Author Archive for Judith Kares

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.

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.

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.

OIG releases Work Plan for Fiscal Year 2010

The Office of Inspector General (OIG) of the Department of Health and Human Services has just released its Work Plan for FY 2010.  A number of significant issues relating to hospital services covered under Parts A and B are targeted for review.  These areas, as identified in the Work Plan, include the following:

• Part A hospital capital payments
• Provider based status for inpatient and outpatient facilities
• Part A inpatient prospective payment system (IPPS) wage indexes
• Hospital payments for nonphysician outpatient services under the IPPS
• Payments to organ procurement organizations
• Inpatient rehabilitation facility admission of patient assessment instruments
• Critical access hospitals
• Medicare disproportionate share payments
• Duplicate graduate medical education payments
• Interrupted stays at inpatient psychiatric facilities payments
• Provider bad debts
• Medicare secondary payer
• Reliability of hospital-reported quality measure data
• Hospital admissions with conditions coded present-on-admission
• Hospital readmissions
• Adverse events:  various reviews
• Payments for diagnostic x-rays in hospital emergency departments
• Oversight of hospitals’ compliance with the Emergency Medical Treatment and Labor Act (EMTALA)
• Observations services during outpatient visits
• Coding and documentation changes under the Medicare Severity Diagnosis Related Group  (MSDRG) system
• Financial status of hospitals in the New Orleans area

More than half of them focus on the calculation of, with various adjustments to, payment for inpatient services under the IPPS, including whether certain outpatient services provided before or during that stay will be included in the IPPS payment for that stay or will be otherwise payable.  OIG proposed review ranges from the appropriateness of the current methodology for calculating the capital payment (which is designed to cover the costs of equipment and facilities) to the reliability of hospital-reported quality measure data, which will determine whether a hospital is entitled to a full or reduced cost-of-living update to its operating payment during a particular fiscal year.

Other areas targeted for review include some of the most complex decisions that hospitals have to make, including the spectrum of care required—outpatient, outpatient observation and inpatient–and the appropriateness of specific admissions and discharges.

Hospitals are encouraged to review the Work Plan carefully and to follow the OIG’s ongoing activities as they conduct related audits and report the results of those audits.  At the same time, hospitals should begin to proactively review their own operations in the targeted areas to identify any issues that need to be addressed sooner, rather than later.

Never Events – Updated guidance on reporting surgical errors for Medicare inpatients

During the last few years, there has been considerable focus on certain events identified as “serious, largely preventable and of concern to both the public and health care providers.” These events have become more popularly known as “never events”—events that should never occur in a well-run healthcare facility with appropriate quality controls. In June of this year, Medicare released three national coverage determinations (NCDs) for the following surgical errors:

• Wrong surgical or other invasive procedure performed on a patient (NCD 140.6);
• Surgical or other invasive procedure performed on the wrong body part (NCD 140.7); and
• Surgical or other invasive procedure performed on the wrong patient (NCD 140.8).

Under the new NCDs, effective for services performed on and after January 15, 2009, CMS will not cover surgical or other invasive procedures performed in error, as described above. In addition, Medicare will also not cover hospitalizations and other procedures “related” to these non-covered services.

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CMS updates CLIA waived tests

CMS recently issued Medicare Claims Processing Manual Transmittal 1799 (CR 6570), which is a Recurring Update Notification to inform contractors of new waived tests approved by the Food and Drug Administration under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). Since these tests are marketed immediately after approval, CMS must notify its contractors of the new tests so that the contractors can accurately process claims.  This seems like a good time to review the basic guidelines set out under CLIA with respect to waived tests.

CLIA regulations require that all laboratories performing and billing tests to Medicare be appropriately certified.  There are varying levels of certification under CLIA, including certificate of waiver, certificate for provider-performed microscopy procedures (PPMP), certificate of registration, certificate of compliance, and certificate of accreditation.

Only laboratories with a current certificate of waiver are permitted to bill, and receive payment from, Medicare for laboratory tests categorized as waived complexity under CLIA.  To ensure that Medicare only pays for laboratory tests categorized as waived complexity under CLIA in facilities with a CLIA certificate of waiver, laboratory claims are currently edited at the CLIA certificate level.

Independent laboratories performing tests covered by CLIA must submit their CLIA number in Item 23 of the CMS 1500 paper claim (or its electronic equivalent).  The CLIA number, however, is not required on the UB-04 (or its electronic equivalent).

Using data obtained from the certification process, the Common Working File (CWF) edits Carrier/MAC claims to ascertain that the laboratory identified by the CLIA number is certified to perform the test.  Providers that bill FIs are responsible for verifying CLIA certification prior to ordering laboratory services under arrangement. The survey process validates that these providers have procedures in place to insure that laboratory services are provided by CLIA approved laboratories.

CMS identifies waived tests by providing an updated list of waived tests to Medicare contractors on a quarterly basis via a Recurring Update Notification. To be recognized as a waived test, some CLIA waived tests have unique Healthcare Common Procedure Coding System (HCPCS) procedure codes and some must have a QW modifier included with the HCPCS code.

Hospitals are encouraged to review Transmittal 1799 (CR 6570) (along with MLN Matters Article MM 6570 and Job Aid JA 6570) carefully with respect to the updated list of waived tests and related billing requirements, including attachment of -QW modifier.  Please note that your Medicare contractor will not search their files to either retract payment or retroactively pay claims processed before CR 6570 is implemented. However, they will adjust claims that you bring to their attention.

Condition code 44 – The continuing saga

On Friday, CMS issued Medicare Claims Processing Manual (MCPM) transmittal 1803, which is the October 2009 update to the Outpatient Prospective Payment System (OPPS). CMS included minor revisions to those sections of Chapter 1 of the MCPM that relate to condition code 44.

As you will recall, condition code 44 is used when a patient’s initial inpatient status is successfully changed to outpatient for purposes of billing and payment. This generally occurs when case management and other utilization review personnel were not available (weekends and holidays) at the time that the admission decision was made, and it is later determined that the patient does not meet Medicare’s inpatient guidelines. Condition code 44 is reported on the subsequent outpatient (013X) type of bill that is submitted to recover for the services provided in the inpatient setting.

Those inpatient services are covered and reimbursed on the same terms and conditions as if they actually had been provided in the outpatient setting, so long as all of the following criteria are met:

• The decision to change status must be made by the hospital’s “utilization review committee” (UR committee). One “member” of the UR committee can make the decision, with the attending physician’s agreement; in all other cases, the decision must be made by at least two “members.” The change in status must be made prior to discharge or release of the patient and before the hospital has submitted a claim for the inpatient admission;
• A physician must concur with the decision;
• The physician’s concurrence must be documented in the patient’s medical record; and
• The UR committee must provide written notice to the hospital, the patient and the patient’s physician within two days (but not later than the patient’s discharge or release from the hospital) of the change and its impact on the patient, including financial liability for applicable deductible and coinsurance amounts.

In the transmittal issued on Friday, CMS stated that although one physician member of the UR committee is empowered to make the decision to change status, the physician member who makes the decision must be different from the concurring physician, who is the physician responsible for the care of the patient. Based upon this most recent statement, it is not clear what the effect would be if the physician responsible for the care of the patient did not concur with the change in status.  

The regulations that set out the hospital’s conditions of participation (CoP), which call for the establishment of a UR committee, along with the scope of its responsibility and authority (including change of status), indicate that, in all other circumstances, the change in status decision must be made by two members of the UR committee. Presumably, this is the procedure that a hospital should follow if it were unable to obtain the agreement of the patient’s physician to change the status of care from inpatient to outpatient.

Hospitals are encouraged to have at least two signatures on the documentation for the change in status: (1) when the attending physician concurs, signatures of both the attending physician and the physician member of the UR committee who made the change in status decision; or (2) when the attending physician does not concur, signatures of the two physician members of the UR committee who made the decision to change status.

Hospitals are also encouraged to confirm with their FI/MAC that the process as outlined above, particularly when the patient’s physician does not concur, meets the requirements of a condition code 44 change in status.

Inpatient HINNs: Protecting the hospital’s right to recover payment for non-covered services

Last week, I participated in an HCPro audioconference on HINNs. “HINN” stands for hospital-issued notice of non-coverage. It’s the inpatient equivalent of an advanced beneficiary notice (ABN). Under Medicare’s limitation on liability (LOL) provisions, hospitals are required to provide prior notice, in a prescribed form, when certain outpatient or inpatient services ordered by a physician do not meet Medicare’s medical necessity guidelines for the patient’s condition.

In such cases, the ABN is the prescribed form of prior notice for outpatient services, while the HINN is the prescribed from of prior notice for inpatient services. Although the prior notice requirements for LOL have been in place for a number of years, hospitals continue to struggle to provide timely, appropriate notification, particularly in the inpatient setting. [more]

Inpatient Part B benefit – limited services payable under Part B to hospital inpatients

Although there were several transmittals and other CMS issuances published during the past week, they were primarily technical in nature rather than of general interest.  Having just completed a Medicare Boot Camp (Hospital Version) course in Chicago, I was reminded of a topic that I have wanted to discuss for some time.   Although not new–that is, there have been no recent changes—there are several things that participants seem surprised about when we discuss them in class.  Under the limited inpatient Part B benefit, hospitals can bill Medicare for certain nonphysician services furnished by a hospital (directly or under arrangements) to an inpatient of the hospital when these services are not covered under Part A.

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Never Events—CMS issues surgical error NCDs and related guidance

In 2002, the National Quality Forum (NQF) published a list of 27 events identified as “serious, largely preventable and of concern to both the public and health care providers.”  These events have become more popularly known as “never events”—events that should never occur in a well-run health care facility with appropriate quality controls.  The updated list currently contains 28 adverse events, including the following surgical errors:

• Wrong surgical or other invasive procedure performed on a patient;
• Surgical or other invasive procedure performed on the wrong body part; and
• Surgical or other invasive procedure performed on the wrong patient.

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