Anthem Blue Cross announces plans to significantly cut reimbursement on E/M services with modifier 25

November 16, 2017
Area(s) of Interest: Commercial Payors Payor Issues and Reimbursement 

Due to the overwhelming opposition from organized medicine, in February 2018, Anthem announced it will not proceed with its policy to reduce payments for E&M services reported with modifier 25. Read more here.

Anthem Blue Cross recently notified physicians in several states of upcoming changes to the payor’s reimbursement policies and claims editing software, called ClaimsXten. As part of the policy changes, scheduled to become effective on January 1, 2018, Anthem will begin reducing reimbursement of evaluation and management (E/M) services billed with modifier 25 under the following circumstances:


  • When a minor surgical procedure code (0 or 10-day global period) is reported on the same day as an E/M code by the same physician, payment for the E/M code will be reduced by 50 percent.

  • When a preventative/wellness exam and a problem-oriented E/M are billed during the same encounter, payment for the problem-oriented E/M code will be reduced by 50 percent.


The California Medical Association (CMA) is very concerned with the adverse impacts of this new policy upon our physician members and is coordinating with the American Medical Association and the American Association of Dermatologists, along with many other state and specialty organizations, to push back on the change.

These changes come in the wake of several controversial initiatives by Anthem, including the termination of physicians for out-of-network ambulatory surgical center referrals and its new outpatient advanced radiologic imaging policy, delayed until at least December 1, 2017, which is designed to restrict radiologic imaging procedures such as MRI, CT and PET scan in the hospital outpatient department setting.


In August 2017, Anthem also announced it was exiting California’s health benefit exchange, Covered California, except in three regions of Northern California, thereby requiring over 150,000 enrollees to look for new coverage.


Physicians are urged to thoroughly review and assess the impact any proposed modifications to their contract would have on their individual practices. To assist physicians in analyzing the change, CMA has developed a simple worksheet that will help calculate the net financial impact to their practice resulting from this change. The Modifier -25 financial impact worksheet is available free to CMA members.


Physicians should be aware that California law requires health plans and their contracting medical groups/IPAs to provide 45 business days’ advance notice of a material change to a contract, manual, policy or procedure (28 C.C.R. §1300.71(m)). A change is considered “material” if “a reasonable person would attach importance [to it] in determining the action to be taken upon the provision.”


Physicians have the right to terminate the agreement prior to the implementation of the change if the physician does not agree to the proposed change (Health & Safety Code §1375.7; Insurance Code §10133.65). For more information on physicians’ rights and options when a health plan makes a material change to a contract, manual, policy or procedure, see CMA’s resource titled, “Contract Amendments: An Action Guide for Physicians.”



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