As the year comes to a close, dermatology practices are reflecting on the challenges they faced in dermatology billing and medical billing. The complexities of ever-changing regulations, payer-specific guidelines, and nuanced coding requirements have led to common mistakes that significantly impact revenue. By understanding these pitfalls and learning how to avoid them, practices can streamline the billing process and ensure a financially healthy 2025. This comprehensive guide explores the top 10 billing mistakes of 2024, complete with in-depth examples and strategies for improvement.
1. Incorrect Use of CPT Codes for Lesion Removal
Improperly coding lesion removal procedures continues to be a widespread issue in dermatology billing. Dermatology CPT codes, such as CPT 11200, for example, cover the removal of 1-14 skin tags as a single unit. However, many practices inaccurately billed this code multiple times for each lesion removed. Similarly, CPT 11201, meant for additional groups of 10 skin tags, was frequently misapplied, leading to claim denials and revenue loss.
Example:
A dermatology group in Florida billed CPT 11200 ten times for the removal of 10 lesions on one patient, expecting reimbursement for each lesion. The claim was denied because the code covers the removal of up to 14 lesions under a single charge. Upon review, they also discovered they were not billing CPT 11201 for additional lesions correctly, losing an estimated $8,000 in potential revenue over six months.
Solution:
To avoid these mistakes, practices should provide thorough training for coders and cross-check claims with CMS coding instructions before submission. Regular audits of commonly billed procedures can also help catch errors early.
2. Inaccurate Diagnosis Coding
Diagnosis codes must accurately reflect the patient’s condition and the medical necessity of the procedure performed. A frequent issue in 2024 was the misalignment of ICD-10-CM codes with procedures, resulting in denials. When codes used don’t justify the treatment, payers reject the claim, even if the procedure was medically necessary.
Example:
A Texas dermatology clinic submitted claims for phototherapy treatments using the diagnosis code for contact dermatitis instead of atopic dermatitis. This mismatch led to repeated denials, as the payer considered the treatment unnecessary for the reported condition. This error affected 20% of their claims for phototherapy, delaying $15,000 in payments and requiring time-intensive corrections.
Solution:
Accurate diagnosis coding begins with proper documentation in the medical record. Practices should regularly review ICD-10-CM Official Guidelines and invest in medical billing services or software that provides prompts to align codes with procedures.
3. Failure to Document Medical Necessity
Documentation is the backbone of successful claims, yet many practices fail to provide adequate detail to justify procedures. Payers scrutinize claims for medical necessity, particularly when procedures could be considered cosmetic.
Example:
A California practice had claims denied for excision of malignant lesions because their documentation didn’t include specifics like lesion size, growth rate, or symptoms such as bleeding or pain. Despite performing medically necessary procedures, the lack of detailed documentation resulted in $25,000 in lost reimbursements over the year.
Solution:
Practices should establish a checklist for documenting medical necessity, including lesion characteristics, patient symptoms, and risk factors. Staff training and regular audits of medical records are critical to ensuring documentation meets payer requirements.
4. Overlooking National Correct Coding Initiative (NCCI) Edits
NCCI edits are designed to prevent improper coding combinations, yet they remain a common cause of claim denials. Many practices unfamiliar with coding edits fail to understand how these apply, especially for procedures performed on the same day.
Example:
A New York practice submitted claims for CPT 17000 (destruction of premalignant lesions) and CPT 17110 (destruction of benign lesions) for the same patient on the same day without using a modifier. The claim was denied because the codes are bundled under NCCI edits. The practice lost $12,000 in revenue before realizing they needed to append the -59 modifier to distinguish the services.
Solution:
Practices should review NCCI edit resources provided by CMS and ensure billing software includes built-in tools to flag potential bundling errors. Training staff on proper modifier usage is also essential.
5. Misreporting Units of Service
Errors in reporting units of service, particularly for procedures involving multiple lesions or treatments, are common. Overbilling or underbilling units can lead to denials or underpayment.
Example:
A Midwest practice incorrectly billed five units for CPT 17000 (meant for the first actinic keratosis treated only) instead of one unit, resulting in a denied claim. Additionally, they failed to report subsequent actinic keratosis treated with CPT 17003 for additional lesions. These mistakes caused a 20% drop in their monthly revenue for lesion destruction procedures.
Solution:
Training staff to interpret CPT guidelines for units of service is essential. Conducting routine audits and implementing automated billing systems with built-in validations can help avoid errors.
6. Inadequate Use of Modifiers
Modifiers clarify claims by providing additional information, but incorrect or missing modifiers are a frequent issue. Proper use of modifiers is critical for ensuring procedures are billed separately when appropriate.
Example:
A Georgia dermatology group saw claims denied for Mohs surgery performed on different anatomical regions because they didn’t use the -59 modifier to indicate separate sites. They lost $18,000 in reimbursements before correcting their process.
Solution:
Practices should invest in modifier-specific training and maintain a reference guide for commonly used modifiers. Billing software that prompts for missing or incorrect modifiers can also reduce errors.
7. Billing for Non-Covered Services
Payers often classify procedures like skin tag removal as cosmetic unless medical necessity is clearly demonstrated. Billing for non-covered services without proper documentation leads to denials.
Example:
A Nevada practice submitted claims for benign lesion excisions without documenting symptoms such as pain or infection. The payer denied the claims, classifying them as cosmetic. Over a year, the practice lost $30,000 in potential revenue.
Solution:
Verify coverage policies for each payer and provide patients with Advanced Beneficiary Notices (ABNs) for procedures that may not be covered. Clear documentation of medical necessity is crucial.
8. Lack of Up-to-Date Coding Knowledge
Coding guidelines are updated annually, and using outdated codes remains a common problem. This year, new ICD-10-CM codes for dermatological conditions were introduced, but some practices continued using retired codes.
Example:
A Florida practice submitted claims for hidradenitis suppurativa treatments using an outdated ICD-10-CM code, leading to repeated denials. The errors caused delays in processing $20,000 worth of claims and strained their cash flow.
Solution:
Practices should subscribe to coding update alerts, attend annual coding seminars, and allocate time for staff to review updated coding manuals.
9. Incomplete Patient Information
Missing or inaccurate patient data frequently causes claim rejections. Errors during patient intake or insurance verification can delay reimbursement significantly.
Example:
A Pennsylvania practice discovered that 15% of their claims were denied due to errors in patient demographics, such as an incorrect date of birth or missing patient name. Correcting these errors delayed payments by an average of 45 days per claim.
Solution:
Implement a double-check system during patient intake and use automated verification tools to ensure accuracy.
10. Neglecting to Verify Insurance Eligibility
Failing to confirm insurance eligibility is a costly mistake. Providing services to patients with lapsed coverage often results in unpaid claims.
Example:
A Colorado practice provided photodynamic therapy to a patient whose insurance had expired. The claim was denied, and the patient was unable to pay out-of-pocket, resulting in a $5,000 loss for the practice.
Solution:
Always verify insurance coverage through payer portals or clearinghouses before services are rendered. This simple step can prevent costly errors.
Final Thoughts
Billing involves many complexities, but errors can be minimized through effective practice management, proper training, and thorough understanding of dermatology CPT codes. By addressing these common mistakes and staying updated on payer requirements, dermatology practices can rectify insurance issues, maintain financial health, and provide exceptional patient care while ensuring revenue cycle management remains efficient.
As 2025 approaches, now is the perfect time to evaluate and refine your billing practices for a smoother and more profitable year. For professional assistance with your dermatology billing and practice management needs, contact Inga Ellzey Billing Companies. Our experienced team is dedicated to helping your practice optimize its billing workflow, reduce errors, and maximize revenue. Visit dermatologybilling.com to learn more.
