Avoid Costly Coding Errors: Get Lipoma Excision Right!
Compass reviews thousands of dermatology records annually and frequently finds CPT® coding errors, particularly misclassifying lipoma excisions as cutaneous lesion removals. This mistake can lead to reimbursement denials and affect MIPS quality measures 355 and 357.
Why Proper Coding Matters
The Current Procedural Terminology (CPT®) manual categorizes excision codes differently based on the origin of the lesion:
- Cutaneous lesions (e.g., dermatofibroma, cyst) → Report with CPT® 11400–11646 (based on size, location, and margins).
- Lipomas & subcutaneous/subfascial tumors → Use musculoskeletal CPT® codes (based on depth, size, and anatomic site).
Key Documentation Requirements
To support accurate coding and reimbursement, ensure your notes include:
- Pathology report confirms the lesion is a lipoma.
- Anatomic location (e.g., back, thigh, scalp).
- Size (greatest diameter + margin).
- Depth (subcutaneous vs. subfascial).
- Medical necessity (pain, rapid growth, etc.).
- Closure type (simple, intermediate, or complex).
Place of Service (POS) Pitfalls
CMS may deny or reduce payment if a lipoma excision is billed in the office (POS 11) when it’s deemed “rarely performed” in that setting. Payment varies based on:
- Facility vs. non-facility rates (MPFS database).
- Payer policies (some require prior authorization).
In our next post we’ll break down the CPT® codes for subcutaneous vs. subfascial excisions and how to avoid claim denials.
