AAFP Decries 50 Percent Cut for E/M Codes with Modifier 25

In an Aug. 1 letter to Augustine Manocchia, M.D., senior medical director of Blue Cross Blue Shield of Rhode Island (BCBSRI), the AAFP said it recently learned about the insurer's plan to reduce payment by 50 percent for E/M services when billed with another medical procedure performed at the same visit.

The letter, signed by AAFP EVP and CEO Douglas Henley, M.D., said the policy "adversely affects primary care physicians" and called on the insurer to reconsider its action.

The Academy pointed out that family physicians improve the health of patients, families and communities by providing comprehensive, evidence-based and cost-effective care.

However, family medicine practices already operate on razor-thin margins under the current fee-for-service payment system, and they face increased administrative and clinical personnel costs as they transition to value-based contracts.

According to the AAFP, the updated modifier 25 policy hampers those physician efforts and is detrimental to patient care.

"Rather than penalizing all physicians in your market, we believe BCBSRI should conduct further analysis to determine if there are physicians that are outliers, and then develop policies that target them for their inappropriate use of modifier 25," said the Academy.

The letter pointed out that the new policy impedes BCBSRI's stated mission of facilitating patient access to affordable, high-quality health care by reducing access and incentivizing physicians to ask patients to return on another day for a medical procedure.

In the end, BCBSRI could end up paying more if physicians refer patients out to higher-cost subspecialists for services that could have been provided in one visit at the primary care office, noted the AAFP.

The letter notes that CPT guidelines specify modifier 25 should be used to describe "a significant, separately identifiable and medically necessary E/M service performed on the same day as a procedure, outside of the global fee concept." The guidelines also call for appropriate reimbursement of separate services "whether provided on the same date or different dates."

Other insurers have argued that much of the practice expense of providing two patient services on the same day is common, and therefore the 50 percent fee reduction is appropriate.

However, the AAFP repeatedly counters that argument.

As the letter pointed out, CMS decides practice expense inputs for each service using the resource-based relative value scale and, in doing so, takes into account any redundancy associated with performing a minor procedure during the same encounter as an E/M service.

"To reduce the payment amount for E/M services by 50 percent is to double count perceived redundancies in practice expenses and discount payment for both the E/M service and the procedure," said the AAFP.

The letter also noted that another payer, Anthem, recently announced its decision to halt plans to implement the same modifier 25 policy and called for continued engagement between payers and physicians to counter rising health care costs.