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Fixing your Outpatient Edits = Big Credits

Tackling the claims edits challenge is difficult.  Healthcare systems buy and install editing software that goes through front-end claim scrubbing before clean claims go out the door.  The system automatically detects coding errors related to unbundling (NCCI/MUE edits), modifier appropriateness, diagnoses (LCD and NCD edits), revenue code errors and duplicate claims.  The following are the most common edits that affect payments and clean claims.


CMS developed the Medicare National Correct Coding Initiative (NCCI) with the intent to encourage proper coding methodologies.  According to CMS, the purpose of the NCCI edits is to prevent improper payment when incorrect code combinations are reported. The NCCI contains two tables of Procedure-to-Procedure (PTP) edits that apply for physicians/practitioners and outpatient hospital services.

The Column One/Column Two Correct Coding Edits table, which includes the Mutually Exclusive Edits (MUEs) table, contains code pairs that should not be reported together for a number of reasons explained in the Coding Policy Manual.

For example, the following CPT codes: CPT 12031 - Intermediate repair and CPT 99451 - Interprofessional telephone/internet consult, are considered mutually exclusive.  These two procedures cannot be performed on the same patient based on temporal considerations.

In addition, Medically Unlikely Edits (MUEs), part of the NCCI edits, are designed to limit coding errors by assigning the maximum number of units of service (UOS) that can be reported for a single patient on a single date of service.  

For Example, CPT 43235, Esophagogastroduodenoscopy (EGD), has an MUE of 1, meaning that it can only be performed once for the day.  Another example would be CPT 85025, Blood count; Complete (CBC) and Automated Differential Count, has a limit of 4 MUEs for a date of service.


The Procedure-to-Procedure (PTP) edits are designed to prevent unbundling of services by using a 59 modifier, which is commonly misused.  According to the CPT Manual, modifier 59 is defined as “Distinct Procedural Service.”  It identifies a service that is separate and distinct from another service, different anatomic sites, and/or a separate encounter not normally performed by the same day by the same physician.  Modifier 59 should not be used unless the proper criteria are met and documentation is available to substantiate the use of the modifier. 

CMS has established four new HCPCS modifiers to define specific subsets of the 59 modifier:

  • XE Separate Encounter, A Service That Is Distinct Because It Occurred During A Separate Encounter,
  • XS Separate Structure, A Service That Is Distinct Because It Was Performed On A Separate Organ/Structure,
  • XP Separate Practitioner, A Service That Is Distinct Because It Was Performed By A Different Practitioner, and
  • XU Unusual Non-Overlapping Service, The Use of A Service That Is Distinct Because It Does Not Overlap Usual Components Of The Main Service.  (source: CPT Manual)

A common misuse of modifier 59 involves reporting a radiologic diagnostic testing with contrast material and appending modifier 59 to justify additional medication administered to the patient on the same encounter on the same day.

LCD and NCD:

According to Chapter 13 of the Medicaid Program Integrity Manual, a local coverage determination (LCD) is a decision made by a Medicare Administrative Contractor (MAC) on whether a particular service or item is reasonable and necessary. MACs develop LCDs when there is no national coverage determination (NCD) for a specific issue, or when there is a need to define further an NCD for their specific region.

When a bill results in a diagnosis edit, it is usually because of an LCD or NCD issue, and the account needs to be reviewed.  Consequently, the complete medical record would need to be reviewed and/or the prescribing/treating physician would need to be contacted to see if an additional diagnosis code could or should be added.  Once an approved diagnosis is added to the account, the claim will usually pass through the scrubber, and a bill will be generated.

Revenue Codes:

Revenue codes play an important part in the billing process.  The revenue code tells an insurance company whether the procedure was performed in the emergency room, operating room or another department.  If the wrong revenue code is assigned this could affect the payment.  For example, stitches may be given to a patient in the emergency room, or in a completely different area of the hospital such as the maternity ward.  Depending on where the procedure was performed, the price for the procedure can be drastically different.

Duplicate Claims:

A duplicate claim is a claim that is submitted for a single encounter on the same date, by the same provider, for the same beneficiary, for the same service or item. These types of claims are denied as duplicates, with error code CO18.  Claims rejected as duplicates may actually be valid claims for payment if the correct condition codes or modifiers are applied to demonstrate that they are not really duplicates.  Both claims would need to be reviewed to confirm that they are either duplicate or separate claims. In an instance where a claim is a duplicate, one claim would need to be canceled in order for the other to be processed.  If they are two separate claims, the condition codes and modifiers would need to be reviewed in order to generate a clean claim.


Ultimately, these error codes can be responsible for significant delays in processing claims, and the ability to generate a bill.  The rapidly changing nature of LCD and NCD edits, for example, continue to generate a number of billing errors, and subsequently hold up claims.  Hospital staff needs to maintain vigilance regarding billing compliance and also must perform regular audits to ensure that their processes and institutional knowledge base are sufficient to minimize these billing errors.   If you have any questions about these billing edits or need additional assistance, please contact our office at 800-957-6900 or email at [email protected].


Proper Use of Modifier 59 MLN Matters® Number: SE1418 Revised

Article Release Date: March 2, 2020

Medicaid program Integrity manual

National Correct Coding Initiative Edits

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