Department of Health and Human Servces


OFFICE OF


INSPECTOR GENERAL


LIVER BIOPSIES


AUGUST 199 OEI-12-8

EXECUTIVE SUMMAR 


PUROSE 

The Office of Inspector General (OIG) conducted this study to review the performance, coding, and financing of liver biopsies paid for by the Medicare program. 

BACKGROUN 

Liver biopsies are used to diagnose liver disorders, such as cancer, hepatitis, and 

cirrhosis. Physicians can biopsy livers in a number of ways: 

A needle may be inserted through the skin and between the ribs to draw a 

sample (a closed needle biopsy); 

A surgical incision may be made into the abdomen, and a needle used to obtain 

a specimen (an open needle biopsy); 

Following a surgical incision into the abdomen, a wedge of tissue may be 

excised (an open wedge biopsy). 

Physicians and hospitals use two different coding systems to submit claims to Medicare for these procedures. Hospitals , using the International Classification of Diseases. 9th


Revision. Clinical Modification (ICD- CM), describe the biopsies as "open (wedge)" or "closed (needle)," while physicians, using a version of Physicians' Current 

Procedural Terminology (CPT-4) describe them as "needle" or "wedge." Neither 

system fully describes an open needle procedure. Coding instructions for physicians instruct them not to bil for open biopsies unless they are "separate procedures " not 

performed incident to another procedure. 

Only open procedures contribute to determining payment to hospitals. Knowing that this is a potential area for abuse, the Health Care Financing Administration (HCFA) requires Medicare s fiscal intermediaries to review operative reports for each open 

biopsy claim submitted.


MElHODS 

The OIG randomly selected 329 physician claims for liver biopsies, representing a 1 

percent sample of 1986 claims. We obtained hospital records for 88 percent of these 

claims, and subjected them to medical review and coding validation. 

FIINGS 

Liver biopsies in which the abdomen is opened but only a needle sample is taken cannot be described correctly under the current coding systems. These procedures represent 14 percent of all liver biopsies. 
Thirteen percent of physician claims for liver biopsies were miscoded. 

Thirty-one percent of payments to physicians should not have been made 

either because they did not perform the procedure as biled ($256), or because 

it was performed in the course of a more major procedure ($12 618). This 

generalizes to $1 287 400 in overpayments to physicians for liver biopsies in 

1986. 

In only one case was payment made incorrectly to a hospital, indicating that the 

fiscal intermediary review of operative reports is successful. 

RECOMMATIONS 

The HCF A should ensure that payment for all biopsies can be made correctly, by: 

Recommending that the coding structures be changed so that all 

biopsies, particularly open needle biopsies, can be properly classified. 

Ensuring that carriers adjust payment for open biopsies performed in the 

course of more major procedures. 

In commenting on the draft version of this report, HCFA indicated that codes have 

been created to indicate biopsies performed in the course of more major surgery, with 

a reduction in payment. They do not believe that carriers should adhere to CPT 

guidelines, since HCF A can issue guidelines which supercede CPT guidelines. HCF A' 

comments are attached in their entirety. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . .. 

TABLE OF CONTENTS


EXECUTIVE SUMMAY 

INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

FINDINGS 

RECOMMENDATIONS ............................................. 7


APPENDIX: HCFA's COMMENTS 
INTRODUCTION


PUROSE 

The Office of Inspector General (OIG) conducted this study to review the 

performance, coding, and financing of liver biopsy procedures for patients covered 

under Medicare. This inspection analyzed a random sample of liver biopsies to 

determine: 

the accuracy of procedural codes assigned to liver biopsies, by physicians and by 

hospitals 

the medical necessity of biopsies, and 

the accuracy of Diagnosis-Related Groups (DRGs) assigned to hospital stays in 

which a liver biopsy was performed. 

BACKGROUN 

The Health Care Financing Administration (HCFA), recognizing the potential for 

misrepresentation of the procedure performed, requires Medicare fiscal intermediaries 

(Fls) to review the hospital operative report for each claim for an open (i. , surgical) biopsy. Only open biopsies increase the payment a hospital receives for a patient 

care. 

Liver biopsy is a common procedure used to diagnose various medical conditions 

including liver cancer, hepatitis, and alcoholic and bilary cirrhosis. Physicians and 

surgeons employ three distinct methods for performing a liver biopsy: 

A needle may be inserted the skin and between the ribs to draw a sample; 

A surgical incision may be made into the abdomen, and a needle used to obtain 

a specimen; 

A wedge of tissue may be excised, through a surgical incision into the abdomen. 

If a biopsy is incidental to the primary reason for opening the abdomen, Medicare would not normally pay separately for it. The guidelines given to surgeons in 

Physicians' Current Procedural Terminology (CPT-4), issued by the American Medical 

Association, discuss when a procedure may be considered a "separate procedure" for 

biling purposes. A wedge biopsy, when performed independently of, and not 

immediately related to, other servces, may be listed as a separate service. The 

guidelines do not address open needle biopsies. The "separate procedure" guidelines 
also apply to laparotomies, or incisions into the abdomen, which may be biled for only when it is performed independently of other surgery. 

All three biopsy methods involve the risk of internal bleeding, and both open biopsy methods involve the additional risks of general anesthesia and surgery. Open biopsies always require general anesthesia and sometimes require the assistance of a second 

surgeon for the operation. 

Cog Concer 

When submitting claims for Medicare Part B reimbursement physicians use the 

HCFA Common Procedure Coding System (HCPCS), a version of the CPT-4 coding system referred to above. The HCPCS system classifies liver biopsies as either 

percutaneous needle" (47000) or "wedge (separate procedure)" (47100). This 

requires, in effect, that physicians misclassify open needle biopsies into one of these 

two categories. 

When records staffs submit 
 hospital claims for Medicare Part A reimbursement, they 

use the International Classification of Diseases, 9th Revision, Clinical Modification 

(ICD- CM). That system classifies liver biopsies as either "closed (percutaneous) 

(needle)" (50. 11) or "open biopsy of liver, wedge biopsy" (50. 12). The open biopsy

code was formerly referred to as "other." Thus, hospital staff could at one time

properly code all liver biopsies using ICD- CM codes. They would have coded closed 

needle biopsies as "percutaneous needle" and both open needle and wedge biopsies as

other." However, this coding scheme failed to distinguish between open needle and 

wedge biopsies, and has now been changed so that open needle biopsies do not fit in 

either code. Coding instructions have been issued (through the Coding Clinic, an official source of coding information) that instruct coders to use both the needle 

biopsy code, 50. 11 and the code for exploratory laparotomy, 54. , for an open needle 

biopsy. This, however, is an exception to the general rule, cited in ICD­ , which states that the exploratory laparotomy code should be omitted when the procedure is 

incidental to intra-abdominal surgery. 

Finncial Concern 

The average amount allowed to the surgeon/internist in our sample for a needle 

biopsy was $100.66; the average for a wedge biopsy was $296.04. 

Medicare pays hospitals based on a series of Diagnosis-Related Groups (DRGs), which are weighted by their relative resource consumption. The average DRG has a 

theoretical weight of 1.0000. On average, the more resource-intensive a typical case is the higher the weight and reimbursement. In 1986, DRGs which included closed liver 

biopsies and a diagnosis of liver disease ranged in weight from 0.5794 to 1.1662. 

Those which included open liver biopsies ranged in weight from 0.7623 to 2.7760. 

Thus miscoding of the hospital or physician claim could have a significant impact on 

payment. 
MElHODS 

The OIG selected the sample records analyzed in this study from the 1986 BMAD 

procedure fie containing all Part B claims for a 5 percent systematic sample of Medicare beneficiaries. The OIG selected 20 percent (or a random 1 percent sample overall) of claims for procedure codes 47000 and 47100. This process identified 329 

claims, representing 273 patients and 290 biopsies. All Part B claims related to each 

biopsy were identified. Thirty-three patients who had only one biopsy had a second 

claim and three a third claim, usually for an anesthesiologist, radiologist, or assistant at 

surgery. Seventeen patients had two claims on different dates, so presumably had two 

biopsies. 

In all but 17 cases, the OIG was able to identify the hospital in which the biopsy took 

place. (In two of the 17 cases, the physician s office confirmed that he/she had not 

performed a biopsy, and the Part B claim was in error. ) The OIG requested the 

entire medical record for the admission in which the biopsy took place from each of 

the hospitals. In 88 percent of the sampled cases, we were able to obtain the medical 

record. The final sample consisted of 289 claims for 237 patients representing 253 

procedures. 

The Health Data Institute (HDI) of Lexington, Massachusetts, recoded the records 

determined the correct DRG, and extracted clinical information. Physicians reviewed 

the indications for the surgery, adequacy of the workup, the post-operative monitoring, 

etc. The BOTEC Analysis Corporation of Cambridge, Massachusetts, analyzed the data and reported findings to the OIG. 
FINDINGS


PHYSICIAS MISCODE 13 PERCENT OF 

Thirteen percent (39 of 289 claims) were miscoded, claiming a wedge was performed when actually a needle sample was taken, or vice versa, or biling when no biopsy, or no procedure at all, was performed. Of the 91 claims for wedge procedures for which records were obtained, 70 were correctly coded, 15 were actually needle procedures and 6 were liver resections. Of the 198 claims for needle procedures for which records were obtained, 180 were correctly coded, 9 were actually wedge procedures, 3 were liver aspirations, and 3 were lung biopsies. In three cases, no procedure at all was performed. 

CODING SYSTEMS DO NOT ADEQUATEY DESCRffE 14 PERCENT OF BIOPSIE 

Both coding systems provide conceptually inadequate descriptions of open biopsies. For example, medical record staff code an open needle biopsy procedure as "closed (percutaneous)(needle)," but add a code showing that the abdomen was opened. physician performing the same procedure might have categorized it as "wedge" to emphasize that the procedure was open, and thereby created a misleading impression that a needle biopsy had not occurred. 

This creates two concerns. The first, and most important, is that open needle and wedge procedures may require different amounts of medical resources. If this is true then we may be reimbursing physicians and hospitals for these procedures incorrectly. A second concern is that distinctions which are important for research purposes cannot be made based on these codes. 

THTY-ONE PERCENT OF PAYMNT TO PHYSICIAS SHOUL NOT HAVE BEEN MAE 

We estimate that over $1.2 milion in overpayments for liver biopsies were made to physicians in 1986. These overpayments were due to several incorrect uses of the 

CPT coding system. 

When a surgeon opens the abdomen only to biopsy an organ, s/he may bil either the biopsy code or a code for "laparotomy with or without biopsy(s)." If the surgeon uses the biopsy code, the laparotomy should not be coded, as its only purpose was to provide access to the organ biopsied. The laparotomy code includes all the biopsies performed in that episode. Surgeons violated this principle in 14 claims, in which both the biopsy and laparotomy were coded and paid. These 14 claims involved payments 
of $4 494 for biopsies, $6 344 for laparotomies, and $7659 for primary and secondary 

surgenes. 

In 90 cases, the surgeon biled for a biopsy incidental to a more major procedure. 

six claims for a resection of the liver, the liver tissue was removed because it was cancerous or damaged. A pathologist would examine it and bil for his or her servces. 

The surgeon, however, biled twice for removing the same piece of tissue. 

In those cases where the major procedure was not on the liver, a surgeon may feel that he or she should use a biopsy code to indicate one was done. This should not confer additional reimbursement, however. In the 82 claims of this tye, carriers 

allowed $12 618 for liver biopsies. 

Of 20 claims by primary surgeons for biopsies as primary procedures, the average amount allowed was $339. Of the 59 claims by primary surgeons for biopsies as secondary procedures, the average allowed was $149. Thus the claims for biopsies as secondary procedures appear to reflect an acknowledgement that the biopsy is less 

resource-intensive than when performed as the only procedure. 

We arrived at the overpayment by totaling the payments made for procedures not performed ($256) and those that were secondary to more major procedures ($12 618). This is 31 percent of all payments made for cases for which we obtained records 

($41 187). This implies $1 287 400 in overpayments every year for liver biopsies. 

We did not calculate overpayments for all erroneous claims, since we did not always know the correct payment amount. 

IN ONLY ONE CASE WAS A HOSPITAL PAI IMROPERLY 

We obtained medical records for 47 hospital claims for open biopsy procedures. In all 

but one case, the medical record confirmed that an open biopsy had been performed. In one case, a closed biopsy had been done, and in three cases, while other information in the chart confirmed that an open procedure had been done, the operative report did not describe the biopsy.


This finding suggests that the Fls generally have been successful in obtaining and 

evaluating operative reports. In the one case referred to above, the hospital coded open biopsies of both the kidney and the liver, when in fact both biopsies were closed. Correcting the codes changed the case from DRG 442, with a weight of 1.8156, to DRG 452, with a weight of 0.8080. This is a difference in payment to the hospital of more than $2 500. 
MEDICAL NECEIT OF UV BIOPSIE CONF 

Medical review provided little evidence of unnecessary or inappropriate biopsies. Our review found that: 

98 percent of all biopsies were appropriate in the context of the patients' ilnesses 

and medical histories. 

91 percent of open needle biopsies were appropriate. 

100 percent of all wedge biopsies were appropriate. 

98 percent of all closed needle biopsies were appropriate. 

Internists prescribed 70 percent of biopsy procedures, while surgeons prescribed the remainder (often incidental to direct observation of the liver during another 

procedure ). 

However, while the procedures were clinically appropriate in the abstract, they were 

questionable considering the patient's chance of survval. In virtually all the patients determined to have cancer, the physicians knew that almost to certainty based on 

diagnostic imaging and laboratory analysis (such as carcinoembryonic antigen (CEA) determinations). The physicians performed biopsies for absolute confirmation, and in a few cases to determine if a shunt should be inserted to deliver chemotherapy directly 

to the liver. In only one instance was the cancer in an early enough stage to insert a 

shunt. In 15 of 66 cases the patient died in the hospital. Of the 51 remaining cancer

patients, 21 died within a month of discharge. 

In those patients without liver cancer, the probability of survival 1 year past the biopsy was 75 percent. In the patients with cancer, however, the probability of their survving 

a year was only 25 percent. 

DRG CODING ACCUCY FLWED 

The 289 cases for which records were obtained represented 241 unduplicated hospital stays. Only 71 percent of the cases were assigned to the correct DRG. Sixty-eight 

percent of the closed needle biopsies, 74 percent of the open needle biopsies, and 76 percent of the wedge biopsies were correct. This is a higher rate of incorrect coding than found in previous OIG studies, and may be related to the fact that these patients 

generally had multiple, complex diagnoses. 
RECOMMENDA TIONS


The HCF A should ensure that payment for all biopsies can be made correctly, by: 

Recommending that the coding structures be changed so that all biopsies can 

be properly classified. 

Ensuring that carriers adjust payment for open biopsies performed in the course of more major procedures. 

The HCF A's policy requiring Medicare fiscal intermediaries to review operative 

reports for open biopsies has generally been successful and should be continued. 

In commenting on the draft version of this report, HCFA indicated that codes have been created to indicate biopsies performed in the course of more major surgery, with a reduction in payment. They do not believe that carriers should adhere to CPT 

guidelines, since HCF A can issue guidelines which supercede CPT guidelines. 
APPENDIX


HCF A' s Comments 
:

. . ::::::: 

Health Care DEPARTMENT OF HEALTH &. HUMAN SERVICES Financing Administration 

4J(1 JUN I 0 1992 

Date 

Toby, Jr. 
 V'/

From Acting Admistrator 

OIG Draft Report - "Liver Biopsies." OEI- 12:S8- Sublect 

Inspector General 

Office of the Secretary 

Memorandum 

PDIG 

DIG-AS 

DIG-EI 

DIG-OI 

AIG-MP 

OGC/IG

EX SEC 

DATE SENT 


We reviewed the subject draft report concerning coding and payment for liver 

biopsies biled to the Medicae program. Liver biopsies are used to diagnose liver 

disorders, such as cancer, hepatitis, and cirhosis. The codig of the method used to 

obtain the biopsy determes the amount that Medicae will pay the hospital or 

provider. 

OIG found that 13 percent of the claims for liver biopsIes reviewed in the study 

were miscoded by physicians, and that 31 percent of the payments made to physicians for these biopsies were not appropriate. OIG estimted that $1.2 mion 

overpayments for liver biopsies were made to physicians II 1986. However, OIG only 

found one case in which a hospital was paid improperly for a biopsy procedure. The 

report nOted that this fiding suggests that Medicare fisc .1 intermediares have been 

successful in obtaining and evaluating operative reports. 

OIG recommends that coding structures for liver biopsies be changed so that all 

biopsies can be properly classified. OIG also recommends that the Health Cae 

Financing Admiistration (HCF A) should ensure that ca"iers adhere to exiting 

guidelines in the Physicians ' Current Procedural Termology (CPT-4) which provide for exclusion of open biopsies performed during the course of more major 

procedures. OIG states that HCFA's policy requirg Medicae fiscal intermediares 

to review operative reports for open biopsies has generaly been successful and should 

be continued. We concur with the recommended coding structure changes and the statement regarding Medicare fiscal intermediaries' review of operative report for open biopsies. We do not agree that HCF A should ensure that carers adhere 

existing CPT -4 guidelines. Our specific comments on the recommendations are 

attached for your consideration.


Thank you for the opportunity to review and comment on this report. Please 

advise us if you agree with our position on the report s recommendations at your 

earliest convenience. 

Attachment "lt 

_. e 


.:, ..;.: \w C,1 
Recommendation 

HCF A should recommend that codig structures be changed so that al biopsies particularly open needle biopsies, can be properly classifed. 

HCF A Response


We concur. We believe changes made in 1992 to the Physicians' Curent Procedural 

T enninology (CPT -4) complete all necessar correcre actions for thi 

recommendation. Procedure codes were added to the CP-4 for open needle 

biopsies of the liver. Diferent codes were establihed to indicate if the open needle biopsy was done separately or durig a major procedure. The relative value of an 

open needle biopsy performed durig the course of a major procedure does not 

include the value attributed to openig and closing the abdomen. 

Recommendation 2


HCFA should ensure that carers adhere to existing CPT-4 guidelines which provide for the exclusion of open biopsies performed durig the course of more major procedures. 

HCFA Response 

We do not concur that payment for open needle biopsies performed durig the 

course of more major procedures should be fully denied. The carrer medical


directors have advised us that obtaing a needle biopsy of the liver durig a larger procedure involves additional work and that additional payment is appropriate. However, the relative value established for add-on code 47001 (open needle biopsy performed during the course of a major procedure) does not include the relative value of the work of opening and closing the abdomen. We do agree, however, that payment should be excluded for open biopsies biled as "separate procedures" which were performed during the course of major surgery. 

It should also be noted that, as of January 1 , HCF A has the authority to establish uniform national definitions of servces, codes to represent servces, and payment modifiers to the codes. Therefore. HCF A can issue guidelies that are diferent from those in the CPT-4 manual. To the extent that instructions in the CPT-4 manual are 
Page 2


unclear or are contrary to payment policy associated with the physician payment reform rules, HCF A wi issue instructions that are diferent from or wi clar those in the CPT-4 manual. These HCFA guidelies would supersede any CP-4 manual instructions. In order to ensure uniorm payment policy, HCF A wi anualy issue a Medicare Fee Schedule data base tape which-ll include payment policy indicators 

for each code to the carers.