Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

M P
EDICARE  AYMENTS FOR 

S D
URGICAL  EBRIDEMENT 

S 2004 

ERVICES IN 
Daniel R. Levinson

Inspector General 

May 2007

OEI-02-05-00390
 Office of Inspector General 

http://oig.hhs.gov 
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 
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The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
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on significant issues.  Specifically, these evaluations focus on preventing fraud, waste, or 
abuse and promoting economy, efficiency, and effectiveness in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations. 
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The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
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program guidances, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  E X E C U T I V E   S U M M A R Y
  E X E C U T I V E   S U M M A R Y  

OBJECTIVE 
To determine the extent to which Medicare Part B surgical debridement 
services in 2004 met Medicare program requirements. 
BACKGROUND 
Surgical debridement is the removal of dead or unhealthy tissue from a 
wound using a sharp instrument, such as a curette or scalpel. The 
purpose of surgical debridement is to promote wound healing by 
removing sources of infection and other impediments. 
Medicare Part B payments for surgical debridement services have 
increased in recent years. Between 2001 and 2005, Medicare-allowed 
payments grew by 44 percent, from $140 million to $202 million. 
We conducted a medical record review of 368 surgical debridement 
services from the Centers for Medicare & Medicaid Services (CMS) 
National Claims History file that had a date of service in 2004.  
Physicians with experience in wound care and certified professional 
coders reviewed the medical records to determine whether they met 
Medicare program requirements.  In addition, we interviewed staff 
from the 17 carriers that processed Part B claims in 2004.  We also 
reviewed the carriers local coverage determinations that provided 
additional guidance about surgical debridement services. 
FINDINGS 
Sixty-four percent of surgical debridement services in 2004 did not 
meet Medicare program requirements, resulting in approximately 
$64 million in improper payments. Medicare allowed approximately 
$188 million in 2004 for surgical debridement services.  An estimated  
64 percent of these services did not meet one or more Medicare program 
requirements. As a result, Medicare allowed an estimated $64 million 
in improper payments in 2004.  Higher cost services were less likely to 
meet program requirements than lower cost services. 
Reviewers determined that 39 percent of surgical debridement services 
were billed with a code or modifier that did not accurately reflect the 
service provided.  Twenty-nine percent of services had no 
documentation or insufficient documentation to determine whether the  
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  i  E X E C U T I V E   S U M M A R Y  
services were medically necessary or were coded accurately. One 
percent of all surgical debridement services in 2004 were not medically 
necessary.   
Most carriers had local coverage determinations and edits in place 
but conducted limited medical review of surgical debridement 
services.  Twelve of the seventeen carriers had at least one local 
coverage determination (LCD) in 2004 that addressed surgical 
debridement services.  These LCDs addressed medical necessity and the 
debridement codes but in somewhat different ways.  For example,  
1 carriers LCD was significantly different from the other 11 carriers 
LCDs and, according to reviewers, was inconsistent with Medicare 
coding guidelines.  Twelve of the seventeen carriers had edits in place 
for surgical debridement services at the time of our review. However, 
only 8 of the 17 carriers conducted any medical review of surgical 
debridement services within the past 5 years.  
RECOMMENDATION 
Based on the results of our review, we recommend that CMS: 
Strengthen program safeguards to prevent improper payments for 
surgical debridement services.  CMS should either develop a 
National Coverage Determination or instruct carriers to develop more 
uniform policy guidance that defines surgical debridement and clarifies 
how to most appropriately code the services provided.  The guidance 
should also clarify what information needs to be documented in the 
medical record to meet Medicare program requirements.  CMS should 
also instruct carriers to implement edits, such as frequency edits, as 
appropriate.  
In addition, CMS should instruct carriers to conduct additional medical 
reviews and education efforts on surgical debridement services. 
Carriers should focus their reviews on common coding errors, higher 
cost services, and/or providers who have aberrant billing patterns. 
Education should focus on what services are considered surgical 
debridement, how these services should be correctly coded, and when 
modifiers may be used. 
Lastly, CMS should work with the carrier that has the LCD that is 
different from the others to ensure that this policy is consistent with 
current Medicare coding guidelines. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  ii  E X E C U T I V E   S U M M A R Y  
In addition to these recommendations, we will forward information on 
the miscoded, insufficiently documented, and medically unnecessary 
services in our sample to CMS for appropriate action. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS generally concurs with our recommendations for more review and 
guidance with a focus on coding, billing, and education. CMS believes 
that development of LCDs by Medicare contractors, as opposed to a 
National Coverage Determination, provides the best method of 
strengthening program safeguards.   In particular, CMS concurs with 
our recommendation that guidance on surgical debridement by 
Medicare contractors would help standardize clinical approaches to 
surgical debridement and promote appropriate utilization.  CMS also 
agrees that additional provider education on appropriate coding and 
modifiers is necessary. Lastly, CMS will encourage Medicare 
contractors to use proactive data analysis to determine areas where 
medical review should be increased. 
In addition, CMS notes that in response to the initiation of our review, 
many of the Medicare contractors developed LCDs in 2005 and 2006 
that offer more explicit guidance on surgical debridement. We 
encourage CMS to continue to work with the contractors, particularly 
those that do not currently have LCDs, to ensure uniform and 
consistent policy guidance on surgical debridement services.  
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  iii    T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

Sixty-four percent of surgical debridement services did not 

meet program requirements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

Carriers had some safeguards but conducted limited medical     

review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

R E C O MMEN D A T ION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12

Agency Comments andOffice of Inspector General Response . . .  12 

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

A: 	Detailed Description of Sample Selection and Medical  

 Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

B:	  Confidence Intervalsfor SelectedEstimates . . . . . . . . . . . . . .  17

C:	   AgencyComments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19

A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
 I N T R O D U C T I O N
  I N T R O D U C T I O N  

OBJECTIVE 
To determine the extent to which Medicare Part B surgical debridement 
services in 2004 met Medicare program requirements. 
BACKGROUND 
Surgical debridement is the removal of dead or unhealthy tissue from a 
wound using a sharp instrument, such as a curette or scalpel. The 
purpose of surgical debridement is to promote wound healing by 
removing sources of infection and other impediments.  Surgical 
debridement is commonly performed on patients who have diabetes.  In 
2004, 52 percent of Medicare claims for surgical debridement were for 
patients with a diagnosis of diabetes.1 
Medicare Part B payments for surgical debridement services have 
increased in recent years. Between 2001 and 2005, Medicare-allowed 
payments for these services grew by 44 percent, from $140 million to 
$202 million. In addition, the incidence of diabetes has risen 
significantly in recent years and is expected to continue to increase.2 
As a result, it is reasonable to assume Medicare payments for surgical 
debridement services will also continue to increase. 
Surgical Debridement 
Medicares Supplementary Medical Insurance (Part B) covers physician 

services and outpatient care, including surgical debridement.  

Physicians use codes from the American Medical Associations Current 

Procedural Terminology (CPT) to bill Medicare for these services. 

There are five CPT codes for surgical debridement which are based on 

the level of skin, tissue, muscle, or bone removed.  These CPT codes are:

11040  Debridement; skin, partial thickness; 

11041  Debridement; skin, full thickness; 

11042  Debridement; skin and subcutaneous tissue; 

11043  Debridement; skin, subcutaneous tissue, and muscle; and 

11044  Debridement; skin, subcutaneous tissue, muscle, and bone. 

1  This analysis is based on Medicare Part B claims for Current Procedural Terminology codes 
11040 through 11044 from Centers for Medicare & Medicaid Servicess National Claims 
History file. 
2  Department of Health and Human Services, Diabetes; A National Plan for Action, 
December 2004. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  1  I N T R O D U C T I O N  
Medicare covers and pays for surgical debridement services furnished 
by physicians and other licensed practitioners within the scope of their 
practice under State law.3  In some States, this includes nonphysician 
practitioners, such as nurse practitioners and physicians assistants.  
For the purposes of this report, we refer to all practitioners as 
physicians. 
Surgical debridement services may be performed by different types of 
physicians. In 2005, podiatrists performed 66 percent of surgical 
debridement services covered by Medicare, while general surgeons 
performed 10 percent.  The remaining 24 percent of surgical 
debridement services were performed by other types of physicians and 
practitioners, including vascular surgeons, family practitioners, 
internists, and plastic surgeons.4 
Surgical debridement services may be performed in a variety of settings.  
In 2005, 60 percent of surgical debridement services took place in 
physicians offices, 24 percent in outpatient facilities, and 6 percent in 
nursing facilities or skilled nursing facilities.  The remaining 10 percent 
of services were performed in other settings, such as inpatient hospitals 
and custodial care facilities.5 
Medicare Program Requirements 
General provisions of the Social Security Act (the Act) govern Medicare 
reimbursement for all services, including surgical debridement.   
	 Section 1862(a)(1)(A) of the Act states that no payment may be 
made for services that are not reasonable and necessary for the 
diagnosis or treatment of illness or injury or to improve the 
functioning of a malformed body member.6 
	 Section 1833(e) of the Act requires that physicians furnish such 
information as may be necessary in order to determine the 
amounts due to receive Medicare payment.7 
Regulations that reflect these provisions of Medicare law appear at  
42 CFR  411.15 and 424.5(a)(6). 
3  Centers for Medicare & Medicaid Services, Medicare Benefit Policy Manual, chapter 15,  
 section 60.2, 2003. 
4  This analysis is based on Medicare Part B claims for CPT codes 11040 through 11044 from 
the Centers for Medicare & Medicaid Servicess National Claims History file. 
5  Ibid. 
6   42 U.S.C.  1395y(a)(1)(A). 
7   42 U.S.C.  1395l (e). 
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In addition, the Centers for Medicare & Medicaid Services (CMS) 
National Correct Coding Policy Manual for Part B Medicare Carriers 
(the Coding Manual) addresses the use of CPT codes and modifiers. It 
states that, [p]rocedures should be reported with the [CPT] codes that 
most comprehensively describe the services performed.8 The Coding 
Manual also states that, [i]t is very important that . . . modifiers only be 
used when appropriate.9 Modifiers are two-digit codes that are attached 
to the end of the CPT code to further describe the service performed. 
Under certain circumstances, physicians may use modifiers to bypass 
software-based controlsknown as editsthat identify services that 
generally should not be billed together, such as two services performed on 
the same patient on the same day, by the same physician. 
Medicare Payments 
Medicare reimburses physicians for outpatient surgical debridement 
services according to the Medicare Physician Fee Schedule. The fee 
schedule amounts vary by geographic location and by the setting in 
which the service is rendered, i.e., a facility or nonfacility setting, such 
as a physicians office. Carriers adjust the fee schedule amount based 
on several additional factors to determine the payment for each service. 
For example: 
	 When multiple services are performed by the same physician on 
the same day, the highest-value service is reimbursed at 
100 percent of the fee schedule amount and the other services 
are reimbursed at 50 percent of the fee schedule amount.10 
	 Services provided by nurse practitioners and physician 
assistants are reimbursed at 85 percent of the fee schedule 
amount when billed by these individuals.11 
Table 1 on the next page shows the average fee schedule amounts for 
surgical debridement services provided in nonfacility settings in 2004. 
8 CMS, National Correct Coding Policy Manual for Part B Medicare Carriers, Version 10.3, 
p. viii., 2003. 
9  CMS, National Correct Coding Policy Manual for Part B Medicare Carriers, chapter One 
General Correct Coding Policies, Version 10.3. p. 1A-13, 2003. 
10 CMS, Medicare Claims Processing Manual, chapter 12, section 40.6, 2003. 
11 CMS, Medicare Claims Processing Manual, chapter 12, sections 110 and 120, 2003. 
OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  3  I N T R O D U C T I O N

Table 1  Average Fee Schedule Amounts for Surgical Debridement Services 
Provided in Nonfacility Settings, 2004 
CPT Code  Amount 
11040   $40.44 
11041  $58.26 
11042  $83.19 
11043  $229.79 
11044  $301.14 
Source:  Office of Inspector General analysis of 2004 Medicare Physician Fee Schedule. 
Carrier Role 
CMS contracts with private organizations, called carriers, to process 
and pay Medicare Part B claims.  In 2004, CMS contracted with  
17 carriers to process Medicare Part B claims in the 50 States and the 
District of Columbia.   
Carriers are responsible for implementing program safeguards to reduce 
payment errors.  To accomplish this, carriers may develop local coverage 
determinations (LCD) or instructional articles, which provide additional 
guidance to physicians about specific services.  Carriers may also 
implement edits to prevent improper payments.  Additionally, carriers 
are responsible for conducting medical reviews.  As part of this function, 
carriers analyze data and conduct provider education and training, 
among other activities.   
METHODOLOGY 
We based this study on data from several sources:  (1) a medical record 
review of a stratified simple random sample of allowed Part B surgical 
debridement services, (2) a review of carrier policies and other 
documentation, and (3) structured telephone interviews with carrier 
staff. A detailed description of the sample selection and medical review 
is provided in Appendix A. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  4  I N T R O D U C T I O N  
We selected a stratified simple random sample of 400 claim line items 
for surgical debridement services from CMSs National Claims History 
file.12  We identified all of the allowed claims with CPT codes 11040, 
11041, 11042, 11043, and 11044 that had service dates in 2004 and 
allowed reimbursements of at least $15.  At the start of our review, 2004 
was the most recent full year of Medicare claims data available. The 
population consisted of approximately three million claims that 
represented about $188 million in allowed payments. 
To improve our estimates of improper payments, we stratified our 
population based on Medicare allowed payments.  The first stratum 
included all claims with allowed payments greater than $100.  The 
second stratum included all claims with allowed payments less than or 
equal to $100 and at least $15. We looked for differences in the error 
rates between the two strata.   
Our sample of 400 claims included a total of 402 services for review.13 
We requested the medical record from the physician for each of these 
services.  We based our review on 368 of the 402 services, corresponding 
to a 92-percent response rate. We did not include the other 34 services 
in our analysis because we were unable to locate current addresses for 
the physicians. 
We used a contractor to conduct the medical review.  The reviewers 
included three physicians with experience in wound care and three 
certified professional coders.  In collaboration with the reviewers, we 
developed a review instrument that was based on Medicare program 
requirements.  One physician and one coder reviewed each of the 
medical records: the physician determined whether the service was 
medically necessary, and the coder determined the appropriate CPT 
code and modifier(s) for the service. 
In addition, we reviewed the carriers LCDs that addressed surgical 
debridement services. We compared these LCDs to assess their 
similarities and differences.  We also reviewed documentation provided 
by the carriers about the safeguards they had in place related to 
surgical debridement services.   
12  Multiple claim line items may be billed within a single claim.  For this report, we refer to 
  claim line items as claims.     
13  Multiple services may be billed within a single claim line item. 
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Lastly, we conducted structured telephone interviews with staff at each 
of the carriers that were responsible for overseeing coverage and 
payment issues. Our questions focused on any policies and safeguards 
they had to prevent improper payments for surgical debridement 
services. We conducted these interviews between December 2005 and 
February 2006. 
Standards 
Our review was conducted in accordance with the Quality Standards 
for Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  6    FF II NN DD II NN GG SS

Sixty-four percent of surgical debridement 
Medicare allowed approximately  
services in 2004 did not meet Medicare program 
$188 million in 2004 for surgical 
requirements, resulting in approximately  debridement services. An estimated 
$64 million in improper payments  64 percent of these services did not 
meet one or more Medicare program 
requirements.  As a result, Medicare 
allowed an estimated $64 million in improper payments in 2004.   
Additionally, we found that higher cost services were less likely to meet 
program requirements than lower cost services. Specifically,  
75 percent of services that were greater than $100 did not meet 
requirements, compared to 63 percent of services that were less than or 
equal to $100. 14  Table 2 describes the error rates.  Appendix B provides 
the confidence intervals for key estimates. 
Table 2 
Error Rates of Medicare Part B Surgical Debridement Services, 2004 
Type of Error  Percentage 
39% 
Miscoded 
29% 
Insufficient Documentation  
1% 
Medically Unnecessary 
(5%) 
(Overlapping Error) 
Total Error  64% 
Source:  Office of Inspector General medical review results, 2006. 
Thirty-nine percent of surgical debridement services were miscoded 
An estimated 39 percent of surgical debridement services in 2004 were 
billed with a code and/or modifier that did not accurately reflect the 
service provided.  Specifically, 21 percent were upcoded, meaning that 
the service was reimbursed at a higher rate than appropriate.  Another 
7 percent were downcoded, meaning the service was reimbursed at a 
lower rate than appropriate.  The remaining 10 percent were coded with 
an incorrect modifier, but there was no effect on payment.15  In total, 
14  In a two-tailed test, this difference was significant at the 95-percent confidence level.  
15  Note that these percentages do not add to 39 percent due to rounding. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  7  FF II NN DD II NN GG SS  
these miscoded services represented an estimated $19 million in 
improper payments in 2004.16 
Of those services that were miscoded, almost half (47 percent) were not 
actually surgical debridement. In fact, 20 percent of miscoded services 
were actually routine foot care which should not have been covered by 
Medicare.17 In all of these cases, the physician removed a benign 
hyperkeratotic lesion, such as a corn or callus, and billed it as surgical 
debridement. 
One-third of the services that were miscoded (33 percent) were billed 
with an inappropriate modifier. In these cases, physicians submitted a 
claim with a modifier that was not necessary or did not accurately 
describe the circumstances of the service. For example, several 
physicians submitted claims with modifier 59 when it was not needed. 
Modifier 59 indicates that the service was the second of two distinct 
services and that it should be paid at 50 percent of the fee schedule 
amount. Several physicians used this modifier when they provided only 
one service.18 
The remaining 20 percent of the services that were miscoded were billed 
with a surgical debridement code that did not accurately reflect the 
level of tissue, muscle, or bone removed during the debridement. For 
example, the medical record indicated that tissue was debrided to (but 
not including) muscle, yet physicians billed CPT 11043debridement of 
skin, subcutaneous tissue, and muscle. As one reviewer noted, 
physicians frequently coded the level of debridement based on the depth 
of the wound, as opposed to the extent of the tissue removed. 
Twenty-nine percent of surgical debridement services were insufficiently 
documented 
An estimated 29 percent of services in 2004 were either not documented 
or insufficiently documented. In all of these cases, the physician did not 
16 The $19 million in improper payments represents the difference between the total amount 
of overpayments and underpayments. 
17 Routine foot care includes such services as the cutting and removal of corns and calluses, 
the trimming of nails, and the cleansing and soaking of feet. See Medicare Benefit Policy
 Manual, chapter 15, section 290(B)(2). Except under specific circumstances, routine foot 
care is excluded from coverage under Medicare Part B. These exceptions are outlined in
 sections 290F and 290G of the Manual. 
18 A recent Office of Inspector General report, Use of Modifier 59 to Bypass the Medicares 
National Correct Coding Initiative Edits (OEI-03-02-00771), found that 40 percent of code 
pairs billed with modifier 59 in fiscal year 2003 did not meet Medicare program 
requirements, resulting in $59 million in improper payments. 
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furnish enough information to determine the amount due, and therefore 
Medicare should not have paid for these services.19 In total, these 
services represented an estimated $49 million in improper payments in 
2004. 
For the services that were not documented, physicians failed to submit 
any documentation for the sampled services.  For the services that were 
insufficiently documented, the records did not have enough information 
to determine whether the services were medically necessary or were 
coded accurately.  For example, one medical record indicated that the 
physician changed the wound dressings but did not provide enough 
information to determine whether the physician actually debrided the 
wound. 
The reviewers also noted that some of the services that were not 
sufficiently documented may have been part of an inappropriate 
pattern.  Although the reviewers did not determine whether each of 
these other services was appropriate because they were not in the 
sample, they noted that the number of services provided to some 
beneficiaries may have been excessive.  For example, reviewers noted 
that one patient had 43 debridements involving muscle within a  
9-month period. 
One percent of surgical debridement services were not medically necessary 
Reviewers determined that about 1 percent of surgical debridement 
services in 2004 were not medically necessary. For these services, the 
medical records indicated that the wounds did not need to be debrided.20 
For example, one record showed that the ulcer required dressing 
changes but not surgical debridement.  Another record contained a 
description of a wound with healthy pink tissue and no evidence of 
infection. 
19  42 U.S.C.  1395l(e).  
20  We did not report an estimate of improper payments for the medically unnecessary    
   services because the confidence interval contained zero. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  9  FF II NN DD II NN GG SS
  
Based on interviews with staff 
Most carriers had local coverage determinations 
at each carrier and a review of 
and edits in place but conducted limited medical 
documentation, we found that most 
review of surgical debridement services 
carriers had LCDs and edits in place 
to prevent improper payments for surgical debridement. However, the 
carriers performed only limited medical review of surgical debridement 
services in the past 5 years. Table 3 describes the types of safeguards 
that each carrier had in place. 
Table 3 
Key Safeguards for Surgical Debridement Services 
Limited  Widespread 
Edits for  Edits for  Medical  Medical 
Carrier  LCD  Frequency  Diagnosis  Review*  Review* 
1  U  U 
2  U  U  U 
3  U 
4 
5  U  U 
6  U  U 
7  U  U  U 
8  U  U 
9  U  U 
10  U  U  U 
11  U  U 
12  U  U  U 
13  U  U  U 
14  U  U  U 
15  U  U  U  U 
16 
17  U 
Total  12  3  10  8  3 
Source: Office of Inspector General interviews and document review, 2006. 
*The carrier has conducted this activity within the past 5 years. 
Local Coverage Determinations. In 2004, 12 of the 17 carriers had at least 
one LCD that addressed surgical debridement services. The remaining 
five carriers did not have LCDs that addressed surgical debridement 
services. 
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All of the 12 carriers that had LCDs addressed medical necessity and the 
debridement codes but in somewhat different ways. For example, all 12 
carriers considered surgical debridement to be medically necessary for 
patients with certain diagnosis codes; however, the number of diagnosis 
codes varied significantly from 3 to 128. Further, all addressed the codes. 
However, 8 of the 12 carriers explained when it was appropriate to use the 
surgical debridement codes, while 3 other carriers outlined when it was 
not appropriate to use these codes. The remaining carrier only listed the 
codes. 
In addition, 1 carrier had an LCD that was significantly different from 
the other 11 carriers LCDs. According to the reviewers, this LCD was 
also inconsistent with the CPT Manual.21 Specifically, this LCD allowed 
physicians to bill for the removal of keratotic lesions using CPT code 
11040 (debridementskin, partial thickness) under certain 
circumstances.22 The CPT Manual contains a different series of 
codesCPT 11055, 11056, and 11057for the removal of these lesions. 
These codes are considered routine foot care and are generally not 
covered by Medicare.23 
Edits. Twelve of the seventeen carriers had edits in place for surgical 
debridement services at the time of our review. Three carriers had edits 
that limited the frequency with which surgical debridement may be billed. 
Ten carriers had edits that ensured that surgical debridement services are 
billed with the diagnosis codes that are designated in their LCDs.24 
Medical Reviews. Nine of the seventeen carriers reported that they had not 
conducted any medical review of surgical debridement services in the past 
5 years. Five carriers conducted only limited reviews of surgical 
debridement services that generally targeted physicians with aberrant 
billing patterns. For example, one of these five carriers had conducted 
medical reviews of only two physicians within the past 5 years. Three 
other carriers had conducted both limited and more widespread reviews of 
over 100 claims. 
21 For more information see the National Heritage Insurance Companys LCD entitled Foot 
Care (L21861). 
22 According to the LCD, to bill CPT code 11040, a keratotic lesion must directly or indirectly 
contribute to perilesional soft tissue inflammation and/or pain. 
23  Medicare Benefit Policy Manual, chapter 15, section 290(B)(2). 
24  One carrier had both types of edits in place. 
OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  11    R E C O M M E N D A T I O N  

Our review found that almost two-thirds of all surgical debridement 
services in 2004 did not meet Medicare program requirements.  As a 
result, Medicare allowed an estimated $64 million in improper 
payments in 2004.  This finding demonstrates the need for CMS to take 
steps to ensure that these services meet Medicare program 
requirements and are paid appropriately. 
Based on the results of our review, we recommend that CMS: 
Strengthen program safeguards to prevent improper payments for surgical 
debridement services   
CMS should either develop a National Coverage Determination or 
instruct carriers to develop more uniform policy guidance, such as LCDs 
and instructional articles, that defines surgical debridement and 
clarifies how to most appropriately code the services provided.  The 
guidance should also clarify what information needs to be documented 
in the medical record to meet Medicare program requirements.  CMS 
should also instruct carriers to implement edits, such as frequency 
edits, as appropriate.  
In addition, CMS should instruct carriers to conduct additional medical 
reviews and education efforts on surgical debridement services. 
Carriers should focus their reviews on common coding errors, higher 
cost services, and/or providers who have aberrant billing patterns. 
Education should focus on what services are considered surgical 
debridement, how these services should be correctly coded, and when 
modifiers may be used. 
Lastly, CMS should work with the carrier that has the LCD that allows 
the removal of keratotic lesions to be billed as surgical debridement to 
ensure that this policy is consistent with current Medicare coding 
guidelines. 
In addition to these recommendations, we will forward information on 
the miscoded, insufficiently documented, and medically unnecessary 
services in our sample to CMS for appropriate action. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS generally concurs with our recommendations for more review and 
guidance with a focus on coding, billing, and education. CMS believes 
that development of LCDs by Medicare contractors, as opposed to a 
National Coverage Determination, provides the best method of 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004 12  R E C O M M E N D A T I O N  
strengthening program safeguards.   In particular, CMS concurs with 
our recommendation that guidance on surgical debridement by 
Medicare contractors would help standardize clinical approaches to 
surgical debridement and promote appropriate utilization.  CMS also 
agrees that additional provider education on appropriate coding and 
modifiers is necessary.  Lastly, CMS will encourage Medicare 
contractors to use proactive data analysis to determine areas where 
medical review should be increased. 
In addition, CMS notes that in response to the initiation of our review, 
many of the Medicare contractors developed LCDs in 2005 and 2006 
that offer more explicit guidance on surgical debridement. We 
encourage CMS to continue to work with the contractors, particularly 
those that do not currently have LCDs, to ensure uniform and 
consistent policy guidance on surgical debridement services.  The full 
text of CMSs comments is provided in Appendix C. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  13   
A P P E N D I X   ~ A  
 A P P E N D I X ~ A  
Detailed Description of Sample Selection and Medical Review 
Sample Selection  
We selected a stratified simple random sample of 400 claim line items 
for surgical debridement services from CMSs National Claims History 
file.25  To do this, we identified all of the allowed claims with CPT codes 
11040, 11041, 11042, 11043, and 11044 that had service dates in 2004.26  
We included only claims that had allowed reimbursements of at least 
$15 to focus our review on higher dollar claims.27  The population 
consisted of 3,139,435 claims that represented $188,262,601 in allowed 
payments.    
To improve our estimates of improper payments, we stratified the 
population by allowed amount.  We also looked for differences in the 
error rates between the two strata.  Table 1 below shows the two strata 
and the number of claims we selected from each. 
Table 1  Population Count and Sample Size by Strata  
Number of   Number of 
Stratum  Claims in Population  Claims in Sample 
233,643  150 
1 - Allowed reimbursement greater than $100 
 
2 - Allowed reimbursement less than or equal  2,905,792  250 
  to $100 and at least $15 
Total  3,139,435  400 
Source:  Office of Inspector General, 2006.   
 
The 400 claims in our sample included 412 services.  (For six claims in 
our sample, the physicians billed multiple services on the same claim 
line items.)  We excluded 10 services from our sample.  Five of these 
services were excluded because of an ongoing investigation by the Office 
of Inspector General.  Another five services were excluded because the 
claims were not for physicians services and therefore should not have 
been included in our sample.  Our final sample included a total of  
402 services.   
 
25  Multiple claim line items may be billed within a single claim.  For this report, we refer to  
  claim line items as claims.     
26  We did not include claims from outside the 50 States and the District of Columbia. 
27   Claims reimbursed at less than $15 represented less than 1 percent of claims and allowed   
   dollars in the population. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  14  A P P E  N  D   I X  ~  A  
Medical Record Request  
We used a contractor to conduct the medical review.  We requested all 
documentation from the initial evaluations of the wounds through  
30 days after the dates of service. We also requested that physicians 
furnish all documentation relevant to the sampled service such as the 
patients diagnoses and treatment plan (if applicable), any pressure 
relief prescribed, operative notes, pathology reports, and x-rays. 
We worked with a contractor to collect the medical records for each of 
the sampled services.  The contractor made at least three attempts to 
contact each physician.  The contractor mailed two request letters and 
made one telephone inquiry.  In cases in which the contractor was able 
to verify the address, we sent a third request letter via certified mail.   
Our review was based on a total of 368 of the 402 services, 
corresponding to a 92-percent response rate. We received and reviewed 
medical records for 354 services.  For another 14 services, either the 
physician did not produce any documentation in response to our third 
request letter sent via certified mail or the documentation that the 
physician produced did not contain any information relevant to our 
sampled service.  In our analysis, we considered these services to be 
undocumented.  We did not include the remaining 34 services in our 
analysis because we were unable to locate current addresses for the 
physicians. 
Medical Record Review 
To conduct the medical review, we contracted with independent medical 
reviewers.  The reviewers included three physicians (two podiatrists and 
one vascular surgeon) and three professional coders.  The two 
podiatrists were board certified in foot surgery by the American Board 
of Podiatric Surgery.  The vascular surgeon was board certified in 
general and vascular surgery by the American Board of Surgery.  The 
physicians all had experience reviewing medical records and each had a 
minimum of 20 years of wound care experience.  All of the coders were 
Certified Professional Coders and each had a minimum of 9 years of 
experience.28 
We developed a review instrument in collaboration with the reviewers.  
The instrument was based on Medicare program requirements and 
included questions about the existence and nature of the wound, as well 
28  The coders were certified by the American Academy of Professional Coders. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  15  A P P E N D I X ~ A  
as the service provided. In developing the instrument, we reviewed the 
American Medical Associations manual on Current Procedural 
Terminology and the LCDs that addressed surgical debridement 
services that were in effect in 2004. Staff from CMS also reviewed and 
provided feedback on the instrument.  
Test review. To test our review instrument and further train our 
reviewers, we conducted a preliminary medical review of 30 claims that 
we randomly selected from the universe of claims in 2004.  This sample 
was separate from the sample we used in our review.29 
Final sample review.  Using the final review instrument, one physician 
and one coder reviewed each of the records.  The physician reviewer 
determined whether the sampled service was medically necessary.  The 
coder determined the appropriate CPT code and modifier(s) for the 
sampled service.  If the service provided was routine foot care, the 
physician reviewer referred to the Medicare Benefit Policy Manual to 
determine whether or not the service should have been covered by 
Medicare.30 
Calculation of improper payments. We analyzed the information from the 
medical reviewers using SAS and SUDAAN.  For the services that were 
not medically necessary, insufficiently documented, or not covered by 
Medicare, we counted the entire amounts Medicare allowed for the 
services as improper. For services that were upcoded or downcoded, we 
calculated the amount based on the CPT code and modifier(s) that the 
reviewers determined were correct.  We used the 2004 Medicares 
Physician Fee Schedule for the CPT code and adjusted this payment 
amount based on the modifier, the place of service, and physician 
specialty. We then subtracted this amount from the amount Medicare 
allowed for the service to determine the amount overpaid or underpaid. 
Finally, we calculated the total net difference for all services and 
projected it to the universe of surgical debridement services in 2004. 
29  All claims in 2004 were given a chance for selection in both samples.  There was no overlap 
  of claims between the samples. 
30   Medicare Benefit Policy Manual, chapter 15, sections 290F and 290G. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  16    A P P E N D I X ~ B  
Confidence Intervals for Selected Estimates 
Table 1:  Estimates of All Errors 
Estimate Description     Point Estimate   95-Percent Confidence 
Interval 
Percentage of all surgical debridement services that did not meet  
64.2%  58.3  70.1% 
Medicare program requirements 
Percentage of services that were miscoded  38.7%  32.8  44.6% 
Percentage of services that were insufficiently documented  29.1%  23.5  34.6% 
Percentage of services that were medically unnecessary*  0.9%  0.3  3.2% 
Percentage of services with overlapping errors  (4.5%) 
*Confidence interval calculated using the logit transformation. 
Source:  Office of Inspector General medical review results, 2006. 
Table 2:  Estimates of Miscoded Errors 
Estimate Description  Point Estimate   95-Percent Confidence 
Interval 
Percentage of all services that were upcoded  21.3%  16.4  26.2% 
Percentage of all services that were downcoded  7.1%  3.9  10.3% 
Percentage of all services that were miscoded with no effect on payment  10.3%  6.6  14.0% 
Percentage of miscoded services that were not surgical debridement  46.5%  36.8  56.2% 
Percentage of miscoded services that were routine foot care that should  20.3%  12.2  28.3% 
not have been covered by Medicare 
Percentage of miscoded services billed with inappropriate modifiers  33.3%  24.1  42.4% 
Percentage of miscoded services billed with CPT codes that did not  20.2%  12.9  27.5% 
accurately reflect the level of tissue, muscle, or bone removed during 
debridement 
Source:  Office of Inspector General medical review results, 2006. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  17  A P P E N D I X ~ B  
Table 3:   Estimates of Improper Payments 
Estimate Description  Point Estimate  95-Percent Confidence 
Interval 
Amount allowed for all surgical debridement services that did not meet 
$64,004,113  $52,540,327  $75,467,899 
Medicare program requirements 
Amount allowed for services that were miscoded 
$19,344,984  $11,205,351  $27,484,618 
Amount allowed for services that were insufficiently documented  $49,389,222  $40,088,836  $58,689,608 
Amount allowed for services that were medically unnecessary  confidence interval contains 
$1,507,694 
zero 
Amount allowed for services with overlapping errors  ($6,237,787)   
Source:  Office of Inspector General medical review results, 2006. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  18    A P P E N D I X ~ C  
Agency Comments 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004
 19  A P P E N D I X ~ C  

  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004
 20  A P P E N D I X   ~   C  
  A C K N O W L E D G M E N T S  

This report was prepared under the direction of Jodi Nudelman, 
Regional Inspector General for Evaluation and Inspections in the New 
York regional office, and Meridith Seife, Deputy Regional Inspector 
General. 
Miriam Anderson served as the team leader for this study.  Other 
principal Office of Evaluation and Inspections staff from the New York 
regional office who contributed to this report include David Rudich and 
Thomas Zimmerman.  Central office staff who contributed include 
Kevin Farber, Scott Horning, Doris Jackson and Barbara Tedesco. 
  OEI-02-05-00390  MEDICARE PAYMENTS FOR SURGICAL DEBRIDEMENT SERVICES IN 2004  21