Modifier 22 Use in Fee-for-Service Medicare

Key Points

Question

How often is Medicare’s modifier 22 used in common surgical procedures and is its use associated with increased compensation?

Findings

In this cross-sectional study evaluating 10 high-volume surgical procedures (N = 625 316), modifier 22 was appended to a relatively small number of cases; associated charges were somewhat higher, but payment increases were small. Further, because modifier 22 claims were more likely to be denied, the net financial impact was negligible.

Meaning

The findings suggest that alternative mechanisms are needed for surgeons to be able to accurately convey increased work and to create incentives for providing equitable care to patients with the most complex cases.

This cross-sectional study evaluates the association between the use of Medicare’s modifier 22 and compensation for common surgical procedures.

Abstract

Importance

Modifier 22 is a mechanism designed for surgeons to identify cases that are more complex than their Current Procedural Terminology code accounts for. However, empirical studies of the use and efficacy of modifier 22 are lacking.

Objective

To assess the use of modifier 22 in common surgical procedures and the association of use with compensation.

Design, Setting, and Participants

This was a cross-sectional analysis of the 2021 Physician/Supplier Procedure Summary Limited Data Set including all Part B carrier and durable medical equipment fee-for-service claims. Claims for 10 common surgical procedures were evaluated, including mastectomy, total hip arthroplasty, total knee arthroplasty, coronary artery bypass grafting, laparoscopic right colectomy, laparoscopic appendectomy, laparoscopic cholecystectomy, kidney transplant, laparoscopic total abdominal hysterectomy and bilateral salpingo-oophorectomy, and lumbar laminectomy. Data were analyzed from August to November 2023.

Main Outcomes and Measures

Rate of modifier 22 use, rate of claim denial, mean charges, mean payment for accepted claims, and mean payment for all claims.

Results

The sample included 625 316 surgical procedures performed in calendar year 2021. The proportion of modifier 22 coding for a procedure ranged from 5725 of 251 521 (2.3%) in total knee arthroplasty to 1566 of 18 459 (8.5%) in laparoscopic total abdominal hysterectomy and bilateral salpingo-oophorectomy. Submitted charges were 11.1% (95% CI, 9.1-13.2) to 22.8% (95% CI, 21.3-24.3) higher for claims with modifier 22, depending on the procedure. Among accepted claims, those with modifier 22 had increased payments ranging from 0.8% (95% CI, 0.7-1.0) to 4.8% (95% CI, 4.5-5.1). However, claims with modifier 22 were more likely to be denied (7.4% vs 4.0%; P < .001). As a result, overall mean payments were mixed, with 4 procedures having lower payments when modifier 22 was appended, 4 procedures having higher payments with modifier 22, and 2 procedures with no difference. The largest increase in mean payment for modifier 22 claims was for kidney transplant with an increased payment of $71.46 (95% CI, 55.32-87.60), which translates to a relative increase of 3.4% (95% CI, 2.9-4.6).

Conclusions and Relevance

The findings in this study suggest that modifier 22 had little to no financial benefit when appended to claims for a diverse panel of surgical procedures. In the current system, surgeons have little reason to request modifier 22, and no mechanisms currently exist for surgeons to recoup payment for difficult operations.

Introduction

With the introduction of the relative value unit (RVU) system in 1992, Medicare began paying surgeons a flat fee based on the type of procedure performed. This fee covers the care of the patient from the day of the procedure through the end of the global period, which is usually 90 days for major operations. Although the same type of procedure can differ in complexity and associated work, the RVU system does not account for any additional effort. For example, there is one Current Procedural Terminology (CPT) code for laparoscopic cholecystectomy (CPT 47562), even though patients undergoing this procedure can present with different diagnoses (symptomatic cholelithiasis vs acute cholecystitis) and can be cared for in different settings (outpatient vs inpatient), with markedly different operative times and postoperative care plans.

The only mechanism for surgeons to identify cases requiring more work in the RVU system is to append modifier 22 to their claim. Per the Centers for Medicare and Medicaid Services (CMS), “When the work required to provide a service is substantially greater than typically required, it may be identified by adding modifier 22 to the usual procedure code.”¹ In contrast to procedure codes, evaluation and management codes increasingly allow flexibility for patient complexity. For example, new office visits allow 4 levels of service with associated work RVUs ranging from 0.93 to 3.5. Codes also exist (eg, 99417 and 99418) to identify visits that take longer than the highest level of care available,² and additional codes (eg, G2211) have been proposed,³ and may soon be implemented, to allow additional financial support for office-based care. One of the principal arguments for having diverse codes is to ensure that patients with complex conditions have appropriate access to care.

Empirical studies on the use of modifier 22 are lacking. In single-institution studies, reimbursement differed little or not at all between cases that had modifier 22 coded and those that did not.^4,5,6 Further, denial of claims and delays in payment may occur when modifier 22 is appended.⁵ In the present study, we used a national fee-for-service Medicare dataset to assess the overall use and financial impact of appending modifier 22 to surgical claims across a diverse set of high-volume operations.

Methods

Data Source

The 2021 Physician/Supplier Procedure Summary Limited Data Set was obtained from CMS.⁷ This file summarizes all Medicare Part B carrier and durable medical equipment fee-for-service claims for calendar year 2021, as tabulated on June 30, 2022. Because the dataset does not include patient identifiers, this research did not meet the definition of human participants research, and we did not need institutional review board approval or participant consent, as confirmed with The University of Texas MD Anderson Cancer Center institutional review board.

Data Structure, Sample Selection, and Inclusion and Exclusion Criteria

The Physician/Supplier Procedure Summary Limited Data Set summarizes inpatient and outpatient patient-level claims for all unique combinations of CPT codes, specialty, carrier, locality, and first- and second-level modifiers. Data are provided on (1) the number of submitted, denied, and accepted claims and (2) the US dollar value of submitted charges, allowed payments, and actual payments (the difference between the latter 2 reflecting copayments made by patients).

We selected 10 CPT codes for this analysis, including mastectomy (CPT 19303), total hip arthroplasty (CPT 27130), total knee arthroplasty (CPT 27447), coronary artery bypass grafting (CPT 33533), laparoscopic right colectomy (CPT 44205), laparoscopic appendectomy (CPT 44970), laparoscopic cholecystectomy (CPT 47562), kidney transplant (CPT 50360), laparoscopic total abdominal hysterectomy and bilateral salpingo-oophorectomy (CPT 58571), and lumbar laminectomy (CPT 63047). We focused on highly utilized major surgical procedures across diverse specialties in which at least 1% of claims had an associated modifier 22 request. Additional information about procedure selection is included in eMethods 1 in Supplement 1. Combined, these 10 codes accounted for $966 million in Medicare spending in 2021 (eMethods 2 in Supplement 1).⁸

We then applied several exclusion criteria (Figure 1). The aims of these criteria were to exclude (1) potentially spurious claims, such as those made by health care professionals who do not typically perform surgery (eg, hospitalists), and claims made in unusual settings (eg, a physician’s office) and (2) claims that may have systematically higher or lower payments than average (eg, assistant at surgery claims). To further reduce the risk of including payments that would be higher or lower for reasons beyond modifier 22, we limited our analysis to a select group of modifiers that were not anticipated to affect payment: modifier 22; modifiers LT and RT, which identify if a procedure is being performed on the left or right side of the body; and modifier GC, which indicates that a resident was involved in the surgery. Lastly, we limited our analysis to only carriers and localities with at least 1 modifier 22 claim. Data were analyzed from August to November 2023.

Figure 1. Flow Diagram of Exclusion Criteria Used to Select Claims.

Initial counts by procedure are listed in eMethods 1 in Supplement 1; the final counts for the 10 included procedures are listed in eTable 1 in Supplement 2.

Outcomes

We evaluated 4 outcomes:

1. Mean charges submitted by health care professionals.

2. Mean payment for accepted claims: the mean amount paid by CMS across accepted claims; this outcome excludes denied claims and reflects the potential benefit of modifier 22.

3. Claim denial rate: the proportion of claims that were denied at the time the dataset was generated (June 30, 2022).

4. Mean payment for all claims: the mean amount paid by CMS across all claims; this outcome includes denied claims and reflects the real-world impact of modifier 22.

Statistical Analysis

A weighted hierarchical regression model was generated for each outcome for each CPT code. The primary predictor was whether or not modifier 22 was coded. A random effect was generated for each combination of Medicare carrier and locality to adjust for varying baseline payment amounts across each permutation. There are currently 12 regional Medicare carriers and 112 state or substate localities. For each outcome and CPT code, we calculated the absolute coefficient (ie, mean change in the outcome when modifier 22 was requested), the relative coefficient (ie, percent change in the outcome when modifier 22 was requested), and the mean marginal effect (ie, the adjusted mean amount when modifier 22 was or was not requested). All analyses were run in Stata version 15.1 (StataCorp) using 2-sided tests and an α of .05.

Results

Sample Characteristics

The final sample included 625 316 procedures. Sample size varied by procedure, ranging from 7682 (mastectomy) to 251 521 (total knee arthroplasty) (eTable 1 in Supplement 2). The proportion of modifier 22 coding for a given procedure type ranged from 5725 of 251 521 (2.3%) in total knee arthroplasty to 1566 of 18 459 (8.5%) in laparoscopic total abdominal hysterectomy and bilateral salpingo-oophorectomy (numerical data for remaining procedures are provided in eTables 1-5 in Supplement 2).

Mean Submitted Charges

The adjusted mean submitted charges for claims with modifier 22 were consistently higher than those for claims without modifier 22 across all 10 procedures (Figure 2; numerical data are provided in eTables 1-5 in Supplement 2). The absolute mean difference ranged from $311.65 (95% CI, 278.08-345.23) for laparoscopic appendectomy to $1591.92 (95% CI, 1551.98-1631.86) for total hip arthroplasty. This result translates into proportional increases ranging from 11.1% (95% CI, 9.1-13.2) to 22.8% (95% CI, 21.3-24.3).

Figure 2. Association of Modifier 22 Status With Mean Submitted Charges.

Numerical data are provided in the eTables in Supplement 2. CABG indicates coronary artery bypass graft; TAH/BSO, total abdominal hysterectomy/bilateral salpingo-oophorectomy; THA, total hip arthroplasty; TKA, total knee arthroplasty.

Mean Payments for Accepted Claims

The adjusted mean payment for accepted claims with modifier 22 was consistently higher than for those without modifier 22, although absolute differences were small (Figure 3). Absolute payment increases for accepted claims ranged from $7.51 (95% CI, 6.16-8.86) for lumbar laminectomy to $98.35 (95% CI, 92.98-103.72) for kidney transplant. This translates into proportional increases ranging from 0.8% (95% CI, 0.7-1.0) to 4.8% (95% CI, 4.5-5.1).

Figure 3. Association of Modifier 22 Status With Mean Payments for Accepted Claims (Excluding Denied Claims).

Numerical data are provided in the eTables in Supplement 2. CABG indicates coronary artery bypass graft; TAH/BSO, total abdominal hysterectomy/bilateral salpingo-oophorectomy; THA, total hip arthroplasty; TKA, total knee arthroplasty.

Claim Denial Rates

Across the entire sample, the proportion of claims denied was 4.1%, but this rate differed according to whether modifier 22 was billed. Claims with modifier 22 had higher claim denial rates (7.4%) than those without modifier 22 (4.0%; P < .001). Adjusted claim denial rates varied across procedures but were consistently higher in claims with modifier 22 (Figure 4). The absolute increase in claim denial rate ranged from 0.8% (95% CI, 0.1-1.6) for kidney transplant to 9.3% (95% CI, 8.1-10.5) for mastectomy. This translates into proportional increases ranging from 10.3% (95% CI, 0.9-19.7) to 79.2% (95% CI, 72.9-85.6).

Figure 4. Association of Modifier 22 Status With Claim Denial Rates.

Numerical data are provided in the eTables in Supplement 2. CABG indicates coronary artery bypass graft; TAH/BSO, total abdominal hysterectomy/bilateral salpingo-oophorectomy; THA, total hip arthroplasty; TKA, total knee arthroplasty.

Mean Payment for All Claims (Including Denied Payments)

Mean overall payments for all claims, which reflect the combined effect of both accepted and denied claims, are presented in Figure 5. Of the 10 procedures, 4 (mastectomy, total hip arthroplasty, laparoscopic cholecystectomy, and lumbar laminectomy) were paid less and 4 (total knee arthroplasty, coronary artery bypass grafting, laparoscopic appendectomy, and kidney transplant) were paid more when modifier 22 was appended compared to when modifier 22 was not appended. The remaining 2 procedures (laparoscopic right colectomy and laparoscopic total abdominal hysterectomy with bilateral salpingo-oophorectomy) showed no difference. The absolute increase among those paid more was small, with kidney transplant having the highest marginal increase in payment of $71.46 (95% CI, 55.32-87.60), which translates to a relative increase of 3.4% (95% CI, 2.9-4.6).

Figure 5. Association of Modifier 22 Status With Mean Payments for All Claims (Including Denied Claims).

Numerical data are provided in the eTables in Supplement 2. CABG indicates coronary artery bypass graft; TAH/BSO, total abdominal hysterectomy/bilateral salpingo-oophorectomy; THA, total hip arthroplasty; TKA, total knee arthroplasty.

Discussion

This cross-sectional study assessed the overall use and financial impact of appending modifier 22 to surgical claims. We found that, in fee-for-service Medicare, requests for modifier 22 across a diverse set of high-volume procedures was associated with little to no financial benefit for surgeons. While inclusion of modifier 22 was associated with up to 20% higher submitted charges, the increase in payment was modest (<5%) among those accepted and was associated with a near doubling of denial rates. Thus, the net financial impact was negligible.

These findings are concordant with empirical studies in the literature. Of the 3 single-institution studies looking at the use of modifier 22 in joint replacement surgeries, 2 studies found no difference^4,5 in payment when modifier 22 was requested, and the third⁴ found mixed results with modest increases (approximately 6%) for total hip arthroplasty and no difference for total knee arthroplasty. A single-institution urologic study⁹ analyzed the use of modifier 22 and found that 31% of claims with modifier 22 received additional compensation. Breaking this down by insurance category, private insurers were more likely (43%) to pay an additional amount for modifier 22 claims than Medicare was (24%). Further, across the entire sample, 82% of claims with modifier 22 appended were initially denied, and payments were typically delayed for more than 2 months.

Modifier 22 is the only mechanism in the RVU system to compensate surgeons for their added effort on the most challenging cases, but our study findings suggest that additional compensation with modifier 22 does not actually occur. The RVU system already incentivizes surgeons to operate on patients with simple presentations that can be managed expeditiously with low risk. Learning that there is likely no financial benefit with modifier 22 further entrenches this perverse incentive.

The original goal of the RVU system was to appropriately compensate physicians for the work required to care for each patient. This goal is admirable, but an increasing number of studies have shown that it is not being attained, with inaccuracies identified regarding assumed operative times,^10,11,12 postoperative length of stay,^13,14 and outpatient clinic visits.¹⁵ These inaccuracies create tension among health care professionals because CMS is legally mandated to balance the Medicare budget. For every additional dollar given to one specialty, a dollar must be removed from another. Inaccuracies in one part of the RVU system therefore impact all other parts.

What options might exist to ensure physician compensation accurately matches performed work? One option would be to generate transparent and publicly available criteria for when modifier 22 can be awarded. The CMS definition cited in the Introduction is vague and opaque. Should increase in operative time be the predominant factor? Or should more qualitative aspects, such as complexity, body habitus, density of adhesions, or anatomic variation, drive the decision to award extra compensation? Presumably, insurers have internal policies regarding modifier 22 reimbursement, but we are not aware of any that are posted publicly. A second option would be for surgical procedures to adopt complexity structures akin to the diagnosis-related group system or to the evaluation and management system used for office- or hospital-based visits. The current system stratifies surgical procedures into different CPT codes, sometimes in illogical ways. For example, open appendectomy has 2 codes—with and without abscess—while laparoscopic appendectomy has only 1. Consider a system where every operation has 3 levels of complexity that can be justified based on diagnosis, operation time and complexity, length of stay, and complications. If hospitals can be paid more for complexity, then surgeons should as well. Removing global periods is another option that has been proposed,¹³ as more complex operations often result in more complex postoperative care, and would allow surgeons to take advantage of the spectrum of evaluation and management codes that are now available, along with their updated RVU values, after surgery. It may also be worth considering radical changes to the surgical RVU system and transitioning from a procedure-based model toward one that accounts for time expended. If any of these policies were to be enacted, we would suggest doing so in controlled trial–like settings with rigorous data keeping structures in place to prospectively evaluate the effects on patient access and outcomes.

Limitations

This study has limitations. First, because we used an aggregated dataset, our standard errors are artificially small, which may have resulted in narrower confidence intervals than would have been generated using claim-level data. Second, strict inclusion criteria were used to ensure comparable claims were included but may have reduced the external validity of our study. Third, the 2021 Physician/Supplier Procedure Summary file was generated on June 30, 2022; because health care professionals are given 1 year to appeal denied claims, a portion of denied claims were still eligible for appeal at the time of data analysis. The dataset does not provide information about whether a claim was currently being appealed. If pending claims were clustered in the modifier 22 category, our denial rate estimates may be exaggerated. Nevertheless, surgeons reviewing their 2021 calendar year results in July 2022 can expect to see the results presented here.

Conclusions

In this cross-sectional study of a national fee-for-service Medicare dataset, modifier 22 had little to no financial benefit for surgeons when appended to claims for a diverse panel of surgical procedures. In the current system, surgeons have little reason to request modifier 22, and no mechanisms currently exist for surgeons to recoup payment for difficult operations. Mechanisms are needed for surgeons to be able to accurately convey increased work and to create incentives for providing equitable care to patients with the most complex cases.

Supplement 1.

eMethods 1. Identification of Included CPT Codes

eMethods 2. Included Procedures & Annual Payments

Supplement 2.

eTable 1. Mod 22 Rate

eTable 2. Charges

eTable 3. Mean Payment Accepted Claims

eTable 4. Denial Rates

eTable 5. Mean Payment

Supplement 3.

Data sharing statement