Department of Health and Human Services


OFFICE OF


INSPECTOR GENERAL


APPLYING THE NATIONAL


CORRECT CODING INITIATIVE TO


MEDICAID SERVICES


, SERVICe" 

Inspector General 

October 2004 

OEI -03-02-00790 q",cf::W 
Office of Inspector General 

://oi hhs. 

The mission ofthe Offce ofInspector General (OIG), as mandated by Public Law 95-452 

as amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The OIG's Office of Audit Services (OAS) provides all auditing services for HHS , either by 

conducting audits with its own audit resources or by overseeing audit work done by others. 

Audits examine the performance of HHS programs and/or its grantees and contractors 

in carrying out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations in order to reduce waste , abuse, and 

mismanagement and to promote economy and efficiency throughout the department. 

Office of Evaluation and Inspections 

The OIG's Offce of Evaluation and Inspections (OEI) conducts short-term management 

and program evaluations (called inspections) that focus on issues of concern to the 

department, the Congress, and the public. The fidings and recommendations contained 

in the inspections reports generate rapid, accurate, and up-to-date information on the 

effciency, vulnerabilty, and effectiveness of departmental programs. The OEI also 

oversees State Medicaid fraud control units, which investigate and prosecute fraud and 

patient abuse in the Medicaid program. 

Office of Investigations 

The OIG's Office of Investigations (01) conducts criminal, civil, and administrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 

and of unjust enrichment by providers. The investigative efforts of 01 lead to criminal 

convictions, administrative sanctions, or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support in OIG's internal operations. The OCIG imposes program exclusions and 

civil monetary penalties on health care providers and litigates those actions within the 

department. The OCIG also represents OIG in the global settlement of cases arising 

under the Civil False Claims Act, develops and monitors corporate integrity agreements 

develops compliance program guidances, renders advisory opinions on OIG sanctions to 

the health care community, and issues fraud alerts and other industry guidance. 
The National Correct Coding Initiative (eCl) consists of automated 

edits used to evaluate Medicare claim submissions when a provider 

bils more than one service for the same beneficiary and same date of 

service. Although use of the CCI edits is mandatory in the Medicare 

program, State Medicaid agencies are not required to use these edits 

in processing their claims. Based on a 2003 survey of all State 

Medicaid agencies , we found that most States do not use the Medicare 

CCI edits. Only seven States use all or some of these coding edits. 

Our review of 2001 claims data available for 39 State Medicaid 

agencies found that these 39 States paid $54 millon for servces that 

would have been denied based on the CCI edits. Using these edits 

would promote correct coding by providers and reduce Medicaid 

expenditures for services that the edits would deny. Therefore, we 

recommend that the Centers for Medicare & Medicaid Services (CMS) 

encourage States to explore the use of Medicare CCI edits within their 

Medicaid programs. CMS concurred with our recommendation. 

OEI. 03- 02. 00790 APPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
OEI- 03. 02- 00790 

OBJECTIVE 

To determine (1) the extent to which State Medicaid agencies use the 

National Correct Coding Initiative (eCl) edits or similar edits and 

(2) the extent to which the Medicaid program paid for services that

would have been denied if State Medicaid agencies implemented the 

CCI edits used by the Medicare program. 

BACKGROUND 

The Medicaid program was established in 1965 under Title XIX of the 

Social Security Act. Financed by a Federal-State partnership, the 

Medicaid program covers health services for approximately 40 million 

people including children, the aged, blind, or disabled, and people who 

are eligible to receive federally assisted income maintenance payments. 

Each State Medicaid agency administers its own program within 

Federal guidelines , and coverage policies may vary from State to State. 

In January 1996, the Centers for Medicare & Medicaid Services (CMS) 

implemented the CCI in the Medicare program. This initiative was 

developed to promote correct coding of health care services by providers 

and to prevent Medicare payment for improperly coded services. The 

initiative consists of automated edits used to evaluate claim 

submissions when a provider bils more than one service for the same 

beneficiary and same date of service. 

To determine if State Medicaid agencies use CCI edits or any similar 

edits, we conducted a mail survey of Medicaid agencies in all 50 States 

and the District of Columbia. Forty-nine of the fifty.one agencies 

responded to the survey. 

To determine if State Medicaid agencies paid for services that would 

have been denied based on the CCI edits, we matched the fourth 

quarter 2001 CCI edits against CMS's Medicaid Statistical Information 

System claims data for the 39 States that had provided 2001 data at the 

time of our review. We then calculated the amount States paid for those 

services that the edits would have denied. 

FINDINGS 

Most State Medicaid agencies do not use the National Correct 

Coding Initiative edits. 
 Only 7 of 49 State Medicaid agencies that 

responded to our 2003 survey reported that they use CCI edits in 

APPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES 
processing their claims. These States do not all use CCI edits to the 

same extent. Two States reported using all CCI edits , three States use 

the edits only for particular types of services, and two States use only a 

small number of the edits. 

Another eight States use a commercial edit package that includes edits 

to prevent payment for services by a provider on the same day for the 

same beneficiary. Commercial edit packages may be purchased by the 

States and modified to accommodate each State s coverage policies. 

Thirty.two States do not use CCI edits or a commercial edit package but 

have other edits in place. States' edits include some that are 

comparable to CCl edits. 

Two States reported that their systems do not include any edits to deny 

services performed by a provider on the same day for the same 

beneficiary. Another two States did not respond to our survey. 

Thirt-nine State Medicaid agencies paid $54 millon in 2001 for 

services that would have been denied based on the National Correct 

Coding Initiative edits. 
 Thirty-nine States had provided 2001 Medicaid 

claims data at the time of our review. The 39 States paid $150 milion 

in 2001 for 3.2 million services involving CCI code pairs that were 

performed by a provider on the same day for the same beneficiary. 

These States paid $57 million for services involving the second code in a 

CCI code pair, the servces that CCI usually does not allow. Ofthis 

amount, $54 milion (94 percent) was paid for services that would have 

been denied based on CCI edits. The remaining $3 milion would have


been appropriate according to the CeI edits since a valid CCI modifier 

was included with the code pair. 

The amount paid for services that would have been denied based on the 

CCI edits varied widely by State. Payments in the 39 States ranged 

from $33 491 to over $9 milion. States that reported using some or all 

ofthe CCI edits paid $4. 1 million for servces that would have been 

denied based on CCl edits. The States that use a commercial edit 

package paid $5 million for services that would have been denied based 

on CCI edits. States that use other edits paid $44. 1 milion for services 

that would have been denied based on CCI edits. 

OEI- 03. 02. 00790 APPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES III 
Nearly half of the $54 milion in payments for services that CCI edits 

would have denied were made for code pairs in the Medicine category.! 

Services in this category include psychiatry, physical therapy, 

cardiovascular, and pulmonary servces. Just 75 code pairs made up 

75 percent of the payments for Medicine services that would have been 

denied based on the CCI edits. 

RECOMMENDATION 

Although most States have some edits in place to prevent inappropriate 

payments for services biled by a provider for the same beneficiary and 

same date of service, few States use CCI edits in processing their 

Medicaid claims. States are not required to use CCI edits; however, by 

using these edits , States could promote correct coding by providers and 

prevent payment for servces that would be denied based on CCI edits. 

At the time of our review, States could use their own local codes to 

identify services. However, under the Health Insurance Portability and 

Accountability Act, States are now required to use a uniform national 

coding system. A standardized coding system increases the potential for 

reducing inappropriate Medicaid payments through the use of CCI 

edits. 

CMS should encourage States to explore the use of CCI edits. 


recommend that CMS encourage States to explore the use of CCI edits 

within their Medicaid programs. We found that a small number ofCCI 

edits in the Medicine category made up a large portion of Medicaid 

payments for services that CCI edits would have denied. Therefore, if 

implementing the entire CCI edit package is not practical, States may 

want to evaluate which CCI edits would produce the greatest reduction 

in payments in their Medicaid programs. 

AGENCY COMMENTS 

CMS concurred with our recommendation and stated that it wil 

distribute our final report to each of its 10 regional offces so that the 

regional offces can work with States to explore the use of CCI edits. 

The complete text of CMS's comments can be found in Appendix C. 

1 The Medicine category is represented by codes 90000-99199 and 99500-99600 from the 

American Medical Association Current Procedural Terminologymanual. These include 

codes for non-invasive or minimally invasive services that are not considered open 

surgical procedures or evaluation and management services. 

OEI- 03. 02. 00790 APPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
. . . . . . .. . . . .. . . . .. . .. . . . . . ........................................ ... . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . ... .. .. ..... . ... ............ . .. . . . .. .. .. . . . . . . . . . . .. 

B L E


ABSTRACT . . . . . . . . . . . . . . . . . . . . . 1

EXECUTIVE SUMMARY


I NT RO DU CT I ON................ ................................. 1

FINDINGS ... ..... ... 6

Most States do not use CCI edits..........................................................


Medicaid paid $54 milion for servces involving CCI code pairs....... 7

RECOMMENDATION ............................................ 9

A P PEN D ICE S . . . . . . . . . 

A: State Medicaid Agencies' Use of Automated Edits 

and Payments for Services Involving CCI Code Pairs................


B: Top 75 Services in the Medicine Category that CCI Edits

Would Have Denied........................................................ ..... 12

C: Comments from the Centers for Medicare & Medicaid 

Services. . ... .. .... .. . .. 14

A C K NOW LED G MEN T S .. . . . . . 
OBJECTIVE 

To determine (1) the extent to which State Medicaid agencies use the 

National Correct Coding Initiative (ecl) edits or similar edits and 

(2) the extent to which the Medicaid program paid for services that

would have been denied if State Medicaid agencies implemented the 

CCI edits used by the Medicare program. 

BACKGROUND 

The Medicaid program was established in 1965 under Title XIX of the 

Social Security Act. Financed by a Federal-State partnership, the 

Medicaid program covers health servces for approximately 40 million 

people including children, the aged, blind, or disabled, and people who 

are eligible to receive federally assisted income maintenance payments. 

In fiscal year 2001, total Medicaid expenditures were $228 bilion. Each 

State Medicaid agency administers its own program within Federal 

guidelines, and coverage policies may vary from State to State. 

All State Medicaid agencies are required by law to implement pre-and 

post-payment claims analysis in their claims processing systems.2 As 

part of pre-payment claims review, States use computerized or 

automated edits programmed into their claims processing systems. The 

edits are designed to prevent excessive payments by detecting 

inappropriate or unnecessary servces. States are not required to use a 

single standardized edit package; each State may determine which edits 

to implement in its claims processing system. 

While States' edits may differ, the Health Insurance Portability and 

Accountability Act requires that States use standardized code sets such


as medical diagnostic codes and medical procedure codes for electronic 

claims transactions. This requirement went into effect on October 16 

2003. However, the Centers for Medicare & Medicaid Services (CMS) 

granted a 3-month extension for States to use local codes until 

December 31 2003. 

National Correct Coding Initiative 

In January 1996, CMS implemented the CCI in the Medicare program. 

This initiative was developed to promote correct coding of health care 

services by providers and to prevent Medicare payment for improperly 

2 42 D. C. 9 1396a. 

OEI. 03. 02- 00790 ApPlYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
coded services. CMS developed these coding policies based on coding 

conventions defined in the American Medical Association Current Procedural Terminology 
 manual, national and local policies and edits 

coding guidelines developed by national societies , analysis of standard 

medical and surgical practices , and a review of current coding practices. 

Although use of CCI edits is mandatory in the Medicare program, State 

Medicaid agencies are not currently required to use these edits in 

processing their claims. However, the edits would be applicable to the 

Medicaid program since they are based on general correct coding 

principles. The CCI edits are currently available to download from 

CMS' s Web site. 

The CCI edit fies contain pairs of Healthcare Common Procedure 

Coding System (HCPCS) codes that generally should not be biled 

together by a provider for the same beneficiary and same date of service. 

One type of edit prevents payment for servces that are components of a 

more comprehensive procedure. When comprehensive and component 

codes are biled together, Medicare pays for the comprehensive code but 

not the component code. For example, if an infusion procedure is 

performed, the placement ofthe catheter should not be biled separately 

because the placement of the catheter is considered a component of the 

infusion procedure. Therefore, according to the CCI edit, if both 

services are biled, only the comprehensive code for the infusion 

procedure would be paid. Another type of edit deals with mutually 

exclusive code pairs. These edits prevent payment for services that 

cannot reasonably be performed together. When mutually exclusive 

codes are biled together, Medicare generally pays for the least costly 

code. 

METHODOLOGY 

State Medicaid Agency Survey 

To determine if State Medicaid agencies use CCI edits or any edits 

similar to CCI edits, we conducted a mail survey of the Medicaid 

agencies in all 50 States and the District of Columbia. For 

convenience, we wil refer to the District of Columbia as a State 

throughout this report. We asked States whether or not they use the 

CCI edit package and, if applicable, when they implemented the CCI 

edits. We also asked States to describe any other types of automated 

pre-payment edits they have in place dealing with coding issues. We 

compared those States that reported using CCI edits to those States 

OEI- 03. 02. 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
that did not in terms of the dollars paid for services that CCI edits 

would have denied. We collected our data from May through 

July 2003. Forty' nine of the fifty' one States completed the survey, a 

response rate of 96 percent. 

National Correct Coding Initiative Edits 

We obtained CMS's data on CCI edits for the fourth quarter of 2001. 

The CCI edits are updated quarterly; however, the fourth quarter CCI 

edit update includes all prior additions and deletions of code pairs 

through the end of 2001. Since we reviewed 2001 Medicaid data, we 

removed all CCI edits with deletion dates prior to 2001 as well as CCI 

edits that were retroactively deleted during 2001. This left 123 316 CCI 

code pairs for our review. 

The CCI edits are arranged so that the second code in a code pair is 

the service that is usually denied. In some instances, a modifier may 

be included that would allow both services in a CCI code pair to be 

paid. A modifier is a two-digit code that further describes the service 

performed. There are 35 modifiers that may be used to bypass CCI 

edits. Each CCI code pair has a modifier indicator that determines 

whether a modifier can be used. 

Medicaid Statistical Information System 

To determine if State Medicaid agencies paid for services that CCI 

edits would have denied, we matched the CCI edits against CMS' 

Medicaid Statistical Information System (MSIS) 2001 claims data for 

the 39 States that had provided data at the time we began our review. 

States submit Medicaid enrollment, payment, and utilization data to 

CMS for entry into the MSIS. 

From the claims data file containing non -institutional servces , we 

identified fee-for-service claims that involved CCI code pairs billed by 

a provider for the same beneficiary and same date of service. To 

determine if any of these services would have been denied based on 

CCI edits, we compared the date of service with the edit's effective 

date. This enabled us to determine whether the Medicare CCI edit 

was in place on the date the Medicaid services were performed. 

We identified 3.2 milion services involving active CCI code pairs 

biled by a provider for the same beneficiary and same date of service. 

Medicaid paid $150 milion for these services in 2001. We then 

reviewed the data to determine if a modifier was allowed with the 

code pair and whether an appropriate modifier was included. 

OEI- 03. 02. 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
Based on our review, we calculated the total amount Medicaid paid 

for services that CCI edits would have denied. The total paid 

represents the amount Medicaid paid for the second servce in a CCI 

code pair when: 

1. The code pair did not allow a modifier.


2. The code pair allowed a modifier, but an appropriate modifier was 

not included.


Data Limitations 

CCI edits are made up of national HCPCS codes. Many States used 

local codes at the time of our review; however, our review was limited 

to national HCPCS codes that were part ofthe CCI edits. All States 

did use some national HCPCS codes during our review, and it is these 

services that are included in our calculation of the amount Medicaid 

paid that CCI edits would have denied. Services biled with local 

codes are not captured by this review. 

In addition, our data indicated that most State Medicaid agencies 

utilzed the same modifiers as those used in the Medicare program. 

However, State Medicaid agencies also had the option to use their 

own unique modifiers. It is possible that States used local modifers 

that would have allowed CCI edits to be bypassed; however, these 

modifiers would not have been recognized as valid for our review. 

Therefore, those services would be included in our calculation of the 

amount Medicaid paid- that CCI edits would have denied. 

For our analysis, we used the modifier indicator that was attached to 

the code pair in the fourth quarter 2001 CCI update. However, some 

modifier indicators changed during 2001 , meaning that the code pair 

changed from allowing a modifier to not allowing a modifier or vice 

versa. Our calculations are based on the edits that were effective 

during 2001 and their associated modifier indicator from the fourth 

quarter of 2001.


Payments for some services may have been included in our 

calculations even if they involved adjusted payments. Adjustments 

may have occurred when two services in a CCI code pair were 

performed on the same day but biled to the Medicaid program 

separately. In this case, payment for both services may have been 

correct if payment of the second service was reduced to account for the 

payment of the service billed first. Only a manual review of claims 

history data could determine if the services were paid appropriately 

OEI. 03. 02- 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
due to such adjustments; we did not conduct a manual review of the 

data. 

Finally, our calculations do not include any payments for services that 

CCI edits would have denied for the 12 States that had not submitted 

claims data to the MSIS at the time of our review. 

This study was conducted in accordance with the Quality Standards for Inspections issued by the President's Council on Integrity and 

Effciency. 

OEI- 03. 02- 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
OEI. 03. 02. 00790 

Most State Medicaid agencies do not use the Only 7 of 49 State Medicaid 

agencies that responded to National Correct Coding Initiative edits. our 2003 survey reported 

that they use CCI edits in processing their claims.3 However, these 

States do not all use CCI edits to the same extent. 

o Two States reported that they use all CCI edits. 

o One State uses all CCI edits except those for anesthesia services.


o Two States use CCI edits related to surgical codes, but one uses 

these edits for post-payment rather than pre'payment review. 

o Two States use just a small number of CCI edits. One State uses 

149 CCI edits , and another uses 16. 

States' Use of Commercial Edit Packages 

Another eight States use a commercial edit package that includes edits 

to prevent payment for services performed by a provider on the same 

day for the same beneficiary. Commercial edit packages may be 

purchased by the States and modified to accommodate each State 

coverage policies. While commercial edit packages may include edits for 

services covered by Medicaid that might not be captured by the CCI 

edits, they may not include all CCI edits currently used by Medicare. 

States ' Use of Other Edits 

Thirty"two States do not use CCI edits or a commercial edit package but 

have other edits in place. States' edits include some that are 

comparable to CCI's comprehensive/component and mutually exclusive 

edits. A few States have edits that are based on CCI criteria. 

Two States reported that their systems do not include any edits to deny 

services performed by a provider on the same day for the same 

beneficiary. A breakdown ofthe types of edits each State uses is 

presented in Appendix A. 

Several States are planning to change their editing packages in the near 

future. Three States are planning to implement the entire CCI edit 

package. One State is adding more CCI edits, and one State is 

considering implementing some CCI edits. Another State is dropping 

3 The number of active edits in the CCl edit package at the time of our survey was 

approximately 200 000 edits. 

ApPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES 
the CCI edits that they used in their post-payment review and 

switching to a pre-payment commercial edit package. 

Thirt-nine State Medicaid agencies paid Thirty' nine States had provided 

$54 milion in 2001 for services that would 2001 Medicaid claims data at

have been denied based on the National the time of our review. The 

Correct Coding Initiative edits. 39 States paid $150 millon in 

2001 for 3.2 milion servces 

involving CCI code pairs that were performed by a provider on the same 

day for the same beneficiary. These States paid $57 millon for services 

involving the second code in a CCI code pair, the services that CCI 

usually does not allow. Ofthis amount, $54 milion (94 percent) was 

paid for services that would have been denied if CCI edits had been 

used in the Medicaid program. The remaining $3 milion would have 

been appropriate according to the CCI edits since a valid CCI modifier 

was included with the code pair. 

State Payments for Services CCI Edits Would Deny 

The amount paid for servces that would have been denied based on the 

CCI edits varied widely by State. Payments in the 39 States ranged 

from $33 491 to over $9 millon. Twenty-four States each paid over 

$500 000 for services that would have been denied based on CCI edits. 

More than half of the $54 milion in payments for services that would 

have been denied based on CCI edits were made by four States. These 

States did not use CCI edits. A list of States' payments for services that 

would have been denied based on CCI edits is included in Appendix 

We found that even those States that reported using some or all CCI 

edits could reduce their payments for services involving CCI code pairs. 

For example , the two States that only use those CCI edits related to 

surgical procedures each paid over $500 000 for services that CCI edits 

would have denied. One State that reported using all of the CCI edits 

stil made payments for CCI code pairs. However, these payments may 

have been the result of the use of local modifiers , modifier indicator 

changes made during 2001 , or adjustments made when the two services 

in a code pair were biled separately. Medicaid claims data were only 

available for five of the seven States that use CCI edits; therefore , we 

could only calculate the amount paid for services involving CCI code 

pairs for these States. These five States paid a total of $4. 1 milion for 

services that would have been denied based on CCI edits. 

OEI- 03. 02. 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO ME.DICAID SERVICES 
OEI. 03. 02. 00790 

N G 

We found that the eight States that reported using a commercial edit 

package paid between $127 444 and $1.3 million for services that would 

have been denied based on CCl edits. These eight States paid a total of 

$5 milion for services that would have been denied based on CCI edits. 

We were able to calculate the amount paid by 24 of the 32 States that 

use other edits for servces involving CCI code pairs, since claims data 

were only available for these States. The 24 States paid a total of 

$44. 1 million for services that would have been denied based on CCI 

edits. These States paid an average of $1.8 milion for servces 

involving CCI code pairs performed by a provider on the same day for 

the same beneficiary. 

Of the two States that do not have any edits to deny servces performed 

by the same provider on the same day for the same beneficiary, one paid 

$228 835 for services involving the second code in a CCI code pair. This 

State was one of the smallest States in terms of total Medicaid 

expenditures. The other State reported that their new claims 

management system wil incorporate the CCI edits. We did not have 

the claims data required to calculate payments made by this State. 

Most Payments Made for Few Code Pairs 

We found that Medicaid made payments for 17 797 ofthe 123 316 CCI 

code pairs. Nearly half of the $54 million in Medicaid payments were 

made for code pairs in the Medicine category.4 Services in this category 

include psychiatry, physical therapy, cardiovascular, and pulmonary 

services. One code pair, relating to psychotherapy services, made up 

12 percent ofthe Medicine payments that would have been denied based 

on CCI edits. In fact, just 75 code pairs made up 75 percent ofthe 

payments for Medicine services that would have been denied based on 

CCI edits. A list of the top 75 Medicine code pairs is presented in 

Appendix B. Payments for other categories of services such as 

Anesthesia, Surgery, Radiology, Pathology, and Evaluation and 

Management ranged from less than 1 percent to 10 percent of Medicaid 

payments for services CCI edits would have denied. 

4 The Medicine category is represented by codes 90000­
99199 and 99500-99600 from the 

American Medical Association Current Procedural Terminology manual. These include 

codes for non-invasive or minimally invasive services that are not considered open 

surgical procedures or evaluation and management services. 

ApPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES 
Although most States have some edits in place to prevent inappropriate 

payments for services biled by a provider for the same beneficiary and 

same date of service, few States use CCI edits in processing their 

Medicaid claims. States are not required to use CCI edits; however, by 

using these edits, States could promote correct coding by providers and 

prevent payment for services that would be denied based on CCI edits. 

At the time of our review, States could use their own local codes to 

identify services. However, under the Health Insurance Portability and 

Accountability Act, States are now required to use a uniform national 

coding system. A standardized coding system increases the potential for 

reducing inappropriate Medicaid payments through the use of CCI 

edits. 

CMS should encourage States to explore the use of CCI edits. We 

recommend that CMS encourage States to explore the use of CCI edits 

within their Medicaid programs. We found that a small number of CCI 

edits in the Medicine category made up a large portion of Medicaid 

payments for services that CCI edits would have denied. Therefore, if 

implementing the entire CCI edit package is not practical, States may 

want to evaluate which CCI edits would produce the greatest reduction 

in payments in their Medicaid programs. 

Agency Comments 

CMS concurred with our recommendation. If implementing the entire 

CCI edit package is not practical, CMS stated it wil encourage States to 

evaluate which edits would produce the greatest reduction in payments 

in their Medicaid programs. CMS wil also distribute our final report to 

each of its 10 regional offces so that the regional offces can work with 

States to carry out our recommendation. The complete text of CMS' 

comments can be found in Appendix C. 

OEI. 03- 02. 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
. 

! . . ,. 

 :.. . ! 

..g

. 

State Medicaid Agencies' Use of Automated Edits and 

Payments for Services Involving CCI Code Pairs 

$555 793 $217 202 

650 148 $562 969 

Use all edits except for 

anesthesia $261 845 $50 303 

$21 756 623 226 709 

170, 824 150 073 

199 404 $534 222 

$573 044 $228 835 

$77,496 $33 491 

681 198 $1,495 651 

Use all edits 924 370 $935 291 

971 321 $884 148 

272 965 $392 153 

$935 748 $298 243 

763,421 821 799 

$1,446 315 $489 905 

050,480 127 206 

--u 933 439 305 106 

723 677 104 502 

$336 867 $125 260 

$863 636 $304 762 

$10,415,460 046 113 

:c.: 

Use edits related to 

004 852 $531,470 

surQical codes 544 359 $543 244 

Use 149 edits 403,401 035 207 

Use all edits 

183, 193 $741 180 

$317 045 $122 696 

$14 643, 723 $6, 116 975 

OEI. 03. 02- 00790 ApPlYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
$25, 128 739 180 167 

$978 519 $268 843 

125 478 $528,994 

575 242 $617 050 

041 905 054 331 

$232 678 $50 329 

$501,267 $127,444 

$3, 288 616 300, 869 

$799 108 $317 790 

Use 16 edits 

132 297 $902 217 

824 796 $504 312 

$634 886 $230 803 

Sources: 2003 OEI survey of State Medicaid agencies, CMS's 2001 MSIS fee-for-service claims data for 39 States. 

1 Since State had not submitted MSIS claims data at the time of our review, we were unable to calculate payments for services that CCI edits would have denied. 

2 This State reported using all CCI edits; however, we identified payments that should have been denied. This could be due to 

adjusted payments, modifier indicator changes during 2001 , or the use of local modifiers by the State. 

3 State did not respond to survey. 

4 Five of the seven States that use CCI edits had the edits in place in 2001. North Carolina and North Dakota implemented the 

edits in 2002. 

5 This column was calculated based on payments for the second code in the CCI code pairs. 

OEI. 03. 02. 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
A P I X


Top 75 Services in the Medicine Category that CCI Edits Would Have Denied 

90847 Family psychotherapy w/patient 90804 Individual psychotherapy, offce, 20-30 min 761 811 

96410 Chemotherapy infusion method 90780 IV infusion therapy, 1 hour $936 033 

95903 Motor nerve conduction test, with F-wave 95900 Motor nerve conduction test, without F-wave $917 724 

97530 Therapeutic activities 97116 Gait training therapy $711 771 

90853 Group psychotherapy 90804 Individual psychotherapy, offce, 20-30 min $698, 342 

97140 Manual therapy 97530 Therapeutic activities $551 683 

90806 Individual psychotherapy, off, 45-50 min 90862 Medication management $549 513 

90853 Group psychotherapy 90862 Medication management $543 913 

90853 Group psychotherapy 90806 Individual psychotherapy, off, 45-50 min $516 779 

90853 Group psychotherapy 90816 Indiv psychotherapy, hosp, 20-30 min $471 111 

96412 Chemotherapy, infusion method add-on 90780 IV infusion therapy, 1 hour $470 084 

90857 Interactive group psychotherapy 90853 Group psychotherapy $353 131 

93505 Biopsy of heart lining 93501 Right heart catheterization $351 673 

90847 Family psychotherapy w/patient 90806 Individual psychotherapy, off, 45-50 min $329,337 

90853 Group psychotherapy 90801 Psychiatric diagnostic interview $317 970 

92980 Insert intracoronal) stent 92982 Coronal) artel) dilation $297 530 

90853 Group psychotherapy 90847 Family psychotherapy w/patient $280 970 

90804 Indiv psychotherapy, offce, 20-30 min 90862 Medication management $268 097 

94060 Evaluation of wheezing 94375 Respiratol) flow volume loop $261 868 

96530 Pump refillng, maintenance 96410 Chemotherapy infusion method $258 976 

97530 Therapeutic activities 97535 Self-care management training $240 296 

99233 Subsequent hospital care 94657 Continued ventilator management $202 131 

92980 Insert intracoronal) stent 93556 Imaging, cardiac catheterization $200 649 

94010 Breathing capacity test 94375 Respiratol) flow volume loop $190 105 

96530 Pump refiling, maintenance 96412 Chemotherapy, infusion method add-on $185 783 

90847 Family psychotherapy w/patient 90801 Psychiatric diagnostic interview $181 727 

90806 Individual psychotherapy, off, 45-50 min 90801 Psychiatric diagnostic interview $180 289 

93005 Electrocardiogram (ECG), tracing 93041 Rhythm ECG , tracing $179 786 

92508 Group speech/hearing therapy 92507 Individual speech/hearing therapy $172 816 

94060 Evaluation of wheezing 94664 Aerosol or vapor inhalations $169 610 

96410 Chemotherapy infusion method 90781 IV infusion , additional hour $157 546 

90847 Family psychotherapy w/patient 90862 Medication management $150, 891 

97150 Group therapeutic procedures 97110 Therapeutic exercises $150 315 

90847 Family psychotherapy w/patient 90816 Individual psychotherapy, hosp, 20-30 min $140 729 

92980 Insert intracoronal) stent 93555 Imaging, cardiac catheterization $139 440 

97110 Therapeutic exercises 97002 Physical therapy reevaluation $136 902 

97150 Group therapeutic procedures 97530 Therapeutic activities $134 226 

90853 Group psychotherapy 90818 Individual psychotherapy, hosp, 45-50 min $129 144 

97012 Mechanical traction thera 97140 Manual thera $129 029 

1 We considered a code pair to be in the Medicine categol) if the Column 2 code, the code that would be denied by CCI, was in the Medicine categol). The Medicine categol) includes codes in the range 90000-99199 and 99500-99600 from the American Medical Association Current Procedural Terminology manual. 

OEI. 03. 02. 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
x ­


93000 Electrocardiogram (ECG), complete 93040 Rhythm ECG with report $120, 979 

99232 Subsequent hospital care 94657 Continued ventilator management $116, 664 

97113 Aquatic therapy/exercises 97110 Therapeutic exercises $116 346 

94060 Evaluation of wheezing 94640 Airway inhalation treatment $115 214 

90804 Indiv psychotherapy, offce, 20-30 min 90801 Psychiatric diagnostic interview $111 257 

96115 Neurobehavioral status exam 96111 Developmental test, extended $103 773 

92506 Speech/hearing evaluation 92507 Individual speech/hearing therapy $103 034 

94060 Evaluation of wheezing 94010 Breathing capacity test $97 651 

93350 Echo transthoracic 93307 Echo exam of heart $95 315 

90925 ESRD-related services , day 90935 Hemodialysis , one evaluation $92 134 

97530 Therapeutic activities 97113 Aquatic therapy/exercises $90, 237 

93017 Cardiovascular stress test 93005 Electrocardiogram , tracing $88 200 

90801 Psychiatric diagnostic interview 90862 Medication management $87 895 

96412 Chemotherapy, infusion method add-on 90781 IV infusion , additional hour $87 706 

90846 Family psychotherapy w/o patient 90806 Individual psychotherapy, off, 45-50 min $81 090 

94640 Airway inhalation treatment 94664 Aerosol or vapor inhalations $80, 540 

97140 Manual therapy 97124 Massage therapy $79, 644 

92982 Coronary artery dilation 93556 Imaging, cardiac catheterization $79 064 

93621 Electrophysiology evaluation 93620 Electrophysiology evaluation $78, 970 

93641 Electrophysiology evaluation 93620 Electrophysiology evaluation $78 909 

97504 Orthotic training 97110 Therapeutic exercises $76 668 

96530 Pump refilling, maintenance 96408 Chemotherapy, push technique $67 750 

93303 Echo transthoracic 93307 Echo exam of heart $67 234 

90806 Individual psychotherapy, off, 45-50 min 90805 Indiv psychotherapy, off, 20-30 min w/e&m $65 677 

98941 Chiropractic manipulation 97140 Manual therapy $65,446 

93010 Electrocardiogram (ECG) report 93042 Rhythm ECG , report $63, 228 

90816 Indiv psychotherapy, hosp, 20-30 min 90801 Psychiatric diagnostic interview $62 695 

90853 Group psychotherapy 90817 Indiv psychotherapy, hosp, 20­ , w/e&m $61 398 

97035 Ultrasound therapy 97022 Whirlpool therapy $59, 850 

90847 Family psychotherapy w/patient 90812 Interact indiv psychotherapy, off, 45-50 min $55 142 

95810 Polysomnography, 4 or more 95811 Polysomnography w/cpap $53 515 

99211 Offce/outpatient visit, established patient 90862 Medication management $51 028 

90853 Group psychotherapy 90805 Indiv psychotherapy, off, 20-30 min w/e&m $50 831 

76856 Ultrasound exam , pelvic , complete 93975 Vascular study $50 793 

90925 ESRD-related services , day 90937 Hemodialysis , repeated evaluation $50 342 

92553 Audiomet , air & bone 92555 Speech threshold audiomet $50 087 

OEI. 03- 02- 00790 ApPLYING THE NATIONAL CORRECT CODING INITATIVE TO MEDICAID SERVICES 
Comments from the 

Centers for Medicare & Medicaid Services 

DEAI OFHE HU SBCE C$ fOS M$d & ModlIj &llVce 

AdmtntrAtar 

wa. DC 2001 

DATE: AUG 1 9 

TO: Geoge F. Grb

Act Deputy Inpecr Ge for Evaluati an Inpem 

FROM: Mark B. McClellan 
 h. . Admnisttor ilthJ IlW I 

SUBJCf: Ofce of Inper Geer (010) Dr Re Applyi 1M National Correct Cog Initiative to Medicai Servces. " (OEI-0-OZ-Q790) 

Th you for the oppunty to an commt on th above-f8et(1ed drft reprt. OIG 

reewed the applicailty of a of edts deelope by Medica, which baveprven effecve in idenfy ar of abuse du to up-coing or other inappprate use of varous co with Tite XVI. 010 thought ther woud be vaue in aplyi the $8e cong edts to Medcad clai on a samle bas to se wheter. and to wha extent, use of such edits would 

prve similarly usel in Title XI GIG concluded that the Co Cong Initiatve (CCl) migh have considerable mert. even ona limte bas. since a sm numbe of edits yielded large rets. 

The Ceter for Medica & Medicad Serce (CMS) aplauds OIO' efrt in ths rega. We beieve ther would be value in encourging st to look seousy into OIO'

remmendation and, wher appat, incorprae these or simila ediUi into th meczed 

claims procsig syste. CMS will not madae su edts at ths tie du to the varety of 

systes an aproaches in stae Medicaid Maagement Informaton Systes. Howe, we as our regina offce sys Stff to work closely with stae systems staff to gl wher value can be gaed from the oro' s ver usful analysis. 

We appreat the effor tht went into ths report and the oppoity to reiew an comment on th issues it rase. Our reponse to the om audit remmention follows. 

OIG Recemmendatlon. 

The CM should enurge st to exlore th us of CCI edts withn thei Medcad 

prgr. OIG found tht a sml numbe of CCI edts in the Meici category ma up a lare porton of Medcad payments for sece that CCI edts would bve dened. Therre. if 

implementing the entire eCI edt packge is notpratica stas may wa to evaluate wbich CCI 

edits would prduce the grea teducton in payments in thei Medc:d prgr. 

OEI. 03. 02. 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
Page 2 - Gerge F. Grob 

CMS Response 

We concur. Becuse a small number of edts in the Medcie cateory made up a lage porton

ofMed aid payments for serce th CCI edts would have dened if implementig the entire CCI edt pacage is not prca, we wil encourge states to evaluate which edts would 

produce the greatest reducton in payments in thei Medcad prgr. Once the OIG' s reort is 

published in fial, we will distbut copies to each of our 10 regional offces in order for them to 

work with the sta to ca out OIG"s recmmendaton. 

OEI. 03- 02. 00790 ApPLYING THE NATIONAL CORRECT CODING INITIATIVE TO MEDICAID SERVICES 
This report was prepared under the direction of Robert A.Vito 

Regional Inspector General for Evaluation and Inspections in 

the Philadelphia regional office, and Linda M. Ragone, Deputy Regional 

Inspector General. Other principal Offce of Evaluation and Inspections 

staff who contributed include: 

Tara J. Bernabe Team Leader 

Nancy J. Molyneaux Program Analyst 

Cortney Hayflnger Program Analyst 

Linda Frisch Program Specialist 

Tricia Davis, 
 Director, Medicare and Medicaid Branch 

Technical Assistance 

Scott Horning, 
 Program Analyst 

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