Practice Management Alert

Question: We submitted a claim on July 17 for an FNA service performed on July 15. We received a denial. Our practice is owned and operated by the hospital. Our doctor performed a fine needle aspiration (FNA) of a patient's mass at our clinic on July 15. The pathology report indicated that the patient needed an excision so the doctor admitted the patient to the hospital on July 17 for that procedure. We billed 10021. What did we do wrong?

New York Subscriber

Answer: Because your practice is owned or operated by a hospital, you need to append modifier PD (Diagnostic or related nondiagnostic item or service provided in a wholly owned or operated entity to a patient who is admitted as an inpatient within 3 days) to the FNA code.

You can bill the FNA using 10021-PD (Fine needle aspiration, without imaging guidance). The modifier effectively turns the clinic-based procedure into a facility-based procedure. Therefore, your doctor will receive payment for his services at the facility rate rather than the outpatient fee schedule, and your clinic cannot bill for the costs associated with the supplies or other practice expenses related to the FNA.

As of July 1, 2012, entities such as your practice that are wholly owned or operated by a hospital and that provide any diagnostic or related non-diagnostic services to a patient who is admitted to that hospital within three days must append modifier PD to the codes for those services.

Practices self-designate during Medicare enrollment whether they're owned or operated as a hospital. The hospital is responsible for alerting the practices they own or operate if the patient is admitted.

When practices append PD to a code that doesn't have both professional and technical components, Medicare will pay for the service based on the facility rate (rather than the non-facility rate). If a code has both professional and technical components, modifier PD will trigger Medicare to pay the practice for only the professional component. The technical component will be considered a hospital cost.

Resource: You can learn more about modifier PD use at www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM7502.pdf. CMS posted FAQs on the payment window at http://cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/CR7502-FAQ.pdf.