The Shape of Professional and Technical Components in CMS FFS Data

What are Professional and Technical Components and Why Do They Matter?

Professional and technical components are HCPCS modifiers that splits Medicare payment into supervision/interpretative and equipment/facility costs. This allows separate entities to bill for their portion of a service. For example, one facility may manage diagnostic testing while a physician or other health care provider handles interpretation(1). This can also apply in situations where an independent diagnostic facility has two different service locations(2).

However, not all services can utilize professional and technical components, CMS restricts usage to specific HCPCS codes Acceptable codes are reported annually in the Physician Fee Schedule. As seen in Table 1, these codes are disproportionally related to radiology(3-5).

Table 1. Service Summary of 2019 HCPCS Codes that can Report Professional and Technical Components (N=950)

Table 1 caption: A categorical breakdown of HCPCS codes that could report professional and technical components in 2019. The data is sourced from the Physician Fee Schedule and categorized based on Codify code groups.

There is a lack of information about the shape and prevalence of professional and technical components in CMS FFS data. For studies that depend on diagnostic or imaging services, the presence of professional and technical components can result in over-counting services and under-estimating costs. This article describes the prevalence of these components, which services are most impacted, and how these components appear in the data.

Methodology

We searched all HCPCS modifier fields in the 2019 100% Medicare FFS Outpatient and Carrier files for professional component (26) and technical component (TC) modifiers. Outpatient and Carrier files were chosen due to their reliable HCPCS reporting. Global billing was defined as having a HCPCS code without a 26 or TC modifier. No cleaning or reduction was applied to these data. When reporting at the claims level, a claim is considering having a professional or technical component if one of its line items contains a TC or 26 modifier.

Due to differences in claim forms and processing, denied items are defined differently between Carrier and Outpatient files. Denied Carrier items are defined as having a denied line processing code. Denied Outpatient lines are defined as having a provider payment amount of $0. Reference the article Identifying Claim Denials in Medicare Fee-for-Service Research Identifiable Files.

For top 5 HCPCS codes, files were separated by file and component type (IE: Outpatient Revenue Center Rows with Professional Components, Outpatient Revenue Center Rows with Technical Components, Carrier Lines with Professional Components, and Carrier Lines with Technical Components). The top 5 HCPCS codes are the 5 most reported HCPCS codes in the subset data mentioned previously.

All reimbursement values are calculated at the revenue center or line level. These values represent unadjusted mean payment amounts and do not account for geographic adjustment, service complexity, or policy adjustments. HCPCS 71045 and 71046 were chosen as both were present in all top 5 HCPCS tables (Tables 3-6).

Results

Table 2 shows the prevalence of professional and technical components at the claim level. Professional components are more frequent in Carrier settings than Outpatient settings, 11.82% versus 0.29% respectively. Technical components are reported at a lower percentage, less than 2%, for both Outpatient and Carrier files.

Table 2. Percent of Outpatient or Carrier Claims with a Professional or Technical Component, 2019

Table 2 caption: Percentage of claims in the 2019 Outpatient and Carrier files with either a professional or technical component.

Tables 3-6 summarizes the most common HCPCS codes by professional/technical component and file type. These codes account for 25% or more of their respective data subsets. Some HCPCS codes show up frequently across file and component type, such as 71046 and 71045.

Table 3. Top 5 Professional Component HCPCS Codes, 2019 Outpatient

Table 3 caption: The top 5 most frequent HCPCS codes with a professional component in the 2019 Outpatient file.

Table 4. Top 5 Technical Component HCPCS Codes, 2019 Outpatient

Table 4 caption: The top 5 most frequent HCPCS codes with a technical component in the 2019 Carrier file.

Table 5. Top 5 Professional Component HCPCS Codes, 2019 Carrier

Table 5 caption: The top 5 most frequent HCPCS codes with a professional component in the 2019 Carrier file.

Table 6. Top 5 Technical Component HCPCS Codes, 2019 Carrier

Table 6 caption: The top 5 most frequent HCPCS codes with a technical component in the 2019 Carrier file.

Discussion

Professional and technical components have varying degrees of frequency between 2019 Outpatient and Carrier data. Approximately 12% of all Carrier claims contain a professional component, but technical components take up less than 2% of Carrier and Outpatient claims. This could suggest that technical portions of services are billed or bundled in other settings, such as Inpatient. However, this would require more intensive matching criteria since Inpatient settings typically do not report HCPCS.

The most frequently reported HCPCS codes are related to radiology and imaging, which aligns with CMS’s restrictions on component use.

When considering their impact on research, professional and technical components may have a larger impact than researchers expect. Since approximately 110 million Carrier claims contain a professional component, it highlights that there is a significant amount of deduplication and identification of technical components to ensure accurate utilization counts and costs. Consider that only 12.7 million Outpatient and Carrier claims contain a technical component, a linking methodology will need to consider more than just Outpatient and Carrier files. When limited to only these files, it is vital to understand that there is potential underestimation of cost.

Limitations

This article has several limitations. First, we did not attempt professional and technical component linkage, limiting our ability to quantify the extent of double counting and cost. Second, results reflect a single year of data and may not capture changes in policy or billing behavior over time. Third, this article does not describe providers who utilize these components, which could describe billing behavior. These limitations restrict us from providing stronger suggestions on professional and technical component management.

Conclusion

The primary concern associated with professional and technical components is their potential to introduce bias through double-counting of service utilization and underestimation of total costs. This article characterizes the prevalence of these components in 2019 Outpatient and Carrier data. We found that around 12% of Carrier claims contain a professional component but only 1-2% of Carrier and Outpatient claims contained a technical component. Consistent with CMS’s billing requirements, the most associated HCPCS codes were related to radiology. Thus, studies examining radiology utilization or reimbursement would benefit from deduplicating services to ensure accurate measurements.