By Allison Shelton and Beth Anne Jackson, Brown & Fortunato
The U.S. Attorney’s Office for the Northern District of Texas recently announced a $3.3 million settlement with Tarrant County Hospital District d/b/a John Peter Smith Hospital (JPS) in Fort Worth, Texas. The settlement resulted from a whistleblower complaint filed by JPS’s former Director of Compliance, Erma Lee, under the qui tam provisions of the False Claims Act (FCA). Lee alleged that for several years JPS improperly appended modifier codes -25, -59, and XU to claims. JPS did not admit to any liability but agreed to settle the lawsuit.
According to Lee’s complaint, she began working for JPS in 1996, and she held the position of Privacy Officer and Director of Compliance from 2004 until 2017. In 2015, Lee participated in an internal audit of claims filed with modifiers -25, -59, and -XU. According to Lee’s complaint, the audit found a 95 percent error rate relating to the use of modifier -25, and a 70 percent error rate relating to the use of modifiers -59 and -XU.
Following the 2015 audit, Lee claimed that she presented the findings and a corrective action plan to JPS’s executive management. The corrective action plan included recommendations to monitor use of the modifier -25 on a weekly basis and to report and refund any overpayments. According to Lee, she inquired into JPS’s responses to the audit in 2016 and 2017 until she was ultimately terminated.
Lee filed the whistleblower complaint against JPS under seal on May 4, 2018, in the U.S. District Court for the Western District of Texas. Thereafter, the government investigated and ultimately declined to intervene. Nonetheless, Lee pursued the lawsuit.
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On August 27, 2021, the U.S. Attorney’s Office for the Northern District of Texas announced the JPS settlement. Under the settlement agreement, JPS agreed to pay $3,318,673.00. The settlement amount included a $438,673 voluntary repayment that JPS made to Novitas Solutions on January 30, 2020. As the relator in the qui tam action, Lee received a portion of the settlement amount, and the remainder was paid to the U.S. Government.
The JPS settlement underscores the compliance risks associated with the usage of modifier codes -25, -59, and -XU. These codes bypass automatic Procedure-to-Procedure (PTP) edits and denials under the Medicare National Correct Coding Initiative (NCCI). The PTP edits monitor for HCPCS / CPT codes that should be not reported together by a single provider on a single date of service for the same patient. When the NCCI PTP edits find codes that should not be reported together, the edit results in an automatic denial of any claims for services that are considered part of a more comprehensive service. These edits and denials can be bypassed, however, when certain modifiers, including -25, -59, and -XU, are appended to the claim.
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Such modifiers are important and appropriate to address clinical circumstances that warrant additional claims for services. That said, appending the modifiers to claims when the clinical circumstances do not justify their usage is a hot button issue for compliance. In 2005, the Officer of Inspector General released reports indicating that Medicare paid a high percentage of claims that were inappropriately filed with modifiers -25 and -59. These modifiers have been the subject of not only governmental compliance reviews and initiatives but also multiple FCA settlements.
Code -25 is a global surgery modifier that can be used with minor surgeries and other procedures to claim payment for significant evaluation and management (E&M) services that are not inherent to the surgical procedure. On April 20, 2021, the Department of Justice announced a $2.6 million settlement with Massachusetts Eye and Ear that resolved allegations relating to the usage modifier -25 for E&M claims that purportedly violated the FCA.
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Likewise, modifier -59 has been the basis for FCA settlements. This modifier indicates a “Distinct Procedural Service” and may be used when two or more procedures are performed at different anatomic sites or during different patient encounters on a single day. On December 11, 2018, the Department of Justice announced an $11.25 million settlement with a hospital called Coordinated Health in Pennsylvania. The settlement resolved a lawsuit based on allegations that improper usage of the modifier -59 resulted in unbundled orthopedic surgical claims that violated the FCA.
The settlements with Massachusetts Eye and Ear, Coordinated Health, and JPS emphasize the need for providers to understand and monitor the appropriate usage of modifiers that bypass the NCCI PTP edits. When circumstances warrant these modifiers, they absolutely should be used, but it is important to ensure that clinical documentation supports and justifies any claims with these modifiers. Further, the events surrounding the JPS settlement highlight the need for providers to have reasonable and appropriate transparency in their compliance efforts. Individuals who report compliance concerns need to know that the organization appreciates their efforts and will appropriately investigate and respond to their reports.