assistance of a second 
surgeon for the operation. 
Cog 
Concer 
When submitting claims for Medicare Part B reimbursement 
physicians use the 
HCFA Common Procedure Coding System (HCPCS), a version of the CPT-
4 coding
system referred to above. The HCPCS system classifies liver biopsies as either 
percutaneous needle" (47000) or "wedge (separate procedure)" (47100). This 
requires, in effect, that physicians misclassify open needle biopsies into one of these 
two categories. 
hospital claims for Medicare Part A reimbursement
When records staffs submit 
 , they 
use the International Classification of Diseases, 9th Revision, Clinical Modification 
(ICD- CM). That system classifies liver biopsies as either "closed (percutaneous) 
(needle)" (50. 11) or "open biopsy of liver, wedge biopsy" (50.12). The open biopsy
code was formerly referred to as "other." Thus, hospital staff could at one time
properly code all liver biopsies using ICD- CM codes. They would have coded closed 
needle biopsies as "percutaneous needle" and both open needle and wedge 
biopsies as
other." However, this coding scheme failed to distinguish between open needle and 
wedge biopsies, and has now been changed so that open needle biopsies do not 
fit in 
either code. Coding 
instructions have been issued (through the  Coding Clinic, an
official source of coding information) that instruct coders to 
use both the needle 
biopsy code, 50. 11  and the code for exploratory laparotomy, 54.  , for an open needle 
biopsy. This, however, is an exception to the general rule, cited in ICD , which
states that the exploratory laparotomy code should be omitted when the procedure is 
incidental to intra-abdominal surgery. 
Finncial Concern 
The average amount allowed to the surgeon/internist in our sample for a needle 
biopsy was $100.66; the average for a wedge biopsy was $296.04. 
Medicare pays hospitals based on a series of Diagnosis-Related Groups (DRGs),
which are weighted by their relative resource consumption. The average DRG 
has a 
theoretical weight of 1.0000. On average, the more resource-intensive a typical case is
the higher the weight and reimbursement. In 1986
, DRGs which included closed liver 
biopsies and a diagnosis of liver disease ranged in weight from 0.
5794 to 1.1662. 
Those which included open liver biopsies ranged in weight from 0.
7623 to 2.7760. 
Thus miscoding of the hospital or physician claim could have a significant impact on 
payment.  MElHODS 
The OIG selected the sample records analyzed in this study from the 1986 BMAD 
procedure fie containing all Part B claims for a 5 percent systematic sample of
Medicare beneficiaries. The OIG selected 20 percent (or a random 1 percent sample
overall) of claims for procedure codes 47000 and 47100. This process identified 329 
claims, representing 273 patients and 290 
biopsies. All Part B claims related to each 
biopsy were identified. Thirty-three patients who had only one biopsy had a second 
claim and three a third claim, usually for an anesthesiologist, radiologist, or assistant at 
surgery. Seventeen patients had two claims on different dates, so presumably had two 
biopsies. 
In all but 17 cases, the OIG was able to identify the hospital in which the biopsy took 
place. (In two of the 17 cases, the physician s office confirmed that he/she had not 
performed a biopsy, and the Part B claim was in error. ) The OIG requested the 
entire medical record for the admission in which the biopsy took place from each of 
the hospitals. In 88 percent of the sampled cases, we were able to obtain the medical 
record. The final sample consisted of 289 claims for 237 patients representing 
253 
procedures. 
The Health Data Institute (HDI) of Lexington, Massachusetts, recoded the records 
determined the correct DRG, and extracted clinical information. Physicians reviewed 
the indications for the surgery, adequacy of the workup, the post-operative monitoring, 
etc. The BOTEC Analysis Corporation of Cambridge, Massachusetts, analyzed the
data and reported findings to the OIG.  FINDINGS

PHYSICIAS MISCODE 13 PERCENT OF 
Thirteen percent (39 of 289 claims) were miscoded, claiming a wedge was performed
when actually a needle sample was taken
, or vice versa, or biling when no biopsy, or
no procedure at all, was performed. Of the 91 
claims for wedge procedures for which
records were obtained, 70 were correctly coded, 15 were actually needle procedures
and 6 were liver resections. Of the 198 claims for needle procedures for which
records were obtained
, 180 were correctly coded, 9 were actually wedge procedures
were liver aspirations, and 3 were lung biopsies. In three cases , 3
, no procedure at all
was performed. 
CODING SYSTEMS DO NOT ADEQUATEY DESCRffE 
14 PERCENT OF
BIOPSIE 
Both coding systems provide conceptually inadequate descriptions of open 
biopsies.
For example, medical record staff code an open needle biopsy procedure 
as "closed
(percutaneous)(needle)," but add a code showing that the abdomen was opened.
physician performing the same procedure might have categorized it as "
wedge" to
emphasize that the procedure was open
, and thereby created a misleading impression
that a needle biopsy had not occurred. 
This creates two concerns. The first, and most important, is that open needle and
wedge procedures may require different amounts of medical 
resources. If this is true
then we may be reimbursing 
physicians and hospitals for these procedures incorrectly.
A second concern is that distinctions which are important for 
research purposes
cannot be made based on these codes. 
THTY-
ONE PERCENT OF PAYMNT TO PHYSICIAS SHOUL 
NOT
HAVE BEEN MAE 
We estimate that over $1.2 milion in 
overpayments for liver biopsies were made to
physicians in 1986. These overpayments were due 
to several incorrect uses of the 
CPT coding system. 
When a surgeon opens the abdomen only to biopsy an organ
, s/he may bil either the
biopsy code or a code for "laparotomy with or without biopsy(s).
" If the surgeon uses
the biopsy code, the laparotomy should not be coded, as its only 
purpose was to
provide access to the organ biopsied. The laparotomy code 
includes all the biopsies
performed in that 
episode. Surgeons violated this principle in 14 claims, in which both
the biopsy and laparotomy were coded and paid. 
These 14 claims involved payments  of $4 494 for biopsies, $6 344 for laparotomies, and $7659 for primary and secondary 
surgenes. 
In 90 cases, the surgeon biled for a biopsy incidental to a more major procedure. 
six claims for a resection of the liver, the liver tissue was removed because it was
cancerous or damaged. A pathologist would examine it and 
bil for his or her servces. 
The surgeon, however, biled twice for removing the same piece of tissue. 
In those cases where the major procedure was not on the liver
, a surgeon may feel
that he or she should use a biopsy code to indicate one was done. This 
should not
confer additional reimbursement, however. In the 82 claims of this tye, carriers 
allowed $12 618 for liver biopsies. 
Of 20 claims by primary surgeons for biopsies as primary procedures
, the average
amount allowed was $339. Of the 59 
claims by primary surgeons for biopsies as 
secondary procedures, the average allowed was $149. Thus the 
claims for biopsies as
secondary procedures appear to reflect an acknowledgement 
that the biopsy is less 
resource-intensive than when performed as the only procedure. 
We arrived at the overpayment by totaling the 
payments made for procedures not
performed ($256) and those that were secondary to more major procedures ($12 
618).
This is 31 percent of all payments made for cases for 
which we obtained records 
($41 187). This implies $1 287 400 in overpayments every year for liver 
biopsies. 
We did not calculate overpayments for all erroneous claims
, since we did not always
know the correct payment amount. 
IN ONLY ONE CASE WAS A HOSPITAL PAI IMROPERLY 
We obtained medical records for 47 hospital 
claims for open biopsy procedures. In all 
but one case, the medical record confirmed that an open biopsy 
had been performed.
In one case, a closed biopsy had been done
, and in three cases, while other
information in the chart confirmed that an open procedure had been done
, the 
operative report did not describe the biopsy.

This finding suggests that the Fls generally have been 
successful in obtaining and 
evaluating operative reports. In the one case referred to above, the hospital coded
open biopsies of both the kidney and the liver
, when in fact both biopsies were 
closed.
Correcting the codes changed the case from DRG 442
, with a weight of 1.8156, to
DRG 452, with a weight of 0.8080. This is a difference in payment to the hospital of 
more than $2 500.  UV  CONF 
NECEIT 
MEDICAL  OF  BIOPSIE 
Medical review provided little evidence of unnecessary or inappropriate biopsies. Our
review found that: 
98 percent of all biopsies were appropriate in the context of the patients
' ilnesses 
and medical histories. 
91 percent of open needle biopsies were appropriate. 
100 percent of all wedge biopsies were appropriate. 
98 percent of all closed needle biopsies were appropriate. 
Internists prescribed 70 percent of biopsy procedures, while surgeons prescribed the
remainder (often incidental to direct observation of the liver during another 
procedure ). 
However, while the procedures were clinically appropriate in the abstract, they were 
questionable considering the patient's chance of survval. In virtually all the patients
determined to have cancer, the physicians knew that almost to certainty based on 
diagnostic imaging and laboratory analysis (such as carcinoembryonic antigen (CEA)
determinations). The physicians performed biopsies for absolute confirmation
, and in
a few cases to determine if a shunt should be inserted to deliver 
chemotherapy directly 
to the liver. In only one instance was the cancer in an early enough stage to insert a 
shunt. In 15 of 66 cases the patient died in the hospital. Of the 51 remaining cancer
patients, 21 died within a month of discharge. 
In those patients without liver cancer, the probability of survival 1 year past the 
biopsy
was 75 percent. In the patients with cancer, however, the probability of their survving 
a year was only 25 percent. 
ACCUCY FLWED 
DRG CODING 
The 289 cases for which records were obtained represented 
241 unduplicated hospital
stays. Only 71 percent of the cases were assigned to the correct DRG. Sixty-eight 
percent of the closed needle biopsies, 74 percent of the open needle biopsies, and 76
percent of the wedge biopsies were correct. This is a higher rate of incorrect 
coding
than found in previous OIG studies, and may be related to the fact that these patients 
generally had multiple, complex diagnoses.  RECOMMENDA TIONS

The HCF A should ensure that payment for all biopsies can be made 
correctly, by: 
Recommending that the coding structures be changed so that all 
biopsies can 
be properly classified. 
Ensuring that carriers adjust payment for open 
biopsies performed in the
course of more major procedures. 
The HCF A's policy requiring Medicare fiscal intermediaries to review operative 
reports for open biopsies has generally been successful and should be continued. 
In commenting on the draft version of this report, HCFA indicated that codes have
been created to indicate biopsies performed in the course of more major 
surgery, with
a reduction in payment. They do not 
believe that carriers should adhere to CPT 
guidelines, since HCF A can issue guidelines which supercede CPT guidelines.  APPENDIX

HCF A' s Comments  :- . '-
- . '''' == ::::::: 
Health Care
DEPARTMENT OF HEALTH &. HUMAN SERVICES 
Financing Administration 
JUN I 0  Memorandum 
4J(1  1992 
Date  V'/
Toby, Jr. 

From  Acting Admistrator  PDIG 
DIG-
AS 
DIG-
OIG Draft Report - "Liver Biopsies." OEI-12:S8- EI 
Sublect  DIG-
OI 
AIG-
MP 
Inspector General  OGC/IG
EX SEC 
Office of the Secretary 
DATE SENT 

We reviewed the subject draft report concerning 
coding and payment for liver 
biopsies biled to the Medicae program. Liver biopsies are used to diagnose liver 
disorders, such as cancer, hepatitis, and cirhosis. The codig of the method used to 
obtain the biopsy determes the amount that Medicae will pay the hospital or 
provider. 
OIG found that 13 percent of the claims for liver biopsIes reviewed in the study 
were miscoded by physicians, and that 31 percent of the payments made to physicians
for these biopsies were not appropriate. OIG estimted that $1.2 mion 
overpayments for liver biopsies were made to physicians II 1986. However, OIG only 
found one case in which a hospital was paid improperly for a biopsy procedure. The 
report nOted that this fiding suggests that Medicare fisc .1 intermediares have been 
successful in obtaining and evaluating operative reports. 
OIG recommends that coding structures for liver 
biopsies be changed so that all 
biopsies can be properly classified. OIG also recommends that the Health Cae 
Financing Admiistration (HCF A) should ensure that ca"iers adhere to exiting 
guidelines in the Physicians' Current Procedural Termology (CPT-4) which provide 
for exclusion of open biopsies performed during the course of more major 
procedures. OIG states that HCFA's policy requirg Medicae fiscal intermediares 
to review operative reports for open biopsies has generaly been successful and should 
be continued. We concur with the recommended coding structure changes and the 
statement regarding Medicare fiscal intermediaries' review of operative report for
open biopsies. We do not agree that HCF A should ensure that 
carers adhere 
existing CPT -4 guidelines. Our specific comments on the recommendations are 
attached for your consideration.

Thank you for the opportunity to review and comment on this report. Please 
advise us if you agree with our position on the report 
s recommendations at your 
earliest convenience. 
Attachment  "lt 
_. e 

.:, ..;.: \w  C,1  Recommendation 
HCF A should recommend that codig 
structures be changed so that al biopsies 
particularly open needle biopsies, can be properly classifed. 
HCF A Response

We concur. We believe changes made in 
1992 to the Physicians' Curent Procedural 
T enninology (CPT -4) complete all necessar correcre 
actions for thi 
recommendation. Procedure codes were added to the CP-
4 for open needle 
biopsies of the liver. Diferent codes were establihed to indicate if the open needle
biopsy was done separately or 
durig a major procedure. The relative value of an 
open needle biopsy performed durig the course of a major procedure does not 
include the value attributed to openig and closing the abdomen. 
Recommendation 2

HCFA should ensure that 
carers adhere to existing CPT-4 guidelines which provide
for the exclusion of open biopsies performed durig the course of more major
procedures. 
HCFA Response 
We do not concur that payment for open needle biopsies 
performed durig the 
course of more major procedures should be fully denied. 
The carrer medical

directors have advised us that obtaing a needle biopsy of the liver durig a larger
procedure involves additional work and that 
additional payment is appropriate.
However, the relative value established for add-on code 
47001 (open needle biopsy
performed during the course of a major procedure) does not 
include the relative
value of the work of opening and 
closing the abdomen. We do agree, however, that
payment should be excluded for open biopsies 
biled as "separate procedures" which
were performed during the course of major 
surgery. 
It should also be noted that, as of January 1 
, HCF A has the authority to establish
uniform national definitions of servces, codes to represent servces
, and payment
modifiers to the codes. Therefore. HCF A can 
issue guidelies that are diferent from
those in the CPT-4 manual. To the extent that instructions in the CPT-4 manual are  Page 2

unclear or are contrary to payment policy 
associated with the physician payment
reform rules, HCF A wi issue instructions that are diferent from or wi clar those
in the CPT-4 manual. These HCFA guidelies would supersede any CP-4 manual
instructions. In order to ensure uniorm payment policy, HCF A wi anualy issue a
Medicare Fee Schedule data base tape which-ll 
include payment policy indicators 
for each code to the carers.