8.2 Worked Case 1 — Medicare Outpatient

Case Narrative (Fictional)

Patient: Harold Vance, age 68, covered by Medicare Part B as primary; no secondary coverage on file. His annual Part B deductible has not yet been met this year.

Provider: Dr. Lena Ortiz, a family-medicine physician who is a participating provider with Medicare and accepts assignment.

Setting: Dr. Ortiz's office, place-of-service (POS) code 11.

Encounter: Mr. Vance presents for a scheduled visit reporting fatigue and a separate complaint of a painful skin lesion on his forearm. Dr. Ortiz performs a problem-focused evaluation and management (E/M) service addressing the fatigue, orders labs, and reviews medications. During the same visit she also evaluates and removes the benign skin lesion as a minor surgical procedure.

Coding summary from the office: one E/M office visit code and one minor procedure code (lesion removal). The procedure carries a 10-day global period.

Modifier 25 Logic

Minor procedures include a small inherent E/M component — the pre- and post-procedure assessment of the lesion itself. Medicare will bundle a same-day E/M into the procedure unless the E/M is significant and separately identifiable from the work of the procedure.

Here the fatigue workup is a distinct problem with its own history, exam, and medical decision-making, unrelated to the lesion. That qualifies the E/M as separately reportable. The biller appends modifier 25 (significant, separately identifiable E/M service by the same physician on the same day as a procedure) to the E/M code — never to the procedure code. Without modifier 25, the payer denies or bundles the E/M line.

Contrast this with two related modifiers the exam may dangle as distractors: modifier 57 (decision for major surgery, used before a procedure with a 90-day global period) and modifier 24 (unrelated E/M during a postoperative global period). For a minor procedure with a same-day E/M, modifier 25 is the correct choice.

CMS-1500 Box-Level Walkthrough

Because this is a physician professional service, it is billed on the CMS-1500 claim form (electronic equivalent 837P), not the facility UB-04.

A frequent exam trap: pointing both lines to the same diagnosis. Box 24E must link the E/M to the fatigue diagnosis and the lesion removal to the lesion diagnosis, or medical necessity fails.

Expected Payment vs Patient Responsibility (Illustrative)

The figures below are illustrative only and not current Medicare rates; use the deductible and allowed amounts from the current CMS fee schedule when billing.

Assume the combined Medicare-allowed amount for both lines is $200 (illustrative) and Mr. Vance still owes $120 (illustrative) of his annual Part B deductible.

1. The deductible is satisfied first: $120 of the $200 is applied to the deductible and is the patient's responsibility.
2. The remaining $80 is subject to 20 percent coinsurance: the patient owes $16, Medicare pays $64.
3. Total Medicare payment: $64. Total patient responsibility: $136 ($120 deductible + $16 coinsurance).

Because Dr. Ortiz accepts assignment, she is paid the allowed amount and cannot balance bill Mr. Vance above it. A non-participating provider could charge up to the limiting charge (115 percent of the non-par allowed amount), but a participating provider who accepts assignment cannot — a classic CPB distinction.

Global Period and What It Bundles

The lesion removal carries a 10-day global period, meaning routine follow-up care related to that procedure for the next 10 days is included in the procedure payment and is not separately billable. If Mr. Vance returns on day 5 solely for a dressing change on the lesion, that visit is bundled — billing a separate E/M would be a denial or a compliance problem.

But if he returns on day 5 for an unrelated problem — say chest pain — the biller appends modifier 24 (unrelated E/M during the postoperative period) to that E/M so the payer knows it is not follow-up care. Knowing which global-period modifier applies to which timing is exactly the kind of distinction the CPB exam tests:

Reading the Remittance for This Claim

When Medicare's 835 electronic remittance advice (ERA) posts, the biller will see the allowed amount, the Medicare payment, and the patient-responsibility amount carried under group code PR. The difference between Dr. Ortiz's billed charge and Medicare's allowed amount posts as a CO (contractual obligation) write-off — required because she accepts assignment.

If there were a secondary payer on file, the PR balance would forward to that plan. With "NONE" in box 11, the $136 patient responsibility is billed directly to Mr. Vance. A frequent posting error is writing off the CO amount but then also writing off the PR amount, leaving the practice unpaid for money the patient legitimately owes — a revenue-cycle leak the CPB exam expects billers to catch.