AAOS Now

Published 9/1/2011
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Margaret M. Maley

Discounting for multiple arthroscopic procedures

By Margaret M. Maley

It may take more from the bottom line than you think!

It’s hardly a surprise when payers issue an explanation of benefits (EOB) with a reduction in reimbursement for multiple procedures performed during the same operative session by the same provider. Both Medicare and all payers that follow Medicare reimbursement policies use the multiple procedure reduction rule when calculating the reimbursement for the additional procedures.

Under this formula, payers reimburse the highest valued procedure at 100 percent of the fee schedule amount (or billed amount, if it is less), and 50 percent for the second, third, fourth, and fifth procedures. (For a complete review of the multiple procedure reduction rule and modifier 51, see “Back to Basics,” AAOS Now September 2010.)

A formula used by Medicare for discounting that is not as widely known, but is increasingly being used by other payers that follow Medicare reimbursement rules, is the multiple endoscopy reduction rule. In orthopaedics, this formula may be applied when more than one arthroscopic procedure is performed by the same provider, in the same joint, during the same operative session.

Again, the highest valued arthroscopic procedure is reimbursed at 100 percent of the fee schedule or billed amount (if it is less). However, with the multiple endoscopy reduction rule, additional arthroscopic procedures may be reduced by more than 50 percent. The multiple endoscopy reduction formula reduces the additional procedure by the fee schedule amount assigned to the base code of the arthroscopic joint family, as shown in Table 1.

What it means to you
The impact of the multiple endoscopy reduction formula can be seen in the following example, using the 2011 hip arthroscopy Current Procedural Terminology (CPT) codes and Medicare relative value units (RVUs) (
Table 2).

An orthopaedic surgeon reports an arthroscopic acetabuloplasty (29915) and arthroscopic treatment of a cam lesion (29914) on the same hip during the same operative session. Using the multiple procedure reduction rule, the acetabuloplasty would be reimbursed at 100 percent of the fee schedule amount, and the treatment of the cam lesion would be reimbursed at 50 percent (15.16 RVUs instead of 30.32 RVUs).

Under the multiple endoscopy reduction rule, however, the acetabuloplasty would be reimbursed at 100 percent of the fee schedule amount, and the arthroscopic treatment of the cam lesion would be reduced by 64 percent, to 11.05 RVUs (Table 3). This is the reduction that results when the RVUs for the diagnostic hip arthroscopy (29860; 19.27 RVUs) are subtracted from the RVUs for the arthroscopic treatment of a cam lesion (29914; 30.32 RVUs).

The percent reduction is not constant; it will vary based upon the joint and the value of the additional arthroscopic procedure performed. However, the multiple endoscopy reduction formula is consistently unfavorable when compared to the standard multiple procedure reduction formula. Because diagnostic ankle arthroscopy doesn’t have a code, additional ankle arthroscopies are conventionally discounted using the standard multiple procedure reduction formula of 50 percent.

Check contract language
Understanding the difference between these two formulas is especially critical when negotiating contracts with third-party payers. Although physician practices cannot negotiate with Medicare, they can negotiate with other payers to have arthroscopic procedures discounted under the multiple procedure reduction formula rather than the multiple endoscopy rule.

Orthopaedic surgeons and their office managers should be aware of this nuance and use the information strategically when negotiating employment agreements with hospitals or managed care contracts with third-party payers. It is also important to know what multiple procedure reduction formula is being utilized when the actual payment is compared to the expected payment.

Margaret M. Maley is a consultant with KarenZupko & Associates (KZA), and a presenter for the coding and reimbursement workshops jointly sponsored by the AAOS and KZA. This article has been reviewed by members of the AAOS Coding, Coverage, and Reimbursement Committee. If you have coding questions you would like to see addressed in future columns, send them to aaoscomm@aaos.org