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Note from the instructor: Medicare change processes Part I: Claim adjustments and Reopenings

This week’s note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.  

This note will begin a two-part discussion on several Medicare processes involving changes to claims as originally submitted and/or adjudicated. We will focus on timely claims adjustments and the reopening of claims by contractors and adjudicators, as well as by providers and beneficiaries. Next week we will review the five-level Medicare appeals process and the relationship of that process to claim adjustments and reopenings.

Recent guidance

CMS recently released Medicare Claims Processing Transmittal R3022CP, which sets out a new streamlined, standardized process for providers to request the reopening of a claim (Reopening). Prior to this, A/B Medicare Administrative Contractors (A/BMACs) were permitted to create their own reopening processes, subjecting providers to different processes in different jurisdictions. To prepare for the new process, CMS sought permission and approval from the National Uniform Billing Committee to create:

  • A new Type of Bill frequency code (“Q”) for providers to use to identify a Request for Reopening; and
  • Several series of Condition Codes for providers to use to designate the type of Reopening being requested and other key facts.

In addition to Transmittal R3022CP, CMS also released two related MLN Matters articles: MM8581 and SE1426. Both provide helpful information, but MLN Matters article SE1426, in particular, provides a comprehensive list of the new Condition Codes and examples of appropriate coding, depending upon the type of Reopening being requested. Hospitals are encouraged to review these recently released documents, along with Chapter 34 of the Medicare Claims Processing Manual (MCPM), which focuses on Reopenings, to answer any questions they might have.

Claim adjustments

Before we focus on Reopenings, we need to review the Medicare rules relating to claim adjustments. A provider’s ability to adjust its initial claim is limited to the following:

  1. If the provider failed to include a particular item or service on the initial claim, an adjustment claim to include the item or service is subject to the timely filing limitation for the item or service (generally, one year from the date of service).
  2. With respect to IPPS claims, there is an even shorter time frame. If the adjustment would result in a change to a higher paying DRG, the adjustment must be submitted within 60 days of the date of the remittance for the initial claim.
  3. If, however, an adjustment claim otherwise corrects or supplements information previously submitted on a timely claim about specified services or items furnished to a specified individual, it is subject to the rules governing administrative finality, rather than the otherwise applicable timely filing limitations. The rules governing administrative finality include Reopenings and are found in the MCPM, Chapter 34.  For claims submitted on and after January 1, 2015, such claims must be submitted with a “Q” in the fourth position of the Type of Bill to identify them as a Reopening. (See MCPM, Chapter 1, Section 70.5 for more information.)

Reopenings

Let us now review Reopenings, in general, and the new Request for Reopening process, in particular. As defined by Medicare, “a reopening is a remedial action taken to change a final determination or decision that resulted in either an overpayment or an underpayment, even though the determination or decision was correct based on the evidence of record.”

In Transmittal R3022CP and relevant sections of Chapter 34 of the MCPM, CMS notes Reopenings are “separate and distinct” from the Medicare appeals process. The principal difference is providers have certain rights to appeal under the Medicare appeals process, whereas the decision to Reopen is generally at the discretion of the contractor or adjudicator. For example, an A/BMAC’s denial of a claim is an initial determination, which gives the provider certain rights to appeal that denial. On the other hand, an A/BMAC’s refusal to reopen a claim determination is not an initial determination and, therefore, is not appealable. Generally, a claim determination may not be appealed and Reopened at the same time. For example, if a Reopening is pending when a subsequent timely appeal is filed, the Reopening will be refused in order for the appeal to proceed. There are also different time limitations and conditions that apply to a provider’s right to appeal and a provider’s right to Request a Reopening.

With respect to Reopenings, whether initiated by a contractor or adjudicator or requested by a party (a provider or beneficiary), the time limitations also vary depending upon who is initiating or requesting the Reopening and whether the decision maker is a contractor or adjudicator.

A contractor may reopen and revise its initial determination or redetermination on its own motion, as follows:

  • Within one year from the date of the initial determination or redetermination for any reason; or
  • Within four years from the date of the initial determination or redetermination for good cause as defined in §10.11; or
  • At any time if:
    • There exists reliable evidence the initial determination was procured by fraud or similar fault as defined in 42 CFR §405.902; or
    • The initial determination is unfavorable, in whole or in part, to the party (provider or beneficiary), but only for the purpose of correcting a clerical error on which the determination was based. Third party payer error does not constitute clerical error for these purposes.

A party (provider or beneficiary) may request a contractor to reopen and revise its initial determination or redetermination under the same circumstances, except a party may not request a contractor to reopen its initial determination or redetermination at any time upon reliable evidence of fraud or similar fault. In addition, although in certain circumstances a contractor can reopen at any time, CMS does not expect a contractor would regularly grant such requests, especially for older claims where the claims history is not readily available.

An adjudicator, either a Qualified Independent Contractor (QIC), an Administrative Law Judge (ALJ) or the Appeals Council (AC), may only reopen and revise its reconsideration, hearing decision or review, respectively, under the following conditions:

  • Within 180 days from the date of its decision for good cause in accordance with 42 CFR §405.986; or,
  • At any time if the reconsideration or hearing decision or review was procured by fraud or similar fault.

A party may only request an adjudicator (QIC, ALJ or the AC) to reopen and revise its reconsideration, hearing decision or review within 180 days from the date of the reconsideration or hearing decision or review, as applicable, for good cause in accordance with 42 CFR §405.98.

New Request for Reopening process

As noted above, when a provider needs to correct or supplement a claim within the timely filing limits for those items or services, providers may submit an adjustment claim. When the need for a correction is discovered beyond the timely filing limits, however, an adjustment bill is not allowed, and a provider must utilize the Reopening process to correct the error. In MLN Matters article SE1426, CMS provides guidance on the new Reopening process, including the new Type of Bill and Condition Codes to be reported and examples of appropriate coding. With respect to Requests for Reopening submitted on and after January 1, 2015, providers are required to report the following codes and related information:

  • Type of Bill xxxQ
  • An applicable Reopening Condition Code (R1-R9) to identify the nature/circumstances of the error or mistake to be corrected
  • An applicable Adjustment Condition Code (D0, D1, D2, D4, D9, E0) to identify what was changed on the claim, if appropriate
  • A Condition Code W2 to attest there is no appeal in process
  • An Adjustment Reason Code (for DDE claims only)
    • R1 = less than one year from Initial Determination
    • R2 = one to four years from Initial Determination
    • R3 = more than four years from Initial Determination
  • Reopenings that require “Good Cause” to be documented must have a Remark/Note from the provider to that effect.

To facilitate the Reopening process, CMS recommends any Reopening request that contains changes or additions from the original claim should contain a remark/note explaining what has been changed. If the change or addition affects a line item instead of a claim item, CMS recommends providers indicate which lines are being changed in the remark/note.

The next note will review the five-level Medicare appeals process and the relationship of that process to claim adjustments and Reopenings in more detail.

Note from the instructor: Multiple Final Rules Result in Payment Increase to Most Providers except General Acute Care Hospitals

This week’s note from the instructor is written by Kimberly Anderwood Hoy Baker, JD, CPC, regulatory specialist for HCPro.  

CMS published a number of final rules in the Federal Register for various hospital and other payment systems.  They published rules for general acute care hospitals, long term acute care hospitals (LTACH), inpatient psychiatric facilities (IPF) and inpatient rehabilitation facilities (IRF).  In addition, the hospice and skilled nursing facility final rules were also published this week. Overall, most provider types included in these rules will see a payment increase in FY 2015, not only to operating rates, but also to their overall payments to their industries.

The IRFs will see an overall increase of $180 million attributable to a 2.2% update in their operating rates.  The IPFs will see an overall increase of $120 million attributable to a 2.1% update in their operating rates including to the Federal Per Diem Base Rate and rates for Electroconvulsive Therapy (ECT).  In the final rules, there was also information on the ICD-9 to ICD-10 transition for both these payment systems.  For IRFs, there was information on General Equivalency Mapping for conditions affecting the inpatient grouper (e.g. comorbidities) and presumptive compliance rules.  For IPFs, CMS discussed the elimination of 156 non-specified conditions for comorbidity adjustments.

The LTACH industry will see an increase of $62 million with an update of 2.2% in their operating rates.  The SNF industry will also see an increase of $750 million resulting from a 2.0% update to their operating rates and hospice will see an increase of $230 million resulting from a 2.1% update to their operating rates.

The exception to the overall growth in payment rates for FY 2015 is general acute care hospitals paid under the IPPS system.  Although they will see a 1.4% update to their payment rates, overall CMS projects that payments will decrease by $756 million.  The IPPS will also see a change in how the Inpatient Quality Reporting (IQR) adjustment is applied to the standardized amounts and the addition of a reduction to the standardized amount for non-compliance with Electronic Health Record (EHR) requirements.  Failure to meet each of these will result in a .25% reduction in the market basket update for these hospitals, which could total ½ the total market basket update they would otherwise be entitled.

Other quality adjustments include the new Hospital Acquired Condition (HAC) reduction program which will result in a 1% reduction for hospitals with the highest rate of HACs (highest quartile) compared to other hospitals.  The Hospital Readmission Reduction Program penalty will increase to a maximum of 3% for FY 2015 and chronic obstructive pulmonary disease and hip/knee arthroplasty will be added to the list of monitored conditions this year. Coronary artery bypass graft procedures to be added to that list in 2017.  The pool for the Value Based Purchasing program, in which hospitals can be rewarded or penalized for meeting certain quality based measures, will increase to 1.5% this year as well.

Also affecting rates for FY 2015 is the change to the Labor Markets that CMS uses to establish wage indices.  CMS is implementing changes in labor markets based on Office of Budget and Management labor areas from 2010 census data.  This will result in a decrease in the wage index for some hospitals and skilled nursing facilities. For those providers negatively affected, CMS is implementing a one year 50/50 blend of the wage index calculated under the old labor market areas and the new areas.  A very few hospitals were moved from urban designation to rural, resulting in a lower wage index. These hospitals will have a three year transition period to the new wage indices.  Additionally, for critical access hospitals (CAH) located in formerly rural areas that are now designated urban, they will have a two year transition period to apply to be reclassified to retain their CAH status.

2014 Medicare Compliance Forum-Wednesday, August 20 is last day for early bird pricing!

The top five reasons to attend the 2014 Medicare Compliance Forum

The 2014 Medicare Compliance Forum (October 23–24) is the only seminar that will teach you how to respond to the sweeping changes CMS implemented for inpatient and outpatient services. Learn how the changes will impact operations from utilization review to billing and coding, and gain the information needed to predict the impact on your revenue stream for 2015.

The speakers discuss why these MCF sessions are important:

  • Practical Strategies for Enhancing Your UR Committee

This session is “going to give people the opportunity to not only see how they need to change their policies but it’s a chance to talk to other people and find out what they picked up from the sessions and what they already incorporated into their policies.” Kimberly A. Hoy Baker, JD, CPC

  • Updates to the Outpatient Prospective Payment System APCs: How Comprehensive Can You Get?

“Be the first one in your hospital to understand the difference between the current outpatient hospital Ambulatory Payment Classifications (APCs) and comprehensive APCs and be able to explain it to management.” Gina M. Reese, Esq., RN

  • Rise to the Challenge of Medicare’s “Inpatient-Only” Procedure List

“The 2-midnight rule may be overly confusing to surgeons and interventionists who perform inpatient-only procedures. Having an effective plan for education and case management assistance will reduce the risk of unpaid claims.” Deborah K. Hale, CCS, CCDS

  • An Inside Look at the Probe and Educate Audits of Inpatient Claims

“What has the probe and educate period actually shown? By taking a deep dive into real-life examples, this session provides an understanding of the framework under which probe and educate reviews are taking place.” Ralph Wuebker, MD, MBA

The Physician Advisor: Strategies That Affect the Success of This Key Player on Your UR Committee

“A physician advisor is a critical component of your UR committee and can have a significant positive impact on both your Medicare denials and appeals. This presentation will discuss how to select, train, and engage your physician advisor with your medical staff.” Mark Michelman, MD, MBA

Don’t miss two exciting pre-conferences on October 22!

  • Inpatient versus Outpatient: A Soup to Nuts Menu for Success
  • Tricks of the Trade: Uncovering and Optimizing Medicare Resources

Click here or call 800-780-0584 for agenda and registration information. Register by August 20, 2014, to enjoy the early bird pricing!

Note from the instructor: OIG Testifies on Observation Services-Again

This week’s note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro.  

A report from the Office of Inspector General (OIG) caught my eye and I thought it may be another window into the world of what CMS may be conjuring up for the coming fiscal year.

On July 30, the OIG testified before the United States Senate Special Committee on Aging regarding observation services and the impact on Medicare beneficiaries.  The transcript of the hearing is titled “Admitted or Not? The Impact of Medicare Observation Status on Seniors”.

Last year, just before the release of the FY 2014 IPPS final rule and CMS’s announcement of the two-midnight hospital policy, the OIG published a similar report called Hospitals’ Use of Observation Stays and Short Inpatient Stays for Medicare Beneficiaries. Over the past year, there has been a lot of confusion, to say the least, and continued education of both Medicare Administrative Contractors (MACs) and providers regarding this regulation.

Although this memorandum appears to be related to a request for full funding of the OIG’s FY 2015 budget to allow them to focus on hospital payment policy, there are some interesting statements that makes me wonder just what might be in the soon to be published IPPS final rule.

Here are the three key points as cited by the OIG:

  • 3-day acute care qualifying stay for a covered skilled nursing facility (SNF) stay: “It is important to ensure that beneficiaries with similar post-hospital care needs have the same access to and cost-sharing for SNF services. Allowing nights spent as an outpatient to count toward the three nights needed to qualify for SNF services may require additional statutory authority.”
  • Alternative to the 2-midnight rule:  “CMS expects this policy to reduce the numbers of short inpatient stays and of observation stays lasting two nights or longer. The policy has not been evaluated to ensure that it is working effectively. This policy will affect hospitals’ use of observation stays and short inpatient stays, which in turn will affect Medicare and beneficiary payments to hospitals. The new policy may also affect beneficiaries’ access to SNF services. Because providers have been vocal in their opposition to the 2-midnight policy and because CMS and Congress are considering alternatives, a careful evaluation of the 2-midnight policy and possible alternatives is essential.”
  • Short stay payment structure: “A number of factors must be carefully considered, including clear guidelines for hospitals and contractors; similar payments for similar care; and the overall impact on Medicare payments, hospitals, and beneficiaries. This will continue to require a concerted effort by a number of key players, including CMS, CMS’s contractors, providers, OIG, and Congress.”

For years, providers have been asking CMS to consider time spent in observation to be counted towards the beneficiary’s three-day qualifying stay for a covered SNF stay. Maybe CMS has finally heard our pleas. In regards to an alternative to the 2-midnight rule, we need to be careful what we ask for, as any changes or clarifications to the current regulation are sometimes less palatable than the current one.  As far as the short stay payment structure, this would be much easier to implement for a hospital paid under the prospective payment system (PPS) than a hospital paid under cost such as a critical access hospital (CAH) but in the world of Medicare, anything is possible. Stay tuned for breaking news from HCPro on the release of the FY 2015 IPPS final rule.

Note from the instructor: Reimbursement for outpatient services provided to critical access hospital (CAH) patients

This week’s note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.  

Several weeks ago, we began a review of the complex rules surrounding reimbursement to CAHs. CAHs are a special category of small rural hospitals that provide both inpatient and outpatient services in what would otherwise be medically underserved parts of the country. To assure their ability to continue to do so, CAHs generally receive reimbursement for the facility component of both their inpatient and outpatient hospital services based on 101% of reasonable costs. In this week’s note we will conclude our review of CAH reimbursement issues, focusing on special billing and payment issues relating to both inpatient and outpatient services performed by certified registered nurse anesthetists (CRNAs).  Beginning with dates of service on and after January 1, 2013, these special billing and payment rules may apply not only to CRNA anesthesia services, but to other services that the CRNA is legally authorized to perform in the state in which the services are furnished.

Payment for inpatient facility and professional services

As noted in our prior discussion, CAHs bill for the facility/technical component of covered Part A inpatient services to the A/B Medicare Administrative Contractor (A/BMAC) on the UB-04 (Type of Bill [TOB] 011X), and are reimbursed on the basis of 101% of reasonable costs, less the applicable Part A deductible and coinsurance amounts. Most professional services provided to CAH inpatients are billed separately to the A/BMAC on the CMS 1500, with the place of service reported as hospital inpatient. With the exception of payment for certain CRNA services, payment is made under Part B, based on a fee schedule (e.g., Medicare Physician Fee Schedule [MPFS]), charge or other fee basis, less the applicable Part B deductible and coinsurance amounts.

Payment for the facility services is made to the CAH, and payment for the professional services is generally made to the respective practitioners.

Payment for outpatient facility and professional services under Method I and Method II

With respect to outpatient services, CAHs may bill using either Method I or Method II. Under Method I, reimbursement for both the facility and professional services provided to CAH outpatients is similar to reimbursement for the facility and professional services provided to CAH inpatients. Facility services are billed on the UB-04 (TOB 085X), but payment is made to the CAH under Part B, rather than Part A. With the exception of payment for certain CRNA services, professional services are billed on the CMS 1500, with the place of service reported as hospital outpatient, and payment is generally made to the respective practitioners under Part B.

Under Method II, CAHs may elect to receive reimbursement for both the facility and professional services provided to their outpatients by practitioners who have assigned their right to payment to the CAH for that cost report period (CRP). Under Method II, with respect to those outpatient services whose professional component is provided by a practioner who has elected Method II reimbursement:

  • The CAH bills for both the respective facility and professional services to the A/BMAC on the same UB-04 (TOB 085X), reporting appropriate revenue and HCPCS codes for all services
    • Payment for the CAH facility services will be 101% of the reasonable cost for those services, less the applicable Part B deductible and coinsurance amounts
    • Payment for professional services will be paid at 115% of whatever amount the A/BMAC would pay under the MPFS, etc.
  • Payment for both the facility and professional services is made to the CAH under Part B.

With respect to those outpatient services whose professional component is provided by a practioner who has not assigned his/her right to payment to the CAH, reimbursement for both the facility and professional services follows Method I.

Special reimbursement for CRNA services under the pass-through exemption

Since 1989, a CAH that meets certain requirements has been able to receive a pass-through exemption for anesthesia services provided by a qualified non-physician anesthetist (CRNA) who is either employed by the CAH or who provides those services under arrangements with the CAH. For services provided on and after January 1, 2013, CMS has extended the pass-through exemption to other services that a CRNA is legally authorized to perform in the state in which the services are furnished. A CAH may qualify for the pass-through exemption so long as:

  • The CAH is located in a rural area or has been reclassified as rural;
  • The CAH employs or contracts with at least one full-time CRNA. (The CAH may employ or contract with more than one CRNA, but the total number of hours furnished by all CRNAs may not exceed 2080 hours per year); and,
  • The CAH’s total volume of surgical procedures requiring anesthesia (including both inpatients and outpatients) does not exceed 800 procedures during the calendar year. (To maintain its qualification for the pass-through exemption, a CAH must demonstrate prior to January 1 of each respective year that its volume of surgical procedures requiring anesthesia during the prior year did not exceed this limitation).

Under the pass-through exemption, a CAH may be reimbursed for CRNA professional services at 101% of reasonable costs (less the applicable deductible and coinsurance amounts), rather than the otherwise applicable MPFS amount. This exemption applies to both inpatient and outpatient CRNA professional services. Since CAHs also receive 101% of the reasonable costs of related CRNA inpatient and outpatient facility services, CAHs that qualify for and elect the CRNA pass-through exemption receive 101% of the reasonable costs for both inpatient and outpatient facility and professional CRNA services, less the applicable deductible and coinsurance amounts.

A CAH that qualifies for the pass-through exemption for CRNA services may elect Method II payment for all outpatient professional services except CRNA professional services. In that case, the CAH may retain pass-through payment for the CRNA professional services (both inpatient and outpatient) and receive payment under Method II for all other outpatient professional services performed by practitioners who have assigned their right to payment to the CAH.

When billing for CRNA services subject to the pass-through exemption, a CAH should include both facility and professional services on a single UB-04 claim form, with TOB 011X (inpatient) or TOB 085X (outpatient), as appropriate. CRNA facility services for anesthesia should be billed with revenue code 037X, and non-anesthesia facility services which the CRNA is authorized to perform under state law should be billed with a more appropriate revenue code. In both instances, the services should be reported with a HCPCS code that identifies the services performed. CRNA professional services should be billed with revenue code 0964, along with the relevant HCPCS code.

Billing for outpatient facility and professional CRNA services under Method II

If a CAH fails to qualify for the pass-through exemption or elects to receive payment for outpatient CRNA services under Method II, the exemption is withdrawn for both outpatient and inpatient CRNA professional services. Under Method II, the CAH will bill for outpatient CRNA facility and professional services on a single UB-04 (TOB 085X), reporting the facility and professional services with an appropriate revenue code (e.g., 037X for facility CRNA anesthesia services and 0964 for all professional CRNA services).  Reimbursement will follow applicable Method II reimbursement, as set out below:

  • Payment for the CRNA facility services will be 101% of the reasonable cost for those services, less the applicable Part B deductible and coinsurance amounts
  • Payment for the CRNA professional services will be paid at 115% of whatever amount the A/BMAC would pay for those services under the MPFS, etc. For example, CRNA professional anesthesia services will be paid, as follows:
    • 115% of the MPFS amount for not medically directed anesthesia, when designated by the “QZ” modifier; or
    • 115% of the reduced amount (0.50) of the MPFS amount for medically directed anesthesia, when designated by the “QY” modifier.
  • Payment for both the facility and professional services is made to the CAH under Part B.

As noted above, when the pass-through exemption for CRNA services does not apply, a CAH will submit the inpatient facility CRNA services on the UB-04, TOB 011X, and will be reimbursed for those services on the basis of 101% of reasonable costs, less the applicable Part A deductible and coinsurance amounts. The professional CRNA inpatient services will be submitted separately to the A/BMAC on the CMS 1500, with the place of service reported as hospital inpatient. Payment will be made under Part B, based on the MPFS, less the applicable Part B deductible and coinsurance amounts.

Related resources

For additional information on this week’s discussion, please see the following source authorities:

42 CFR 412.113(c)

Medicare Claims Processing Manual, Chapter 4, Section 250.3.3

Medicare One Time Notification Transmittal 1379

Note from the instructor: Reimbursement for outpatient services provided to critical access hospital (CAH) patients

Several weeks ago, we began a review of the complex rules surrounding reimbursement to CAHs. CAHs are a special category of small rural hospitals that provide both inpatient and outpatient services in what would otherwise be medically underserved parts of the country. To assure their ability to continue to do so, CAHs generally receive reimbursement for the facility component of both their inpatient and outpatient hospital services based on 101% of reasonable costs. In this note we will continue our discussion, focusing on specific rules that relate to anesthesia services (both inpatient and outpatient) and the expansion of coverage for certain services performed by anesthesiologists.

Payment for inpatient facility and professional services

As noted in our prior discussion, CAHs bill for the facility/technical component of covered Part A inpatient services to the A/B Medicare Administrative Contractor (A/BMAC) on the UB-04 (Type of Bill [TOB] 011X), and are reimbursed on the basis of 101% of reasonable costs, less the applicable Part A deductible and coinsurance amounts. Most professional services provided to CAH inpatients are billed separately to the A/BMAC on the CMS 1500, with the place of service reported as hospital inpatient. With the exception of payment for certain anesthesia services, payment is made under Part B, based on a fee schedule (e.g., Medicare Physician Fee Schedule [MPFS]), charge or other fee basis, less the applicable Part B deductible and coinsurance amounts.

Payment for the facility services is made to the CAH, and payment for the professional services is generally made to the respective practitioners.

Payment for outpatient facility and professional services under Method I and Method II

With respect to outpatient services, CAHs may bill using either Method I or Method II. Under Method I, reimbursement for both the facility and professional services provided to CAH outpatients is similar to reimbursement for the facility and professional services provided to CAH inpatients. Facility services are billed on the UB-04 (TOB 085X), but payment is made to the CAH under Part B, rather than Part A. Professional services are billed on the CMS 1500, with the place of service reported as hospital outpatient, and payment is generally made to the respective practitioners under Part B.

Under Method II, CAHs may elect to receive reimbursement for both the facility and professional services provided to their outpatients. The CAH’s right to receive reimbursement for professional services, however, only applies to the professional services performed by practitioners who have assigned their right to payment to the CAH for services they provide to its outpatients during that cost report period (CRP).

Under Method II, with respect to those outpatient services whose professional component is provided by a practitioner who has assigned his/her right to payment to the CAH for that CRP:

  • The CAH bills for both the respective facility and professional services to the A/BMAC on the same UB-04 (TOB 085X), reporting appropriate revenue and HCPCS codes for all services.
    • Payment for the CAH facility services will be 101% of the reasonable cost for those services, less the applicable Part B deductible and coinsurance amounts.
    • Payment for professional services will be paid at 115% of whatever amount the A/BMAC would pay under the MPFS, etc., based upon the type of service provided and the modifier applied to the HCPCS code.
      • For example, payment for Medicare participating physician services =

MPFS – (deductibles and coinsurance) X 115%.

  • Payment for both the facility and professional services is made to the CAH under Part B.

With respect to those outpatient services whose professional component is provided by a practitioner who has not assigned his/her right to payment to the CAH for that CRP, reimbursement for both the facility and professional services follows Method I. That is, facility services are billed on the UB-04 (TOB 085X) by, and payment is made under Part B to the CAH.  On the other hand, professional services are billed on the CMS 1500 by, and payment is generally made under Part B to, the respective practitioners.

Expansion of Method II payment for certain services

In the last few years, the scope of outpatient services subject to Method II reimbursement has been expanded to include the following:

  • Certain otherwise covered services performed by anesthesiologists that are reasonable, medically necessary, or surgical; and
  • Any otherwise covered services performed by certified registered nurse anesthetists (CRNAs) within their scope of practice under applicable state law.

For services provided on and after January 1, 2014, a Method II CAH may be reimbursed for otherwise covered services performed by an anesthesiologist (who has assigned his or her right to payment) that are reasonable, medically necessary, or surgical, when those services are submitted with revenue code 0963 (professional fees for Anesthesiologist [MD]).

Unfortunately, the Medicare claims processing system can currently only process Method II payment for services billed with revenue code 0963 that are within the anesthesiology HCPCS code range of 00100-01999. CMS has indicated that the system will be able to appropriately process claims for non-anesthesia HCPCS codes after October 6, 2014. In the meantime, CAHs should contact their A/BMACs for instructions on how to obtain the appropriate reimbursement under Method II for non-anesthesia services billed with revenue code 0963.

In addition, for services provided on and after January 1, 2013, a Method II CAH may be reimbursed for any services that a CRNA (who has elected Method II reimbursement) is authorized to perform under applicable state law, when submitted with revenue code 0964 (CRNA professional services). Unfortunately, prior to May 2, 2014, the Medicare claims processing system was also unable to process Method II payment for services billed with revenue code 0964 that were outside of the anesthesiology HCPCS code range of 00100-01999. Therefore, CAHs should contact their A/BMACs for guidance on how to re-bill any claims with dates of service on or after January 1, 2013 that were billed with non-anesthesia HCPCS codes.

Ongoing discussion and related resources

We will conclude our review of CAH reimbursement issues, focusing on special billing and payment issues relating to CRNA anesthesia services (both inpatient and outpatient), in next week’s Medicare Insider.  For additional information on this week’s discussion, please see the following source authorities:

42 CFR 413.70

Medicare Claims Processing Manual, Chapter 4, Section 250

Medicare Claims Processing Manual, Chapter 12

Medicare One Time Notification Transmittal R1379OTN.

Note from the instructor: CMS Updates Medically Unlikely Edits (MUE) File

This note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro.  

A few weeks ago, CMS released MLN Matters article SE1422 titled Medically Unlikely Edits and Bilateral Procedures. Upon first glance, this MLN Matters article seems to be focused on certain claims with noncompliant coding for bilateral surgical procedures that may have triggered improper payments. In the past few years, the Office of Inspector General (OIG) has identified inappropriate billing using multiple lines to bypass the MUEs per CMS’ previous guidance in Transmittal 652. CMS states that the purpose of this article is to inform providers that MUE changes may now cause multiple claim lines for bilateral procedures to be “unpayable”. However, this article goes on to announce that as of July 1, 2014, dates of service, CMS is converting most MUEs into per day edits and that the MUE Adjudication Indicator (MAI) indicates the type of and basis for the MUE.

Since 2007, hospitals have been navigating the MUE minefield. The edit occurs when a provider bills more than the maximum units of service for a HCPCS/CPT code than would be reported under most circumstances for a single beneficiary on a single date of service. Not all HCPCS/CPT codes have an MUE and CMS publishes most, but not all, MUE values on its website. Some MUEs have been deemed to be confidential and are only for the eyes of CMS and its contractors. This has been an irritant (to say the least) for providers since the implementation of MUEs but we are making progress in understanding how the files work.

In SE1422 and on the CMS MUE website, they describe two additional fields that have been added to the published MUE file. One field indicates whether each MUE is a claim line or date of service edit and the second field provides the rationale for each MUE.  More information about the rationale of the MUE is available in the National Correct Coding Initiative Policy Manual for Medicare Services, Chapter 1, Section V (Medically Unlikely Edits).

CMS has defined the three MAIs as:

  • 1 = MUE is based on a line edit. Medically appropriate units of service in excess of the MUE may be reported on a separate line with an appropriate modifier and each line will process for payment.
    • Example: 49062, Drainage of extraperitoneal lymphocele to peritoneal cavity, open
  • 2 = MUE is based on a regulation or subregulatory instructions, including the instruction that is inherent in the code descriptor or its applicable anatomy. Providers should consider the initial claim or any denials for this type of edit to be either a clerical error or an error in the interpretation of the instructions. CMS has not identified any exceptions to this type of MUE.
    • Example: 49321, Laparoscopy, surgical, with biopsy
  • 3 = MUE is based on clinical information such as billing patterns, prescribing instructions, or other information, and exceptions beyond the MUE would be rare. Providers should review the initial claim or a denial for a clerical, coding, or billing error.
    • Example: 49082, Abdominal paracentesis without imaging guidance

For all MUE edit denials, and as an alternative to filing an appeal, if the provider identifies a clerical error and the correct value is equal to or less than the MUE, the provider may request a reopening to correct the claim. CMS cautions providers about routinely using this method to correct unintentional errors and that reopening requests do not extend the window for filing appeals.

All providers should review SE1422 for more information on the appropriate billing of bilateral surgical procedures, as well as review the other MUE examples that CMS has provided.

Note from the instructor: CY 2015 OPPS Proposed Rule contains Significant Policies

This week’s note from the instructor is written by Kimberly Anderwood Hoy Baker, JD, CPC, regulatory specialist for HCPro.  

On July 3, CMS posted the display copy of the CY 2015 OPPS Proposed Rule with proposed payment and policy changes for hospital outpatient and ambulatory surgery center services. Notably, the rule contains refinements to the Comprehensive Ambulatory Payment Classification (APC) policy (adopted in the CY 2014 OPPS Final Rule for implementation in CY 2015) and significant increased packaging of ancillary services. The rule also included a very significant proposal on inpatient certification, eliminating the onerous requirement for most hospital inpatient stays.

CMS made several adjustments to the policy for payment of Comprehensive APCs. Most significantly they proposed a “complexity adjustment”. The complexity adjustment applies when a primary procedure assigned to a Comprehensive APC is reported with other specified procedures also assigned to Comprehensive APCs or with a specified packaged add-on code.  When one of these combinations are reported, the payable APC is increased to the next highest APC in the clinical group (i.e., from level II to level III). New Addendum J has details of the code combinations subject to this complexity adjustment and the APC that will be paid when one of the combinations is reported. Also included in Addendum J is the ranking of procedure codes for determining the primary procedure that will control the APC assigned when multiple procedures assigned to Comprehensive APCs are reported.

Another significant refinement to the policy relates to the services excluded from the Comprehensive APC payment. The rule contains new Table 6, listing 10 categories of services not subject to packaging to the Comprehensive APCs. There are two significant changes from the policy articulated in the CY 2014 OPPS Final Rule. Self-administered drugs that are not treated as supplies to the procedure will be excluded from packaging and are still billable to the patient. The prior rule implied these drugs would be packaged to the Comprehensive APC. However, CMS proposes excluding them based on their statutory exclusion from coverage under Part B.

They have also proposed to exclude therapy services that are reported on separate facility claims “for recurring services” from packaging to Comprehensive APCs. CMS refers to them as “recurring” services in the proposed rule, but they are presumably referring to services the Claims Manual defines as “repetitive services”, which are required to be billed on a separate monthly claim. They also proposed to exclude ambulance service; brachytherapy; mammography; preventative services; pass-through drugs, biologicals and devices; and services paid on a reasonable cost basis.

The proposed rule also makes another significant packaging proposal related to ancillary services with costs of $100 or less. CMS is proposing to conditionally package services with a mean cost of $100 or less, eliminating status indicator “X” and reassigning these codes to status indicator “Q1” (STV Packaged). Table 11 has the list of APCs that will be packaged under the new rule, including level I and II x-rays, level I ultrasounds, ECGs, and many other ancillary procedures and diagnostic tests. The proposal would exclude preventative services, certain psychiatry and counseling services, and drug administration services from the new policy. Services that formerly had a status indicator “X” but are not subject to packaging (i.e., they have a cost greater than $100) will be reassigned to status indicator “S”.

One of the most significant proposals in the rule did not relate to outpatient services at all, but rather to the inpatient certification requirement. In the CY 2014 IPPS Final Rule, CMS adopted revised certification requirements for all inpatient admissions. Because all elements of the new certification had to be signed by the physician prior to discharge, this requirement has created a great deal of difficulty for hospitals and arguably required the most extensive change to computerized documentation systems of all the changes in 2014.

The proposal would modify the regulation on certification to only require the certification for outlier cases and long-stays, defined as stays 20 days or longer. The requirements for the new certification are similar to the requirements under the current rule: reason for continued hospitalization or special and unusual circumstances for outliers, estimated time the patient will remain in the hospital, and plans for post-hospital care. CMS is careful to note that the order requirements also adopted in the CY 2014 IPPS Final Rule are not proposed to change and an order complying with the new order requirements is still necessary to demonstrate the patient is considered an inpatient during this stay.

The rule contains other proposals including payment updates, a proposal for a new modifier to identify off-campus provider based department services, an increase to the outlier threshold, and quality proposals. As always, providers are encouraged to read the rule for policies significant to their operations and submit comments on proposals that will unduly or negative affect them. The comment deadline was not set in the display copy of the rule, but the rule is set to be published in the Federal Register on July 14 and the comment period is normally 60 days from the publication date.

Note from the instructor: CMS’ Advisory Panel on Hospital Outpatient Payment seeks input on chemotherapy supervision rules

This week’s note from the instructor is written by Debbie Mackaman, RHIA, CPCO, regulatory specialist for HCPro.  

Hospital outpatient therapeutic services paid under OPPS or paid to critical access hospitals (CAH) on a cost basis must be furnished “incident to” a physician’s service to be covered. There are four elements to meet incident to; however, furnishing the service under the appropriate level of supervision by a physician or non-physician practitioner has become the most complex.

In most circumstances, CMS has designated direct supervision to be the default level of supervision for hospital outpatient therapeutic services. CMS has also designated general supervision as appropriate for specific services that have been identified through a sub-regulatory process. The Advisory Panel on Hospital Outpatient Payment–called the Panel—which has included representation from CAHs since 2010, considers recommendations from providers and its own members.

The Panel meets in March and August, and CMS prioritizes requests for consideration by the Panel based on service volume, total expenditures, and frequency of requests. Hospitals may request that the Panel review a particular service and recommend to CMS that it be approved to be provided under general supervision. Following the Panel meeting, CMS posts their preliminary decisions on the Panel’s recommendations for a 30-day comment period. After the comment period, they will issue their decisions effective July 1 following the March meeting or January 1 following the August meeting.

On March 10, 2014, the Panel met and reviewed the supervision levels of eight HCPCS codes related to the administration of chemotherapy, complex drugs, or biologic agents. At that meeting, the Panel recommended that these codes be changed from direct to general supervision. However, CMS “believed that the appropriate supervision level for these services is inherently a clinical issue” and they decided not to change the supervision requirement. Although CMS solicited public comments regarding the clinical standards for supervision for both initial and subsequent administrations of these drugs, it appeared to CMS that the commenters misunderstood their intent of suggesting a different supervision level for the initial administration and when that same drug is being given in a subsequent encounter. Instead, CMS decided to refer these services back to the Panel for further deliberations at the August 2014 Panel meeting.

CMS explained that current clinical guidelines suggest that a general level of supervision is unsafe. They are asking for more input whether the supervision level should be direct for the initial administration followed by general for subsequent administrations of the same drug. CMS also stated that they “welcome other suggested approaches that balance professional and hospital viewpoints” and asked the Panel to weigh supervision levels as recommended by clinical guidelines from professional associations with the realities of hospital operations and patient care in rural areas.

On CMS’ hospital OPPS website, hospitals can also find the current list of hospital outpatient therapeutic services that are either designated as non-surgical extended duration therapeutic services (NSEDTS or “extended duration services”) or those that may be furnished under general supervision in accordance with applicable Medicare regulations and policies. When hospitals review the list, they may find a surprise that will go into effect on July 1, 2014. CMS’ preliminary decision on one of the recommendations from the March 10 Panel meeting stated that they would not move transfusion of blood or blood products (HCPCS 36430) from direct to general supervision.

“While we would not accept the Panel’s recommendation that CMS change the supervision level to general for CPT code 36430, we would designate this code as a Non-Surgical Extended Duration Therapeutic Services (or “extended duration services”), which would require an initial period of direct supervision with potential transition of the patient to general supervision. We believe blood transfusion warrants direct supervision initially to manage potential adverse events and reactions.”

In looking at the updated list, hospitals will find that HCPCS 36340 will change from direct supervision to general supervision which is contradictory to their March statement. For hospitals that struggle with meeting direct supervision for certain outpatient services, like blood transfusions, that are often provided by nursing staff and sometimes “after usual department hours,” this may be the solution they have been looking for.

Note from the instructor: CMS Updates Special Edition Article on the Proper Use of Modifier -59

This week’s note from the instructor is written by Debbie Mackaman, RHIA, CPCO, regulatory specialist for HCPro.  

CMS has released an updated MLN Matters Special Edition article SE1418 on the proper use of modifier -59. This high-risk modifier has been the subject of much discussion within hospitals—both prospective payment system and critical access hospitals—and the subject of various audits by Medicare Administrative Contractors, Recovery Auditors, and the Office of the Inspector General (OIG).

For years, hospitals have been navigating the Procedure to Procedure (PTP) edits that were implemented under the National Correct Coding Initiative (NCCI). PTP edits are pairs of CPT or HCPCS Level II codes that are not both separately payable when billed by the same provider for the same beneficiary for the same date of service, unless an appropriate modifier is reported. Based on a Correct Coding Modifier Indicator (CCMI), certain modifiers will override an NCCI PTP edit and allow both services to be considered for separate payment.

However, CMS states that one of the functions of the NCCI PTP edits is to prevent payment for codes that report overlapping services, except in those instances where the services are “separate and distinct.” According to CMS and further confirmed by OIG audits, modifier -59 is often used incorrectly.

The previous article, SE0715, has now been replaced with SE1418. SE1418 describes three other “limited situations.” It also gives examples of when modifier -59 may be used if reporting two services as separate and distinct when they are performed during the same encounter. The following examples are given:

  • Modifier -59 is used appropriately for two services described by timed codes (i.e., per 15 minutes, per hour) when they are provided during the same encounter and only when they are performed sequentially (i.e., one service is completed before the subsequent service begins)
  • Modifier -59 is used appropriately for a diagnostic procedure which precedes a therapeutic procedure only when the diagnostic procedure is the basis for performing the therapeutic procedure
  • Modifier -59 is used appropriately for a diagnostic procedure which occurs subsequent to a completed therapeutic procedure only when the diagnostic procedure is not a common, expected, or necessary follow-up to the therapeutic procedure

Additional examples may be found on the NCCI Overview page, under the link “Modifier 59 Article: Proper Usage Regarding Distinct Procedural Service” although this article does not include the new CMS guidance. Further clarification can also be found in Chapter 1 of the NCCI Manual that states modifiers should only be appended to HCPCS/CPT codes if the clinical circumstances justify its use and that a modifier should not be appended to a HCPCS/CPT code solely to bypass an NCCI edit. If CMS imposes restrictions on the use of a modifier, the modifier may only be used to bypass an NCCI edit if the restrictions are fulfilled.

In discussing the proper application of modifiers with a variety of hospitals around the country, it seems like there are many different procedures and a variety of staff involved in this process. Coding and billing staff, auditing and compliance teams, and individual departments who have modifier -59 attached to HCPCS codes in the charge description master should all carefully review and discuss SE1418 to ensure the modifier is being used appropriately and proper payment is being received.