More on deductibles and coinsurance

CMS recently published the Part A deductible and coinsurance and Part B deductible amounts for CY 2010.  For most covered inpatient stays, as well as covered outpatient services, Medicare does not pay the entire Medicare allowable for those stays or outpatient services.  Beneficiaries generally are responsible for a portion of the Medicare allowable in the form of deductibles and/or coinsurance.

Under Part A, Medicare beneficiaries are entitled to 90 regular benefit days per benefit period. Regular benefit days renew whenever a new benefit period begins.  That is, a patient once again has 90 covered inpatient days every time a new benefit period begins.  Medicare beneficiaries are also entitled to 60 lifetime reserve days, which may be used after regular benefit days for that benefit period have been exhausted.  Lifetime reserve days do not renew.  Once used, they are gone forever.

A benefit period begins with the first day on which a patient is admitted to an inpatient hospital or a SNF to receive services.  That benefit period continues until there is a 60-consecutive-day period during which the patient is not an inpatient in either a hospital or a SNF.  (With respect to the latter, the benefit period does not close as long as the patient is receiving skilled care as an inpatient in the SNF.)

For the first 60 covered inpatient days during a benefit period, the beneficiary is responsible for one inpatient deductible.  The applicable inpatient deductible is the one in effect during the calendar year in which that benefit period begins.  For inpatient covered days 61-90, the beneficiary is responsible for a daily coinsurance amount equal to 25% of the applicable inpatient deductible.  If a beneficiary exhausts (uses up) his regular benefit days, he may then draw upon any remaining lifetime reserve days.  For each lifetime reserve day, the beneficiary is responsible for a daily coinsurance amount equal to 50% of the applicable inpatient deductible. With respect to the coinsurance calculation, the coinsurance amount is based on the deductible applicable for the calendar year in which the coinsurance days occur.

The following is an example of how these rules would apply to an inpatient stay that begins in December of one year (2009) and ends during the following year (2010):

Assume that this was the first inpatient admission during the benefit period and that the beneficiary remained in the hospital for 61 covered days.  Because the benefit period began in 2009, the deductible for 2009 (the year in which the benefit period began) would be applied, in the amount of $1068.00.  This is the only amount for which the beneficiary would be liable for the first 60 covered days.  He would then be responsible for an additional single day’s coinsurance for day 61, in the amount of $275.00, which is the coinsurance amount for covered days occurring during 2010.  Thus the beneficiary’s total liability for this stay would be $1343.00.

Hospitals are advised to assure that applicable deductible and coinsurance amounts are applied to each inpatient stay, particularly those that cross over from one calendar year to another.

Providers report first RAC denials in Florida, South Carolina

Over at the Revenue Cycle Institute, my colleague Andrea Kraynak has a great post on the first RAC denials that we’re seeing so far. There’s some really solid, in-depth information there regarding the experiences of two providers with RAC denials and even a discussion of particular CPT codes affected. Great information for all of us looking to stay on top of this evolving issue.

Go over to the Revenue Cycle Institute to read more.

Signature for Laboratory Tests, Clarification in the MPFS Final Rule

This week, I would like to review a “clarification” regarding physician signatures on orders for clinical diagnostic testing that came out in the Final Rule for Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for 2010.  This blog is hospital-directed and we do not normally report on physician fee schedule issues, however, this “clarification” could affect hospital policies on obtaining signatures for the laboratory services they provide.

In the proposed rule published in August, CMS solicited comments on the issue of signatures on clinical diagnostic lab test orders, and a distinction they were drawing between test orders and lab requisitions.  In the final rule, CMS reviewed their policy and the comments they received on that policy.

As part of their “clarification” in the proposed rule, CMS reviewed the history of Federal Register and manual guidance on the requirement for signatures on lab requisitions and orders.  The issue was first discussed in the clinical lab negotiated rule making final rule on coverage and administrative policies, published November 23, 2001 in the Federal Register. In that rule, CMS indicated that lab tests must be ordered by a physician treating the patient, but that a signed requisition from the physician was not the only way to document that order.  However, in the 2010 final rule “clarification” they also state that at the time of the 2001 publishing, they “implicitly left in place the existing requirements for a written order to be signed by the ordering physician”.

After the 2001 rule, in implementing manual sections in Transmittal AB-02-030 they reiterated the statement that a signature is not required on requisitions.  They go on to say that another way of documenting the order for these services would be for the ordering physician to document the order in the patient’s medical records.  The applicable regulations at 42 CFR 410.32 also do not require the entity submitting a claim for clinical laboratory service to maintain the physician’s order, but do allow for additional information to be requested.  They also require that the billing entity be able to provide on audit “documentation of the order for the service billed (including information sufficient to enable CMS to identify and contact the ordering physician or nonphysician practitioner). ” (emphasis added)

These statements were incorporated into the paper-based Carriers Manual via Transmittal R1787B3 published in 2003.  Highlighted in red text is the statement “NOTE:  No signature is required on orders for clinical diagnostic tests paid on the basis of the physician fee schedule or for physician pathology services.”  When CMS transitions to the internet-only manuals this section was inadvertently left out, however CMS added it back in Transmittal 94 to the Benefit Policy Manual in 2008.  The new language in the Benefit Policy Manual states that it also applies to tests paid based on the clinical lab fee schedule.

The language in the manual seems clear regarding signatures on lab test orders, however, CMS points out in their clarification that the change in terminology from “requisition” in the 2001 rule to order in the manual was inadvertent.  They continue to reiterate that they do not require a signature on a lab requisitions as they view them as administrative in nature, but a signature on a lab requisition could qualify as a physician order.  They go on to point out, notwithstanding the clear manual text, that it is their longstanding policy that a written order for diagnostic tests must be signed by the ordering physician.  They also cite the Conditions of Participation and Joint Commission standards as having signature requirements in their medical records standards.

This leaves us in the strange situation that the manual, through several transmittals and iterations, says no signature is required for lab orders.  But we have a preamble discussion that says in effect ‘we didn’t really mean that’ and CMS stating their longstanding policy is to require signatures on lab orders which was suppose to be implicit in their statements about not requiring a signature on requisitions.

This led to many very good comments.  Several of these CMS deferred to future rule making or indefinitely, simply stating they would consider the comment.  Some responses were quite vague.  For instance, a commenter asked if the requisition did not need to be signed and the documentation of the order could be maintain instead in the physician’s medical record, how was the lab suppose to verify its existence, especially in light of the urgency of testing degrading samples or the need to immediately perform tests.  CMS’ response what simply that the regulation allows for the billing entity to request additional documentation from the physician without further explanation about when the entity should obtain this documentation, etc.

Due to the confusion raised by this issue, I would expect that it will be raised on the next hospital open door forum and will be the subject of more clarification in the near future.  In the meantime, I encourage providers to review the discussion in the final rule.  The discussion begins on page 939 of the display copy of the rule.  Additionally, the provider may wish to inquire with their MAC as to specific standards the MAC may be applying and their rationale for their policies in light of the clarification.

On a personal note, for those of you wondering why you haven’t seen a note from me in a while, I was off having a baby.  Zoey Mae was born August 4th and is doing well but still keeping her mom awake at nights.  Her and I enjoy sitting up and reading all that interesting reading material CMS seems to like to putting out.  Glad to be back!

MedicareFind tip: How to access the inpatient-only list

MedicareFind users have been sending in some really great questions lately — thanks for your interest in learning how to use this product! One that I want to tackle today is about finding CMS’ list of inpatient-only procedures.

CMS publishes the inpatient-only list with each OPPS final rule as Addendum E . The best way to access this in MedicareFind is to do a FIND for “Addendum E”, then apply the “Data Files” filter — this will make it so you are seeing a list of documents in the Excel data file format that CMS releases (rather than, for example, the Federal Register format). From here you can use the “Year” filters to access whichever inpatient-only list you need.

You can also access the inpatient-only list by using Addendum B, which CMS updates quarterly. Perform a FIND for “Addendum B” and, as before, apply the “Data Files” filter. From here apply a “Year” filter, then pick the appropriate month depending on which quarter’s file you want. When you open up the Excel document, sort the data by status indicator. The codes with a “C” status indicator are inpatient-only procedures.

Happy FINDing! Sign up for a MedicareFind free trial today.

CMS issues 2010 final rule for ambulatory surgery centers and most hospital outpatient departments

CMS has released a display copy of the outpatient prospective payment system (OPPS) final rule for 2010, which also includes the 2010 changes to the rules for ambulatory surgery centers (ASCs).  This final rule will be published in the Federal Register on November 20.  In terms of reimbursement, OPPS hospitals that meet quality indicator reporting requirements for 2010 are entitled to the “full update,” which will result in a 2.1% increase in their payments for 2010.  Those OPPS hospitals that do not meet their quality indicator reporting requirements will be subject to a reduced update of 0.1% in 2010.  ASCs, on the other hand, will receive a 1.2% inflation update beginning January 1, 2010.

Among the most anticipated changes in the OPPS final rule are the so-called “incident to” a physician’s services requirements.  Most nonphysician outpatient therapeutic services that are provided by hospitals or critical access hospitals (CAHs) are only covered if they are provided “incident to” the services of a physician or another specified nonphysician practitioner.

During the last few years, CMS has made several changes to the “incident to” rules.  Prior to 2009, for example, such services had to be provided on the order of a physician.  In 2009, CMS expanded the practitioners qualified to meet the order requirement to include clinical psychologists, licensed clinical social workers, physician assistants, nurse practitioners, clinical nurse specialists and certified nurse-midwives (the “NPPs”).  In that same year, however, CMS clarified that, in order to be covered, such services must be provided under the supervision of a physician or clinical psychologist who is “on the premises” and immediately available.  On the premises was defined as “present in the provider-based department.”

The latter revision prompted considerable response from the hospital community, which ultimately resulted in the following changes to the therapeutic “incident to” rules.  These changes were announced in the OPPS 2010 final rule and will become effective for services provided on and after January 1, 2010.

In order to be covered, most therapeutic outpatient hospital and CAH services furnished incident to a physician or nonphysician practitioner must be furnished

1. By or under arrangements made by the hospital or CAH;
2. On the order of a physician or one of the specified NPPs;
3. As an integral though incidental part of a physician’s or nonphysician practitioner’s services;
4. In the hospital or CAH or in a provider-based department of the hospital or CAH; and
5. Under the direct supervision of a physician or one of the specified NPPs (which includes the same nonphysician practitioners as those permitted to order such services); nonphysician practitioners may directly supervise services they are permitted to provide themselves within the scope of their licensure and hospital-granted privileges, assuming they otherwise meet all Medicare conditions of participation and related requirements.

In general, for services furnished in the hospital or CAH or in an on-campus provider-based department of the hospital or CAH, “direct supervision” means that the physician or nonphysician practitioner must be present on the same campus and must be immediately available to furnish assistance and direction throughout the procedure.  It does not mean that he or she must be present in the room where the procedure is performed.  “In the hospital or CAH” means areas in the main buildings of the hospital or CAH that are under the ownership, financial and administrative control of the hospital or CAH; that are operated as part of the hospital or CAH; and for which the hospital or CAH bills the services furnished under the hospital’s or CAH’s CMS Certification Number.

For services furnished in an off-campus provider-based department of the hospital or CAH, “direct supervision” means the physician or nonphysician practitioner must be present in the off-campus provider-based department and must be immediately available to furnish assistance and direction throughout the procedure.  It does not mean that he or she must be present in the room where the procedure is performed.

Please note, however, there is an exception for pulmonary rehabilitation, cardiac rehabilitation and intensive rehabilitation services, wherever these services are provided.  For these services, direct supervision must be furnished by a doctor of medicine or osteopathy, whether provided in the hospital or CAH or in an on- or off-campus provider-based department of the hospital or CAH.

Please also note that these most recent revisions do not become effective until January 1, 2010.  Prior existing rules will be effective through December 31, 2009.  Hospitals and CAHs are advised to review these updated “incident-to” rules, and to make such modifications to existing policies and procedures as necessary to assure that they are in compliance with these changes, effective for dates of service on and after January 1, 2010.

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I’ll show what MedicareFind has to offer and demonstrate features that can help save a lot of time as you search for the source authority documents you need. I’ll also address any live questions that we receive.

We’ve held a couple of these demos over the past few months and received great feedback from attendees — so I think this should be a great resource for current users looking to get the most out of MedicareFind or prospective subscribers evaluating whether this is the right product for them.

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CMS Announces the 2010 Medicare Premiums and Deductibles

CMS recently announced the CY2010 Medicare Part A deductible for inpatient hospital services. When a patient is admitted as an inpatient, the deductible will increase from $1,068 in 2009 to $1,100 in 2010. In addition, beneficiaries will pay an additional daily coinsurance of $275 for days 61 through 90 and $550 for lifetime reserve days. For 2009, the corresponding amounts are $267 and $534, respectively.

The majority of Medicare beneficiaries do not have to pay a premium for Part A inpatient services. This is based on their previous Medicare-covered employment history or because they are a spouse or widow(er) of a covered beneficiary.  However, a small percentage of beneficiaries will see an increase of $18 on their monthly premium to $451 per month for 2010.  In some cases, beneficiaries will qualify to pay a reduced premium based on employment coverage and their monthly premium will be $254 in 2010.

CMS also announced that the Part B deductible will increase to $155 based on an annual percentage increase index. Unfortunately, the Social Security Administration also announced that there would be no increase in Social Security benefits for 2010.  Medicare Part B monthly premiums cover a portion of the cost of outpatient hospital services, physicians’ services, certain home health services, durable medical equipment, and other items.  In 2010, most Medicare beneficiaries (approximately 73%) will not see an increase in their monthly premiums as a result of a “hold harmless” provision in the current law. These beneficiaries will pay the same monthly premium that they paid in 2009 at $96.40.  The other 27 percent of beneficiaries that are not protected by the hold-harmless provision because they are new Medicare enrollees during the year or because they are subject to premiums based on their income or other factors will pay the increased premium of $110.50.  The Administration continues to urge Congress to take actions that would protect all beneficiaries from higher Part B premiums and eliminate the inequity between these two groups.

More detailed information can be found in the October 22 Federal Register and related fact sheet.

Implementation of permanent and nationwide RAC Program

Now that CMS has implemented a permanent and nationwide Recovery Audit Contractor (RAC) Program, as authorized by the Tax Relief and Healthcare Act of 2006, hospitals need to keep themselves informed about the issues that have been approved for review in their region. Going forward, the four regional RACs will continue to review claims on a post-payment basis, using standard Medicare policies. They will be limited, however, to a three-year look-back period, with no review of claims paid prior to October 1, 2007.

In addition, they must submit issues for approval by CMS, prior to widespread review. Each RAC is required to post on its Web site a list of those issues that have been approved for review. The list of approved issues is continually being updated, so hospitals need to check for any changes or additions on a regular basis.

For example, CGI, the RAC for Region B (which includes states in the Midwest and Upper Midwest) recently updated the issues approved for review to include the following:

• Blood transfusions (outpatient hospital and physician)—IN, MI, MN
• IV hydration (outpatient hospital and physician)—IN, MI, MN
• Bronchoscopy services (outpatient hospital and physician)—IN, MI, MN
• Neulasta (outpatient hospital and physician)—IL, IN, KY, MI, MN, OH, WI
• Once-in-a-lifetime procedures (outpatient hospital and physician)—IL, IN, KY, MI, MN, OH, WI
• Untimed codes (outpatient hospital and physician)—IL, IN, KY, MI, MN, OH, WI

Contact information for the four regional RACs is set out below:

• Region A (Mid-Atlantic and New England) — Diversified Collection Services
• Region B (Midwest and Upper Midwest) — CGI
• Region C (South and Southeast) — Connolly Consulting
• Region D (West and U.S. Territories of Guam, American Samoa and Northern Marianas) — HealthDataInsights

Additional information can also be found on the CMS RAC Web site. Hospitals should incorporate a review of all identified issues into their internal improvement and compliance efforts.

October 8 Open Door Forum

The transcript and audio of the October 8 Hospital & Hospital Quality Open Door Forum are now available on MedicareFind.

This call featured a lengthy Q&A period, including discussion of:

• Services that require active monitoring and their relation to observation time
• Charges for nursing services
• H1N1 resources

… and more.

Sign up for a free trial to MedicareFind to access the transcripts and audio of this and previous ODF calls.

Recent OIG Reports and Medical Review Implications

In last week’s post, we looked at the OIG Work Plan for Fiscal Year 2010. There were many issues listed for both Part A and Part B that will be on the radar for a targeted review. Hospitals are encouraged to closely examine the OIG Work Plan as part of their annual compliance program review process.

In addition, reviewing OIG audits can help hospitals and physicians identify some challenging areas within their own operations. This week, CMS published Transmittal 574 that focused on four recent OIG reports:

• Part B Chemotherapy Administration Payment and Policy;
• Prevalence and Qualifications of Nonphysicians Who Perform Medicare Physician Services;
• Inappropriate Medicare Payments for Chiropractic Services; and,
• Part B Billing for Ultrasound.

In these reports, the OIG presented their findings and made recommendations for CMS to reduce the Medicare program’s vulnerability with regards to questionable claims. This transmittal directs all contractors – Carriers, Fiscal Intermediaries (FI), and Medicare Administrative Contractors (MAC) – to review the information contained in the OIG reports and begin to analyze claims data for these areas. If the contractor’s findings indicate potential problems with their providers and suppliers, they have been directed to take the appropriate action, which may include automated prepayment edits and/or pre- and post-payment reviews.

Hospitals should review this transmittal and the related OIG reports to identify any issues that may need to be addressed as soon as possible. Staying abreast of the OIG audit reports is necessary in today’s regulatory environment. These reports can help guide a facility’s compliance activities, help identify processes that may need correction and prevent recoupments in the future.