At Corcoran Consulting, we are often asked if removal of benign skin lesions is a covered service; the answer is “sometimes.” This column will explain when the removal is a covered service by Medicare and when it is not.

Q. Does Medicare reimburse removal of benign skin lesions?

A. Sometimes, but not if the removal is considered cosmetic. Medicare clearly defines its policy on cosmetic surgery coverage. The Medicare Benefit Policy Manual (MBPM) Chapter 16, §10 states, “No payment may be made … for certain items and services … [including] Cosmetic Surgery.” In the same manual, Chapter 16, §120 notes: “Cosmetic surgery or expenses incurred in connection with such surgery is not covered.”

Q. When are these procedures covered?

A. Local Coverage Determination groups (LCDs) note that coverage might be provided in the event of a threat to health or function. Wisconsin Physician Services (WPS), the Medicare Administrative Contractor for a number of states, publishes a specific policy on when these procedures may be covered (www.cms.gov/medicare-coverage-database/view/lcd.aspx?LCDId=35498 ): “Medicare will ... consider the removal of benign skin lesions as medically necessary, and not cosmetic, if one or more of the following conditions is present and clearly documented in the medical record:

1. The lesion has one or more of the following characteristics: bleeding, itching, pain; change in physical appearance (reddening or pigmentary change), recent enlargement; or
2. The lesion has physical evidence of inflammation, eg, purulence, oozing, edema, erythema.
3. The lesion obstructs an orifice, or
4. The lesion clinically restricts vision, or
5. There is clinical uncertainty as to the likely diagnosis, particularly where malignancy is a realistic consideration based on the lesion appearance,
6. A prior biopsy suggests or is indicative of lesion malignancy or premalignancy.
7. The lesion is in an anatomical region subject to recurrent physical trauma and there is documentation or such trauma.
8. Wart removals will be covered under the guidelines listed above. In addition, wart destruction will be covered when the following clinical circumstance is present:
   1. Periocular warts associated with chronic recurrent conjunctivitis thought secondary to lesional virus shedding
   2. Warts showing evidence of spread from one body area to another, particularly in immunosuppressed patients.”

Be sure your chart note reflects all complaints regarding the lesions or the examination notes a threat to health (such as possible malignancy, if that is a concern). Weak documentation in the chart won’t support a claim; a medical record statement of “irritated skin lesion” is not sufficient justification for lesion removal when solely used to reference a patient’s complaint or a physician’s physical findings.

Q. What if we don’t know if the lesion is benign or malignant?

A. Not all benign lesions can be identified as such in advance. When you don’t know, the wisest course may be to hold the claim pending return of the pathology report.

Alternatively, you can use a diagnosis such as D492 (Neoplasm of unspecified behavior, bone, soft tissue and skin). Corcoran’s recommendation is to hold the claim and avoid confusion.

Q. How should we proceed if the lesion is benign?

A. The WPS LCD states, “If the beneficiary wishes one or more benign symptomatic lesions removed for cosmetic purposes, the beneficiary becomes liable for the service(s) rendered.

The physician has the responsibility to notify the patient in advance that Medicare will not cover cosmetic dermatological surgery and that the beneficiary will be liable for the cost of the service. It is strongly advised that the beneficiary, by his or her signature, accept responsibility for payment. Charges should be clearly stated as well.”

In some cases, the lesion is clearly benign on exam, the patient does not have complaints (except those related to appearance) and the patient still desires removal. In this case, obtain the patient’s agreement to pay with an Advance Beneficiary Notice of Noncoverage (ABN, for Medicare Part B) or other financial waiver for other payers.

Remember that Medicare Advantage plans (Part C) are prohibited from using the ABN form; they are required to have a process, often known as an organizational determination, for determining coverage. And, while private or commercial insurance plans are not required to follow Medicare’s guidelines, they often do.

For a known benign lesion, in the absence of signs, symptoms, illness or injury, use a diagnosis code such as Z41.1 (Encounter for cosmetic surgery). This will properly prompt a denial.

Q. What about actinic keratosis?

A. That’s a different story. The Medicare NCD 250.4 specifically supports coverage (www.cms.gov/medicare-coverage-database/view/ncd.aspx?NCDId=129 ). “Actinic Keratosis (AKs), also known as solar keratoses, are common, sun-induced skin lesions that are confined to the epidermis and have the potential to become a skin cancer.” It goes on to state, “Effective for services performed on and after November 26, 2001, Medicare covers the destruction of actinic keratoses without restrictions based on lesion or patient characteristics. OM

Suzanne L. Corcoran, COE is vice president of Corcoran Consulting Group. She can be reached at (800) 399-6565 or www.corcoranccg.com .