Dermatology Medical Billing and Revenue Cycle Management 

Most dermatology practices arrive here with one specific problem. Here are the five we are asked about most.

Why do my modifier 25 claims keep getting denied or downcoded?

Because dermatology bills modifier 25 more than almost any specialty, and payers have built automated programs around that.

Modifier 25 marks a significant, separately identifiable E/M performed on the same day as a procedure. Different diagnoses are not required, which is the most common misunderstanding. What is required is an E/M note that would still stand up if the procedure were deleted from the record.

The structural problem is clinical, not behavioural. A dermatology visit is usually evaluate and treat in one encounter. The patient comes in, you look, you biopsy or you freeze. That means modifier 25 rides on a large share of your claims, and every payer edit engine notices.

The Office of Inspector General audit published on 18 November 2025 (report A-04-21-04083) found that in 2019 and 2020, approximately 61.5 percent of Medicare paid dermatology claims for E/M services included a minor surgical procedure performed the same day by the same dermatologist. Of 100 sampled claims, dermatologists met Medicare requirements on 90 and failed on 10. OIG estimated overpayments of $62,915,655.

Office of Inspector General, November 2025

The headline of that report is that dermatologists generally met requirements. Payers did not respond to the 90. They responded to the 10 and to the dollar figure, and they built specialty-wide edits.

What payers have actually done

Cigna's policy did not survive contact with a regulator. The Maryland Insurance Administration issued a consent order against it on 13 March 2026, then issued Bulletin 26-9 on 7 April 2026 extending the prohibition on automatic downcoding to all insurers in the state, citing Section 15-1005 of the Insurance Article.

Dermatology Times reported in June 2026 that thirteen major payers now operate automated E/M denial programs, and that some have moved from paying a reduced rate to denying outright pending records.

Fewer than 1 percent of denied claims are appealed. Of those that are, 75 to 80 percent are overturned.

Dermatology Times, June 2026

That gap is the whole argument. The denials are not mostly correct. They are mostly unchallenged.

What documentation survives

• A problem or complaint documented separately from the procedure site
• History, exam or medical decision making that exists independently of the procedure decision
• A plan that is not entirely consumed by the procedure
• An E/M level supported by the medical decision making or by time, not by habit

Different diagnoses are not required. The American Medical Association is explicit on that point in CPT. The test is whether the E/M note would stand on its own.

The 2021 office visit E/M restructure, which moved leveling to time or medical decision making, measurably reduced the documentation burden for reporting modifier 25 (Cutis, 2021).

How should biopsies, excisions, and destructions be coded so they actually get paid?

Three different rule sets, and each fails differently.

Biopsies are coded by technique, with only one primary code per session. Excisions are coded by measured size including margins, taken before you cut. Destructions are coded by count, and the count has to be in the note. Most dermatology denials in this group come from getting the arithmetic wrong rather than from anything clinical.

Biopsies are coded by technique, not by lesion

The 2019 CPT restructure deleted 11100 and 11101 and replaced them with technique-specific codes:

Only one primary code per encounter, no matter how many techniques you used. Select the primary by the most intensive technique performed: incisional outranks punch, punch outranks tangential. Every additional lesion then uses the add-on from that same family.

Two things go wrong constantly. Two primary codes get billed in one session, which denies. And add-on codes get missed on multi-biopsy visits, which nobody notices because nothing denies. That second one is silent, and it is usually the larger number.

If the note does not name the technique, the code is not supportable.

Excisions are coded by what you measured before you cut

Code selection depends on lesion type from pathology, anatomic site, and excised diameter.

Excised diameter is the greatest clinical diameter of the lesion plus twice the narrowest margin required for complete excision. A 1.5 cm malignant lesion with 1.5 cm margins is 1.5 plus 3.0, so 4.5 cm, coded 11606 on the trunk.

Measure before excision. The specimen contracts once skin tension releases and contracts again in formalin. Sizing from the pathology report underpays every time, and it underpays quietly.

Site families matter and are not intuitive:

Wait for pathology before choosing between the benign and malignant series. A benign code against a malignant diagnosis denies automatically, and so does the reverse.

Simple closure is bundled into the excision. Intermediate repairs (12031 to 12057), complex repairs (13100 to 13160) and adjacent tissue transfers (14000 to 14302) are separately reportable when documented and medically necessary. The note has to record the defect size.

Destructions are coded by count

Premalignant and benign destruction codes:

Ten actinic keratoses is 17000 once plus 17003 nine times. It is not 17000 times ten. Link to L57.0.

Skin tags are 11200 for up to fifteen, then 11201 for each additional ten. Using 17110 for a skin tag is a code mismatch and denies.

Billing 17000 and 17110 on the same date requires modifier 59 or an X modifier showing separate sites, or the payer bundles and pays one.

The bundling rule that catches everyone

If you biopsy a lesion and then definitively excise or destroy the same lesion in the same session, code the excision or destruction only. The biopsy is bundled. A genuinely separate lesion at a different site can be reported with the appropriate modifier.

This is the most common source of CO-97 denials in dermatology.

Free dermatology coding tool

Lesion Excision Code Finder

This tool also lives at its own address: /tools/lesion-excision-code-finder/.

How is Mohs surgery billed, and why do Mohs claims get denied?

Mohs is coded by stage and by tissue block, using 17311 to 17315.

The codes count blocks, not slides. Three rules cause most denials: the surgeon must also be the pathologist, pathology is bundled and cannot be billed separately, and repairs beyond simple closure are coded separately. Mohs codes carry zero global days.

A stage is one complete cycle: excision, mapping, colour coding, processing, microscopic examination. A tissue block is one piece of tissue embedded for sectioning. The codes refer to blocks, not slides, and this is where stage-count denials usually originate.

Additional stages are totalled as units on a single line, not spread across multiple lines. For multiple separate lesions on the same day, report the first stage of each lesion on separate lines with modifier 59.

The rule that disqualifies the claim entirely

CMS is explicit that codes 17311 to 17315 are reserved for the surgeon who removes the lesion, prepares the slides, and interprets them (Medicare Coverage Database Article A57477).

If a separate pathologist reads the tissue and bills for it, the service is not Mohs. The surgeon reports standard excision plus repair, and the pathologist bills pathology. Because pathology is bundled into the Mohs codes, surgical pathology codes such as 88305 and 88331 are not separately billable for the Mohs specimen. Adding one hits an NCCI edit and denies.

Global period and repair

Mohs codes carry zero global days, so procedures on later dates do not need modifier 79.

Simple closure is bundled. Intermediate and complex repairs, flaps and grafts are separately reportable, typically with modifier 59, and carry their own global periods. Site-specific adjacent tissue transfer codes exist for Mohs on eyelids, nose, ears and lips.

Reconstruction after Mohs is sometimes denied as cosmetic. It is not. The appeal has to document the malignancy and the Mohs origin of the defect.

Why was a lesion removal denied as cosmetic?

Because the same physical act bills entirely differently depending on documented medical necessity, and the documentation did not establish it.

Benign lesion removals denied as cosmetic usually lack a recorded symptom: bleeding, irritation, pain, functional impairment, or recurrent trauma. The clinical judgement was almost certainly sound. What is missing is the sentence that proves it.

Local coverage determinations often set the threshold quite specifically, requiring that the lesion sits in an anatomical region subject to recurrent physical trauma and that documentation shows such trauma has in fact occurred. That is a documentation standard, not a clinical one.

What establishes necessity

• The symptom, named, and its duration
• Failed conservative management where relevant
• Functional impact, described concretely
• A specific ICD-10 code, with laterality and site

Never write a cosmetic rationale on a claim intended for insurance. A note that says the patient requested removal for appearance has decided the outcome before the payer has read anything else.

Skin tags draw this denial more than anything else, because 11200 is presumed cosmetic unless the record says otherwise.

How do we get biologics approved faster?

By submitting what the payer's policy asks for the first time, in the format it asks for.

Most biologic delays in dermatology are not clinical disagreements. They are missing severity scores, missing documentation of step therapy failures, or a diagnosis code that is not specific enough to meet the policy. The volume of this work is the real problem, not the difficulty of any single case.

Dermatology practices spend a mean of 13 hours a week on prior authorization, and roughly one in three requests is denied outright (AJMC, 2026). An earlier survey by the American Academy of Dermatology found dermatologists and staff spending a mean of 3.3 hours a day on prior authorizations, with 60 percent of dermatologists interrupting patient visits to deal with them, and prior authorization required for 65 percent of clobetasol prescriptions and 76 percent of tretinoin (JAAD, 2021).

Health plans say the picture is improving, citing an 11 percent reduction in prior authorization requests since June 2025 and a standardised electronic prior authorization framework targeted for 2027. Whether that is felt in a dermatology practice this year is a different question, and the volume of work in the meantime is real.

Across Medicare Advantage generally, insurers made nearly 53 million prior authorization determinations in 2024 and denied 4.1 million of them, 7.7 percent. Only 11.5 percent of denials were appealed. Of those appealed, 80.7 percent were overturned (KFF analysis of CMS data, January 2026).

That last figure is worth reading twice. Four in five denials that get challenged are reversed, and nine in ten are never challenged.

What payers typically want

Requirements vary by plan and change, so verify against the current policy bulletin. The recurring pattern:

• Psoriasis biologics: body surface area above 10 percent or PASI above 12, often with a DLQI score, plus documented failure of topicals and phototherapy
• Atopic dermatitis: IGA of 3 or above, or EASI of 16 or above, plus documented failure of two to three high potency topical corticosteroids over four weeks each
• Specific diagnosis coding. L40.0 for plaque psoriasis, not L40. Nonspecific codes fail on submission rather than on merit

Buy and bill or specialty pharmacy

Buy and bill means the practice purchases the drug, administers it, and bills the medical benefit with a J-code plus administration. Medicare Part B requires this route for physician administered drugs. Specialty pharmacy routes the drug through the pharmacy benefit and the practice bills only the administration.

Buy and bill produces more revenue per dose only where ASP reimbursement exceeds your acquisition cost. For some newer biologics it does not, and the practice loses money on every dose without noticing until someone runs the numbers. Distributors typically extend a 90 day window to pay for the drug, and claims commonly take around six weeks to pay, faster with Medicare (Dermatology Times).

Some biologics have no permanent J-code and bill under an unclassified code, which requires current verification and accurate NDC and unit reporting.

What this costs a dermatology practice

Quilven is paid a percentage of what we collect for you.

No setup fee, no monthly platform fee, no minimum, month to month with 30 days notice. If we do not collect, we do not get paid.

We quote your rate after the free 48-hour AR audit rather than before, because a rate given without seeing your claim data is a guess. What moves the number is claim volume, how much prior authorization you carry, and coding complexity.

Should we outsource billing or hire a certified coder?

If your denial rate and AR are within benchmark and stable, and you have a coder who understands dermatology, keep them.

Outsourcing solves a capacity and specialism problem, not a competence one. The practices that regret switching are usually the ones that were doing fine and switched on price.

Every answer to this question that ranks in search is published by a company selling outsourced billing, including this one. So here are the honest triggers.

Outsourcing makes sense when:

• Denials and AR are outside benchmark and have not moved in two quarters
• You cannot hire or retain a coder who actually knows dermatology, which is a genuinely small talent pool
• One person holds all the payer knowledge and there is no cover when they are away
• You are adding providers and cannot add billing headcount at the same rate

In-house makes sense when:

• Your numbers are good and stable
• Your coder knows derm and works denials properly
• Your payer mix is simple

On cost, the honest starting point: the US Bureau of Labor Statistics puts the median annual wage for medical records specialists, the category covering billers and coders, at $50,250 as of May 2024. Benefits and payroll taxes typically add 25 to 40 percent on top, before software, continuing education, or cover.

The figures circulating in this industry for the fully loaded cost of an in-house biller, and for how much outsourcing improves collections, come from billing company marketing and have no independent source. We are not going to repeat them.

What we handle

Get a free 48-hour AR audit

We look at your claim data and tell you what is not being worked, where the denials cluster, and what it is costing you. No obligation, and no requirement to switch anything.

Common questions

Sources

• Office of Inspector General, report A-04-21-04083, 18 November 2025
• CMS Medicare Coverage Database, Article A54602, removal of benign skin lesions
• CMS Medicare Coverage Database, Article A53883, Mohs micrographic surgery
• American Academy of Dermatology prior authorization survey, JAAD, 2021
• KFF, Medicare Advantage prior authorization determinations, January 2026
• US Bureau of Labor Statistics, medical records specialists
• Dermatology Times, the new economics of dermatology claims, June 2026
• American Medical Association, Anthem rescinds pay cut for same-day services
• AAPC, excision of benign or malignant skin lesion
• AJMC, dermatology practices absorb rising prior authorization costs, 2026