What is modifier 25 used for?
Modifier 25 indicates that a significant, separately identifiable Evaluation and Management (E/M) service was performed by the same physician on the same day as a procedure, allowing both to be billed when properly documented.
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Definition
Modifier 25 is an AMA CPT modifier appended to an E/M code to indicate the E/M service was significant and separately identifiable from a procedure performed on the same date.
The detail
Modifier 25 is used on millions of Medicare claims every year and has been an OIG audit target for two decades. The AMA CPT definition requires that the E/M service be 'significant and separately identifiable' from the procedure performed the same day. In practice, this means the E/M must address a problem distinct from the procedure, with documentation supporting the separate work. Common correct uses: a dermatology patient is seen for acne management (E/M with 99213-25) and during the same visit, a separate suspicious lesion is biopsied (11102). Common incorrect uses: routine pre-procedure exam for a planned procedure (the pre-procedure exam is bundled into the procedure RVU and cannot be billed separately). OIG found in 2005 that 35 percent of claims using modifier 25 that Medicare allowed in 2002 did not meet program requirements, resulting in $538 million in improper payments. Recent audits find the same problem: in a 2025 review of E&M visits billed with modifier 25 on the same day as eye injections, documentation for 22 of 24 sampled services did not support the modifier, and OIG recommended that CMS recover up to $124 million; a separate 2025 audit estimated that about $39.6 million of the $222.5 million Medicare paid podiatrists for such visits did not comply. Documentation must clearly show two distinct services with separate medical decision-making; without it, the modifier fails audit.
Modifier 25 allows a same-day E/M service to be paid when it is significant, separately identifiable, and above and beyond the usual pre- and postoperative care for the procedure.
OIG found that 35 percent of claims using modifier 25 that Medicare allowed in 2002 did not meet program requirements, resulting in $538 million in improper payments.
In a 2025 OIG audit of E&M visits billed with modifier 25 on the same day as eye injections, documentation for 22 of 24 sampled services did not support the modifier; Medicare had paid $124 million for 1.4 million such visits.
OIG estimated that about $39.6 million of the $222.5 million Medicare paid podiatrists for E/M services billed with modifier 25 during its audit period did not comply with Medicare requirements.
What this means for clinic owners
From Sorso
If you bill modifier 25 frequently, run a quarterly self-audit of charts. If your documentation does not show two clearly separate services with distinct decision-making, you have audit exposure. Fixing this proactively is one of the cheapest risk reductions available.
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Founder of Sorso and a CFA charterholder. Before Sorso, Stan spent 19 years in corporate finance at institutions including UniCredit and Société Générale — managing a $450M loan portfolio and making senior partner at a major mezzanine lender by 29 — then built a fractional CFO firm exclusively for outpatient healthcare clinics.
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