The New Jersey No Fault Personal Injury Protection (PIP) regulations were modified effective January 4, 2013. Those regulations, in Section 11:3-29.4(a)(2), provide
The non-physician facility fees in subchapter, Appendix, Exhibit 7 [The Hospital Outpatient Surgery Fee Schedule (HOSF)] shall not apply to services provided in hospital emergency rooms. The bills for these services shall use the modifier “-ER”.
PIP insurance carriers have used this provision to argue that use of the ER modifier for hospital Emergency Room claims is mandatory in order for the hospital to receive reimbursement at its usual and customary rates (UCR). Without the modifier, carriers argue, reimbursement should be at the Exhibit 7 HOSF rate, or worse, at the Exhibit 1, Physician Fee Schedule rate. While Callagy Law has been aggressively opposing the carrier position, PIP insurance carriers have, at times, been successful with this argument. Indeed, as a general rule, we have been prevailing about 65% of the time, with carriers prevailing about 35% of the time.
Before even delving into the purpose of modifiers and other arguments against the carrier’s position, it should be understood at the outset that historically no fee schedule applied to hospital ER services or, for that matter, any other hospital services. To the extent the physician fee schedule had been applied to hospital facility services they were inappropriate applications of the fee schedule and are, at this point, largely recognized as such. The HOSF and the regulations effective 1/4/13 did nothing to change that. Indeed, it is our position hospital ER services remain outside the purview of any fee schedule, whether it is the physician’s fee schedule or the HOSF, since the physician fee schedule applies to physicians and the HOSF applies to outpatient surgeries. The exemption to application of Exhibit 7 quoted above, which calls for use of an “ER” modifier, refers to outpatient surgeries conducted as part of ER treatment, not standard non-surgical ER services, such as evaluations (9928X), radiology, labs or other non-surgical items. Hence, discussion of the ER modifier is completely misplaced in the absence of ER surgery. But even if the exemption is implicated either because there is an ER surgery or a carrier insists on its use even for non-surgical ER treatment, it should never be construed as mandatory.
PIP carriers emphasize use of the word “shall” in the regulations to suggest that use of the modifier is a prerequisite for services to be removed from application of Exhibit 7. If it were optional, they argue, a more permissive word, such as “may” or “could,” would have been used. This is too strict an interpretation and serves to undermine the intention of the regulations.
First, it is always eminently clear from hospital bills (UB forms) when the services are Emergency Room services, including the words “Emergency Room” in front of the ER evaluation CPT Code (9928X). It is hard to fathom how a conclusion could be drawn not to exempt a claim from Exhibit 7 because the initials “ER” were not used after a CPT Code but the words “Emergency Room” or something similar appears right on the UB, and all the clinical records show the treatment was pursuant to admission to the hospital emergency room.
Second, the purpose of the modifier is to inform the carrier of the nature of the services rendered, so that the carrier knows the proper level of reimbursement, not to create a technical prerequisite to proper payment. It is disingenuous at best for any carrier to suggest they were unaware the services were pursuant to ER treatment in the face of a standard hospital ER claim simply because the initials “ER” do not appear after the CPT Codes. This certainly elevates form over substance to an absurd and unjust level.
Finally, it is ironic that the carrier position suggests that the intent of the regulations, through use of the word “shall,” is to require the modifier. This turns the regulation on its head. The purpose of the regulation is not to define modifiers as either mandatory or optional; if that were the regulation’s purpose, I would agree with the carriers. The purpose of the regulation is to exempt hospital ER surgical treatment from the HOSF Fee Schedule. To deny that exemption because the modifier is not used defeats that purpose. The carriers’ position calls for use of the modifier simply for the sake of the modifier, not for the intent of the regulation, which is the exemption of ER services from application of Exhibit 7.
Several arbitrators, in very well-reasoned decisions, agree with this position. They are well-reasoned not because they agree with our view, but because they hold true to the intent of the regulation and a common sense reading of the language, rather than an interpretation that is hyper-technical. For example, DRP Joseph Tamburino, in Cape Regional Medical Center v. Geico, NJ1404001554453, determined:
[T]he purpose of appending a modifier to a CPT Code is to provide clarification and detail as to the nature of the medical services rendered. . . . I find that the [carrier] was on notice of the nature of the services rendered (emergency room services) and to now argue that the lack of the “ER” modifier justifies denial is a matter of form over substance. The [hospital’s] . . . bill served upon [the carrier] clearly indicates next to CPT 29125 and 99284—“emerg room.”
In conclusion, even though Callagy Law is prevailing the great majority of the time on this issue, and we are confident we will continue to prevail to an even greater degree, and despite the fact that our position is the correct one from both the legislative intent of the regulation and a common sense interpretation, we recommend that all of our hospital clients use the ER modifier. Even if a manual process needs to be added to ER billing procedures, or corrected claims need to be issued with the modifier, it is worth it. As explained above, we have found that carriers are prevailing on this issue in excess of 30% of the time. This is too often and is costing hospitals significant revenue.
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