Department of Health and Human Services 
OFFICE OF

INSPECTOR GENERAL

A COMPENDIUM  OF  REPORTS AND

LITERATURE ON  CODING  OF  PHYSICIAN

SERVICES

JUNE GIBBS BROWN 
Inspector  General 
MAY  1994 
OEI-03-91-00921  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector 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 three OIG operating components:  the Office of Audit Services, the 
Offke  of Investigations,  and the Offke  of Evaluation and Inspections.  The OIG also informs 
the Secretary of HHS of program and management problems and recommends courses to 
correct them. 
OFFICE OF AUDIT  SERVICES 
The OIGS 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 INVESTIGATIONS 
The OIGS  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 axwictions, 
administrative sanctions, or civil money penalties.  The 01  also oversees  State Medicaid fraud 
control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 
OFFICE OF EVMIJATION  AND  INSPECTIONS 
The OIGS Office 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 findings and recommendations  contained  in these inspection 
reports generate  rapid, accurate, and up-to-date information on the efficiency, vulnerability, 
and effectiveness  of departmental programs. 
This report was prepared in the Philadelphia Regional  Office, under the direction of Joy Quill, 
Regional  Inspector General and Robert A. Vito, Deputy Regional  Inspector General. 
Participating in this project were 
REGION  HEADQuARTERs 
Robert A. Baiocco, Project Leader  W. Mark Krushat, SC.D.

Donna  M. Millan, Lead Analyst  Wayne Powell, Program Specialist

Robert A  Katz

Daniel  E. Brooks

Cynthia Hansford, Administrative  Staf

To obtain a copy of this repo~  call the Philadelphia Regional  Office at (800) 531-9562
 Department of Health and Human Services
OFFICE OF 
INSPECTOR GENERAL 
A COMPENDIUM  OF  REPORTS AND

LITERATURE ON  CODING  OF  PHYSICIAN

SERVICES

JUNE GIBBS BROWN 
Inspector  General 
MAY  1994 
OEI-03-91-00921  EXECUTIVE  SUMMARY 
PURPOSE 
This  report  is a companion  to Coding of Physician Services (OEF03-91-W920),  an 
evaluation  of the  American  Medical  Associations  (AMA)  Current  Procedural 
Terminology,  Fourth  Edition  (CPT-4)  coding  system.  It lists and  summarizes  the 
documents  used  to develop  issues  covered  in that  report. 
BACKGROUND 
The  purpose  of Coding of Physician Savices  (OEI-03-914M920) was to describe 
vulnerabilities  in the  maintenance,  use,  and  management  of the  CPT-4  system,  as they 
relate  to Medicare  reimbursements.  It was part  of the  Office  of Inspector  Generals 
(OIG)  continuing  effort  to improve  the  effectiveness  of procedure  coding.  That  report 
based  its findings  on both  a literature  review  and  structured  interviews.  During  the 
first phase,  we collected  documentation  from  both  government  and  non-government 
sources  to identify  key coding  issues.  In the  second  phase,  we conducted  structured 
interviews  to refine  these  issues. 
That  report  found  that  incorrect  coding  can lead  to increases  in Medicare 
reimbursement  and  payment  inequities  under  the  Medicare  Fee  Schedule.  Flaws  in 
the  CPT-4  codes,  guidelines  and  index  contribute  to improper  coding.  In addition  the 
health  Care  Financing  Administrations  (HCFA)  management  of CPT-4  does  not 
ensure  appropriate  Medicare  reimbursement. 
Both  HCFA  and  the  AMA  have  taken  corrective  measures.  However,  our  analysis 
indicates  that  additional  improvements  are  needed  in the  CPT-4  system  itself  and 
HCFAS management  of the  system.  See  Co&g  of Physician Savka  for  a listing of 
OIG  recommendations. 
METHODODGY 
Documents  reviewed  in this report  were  taken  from  both  government  and  non 
govemment  sources  dating  from  1984, after  HCFA  started  using  CPT-4.  We  chose 
government  agencies  which  regulate  or monitor  physician  activity under  Medicare.  In 
the  Department  of Health  and  Human  Services  (HHS),  this includes  HCFA  and  the 
OIG.  In the  U.S.  congress,  it includes  the  Physician  Payment  Review  Commission 
(PPRC)  and  the  General  Accounting  Office  (GAO). 
We  compiled  published  non-government  documents  primarily  from  an on-line  search 
of the  database  files of the  National  Library  of Medicines  Medical  Literature  Analysis 
and  Retrieval  System  (MEDLARS).  Non-government  documents  include  studies  with 
developed  methodologies  which  analyzed  data  and  discussions  of expert  opinion  that 
synthesized  personal  experience  and  references  to other  work.  The  non-government 
i  documents  represent  current  thought  about  CPT-4  coding  issues.  After  reviewing  each 
document,  we extracted  and  summarized  only that  information  which  related  to the 
CPT-4  system  or its application. 
We  grouped  documents  according  to source  and  summarized  each  sources  comments. 
Documents  within  each  agency  are  in chronological  order  from  most  recent  to earliest. 
The  numbers  of documents  reviewed  are  shown below. 
.  U.S.  Department  of Health  and Human  Sexvkes 
Ofice  of Inspector General -15  repo~ 
Health  Care Financing Administration  -6  reports 
.  U.S.  C.Ongress 
General Accounting  OfJ-ice-2  repon$ 
Physician Payment  Review  Commiwion  -2  reports 
.  Non-Government  Sources 
13 documents 
This inspection  was conducted  in accordance  with  the  Quality  Standards  for 
Inspections  issued  by the  Presidents  Council  on Integrity  and  Efficiency. 
FINDINGS 
The  following  are  summaries  of the  documents  from  each  source. 
U.S.  DEPARTMENT  OF HEALTH  AND  HuMAN  SERVICES 
OFFICE  OF  INSPECIOR  GENERAL 
The  OIG  reports  identify  inappropriate  use of CPT-4  in Medicare  claims,  HCFAS 
inadequate  management  of the  administration  of CPT-4  and  flaws within  the  CPT-4 
codes,  guidelines,  and  index which leave  the  system vulnerable  to miscoding. 
Findings  are  based  primarily  upon  reviews  of HCFA  Part  B Medicare  Annual  Data. 
Medical  reviews,  beneficiary  histories  and  literature  searches  were  also included. 
Focus  groups  also assisted  in analysis  and  providing  background  information. 
Recommendations  include  developing  computerized  edit  screens  to detect  improperly 
coded  claims,  suggesting  CPT-4  code  revisions,  and  changing  major  reimbursement 
policy. 
ii  U.S.  DEPARTMENT  OF HEALTH  AND  HuMAN  SERVICES 
HEALTH  CARE  FINANCING  ADMINISTRATION 
OjJke of Research and Denwnstrdons 
The  HCFA  contracted  with health  policy experts  to develop  optimum  strategies  for
appropriately  reimbursing  providers  and  containing  rising Medicare  costs.  One  study
advocated  a uniform  procedure  coding  system whose  basis was the  CPT-4  system.  The
resource-based  relative  value  unit  (RW)  used  in the  Medicare  Fee  Schedule  was
developed  during  a Harvard  University  study.  One  study examines  payment
approaches  such  as collapsing and  packaging  codes  to reduce  Medicare
expenditures  resulting  from  improper  coding.  One  study identified  flaws with  CPT-4S
use  for outpatient  services,  while  another  found  tracking  of physician  coding  practice
to be  an important  factor  in evaluating  coding  policy.
U.S.  CONGRESS

GENERAL  A(XOUNTING  OFFICE

The  GAO  reports  explored  the-broader  context  of fraud  and  abuse  within  the  health 
care  industry.  Fraud  and  abuse  can include  practices  such as overcharging  for 
services,  billing  for services  not  rendered,  or billing  for unnecessary  services.  The 
GAO  also  cited  that  HCFAS ineffective  management  of contractors  leaves  Medicare 
exposed  to inappropriate  reimbursements.  As Medicare  expenditures  continue  to 
soar,  the  concern  for waste  and  control  over  HCFA  contractors  becomes  more  urgent. 
U.S.  CONGRESS

PHYSICIAN  PAYMENT  REVIEW  COMMISSION

In its role  of advising  Congress  on physician  payment  and  Medicare  policy, the  PPRC 
has  analyzed  various  issues in health  care  cost, quality,  and  delivery.  It concludes  that 
continued  attention  to coding  issues is imperative  because  of CPT-4S key role  in the 
assignment  of RWS  under  the  Medicare  Fee  Schedule. 
NON-GOVERNMHW  SOURCES 
Documents  gathered  primarily  from  MEDLINE  vary in scope.  Topics  include 
provider  manipulation  of codes,  flaws in code  definitions,  preliminary  use  of the 
Evaluation  and  Management  codes,  and  Medicare  Fee  Schedule  issues. 
... 
Ill
 TABLE  OF  CONTENTS

ExKurnm  summary  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..i

GovERNMmTsouRcEs  . . . . . . . . . . . . . . . . . . . . . . . . . ..-.  ..*..*  . . . ...1

U.S.  DEPARTMENT  OF HEALTH  AND  HuMAN  SERVICES 
Office  of Inspector  General  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...1
Health  Care  Financing  Administration  . . . . . . . . . . . . . . . . . . . . . . . . ..8
U.S.  CONGRESS 
General  Accounting  Office  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...12
Physician  Payment  Review  Commission  . . . . . . . . . . . . . . . . . . . . . . . .  14
NON-GOWRNMENT  SOURCES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..17
INDEX  OF MXUMHWX  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...25
 GOVERNMENT  SOURCES

U.S.  DEPARTMENT  OF HEALTH  AND  HuMAN  SERVICES 
OFFICE  OF INSPECTOR  GENERAL 
Draft  Survey Review  of Inappropriate  Laboratory  Procedure  Codes 
(A-03-92-00012)  July  1992 
This  review  surveyed  laboratory  procedure  code  changes  initiated  by the  College  of 
American  Pathologists  (CAP). 
The  CAP  recommended  to the  AMA  that  99 procedure  codes  be  deleted  from  the 
CPT-4  manual.  The  OIGS initial  review  found  that  62 of the  procedure  codes  should 
have  been  deleted,  while  the  remaining  7 codes  should  be  retained  with  revisions  to 
their  descriptors.  Thirty  additional  codes  were  pending  further  OIG  review  but  were 
included  in CAPs complete  revision  of the  laboratory  codes  which  premiered  in the 
1993 CPT-4.  The  CAP  stated  that  the  reasons  for its recommended  deletions  are  that 
these  92 codes  represented  either  machine  calculations,  procedures  that  were  not 
clinically useful,  or obsolete  procedures.  The  allowed  charges  for  these  92 codes 
totalled  $109.3 million  in 1991. 
Liver  Biopsies 
(OEI-12-88-00901)  March  1992 
This  report  examined  the  accuracy  of physician  and  hospital  procedure  coding  for liver 
biopsies.  Findings  were  based  upon  a medical  review  and  coding  validation  of over 
300 physician  claims  for liver biopsies. 
The  report  found  that  the  coding  system  did not  adequately  describe  open  needle 
biopsies.  The  CPT-4  described-the  biopsies  as either: 
	 percutaneous  needle  (or  closed  needle  biopsy where  needle  is inserted 
through  the  skin) under  code  47000 or 
s	 open  wedge  biopsy (involving  a surgical  incision  and  excision  of tissue)  under 
code  47100 
No  code  was available  to clearly  describe  open  needle  biopsy, a procedure  where 
after  an incision,  a needle  is used  to obtain  a specimen  for examination.  The  report 
stated  that  this condition  necessitated  that  physicians  misstate  open  needle  biopsy 
under  one  of these  two codes.  For  example,  a staff member  coded  the  open  biopsy by 
using  closed  (percutaneous)  [needle],  but  then  added  a code  stating  that  the 
abdomen  had  been  opened. 
1
 The  report  also found  Medicare  overpaid  $1.2 million  to physicians  for liver biopsies
in 1986.  It revealed  that  physicians  b-tied for both  a biopsy  and  a laparotomy  with or
without  biopsy(s).
The  laparotomy  code  includes  all biopsies  performed  in that  episode,  so it was not
necessary  to bill for another  biopsy  alone.  In addition,  some  physicians  billed  twice for
performing  a biopsy  for one  piece  of tissue, while  others  billed  for the  biopsy  when  it
was incidental  to a more  major  procedure.
The  OIG  recommended  that  CPT-4  code  revisions  be  made  so all biopsies  could be
appropriately  classified.  Carriers  should  adhere  to CPT-4  guidelines  which  provide  for
the  exclusion  of biopsies  when  performed  as part  of a more  major  procedure.
Coding  revisions  in the  1992 CPT-4  added  codes  to indicate  whether  a biopsy  was
done  separately  or done  during  a major  procedure.  In its comments  to this draft
report,  HCFA  stated  that  it could  issue guidelines  which  may supersede  those  in
CPT-4  when  it felt  CPT-4  was unclear.  The  HCFAS instructions  may differ  from  or
elaborate  on instructions  from  CPT-4.
Manipulation  of Procedure  Codes  by Physicians  to Mmdmize  Medicare  and  Medicaid
Reimbumementw  A Management  Advisory  Report
(A-03-91-00019)  August  1991
This  audit  presented  the  preliminary  results  of a review  of the  physician  practice  of
manipulating  CPT-4  procedure  codes  to maximize  reimbursement  from  Medicare  and
Medicaid.  The  OIG  had  conducted  this audit  in cooperation  with  Gabrieli  Medical
Information  Systems,  Incorporated  (GMIS),  a company  with its own copyrighted,  fully-
automated  cost containment  software.  Findings  were  based  upon  a computerized
review  of claims  billed  over  a 2 week  period  from  Pennsylvania  Blue  Shield  and  the
Pennsylvania  Department  of Public  Welfare.
Findings  revealed  that  physicians  manipulated  CPT-4  to drain  Medicare  and  Medicaid
of millions  of dollars  annually.  During  the  2 week  period,  the  GMIS  edit  system
detected  overpayments  totalling  almost  $500,000.  Annualized,  this figure  totaled  an
estimated  $12.9 million  in overpayments  for this carrier  and  State  Medicaid  agency.
Surgical  codes  comprised  half of the  Medicare  overpayments.  About  78 percent  of
the  overpayments  resulted  from  unbundling.
The  OIG  contended  that  in light of the  Medicare  Fee  Schedule,  physicians  facing
sharp  payment  cuts would  compensate  by increasing  manipulative  coding  practices.
The  OIG  stated  that  a comprehensive  and  effective  pre-payment  edit  system  is the
key to detecting  procedure  code  gaming by physicians!  Although  HCFA  had just
mandated  68 new prepayment  screens,  a more  sophisticated  system  may be  needed  to
detect  code  manipulation.  The  OIG  urged  HCFA  to mandate  the  use  of prepayment
edit  screens  for Medicare  and  State  Medicaid  agencies.
2
 Zero  Crossers
(OEM3-91-00460)  August  1991
This report  quantified  Medicare  reimbursements  for in-office  diagnostic  vascular  tests
using  devices  known  as zero crossers.  Findings  were  based  upon  a sample  of
Medicare  Part  B Annual  Data,  containing  services  under  four  commonly  used
procedure  codes  used  for billing  diagnostic  tests.
The  report  found  that  zero  crossers  accounted  for about  17 percent  of frequently
performed  ultrasound  tests  in 1988.  Four  different  codes  were  used  to bill for zero
crossers,  and  the  reimbursement  for zero  crossers  and  more  sophisticated  equipment
were  similar.  The  CPT-4  codes  failed  to distinguish  zero  crossers  from  more
complicated  testing  devices  which  produced  more  sophisticated  test  results.
The  OIG  recommended  that  CPT-4  code  revisions  be  made  to reflect  the  different
levels  of sophistication  of these  tests  and  that  HCFA  align its reimbursement  rates
accordingly.  Payment  options  ranging  horn  a $100 allowance  to non-coverage  for zero
crossers  could  save between  $24.9 million  to $124.5 million  over  a 5 year  period.  In
response,  the  vascular  specialty  societies  initiated  CPT-4  revisions,  which  first
appeared  in the  1992 CPT-4.
Low Cost  Ultrasound  Equipment
(OEM3-88-01401)  July  1991  .
This  report  reviewed  the  appropriateness  of Medicare  reimbursements  for low-cost
ultrasound  equipment.  Findings  were  based  upon  a review  of information  on
ultrasound  tests  from  medical  diagnosticians,  equipment  manufacturers,  technical
journals,  and  physiological  testing  experts.  The  OIG  obtained  statistical  data  and
corresponding  procedure  codes  from  HCFAS Part  B Medicare  Annual  Data  system.
The  report  found  that  an  array  of ultrasound  equipment  exists with  a variety  of
complexities.  The  selection  ranged  from  simple  hand-held  devices,  such  as the  Pocket
Doppler,  to state-of-the-art  equipment  that  performed  sophisticated  tests.  The  CPT-4
codes  used  to bill for ultrasound  equipment,  however,  failed  to distinguish  between
test  types  or results.  These  codes  did not  adequately  differentiate  these  tests  or their
results.  Consequently,  reimbursement  for any particular  ultrasound  test  was paid  at
the  same  rate  without  regard  to the  intensity  of the  test  or the  quality  of the  data
produced.  A physician  who performed  a diagnostic  test  using a Pocket  Doppler
could  conceivably  claim  the  same  reimbursement  as someone  who  conducted  a more
extensive  test  producing  more  sophisticated  results.
To  address  this vulnerability  to inappropriate  billings, the  OIG  recommended  revisions
in the  CPT-4  codes  and  reimbursement  rates  to reflect  the  different  levels  of
sophistication  in ultrasonic  vascular  testing.  The  OIG  also recommended  prohibiting
payment  for tests  for pocket  dopplers  (see  Pocket  Dopplers:  A Management  Advisory
Repo@  0EI-03-91-O0461).  In response,  vascular  specialty  societies  initiated  CPT-4
3  code  revisions  and  HCFA  incorporated  the  use  of pocket  dopplers  into  the  fee  for
physician  office visits.
Pocket  Dopplers  Management  Advisory  Report
(OEI-03-91-00461)  June  1991
This management  advisory  report  quantified  the  amount  Medicare  reimbursed  for a
hand-held  vascular  ultrasound  device  known  as the  pocket  doppler,  and  estimated
potential  savings if the  Medicare  discontinued  payment  for this test.  To  determine
how often  this test  was performed,  the  OIG  consulted  1988 Part  B Medicare  Annual
Data.
The  report  found  that  pocket  dopplers  accounted  for 7 percent  of frequently
performed  in-office  ultrasound  services  in 1988.  If HCFA  were  to deny
reimbursement  for this device,  Medicare  would  save an estimated  $30 million  over  S
years.  The  important  coding  issue was that  this simple  diagnostic  test  could  be billed
under  four  codes  which  covered  a variety  of tests.  Similar  to the  zero  crosser,  the
codes  used  to bill Pocket  Dopplers  and  other  ultrasound  devices  did not  distinguish
test  types  or quality  of data  results.  The  Pocket  Doppler,  a simple  diagnostic  test,
could  be billed  with  a variety  of codes  which  covered  an array  of diagnostic  ultrasound
tests.
The  vascular  medical  specialty  societies  initiated  code  changes  which  premiered  in the
1992 CPT-4.  The  HCFA  instructed  its carriers  not  to reimburse  for Pocket  Doppler
tests,  but  to include  them  as part  of the  physician  office visit.
Ensuring  Appropriate  Use  of Laboratory  Servbx  A  Monograph 
(OEI-05-89-89150)  October  1990 
This inspection  examined  the  factors  that  affect  the  use  of diagnostic  clinical 
laborato~  sewices.  Findings  were  derived  from  a compilation  of previous 
Government  and  private  sector  studies,  HCFAS Part  B Medicare  Annual  Data  files, 
and  the  OIGS studies  of physician  office laboratories  (POLS)  and  physician  financial 
arrangements. 
The  report  found  that  the  use  of lab  services  has been  steadily  rising.  The  sheer 
volume  (19 billion  diagnostic  tests  per  year)  made  carrier  monitoring  of lab  service 
billings  difficult.  The  report  found  that  manipulative  billing practices,  such  as 
fragmentation  and  upcoding  or procedure  inflation,  caused  inappropriate  payments. 
Fragmentation  occurred  when  physicians  ordered  specific  tests  they  had  used  most 
often  in the  form  of customized  packages  for their  individual  needs.  Medicare 
prefers  these  packages  billed  as a single item.  There  would  never  be  enough  CPT-4 
codes  to describe  every  single customized  package  for each  individual  physician.  In 
1987, only 2 million  lab tests  billed  to Medicare  were  comprehensive  profiles,  while 
the  projections  estimated  that  55 million  should  have  been  billed  as less expensive 
profiles,  rather  than  as individual  tests.  Upcoding  occurs  because  multiple  procedure 
4
 codes  exist which  essentially  defiie  the  same  lab procedure. 
The  report  recommended  the  use  of laboratory  roll-ins  (LRIs)  as a promising  method 
of controlling  the  use  of lab  services.  Under  LRIs,  Medicare  would  no longer 
reimburse  for lab  semices.  Instead,  lab  services  would  be bundled  into  Medicares 
payment  for  a physician  office visit. 
Problems  with  Coding  of Physician  Services  Medicare  Part B 
(oAIww007  00) February  1989 
This  inspection  examined  the  lack  of uniformity  in the  coding  of physician  office  and
inpatient  visits.  It attempted  to determine  whether  any problems  with the  codes  for
physicians  office  and  hospital  visits exist and  to identify  the  causes  for these  coding
problems.  The  OIG  based  its analysis  on information  from  Part  B Medicare  Annual
Data  for a 2 year  period.  Experts  in provider  billing habits,  including  physicians,
carriers  and  HCFA  officials, were  consulted  to assist in statistical  analysis.
The  OIG  concluded  that  wide variations  in coding  of office  and  hospital  visits existed,
due  primarily  to differences  in the  interpretation  of the  services  each  code
represented.  The  report  found  confusion  about  what  correctly  constitutes  a physician
consultation  as defined  by Medicare.  In addition,  the  availability  of too  many  codes  to
describe  office  and  hospital  visits had  contributed  to the  uncertainty  about  the
distinction  between  the  levels  of codes.
The  report  recommended  that  HCFA  work with the  AMA  to reduce  the  number  of
codes  to prevent  the  incidence  of inappropriate  coding.  The  OIG  supported  providing
fewer  code  choices  and  greater  distinction  between  code  levels  to clear  the  confusion
surrounding  the  visit codes.  The  HCFA  should  designate  what  is meant  by routine
visit code  and  ensure  consistent  interpretation  of these  codes.  In addition,  the  OIG
recommended  HCFA  inform  providers  of the  proper  use  and  interpretation  of CPT-4.
Medicare  Physician  consultation  SeMces 
(OAI-02-88-00650)  June  1988 
This  report  assessed  HCFAS effectiveness  in assuring  appropriate  reimbursement  for 
physician  consultation  services  in a hospital  setting.  The  OIG  conducted  discussions 
with  Medicare  carriers,  Medicaid  State  agencies,  hospital  administrators,  and 
physicians  representing  several  specialties.  A sample  of inpatient  consultation  claims 
were  reviewed  with the  corresponding  medical  records  and beneficiary  histories. 
The  review  found  that  the  definition  of a physician  consultation  differed  among 
respondents  and  that  carrier  interpretation  and  use  of consultations  varied 
considerably.  Seventy-one  percent  of respondents  felt  that  the  five levels  of CPT-4 
codes  overlapped  and  that  it was difficult  to decide  where  one  code  level  ended  and 
another  code  level began.  Because  of this overlap,  Medicare  overpaid  $73 million  for 
physician  consultations. 
5  The  OIG  recommended  HCFA  develop  a defiition  of a consultation  which 
specifically  addresses  conditions  for that  particular  code.  The  HCFA  should  also 
collapse  the  numerous  codes  into  fewer,  more  comprehensive  codes  to minimize  the 
confusion  between  definitions. 
The  AMA  revised  the  visit codes  and  developed  the  Evaluation  and  Management 
codes  which  premiered  in the  1992 CPT-4. 
Coronary  Artery  Bypass  Graft  Surgery 
(oAI~  O) Augw  1987 
This  report  documented  medical  practice  in delivering  quality  coronaxy  artery  bypass 
graft  surgery  (CABG),  obtained  expert  opinion  on the  most  efficient  and  economic 
delivery  of CABG,  and  determined  the  actual  Medicare  hospital  and  physician 
insurance  allowances  for beneficiaries  who underwent  the  surgery.  Working  closely 
with  surgeons,  cardiologists,  private  business,  and  Medicare  carriers,  the  OIG 
evaluated  and  verified  the  pertinent  issues on CABG. 
The  OIG  analyzed  a random  sample  of Medicare  beneficiaries  billing  data  and 
reviewed  patient  histories  provided  by carriers. 
The  report  found  that  the  existence  of six codes  to bill for CABG  might  encourage 
abuse  by reimbursing  for additional  and  unnecessary  grafts.  Before  HCFA  mandated 
the  use  of CPT-4  codes,  many  carriers  relied  on only three  codes  for this procedure 
under  the  California  Relative  Value  Studies.  When  HCFA  implemented  the  CPT-4 
based  Common  Procedural  Coding  System,  three  additional  codes  were  used  to 
describe  CABG.  The  report  stated  that  the three  codes  that  were  added  when 
HCPCS  was implemented  have  resulted  in increased  CABG  expenditures  by most 
Medicare  carriers.  The  OIG  found  that  only 8 of the  38 carriers  surveyed  restricted 
payments  to a fixed amount  if the  surgery  included  three  or more  arteries.  One  of 
these  carriers  allows the  same  amount  if two or more  arteries  are  involved.  In 
addition,  six carriers  made  no pricing  distinctions  among  four  or more  arteries. 
The  report  stated  that  over 60 percent  of the  surgeons  intemiewed  agreed  that  the 
same  payment  for three  or more  grafts  is appropriate.  Also 50 percent  of those 
thoracic  surgeons  did not  object  to the  same  payment  for all CABG  surgeries 
regardless  of the  number  of grafts  involved.  Some  surgeons  thought  that  allowing 
higher  payments  for more  grafts  would  provide  an economic  incentive  for  abuse. 
The  OIG  recommended  consolidating  the  CABG  codes  and  limiting  payment  to a 
maximum  of three  grafts.  This-coding  revision  would  save $5 million.  The  1993 
edition  of CPT-4  still contains  six codes  for CABG. 
The  OIG  also recommended  that  Medicare  consolidate  all physician  fees  for CABG, 
eliminating  separate  bills for the  assistant  surgeons  and  anesthesiologist,  and  develop 
6 utilization  screens  to eliminate  payments  for fragmented  services  and  post-surgical 
services  which  should  be  included  in a global  fee. 
Review  of Radiology  SeMces  Paid  by Empire  Blue  Cross/Blue  Shield  Under  Title 
XVIII  of the  Social  Security  Act 
(A-02 8tw022)  April  1987 
This audit  examined  one  carriers  claims  processing  controls  for radiology  services.
Findings  were  based  upon  a thorough  examination  of carrier  claims  processing
controls  and  a computerized  analysis  of a sample  of claims.
The  review  found  that  the  computer  edits were  inadequate  in detecting  multiple
radiology  tests  which  should  have  been  paid  under  one  bundled  procedure  code.  As a
result,  physicians  received  a higher  reimbursement  for billing  under  several  codes
instead  of using the  bundled  procedure  code.  The  carrier  overpaid  $1.3 million  in
radiological  services.  The  edits  were  inadequate  in detecting  unbundled
comprehensive  codes  because:
	 the  prepayment  edits were  established  for only three  bundled  radiology  codes 
and 
	 the  edit was too  narrowly  defined  and was only able  to detect  two individual 
services. 
The  OIG  recommended  that  the  carrier  recover  the  overpayments,  develop  and  install
more  edits  to identify  unbundled  radiology  tests,  and  continue  to monitor  the
effectiveness  of these  edits.
Review  of Multichannel  Laboratory  Claims  Process  by Empire  Blue  Cross/Blue  Shield
Under  Title  XVII  of the  Social  Security  Act
(A-02-85-02030)  March  1985
(A0X&02013)  June  1986
(A-O2-874I1O26)  September  1987 
(A-O2-88-O1OO1) October  1988 
These  audits  evaluated  the  procedures  and  controls  over  claims  processed  for 
laboratory  services  provided  by independent  clinical laboratories  and  physician 
providers.  On-site  reviews  of lab  and  providers  facilities  were  also conducted. 
The  reviews  revealed  a pattern  of overallowances  due  to a lack  of controls  on 
payment  of profiles  and  individual  lab  services.  The  initial  audit  of March  1985 found 
overpayments  in claims  from  calendar  year  1982.  It found  that  physicians  billed  for a 
number  of individual  laboratory  tests  instead  of a lower-priced,  comprehensive  profile 
of tests.  These  overpayments  resulted  from  a lack  of adequate  prepayment  edit 
screens  to detect  multiple  bills.  Claims  examiners  failed  to convert  individual  tests  to 
profiie  codes,  due  in part  to unclear  written  instructions.  The  follow-up  audits 
7 confirmed  the  continuing  existence  of these  weaknesses  despite  efforts  to review  the 
computer  edits  and  reeducate  claim  examiners.  And  althou@  the  carrier  had 
implemented  computerized  edit  screens  to detect  these  multiple  billings,  not  all 
necessary  codes  were  identified.  The  audits  found  the  carrier  overpaid  approximately 
$2.6 million  between  calendar  years  1984 to  1986. 
Recommendations  advised  the  carrier  to recover  the  overpayments  and  continue  to 
revise  the  computerized  payment  screens  to include  claims  containing  group 
procedures  (profiles)  billed  in conjunction  with one  or two individual  tests. 
DEPARTMENT  OF  HEALTH  AND  HUMAN  SERVICES 
HEALTH  CARE  FINANCING  ADMINETRATION 
OjJice of Reseamh  and Demons@tiorLs 
Medicare  Visits  to Medicare  Patients:  Physician  Coding  Practices  conduct~  by  -

Trude  in cooperation  with  the RAND  Corporation.

(HCFA  Contract  #99-G98489/O-08)  May  1992

This  study presented  evidence  that  physicians  do not  uniformly  or accurately  code 
their  visit services.  Findings  were  based  on an analysis  of 1986 Medicare  claims, 
specifically  Part  B physician  services  and  the  Medicare  Provider  Analysis  and  Review 
file. 
The  report  showed  that  a high percentage  of physicians  used  one  code  to describe 
their  practice.  The  level  of service  varied  from  carrier  to carrier  which  suggests  that 
these  variations  in code  levels  are  due  to individual  coding  practice  rather  than  patient 
caseload. 
Although  this study  could  not  definitively  link physician  upcoding  to economic  factors 
prior  to the  Medicare  Fee  Schedule,  policy makers  are  still interested  in improving  the 
coding  system.  Using  three  alternative  coding  systems based  upon  three  different 
assumptions  of physicians  upcoding  behavior,  the  study evaluated  the  effect  of the 
number  of code  levels  on expenditures.  These  models  assume  that  physicians  face 
less risk of detection  or may feel justified,  and  they  therefore  upcode.  From  these 
models,  costs from  upcoding  are  higher  within  a five-level  code  system  and  lower  in a 
three-level  system.  The  three-level  system  has larger  differences  in reimbursement 
between  codes  and  would  provide  less opportunity  for upcoding.  Assuming  that 
physicians  continue  to code  as they  did before  the  Medicare  Fee  Schedule,  differences 
in dollar  amount  of physician  reimbursement  increase  as the  number  of the  levels  of 
semices  decrease. 
A trade-off  exists between  improving  the  precision  of codes  and  their  ease  of use. 
A coding  system with fewer  level  of codes  becomes  easier  to use, while  one  that 
incorporates  the  time  element  and  more  codes  is more  complex.  With  fewer  code 
8 levels,  descriptions  of semices  become  less concise.  Nonetheless,  policy makers  must 
consider  the  benefits  and  drawbacks  of each  coding  alternative. 
Final Repofi  A  Study  of Coding  Accuracy  in Outpatient  Care  Facilities  conducted  by

&pen  Systems  Corporation

(no report  identification  number)  March  1992

This  study  determined  the  degree  of accuracy  of ICD-9  and  CPT-4  coding  of 
procedures  in hospital  outpatient  departments  and  ambulatory  surgical  centers.  It 
identified  sources  of miscoding  and  determined  the  existence  of coding  guidelines  and 
standards.  Findings  were  based  upon  an extensive  literature  search,  as well as 
consultation  with  private  and  public  health  care  organizations  and  coders. 
The  report  found  little  quantitative  data  on the  error  rate  of hospital  outpatient 
coding.  It found  that  new procedures  and  services  lacked  codes  and  that  the  coding 
systems  were  too rigid/narrow  for coding  legitimate  procedures  and  diagnoses.  A 
(cid:31) lack  of uniformity  existed  in coding  guidelines,  advice,  and  application  among  payers 
and  Peer  Review  Organizations  (PROS).  Many  respondents  stated  that  they  had  no 
systematic  measurement  of coding  accuracy  for both  ICD-9  and  CPT-4  systems. 
Respondents  advocated  a uniform  coding  system  for both  inpatient  and  outpatient 
services,  a clearinghouse  or centralized  body  for information  on both  systems, 
standardization  of guidelines  across  payers,  and  more  education  in proper  coding. 
Report  to Congress  Medicare  Physician  Payment-Volume  and Intensity  of Physician

SeMq  Relative  Value  Scales  for Physician  Services,  Implementation  of a National

Fee  Schedule.

(HCFA  Publication  #03287)  October  1989

This  report  discussed  the  factors  that  affect  the  volume  of physician  services  and  the 
growth  of expenditures  under  Medicare  Part  B.  It was based  upon  an HHS  analysis  of 
national  trends  in charges  for physician  services,  discussions  with  health  research 
experts,  and  data  from  other  health  care  studies. 
Medicare  expenditures  for physician  services  grew from  $15.1 billion  to $26.6 billion 
between  1982 and  1987.  Forty  percent  of this growth  can be  attributed  to inflation 
and  technology,  while  another  15 percent  was due  to an increase  in the  number  of 
beneficiaries. 
Part  of the  remaining  45 percent  was due  to payment  mechanisms,  such  as fee-for-
service  arrangements  with separate  payments  for each  service  rendered  and  higher 
remuneration  for specialists.  The  way in which  physicians  define  and  report  their 
services  to Medicare  also affected  reimbursement  amounts.  Coding  practices  such as 
upcoding  (assigning  a more  expensive  code  for services  performed),  and  unbundling 
(billing  separately  for procedures  which  could  fall under  one  comprehensive  code), 
affects  reimbursement  amounts. 
9 Medicare  Part  B payment  system  data  showed  sharp  increases  in expenditures  for 
physician  services  byspecific  area.  Thetotal  allowed  charges  for surgery  and 
associated  services  grew85  percent  and  accounted  forover40  percent  of the  overall 
spiraling  physician  fees.  Medicare  visits increased  by over  50 percent,  and 
consultations  multiplied  by 127 percent.  Lab  services  rose  by 84 percent,  accounting 
for  11 percent  of overall  growth. 
Attempts  at controlling  Medicare  expenditures  for physician  services  included 
aggregating  payments,  influencing  physician  and  beneficiary  behavior,  and  establishing 
growth  targets.  Creating  capitated  payments,  where  physicians  were  paid  a 
predetermine  amount  to cover  some  or all of Medicare  services  was one  option.  An 
alternative  similar  to the  hospital  diagnostic  related  group  (DRG)  system  could  pay a 
single  amount  for all related-physician  procedures.  A less drastic  bundling  approach 
to rein  in costs was to redefine  packages  of services.  One  example  was to design  and 
price  an office visit which would  include  all related  ancillary  services  (lab  tests,  x-rays). 
This  method  would  collapse  many  services  into  one  comprehensive  semice  package. 
Including  the  office  charge  with  a minor  surgical  procedure  or diagnostic  test  was 
another  bundling  option.  More  exact  coding  rules  and  definitions  of services  could 
also reduce  both  upcoding  and  unbundling. 
A National  Study  of Resource-Based  Relative  Value  Scales  for Physician  SeMces

conducted  by  the Harvard  University  School  of Public Health

under  William  C. Hsaio,  Ph.D

(HCFA  Contract  #17  C-9-8795/l-03)  1988  and  1990

This  study  developed  resource-based  relative  value  scales  (RBRVS)  for most  medical 
procedures  and  formulated  RWS  to be  consistent  in value  across  all medical 
specialties. 
The  study  constructed  RWS  for procedures  listed  in the  CPT-4  coding  system.  To 
establish  actual  work values,  the  study team  worked  with physicians  representing 
medical  specialty  societies,  statisticians,  and  evaluators  to array  services  and  determine 
the  resources  and  difficulty involved  for  each  service.  A small  number  of services 
performed  in each  medical  specialty  were  chosen  since  the  coding  system  contains 
about  7,000 services.  The  measurements  established  for these  services  were  then 
extrapolated  to  a larger  group  of services,  grouped  into  homogeneous families 
categorized  by specialty,  setting,  anatomic  part  and  other  factors. 
The  study found  limitations  with  CPT-4  when  developing  RWS  and  adopting  them 
into  the  RBRVS.  The  studies  stated  that  the  CPT-4  coding  system  assigned 
ambiguous  descriptions  to the  codes  classifying physician  office  services.  Although 
CPT-4  included  global  codes  for surgical  procedures,  services  varied  between  surgical 
specialties.  The  CPT-4  coding  system  did not  adequately  specify  services  to be 
included  in each  global  bill.  This  shortcoming  in CPT-4  precludes  generating  accurate 
RWS  for services  billed  globally  unless  each  global  package  is well defined. 
10
 Packaging  Physician  Servicex  Alternative  Approaches  to Medicare  Part B

Reimbursement  prepared  by Janet B. Mitche~  Ph.D.  in cooperation  with  the  Center

for Health  Economics  Research

(HCFA  Contract  #500-81-0054)  August  1987

This  study  explained  the  different  factors  contributing  to the  rising expenditures  for
physician  services.  From  1965 to  1984, the  amount  the  United  States  spent  on
reimbursing  physician  services  increased  almost  nine-fold.  In  1965, the  U.S. spent
about  $8.5 billion  on physician  services;  this number  increased  to $75.4 billion  in 1984.
Although  some  of the  increase  could be  attributed  to economic  factors  such as
population  growth  and  inflation,  the  increased  intensity  of services
was also part  of the  growth.  The  increased  intensity  of services  was the  result  of
billing  methods  called  unpackaging  and  procedure  code  inflation  and  the
involvement  of multiple  physicians.
Unpackaging  is the  practice  of submitting  itemized  claims  for every  service  performed.
When  physicians  submitted  itemized  bills, their  charges  for services  were  usually  higher
than  charges  for services  billed  in a comprehensive  global  fee.
Procedure  inflation  occurs  when  a physician  bills for a more  extensive  or intensive
(therefore,  more  costly)  procedure  than  what  is actually  performed.  A larger  number
of codes  and  uncertainty  about  the  distinction  between  codes  contributes  to the
likelihood  of this practice.  Although  advances  in technology  would  require  more
codes,  many  codes  or groups  of codes  are simply exceedingly  fine variations  on a
common  theme.
For  example,  the  variety  and  unclear  levels  of office visit codes  leaves  them  vulnerable
to procedure  inflation.  Physicians  can use six different  codes  for a follow-up  office
visit.  One  category  for office visits could  simplify billing because  physicians  could  only
bill under  that  one  code  number,  making  reimbursement  clear  for a particular  visit.  .
Expenditures  for physician  services  rose  also because  of the  increased  number  of
physicians  and  practitioners  involved  in treating  patients  for a particular  procedure.
For  a surgical  procedure,  not  only was the  primary  surgeon  involved,  but  an
anesthesiologist,  an assistant  surgeon,  or any number  of other  specialists  could  also
participate.  Each  provider  could  submit  a separate  bill.  Post-operative  care  or follow-
up visits also  added  to the  bills submitted  for a procedure.
Strategies  to counter  unpackaging,  such  as collapsing  procedure  codes,  could  offer  an
alternative  for Medicare  billing.  Collapsed  codes  group  many  generic  procedures
(office  visits, lab  services,  radiological  services)  together  under  a lesser  number  of
codes.  Rather  than  assembling  different  services,  it aggregates  them  into  a CPT-4
code  by revising  the  terminology  and  definition  to include  these  services.
Packaging,  unlike  collapsing,  involves bundling  together  a variety  of services  under  one
code.  A bundled  procedure  code  would  define  exactly what  kinds  of services  it
11  includes.  Collapsing  and  repackaging  codes  have  both  benefits  and  disadvantages. 
Policy makers  who want  to implement  and  evaluate  these  strategies  should  think  about 
what  procedures  to include  for payment,  how much  to pay, and whom  to pay. 
Analysis  of South  Carolina  Experience  in Converting  From  NABSP  to HCPCS

conducted  by  Moshrnan  Associates

(HCFA  Report  #781241)  January  1982

The  HCFA  commissioned  this study to determine  if a national  uniform  coding  system 
would  affect  total  allowed  payments  under  Medicare  Part  B.  In this study, South 
Carolina  Blue  Cross  Blue  Shield  (SCBCBS)  was allowed  to convert  from  its own 
coding  system  (a version  of the  National  Association  of Blue  Shield  Plans  or NABSP) 
to HCFAS Common  Procedure  Coding  System  (HCPCS).  The  study based  its 
findings  on analysis  of the  number  of and  payments  for claims  coded  in both  SCBCBS 
and  HCPCS. 
The  study  concluded  that  the  changeover  in SCBCBS  to the  HCPCS  system 
incorporating  the  CPT-4  codes  had  no significant  adverse  effect  on total  Medicare 
outlays.  It recommended  additional  conversion  to HCPCS  and  continued  data 
collection  and  analysis  of the  conversion.  The  study also stated  that  a unified  national 
medical  procedural  coding  system would  reflect  changes  in medical  technology  in a 
uniform  manner.  A uniiled  system would  enable  comparison  of frequency  of services 
and  charges  among  carriers.  The  review  also contended  that  if HCFA  were  to adopt 
such  a system,  a body would  be  need  to maintain  and  update  the  system  and 
disseminate  changes  to users. 
U.S.  CONGRESS

GENERAL  ACCOUNTING  OFFICE

Medicare:  Fraud  and Abuse  in Medicare  Claims  Processing

(GAO/HIUXZ3-6)  December  1992.

The  GAO  reported  that  Medicare  has lost billions  of dollars  from  waste,  fraud,  and 
abuse.  The  program  is highly vulnerable  to waste  and  abuse  because  of weaknesses  in 
its internal  controls. 
The  potential  loss to Medicare  can total  a significant  amount.  Medicare  expenditures 
increased  by 60 percent  from  approximately  $70 billion  in 1985 to over  $110 billion  in 
1991.  In addition,  the  number  of claims  processed  has grown  450 percent  since  1975. 
The  GAO  stated  that  HCFAS inadequate  management  of contractors  has  left 
Medicare  exposed  to fraud  and  unnecessary  payments.  A lack  of clear  guidelines  from 
HCFA  to its contractors  on combatting  fraud  and  abuse  has left  Medicare  funds 
vulnerable.  As a result,  payment  enforcement  varies  among  carriers.  Beneficiary 
complaints,  a usual  source  of provider  fraud  and  abuse,  go unresolved.  Moreover, 
12
 carriers  fail to recover  provider  overpayments.  Underfunding  of tracking  systems  to 
catch  overpayments  also contribute  to ineffectiveness. 
The  GAO  found  that  HCFA  has failed  to adjust  and  standardize  reimbursement  for 
new technologies.  High  reimbursement  rates  for new technologies  have  encouraged 
the  unnecessary  use  of radiological  technologies  in low-volume  areas.  Even  after  the 
cost of a new technology  decreases  because  of increased  utilization,  wide  disparities  in 
reimbursement  rates  still exist across  geographic  areas. 
The  HCFAS ineffective  oversight  of contractors  billing  controls  has  contributed  to 
overpayments.  Lack  of control  over  issuances  of billing identification  numbers  has led 
to millions  of dollars  in overpayments  for lab services.  Ineffective  tracking  of provider 
identification  numbers  has  allowed  providers  to submit  fraudulent  bills for tests.  Lack 
of system  control  and  the  resulting  multiple  identification  numbers  made  tracking 
fraudulent  providers  difficult. 
The  GAO  recommended  that  HCFA  assume  greater  control  in managing  its 
contractors.  To  coordinate  various  independent  efforts  to combat  health  care  fraud, 
GAO  recommended  that  Congress  establish  a unified  commission  to address  fraud 
nationally.  The  commission  could  identify  issues  contributing  to fraud  and  formulate 
the  most  effective  methods  of addressing  them.  The  GAO  identified  standardization 
of claims  administration  and  coordinating  and  sharing  information  on fraudulent 
providers  as areas  for potential  evaluation. 
Vulnerable  Payers  Lose  Billions to Fraud  and Abuse 
(GAo/HR.D-92-69)  May  1992 
This  GAO  report  explored  the  nature  of fraud  and  abuse  in the  health  care  industry
and  identified  obstacles  which  hinder  insurers  flom  eliminating  fraud  and  abuse.
Findings  were  based  upon  interviews  with private  insurers,  health  care  trade  groups,
Medicare  and  Medicaid  State  agencies,  and  State  and  Federal  investigative  agencies.
An  extensive  literature  search  was also included.
The  GAO  found  several  obstacles  which  hamper  efforts  to identify  fraud  and  abuse  in
the  health  insurance  system.  The  sheer  number  of payers  and  claims  using different
billing  guidelines  has  made  detecting  fraud  cumbersome.  It has  also hindered
identification  of physicians  billing patterns.  Payers  must  weigh  the  benefits  of claims
review  and  deterrent  efforts  against  the  administrative  cost of implementation.
Although  insurers  had  some  type  of prepayment  claims  edits  and  reviews,  these
controls  delayed  claims  processing  and  payment  and  added  to the  hassle factor
providers  face.  The  laws surrounding  physician  ownership  and  referrals  also
complicated  efforts  to detect  fraud.
Health  insurance  fraud  and  abuse  could  include  practices  such  as overcharging  for
services,  billing  for services  not  rendered,  and  rendering  services  that  are  unnecessary.
This  report  cited  previous  OIG  work which had  identified  procedure  upcoding  and
13  unbundling.  The  GAO  estimated  that  health  care  fraud  (including  manipulative  billing 
practices  and  physician  kickbacks)  resulted  in 10 percent  of the  total  amount  spent  on 
health  care  or $70 billion  for fiscal year  1992. 
The  GAO  recommended  that  a national  commission  devoted  exclusively to health  care 
fraud  formulate  ways to tackle  obstacles  to eliminating  fraud.  The  commission  can 
develop  plans  to:  standardize  claims  administration  among  payers,  collectivize  various 
Federal  and  State  regulators  and  law enforcement  officials to construct  strategies  to 
detect  and  eliminate  health  care  fraud  and  abuse,  and  review  proposed  legislation  on 
the  subject. 
U.S.  CONGRESS

PHYSICIAN  PAYMENT  REVIEW  COMMISSION

Annual  Report  to Cmwress.  1993

Carrying  out  its mandate  to advise  Congress  on physician  payment  and  Medicare 
policy, the  PPRC  continued  to monitor  the  implementation  and  evolution  of physician 
payment  reform. 
The  PPRC  examined  the  various  aspects  of Medicare  payment  initially  affected  by the 
implementation  of a resource-based  Fee  Schedule.  With  Medicare  only beginning  its 
5 year  transition  to the  Fee  Schedule,  long-term  effects  of payment  reform  cannot  be 
measured.  The  Commission  conducted  a sulvey  of physicians  to monitor  physician 
understanding  and  perceptions  of the  Medicare  program. 
The  PPRC  stated  that  after  6 months  use  of the  new Fee  Schedule,  many  physicians 
still do not  understand  certain  components  of the  payment  system.  The  topics  that  the 
physicians  addressed  included  understanding  the  Fee  Schedule,  concerns  over  the 
Evaluation  and  Management  (E/M)  services,  payment  packages,  and  experience  with 
other  payers  besides  Medicare.  -Physician  confusion  about  major  components  of 
payment  policy is alarming.  The  Commission  stated  that  this widespread  lack  of 
understanding  of the  Fee  Schedule  threatens  the  equity  and  accuracy  of payments, 
detracting  from  the  systems credibility  in general. 
Physicians  specifically  raised  the  issues  of imprecise  coding  of services  and 
administrative  burden  in dealing  with Medicare.  The  E/M  revisions  were  designed  to 
bring  about  uniformity  to the  coding  of office visits, which  represent  one-third  of 
Medicares  payments  for physician  services.  Previously,  interpretation  of the  old visit 
and  consultation  codes  varied  from  carrier  to carrier.  Now with the  implementation  of 
a national  fee  schedule  designed  to effect  payment  equity  and  consistency,  coding 
variation  had  to be  eliminated. 
When  questioned  about  their  understanding  of the  new E/M  codes,  67 percent  of 
physicians  thought  they  adequately  understood  how to use the  new billing  codes. 
14
 Eleven  percent  of physicians  stated  that  the  new E/M  described  their  service  very 
accurately,  while  54 percent  of physicians  thought  the  codes  were  somewhat 
accurate.  The  PPRC  wrote,  perhaps  most  telling,  those  who  adequately  understood 
the  codes  were  more  likely to think  that  the  codes  accurately  described  their  services. 
The  CPT-4  code  defines  the  physician  service  to which  a RVU  is attached.  The  RVU 
reflects  an average  of the  amount  of work  done  for a given service.  If a CPT-4  code 
encompasses  a very broad  range  of work,  the  amount  of work  performed  under  that 
code  may vary from  physician  to physician.  The  result  would  be  inequitable  payment. 
Codes  must  encompass  an acceptable  range  of work  to generate  an accurate  work 
value  and  facilitate  equitable  payment. 
Addressing  CPT-4  coding  changes  was one  of the  PPRCS recommendations  to ensure 
credibility  and  objectivity  in the  assignment  of RWS.  In  1992, HCFA  began  a process 
to assign updated  RWS.  The  values  adopted  for the  Fee  Schedule  include  RWS 
initially  proposed  by the  AMAs Relative  Value  Update  Committee  (RUC).  The 
HCFAS review  panel  accepted  over  half the  RUCS recommendations  for work values. 
The  rating  of work  is inherently  subjective,  states  thePPRC.  Hence,  decision  rules 
and  criteria  must  be  established  to ensure  consistency  of work values  to safeguard  the 
equity  of the  Fee  Schedule.  Although  many  improvements  in this update  process  have 
been  made,  the  PPRC  made  other  recommendations  which  include: 
	 a reference  set which  is a range  of acceptable  values  within  which  the  value  of 
given  service  would  fall; 
	 the  availability  of objective  data  which  includes  the  time  involved  in 
performing  a given service; 
the  formulation  of decision  rules to guide  the  addition  of supplementary 
6 
services  and  to guide  when  a proposed  RW  should  be  accepted;  and 
c	 fair  representation,  guidelines  for evidence  and  presentation,  and  openness  to 
public  comment. 
Annual  Renort  to Cowzress.  1992 
This  report  represented  a continuation  of the  PPRCS development  and  revision  of 
Medicare  physician  payment  reform.  The  PPRC  works within  the  global  context  of 
changing  legislation  and  interrelated  policy that  all affect  the  financing,  availability, 
and  delivery  of health  care. 
The  1992 report  set the  historical  framework  of PPRCS reform  effort,  which  for 
Medicare,  has  culminated  with the  implementation  of the  Medicare  Fee  Schedule. 
The  abandoning  of the  customary,  prevailing,  reasonable  (CPR)  charge  mechanism 
and  the  advent  of the  resource-based  payment  method  is integral  to Medicare 
payment  reform. 
15  In the  resource-based  Fee  Schedule,  the  CPT-4  plays a significant  role.  The  PPRC 
stated  that  coding issues  are  extremely  important  because  it is not  possible  to assure 
equitable  payment  under  a national  fee  schedule  unless  each  code  represents  a similar 
amount  of work  to all physicians  who use it.  The  PPRC  identified  several  problems 
which  prevent  the  assignment  of accurate  and  appropriate  relative  value  units  to 
services.  Services  that  may not  have  procedure  codes  were  one  concern.  Another  was 
that  certain  CPT-4  codes  may  encompass  an array  of significantly  different  services 
and/or  different  amounts  of work. 
Although  the  new Evaluation  and  Management  (E/M)  codes  have  been  accepted  and 
are  now being  used,  the  PPRC  still has reservations  about  physician  interpretation  of 
the  E/M  codes.  Problems  with  definitions  with new codes  may cause  uncertainty  and 
confusion.  For  example,  uncertainty  exists for coding  a patient  with  multiple  problems 
or appropriate  coding  for patients  in nursing  home. 
Even  though  all CPT  codes  encompass  a range  of work,  some  codes ranges  of work 
are  defined  narrowly,  while  others  encompass  a much  broader  range.  For  example,  a 
code  for the  excision  of a supratentorial  brain  tumor  includes  a procedure  lasting  from 
2 to  10 hours.  And  when  variations  in work  can fall under  one  code,  it will not  be 
translated  into  corresponding  payment  differences  in the  fee  schedule. 
Using  the  CPT-4  as a basis  for assigning  the  relative  value  and  resulting  payment 
brings  new  challenges  to the  coding  system.  The  PPRC  stated  that  HCF~  as a 
participant  in the  CPT-4  code  process,  is in an ideal  position  to  articulate  its coding 
concerns  for the  Fee  Schedule.  An  evaluation  of the  codes  and  a discussion  for new 
coding  priorities  for  the  Fee  Schedule  is necessary.  The  PPRC  urged  HCFA  to 
maintain  its seat  on the  CPT-4  Editorial  Panel  and  develop  and  articulate  its coding 
needs  for a resource-based  payment  system  to provide  a framework  for consistent 
coding  decisions. 
16
 NON-GOVERNMENT  SOURCES

Non-government  documents  include  studies  with developed  methodologies  which 
analyzed  data  and  discussions  of expert  opinion  that  synthesized  personal  experience 
and  references  to other  work.  The  non-government  documents  represent  current 
thought  about  CPT-4  coding  issues.  We  reviewed  each  document  and  summarized 
only that  information  which  related  to the  CPT-4  system  or its application. 
The  Podiatric  Medicare  Monitor  1 (Winter  1993):  2-4.  The  Podiatric  Monitor  is 
developed  by Foot  Health  Advocacy  and published  by Professional  (hmmmication$ 
Inc. 
Podiatrists  and  orthopedic  surgeons  have  not  reached  a consensus  on the  correct  code 
for the  arthroplasty  procedure  of a lesser  toe.  In coding  the  removal  of the  head  of 
the  proximal  phalanx  in the  second  toe  to straighten  the  toe  and  relieve  dorsal 
hyperkeratosis,  some  practitioners  use  28153, while  others  use  28285.  The  non-
specific  CPT  definitions  do not  lend  assistance  for providers  to use the  absolutely 
correct  code.  The  28285 has  a higher  RVU  and  reimburses  more  than  28153 and 
28160. 
Steve~  Carol.  Avoiding  the Most  Common  Mistakes.  Medical  Economics  19 
October  l%  101-109. 
Physicians  are  attempting  to adjust  to the  new Evaluation  and  Management  (E/M) 
codes  which  premiered  in the  1992 CPT-4.  The  HCFAS early  claims  review  of these 
codes  revealed  that  approximately  60 percent  of physicians  are  using the  new E/M 
codes  correctly.  While  some  criticized  the  physicians  current  accuracy  average,  the 
article  stated  physicians  may not  receive  clear  instructions  on providing  adequate 
documentation  for the  correct  coding  choice.  One  coding  expert  stated  that  the  fault 
lies with  the  codes  themselves. 
The  most  common  mistake  physicians  have  made  with the  E/M  codes  is attempting  to 
crosswalk or equate  them  with  the  old visit codes.  Crosswalking  to get  the  correct 
code  has been  a particular  problem  with the  high end intensive  codes  because 
physicians  have  not  had  the  proper  documentation  to support  the  use  of these  codes. 
Lack  of proper  support  for the  coding  results  in an audited  or rejected  claim. 
Widespread  misuse  of the  new codes  could  pose  problems  for the  new Medicare  Fee 
Schedule  since  E/M  codes  constitute  about  35 percent  of all charges. 
17 Jon=  Marlee@  ART.  RBRVS  is Still Evolving  Seven  Issues of Interest  to 
Physicians  and Health  Information  Professionals.  JournaI of American  Health 
Information  Mana~ement  Association  63 (September  1992):  44-48. 
The  executive-vice  president  of Health  Care  Setices  at St. Anthonys  Publishing,  Inc., 
raised  reimbursement  concerns  under  the  new Medicare  Fee  Schedule,  including: 
  differentiating  between  specific  E/M  codes  for emergency  room  visits,
.  hospital  training  in CPT-4  codes  for physicians,
  revisions  of cardiology  codes,  and
  use  of critical  care  codes.
Also  adding  to the  complexity  of the  Fee  Schedule  are  the  various  carrier 
interpretations  of the  codes  and  payment  policy. 
RBRVS  Briefs.  Texas  Medicine  88 (March  1992):  58. 
Each  Medicare  carrier  instituted  an early  claims  review  program  to randomly  select  25 
claims  per  week  for tracking  use  of the  new Evaluation  and  Management  (E/M) 
codes.  A total  of 600 claims were  reviewed.  The  HCFA  stated  that  the  review was 
intended  to be  informational  and  not  punitive  nor  burdensome. 
Olmstea&  Dennis  L  Medicare  Monitoring  of Payment  Reform.  Pennsylvania 
Medicine  95 (March  1992):  16-17. 
With  the  implementation  of the  new Evaluation  and  Management  (E/M)  codes, 
Pennsylvania  Blue  Shield  began  to monitor  code  usage  to identify  changes  in coding 
and  utilization  patterns.  The  Medicare  carrier  performed  an early  claims  review  to 
provide  HCFA  and  physicians  with information  about  the  appropriate  use  of the  new 
E/M  codes.  The  claims  review  began  in Februaly  1992 and  lasted  through  to June 
1992.  A weekly  sample  of 25 claims  containing  the  new E/M  codes  were  selected. 
Carrier  staff  telephoned  the  physicians  whose  claims  had  been  pulled.  The  carrier 
then  reviewed  the  records  to validate  the  codes  used  for each  claim.  If the 
documentation  supported  the  E/M  codes  billed,  the  physician  was contacted  and  told 
that  the  code  submitted  had  been  confirmed.  If the  documentation  did not  support 
the  code  submitted,  the  carrier  informed  the  physician  of the  correct  code  that  should 
have  been  used.  The  review  was for educational  purposes  only and  was not  intended 
as a punitive  measure. 
Holoweiko,  Mark.  Practice Audits  Made  Perfect.  Business  and  Health  (July  1991): 
47-53. 
In the  midst  of soaring  health  care  costs, private  insurers  are  looking  for ways to cut 
unnecessary  expenditures.  In the  past,  private  insurers  screened  claims with  the  belief 
that  it was less costly to deny  a claim before  it was paid  than  to recover  funds  in a  post-payment  review.  While  the  Federal  government  can ban  a provider  from 
participating  in Medicare  or Medicaid,  private  insurers  do not  have  similar  leverage. 
Taking  their  cue from  the  Federal  government,  private  insurers  have  been  using audits 
to recover  overpayments.  These  postpayment  audits  result  from  computer  edits which 
detect  inappropriately  coded  claims.  The  audits  involve  reviews  of medical  records 
and  documentation.  Auditors  particularly  check  whether  services  were  billed  at their 
correct  level  according  to CPT-4.  Medicare  also informed  auditors  to beware  of 38 
potentially  billing  abusive  practices  such as consistent  use  of a single procedure  code 
or a constant  level  of semice,  upcoding  or overuse  of office visits, unnecessary 
diagnostic  lab  tests,  and  unbundling.  Insurance  companies  have  programmed  their 
software  systems  to include  these  practices. 
Novaclq  Janet.  Upgrades.  Forbe~  27  May  1991,  125-126. 
Upgrading  procedure  codes  has  contributed  to the  increase  in physician  revenues. 
Between  1985 and  1989, the  average  physicians  income  grew approximately  39 
percent  to $155,800.  At the  same  time,  the  nations  total  expenditures  for physician 
services  grew 59 percent  to a staggering  $118 billion. 
In reaction  to government  and  employer  moves  to cut costs and  contain  budgets, 
physicians  have  been  finding  innovative  billing practices  to inflate  their  charges.  Some 
providers  have  simply raised  their  rates  or performed  more  (sometimes  unnecessary) 
services.  Some  physicians  upgraded  bills or charge  for a higher  level  of service  than 
what  was performed. 
Coding  a limited office visit as an intermediate  visit was one  example.  Between 
1985 and  1988, the  number  of brief  visits billed  under  Medicare  decreased  8 percent, 
while bills for more  expensive  extended  visits increased  13 percent.  According  to 
health  payment  specialist  Dr.  Robert  Hertenstein  at Caterpillar,  Inc., overall,  physician 
fees  are  inflated  by 20 percent.  In addition,  doctors  performed  procedures,  once 
restricted  to hospital  settings,  in their  offices using sophisticated  equipment.  This 
practice  also inflated  costs. 
Chan&  Sophia  W.  and L@  Harold  S. Reimbursement  and  the  Dynamics  of Surgical 
Procedure  Innovation.  Edited  by Gelij~  Annetine  C  and  _  EtharI  A.,  Medical 
Innovation  at the  Crossroads-Volume  Ik  The  ChantiE  Economics  of Medical 
Technolom.  Washington  D.C.:  National  Academy  Pre~  1991. 
Although  economic  factors  have  affected  the  use  of new technologies  in medical 
practice,  the  relationship  between  the  application  and  dissemination  of the  technology 
were  also important  factors.  This  paper  discussed  how payment  affects  the 
development  and  diffusion  of a new surgical  procedure. 
The  designation  of a new procedure  code  may impact  .on the  procedures  payment  and 
use.  Surgical  codes  are  organized  anatomically  and  are  relatively  specific.  There  were 
19  18 specific  codes  to describe  a surgical  knee  arthroscopy,  including  meniscectomy 
(medial  and  lateral),  and  with meniscectomy  (medial  and  lateral),   with  meniscus 
repair  (medial  or lateral),  and  with meniscus  repair  (medial  and  lateral). 
However,  codes  are  not  uniformly  specific  for other  procedures.  In contrast  to 
arthroscopy,  one  code  exists for a supratentorial  craniotomy,  which  describes  a range 
of neurosurgical  procedures  that  could  last  anywhere  from  1 to  12 hours  in length. 
Also while  the  existence  of a procedure  code  for a service  does  not  either  warrant  or 
guarantee  payment  for the  service,  its existence  does  signal the recognition  of a 
distinct  new procedure  and  allows the  possibility  for more  generous  payment. 
Currently  there  are  about  7,000 CPT-4  codes.  Most  billing is performed  by office staff 
who  do not  generally  have  any special  training  in CPT-4.  Miscoding  does  occur.  An 
ofilcial  at Blue  Shield  of California  stated  that  an estimated  15 percent  of claims  are 
coded  incorrectly.  Some  of these  errors  included  coding  new procedures  under  old 
procedure  codes.  Codes  also create  other  billing  concerns.  Upcoding  may occur 
when  physicians  choose  the  most  remunerative  code  among  several  closely related 
codes  for a basic  procedure.  Unbundling  could  occur,  for  example,  when  carriers 
allow a separate  payment  for a Swan-Ganz  catheter  monitoring  during  a coronary 
procedure,  while  another  carrier  may think  it is inherent  to a more  major  procedure. 
Although  estimates  vary as to the  number  of services  that  are  unbundled,  10 to 20 
percent  seems  to be  accepted. 
AIbertson  MD,  Peter  C. and Kamens  MD,  Edward  A  Variations  in Coding  Practices 
Among  Connecticut  Urologists  for the Medicare  Population.  Connecticut  Medicine. 
(September  1990):  508-511. 
To ident@  the  coding  habits  of Connecticut  urologists,  the  authors  reviewed  claims 
data  horn  fiscal year  1986-1987. 
Ninety-nine  percent  of the  claims  for cognitive  services  (evaluation  and  management 
services)  fell into  three  types:  office visits, hospital  visits, and  consultations.  These 
three  types  are  further  subdivided  into  new or established  patient.  Under  each 
broad  category,  an  average  of 82 percent  of the  claims were  filed under  one  primary 
practice  code.  Almost  uniformly  urologists  were  consistent  in their  coding  habits 
within  their  practices,  but  the  specific  practice  code  varied  with  each  urology  practice. 
There  is wide variation  in the  distribution  of claims within  the  six categories.  The 
average  practice  coded  13 percent  of Medicare  claims  as a new patient  office visit. 
However,  the  use  of this code  ranged  from  zero  percent  to 75 percent.  One  may 
presume  that  some  practices  see no new patients,  while  in others  75 percent  of the 
patients  are  new.  The  more  likely explanation  is that  urologists  have  their  own 
subjective  interpretation  of the  CPT-4  code  criteria  and  the  relative  work  value 
associated  with  each  code.  This  coding  bias  results  from  the  imprecise  definitions  in 
CPT-4  codes.  The  Connecticut  urologists  did not  use time  or effort  to select  the 
appropriate  code.  Instead,  they  used  another  standard  for determining  the  correct 
code. 
20
 The  authors  concluded  that  vague  definitions  of the  cognitive  services  caused
variations  in coding.  The  imprecise  definitions  lend  themselves  to individual
interpretation,  resulting  in variations  in their  use.  With  the  advent  of the  Medicare
Fee  Schedule  and  its link to the  CPT-4  code,  the  authors  advocated  increased
precision  in CPT-4  code  definitions  for cognitive  services.  Physicians  must  also actively
define  and  quantify  what  they  do for patients  if they want  to influence  the  new
reimbursement  system.
Coe  Bailey,  Nancy.  !How to Cantrol  Overcharging  By Physicians.  Business  and 
Health  (August  1990):  13-14. 
In  1989, health  insurers  overpaid  $5.8 billion  in unnecessary  claims  because  of
inaccurate  coding.  Most  of the  improper  coding  is difficult  to detect  because  payers
and  processors  do not  have  the  sophisticated  means  to handle  the  ever-growing
number  of claims.  According  to the  U.S. Department  of Commerce,  in 1989, total
health  care  costs  exceeded  $599 billion,  with approximately  one-fifth  or $119 billion  of
that  amount  paid  for physician  services.  Physician  charges  are  predicted  to increase  by
15 percent  in 1990.
Although  physician  billing has increased,  their  income  has not  increased  accordingly
due  to many  economic  factors:  tougher  competition  for patients,  the  move  to
negotiated  fees  under  a managed  care  plan,  resource  costs including  malpractice
insurance  and  the  Federal  governments  threat  of reducing  Medicare  expenditures.
Because  of these  pressures  that  cap  physicians  reimbursement,  physicians  have
attempted  to compensate  for their  losses by becoming  more  aggressive  in their  billing
practices.  To  help  physicians  maximize  their  reimbursement,  a mini industry  of
coding  consultants  advertise  that  they will optimize  physician  reimbursement.
Seminars  teach  physicians  how to manipulate  coding  to receive  higher  reimbursement.
Types  of manipulative  coding  practices  include  unlikely  code  combinations,  code
creep,  or upcoding,  and  unbundling,  according  to studies  initiated  by Boston
Universitys  Health  Policy Institute.
Health  Payment  Review  president,  Marcia  J. Radosevich  stated,  When  you combine
deliberate  attempts  to inflate  medical  claims with  the  sheer  volume  of coding  errors
that  our  research  has shown  to occur,  it translates  into  an estimated  $5.8 billion
annually  in unnecessary  overpayments  to physicians.
Computerized  code  review  services  can  detect  abuses,  but  these  reviews  can  add  an
additional  $50 in administrative  cost every time  a claim  is evaluated.
21 Traskzq Maria  R  Unbundling  Could  Be  Costing  You  a Bundle. Business  and Health 
(March  1990):  20-27. 
Billing practices  such  as fragmentation,  exploding  charges,  upcoding,  code creep 
and,  even  multiple  coding  are  examples  of physician  gaming.  Examples  of gaming 
include  billing for  17 different  lab tests  run  as part  of a single blood  screening.  Billing 
for items  separately  brings  a higher  reimbursement.  Expert  estimates  of the  financial 
loss due  to gaming range  from  negligible  to  15 percent  of total  physician  claims. 
Gaming  to increase  payment  is a way to recoup  losses  suffered  from  tightly 
negotiated  fees  from  managed  care  and  Medicare  and  Medicaid  reimbursement  cuts. 
A growing  industry  of coding  consultants  offer  to teach  physicians  to use  CPT-4  to 
maximize  their  reimbursements.  To  counter  these  practices,  software  consultants 
promote  automated  edits  to detect  and  repackage  overpaid  claims.  While  these 
software  systems  are  used  by many  payers  with some  success,  an automated  system 
will not  solve all physician  gaming.  Software  may not  be  able  to keep  track  of the 
continually  changing  CPT-4.  Some  codes  are  also vague  or ambiguous.  A CPT-4 
Editorial  Panel  member  states,  More  clarification  and  standardization  wont 
completely  eliminate  physician  payment  disputes,  but  they will improve  matters. 
Physician  education  in the  appropriate  use of CPT-4  codes  can  also help. 
Coopers  and Lybrand.  Cost-Benefits  Analvs is of a Uniform  Procedural  Coding  Svstem 
for Phvsician  Semces.  The  American  Medical  Associatiorx  Privately  publishe~  1989. 
Commissioned  by the  ~  this study analyzed  and  compared  the  costs and  benefits 
of revising  the  CPT-4  system  and  with developing  a new uniform  procedure  coding 
system.  Little  data  exists on the  costs of revising  and  developing  uniform  coding 
systems.  The  methodology  used  the  professional  judgment  of medical  record 
professionals,  physicians,  financial  analysts,  and  health  economists.  Case  studies  of 
providers  and  payers  as well as interviews  with health  information  systems  also 
provided  a basis  for findings. 
An  analysis  of revising  the  CPT-4  system  included  a critique  of the  systems 
weaknesses.  This  study cited  flaws in the  current  CPT-4  system: 
.  definition  of terms  are  subjective,  ambiguous  and vague,
.  variations  in specificity,  omission  of services  delivered  by other  providers,  and
.  problems  with index  such  as too  many  elements  of reference  in the  definitions,
insui%cient  eponymic  entries,  omitted  procedures,  limited  cross referencing. 
Problems  in the  application  of CPT-4  also compounded  its effectiveness: 
  inability  to perform  trend  and  historical  statistical  analysis,
  inconsistent  reporting  requirements,  and
.  lack  of rules,  guidelines,  education  and  information  dissemination.
22 Coopers  and  Lybrand  stated  that  improvements  to an updated  CPT-4  system would 
include: 
  use  of objective  criteria  for defining  terms,
  redefining  ambiguous  definitions,
  avoiding  combining  diagnostic  information  into  procedural  codes,
  adding  definitions  from  the  introduction  into  the  coding  guidelines,
  improving  readability  and  layout,  and
  coordinating  changes  in the  text with index  entries  and  providing  more  cross 
-referencing. 
Recommendations  to improve  the  application  of CPT-4  included  gathering  user  input, 
developing  a mechanism  for code  continuity  between  updates,  and  developing  a 
mechanism  for  addressing  user  questions.  The  estimated  cost of revising  CPT-4 
ranged  from  $127.9 million  to $139 million. 
Analysis  showed  that  developing  and  implementing  an entirely  new coding  system 
could  cost from  $591.6 million  to $659.7 million. 
In response  to this study,  the  AMA  conducted  a revision  and  reclassification  of the 
CPT-4  index,  and  established  the  CPT Clearinghouse,  a phone  bank  to  address  user 
inquiries.  In addition,  the  AMA  began  publication  of CPT  Assistant,  a quarterly 
newsletter  which  examines  detailed  coding  questions  and  acts  as the  AMAs  definitive 
CPT-4  coding  reference. 
Part  B News  1 (July  1987):  1-2  Part  B News is published  by United 
Communications  Group  in Rockville,  MD 
Tracking  physician  actions  and  documentation  and  comparing  coding  estimates  was a 
strategy  that  gave  a $6 million  boost  to a group  practice  in West  Virginia.  In three 
specialties,  this physician  trailing  technique  increased  reimbursement  about  $1 million 
merely  by restructuring  the  fee  slips to more  effectively  use  the  CPT-4  codes. 
A coding  consultant  reviewed  the  customary  charge  of the  practice  to identifj  the 
different  payment  possibilities  for each  diagnosis.  The  consultants  version  of the 
coding  of procedures  were  compared  to the  physicians  coding  to determine  which 
coding  scenario  was most  remunerative.  The  consultant  then  pointed  out  the  areas  in 
which  the  physicians  coded  incorrectly.  From  these  coding  errors,  the  consultant 
restructured  a fee  slip to provide  for more  specific  codes.  This  technique,  said the 
CEO  of the  West  Virginia  group,  is to help  physicians  use the  CPT-4  codes  more 
effectively  and  accurately,  which often  means  higher  reimbursement. 
Physicians  and  staff must  become  more  meticulous  in documenting  all procedures 
performed.  Also, instead  of having  the  physician  set the  fee,  staffers  now set the  fees. 
This has  promoted  uniform  billing and  prevented  the  physicians  subjectivity  toward 
the  patient  from  affecting  the  fee. 
23  The  article  also addresses  to physicians  a list of common  coding  pitfalls  to watch  out 
for.  It explained  that  stating  diagnoses  and  using more  specific  codes  and  modifiers 
could  help  physicians  avoid  pitfalls in order  to maximize  your  coding  potential. 
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