Nicoletti Notes August 2026
Published on August 18th, 2026
Dear Friends and Colleagues,
If you’ve opened any emails lately, you’ve seen the news that CMS is proposing to cut payment when an encounter is reported with a procedure and an E/M with modifier 25. They are proposing to pay the highest valued code (whether it is the E/M or the procedure) at 100% and the second and subsequent codes at 50%. Naturally, medical practices don’t like it.
I have a second objection: it still doesn’t define what is a significant, separately identifiable E/M service. If you’re a coder or auditor for a medical practice or payer, you know that when looking at a note, there are different opinions about the matter. The OIG did an audit of modifier 25 for Dermatology. The OIG uses an independent medical review contractor to do their audits. They found only 1 out of 95 encounters did not meet the criteria for a separate office visit. (For five encounters, they did not receive notes.) This audit, dated November, 2025, did not mention the AMA’s March 2023 criteria for using modifier 25.
When I used to do modifier 25 audits, for established patients, I always reviewed the prior note. Sometimes, the prior note showed that the procedure in question was a planned procedure and there was nothing else “new” in the note to support an E/M. Sometimes, the opposite was true.
If CMS finalizes this for January (and they’ll tell us in their November Final Rule release) we know private payers will be sure to follow. I just hope it means they’ll stop reviewing these encounters (wishful thinking).
Best wishes for the rest of summer,
Betsy
You can read these yourself:
OIG report
AMA and modifier 25