Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

APPLYING THE NATIONAL

CORRECT CODING INITIATIVE TO

MEDICAID SERVICES

, SERVICe" 
Inspector General 
October 2004 
OEI -03-02-00790 
q",cf::W  Office of Inspector General 
://oi  hhs. 
The mission ofthe Offce ofInspector General (OIG), as mandated by Public Law 95-452 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs. This statutory mission is carried out through a nationwide network of audits 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS , either by 
conducting audits with its own audit resources or by overseeing audit work done 
by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to 
provide independent 
assessments of HHS programs and operations in order to reduce waste 
, abuse, and 
mismanagement and to promote economy and efficiency throughout the department. 
Office of Evaluation and Inspections 
The OIG's Offce of Evaluation and Inspections (OEI) conducts short-term management 
and program evaluations (called inspections) that focus on issues of 
concern to the 
department, the Congress, and the public. The fidings and recommendations contained 
in the inspections reports generate rapid, accurate, and up-to-date information on the 
effciency, vulnerabilty, and effectiveness of departmental programs. The OEI also 
oversees State Medicaid fraud control units, which investigate and prosecute fraud and 
patient abuse in the Medicaid program. 
Office of Investigations 
The OIG's Office of Investigations (01) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers. The investigative efforts of 01 lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. The OCIG imposes program exclusions and 
civil monetary penalties on health care providers and litigates those actions within the 
department. The OCIG also represents OIG in the global settlement of cases arising 
under the Civil False Claims Act, develops and monitors corporate integrity agreements 
develops compliance program guidances, renders advisory opinions on OIG sanctions to 
the health care community, and issues fraud alerts and other industry 
guidance.  The National Correct Coding Initiative (eCl) consists of automated 
edits used to evaluate Medicare claim submissions when a provider 
bils more than one service for the same beneficiary and same date of 
service. Although use of the CCI edits is mandatory in the Medicare 
program, State Medicaid agencies are not required to use these edits 
in processing their claims. Based on a 2003 survey of all State 
Medicaid agencies , we found that most States do not use the Medicare 
CCI edits. Only seven States use all or some of these coding edits. 
Our review of 2001 claims data available for 39 State Medicaid 
agencies found that these 39 States paid $54 millon for servces that 
would have been denied based on the CCI edits. Using these edits 
would promote correct coding by providers and reduce Medicaid 
expenditures for services that the edits would deny. Therefore
, we 
recommend that the Centers for Medicare & Medicaid Services (CMS) 
encourage States to explore the use of Medicare CCI edits within their 
Medicaid programs. CMS concurred with our recommendation. 
OEI. 03-02. 00790  APPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  OBJECTIVE 
To determine (1) the extent to which State Medicaid agencies use the 
National Correct Coding Initiative (eCl) edits or similar edits and 
(2) the extent to which the Medicaid program paid for services that
would have been denied if State Medicaid agencies implemented the 
CCI edits used by the Medicare program. 
BACKGROUND 
The Medicaid program was established in 1965 under Title XIX of the 
Social Security Act. Financed by a Federal-State partnership, the 
Medicaid program covers health services for approximately 40 million 
people including children, the aged, blind, or disabled, and people who 
are eligible to receive federally assisted income maintenance payments. 
Each State Medicaid agency administers its own program within 
Federal guidelines , and coverage policies may vary from State to State. 
In January 1996, the Centers for Medicare & Medicaid Services (CMS) 
implemented the CCI in the Medicare program. This initiative was 
developed to promote correct coding of health care services by providers 
and to prevent Medicare payment for improperly coded services. The 
initiative consists of automated edits used to evaluate claim 
submissions when a provider bils more than one service for the same 
beneficiary and same date of service. 
To determine if State Medicaid agencies use CCI edits or any similar 
edits, we conducted a mail survey of Medicaid agencies in all 50 States 
and the District of Columbia. Forty-nine of the fifty.
one agencies 
responded to the survey. 
To determine if State Medicaid agencies paid for services that would 
have been denied based on the CCI edits, we matched the fourth 
quarter 2001 CCI edits against CMS's Medicaid Statistical Information 
System claims data for the 39 States that had provided 2001 data at the 
time of our review. We then calculated the amount States paid for those 
services that the edits would have denied. 
FINDINGS 
Most State Medicaid agencies do not use the National Correct 
Only 7 of 49 State Medicaid agencies that 
Coding Initiative edits. 

responded to our 2003 survey reported that they use CCI edits in 
OEI-03. 02-00790  APPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES  processing their claims. These States do not all use CCI edits to the 
same extent. Two States reported using all CCI edits , three States use 
the edits only for particular types of services, and two States use only a 
small number of the edits. 
Another eight States use a commercial edit package that includes edits 
to prevent payment for services by a provider on the same day for the 
same beneficiary. Commercial edit packages may be purchased by the 
States and modified to accommodate each State s coverage policies. 
Thirty.two States do not use CCI edits or a commercial edit package but 
have other edits in place. States' edits include some that are 
comparable to CCl edits. 
Two States reported that their systems do not include any edits to deny 
services performed by a provider on the same day for the same 
beneficiary. Another two States did not respond to our survey. 
Thirt-nine State Medicaid agencies paid $54 millon in 2001 for 
services that would have been denied based on the National Correct 
Thirty-nine States had provided 2001 Medicaid 
Coding Initiative edits. 

claims data at the time of our review. The 39 States paid $150 milion 
in 2001 for 3.2 million services involving CCI code pairs that were 
performed by a provider on the same day for the same beneficiary. 
These States paid $57 million for services involving the second code in a 
CCI code pair, the servces that CCI usually does not allow. Ofthis 
amount, $54 milion (94 percent) was paid for services that would have 
been denied based on CCI edits. The remaining $3 milion would have

been appropriate according to the CeI edits since a valid CCI modifier 
was included with the code pair. 
The amount paid for services that would have been denied based on the 
CCI edits varied widely by State. Payments in the 39 States ranged 
from $33 491 to over $9 milion. States that reported using some or all 
ofthe CCI edits paid $4. 1 million for servces that would have been 
denied based on CCl edits. The States that use a commercial edit 
package paid $5 million for services that would have been denied based 
on CCI edits. States that use other edits paid $44. 1 milion for services 
that would have been denied based on CCI edits. 
OEI-03. 02. 00790  APPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES  III  Nearly half of the $54 milion in payments for services that CCI edits 
would have denied were made for code pairs in the Medicine category.! 
Services in this category include psychiatry, physical therapy, 
cardiovascular, and pulmonary servces. Just 75 code pairs made up 
75 percent of the payments for Medicine services that would have been 
denied based on the CCI edits. 
RECOMMENDATION 
Although most States have some edits in place to prevent inappropriate 
payments for services biled by a provider for the same beneficiary and 
same date of service, few States use CCI edits in processing their 
Medicaid claims. States are not required to use CCI edits; however
, by 
using these edits , States could promote correct coding by providers and 
prevent payment for servces that would be denied based on CCI edits. 
At the time of our review, States could use their own local codes to 
identify services. However, under the Health Insurance Portability and 
Accountability Act, States are now required to use a uniform national 
coding system. A standardized coding system increases the potential for 
reducing inappropriate Medicaid payments through the use of 
CCI 
edits. 
CMS should encourage States to explore the use of CCI edits. 

recommend that CMS encourage States to explore the use of CCI edits 
within their Medicaid programs. We found that a small number ofCCI 
edits in the Medicine category made up a large portion of Medicaid 
payments for services that CCI edits would have denied. Therefore, if 
implementing the entire CCI edit package is not practical, States may 
want to evaluate which CCI edits would produce the greatest reduction 
in payments in their Medicaid programs. 
AGENCY COMMENTS 
CMS concurred with our recommendation and stated that it wil 
distribute our final report to each of its 
10 regional offces so that the 
regional offces can work with States to explore the use of 
CCI edits. 
The complete text of CMS's comments can be found in Appendix C. 
1 The Medicine category is represented by codes 90000-
99199 and 99500-99600 from the 
American Medical Association  Current Procedural Terminologymanual.  These include 
codes for non-invasive or minimally invasive services that are not considered open 
surgical procedures or evaluation and management services. 
OEI-03. 02. 00790  APPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  .
   ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  .. .
....... ... .. .. .. ... .  .. .. ... .. ... ........... ..... ......... ..... ...... . ...... .  .......  ...... ... ... .... ... .. . ... . ... ..   .... .... ...   ....   ... .. .. . ..  ...  .....  ....  ....  ...  ...  '.".   ..  ..  ..  .. .  ..  ..  ..  ..  ....  
B L E

ABSTRACT 
. . . . . . . . . . . . . . . . . . . . . 1
EXECUTIVE SUMMARY

I NT RO DU CT I 
ON................  ................................. 1
FINDINGS  ... ..... ... 6
Most States do not use CCI edits..........................................................

Medicaid paid $54 milion for servces involving CCI code pairs....... 7
RECOMMENDATION  ............................................ 9
A P PEN D ICE S . . . . . . . . . 
A: State Medicaid Agencies' Use of Automated Edits 
and Payments for Services Involving CCI Code Pairs................

B: Top 75 Services in the Medicine Category that CCI Edits
Would Have Denied........................................................ ..... 12
C: Comments from the Centers for Medicare & Medicaid 
Services. . 
... .. .... .. . .. 14
A C K NOW LED G MEN T S .. . . . . .  OBJECTIVE 
To determine (1) the extent to which State Medicaid agencies use the 
National Correct Coding Initiative (ecl) edits or similar edits and 
(2) the extent to which the Medicaid program paid for services that
would have been denied if State Medicaid agencies implemented the 
CCI edits used by the Medicare program. 
BACKGROUND 
The Medicaid program was established in 1965 under Title XIX of the 
Social Security Act. Financed by a Federal-State partnership, the 
Medicaid program covers health servces for approximately 40 million 
people including children, the aged, blind, or disabled, and people who 
are eligible to receive federally assisted income maintenance payments. 
In fiscal year 2001, total Medicaid expenditures were $228 bilion. Each 
State Medicaid agency administers its own program within Federal 
guidelines, and coverage policies may vary from State to State. 
All State Medicaid agencies are required by law to implement pre-and 
post-payment claims analysis in their claims processing systems.2 As 
part of pre-payment claims review, States use computerized or 
automated edits programmed into their claims processing systems. The 
edits are designed to prevent excessive payments by detecting 
inappropriate or unnecessary servces. States are not required to 
use a 
single standardized edit package; each State may determine which edits 
to implement in its claims processing system. 
While States' edits may differ, the Health Insurance Portability and 
Accountability Act requires that States use standardized code sets such

as medical diagnostic codes and medical procedure codes for electronic 
claims transactions. This requirement went into effect 
on October 16 
2003. However, the Centers for Medicare & Medicaid Services (CMS) 
granted a 3-month extension for States to use local codes until 
December 31 2003. 
National Correct Coding Initiative 
In January 1996, CMS implemented the CCI in the Medicare program. 
This initiative was developed to promote correct coding of health care 
services by providers and to prevent Medicare payment for improperly 
2 42 D.  C. 9 1396a. 
OEI. 03. 02-00790  ApPlYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  coded services. CMS developed these coding policies based on coding 
conventions defined in the American Medical Association  Current 
manual, national and local policies and edits 
Procedural Terminology 

coding guidelines developed by national societies , analysis of standard 
medical and surgical practices , and a review of current coding practices. 
Although use of CCI edits is mandatory in the Medicare program
, State 
Medicaid agencies are not currently required to use these edits in 
processing their claims. However, the edits would be applicable to the 
Medicaid program since they are based on general correct coding 
principles. The CCI edits are currently available to 
download from 
CMS' s Web site. 
The CCI edit fies contain pairs of Healthcare Common Procedure 
Coding System (HCPCS) codes that 
generally should not be biled 
together by a provider for the same beneficiary and same date of service. 
One type of edit prevents payment for servces that are components of a 
more comprehensive procedure. When comprehensive and component 
codes are biled together, Medicare pays for the comprehensive code but 
not the component code. For example, if an infusion procedure is 
performed, the placement ofthe catheter should not be biled separately 
because the placement of the catheter is considered a component of the 
infusion procedure. Therefore, according to the CCI edit, if both 
services are biled, only the comprehensive code for the infusion 
procedure would be paid. Another type of edit deals with mutually 
exclusive code pairs. These edits prevent payment for services that 
cannot reasonably be performed together. When mutually exclusive 
codes are biled together, Medicare generally pays for the least costly 
code. 
METHODOLOGY 
State Medicaid Agency Survey 
To determine if State Medicaid agencies use CCI edits or any edits 
similar to CCI edits, we conducted a mail survey of the Medicaid 
agencies in all 50 States and the District of 
Columbia. For 
convenience, we wil refer to the District of Columbia as a State 
throughout this report. We asked States whether or not they use the 
CCI edit package and, if applicable, when they implemented the CCI 
edits. We also asked States to describe any other types of automated 
pre-payment edits they have in place dealing with coding issues. We 
compared those States that reported using CCI edits to 
those States 
OEI-03. 02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  that did not in terms of the dollars paid for services that CCI edits 
would have denied. We collected our data from May through 
July 2003. Forty' nine of the fifty' one States completed the survey, a 
response rate of 96 percent. 
National Correct Coding Initiative Edits 
We obtained CMS's data on CCI edits for the fourth 
quarter of 2001. 
The CCI edits are updated quarterly; however, the fourth quarter CCI 
edit update includes all prior additions and deletions of 
code pairs 
through the end of 2001. Since we 
reviewed 2001 Medicaid data, we 
removed all CCI edits with deletion dates prior to 2001 as well as CCI 
edits that were retroactively deleted during 2001. This left 123 
316 CCI 
code pairs for our review. 
The CCI edits are arranged so that the second code in a code pair is 
the service that is usually denied. In some instances, a modifier may 
be included that would allow both services in a CCI code pair to be 
paid. A modifier is a two-digit 
code that further describes the service 
performed. There are 35 modifiers that may be used to bypass CCI 
edits. Each CCI code pair has a modifier indicator that determines 
whether a modifier can be used. 
System 
Medicaid  Statistical Information 
To determine if State Medicaid agencies paid for services that CCI 
edits would have denied, we matched the CCI edits against CMS' 
Medicaid Statistical Information System (MSIS) 2001 claims data for 
the 39 States that had provided data at the time we began our review. 
States submit Medicaid enrollment, payment, and utilization data to 
CMS for entry into the MSIS. 
From the claims data file containing non -institutional servces , we 
identified fee-for-service claims that involved CCI code pairs billed by 
a provider for the same beneficiary and same date of service. To 
determine if any of these services would have been denied based on 
CCI edits, we compared the date of service with the edit's effective 
date. This enabled us to determine whether the Medicare CCI edit 
was in place on the date the Medicaid services were performed. 
We identified 3.2 milion services involving active CCI 
code pairs 
biled by a provider for the same beneficiary and same date of service. 
Medicaid paid $150 milion for these services in 2001. We then 
reviewed the data to determine if a modifier was allowed with the 
code pair and whether an appropriate modifier was included. 
OEI-03. 02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  Based on our review, we calculated the total amount Medicaid paid 
for services that CCI edits would have denied. The total paid 
represents the amount Medicaid paid for the second servce in a CCI 
code pair when: 
1. The code pair did not allow a modifier.

2. The code pair allowed a modifier, but an appropriate modifier was 
not included.

Data Limitations 
CCI edits are made up of national HCPCS codes. Many States used 
local codes at the time of our review; however, our review was limited 
to national HCPCS codes that were part ofthe CCI edits. All States 
did use some national HCPCS codes during our review, and it is these 
services that are included in our calculation of the amount Medicaid 
paid that CCI edits would have denied. Services biled with local 
codes are not captured by this review. 
In addition, our data indicated that most State Medicaid agencies 
utilzed the same modifiers as those used in the Medicare program. 
However, State Medicaid agencies also had the option to use their 
own unique modifiers. It is possible that States used local modifers 
that would have allowed CCI edits to be bypassed; however
, these 
modifiers would not have been recognized as valid for our review. 
Therefore, those services would be included in our calculation of the 
amount Medicaid paid- that CCI edits would have denied. 
For our analysis, we used the modifier indicator that was attached to 
the code pair in the fourth quarter 2001 CCI update. However, some 
modifier indicators changed during 2001 , meaning that the 
code pair 
changed from allowing a modifier to not allowing a modifier or vice 
versa. Our calculations are based on the edits that were effective 
during 2001 and their associated modifier indicator from the fourth 
quarter of 2001.

Payments for some services may have been included in our 
calculations even if they involved adjusted payments. Adjustments 
may have occurred when two services in a CCI code pair were 
performed on the same day but biled to the Medicaid program 
separately. In this case, payment for both services may have been 
correct if payment of the second service was reduced to account for the 
payment of the service billed first. Only a manual review of claims 
history data could determine if the services were paid appropriately 
OEI. 03. 02-00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  due to such adjustments; we did not conduct a manual review of the 
data. 
Finally, our calculations do not include any payments for services that 
CCI edits would have denied for the 12 States that had not submitted 
claims data to the MSIS at the time of our review. 
This study was conducted in accordance with the  Quality Standards for 
Inspections  issued by the President's Council on Integrity and 
Effciency. 
OEI-03. 02-00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  Only 7 of 49 State Medicaid 
Most State Medicaid agencies do not use the 
agencies that responded to
National Correct Coding Initiative edits. 
our 2003 survey reported 
that they use CCI edits in processing their claims.3 However, these 
States do not all use CCI edits to the same extent. 
o Two States reported that they use all CCI edits. 
o One State uses all CCI edits except those for anesthesia services.

o Two States use CCI edits related to surgical codes, but one uses 
these edits for post-payment rather than pre'payment review. 
o Two States use just a small number of CCI edits. One State uses 
149 CCI edits , and another uses 16. 
States' Use of Commercial Edit Packages 
Another eight States use a commercial edit package that includes edits 
to prevent payment for services performed by a provider on the same 
day for the same beneficiary. Commercial edit packages may be 
purchased by the States and modified to accommodate each State 
coverage policies. While commercial edit packages may include edits for 
services covered by Medicaid that might not be captured by the CCI 
edits, they may not include all CCI edits currently used by Medicare. 
States ' Use of Other Edits 
Thirty"two States do not use CCI edits or a commercial edit package but 
have other edits in place. States' edits include some that are 
comparable to CCI's comprehensive/component and mutually exclusive 
edits. A few States have edits that are based on CCI criteria. 
Two States reported that their systems do not include any edits to deny 
services performed by a provider on the same day for the same 
beneficiary. A breakdown ofthe types of edits each State uses is 
presented in Appendix A. 
Several States are planning to change their editing packages in the near 
future. Three States are planning to implement the entire CCI edit 
package. One State is adding more CCI edits, and one State is 
considering implementing some CCI edits. Another State is dropping 
3 The number of active edits in the CCl edit package at the time of our survey was 
approximately 200 000 edits. 
OEI. 03. 02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES  the CCI edits that they used in their post-payment review and 
switching to a pre-payment commercial edit package. 
Thirt-nine State Medicaid agencies paid  Thirty' nine States had provided 
$54 milion in 2001 for services that would  2001 Medicaid claims data at
the time of our review. The 
have been denied based on the National 
39 States paid $150 millon in 
Correct Coding Initiative edits. 
2001 for 3.2 milion servces 
involving CCI code pairs that were performed by a provider on the same 
day for the same beneficiary. These States paid $57 millon for services 
involving the second code in a CCI code pair, the services that CCI 
usually does not allow. Ofthis amount, $54 milion (94 percent) was 
paid for services that would have been denied if CCI edits had been 
used in the Medicaid program. The remaining $3 milion would have 
been appropriate according to the CCI edits since a valid CCI modifier 
was included with the code pair. 
State Payments for Services CCI Edits Would Deny 
The amount paid for servces that would have been denied based on the 
CCI edits varied widely by State. Payments in the 39 States ranged 
from $33 491 to over $9 millon. Twenty-four States each paid over 
$500 000 for services that would have been denied based on CCI edits. 
More than half of the $54 milion in payments for services that would 
have been denied based on CCI edits were made by four States. These 
States did not use CCI edits. A list of States' payments for services that 
would have been denied based on CCI edits is included in Appendix 
We found that even those States that reported using some or all CCI 
edits could reduce their payments for services involving CCI 
code pairs. 
For example , the two States that only use those CCI edits related to 
surgical procedures each paid over $500 000 for services that CCI edits 
would have denied. One State that reported using all of the CCI edits 
stil made payments for CCI code pairs. However, these payments may 
have been the result of the use of local modifiers , modifier indicator 
changes made during 2001 , or adjustments made when the two services 
in a code pair were biled separately. Medicaid claims data were only 
available for five of the seven States that use CCI edits; therefore , we 
could only calculate the amount paid for services involving CCI code 
pairs for these States. These five States paid a total of $4. 1 milion for 
services that would have been denied based on CCI edits. 
OEI-03. 02.00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO ME.DICAID SERVICES  N G 
We found that the eight States that reported using a commercial edit 
package paid between $127 444 and $1.3 million for services that would 
have been denied based on CCl edits. These eight States paid a total of 
$5 milion for services that would have been denied based on CCI edits. 
We were able to calculate the amount paid by 24 of the 32 States that 
use other edits for servces involving CCI code pairs, since claims data 
were only available for these States. The 24 States paid a total of 
$44. 1 million for services that would have been denied based on CCI 
edits. These States paid an average of $1.8 milion for servces 
involving CCI code pairs performed by a provider on the same day for 
the same beneficiary. 
Of the two States that do not have any edits to deny servces performed 
by the same provider on the same day for the same beneficiary, one paid 
$228 835 for services involving the second code in a CCI code pair. This 
State was one of the smallest States in terms of total Medicaid 
expenditures. The other State reported that their new claims 
management system wil incorporate the CCI edits. We did not have 
the claims data required to calculate payments made by this State. 
Most Payments Made for Few Code Pairs 
We found that Medicaid made payments for 17 
797 ofthe 123 316 CCI 
code pairs. Nearly half of the $54 million in Medicaid payments were 
made for code pairs in the Medicine category.4 Services in this category 
include psychiatry, physical therapy, cardiovascular, and pulmonary 
services. One code pair, relating to psychotherapy services, made up 
12 percent ofthe Medicine payments that would have been denied based 
on CCI edits. In fact, just 75 code pairs made up 75 percent ofthe 
payments for Medicine services that would have been denied based on 
CCI edits. A list of the top 75 Medicine code pairs is presented in 
Appendix B. Payments for other categories of services such as 
Anesthesia, Surgery, Radiology, Pathology, and Evaluation and 
Management ranged from less than 1 percent to 10 percent of Medicaid 
payments for services CCI edits would have denied. 
4 The Medicine category is represented by codes 90000

99199 and 99500-99600 from the 
American Medical Association  Current Procedural Terminology  manual. These include 
codes for non-invasive or minimally invasive services that are not considered open 
surgical procedures or evaluation and management services. 
OEI. 03. 02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES  Although most States have some edits in place to prevent inappropriate 
payments for services biled by a provider for the same beneficiary and 
same date of service, few States use CCI edits in processing their 
Medicaid claims. States are not required to use CCI edits; however, by 
using these edits, States could promote correct coding by providers and 
prevent payment for services that would be denied based on CCI edits. 
At the time of our review, States could use their own local codes to 
identify services. However, under the Health Insurance Portability and 
Accountability Act, States are now required to use a uniform national 
coding system. A standardized coding system increases the potential for 
reducing inappropriate Medicaid payments through the use of CCI 
edits. 
CMS should encourage States to explore the use of CCI edits. We 
recommend that CMS encourage States to explore the use of CCI edits 
within their Medicaid programs. We found that a small number of CCI 
edits in the Medicine category made up a large portion of Medicaid 
payments for services that CCI edits would have denied. Therefore, if 
implementing the entire CCI edit package is not practical
, States may 
want to evaluate which CCI edits would produce the greatest reduction 
in payments in their Medicaid programs. 
Agency Comments 
CMS concurred with our recommendation. If implementing the entire 
CCI edit package is not practical, CMS stated it wil encourage States to 
evaluate which edits would produce the greatest reduction in payments 
in their Medicaid programs. CMS wil also distribute our final report to 
each of its 10 regional offces so that the regional offces can work with 
States to carry out our recommendation. The complete text of CMS' 
comments can be found in Appendix C. 
OEI. 03-02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  .!.  - ..-.- , "": .-''-"--g!...-." ;--
State Medicaid Agencies' Use of Automated Edits and 
Payments for Services Involving CCI Code Pairs 
$555 793  $217 202 
650 148  $562 969 
Use all edits except for 
anesthesia 
$261 845  $50 303 
$21 756 623  226 709 
170, 824  150 073 
199 404  $534 222 
$573 044  $228 835 
$77,496  $33 491 
681 198  $1,495 651 
Use all edits  924 370  $935 291 
971 321  $884 148 
272 965  $392 153 
$935 748  $298 243 
763,421  821 799 
$1,446 315  $489 905 
050,480  127 206 
--u  933 439  305 106 
723 677  104 502 
$336 867  $125 260 
$863 636  $304 762 
$10,415,460  046 113 
:c.:  004 852  $531,470 
Use edits related to 
surQical codes  544 359  $543 244 
Use 149 edits  403,401  035 207 
Use all edits 
183, 193  $741 180 
$317 045  $122 696 
$14 643, 723  $6, 116 975 
OEI. 03. 02-00790  ApPlYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  $25, 128 739  180 167 
$978 519  $268 843 
125 478  $528,994 
575 242  $617 050 
041 905  054 331 
$232 678  $50 329 
$501,267  $127,444 
$3, 288 616  300, 869 
$799 108  $317 790 
Use 16 edits 
132 297  $902 217 
824 796  $504 312 
$634 886  $230 803 
Sources: 2003 OEI survey of State Medicaid agencies, CMS's 2001 MSIS fee-for-service claims data for 39 States. 
1 Since State had not submitted MSIS claims data at the time of our review
, we were unable to calculate payments for services
that CCI edits would have denied. 
2 This State reported using all CCI edits; however
, we identified payments that should have been denied. This could be due to 
adjusted payments, modifier indicator changes during 2001 , or the use of local modifiers by the State. 
3 State did not respond to survey. 
4 Five of the seven States that use CCI edits had the edits in place in 2001. North Carolina and North Dakota implemented the 
edits in 2002. 
5 This column was calculated based on payments for the second code in the CCI code pairs. 
OEI. 03. 02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  A P  I X

Top 75 Services in the Medicine Category that CCI Edits Would Have Denied 
90847  Family psychotherapy w/patient  90804  Individual psychotherapy, offce, 20-30 min  761 811 
96410  Chemotherapy infusion method  90780  IV infusion therapy, 1 hour  $936 033 
95903  Motor nerve conduction test, with F-wave  95900  Motor nerve conduction test, without F-wave  $917 724 
97530  Therapeutic activities  97116  Gait training therapy  $711 771 
90853  Group psychotherapy  90804  Individual psychotherapy, offce, 20-30 min  $698, 342 
97140  Manual therapy  97530  Therapeutic activities  $551 683 
90806  Individual psychotherapy, off, 45-50 min  90862  Medication management  $549 513 
90853  Group psychotherapy  90862  Medication management  $543 913 
90853  Group psychotherapy  90806  Individual psychotherapy, off, 45-50 min  $516 779 
90853  Group psychotherapy  90816  Indiv psychotherapy, hosp, 20-30 min  $471 111 
96412  Chemotherapy, infusion method add-on  90780  IV infusion therapy, 1 hour  $470 084 
90857  Interactive group psychotherapy  90853  Group psychotherapy  $353 131 
93505  Biopsy of heart lining  93501  Right heart catheterization  $351 673 
90847  Family psychotherapy w/patient  90806  Individual psychotherapy, off, 45-50 min  $329,337 
90853  Group psychotherapy  90801  Psychiatric diagnostic interview  $317 970 
92980  Insert intracoronal) stent  92982  Coronal) artel) dilation  $297 530 
90853  Group psychotherapy  90847  Family psychotherapy w/patient  $280 970 
90804  Indiv psychotherapy, offce, 20-30 min  90862  Medication management  $268 097 
94060  Evaluation of wheezing  94375  Respiratol) flow volume loop  $261 868 
96530  Pump refillng, maintenance  96410  Chemotherapy infusion method  $258 976 
97530  Therapeutic activities  97535  Self-care management training  $240 296 
99233  Subsequent hospital care  94657  Continued ventilator management  $202 131 
92980  Insert intracoronal) stent  93556  Imaging, cardiac catheterization  $200 649 
94010  Breathing capacity test  94375  Respiratol) flow volume loop  $190 105 
96530  Pump refiling, maintenance  96412  Chemotherapy, infusion method add-on  $185 783 
90847  Family psychotherapy w/patient  90801  Psychiatric diagnostic interview  $181 727 
90806  Individual psychotherapy, off, 45-50 min  90801  Psychiatric diagnostic interview  $180 289 
93005  Electrocardiogram (ECG), tracing  93041  Rhythm ECG , tracing  $179 786 
92508  Group speech/hearing therapy  92507  Individual speech/hearing therapy  $172 816 
94060  Evaluation of wheezing  94664  Aerosol or vapor inhalations  $169 610 
96410  Chemotherapy infusion method  90781  IV infusion , additional hour  $157 546 
90847  Family psychotherapy w/patient  90862  Medication management  $150, 891 
97150  Group therapeutic procedures  97110  Therapeutic exercises  $150 315 
90847  Family psychotherapy w/patient  90816  Individual psychotherapy, hosp, 20-30 min  $140 729 
92980  Insert intracoronal) stent  93555  Imaging, cardiac catheterization  $139 440 
97110  Therapeutic exercises  97002  Physical therapy reevaluation  $136 902 
97150  Group therapeutic procedures  97530  Therapeutic activities  $134 226 
90853  Group psychotherapy  90818  Individual psychotherapy, hosp, 45-50 min  $129 144 
97012  Mechanical traction thera  97140  Manual thera  $129 029 
1 We considered a code 
pair to be in the Medicine categol) if the Column 2 code, the code that would be denied by CCI, was in the Medicine
categol). The Medicine categol) includes codes in the range 90000-99199 and 99500-99600 from the American Medical Association 
Current Procedural Terminology  manual. 
OEI. 03. 02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  x 

93000  Electrocardiogram (ECG), complete  93040  Rhythm ECG with report  $120, 979 
99232  Subsequent hospital care  94657  Continued ventilator management  $116, 664 
97113  Aquatic therapy/exercises  97110  Therapeutic exercises  $116 346 
94060  Evaluation of wheezing  94640  Airway inhalation treatment  $115 214 
90804  Indiv psychotherapy, offce, 20-30 min  90801  Psychiatric diagnostic interview  $111 257 
96115  Neurobehavioral status exam  96111  Developmental test, extended  $103 773 
92506  Speech/hearing evaluation  92507  Individual speech/hearing therapy  $103 034 
94060  Evaluation of wheezing  94010  Breathing capacity test  $97 651 
93350  Echo transthoracic  93307  Echo exam of heart  $95 315 
90925  ESRD-related services , day  90935  Hemodialysis , one evaluation  $92 134 
97530  Therapeutic activities  97113  Aquatic therapy/exercises  $90, 237 
93017  Cardiovascular stress test  93005  Electrocardiogram , tracing  $88 200 
90801  Psychiatric diagnostic interview  90862  Medication management  $87 895 
96412  Chemotherapy, infusion method add-on  90781  IV infusion , additional hour  $87 706 
90846  Family psychotherapy w/o patient  90806  Individual psychotherapy, off, 45-50 min  $81 090 
94640  Airway inhalation treatment  94664  Aerosol or vapor inhalations  $80, 540 
97140  Manual therapy  97124  Massage therapy  $79, 644 
92982  Coronary artery dilation  93556  Imaging, cardiac catheterization  $79 064 
93621  Electrophysiology evaluation  93620  Electrophysiology evaluation  $78, 970 
93641  Electrophysiology evaluation  93620  Electrophysiology evaluation  $78 909 
97504  Orthotic training  97110  Therapeutic exercises  $76 668 
96530  Pump refilling, maintenance  96408  Chemotherapy, push technique  $67 750 
93303  Echo transthoracic  93307  Echo exam of heart  $67 234 
90806  Individual psychotherapy, off, 45-50 min  90805  Indiv psychotherapy, off, 20-30 min w/e&m  $65 677 
98941  Chiropractic manipulation  97140  Manual therapy  $65,446 
93010  Electrocardiogram (ECG) report  93042  Rhythm ECG , report  $63, 228 
90816  Indiv psychotherapy, hosp, 20-30 min  90801  Psychiatric diagnostic interview  $62 695 
90853  Group psychotherapy  90817  Indiv psychotherapy, hosp, 20 , w/e&m  $61 398 
97035  Ultrasound therapy  97022  Whirlpool therapy  $59, 850 
90847  Family psychotherapy w/patient  90812  Interact indiv psychotherapy, off, 45-50 min  $55 142 
95810  Polysomnography, 4 or more  95811  Polysomnography w/cpap  $53 515 
99211  Offce/outpatient visit, established patient  90862  Medication management  $51 028 
90853  Group psychotherapy  90805  Indiv psychotherapy, off, 20-30 min w/e&m  $50 831 
76856  Ultrasound exam , pelvic , complete  93975  Vascular study  $50 793 
90925  ESRD-related services , day  90937  Hemodialysis , repeated evaluation  $50 342 
92553  Audiomet  , air & bone  92555  Speech threshold audiomet  $50 087 
OEI. 03-02-00790  ApPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES  Comments from the 
Centers for Medicare & Medicaid Services 
DEAI OFHE  HU 
SBCE  C$ 
M$d 
fOS  & ModlIj &llVce 
Awdmatn.tr Atar 
DC 2001 
DATE:  AUG 1 9 
TO:  Geoge F. Grb
Ge 
Act Deputy Inpecr  for Evaluati an Inpem 
FROM:  h. .
Mark B. McClellan 
 ilthJ
Admnisttor  IlW I 
SUBJCf:  OCfoceg o f Inper Geer (010) Dr Re  Applyi 1M National Correct
Initiative to Medicai Servces.  " (OEI-0-OZ-Q790) 
Th 
you for the oppunty to  an commt on th above-f8et(1ed drft reprt. OIG 
reewed theid aepnplficya ilaty rof  a  of edts deelope by Medica, which baveprven
ceffoec ve in  of abuse du to up-coing or other inappprate use of varous
with Tite XVI. 010 thought ther woud be vaue in aplyi the $8e cong edts
to Medcad clai on a samleX baIs  to se wheter. and to wChao ex tent, use of such edits would 
prve similarly usel in Title  GIG concluded that the  Cong Initiatve (CCl)
migh have considerable mert. even ona limte bas. since a sm numbe of edits yielded
rets. 
large 
The Ceter for Medica & Medicad Serce (CsMSt)  aplauds OIO'  efrt in ths rega.
We beieve ther would be value in encourging  to look seousy into OIO'
appat, 
remmendation and, wher  incorprae these  th meczed 
su  or simila ediUi into 
claims procsig syste. CMS will not madae  edts at ths tie du to the varety of 
systes an aproachess iyn sstae  Medicaid Maagement Informaton Systes. Howe, we
as our regina offce  Stff to work closely with stae systems staff to gl wher
value can be gaed from the oro' s ver usful analysis. 
We appreat the effor tht went into ths report and the oppoity to reiew an comment on 
th issues it rase. Our reponse to the om audit remmention follows. 
OIG Recemmendatlon. 
st 
Tphre gCMr.  should enurge  to exlore th us of CCI edts withn thei Medcad 
OIG found tht a sml numbe of CCI edts in the Meici category ma up a
sece 
lare porton of Medcad payments for  that CCI edts would bve dened. Therre. if 
eimdiptsle wmoeunltdin pgr tdhuec een tthiree  geCrIe eadt  ptaecdkgue cton iis nn poatypmraetnitsc ain  stthaesi  Mmaeyd cw:da  ptor egvarlu.a te wbich CCI 
OEI. 03. 02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  Page 2 - Gerge F. Grob 
CMS Response 
We concur. Becuse a small number of edts in the Medcie cateory made up a lage porton
ofMed aid payments for serce th CCI edts would have dened if implementig the entire
CCI edt pacage is not prca, we wil encourge states to evaluate which edts would 
prgr. 
produce the greatest reducton in payments in thei Medcad  Once the OIG' s reort is 
published in fial, we will distbut copies to each of our 10 regional offces in order for them to 
sta  ca 
work with the  to  out OIG"s recmmendaton. 
OEI. 03-02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES  This report was prepared under the direction of Robert A.Vito 
Regional Inspector General for Evaluation and Inspections in 
the Philadelphia regional office, and Linda M. Ragone, Deputy Regional 
Inspector General. Other principal Offce of Evaluation and Inspections 
staff who contributed include: 
Tara J. Bernabe  Team Leader 
Nancy J. Molyneaux  Program Analyst 
Cortney Hayflnger  Program Analyst 
Linda Frisch  Program Specialist 
Director, Medicare and Medicaid Branch 
Tricia Davis, 

Technical Assistance 
Program Analyst 
Scott Horning, 

OEf. 03. 02. 00790  ApPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES