This week’s note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc.
- For electronic submissions: Providers are instructed to place the appropriate (pre-authorized) code above into Loop 2300 REF02 (REF01 = G1). Please note, the loop and segment are included for billing purposes, but only SPN65 needs to be present in the field:
- The original denied inpatient claim (CCN/DCN/ICN) number shall be included in the Billing Notes loop 2300/NTE (NTE01 = ADD) in the format: NTE*ADD*12345678910999~
- For DDE or paper claims:Providers are instructed to use fields 5/MAP1715 (for DDE) or first line of the Treatment Authorization field #63 (for paper) and the following format:
- The original denied inpatient DCN/CCN/ICN shall be added to the Remarks Field (form locator #80) on the claim.
Under the temporary instructions, most hospitals will be paid at 90% of the usual payment amount that would be due to them for TOB 12X if they had originally submitted the claim as an outpatient claim. This partial payment is made based on the OPPS Pricer amount or the lab fee schedule amount after subtracting the beneficiary’s unmet deductible and any coinsurance amounts. Maryland Waiver hospitals will be paid their 90% amount based on the outpatient payment that would have been available if the claim was originally paid as an outpatient claim.
When calculating the expected payment, hospitals need to be aware that CMS will apply this temporary payment methodology at the claim level rather than at the line level. After July 1, contractors will notify providers through their usual methods that they will perform a mass adjustment for all TOB 12X claims that were previously processed under the temporary 90% payment methodology and at that time, providers will receive full payment. When using this temporary billing method, hospitals will receive their regular payment for the outpatient services that are billed on the TOB 13X. This includes those outpatient services provided in the three-day payment window on the day of admission and prior to the inpatient admission including provider-based clinic visits, emergency department visits and observation services.
While hospitals are in the process of identifying claims that meet the rebilling criteria and using the temporary payment methodology, they should not forget to comment on the proposed rule that may eliminate the current exception for timely filing. Comments must be submitted by 5:00 pm on May 17th to be considered by CMS.
Editor’s note: Judith Kares, JD, CPC, regulatory specialist for HCPro, Inc., is the author of this week’s note from the instructor.
To keep eligible professionals, hospitals and critical access hospitals (CAHs) informed on the Medicare and Medicaid Electronic Health Record Incentive Programs (the “EHR Incentive Programs”), CMS has recently added two new Frequently Asked Questions (FAQs) and an updated FAQ to the CMS FAQ Database.
These EHR Incentive Programs are intended to provide incentive payments to eligible professionals, eligible hospitals and CAHs as they adopt, implement, upgrade and demonstrate meaningful use of certified EHR technology.
Under applicable regulations, an electronic health record (EHR)—sometimes called an electronic medical record (EMR)—allows healthcare providers to record patient information electronically instead of using paper records. Since EHRs are often capable of doing much more than just recording information, the EHR Incentive Programs encourage providers to use the capabilities of their EHRs to identify and analyze relevant patient data—including the establishment of appropriate benchmarks–that can lead to improved patient care, as well.
Although most hospitals will be able to receive a payment from both programs, eligible professionals must choose which program in which to participate. Only those professionals who meet the applicable program requirements as set out below would be eligible to receive incentive payments under that incentive program.
Eligible professionals under the Medicare EHR Incentive Program include:
- Doctor of medicine or osteopathy
- Doctor of dental surgery or dental medicine
- Doctor of podiatry
- Doctor of optometry
Eligible professionals under the Medicaid EHR Incentive Program include:
- Physicians (primarily doctors of medicine and doctors of osteopathy)
- Nurse practitioner
- Certified nurse-midwife
- Physician assistant who furnishes services in a Federally Qualified Health Center of Rural Health Clinic that is led by a physician assistant.
In addition, hospital-based eligible professionals are not eligible for incentive payments. An eligible professional is considered hospital-based if 90% or more of his or her services are performed in a hospital inpatient (Place Of Service code 21) or emergency room (Place Of Service code 23) setting.
For relevant eligibility information, hospitals and CAHs are encouraged to visit the Eligible Hospital Information page available at CMS’ official EHR website.
Here are the two new EHR FAQs recently added to the CMS FAQ Database:
FAQ8035. Can attestation information submitted for the EHR Incentive Programs be updated, changed, cancelled or withdrawn after successful submission in the EHR Registration and Attestation System?
A. If an eligible professional (EP) or hospital participating in the Medicare EHR Incentive Program chooses to change or withdraw their attestation, an attestation amendment form or incentive payment attestation withdrawal form must be completed and sent back along with any incentive payments already received.
Medicare Attestation Amendment Form:
Medicare Incentive Payment Withdrawal Form:
An EP or hospital wishing to change or withdraw their attestation in the Medicaid EHR Incentive Program should contact their state directly to make this request.
Please note that the Centers for Medicare and Medicaid Services (CMS) do not require providers who relied on flawed software for their attestation information to submit amended attestation data. For additional information, please see FAQ#6097.
FAQ8037.Can eligible professionals (EPs) or eligible hospitals round their patient volume percentage when calculating patient volume in the Medicaid EHR Incentive Program?
A. To participate in the Medicaid EHR incentive program, EPs are required to demonstrate a patient volume of at least 30% Medicaid patients over a 90-day period in the prior calendar year or in the 12 months before attestation. The Centers for Medicare and Medicaid Services allow rounding 29.5% and higher to 30% for purposes of determining patient volume. Similarly, pediatric patient volume may be rounded from 19.5% and higher to 20%. Finally, acute care hospitals are required to demonstrate a patient volume of at least 10% Medicaid patients over a 90-day period in the prior fiscal year preceding the hospital’s payment year or in the 12 months before attestation. Hospitals’ patient volume may be rounded from 9.5% and higher to 10%.
FAQ7817.How can an EP that is new to a practice meet the patient volume/practice predominantly criteria to be eligible for the Medicaid EHR Incentive Program?
A. There are three ways an EP could meet the patient volume/practice predominantly criteria to potentially qualify for an incentive payment. For illustrative purposes, assume the EP in the below example joined the practice in 2013:
- Next year (2014), after the EP establishes his/her own 90-day patient volume period as an EP from the prior calendar year (2013) or 12-month period prior to attestation, if this option is allowed by his/her state.
- This year (2013), if he/she is part of a group using the group patient volume proxy and it is appropriate to include him/her (i.e., he/she see Medicaid patients*). It is not a requirement that he/she was in the group for the period that is the basis for the proxy. However, using the group patient volume proxy is distinct from whether an EP practices predominantly in a Federally Qualified Health Center (FQHC) or Rural Health Center (RHC). To meet the “practice predominantly” criterion, an EP must use individualized data; there is no group proxy (see below bullet).
- If the EP is working in an FQHC or RHC, next year (2014), after the EP practiced predominately in his/her the FQHC/RHC for at least 6 months. The EP could then use either individual or group proxy needy individual patient volume. FQHCs/RHCs using the group proxy must follow the regulations, including ensuring all EPs in the clinic use the proxy, and counting only encounters associated with the clinic (not an EP’s outside encounters).
Each state has a method to determine whether or not an EP is considered hospital-based. Generally, the state uses data from the prior fiscal or calendar year to make this determination.
*Note that it is within the state’s discretion to require validation of an EP’s status as a Medicaid provider in the form of a paid encounter from the previous year. If the EP is new to practicing medicine (e.g., a recent graduate of an appropriate training program), he/she is not required to provide such information.
Additional information on the EHR Incentive Programs is continually being added to and updated on the official CMS Medicare and Medicaid EHR Incentive Programs website. Interested providers are encouraged to visit that website from time to time for more recent updates.
This week’s note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc.
During the last quarter of 2012, hospital outpatient departments temporarily fell under the therapy caps and manual medical review provisions as required under the Middle Class Tax Relief and Job Creation Act. On January 2, 2013, the American Taxpayer Relief Act revised those provisions that impacted outpatient therapy services, including those provided in hospital outpatient departments for services furnished between January 1 and December 31, 2013.
- Private therapy practices and physician offices;
- Part B Skilled Nursing Facilities;
- Home Health Agencies (TOB 034X);
- Outpatient Rehabilitation Facilities (ORFs) and Comprehensive Outpatient Rehabilitation Facilities (CORFs);
- Hospital Outpatient Departments (TOB 013X including TOB 012X); excluding CAHs.
Critical access hospitals (CAHs) will not be included in applying the payments caps to their outpatient therapy services or reporting the –KX modifier; however, the therapy visits provided at a CAH will count towards all other providers’ therapy payment caps. In other words, if a patient is seen at a CAH and receives physical therapy that Medicare pays $1,000 for, those services will count toward another hospital’s payment cap if the patient transfers care or starts a new episode of care at another facility in the same calendar year. Of interest is that the CMS representative on the recent March Rural Health Open Door Forum stated that CAHs will be considered for inclusion in the therapy caps in 2014 through the proposed rule making process.
The manual medical review provision of the law affects therapy claims that exceed $3,700 threshold cap for PT and SLP services combined and a separate one for OT services. Although the manual medical review provision has been in place with dates of service beginning January 1, 2013, some MACs put this process on hold until further notice. CMS has announced that effective April 1, 2013, Recovery Auditors (RA) will review all therapy claims which have exceeded the $3,700 threshold cap for the year. Although PT and SLP services are combined for triggering the threshold, the medical review will be conducted separately for each discipline.
Recovery Auditors will conduct both prepayment and post payment reviews when services exceed the threshold cap.
- Recovery Audit Prepayment Review Demonstration will be conducted in eleven states -FL, CA, MI, TX, NY, LA, IL, PA, OH, NC, and MO. The claims will be reviewed and compared to the medical record before the claim is processed for payment whenever the $3,700 threshold cap is met.
- The ADR will be sent to the provider by the MAC with instructions to send the records to the RA who will then have 10 business days after receiving the medical record to conduct the prepayment review. The provider will receive a review results letter describing the RA’s findings and their determination.
- The remaining states will fall under post payment review by RAs for all therapy claims that reach the $3,700 threshold cap. The request for medical records will occur immediately after the claim has been processed for payment.
- CMS did not indicate a separate timeframe for completion of the post payment review outside of the current RA process; however, if the RA determines than an improper payment has been made, a demand letter will be sent to the provider from the MAC who will initiate the take back.
- For both prepayment and post payment reviews, the current medical record request limits will not apply to therapy services since they are based on a payment cap. All therapy claims that hit the cap will fall into review outside of the usual RA ADR limits.
Keep in mind that all providers must report the National Provider Identifier (NPI) on the claim form of the physician or non-physician practitioner who is responsible for reviewing the therapy plan of care to prevent claims from being rejected and further delaying payment. Additional guidance on the therapy payment cap and manual medical review can be found on the CMS Therapy Cap web page.
Editor’s note: Judith Kares, JD, CPC, regulatory specialist for HCPro, Inc., is the author of this week’s note from the instructor.
CMS issues recurring update notification highlighting important CY2013 OPPS changes
On Friday, CMS released its annual recurring update notification reflecting the claims processing-related changes implemented in the CY 2013 OPPS final rule. Hospitals and CAHs are encouraged to review the transmittal more thoroughly to assure that they are prepared to implement these changes for services provided on and after January 1, 2013.
Hospitals and CAHs are also encouraged to be on the lookout for a similar transmittal (which has not yet been released) designed to reflect benefit-related changes included in the CY 2013 OPPS final rule. CMS also noted that the January 2013 integrated outpatient code editor (I/OCE) and OPPS pricer will reflect the healthcare common procedure coding system (HCPCS), ambulatory payment classification (APC), HCPCS modifier, and revenue code additions, changes, and deletions identified in this transmittal.
CMS identified the following key changes for CY 2013:
- Changes to device, radiolabeled product and procedure edits for January 2013. The most current list of device edits can be found at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/ .Failure to pass these edits will result in the claim being returned to the provider.
- Intracoronary stent placement procedure codes. The deletion of two CPT codes (92980 and 92981) that describe the placement of non-drug-eluting intracoronary stents and two existing HCPCS G-codes that describe the placement of drug-eluting intracoronary stents, along with the creation of nine new HCPCS C-codes in order to maintain the existing OPPS policy of differentiating payment for intracoronary stent placement procedures involving non-drug‑eluting and drug-eluting stents for CY 2013.
- Outpatient payment for composite APC 8000. Modification of the intracardiac catheter ablation codes that may qualify a cardiac electrophysiologic evaluation and ablation service for composite payment under composite APC 8000 for services provided on and after 1/1/13. CMS’ action follows the AMA CPT editorial panel’s deletion of CPT codes 93651 and 93652 (intracardiac catheter ablation codes), effective 1/1/2013 and creation of new CPT codes 93653, 93654, and 93656, effective 1/1/2013.
- New ‘sometimes therapy’ services that may be paid as non-therapy services for hospital outpatients, Effective January 1, 2013 the addition of two HCPCS codes (G0456 and G0457) to the list of PT/SLP/OT “sometimes therapy” services that may be paid under certain circumstances to a facility under the OPPS. The limited set of sometimes therapy services are paid under the OPPS when they are not furnished as therapy, that is, when they are not furnished under a certified therapy plan of care.
- Coding changes for partial hospitalization psychiatric (PHP) services. Following the AMA’s CPT editorial panel deletion of 28 psychiatric CPT codes, including those related to PHP services, and replacing them with 12 new CPT codes (effective for services provided on and after 1/1/13), CMS’ implementation of corresponding changes to the PHP code set that is used for billing and documenting PHP services.
- Certain changes to drugs, biologicals, and radiopharmaceuticals:
- Effective for services provided on and after 1/1/13, the creation of several new HCPCS codes to identify those drugs, etc. for which no specific code had previously been created. The new codes are set out in Table 1 of Attachment A to the transmittal;
- Effective for services provided on and after 1/1/13, changes to the HCPCS/CPT or long descriptor, or both, of certain drugs, etc. These changes are set out in Table 2 of Attachment A to the transmittal. Hospitals are once again admonished to pay close attention to accurate billing for units of service consistent with the dosages contained in the long descriptors of the active CY 2013 HCPCS and CPT codes;
- For CY 2013, payment for nonpass-through drugs, biologicals and therapeutic radiopharmaceuticals is made at a single rate of ASP + 6%, which provides payment for both the acquisition and pharmacy overhead costs associated with the drug, biological or therapeutic radiopharmaceutical. In CY 2013, a single payment of ASP + 6% will also be made (providing payment for both associated acquisition and pharmacy overhead costs for these pass-through drugs, biologicals and radiopharmaceuticals);
- Any changes in the payment rates effective for services provided on and after 1/1/13, based on sales price submissions from the third quarter of CY 2012, will be incorporated into the January 2013 release of the OPPS Pricer.
- CY 2013 OPPS payment adjustment for certain cancer hospitals. CMS’ updating of the “target payment to cost ratio (PCR)” for CY 2013, for purposes of the cancer hospital payment adjustment, to 0.91 for outpatient services furnished on or after January 1, 2013 through December 31, 2013. Under the Affordable Care Act (ACA), beginning in CY 2012, CMS is to provide additional payments to each of the 11 cancer hospitals so that each cancer hospital’s final payment to cost ratio (PCR) for services provided in a given calendar year is equal to the weighted average PCR (which CMS refers to as the “target PCR”) for other hospitals paid under the OPPS.
- Changes to OPPS pricer logic:
- Rural sole community hospitals (SCHs) and essential access community hospitals (EACHs) will continue to receive a 7.1% payment increase for most services (excluding drugs, biologicals, items and services paid at charges reduced to cost, and items paid under the pass-through payment policy) in CY 2013;
- New OPPS payment rates and copayment amounts will be effective January 1, 2013. All copayment amounts will be limited to a maximum of 40% of the APC payment rate. Copayment amounts for each individual service cannot exceed the CY 2013 inpatient deductible;
- For hospital outlier payments under OPPS, there will be no change in the multiple threshold of 1.75, which will continue to apply for 2013;
- In addition, for hospital outlier payments under the OPPS, there will be no change in the fixed-dollar threshold of $2,025, which will continue to apply for CY 2013. The estimated cost of a service must be greater than the APC payment amount plus $2,025 in order to qualify for outlier payments;
- For outliers for community mental health centers (bill type 76x), there will be no change in the multiple threshold of 3.4, which will continue to apply for 2013;
- Effective January 1, 2013, 3 devices are eligible for pass-through payment (pass-through payment generally equals charges reduced to cost, sometimes subject to an offset amount) in the OPPS Pricer logic. Category C1830 (Powered bone marrow biopsy needle), has an offset amount of $0, because CMS is not able to identify portions of the APC payment amounts for the related procedure that were associated with the cost of a predecessor device. Category C1840 (Lens, intraocular (implantable)) and C1886 (Catheter, extravascular tissue ablation, any modality (insertable)) have offset amounts included in the Pricer for CY 2013, because CMS was able to identify portions of the APC payment amounts for the related procedures that were associated with the cost of certain predecessor devices. Pass-through offset amounts are adjusted annually;
- Effective January 1, 2013, there will be one diagnostic radiopharmaceutical receiving pass-through payment in the OPPS Pricer logic. For APCs containing nuclear medicine procedures, Pricer will reduce the amount of the pass-through diagnostic radiopharmaceutical payment by the wage-adjusted offset for the APC with the highest offset amount when the radiopharmaceutical with pass-through appears on a claim with a nuclear procedure. The offset will cease to apply when the diagnostic radiopharmaceutical expires from pass-through status. The offset amounts for diagnostic radiopharmaceuticals are the “policy-packaged” portions of the CY 2013 APC payments for nuclear medicine procedures and may be found on the CMS website;
- Effective January 1, 2013, the OPPS Pricer will continue to apply a reduced update ratio of 0.980 to the payment and copayment for hospitals that fail to meet their hospital outpatient quality data reporting requirements or that fails to meet CMS validation edits. The reduced payment amount will be used to calculate outlier payments, if any;
- Pricer will continue to update the payment rates for drugs, biologicals, therapeutic radiopharmaceuticals, and diagnostic radiopharmaceuticals with pass-through status when those payment rates are based on ASP, on a quarterly basis.
Again, hospitals and CAHs are encouraged to review this transmittal closely to assure that they are prepared to comply with these changes effective for applicable services provided on and after 1/1/13.
An updated version of the National Correct Coding Initiative (NCCI) manual was recently posted to the CMS NCCI website which included changes identified in red text and will be effective with dates of service January 1, 2013. In addition to two new modifiers, CMS will also be implementing a third edit for add-on codes and has provided some perplexing language regarding reporting unbundled codes.
One of the interesting changes noted in red in chapter one is the following statement:
“Providers reporting services under Medicare’s outpatient hospital prospective payment system (OPPS) must report all services performed including those that are not separately payable. This requirement applies to services not payable due to NCCI edits. Providers should be careful to avoid inappropriately appending NCCI-associated modifiers to codes to improperly bypass an NCCI edit.”
This is rather confusing and could be interpreted in a few different ways. If the NCCI manual instruction states to report the “bundled” code in addition to the separately payable code, providers will hit an NCCI edit and that specific line will be rejected. The question is why CMS would want this information – it would most likely not be appropriate to use the charges attached to the bundled code for rate setting because providers should not be reporting an unbundled procedure code anyway. In the past, CMS has instructed providers to report the costs of care (i.e. charges) by not reporting the CPT code – in instances where a CPT code was not required with a specific revenue code. However, the statement above does not specifically state that. Providers will want to ask for clarification from their MACs and consider asking this question on the next CMS Hospital Open Door Forum call.
According to the NCCI manual, a modifier should not be appended to a HCPCS/CPT code solely to bypass an NCCI edit if the clinical circumstances do not justify its use. There are two modifiers that will be added to the anatomical modifiers that may be used under appropriate clinical circumstances to bypass an NCCI edit:
- LM – Left main coronary artery;
- RI – Ramus intermedius coronary artery.
A variety of staff should be aware of the addition of these two modifiers – coders, department managers, auditors, billers, chargemaster coordinators to name a few – so that when appropriate, an NCCI edit can be bypassed and the hospital appropriately reimbursed for the second procedure.
Some codes in the CPT Manual are identified as “add-on” codes which describe a service that can only be reported in addition to a primary procedure. The CPT Manual instructions specify the primary procedure code for most add-on codes; however, for others, the primary procedure is not specified.
Add-on codes allow reporting of significant supplemental services commonly performed in addition to the primary procedure. They should not be confused with incidental services that are necessary to accomplish the primary procedure (e.g., lysis of adhesions in the course of an open cholecystectomy) or complications that occur during the procedure that are inherent in an invasive procedure (e.g. control of bleeding during an invasive procedure is considered part of the procedure), both which are not separately reportable with an add-on code.
In general, NCCI procedure to procedure edits do not include edits with most add-on codes because CMS considers edits related to the primary procedure to be adequate to prevent inappropriate payment for an add-on coded procedure. However, NCCI does include edits for some add-on codes when coding edits related to the primary procedure must be supplemented.
There are three “types” of add-on codes with the associated edit table. Each table lists the add-on code which is eligible for payment when reported with the primary code, the exception being 99291 critical care evaluation and management, first 3-74 minutes and 99292 each additional 30 minutes critical care. Transmittal 2607 goes into detail regarding the three different edit tables:
- “Type I Add-on Code Edit Table” lists add-on codes for which the CPT Manual or HCPCS tables define all acceptable primary codes.
- “Type II Add-on Code Edit Table” lists add-on codes for which the CPT Manual and HCPCS tables do not define any primary codes.
- “Type III Add-on Code Edit Table” lists add-on codes for which the CPT Manual or HCPCS tables define some, but not all, acceptable primary codes.
Although the add-on code and primary code are normally reported for the same date of service, there are unusual circumstances where the two services may be reported for different dates of service. For example, when critical care (99291) begins on one date of service and rolls over into the following day and the additional critical care time (99292) is provided on that following day.
All providers should take the time to review each chapter of the new NCCI manual to identify any areas that may need clarification with CMS, your MAC and specific staff. Although the changes don’t appear to be that significant on first glance, providers have been stung by that in the past with clarifications that completely changed what we thought to have been true.
Last week CMS released transmittal 2603 that explained how the new 42 non-payable functional G-codes and seven modifiers on selected claims for physical therapy (PT), occupational therapy (OT) and speech-language pathology (SLP) services will be implemented. Although the new codes and modifiers are required beginning with dates of service January 1, 2013, CMS has enacted a testing period in which hospitals and practitioners have until July 1, 2013 date of service to implement and prevent claims rejections.
This new required reporting was originally announced in the 2013 Medicare Physician Fee Schedule Final Rule; however the details were not known at that time. The purpose of the new reporting is to assist CMS reform the Medicare payment system for outpatient therapy services based on the patient’s condition and outcomes. This new requirement will affect hospitals, CAHs, CORFs, SNFs, home health agencies when the patient is not under a plan of care, as well as therapy services furnished personally by an incident to the service of a physician and non-physician practitioners (i.e. nurse practitioners, certified nurse specialists and physician assistants) and therapists in private practice.
The 42 new G-codes assess categories for mobility, body position; carrying, moving and handling objects, self-care, swallowing, motor speech, spoken language, attention, memory, and voice. The seven severity modifiers report percentage of impairment limitation restriction. According to this transmittal, it is the responsibility of the therapist, physician or non-physician practitioner who furnishes the services to track and document the G-codes and modifiers reported on the claim in the beneficiary’s medical record.
There are specific time frames for reporting that providers need to be aware of and create a tracking mechanism:
- At the start of the therapy care (onset);
- At least once on or before the 10th treatment day when ongoing therapy is needed;
- When a re-evaluation is performed (identified by specific CPT codes); and,
- At discharge.
Two functional G-codes will be required on a particular claim when functional reporting is required for therapy services under one plan of care (POC). However, it is possible for a claim to contain four or more non-payable G-codes in cases where a beneficiary receives therapy services under multiple POCs – PT, OT, and/or SLP – from the same therapy provider. The therapy discipline modifiers – GN, -GP, -GO will also be required in addition to the functional severity modifier. For hospitals, a “nominal charge” such as $0.01 must be included on the claim as well as another billable and separately payable service. Professional claims may report a zero charge if their software allows.
Even though the reporting of the functional G-codes and severity modifiers is not required on the claim until July 1, 2013 date of service, hospitals and other providers should test their systems early to prevent claims rejections issues. More details will be forthcoming as CMS roles out this new strategy. Remember that this information will be used to revise the current payment system so accuracy of the data is critical going forward.
With the recent news that legislation has been introduced to reform Recovery Auditors (RA) and that the American Hospital Association (AHA) and four health systems are suing the U.S. Dept. of Health and Human Services (HHS) for unfair Medicare practices in regards to the RA program, I thought it would be of interest to our readers to take a look at the OIG’s report and recommendations on their administrative law judge (ALJ) appeals review from 2010.
Prior to 2005, the OIG had found that at different levels of appeal, standards were not consistently applied and that CMS’s ability to defend its initial decisions was limited. Regulatory changes were then implemented, including requiring ALJs to follow new regulations that addressed how Medicare policy must be applied, when new evidence may be accepted and how CMS can participate in appeals. In addition, oversight was transitioned from the Social Security Administration (SSA) to HHS.
The third level of appeal that is conducted by ALJs differs substantially from the first two levels when appeals are filed with the Medicare administrative contractor (MAC) or the qualified independent contractor (QIC). One of the major differences is that the appellant has the right to a hearing before an ALJ; however, under certain circumstances, the ALJ may not conduct a hearing and may instead make a decision after reviewing the evidence in the case file or on-the-record review. Prior to 2005, ALJs were bound by Medicare laws, regulations, and National Coverage Determinations when making decisions, but were not bound by Local Coverage Determinations or CMS program guidance. In 2005, new regulations were introduced that required ALJs to “give substantial deference” to these policies and to provide an explanation if they decline to follow one of these policies in an appeal. Another change in 2005 was that an appellant must explain in writing the reason for submitting new evidence and ALJs may accept the new evidence only if they determine that the appellant had “good cause” for waiting until the ALJ level to submit it. As a party to the ALJ hearing, CMS or their contractors may also submit evidence, call or cross-examine witnesses during the hearing, and appeal to the next level. The OIG was disappointed to find that CMS participated in only 10% of the appeals that ALJs decided in FY 2010 and when CMS participated, ALJs were less likely to decide fully in favor of appellants.
After review of the data and extensive interviews with various staff, the OIG identified that providers filed 85% of the 40,682 appeals that ALJs decided in FY 2010. Certain providers filed appeals much more frequently than others – referred to by the OIG as “frequent filers.” ALJs reversed prior-level decisions by QICs and decided fully in favor of appellants in 56% of appeals in FY 2010. In contrast, QICs decided fully in favor of appellants in 20A% of appeals in FY 2010. What the OIG found was that ALJs differed from QICs in their interpretation of Medicare policies, in their degree of specialization, and in their use of clinical experts which ultimately contributed to different decisions at the ALJ and QIC levels.
During the interview process, both ALJ and QIC staff indicated that ALJs tended to interpret Medicare policies less strictly than QICs. Most ALJ staff noted that ALJs often decided in favor of appellants when the intent but not the letter of a Medicare policy was met. In contrast, most QICs noted that they try to follow Medicare policy strictly. In addition, ALJ and QIC staff commonly noted that some Medicare policies are unclear and that leads to more fully favorable decisions and to more variation among ALJs.
The OIG also noted at least two other findings. The ALJ and CMS staff raised concerns that the acceptance of new evidence and the organization of case files reduced the efficiency of the appeals system and that ALJ staff handled suspicions of fraud inconsistently.
The OIG report provides very clear recommendations to CMS and/or the Office of Hearings and Appeals (OHMA) and here is a summary of those that providers should be aware of.
- Develop and provide coordinated training on Medicare policies to ALJs and QICs at least annually with the focus on Medicare policy for consistency at the second and third level appeals;
- Identify and clarify Medicare policies that are unclear and can be interpreted differently by soliciting input from MACs;
- Improve the efficiency of the appeals process by standardizing case files and accelerating OMHA’s Electronic Records Initiative to transition from paper to electronic files;
- Revise the current regulations to provide more clear guidance to ALJs regarding when to accept new evidence submitted by providers;
- Seek statutory authority to establish a “modest filing fee” for those providers who have been identified as “frequent filers” as a means to encourage them to assess the appeal before filing;
- Determine whether specialization among ALJs would improve efficiency; however, the current statutory requirement is that appeals are randomly assigned and further development of this recommendation would be necessary; and,
- Increase CMS participation in ALJ appeals making strategic decisions about which contractors are best suited to do this and which appeals most warrant CMS participation such as Part A hospitals and frequent filer appeals.
With the recent OIG report, legislation and lawsuit, it is apparent that changes are on the horizon and we can only hope it will be a win-win solution for all parties involved.
Right on cue, CMS released the 2013 OPPS Final Rule on November 1 and then followed up with the MPFS Final Rule. In a breaking news story, HCPro summarized the changes – the good, the bad and the ugly – that will impact hospitals across the country. I wanted to take this time to review several changes that will impact two high volume departments in the hospital outpatient setting – therapy services and laboratory.
Many laboratory departments have been struggling with the complexity and the number of CPT codes for molecular pathology – now at 115 codes in two different tiers – and how to implement the new codes, even though CMS had allowed hospitals to bill the “stacked codes” instead for 2012. That will all change with dates of service on January 1, 2013 when the stacked codes will be invalid and the CPT codes for the actual molecular pathology services will need to be reported and will be paid under the clinical Laboratory Fee Schedule (CLFS).
In 2012 when these codes first came into play, CMS stated they were not valid of payment and hospitals should still report combinations of “regular” CPT codes for payment that described various steps to perform a specific test – referred to as stacking because different groups of codes are billed depending on the components of the actual test. CMS also clarified in a Hospital Open Door Forum call that hospitals should also report the new molecular pathology codes with the stacked codes so that CMS could use that information for setting rates for implementation in 2013.
Hospitals need to begin now to get ready to implement the new codes as this has the potential to be a major project. This includes updating chargemasters, order entry and charge tickets so there will not be a delay in billing and reimbursement. Physicians, laboratory staff and coders may want to review the AMA CPT Assistant May 2012 and June 2012 for guidance on how to select the appropriate code. Keep in mind that hospitals will be responsible for creating their own pricing based on their current methodology and the CLFS as there is not a one-to-one crosswalk from the current CPT codes over to the molecular pathology codes.
Another major change for hospitals will be reporting functional limitation indicators and outcomes for outpatient rehabilitation therapy. This information will be found in the MPFS Final Rule and not under OPPS because therapy services are paid under the MPFS.
The MCTRJCA, the same Act that implemented the therapy caps and manual medical review for hospital outpatient services from October through December 2012, also required a claims-based data collection process to help reform the Medicare payment system. Of concern to Congress and CMS is that between 1998–2008, Medicare expenditures for outpatient therapy services increased at a rate of 10.1% per year while the number of Medicare beneficiaries receiving therapy services only increased by 2.9% per year. Beginning on page 221 of the display copy of the MPFS Final Rule, a thorough explanation is provided regarding what data CMS will be looking for under the five-year CMS project titled “Development of Outpatient Therapy Payment Alternatives” (DOTPA).
In summary, because current ICD-9 diagnosis codes cannot provide the data needed, specific G-codes will be used to identify what type of functional limitation is being reported and whether the report is on the current status, projected goal status or discharge status. Modifiers will also be used to indicate the severity/complexity of the functional limitation being tracked. The difference between the reported functional status at the start of therapy and projected goal status will represent any progress the therapist anticipates the beneficiary would make during the course of treatment. This reporting will apply to all therapy claims, including those for services above the therapy caps and those that include the -KX modifier.
Again, this will be a major undertaking to update the charge master, order entry systems and charge tickets with new G-codes for services that occur on January 1, 2013. Although this is not a change in the current reimbursement structure and hospitals will be given a six-month testing period to implement no later than July 1, 2013, therapists and billers, as well as other involved in coding and billing of therapy services should become familiar with the new data reporting requirement prior to January 1.
Clarification regarding $716 billion in cost savings to Medicare Program under the Affordable Care Act
Ever since the creation of the Medicare Program—designed to provide health coverage for certain vulnerable portions of the population (the aged, disabled and those with end-stage renal disease [ESRD]) —Medicare, at the direction of Congress, has been attempting to assure that its beneficiaries have access to high quality care, while at the same time containing the costs of that care to assure the economic viability of the program itself. Several important steps in that direction were incorporated into the Affordable Care Act (ACA), some of which have already been implemented, and several of which are being implemented as of the beginning of FY 2013.
Early cost containment efforts
These efforts have led to the development of prospective payment methodologies (e.g., the Inpatient Prospective Payment System [IPPS] and Outpatient Prospective Payment System, [OPPS], etc.) that encourage providers to be more cost effective. They have also led to a number of demonstration projects designed to provide alternative delivery mechanisms to improve the coordination and efficiency of care provided. In recent years, particularly with respect to inpatient stays, CMS has been moving toward pay for performance, which is designed to reward those hospitals that meet and/or exceed certain quality of care standards. CMS has also attempted to assure that those hospitals who fail to provide an acceptable level of care during an inpatient stay are not rewarded for their failure to meet such standards.
Cost savings under the Affordable Care Act
Medicare Advantage plan reimbursement. As part of the ACA, Congress continued its efforts to contain costs while at the same time assuring the delivery of high quality care without a reduction in benefits. To that end, approximately $716 billion in savings have been built into the ACA. These are savings, not cuts to Medicare benefits. A significant portion of savings will come from a reduction in reimbursement to Medicare Advantage plans. Medicare Advantage plans utilize a managed care delivery mechanism to deliver the very same inpatient (Part A) and outpatient (Part B) benefits that are otherwise available to beneficiaries who enroll in what is referred to as “Original” Medicare. Under original Medicare, beneficiaries are generally unrestricted in their selection of providers, whereas certain Medicare Advantage plans may have more restricted provider networks.
The precursors to today’s Medicare Advantage plans were initially introduced as part of a Medicare risk demonstration project that was designed to provide for a more cost effective managed care model for delivering exactly the same benefits offered under original Medicare (Parts A and B). Starting with an initial cost savings of 5% (Medicare risk plans were paid 95% of what it would have cost the Medicare program for those same services if provided under original Medicare), Medicare had come to a point where Medicare Advantage plans were not able to provide the same benefits more cost effectively, particularly to the extent that they attempted to extend their services to rural and other more remote areas. As a result, they were receiving subsidies to provide exactly the same benefits at a higher cost than under original Medicare. Prior to the implementation of the related ACA changes, they were receiving up to 114% of what the comparable costs would have been under original Medicare.
Under the ACA, certain adjustments are now being made to reduce these subsidies. Such reduction in subsidies, however, does not result in a reduction in the services provided to Medicare Advantage enrollees. That is, whatever Medicare Advantage plans receive in reimbursement, there will be no cuts in benefits, because they are bound to provide equivalent benefits to those offered to original Medicare beneficiaries under Part A (inpatient) and Part B (outpatient). Many Medicare Advantage plans also provide prescription drug benefits under Part D.
Other sources of cost savings. Some of the other savings included in that $716 billion are accounted for by the implementation of decreases in facility reimbursement that have been in the works for a number of years, starting in FY 2004, with the voluntary reporting of certain quality indicators. For the first time, during FY 2013, hospitals will be reimbursement based upon their performance (either by achievement or improvement), as identified by quality data submitted by the hospitals themselves. This is a meaningful step toward pay for performance across the board. Beneficiaries have access to these performance scores, which may be helpful to them in making their own health care decisions. Additional savings will also come from reduced Medicare payments that would otherwise be made to hospitals to account for certain excess (preventable) hospital readmissions.
Cost savings to extend economic viability of Medicare program. The ACA cuts to Medicare costs are to be used to extend the economic viability of the Medicare Program. The initial projections were that they would do so for eight more years (through 2024, rather than 2016), without any decrease in the benefits that beneficiaries will receive. Let us hope that these cost containment efforts are successful without compromising the quality of care provided.
Last week CMS issued a correction to the FY2013 IPPS Final Rule. The most notable correction is to the adjustment factors for the Hospital Readmission Reduction program or HRRP.
CMS noted in the correction that they used incorrect MedPAR data in calculating the original factors published with the final rule in August. They originally used data from all of FY2008 in error, rather than just the data from July 1, 2008 forward. The corrected Table 15 is posted on the FY2013 Final Rule Tables page.
Kaiser Health News published a table comparing the originally published HRRP factors with the corrected factors. According to the table published by Kaiser, most hospitals will see no or only a slight increase, although there were a few with a slight decrease to the factor. The table is available at the Kaiser Health News website at this link.
On a related note, as many hospitals are aware, the other new quality adjustment for this year, the Value-Based Purchasing (VBP) adjustment, is also experiencing its own implementation delays. CMS indicated the factors published in Table 16 of the final rule was just proxy amounts with the final being published later this year. In the FY2013 IPPS Implementing Transmittal they also indicated that they will reprocess all claims from October 2012 – December 2012 once the correct factors are implemented in January of 2013.
Because of these delays, CMS has also not released the IPPS Pricer for FY2013. The Pricer will have to be modified substantially to account for the new quality based adjustments and it is not clear if CMS is waiting until the January implementation of the VBP amounts to release the Pricer or if it will be released sooner. Additionally, although not affected by the two quality adjustments at this time, other pricers such as the inpatient psychiatric and rehabilitation pricers which draw from the IPPS Pricer are also not published yet.
Judith Kares, one of my co-authors on the blog did a wonderful breakdown of these adjustments a couple weeks ago. I encourage you to read her article (on the MedicareMentor blog) if you haven’t already and keep an eye on your hospital’s adjustments to ensure they are correct and applied correctly to your payments.