Q2 2026 Healthcare Coding, Compliance and Payment Integrity Update

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Healthcare organizations faced a broad set of coding, reimbursement, documentation, and fraud risks during the second quarter of 2025. The most significant developments involved GLP-1 drug spending, caregiver training, transfer-of-care modifiers, infectious disease services, DME documentation, telehealth licensure and several major enforcement actions.



For payers and providers, the central issue was not the volume of regulatory change alone. It was the operational difficulty of translating those changes into accurate claims logic, updated documentation standards and defensible payment decisions. 

Medicare Spending on GLP-1 Drugs Continued to Accelerate

Medicare Part D spending on 10 commonly used diabetes drugs increased from approximately $7.7 billion in 2019 to $35.8 billion in 2023, a 364% increase. The increase was driven primarily by higher use of:

• Rybelsus
• Ozempic
• Mounjaro

The newsletter also noted that prescribers came from a broad range of specialties, including internal medicine, endocrinology, dentistry, optometry, chiropractic and acupuncture.

Payment-integrity example

A GLP-1 prescription submitted under a diabetes indication may require different coverage support than the same drug used for weight loss. Organizations should review:

• Diagnosis-to-drug consistency
• Prescriber specialty
• Prior authorization criteria
• Refill frequency
• Duplicate therapies
• Use outside medically accepted indications
• Member outcomes and continued-coverage requirements

A broad increase in utilization is not itself proof of improper billing. However, rapid growth combined with inconsistent diagnoses, atypical prescribers, or missing outcome documentation may justify additional review.

Immunosuppressive Drug Billing Expanded to 90-Day Supplies

For dates of service on or after January 1, 2025, suppliers may dispense and bill up to a 90-day supply of qualifying immunosuppressive drugs.

The claim narrative should identify:

• “3 months,” or
• “90 days”

For dates of service before January 1, 2025, the prior 30-day supply limitation remains relevant.

Payment also depends on evidence that the beneficiary received a Medicare-covered transplant. When the transplant is not found in Medicare’s claims history, suppliers may use Modifier KX to indicate that supporting documentation is on file.

Claims example

A supplier bills a 90-day supply but omits the required narrative. The claim may be denied even though the quantity is otherwise allowable. A separate risk occurs when Modifier KX is appended without documentation supporting:



• The transplant date
• Medicare Part A eligibility
• Medicare payment for the transplant
• Medical necessity
• Satisfaction of the applicable LCD requirements

Plans should distinguish between claims that merely need corrected narrative information and claims that lack underlying coverage support.

Caregiver Training Services Require Full-Time Documentation

CMS clarified the billing requirements for caregiver training service codes, including:

• G0541
• G0542
• G0543
• 97550
• 97551
• 97552

The timed codes require the full reported time to be furnished face-to-face with the caregiver, without the patient present. Examples include:

• G0541 and 97550: full initial 30 minutes
• G0542 and 97551: full additional 15-minute increments
• G0543 and 97552: group services, not subject to the same timed-unit requirement

Audit example

A provider bills G0541 after documenting only 22 minutes of caregiver training. That service would not satisfy the full 30-minute threshold. Plans should review:

• Start and stop times
• Total documented minutes
• Whether the patient was present
• Whether the service was individual or group-based
• Repeated units without corresponding documentation
• Caregiver identity and relationship to the treatment plan

Timed services remain a common overpayment risk because billing systems may accept a code even when the documentation does not support the full unit.

Infectious Disease Add-On Code G0545 Requires Substantial Complexity

HCPCS code G0545 allows reporting of additional complexity associated with certain inpatient infectious disease consultations. The service may include:

• Transmission-risk assessment
• Infection-control protocols
• Public health coordination
• Antimicrobial stewardship
• Complex treatment planning
• Counseling of patients and caregivers
• Transition-of-care management
• Analysis of resistance patterns
• Coordination with healthcare facility staff

The code may be reported with qualifying hospital E/M services, including:

• Initial hospital care
• Subsequent hospital care
• Same-day admission and discharge services

Coding example

An infectious disease physician evaluates a hospitalized patient with a resistant infection, develops a specialized isolation protocol, coordinates with hospital staff, counsels family members, and adjusts antimicrobial treatment based on resistance patterns. That scenario may support G0545. A routine inpatient consultation with no additional infection-control, public health, or treatment complexity would not automatically justify the add-on code. Health plans should monitor:

• High-volume use by individual providers
• Use with nonqualifying base E/M codes
• Repetitive billing without changing complexity
• Missing documentation of infection-control or antimicrobial-management work
• Billing by providers whose records do not demonstrate the required expertise or service complexity 
  

Transfer-of-Care Modifiers Require New Operational Logic

Modifiers 54, 55, and 56 continue to identify different portions of surgical care:

• Modifier 54: Surgical care only
• Modifier 55: Postoperative management only
• Modifier 56: Preoperative management only

For 90-day global procedures, CMS changed how informal or undocumented transfers of care are handled. When the surgeon does not intend to provide postoperative care after discharge, the surgeon may be required to append Modifier 54. A practitioner with a different tax identification number who provides occasional post-discharge postoperative care may instead bill the appropriate E/M service and, when applicable, HCPCS code G0559 for the first qualifying visit.

Invalid-use examples

Modifiers 54, 55, and 56 are generally not appropriate for:

• Obstetric global-care codes
• Procedures with a zero-day global period
• E/M services
• Anesthesia
• Radiology
• Laboratory services
• Medicine services
• Ambulance services
• Nonsurgical HCPCS codes
• Assistant surgeons
• ASCs
• Inpatient or outpatient hospitals

Payment-integrity example

A surgeon bills the full global procedure without Modifier 54 while another unaffiliated practitioner separately bills postoperative management. Without proper transfer-of-care logic, the payer may reimburse overlapping portions of the same global package. Plans should validate:

• Global-day assignments
• Provider TIN relationships
• Dates of postoperative care
• Use of Modifier 54, 55 and 56
• G0559 frequency
• Duplicate payment of postoperative services
• Formal versus informal transfer documentation

Modifier 99 Guidance Remained Inconsistent

The newsletter identified a material inconsistency between CPT guidance, CMS claim instructions, and several Medicare Administrative Contractors. The 2025 CPT guidance indicated use of Modifier 99 when more than one modifier is needed. CMS claim-processing guidance allows up to four modifiers and instructs providers to report the additional modifiers in the claim narrative when Modifier 99 is used.

Several MACs reportedly instructed providers to use Modifier 99 when five or more modifiers apply.

Claims example

A provider submits three modifiers plus Modifier 99, but the payer follows a policy requiring Modifier 99 only when more than four modifiers are necessary. The claim could be rejected or processed incorrectly depending on local configuration. Health plans should establish a written hierarchy that considers:

• CMS instructions
• Applicable MAC guidance
• Medicaid policy
• Commercial contracts
• EDI field limitations
• Internal claim-editing capabilities

This is a clear example of why a national code-set rule may still require payer-specific operational interpretation.

Pneumatic Compression Devices Remained a Major Improper-Payment Risk

The newsletter reported a 78.9% improper payment rate for pneumatic compression devices in the 2023 reporting period, representing a projected $41.6 million in improper payments. The leading causes were:

• Insufficient documentation: 55.1%
• Medical necessity: 41.2%
• Other errors: 3.7%

Coverage requires:

• A standard written order
• Medical-record support
• Correct coding
• Proof of delivery
• Evidence of continued need and use, when applicable

The standard written order should include:

• Patient name or Medicare identifier
• Order date
• General item description
• Separately billed accessories
• Quantity
• Treating practitioner name or NPI
• Practitioner signature

Audit example

A supplier bills a pneumatic compression pump and related garments but the order identifies only the base device. If separately billed accessories are not included on the order, payment may be unsupported. Plans should also review:

• Conservative-treatment failure
• Lymphedema diagnosis support
• Refill frequency
• Proof of delivery
• Continued-use documentation
• Duplicate devices
• Accessories billed without the base item
• Orders signed after delivery
  

Place-of-Service Errors in Skilled Nursing Facilities Can Affect Payment

CMS reiterated the distinction between:

• POS 31: Services furnished during a Medicare Part A skilled nursing facility stay
• POS 32: Services furnished in a nursing facility or after Part A SNF benefits are exhausted

Because physician payments may differ by place of service, incorrect reporting may create overpayments or underpayments.

Claims example

A practitioner provides a service during an active Part A SNF stay but bills POS 32. The claim may receive a higher nonfacility payment than appropriate. Plans should compare:

• Patient admission and discharge dates
• Part A coverage periods
• Facility records
• Reported POS
• Same-day claims from multiple providers
• Professional and institutional claim alignment

Modifier CR Continued for Certain Pandemic-Era DMEPOS Claims

The newsletter clarified that Modifier CR remained active for certain DMEPOS items initially provided during the COVID-19 public health emergency. The guidance applied when:

• The base item was first provided between March 1, 2020, and May 11, 2023
• The item was subject to temporary enforcement relief
• Ongoing rental or related supply claims continued afterward

Claims should include:

• Modifier CR
• Other applicable modifiers
• The narrative “COVID-19”
• 
  

Claims example

A supplier continues billing an ongoing rental initiated during the public health emergency but omits Modifier CR and the required narrative. The claim may be denied or fail to route correctly for the applicable exception. Plans should not apply Modifier CR broadly to new equipment furnished after the emergency period.

Telehealth Licensure Remained a State-Level Compliance Issue

Federal telehealth waivers do not eliminate state licensure requirements.

A physician treating a patient located in another state may need:

• Full licensure in that state
• Compact-based licensure
• Temporary practice authority
• A state-specific telehealth registration
• Another recognized exception

Compliance example

A Missouri physician treats a patient physically located in Illinois through telehealth.

The claim may meet Medicare telehealth requirements but still present a state licensure issue.

Health plans should compare:

• Provider licensure state
• Patient location at the time of service
• Compact participation
• Temporary practice rules
• Provider specialty
• Applicable state telehealth law

Coverage and licensure are separate questions. A payable telehealth code does not establish that the practitioner was legally authorized to treat the patient in that jurisdiction.

Hepatitis B Vaccine Coverage and Roster Billing Expanded

CMS expanded the intermediate-risk group for hepatitis B vaccination to include individuals who:

• Have not completed a hepatitis B vaccination series, or
• Have an unknown vaccination history



CMS also directed systems to support roster billing for hepatitis B vaccination using:

• POS 60 for mass immunization centers
• Specialty code 73 for roster billers

Claims example

A mass immunization provider submits a hepatitis B vaccine claim using the correct vaccine and administration codes but does not report the required roster-billing specialty.

The claim may fail despite meeting the underlying coverage criteria.

Plans should validate:

• Vaccination history
• Risk-group qualification
• Roster-biller enrollment
• POS 60
• Vaccine and administration code pairing
• Duplicate doses
• Appropriate intervals between doses
  

Major Enforcement Actions Highlighted Billing-Control Failures

Walgreens settlement over uncollected prescriptions

Walgreens agreed to pay approximately $97.8 million to resolve allegations that government programs were billed for prescriptions never picked up or received by patients.

The alleged conduct occurred over an extended period and involved Medicare, Medicaid and other government programs.

Payment-integrity lesson

Pharmacy claims should be reconciled against:

• Prescription pickup
• Delivery confirmation
• Reversal activity
• Return-to-stock records
• Member complaints
• Automatic refill patterns
• Claims paid without evidence of dispensing

A paid pharmacy claim does not necessarily prove that the medication reached the patient.

Podiatry and skin-substitute fraud allegations

A Fresno-area podiatrist and sales representative were indicted for allegedly submitting false claims involving skin grafts.

The allegations included:

• A nonlicensed sales representative applying grafts
• Claims representing that the podiatrist performed the service
• Payments made to the sales representative
• Millions of dollars in Medicare and Medi-Cal reimbursement

The charges remained allegations at the time of the newsletter.

Payment-integrity lesson

Skin-substitute claims should be reviewed for:

• Rendering-provider credentials
• Practitioner presence
• Product acquisition records
• Units billed
• Wound measurements
• Frequency of application
• Medical necessity
• Financial relationships with sales representatives
• Unusual product or provider concentration
  

Healthcare Data Security Failures Continue to Create Compliance Exposure

Providence Medical Institute entered a $240,000 settlement related to a ransomware incident and alleged HIPAA Security Rule deficiencies. The newsletter emphasized the importance of maintaining Business Associate Agreements with vendors and suppliers.

Compliance example

A healthcare organization allows a technology vendor to access protected health information without an executed BAA. Even if no claim-payment error occurs, the relationship may create separate HIPAA exposure. Organizations should review:

• Vendor inventory
• PHI access
• BAAs
• Security-risk assessments
• Incident-response plans
• Termination provisions
• Subcontractor access
• Data-retention requirements
  

Coding Volume Continued to Increase

The newsletter reported that the number of healthcare procedure codes increased from approximately 28,105 in 2017 to 32,830 in 2025. That increase creates different risks for each part of the healthcare system.

For payers:

• Outdated edits
• Incorrect effective dates
• Slow adjudication
• Increased appeals
• Greater dependence on manual review

For providers:

• Documentation burden
• Coding errors
• Delayed reimbursement
• Increased audit exposure
• Training requirements

For health systems:

• EHR updates
• Billing workflow changes
• Larger coding and compliance teams
• Greater implementation complexity

PCG’s second-quarter 2025 release included:

• CCI Version 31.1
• APC Version 99
• 117 new AMA and HCPCS codes effective April 1, 2025
• Updated Virtual Examiner®, Virtual Reporter®, Virtual AuthTech® and VEWS components
  

What Healthcare Organizations Should Prioritize

The most important actions from the Q2 2025 update were:

1. Review GLP-1 claims for diagnosis, specialty, and coverage consistency.
2. Update immunosuppressive drug logic for 90-day supplies.
3. Validate timed caregiver-training services.
4. Add documentation controls for G0545.
5. Correct transfer-of-care and global-surgery logic.
6. Define a payer-specific Modifier 99 policy.
7. Strengthen pneumatic compression device audits.
8. Validate SNF place-of-service reporting.
9. Review cross-state telehealth licensure.
10. Audit pharmacy claims for uncollected prescriptions.
11. Monitor skin-substitute claims and rendering-provider credentials.
12. Confirm all vendors with PHI access have appropriate BAAs.
13. Load current ICD-10, HCPCS, CCI, and APC updates.
    

Turning Coding Change into Operational Accuracy

Healthcare coding changes create financial risk when they are not translated into claims logic, documentation standards, audit controls, and staff workflows. Virtual Examiner® helps healthcare organizations evaluate claims against current coding rules, historical billing patterns, provider behavior and payment-integrity logic. The objective is not simply to generate more denials. It is to identify claims that require review, reduction, correction, or additional documentation before incorrect payment occurs.