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Even though he didn’t undergo surgery, the hospital has provided services for this patient. The hospital has scheduled and prepared the O.R. As a result of the cancellation, the O.R. schedule has been disrupted and the room will have to be reassigned and prepared for another procedure. There may be a delay if the next patient or the surgeon is not ready. In other words, there are costs involved in cancelling a procedure such as this. Will the hospital be compensated for those costs?

The answer is yes – by billing with the appropriate modifiers, a hospital may be paid for procedures that are canceled due to a patient’s condition or other unforeseen circumstances. Transmittal 2386 of the CMS Claims Processing Manual, Pub 100-04 (effective Jan. 1, 2012) contains updated provisions that allow hospitals to use CPT modifiers to bill Medicare for canceled outpatient procedures in both hospital outpatient departments and ambulatory surgical centers. Modifiers are codes that are appended to CPT/HCPCS codes for certain procedures.

“Modifiers provide a way for hospitals to report and be paid for expenses incurred in preparing a patient for a procedure,” the transmittal reads, “and scheduling a room for performing the procedure where the service is subsequently discontinued.”

For diagnostic tests and procedures for which anesthesia is not required, the hospital may bill using the usual billing codes, simply adding Modifier -52 to the CPT code “to indicate partial reduction, cancellation or discontinuation.” The medical record must document the medical reason the procedure was aborted, because the hospital is not eligible for payment if the patient fails to arrive for the test or just decides not to undergo the procedure. According to APCs Weekly Monitor (the March 16, 2012 edition), “this documentation is crucial to support the resources being reported and to document the clinical/medical reason that necessitated the cancellation of the service.” Modifier -52 also can be used when a physician intends to perform a bilateral procedure but only performs one side. The modifier is not required, however, when the procedure is listed as “bilateral or unilateral” because the payment would be the same. Transmittal 2386 explains further that “Modifier -53 is used to indicate discontinuation of physician services and is not approved for use for outpatient hospital services.”

CPT Modifiers -73 and -74 are used when a procedure requiring anesthesia is not completed.

Modifier -73 is used when a procedure requiring anesthesia is terminated “due to extenuating circumstances or … circumstances that threaten the well-being of the patient” – after the patient is brought into the treatment room, but prior to the administration of anesthesia. Anesthesia includes “local, regional block(s), moderate sedation/analgesia (‘conscious sedation’), deep sedation/ analgesia or general anesthesia.” Any services provided in the recovery room (for recovery from pre-op medications, for instance) are included. Under OPPS rules, when Modifier -73 is used, the hospital is paid 50 percent of the full reimbursement for the procedure.

When a procedure is terminated due to circumstances that threaten the well-being of the patient or other extenuating circumstances (for example, failure of a critical piece of O.R. equipment) occurring after the administration of anesthesia, or after the procedure is started, Modifier -74 is used. Transmittal 2386 explains that Modifier -74 “may also be used to indicate that a planned surgical or diagnostic procedure was discontinued, partially reduced or cancelled at the physician’s discretion after the administration of anesthesia.” The same broad definition of anesthesia is applied. If the procedure is discontinued after the patient has received anesthesia or after the procedure has been started (i.e., “scope inserted, intubation started, incision made,” etc.) the hospital is paid the full OPPS amount.

There is also a set of ICD-9 V-codes for procedures canceled at ambulatory surgical centers (ASCs). These V-codes are never used alone and cannot designate a principal diagnosis. They are reported along with the CPT/HCPCS code for the procedure (and the appropriate modifier) and the ICD-9 code for the reason the procedure was aborted. The HCPro HIM Connection (Dec. 3, 2003) listed these V-codes:

V64.1: Surgical or other procedure not carried out because of contraindication. V64.2: Surgical or other procedure not carried out because of patient’s decision. V64.3: Procedure not carried out for other reasons.

Billing with the above modifiers is allowed only when there are clinical or “extenuating circumstances” that prevent completion of procedures. Transmittal 2386 explains that “the elective cancellation of a procedure (such as a patient not showing up or changing his/her mind) should not be reported.”


The situation is quite different when a patient is admitted for an inpatient procedure that is not completed as planned. Since Medicare requires an admission order prior to such a procedure, patients generally are admitted as they enter the hospital on the day of their procedure or surgery. If the procedure or surgery is canceled because it becomes apparent that the patient’s condition is not optimal to proceed, the treating physician must decide on the proper action to take based on the acuity of the clinical problem. Should the patient be transferred to an inpatient medical bed for treatment? This would be appropriate if admission is justified based on the usual Medicare admission guidelines, including the patient’s clinical condition and the treatment plan at the time the admission decision is made (as well as the physician’s clinical judgment and risk assessment). Should the patient be discharged to outpatient management? In this case, the hospital could bill Part B for any ancillary services that have been provided (Benefit Policy Manual, Chapter 6, Section 10: “Medical and Other Health Services Furnished to Inpatients of Participating Hospitals”) or implement the Condition Code 44 procedure to convert status from inpatient to outpatient prior to release. In either case, the hospital would not be able to bill for the procedure or surgery.

On the other hand, if anesthesia has been administered before the case is canceled or terminated, the hospital would provide routine post-op care and bill for the inpatient procedure even though it hadn’t been completed.

If cancelation is a frequent occurrence, the hospital should determine whether there is a faulty process to blame. Are preregistered patients contacted a day or two prior to a scheduled procedure to be sure they still are planning to undergo the procedure? Have their conditions changed? Are there any acute illnesses, such as cold or flu, which might result in cancelation on arrival? Has the patient received clear instructions on how to prepare for the surgery, such as being NPO or using an anti-staph soap? Pre-op attention to detail can prevent many last-minute cancelations.

In all of these scenarios, it is critical that the nursing staff and the physician clearly document the reason the procedure is not completed as planned and communicate this information through the medical record and by direct messaging to the hospital’s billing department. Use of the proper modifiers and V-codes allows a hospital to receive payment for services even when the procedure isn’t completed as planned.

About the Author

Steven J. Meyerson, MD, is a Vice President of Accretive Physician Advisory Services®. He is Board Certified in Internal Medicine and Geriatrics. He has recently been the medical director of care management and a compliance leader of a large multi hospital system in Florida. He has distinguished himself by creating innovative service lines and managing education for Accretive PAS®.

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To comment on this article please go to editor@racmonitor.com


Steven J. Meyerson, MD, CHCQM-PHYADV

Steven Meyerson, MD, CHCQM-PHYADV, is the founder of Steven Meyerson Consulting. Dr. Meyerson is a nationally recognized expert and consultant in the physician advisor role, case management, and hospital Medicare compliance. He is board certified in internal medicine and geriatrics and serves on the board of the American College of Physician Advisors (ACPA). He edits and writes for the ACPA online blog.

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