CMS and Its Claims Processing Contractors Issued Conflicting Guidance on the Proper Use of the KX Modifier for Part B Immunosuppressive Drug Claims

Medicare Part B paid for some immunosuppressive drugs billed with the KX modifier that were not eligible for Part B payment. Of the 75 claims in our random sample, pharmacies had documentation to support the KX modifier for 65 claims but did not have support for the remaining 10.

The Centers for Medicare & Medicaid Services' (CMS) intention for the KX modifier was to signify an attestation by the pharmacy that it had documentation proving that a beneficiary's organ transplant occurred when the beneficiary was eligible for Medicare coverage. However, guidance in the Medicare Claims Processing Manual (the Manual) is not clearly written and additional guidance issued by claims processing contractors conflicted with the guidelines in the Manual.

Pharmacies improperly received $3,973 in Part B reimbursement for the immunosuppressive drugs on the 10 claims. On the basis of our sample results, we estimated that Part B paid $4.6 million in reimbursement for immunosuppressive drugs billed with the KX modifier that did not comply with Medicare requirements.

We recommended that CMS (1) clarify language in the Manual to be consistent with its intent, as described above, and (2) instruct the claims processing contractors to process immunosuppressive drug claims without the KX modifier and educate pharmacies on the correct use of the modifier.

CMS concurred with our recommendations and provided separate technical comments on our report. We incorporated the technical comments where appropriate.