Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

MEDICARE PAYMENTS FOR 


SURGICAL DEBRIDEMENT 


SERVICES IN 2004 


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 

(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 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 HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

the Department, Congress, and the public with timely, useful, and reliable information 

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. 

Office of Investigations 

The Office of Investigations (OI) 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 OI 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. OCIG imposes program exclusions and civil 

monetary penalties on health care providers and litigates those actions within HHS. 

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. 
ΔEXE CUTIVE S U MMAR Y

 EXECUTIVE SUMMAR 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 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 i 
EXE CUTIVE S U MMAR 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 carrier’s 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. 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 ii 
EXE CUTIVE S U MMAR 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. 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 iii 
Δ T ABLE OF CONTENTS 

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

INTR O D U C T I ON ........................................... 1

FINDI NGS ................................................. 7

Sixty-four percent of surgical debridement services did not 

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

Carriers had some safeguards but conducted limited medical 

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

RECOM M E NDATI O N ...................................... 12

Agency Comments and Office of Inspector General Response ... 12 

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

A: Detailed Description of Sample Selection and Medical 

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

B: Confidence Intervals for Selected Estimates .............. 17

C: Agency Comments .................................. 19

ACKN O W LEDGMENTS .................................... 21
ΔINTROD UCT ION

 INTRODU C TION 

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 

Medicare’s Supplementary Medical Insurance (Part B) covers physician 

services and outpatient care, including surgical debridement. 

Physicians use codes from the American Medical Association’s 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 Services’s National Claims 

History file. 

2 Department of Health and Human Services, “Diabetes; A National Plan for Action,” 

December 2004. 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 1 
INTROD UCT ION 

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 Services’s National Claims History file. 

5 Ibid. 

6 42 U.S.C. § 1395y(a)(1)(A). 

7 42 U.S.C. § 1395l (e). 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 2 
INTROD UCT ION

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 controls–known as edits–that 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 physician’s 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. 

OE I-02-05-00 390 

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. 

MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 3 
INTROD UCT ION

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. 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 4 
INTROD UCT ION 

We selected a stratified simple random sample of 400 claim line items 

for surgical debridement services from CMS’s 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. 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 5 
INTROD UCT ION

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 President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 6 
Δ 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. 

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 

Miscoded 39% 

Insufficient Documentation 29% 

Medically Unnecessary 1% 

(Overlapping Error) (5%) 

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. 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 7 
F I NDING S 

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 11043―debridement 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 Medicare’s 

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. 

OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 8 
F I NDING S 

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. 

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F I NDING S 

Most carriers had local coverage determinations 

and edits in place but conducted limited medical 

review of surgical debridement services 

Based on interviews with staff 

at each carrier and a review of 

documentation, we found that most 

carriers had LCDs and edits in place 

Table 3 

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. 

Key Safeguards for Surgical Debridement Services 

Carrier LCD 

Edits for 

Frequency 

Edits for 

Diagnosis 

Limited 

Medical 

Review* 

Widespread 

Medical 

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. 

OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 10 
F I NDING S 

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 (debridement–skin, partial thickness) under certain 

circumstances.22 The CPT Manual contains a different series of 

codes–CPT 11055, 11056, and 11057–for 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 Company’s 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. 

OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 11 
Δ RECOMME NDA TION 

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 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 12 
R E C O MMENDA T I ON 

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 CMS’s comments is provided in Appendix C. 

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 O E I - 0 2 - 0 5 - 0 0 3 9 0 MEDICARE PAYMENTS FOR S URGICAL DEBRIDEMENT S ERVICES I N 2004 14 

APPENDIX ~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 CMS’s 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. 

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 physician’s 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. 

Population Count and Sample Size by Strata 

Stratum 

Number of 

Claims in Population 

Number of 

Claims in Sample 

1 - Allowed reimbursement greater than $100 233,643 150 

Table 1

2 - Allowed reimbursement less than or equal 

 to $100 and at least $15 

2,905,792 250 

Total 3,139,435 400 

Source: Office of Inspector General, 2006. 

Δ APPENDIX~A 
APP 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 

patient’s 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. 

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APP E N D I X ~A 

as the service provided. In developing the instrument, we reviewed the 

American Medical Association’s 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 Medicare’s 

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. 

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Δ APPENDIX~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 

Medicare program requirements 

64.2% 58.3 – 70.1% 

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 

not have been covered by Medicare 

20.3% 12.2 – 28.3% 

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 

accurately reflect the level of tissue, muscle, or bone removed during 

debridement 

20.2% 12.9 – 27.5% 

Source: Office of Inspector General medical review results, 2006. 

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APP 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 

Medicare program requirements 

$64,004,113 $52,540,327 – $75,467,899 

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 $1,507,694 

confidence interval contains 

zero 

Amount allowed for services with overlapping errors ($6,237,787) 

Source: Office of Inspector General medical review results, 2006. 

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Δ APPENDIX~C 

Agency Comments 

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APP E N D I X ~C 

 OE I-02-05-00 390 MEDI C ARE PAYM E N T S FO R S U R G I C A L DEBRI D EM E N T S E R VICES I N 2004 20 
ΔAPP E N D I X ~ C 

 ACKNOWLEDGMENTS 

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. 

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