Article

Coding & Reimbursement

Skin lesions: Can your documentation stand up to scrutiny?

We are often asked a simple question — whether removal of benign skin lesions is a covered service. The answer, alas, is complicated: “Sometimes.” This column will explain when the removal is a service covered by insurance and when it is not.

Q. Does Medicare cover removal of benign skin lesions?

A. Sometimes, but not if the removal is considered cosmetic. Medicare clearly defines its policy on cosmetic surgery coverage. The Medicare Benefit Policy Manual (MBPM) Chapter 16, §10 states, “No payment may be made … for certain items and services … [including] Cosmetic Surgery.” In the same Manual, Chapter 16, §120 notes: “Cosmetic surgery or expenses incurred in connection with such surgery is not covered.

Q. When are these procedures covered?

A. Local Coverage Determinations (LCDs) note that coverage might be provided when a threat to health or function exists. Noridian Healthcare Solutions, the Medicare Administrative Contractor (MAC) for a number of states, publishes a specific policy on when these procedures may be covered (https://tinyurl.com/y629o9at ). It states:

Medicare will consider the removal of benign skin lesions as medically necessary, and not cosmetic, if one or more of the following conditions is present and clearly documented in the medical record:

  1. The lesion has one or more of the following characteristics:
    1. bleeding
    2. intense itching
    3. pain
  2. The lesion has physical evidence of inflammation, eg, purulence, oozing, edema, erythema.
  3. The lesion obstructs an orifice or clinically restricts vision.
  4. The clinical diagnosis is uncertain, particularly where malignancy is a realistic consideration based on lesional appearance (eg, non-response to conventional treatment or change in appearance). However, if the diagnosis is uncertain, either biopsy or removal may be more prudent than destruction.
  5. A prior biopsy suggests or is indicative of lesion malignancy or premalignancy.
  6. The lesion is in an anatomical region subject to recurrent physical trauma and documentation exists that such trauma has occurred.
  7. Wart removals will be covered under (A) through (F) above. In addition, wart destruction will be covered when the following clinical circumstance is present:
    • Periocular warts associated with chronic recurrent conjunctivitis thought secondary to lesional virus shedding
    • Evidence of spread from one body area to another, particularly in immunocompromised/immunosuppressed patients.

Be sure your chart note reflects all complaints regarding the lesions or the examination notes a threat to health (such as possible malignancy, if that is a concern).

Weak documentation in the chart won’t support a claim; a medical record statement of “irritated skin lesion” is not sufficient justification for lesion removal when solely used to reference a patient’s complaint or a physician’s findings.

Q. What if we don’t know if the lesion is benign or malignant?

A. Not all benign lesions can be identified as such in advance. Noridian’s Local Coverage Determinations (LCD) includes this statement in section D: “D. The clinical diagnosis is uncertain, particularly where malignancy is a realistic consideration based on lesional appearance (eg, non-response to conventional treatment, or change in appearance). However, if the diagnosis is uncertain, either biopsy or removal may be more prudent than destruction.

It further instructs, “When a diagnosis of malignancy has not yet been established at the time the biopsy procedure was performed, the correct diagnosis code to list on the claim would most likely be D49.2 (Neoplasm of unspecified behavior, bone, soft tissue, and skin).” Alternatively, you can hold the claim until the pathology report gives a definitive diagnosis; this is Corcoran’s recommendation.

Q. How should we proceed if the lesion is benign?

A. The Noridian LCD states, “If the beneficiary wishes one or more benign symptomatic lesions removed for cosmetic purposes, the beneficiary becomes liable for the service(s) rendered.

In some cases, the lesion is clearly benign on exam, the patient does not have complaints (except those related to appearance) and the patient still desires removal. In this case, obtain the patient’s agreement to pay with an Advance Beneficiary Notice of Noncoverage (ABN, for Medicare Part B) or other financial waiver. Remember that Medicare Advantage plans (Part C) are prohibited from using the ABN form; they are required to have a process, often known as an organizational determination, for determining coverage. And, while private or commercial insurance plans are not required to follow Medicare’s guidelines, they often do so anyway.

For a known benign lesion, in the absence of signs, symptoms, illness or injury, use a diagnosis code such as Z41.1 (Encounter for cosmetic surgery). This will properly prompt a denial. OM