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Physicians fight back against Anthem modifier 25 payment reduction policy

November 17, 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.

As the California Medical Association (CMA) recently reported, Anthem Blue Cross notified physicians in several states that it will begin reducing reimbursement of evaluation and management (E&M) services billed with modifier 25 effective January 1, 2018. CMA is very concerned with the adverse impacts of this new policy upon our physician members and is coordinating with the American Medical Association (AMA) and the American Association of Dermatologists (AAD), along with many other state and specialty organizations, to push back on the proposed change.


In response to the Anthem policy announcement, AMA recently adopted policy to “aggressively and immediately advocate through any legal means possible, including direct payer negotiations, regulations, legislation, or litigation, to ensure when an evaluation and management (E&M) code is appropriately reported with a modifier 25, that both the procedure and E&M codes are paid at the non-reduced, allowable payment rate.” The resolution was introduced by AAD, CMA and physicians from other state and specialty societies.


While Anthem was not specifically named in the resolution, the adopted policy specifically addresses the proposed reductions in payment of modifier 25 services and paves the way for increased pressure on Anthem to halt implementation of its policy.  


Additionally, CMA has raised this issue with the California Department of Managed Health Care. CMA has received an increased number of complaints about Anthem since the policy announcement.


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 this 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 at through the CMA Center for Economic Services.


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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