Allowed Amount Reductions

Medicare allowed and paid amount reductions may occur for a variety of reasons. Below are various conditions that may reduce allowed and paid amounts under the Medicare program. The CMS Internet Only Manual (IOM) location of each reduction is provided with the explanation for each reduction. In the absence of an IOM reference, another published reference is used.

 
Reduction Reason Description
Ambulance Transports (Multiple Patients) If two patients are transported to same destination simultaneously, for each Medicare beneficiary, Medicare will allow 75 percent of payment allowance for base rate applicable to level of care furnished to that beneficiary plus 50 percent of total mileage payment allowance for entire trip

If three or more patients are transported to same destination simultaneously, payment allowance for Medicare beneficiary (or each of them) is equal to 60 percent of base rate applicable to level of care furnished to beneficiary; however, a single payment allowance for mileage will be prorated by number of patients onboard

This applies to both ground and air transports
Assistant-at-surgery Services Allowed at 16% of Medicare Physician Fee Schedule (MPFS)
Automated Multi-channel Test Panels Go to CMS Clinical Lab Fee Schedule webpage and choose file that corresponds with date of service year and open
  • Providers may bill a panel code or an individual code
  • Payment for automated tests will be determined by number of automated tests billed on same day, by same provider, for same beneficiary
  • Non-automated tests are reimbursed based on clinical lab fee schedule
  • Pricing of claim includes services already paid or active claims for services same day by same provider for same beneficiary
  • Duplicate checking occur within panels and individual codes
  • Each test billed under panel must be reasonable and necessary
  • IOM, Publication 100-04, Medicare Claims Processing Manual, Chapter 16, Section 90.1-90.3.1
Certified Nurse-Midwife (CNM) Services Reimbursement is made at 80% of lesser of actual charge or 100% of MPFS for same service performed by a physician
Diagnostic Cardiovascular Services
  • Technical Component (TC) reduced when one or more of these services is performed
  • Codes are ranked based upon technical allowed amount
  • Highest allowed amount remains unchanged
  • Remaining lower technical allowed amounts are priced at 75%
  • Professional Component (PC) is added back into allowed amount for final allowed amount
  • CMS Change Request (CR) 7442
Diagnostic Imaging Professional/ Technical Component Procedures
  • Reimburse full fee schedule amount for highest PC service and highest TC service with highest payment under MPFS
  • Reimburse 75% for each additional PC service for same date of service
  • Reimburse 50% for each additional TC service for same date of service
  • Modifier 51 will be appended, by Noridian, to identify reduced services, if necessary
  • Information and a claim example available in CMS CR7442
Diagnostic Ophthalmology Services
  • Reduction occurs when one or more of these services is performed
  • Total allowed amount based upon technical component of procedure
  • Highest technical component allowed amount does not change
  • Subsequent technical component allowed amounts are priced at 80%
  • Modifier 51 will be appended, by Noridian, to identify reduced services, if necessary
  • CMS CR7848
Endoscopies (Multiple) Medicare has special payment rules for multiple endoscopies performed on same day

Modifier 51 will be added, by Noridian, to reduced services, if necessary. Providers should not append this modifier on any services
Facility-based Reduction Allowed amounts for services performed in facility based settings are reduced and are represented within MPFS by # symbol
Five Year Pricing Limitation Medicare's claims processing system only holds the pricing/fee schedules for five calendar years. Services processed for dates of service outside of the five-year range will be priced using the oldest year still available.
  • This may affect both the pricing and ability of the claim to process.
  • Services priced manually for a price higher than the fee schedule amount of the oldest available year, will price for the lower rate.
  • Example: A 2009 date of service was adjusted in 2015. Although the code was payable for the year of service, MCS can only use the pricing and status indicators for the oldest available year.
Global Period/Surgery Procedures having a global period (0, 10 or 90 days) may be reduced if another service (no global modifier appended) was performed, within global period, and was paid prior to payment of claim containing global procedure itself Example:
  • 90-day global procedure is provided on November 1, 2014
  • Evaluation/Management (E/M) is provided on November 15, 2014
  • E/M is billed first to Medicare and is paid
  • 90-day global procedure is billed after E/M is paid
  • 90-day global procedure allowed amount may be reduced by allowed amount of E/M
  • Appeal should be requested on E/M to add appropriate modifier, if unrelated to global procedure, as well as appealing payment reduction for 90-day global procedure
Licensed Clinical Social Worker (LCSW) Services Allowed at 75% of MPFS
Marriage and Family Therapists (MFT) Services

Allowed at 75% of MPFS
Mental Health Counselor (MHC) Services

Allowed at 75% of MPFS
Modifier 26 Indicates Professional Component (PC) only (separate from Technical Component (TC))
Modifier 52 Partially Reduced/Eliminated Services. To determine charge amount, reduce normal fee by percentage of service not provided
Modifier 53 Discontinued Procedure (professional services only). To determine appropriate amount to charge, reduce normal fee by percentage of service not provided
Modifier 54 Surgical Care Only. MPFS allowed amount multiplied by sum of pre-operative and intra-operative percentages
Modifier 55 Postoperative Management Only. MPFS allowed amount multiplied by post-operative percent divided by 90 days equals amount per day Medicare allows for procedure. Amount per day multiplied by number of days a provider is providing post-operative care equals MPFS allowed amount
Modifier 62 Co-Surgeons. Reimbursement is 62.5% of MPFS allowed amount
Modifier 66 Team Surgeons – Surgical Team. Priced "by report"
Modifier 78 Return to Operating Room for related surgery during post-operative period
Modifier FX Effective for DOS 1/1/2017 and after.
Modifier TC Reimbursed for technical component of service only
Modifier QX Qualified nonphysician anesthetist service: With medical direction by a physician. 50% reimbursement reduction
Modifier QY Medical direction of one CRNA by an anesthesiologist
Multiple Procedure Payment Reduction (MPPR) HCPCS codes identified as "always therapy" services payable under MPFS have a reduction to Practice Expense (PE) component of payment
Multiple Surgery Rules Apply to certain procedure codes.100% of MPFS amount is allowed for highest valued surgical procedure and 50% for additional surgical procedures (with a multiple surgery indicator of "2") performed same day. Modifier 51 will be appended, by Noridian, to identify reduced services, if necessary
Nurse Practitioner (NP) and Clinical Nurse Specialist (CNS) Services Allowed at 85% of MPFS
Nutrition Professional/ Registered Dietitian Services Allowed at 85% of MPFS
Physician Assistant (PA) Services Reimbursement may occur in all POS settings permitted by state law as long as no other facility or provider charges are paid in connection with service. Reimbursement equals 80% of actual charge or 85% of MPFS, whichever is less.
Physician Assistant-at-surgery Services Allowed at 85% of MPFS and then 16% of that amount is allowed for Assistant-at-surgery
Physician Quality Reporting System (PQRS)
  • Effective January 1, 2015, a 1.5% reduction is applied to allowed amount for eligible professionals who do not report data on PQRS
  • Adjustment will increase to 2% on January 1, 2016 and subsequent years
  • View more about PQRS
Procedure to Procedure Code Edits (Column 1 / Column 2) Per National Correct Coding Initiative (NCCI) rules, Column 2 codes will bundle their payment to specific Column 1 codes.
  • When a Column 2 code is billed and paid before the Column 1 code is submitted, the Column 1 procedure code's allowed amount may be reduced by the already paid services.
  • Providers would need to add distinguishing modifiers to the Column 2 code before the Column 1 code can pay in full.
  • Reopenings or appeals should be used to add the modifiers.
  • View more about NCCI Edits
  • IOM, Publication 100-04, Medicare Processing Manual, Chapter 23, Section 20.9
Sequestration
  • Effective for dates of service on/after April 1, 2013, a 2% reduction is taken from Medicare payment
  • Designed to reduce federal spending
  • CR 8378

When reviewing a claim, keep in mind that more than one type of reduction may apply for the performed service.

 

Last Updated Jun 07 , 2024