8.2 Worked Case 1 — Medicare Outpatient
Key Takeaways
- A significant, separately identifiable evaluation and management (E/M) service performed on the same day as a minor procedure is reported with modifier 25 on the E/M code.
- Physician office services for a Medicare Part B patient are billed on the CMS-1500 (electronic 837P), not the UB-04.
- Patient responsibility under Medicare Part B is typically the annual deductible (if unmet) plus 20 percent coinsurance of the Medicare-allowed amount.
- A participating provider accepts assignment and is paid the Medicare-allowed amount; balance billing above that amount is not permitted.
- Diagnosis codes in CMS-1500 box 21 must support medical necessity for every service line pointered in box 24E.
Case Narrative (Fictional)
Patient: Harold Vance, age 68, covered by Medicare Part B as primary; no secondary coverage on file. 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 provided by 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 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 of a procedure) to the E/M code — never to the procedure code. Without modifier 25 the payer denies or bundles the E/M line.
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.
| Box | Entry for this claim |
|---|---|
| 1 | Medicare checkbox marked |
| 1a | Patient's Medicare Beneficiary Identifier (MBI) |
| 11 | "NONE" entered, indicating no other primary insurance |
| 17 / 17b | Referring or ordering provider, if applicable |
| 21 | ICD-10-CM diagnosis codes: fatigue and the skin-lesion diagnosis |
| 24A | Date of service for each line |
| 24B | POS code 11 (office) |
| 24D | Line 1: E/M code with modifier 25. Line 2: lesion-removal procedure code |
| 24E | Diagnosis pointer linking each line to its supporting box 21 diagnosis |
| 24F | Charge amount per line |
| 27 | Accept assignment: YES |
| 33 / 33a | Billing provider name, address, and National Provider Identifier (NPI) |
Expected Payment vs Patient Responsibility (Illustrative)
The figures below are illustrative only and not current Medicare rates; use the deductible and allowed amounts per 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.
- The deductible is satisfied first: $120 of the $200 is applied to the deductible and is the patient's responsibility.
- The remaining $80 is subject to 20 percent coinsurance: the patient owes $16, Medicare pays $64.
- 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.
In Case 1, where should the biller append modifier 25?
Which claim form is correct for Dr. Ortiz's office services to Mr. Vance?
Using the illustrative figures in Case 1 ($200 allowed amount, $120 unmet deductible, 20 percent coinsurance), what is the total patient responsibility?
Why is "NONE" entered in box 11 of Mr. Vance's CMS-1500 claim?
Dr. Ortiz is a participating provider who accepts assignment. What does this mean for billing Mr. Vance?
If the biller omits modifier 25 from the E/M line in Case 1, what is the most likely outcome?