Decipher Multiple Procedures Payment Reduction Rules

By Edie Hamilton, CPC, CPC-I

Reducing indicator, modifier, and calculation confusion will safeguard reimbursement.

The Medicare Physician Fee Schedule (MPFS) was introduced in 1992 to replace the “reasonable and customary” payment methodology standard for physician services. Under the MPFS, payment has been based on relative value units (RVUs), which represent the value of work or expense each service entails. Multiple Procedure Payment Reduction (MPPR) was introduced concurrently with the MPFS, with the rationale that there are savings associated with multiple procedures performed during a single encounter.
The Harvard School of Public Health conducted a study for the Health Care Finance Administration (now the Centers for Medicare & Medicaid Services (CMS)) in the early 1980s, which found that actual physician work was reduced by approximately 50 percent when subsequent procedures were performed during the same session (as opposed to separate encounters). Originally, the multiple procedure reduction was applied to bilateral procedures and surgical services (e.g., surgery, endoscopy, and dermatology).
Calculate and Apply Reductions
To understand how these reductions are applied, you must first understand how payments are calculated. Per the CMS website, “Medicare is statutorily required to adjust payments for physician fee schedule services to account for differences in costs due to geographic location.” To meet this mandate, CMS applies a Geographic Price Cost Index (GPCI) value to the RVUs for each code to calculate reimbursement. The formula for pricing calculations is:
Work RVU x Work GPCI
+ PE RVU x PE GPCI
+ MP RVU x MP GPCI
= New Total RVU
x Conversion Factor
= Price
Predicted reimbursement can be manually calculated using this formula. CMS’ Physician Fee Schedule Look-up Tool can be configured to provide pricing information, payment policy indicators, RVUs, and the GPCI for each CPT®/HCPCS Level II code, based on the location where services are provided.
Another important factor determining reimbursement is the setting in which services are provided. When services are provided in a non-facility setting, payment rates for non-facility are applied, and when services are performed in a facility setting, facility rates are applied. Publication 100-04, Medicare Claims Processing Manual, chapter 26, section 10.5 contains the place of service information you need to determine when to use the facility versus non-facility amounts.
Identify Multiple Procedure Indicators
CMS has added different types of multiple procedure reductions over the years. There is a column in the Relative Value File labeled “Mult Proc,” and in the Physician Fee Schedule Look-up Tool labeled “Mult Surg,” that has an indicator identifying which type of MPPR applies to each CPT®/HCPCS Level II code. The multiple procedure indicators are:
Mult Proc 0 = no reduction applies
Mult Proc 1 = does not apply to any current codes (was used pre-1995)
Mult Proc 2 = standard payment adjustments
Mult Proc 3 = endoscopic reductions
Mult Proc 4 = diagnostic imaging reduction
Mult Proc 5 = therapy reductions
Mult Proc 6 = diagnostic cardiovascular services
Mult Proc 7 = diagnostic ophthalmology services
Mult Proc 9 = concept does not apply
The full multiple procedure descriptions for all the RVU indicators are available in the RVUPUF file, located in the zip file in the “Downloads” section of the RVU file. Every CPT®/HCPCS Level II code in the RVU file has a Mult Proc indicator. The RVU file also contains other columns with indicators  relevant for MPPR: the Endoscopic Base Code and the Diagnostic Imaging Family Indicator. Each version of MPPR applies reductions differently.
Let’s take a look at the Mult Proc indicators with payment reductions.
Mult Proc 2 Standard Multiple Procedure Reductions
Mult Proc 2 Standard Multiple Procedure Reductions apply to approximately one third of the codes on the MPFS. This category applies to more CPT®/HCPCS Level II codes than all of the other multiple procedure reduction categories combined. It’s comprised mostly of surgical codes and other invasive services, along with a few nuclear medicine codes. When a claim presents with multiple procedures with Mult Proc indicator 2, the code with the highest value is priced at the full fee schedule payment amount (or charge amount, whichever is lower), the second through fifth codes on the claim are priced at 50 percent of the fee schedule amount, and any additional codes with Mult Proc 2 are paid by report. CMS reviews these claims and pays any additional allowed procedures at a minimum of 50 percent of the fee schedule amount. CMS ranks procedures according to value, from highest to lowest, to make these payment reductions.
Although coding rules require appending modifier 51 Multiple procedures to multiple procedures, CMS does not rely on this modifier and makes the appropriate reductions. Other payers may base the reductions on the presence of a modifier. To maximize legitimate reimbursement, be sure to append modifier 51 to the lower-valued codes.
Mult Proc 3 Endoscopy Reductions
Mult Proc 3 Endoscopy Reductions contain the next largest group of codes. It applies to just over 300 CPT®/HCPCS Level II codes. It’s unique because it may result in two separate reductions: the endoscopic reduction and the standard reduction.
Endoscopic reductions are applied when multiple codes in the same endoscopic family are submitted for the same encounter. For example, 31623 Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with brushing or protected brushings and 31628 Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with transbronchial lung biopsy(s), single lobe are in the same endoscopic family, with a shared base code of 31622 Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; diagnostic, with cell washing, when performed (separate procedure). All codes in the same endoscopic family, found in the Physician Fee Schedule Look-up Tool or the RVU file, are grouped together and ranked highest to lowest value. The code with the highest value is paid the lower of the full fee schedule amount or the charge amount. All other codes in that family are paid by subtracting the value of the endoscopic base code from the value of the code submitted. If there are additional endoscopic codes in other families on the same claim, or if there are codes with Mult Proc 2 on the claim, the endoscopic codes are also eligible for the standard multiple procedure reduction.
The total value of the endoscopic family is ranked against the other families or codes eligible for the standard reduction. The code (or code family) ranked highest is priced at the full fee schedule amount, minus any previous endoscopic reductions, if applicable. The other codes or code families are subject to the 50 percent reduction, as shown here:

Mult Proc 4 Diagnostic Imaging Reductions 
Mult Proc 4 Diagnostic Imaging Reductions apply to more than 100 codes. This reduction is separately applied to the professional and technical components of each code. For example, when multiple diagnostic imaging procedures are submitted, such as 70450 Computed tomography, head or brain; without contrast material with modifier 26 Professional component, indicating the physician is reporting only the professional component, only that reduction will be applied. The full fee schedule professional component value is allowed for the highest valued procedure, with subsequent procedures reduced by 25 percent when there are multiple diagnostic imaging procedures performed in the same session.
Similarly, when multiple diagnostic imaging procedures are submitted with modifier TC Technical component, indicating the technical component only, the highest valued code is allowed at the full fee schedule amount and the technical components of subsequent diagnostic imaging services in the same session are reduced by 50 percent.
When multiple diagnostic imaging codes are submitted globally, without modifier 26 or TC, the professional components are ranked and reduced separately from the technical components. It’s theoretically possible that no code on a diagnostic imaging claim would be priced at the full fee schedule value. That’s why it’s critical to identify the professional and technical components with the appropriate modifier to ensure appropriate reimbursement.
Mult Proc 5 Therapy Reductions
Mult Proc 5 Therapy Reductions consist of approximately 50 codes (CMS’ “always therapy” codes). This reduction has been controversial since its 2011 introduction because the reductions apply to the same provider or all providers in the same practice, and are applied regardless of whether the services are performed in one or multiple therapy disciplines. In other words, if providers in the same practice perform speech therapy, occupational therapy, and physical therapy on the same date of service, the reduction considers all of their services together. The therapy code with the highest value is priced at the full fee schedule amount. Subsequent services have a 50 percent reduction taken on the non-facility technical component.
Mult Proc 6 Cardiovascular
and Mult Proc 7 Ophthalmology
Mult Proc 6 Diagnostic Cardiovascular Procedures and Mult Proc 7 Ophthalmology Procedure Reductions were introduced in 2013. The Affordable Care Act directed CMS to review codes frequently billed in combination to identify potentially misvalued codes. As a result of that review, policies were implemented that reduce the technical component of certain diagnostic cardiovascular and ophthalmology procedures. As always, the highest valued service is priced at the full fee schedule amount. Subsequent cardiovascular services are subject to a 25 percent reduction of the technical component, while subsequent ophthalmology services are subject to a 20 percent reduction.
Know the Rules and Their Impact
Since the implementation of the MPFS introduced the first MPPR, CMS has implemented several rules for saving money by reducing payment for these multiple procedures, as mandated by various congressional actions. MPPR rules do not replace any correct coding or editing rules; they are payment rules only. It’s especially important for coders, reimbursement analysts, and practice managers to understand exactly how these rules apply because they can have a significant impact on an individual or group practice.

 
Edie Hamilton, CPC, CPC-I, has more than 20 years practical experience in clinical and surgical coding, professional and outpatient facility billing, physician education, compliance, reimbursement, edits, and denials management at large academic institutions. She is on the content team at Verisk Health, Payment Accuracy Division and is an adjunct instructor in Medical Office Administration. Hamilton is a member of the Chapel Hill, N.C., local chapter.

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