Purpose

To determine whether UnitedHealthcare improperly paid for medical services designated with modifier code 59 that were not distinct and independent from other services provided on the same day. The audit covered the period from September 1, 2012 to August 31, 2013.

Background

The New York State Health Insurance Program (NYSHIP) provides health insurance coverage to more than 1.2 million active and retired State, participating local government and school district employees and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP. The State Department of Civil Service administers the NYSHIP program and contracts with UnitedHealthcare (United) to process and pay medical and surgical claims for services provided to Empire Plan members.

United’s payments to medical providers are based, in part, on procedure codes billed on claims that indicate the medical services performed. United will not pay for certain procedure codes billed in combination with other procedure codes unless the provider includes a modifier code on the claim to further describe the services performed. Modifier 59 is used to indicate that a provider performed a procedure that was distinct or independent from another procedure that was performed on the same day for the same patient. Modifier 59 is used to identify procedures or services that are not normally billed together, but are appropriate under the circumstances. For example, a procedure billed with modifier 59 may involve a different anatomical site or separate injury. From September 1, 2012 to August 31, 2013, United paid over $82.3 million for about 1.3 million services with modifier 59.

Key Findings

• For 13 (5.3 percent) of the 245 claims we tested, a distinct or independent service was not provided despite the service’s designation of modifier 59. The overpayments on the 13 claims totaled $39,345. For example, United paid a provider $28,094 for surgical procedures to remove a tumor and to repair blood vessels and a sciatic nerve that resulted from the removal of the tumor. However, the medical records did not support the provider’s use of modifier 59 on two of the three procedures - the repair of the blood vessels and nerve - because they were not distinct or independent of the removal of the tumor. Consequently, the provider should not have billed, and United should not have paid, $6,250 for the repair of the blood vessels and nerve.
• Using statistically valid methods, we estimate, with a 90 percent confidence level, that United overpaid between $1.6 million and $5.2 million during the one-year period ending August 31, 2013 because providers improperly applied modifier 59 to their claims.

Key Recommendations

• Formally remind providers on the proper use of modifier 59 for claims preparation and submission.
• Recover the $39,345 in overpayments identified by our audit.
• As priorities and resources permit, review the claims of higher risk providers and recover any overpayments identified.

Other Related Audit/Report of Interest

New York State Health Insurance Program: United HealthCare - Certain Claim Payments for Evaluation and Management Services (2010-S-67)