CMS to Automatically Deny Claims with GZ Modifier
by: Justin Vaughn, M.Div, CPC
Director of Compliance

5/16/2011

CMS has issued instructions to its carriers around the country to begin denying claims submitted with the GZ modifier, effective July 1, 2011.  When this modifier is appended to a Medicare claim form it indicates two things:

• The provider has reason to believe the service is not medically necessary, AND

• The provider did NOT secure from the patient a signed Advanced Beneficiary Notice (ABN).

An anesthesia provider would typically submit such a claim where (a) he or she provided anesthesia for a GI case or a case involving an anesthesia service covering a chronic pain injection, AND (b) there is no qualifying diagnosis based on that particular Medicare carrier’s MAC LCD (or no physical status of P3 or higher for those carriers without a MAC LCD). 

CMS was unaware until recently that there was an issue with these claims.  As it happens, use of the GZ modifier has been under the microscope lately due to its being on the OIG’s work plan for 2011.  CMS’s new policy of automatically denying a “GZ case” is simply an attempt to correct the error on the part of its carriers, which had heretofore often paid such claims. 
According to healthcare attorney David Vaughn:

“The net effect of this new rule on anesthesia practices is two-fold: (1) you need to redouble your efforts to secure patient co-morbid conditions in the pre-anesthesia exam that support either a qualifying dx under your Medicare MAC LCD (regardless of whether the case is MAC or a GA), or if you are in a state with no MAC LCD, to document patient co-morbid conditions which warrant P3 and higher; and (2) if you cannot document a patient condition warranting a qualifying dx or P3 and above, that you try to secure an ABN from the patient.  If you do neither, then, GZ must be billed to Medicare, and the claim will be denied, and monies will be reduced.”

Based on the above, we want to encourage our clients to be particularly mindful of the special documentation requirements inherent in these types of cases.  Should you have any questions about this issue, please contact your Medac compliance representative.

The information presented herein reflects general information that is current as of the date it was first published.  In light of changes that may occur in the health care regulatory and compliance environments, the author's presentation of this information might become outdated.  Please check with your individual legal and/or compliance advisor(s) prior to taking any significant actions based upon the information and advice presented.