Modifier -25: How to use it appropriately and avoid costly penalties

Written by the AOA’s Coding & Reimbursement Committee. Excerpted from page 46 of the October 2023 edition of AOA Focus.

When used appropriately, modifiers help providers avoid claim denials and obtain appropriate reimbursement, particularly if the provider’s service was rendered concurrently or in an atypical manner depending on the specific nature of the case. According to the AMA CPT® 2024 Professional Edition, modifier -25 is appended to an evaluation and management (E/M) service code on a claim to indicate the code is a significant, separately identifiable E/M service by the same physician or other qualified health care professional on the same day of the procedure or other service. Appropriately used, modifier -25 is compatible with E/M codes 99202-99215. It also can buttress timely diagnoses and treatment and strongly reinforce high-quality, patient-centric care. 

However, frequent use of modifier -25 has led to continuous scrutiny. The Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services has identified the use of modifier  

-25 as an area of potential fraud and misuse. Problems with the use of modifier -25 have been known since 2005, when the OIG published an analysis showing that 35% of Medicare claims with modifier -25 did not meet program requirements. Furthermore, a 2015 OIG report concluded that while most eye care physicians do not exhibit questionable billing practices, doctors of optometry are billing claims with modifier -25 at a higher rate than other eye care providers. 

In two recent investigations, the U.S. Department of Justice settled with physicians who allegedly misused modifier -25 and received payments. In addition, physicians often experience systematic claim denials and/or reductions in payments when modifier -25 is used. As such, all doctors of optometry should understand how to use it appropriately. 

Key considerations for reporting modifier -25 

The definition of what is “separate and significant” is at the heart of whether both an E/M with modifier -25 and a procedure code may be reported together. For example, an established patient visits a doctor of optometry complaining of pain in their left eye and, upon examination, the doctor of optometry discovers a corneal foreign body and removes it. Because the removal of the foreign body included the pre- and post-operative services, in this case, the use of modifier -25 would not be appropriate. If the doctor of optometry were to use the modifier, a claim audit would likely result in it being denied. 

Alternatively: a patient comes in for glaucoma follow-up and, during the examination, the doctor of optometry discovers trichiasis and epilates the offending lash(es). Use of modifier -25 would be appropriate because the scheduled examination was related to the management of glaucoma, and thus a significant, separately identifiable E/M service from the epilation procedure.  

The appropriate use of modifier -25 keeps the payment of the E/M visit from being bundled into payment of the procedure, which would cause the doctor to not be reimbursed for the entirety of the services performed. 

To avoid an audit or claim denial, doctors of optometry should consider the following when using modifier -25: 

• If E/M services are provided that exceed what is normally involved in a procedure, including the pre- and post-operative work, then an E/M service should be reported along with modifier -25.
• Doctors of optometry should be aware of what E/M services are included as a standard part of performing surgical services.
• It is possible for the use of modifier -25 to be appropriate when additional E/M services are necessary for performing surgical procedures.
• Modifier -25 can always be appended when reporting E/M services and, depending on the payer, often with General Ophthalmological examination codes.
• Doctors of optometry must clearly show that separate, identifiable services have been performed and the work involved for the procedure did not overlap with the work performed for the office visit.

Appealing a claim denial 

Unfortunately, some payers don’t reimburse for the separate E/M service even if the provider codes according to these criteria. Doctors of optometry should appeal any inappropriately denied or bundled claims. A payer’s review of the documentation may result in reimbursement. If a payer inappropriately denies a claim that includes modifier -25, doctors of optometry should follow these steps: 

1) Ensure that the patient encounter meets the criteria for the appropriate use of modifier -25. 

Doctors of optometry should rigorously check the patient’s chart and examination notes to verify that they performed a service that was significant and separate from the original intent of the visit. 

2) Be well-versed in the payer’s criteria.

Some payers have stipulated that they will not reimburse for an E/M service in addition to certain procedures, even if the provider submits documentation to support the use of modifier -25. 

3) If it is the payer’s policy to consistently reject modifier -25 claims, doctors of optometry should enlist the support of the AOA and their state association.

Payers are more likely to reconsider their policies if the appellant voice is bigger, louder and stronger. 

4) Appeal with pertinent supporting documentation. 

A strong appeal should include a reference to the fact that HIPAA requires third-party payers to use ICD-10 and CPT as the official code set. It should also include supporting documentation and a copy of CPT’s “Appendix A - Modifiers” description of modifier -25. 

3 takeaways 

• The federal government and private payers are heavily scrutinizing the use of modifier -25.
• When used appropriately, the use of modifier -25 can help to ensure that patients receive appropriate treatment and that doctors of optometry are reimbursed appropriately for their service.
• If a doctor of optometry believes a claim that includes modifier -25 was inappropriately denied, the doctor should follow appropriate criteria when appealing.