This week’s note from the instructor is written by Kimberly Hoy Baker, JD, regulatory specialist for HCPro.
On September 28, CMS held another special open door forum on the 2-Midnight Benchmark and its implementation, starting October 1, 2013. CMS declined to delay implementation of the inpatient status benchmark, but instead put in place a 90-day “implementation period” with a moratorium on audits with the exception of “probe and educate” reviews by Medicare Administrative Contractors (MACs). The open door forum also reviewed several frequently asked questions (FAQs) and allowed an open question and answer time.
During the open door forum, CMS discussed a written announcement dated September 26, placed on their medical review website regarding audits during the 90-day implementation period. CMS stated it will not permit Recovery Auditors to review cases with less than two midnights of inpatient care for the 90 days following the October 1 implementation of the 2-Midnight Benchmark. During this time however, CMS has instructed the MACs to audit a probe sample from every hospital of 10-25 cases that had less than two midnights of care.
The probe audits will be done on a pre-payment basis, and if the hospital receives a negative determination on a case, the hospital will be able to rebill the case under the new Part B inpatient billing rules. Following the probe audit, the MAC will identify “issues” with the hospital’s cases and provide further education if necessary. If no “issues” are identified, the MAC has been instructed not to conduct further reviews of cases with less than two midnights during that 90 day implementation period.
Additionally, CMS reiterated the 2-Midnight Presumption, noting they have instructed the MACs and Recovery Auditors not to review cases with at least two midnights of inpatient care from October 1 through December 31. It was not clear from the notice if this limitation on review of cases with two midnights was limited to the implementation period. However, based on the guidance on the 2-Midnight Presumption, it would seem this is not limited to the implementation period. Rather this prohibition on reviews would seem to apply after the implementation period as well, unless a provider is found to be gaming the system or delaying care to meet the two midnight requirement, as indicated in prior guidance.
In addition to discussing limitations on audits, CMS also reviewed several FAQs it had received with pre-written answers that were read by CMS representatives. The FAQs were to be placed on CMS’ medical review website within a “few days,” however, they have not appeared on the website. Several of CMS’ sites have a notice indicating they are not up to date because of the government budget shut down, and these FAQs may be victims of bad timing. Hopefully, they will be posted soon as they represent essential guidance to the provider community. Providers can watch for them here.
Note from the instructor: FY 2014 IPPS Final Rule adjustments and preparation (Part I): The Hospital Readmission Reduction Program
This week’s note from the instructor is written by Judith Kares, JD, regulatory specialist for HCPro.
In the August 6, 2013, issue of Medicare Insider, Debbie Mackaman provided a broad overview of the recently released FY 2014 Inpatient Prospective Payment System (IPPS) final rule. Here, and the next three issues of Medicare Insider, we will review certain adjustments to n hospitals’ inpatient reimbursement for inpatient admissions covered under Part A. All three of these adjustments are part of CMS’ movement toward “pay for performance” as part of CMS’ overall Hospital Quality Improvement Program.
Two of these adjustments are effective for most IPPS hospital discharges occurring on or after October 1, 2012 (the beginning of FY 2013). These adjustments were implemented under the Hospital Readmission Reduction Program (HRRP) and the Hospital Value-based Purchasing Program (HVBPP). These two programs are in effect for most IPPS inpatient hospital discharges occurring during FY 2014, with certain changes. The third adjustment will become effective for certain IPPS and Maryland waiver hospital discharges occurring on or after October 1, 2014, (the beginning of FY 2015) under the yet to be finalized Hospital-Acquired Condition Reduction Program (HACRP).
Hospitals looking for more specific guidance are encouraged to review the FY 2014 IPPS Final Rule, which was published in the Federal Register Monday, August 19, 2013.
On the way to pay for performance
CMS has been moving toward pay for performance under its overall Hospital Quality Improvement Program for several years, beginning with a 2% reduction in payment for inpatient services when hospitals fail to meet certain quality indicator reporting requirements. This was followed by CMS’ decision to ignore the presence of certain conditions for purposes of DRG assignment when these conditions have been identified by CMS as hospital-acquired conditions (HAC) that CMS has determined would not arise after admission if the hospital was providing an acceptable quality of care, but were not documented as being present at the time of admission.
CMS’ most recent steps toward pay for performance, implementation of the HRRP and HVBPP, is effective for inpatient services provided on or after October 1, 2012.
Application of HRRP adjustments to “base operating portion of the DRG payment”
Adjustments under the HRRP for applicable hospitals are based on what CMS refers to as the “base operating portion of the DRG payment.” This refers to the wage-index and/or cost of living adjustments applicable to the standardized amount for that hospital, plus any applicable new technology add-on payment. If applicable, the base operating amount used is also based on the acute or post-acute transfer amount.
However, the base operating amount does not include DSH, IME, or LV hospital adjustments or any applicable inpatient operating outlier payment. In addition, CMS clarified in the FY 2014 IPPS final rule that, for purposes of the HRRP adjustment, the base operating amount does not include any otherwise applicable HVBPP adjustment.
Basis of HRRP reductions for FYs 2013 and 2014
For discharges during FY 2013, the HRRP requires a reduction to most hospitals’ base operating DRG payments to account for excess readmissions of selected applicable conditions—acute myocardial infarction, heart failure, and pneumonia. Although there will be no expansion of applicable conditions for FY 2014, several conditions will be added to the program for FY 2015.
For purposes of the HRRP, a “readmission” occurs when a patient is discharged from an applicable hospital (initial index hospitalization) and then admitted to the same or another acute care hospital within 30 days of the date of discharge from the initial hospital. Only one readmission during the 30 days following the discharge from the initial hospitalization will count as a readmission for purposes of calculating the excess readmission ratio. Certain readmissions, including planned readmissions, are not counted for these purposes. In the FY 2014 IPPS final rule, CMS also clarified that an unplanned readmission after a planned readmission within 30 days of an initial index discharge will not be counted as a readmission.
We will discuss additional exclusions (e.g., certain patients, hospitals, and readmissions), as well as the source of data to be used for purposes of determining excess readmissions and related factors after we have discussed the formula for calculating an applicable hospital’s HRRP adjustment factor in next week’s Medicare Insider.
Determining a hospital’s HRRP adjustment factor and impact on hospital reimbursement
For FY 2013, an applicable hospital’s HRRP adjustment factor is the higher of a hospital-specific ratio or a floor adjustment factor of .99, resulting in a maximum reduction in base operating DRG payments of 1%. The hospital-specific ratio will be rounded to the fourth decimal place. For FY 2014, the floor adjustment will increase to 0.98, or a maximum reduction of 2%, and for FY 2015 and subsequent fiscal years, the floor adjustment will increase to 0.97, or a maximum of 3%.
The ratio used to calculate the HRRP adjustment factor is equal to the following: 1 – (“aggregate payments for excess admissions”/“aggregate payments for all discharges”)
The term “aggregate payments for excess readmissions” for a specific hospital for a specific period is defined as the sum, for applicable conditions, of the product (for each applicable condition) of:
- The base operating DRG payment for that hospital for that period for that condition
- The number of admissions for that hospital for that period for that condition
- The “excess readmission ratio” for that hospital for that period minus one
The “excess readmission ratio” for an applicable hospital for each applicable condition is equal to the following: (“risk-adjusted readmissions based on actual readmissions”/“risk-adjusted expected readmissions”)
The term “aggregate payments for all discharges” for a specific hospital for a specific period is defined as the sum of the base operating DRG payment amounts for all discharges for all conditions from that hospital for that period.
If a hospital is subject to an HRRP adjustment, CMS will apply the HRRP adjustment factor to all discharges from that hospital during the respective fiscal year, not just to discharges from that hospital for applicable conditions.
Sources of data to be used for purposes of determining excess readmissions and related factors
CMS has determined that 3 years’ worth of data is necessary to determine excess readmission ratios and related factors, including a hospital’s HRRP adjustment factor for a given year. The applicable period for FY 2013 is July 1, 2008-June 30, 2011, and the applicable period for FY 2014 is July 1, 2009-June 30, 2012.
As noted above, certain readmissions, based on the nature of the patient involved, the hospital to which the patient is admitted, and the readmission itself, are excluded for purposes of determining excess readmissions and other HRRP related factors. In the FY 2014 IPPS Final Rule, CMS provided additional guidance about certain exclusions set out below, as well as the data to be relied on in determining whether these exclusions apply:
- Discharges for patients, where death is reported with Discharge Status Code 20 as the discharge event
- Discharges where the patient is reported as having been discharged AMA
- Discharges that are determined to be transfers for payment purposes, based on identification/review of contiguous stays, not based upon the reporting of applicable discharge status Codes
- Discharges for patients under age 65 (eligible for Medicare by reason of disability, etc.), based on information from the Medicare Enrollment Database
- Discharges for patients enrolled in Medicare Part C (Medicare Advantage), based on information from the Medicare Enrollment Database
- Same day discharges for AMI, based upon admission and discharge dates from MedPAR claims data
In addition, although most short-term, acute care hospitals, particularly those paid under the IPPS, are subject to the HRRP, Puerto Rico hospitals are generally exempt, and Maryland waiver hospitals are exempt for services provided during FYs 2013 and 2014. The latter exemption is based on CMS’ determination that Maryland has implemented a State program for FY 2014 that is expected to achieve comparable savings in Maryland waiver hospitals to what would be achieved under the HRRP, were they to be subject to it during FY 2014.
Hospitals are encouraged to review the FY 2014 IPPS Final Rule if they have additional questions about the HRRP changes for FY 2014. In next week’s Note, we will continue our review of adjustments to IPPS payment, focusing on changes to the HVBPP adjustment for FY 2014.
This week’s note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro.
It is Friday, August 2, and the clock is just about to chime and announce the weekend has arrived when suddenly a notice appears in my inbox. Yes, as expected, it is the 2014 Inpatient Prospective Payment System (IPPS) Final Rule with the delivery of a little bit of good news and, in my opinion, a whole lot of bad news for hospitals and critical access hospitals (CAH) across the country.
The good news is that the IPPS operating payment rates will increase by 0.7% for those hospitals that successfully participate in the Hospital Inpatient Quality Reporting (Hospital IQR) Program. Of course, it could have been at least 1% higher, but hospitals took a -0.8% hit on the mandatory documentation and coding recoupment adjustment and a 0.2% decrease to accommodate the shifts from inpatient to outpatient or vice versa with the implementation of the new “two midnights” regulation.
Two Midnights Rule
To understand the new “two midnights” regulation, we have to break it down into its individual parts. First, CMS is clarifying and specifying in the regulations that payment for a Medicare Part A stay is directly tied to a physician’s or other qualified practitioner’s order for inpatient care. Going forward, the written order will be required for payment of hospital inpatient services.
Second, CMS is specifying a revised timeframe to determine when Medicare Part A payment is generally appropriate. While CMS has historically used a 24-hour benchmark for inpatient admissions, they are now specifying that the 24 hours related to inpatient admission decisions are those that span or cross over two midnights, which corresponds to how Medicare utilization is assessed against patients and providers. According to CMS, this new regulation is being implemented to provide both consistency and clarity. However, physicians will still be expected to make that “complex medical decision” to admit or not admit based on what they know at the time of the inpatient order. Each patient is unique in his or her presentation and resolution of illness and even CMS states in the rule that they “have expected and continue to expect that physicians will make the decision to keep a beneficiary in the hospital when clinically warranted and will order all appropriate treatments and care in the appropriate location based on the beneficiary’s individual medical needs.”
Here is where it gets a little confusing: the “two midnights” timeframe actually begins when the patient starts receiving services in the hospital. This includes outpatient observation, emergency department services, procedure or treatment room services, or services provided in the operating room. Although the time a beneficiary spends as an outpatient before the inpatient order is written is not considered to be true inpatient time, the physician or the Medicare review contractor may consider this period when determining whether it is appropriate to expect the patient to stay in the hospital at least two midnights as part of an admission decision, according to CMS. However, if the patient stays less than two midnights due to unforeseen circumstances, the documentation must clearly support why this occurred. Otherwise, the review contractors will generally determine that those services should have been provided on an outpatient basis instead. CMS stated that the inpatient-only procedures would be excluded from the “two midnights” requirement.
Unfortunately, it appears that the “two midnights” rule paints all of the patients with the same brush and paints the physicians into a corner. CMS’ concern—the OIG recently agreed with them in another report—is that the patients are staying too long in observation, which is a service intended for making a decision whether to admit, discharge, or transfer. If physicians are now tasked with looking into their crystal ball to determine whether the patient will stay for two midnights—and if so, write the admit order—more physicians may be inclined to leave the patient as an outpatient rather than risk an admission being deemed not medically necessary because their patient improved faster than anticipated.
In addition to hospital concerns, the patient will be left paying coinsurance, deductible, and out-of-pocket expenses for outpatient services, regardless whether the facility is charging observation, when there is a doubt whether the patient will stay for two midnights. CMS stated that it would be easy for the patient to understand the “two midnights” rule, but if patients are being cared for in inpatient areas—which is not uncommon for patients who are receiving observation services—and they stay two midnights, this will not necessarily mean they are an inpatient and they may incur greater out-of-pocket expenses.
The “two midnights” rule has the potential to create a huge operational burden for facilities, beyond what they already do to try to stay in compliance with monitoring the appropriateness of admissions, applying Condition Code 44 when appropriate, and Part A to Part B rebilling. It also has the potential to significantly impact a patient’s out-of-pocket expense if physicians become leery about writing the order to admit.
Part A to B Rebilling
Related to the new “two midnights” rule is the final rule for the Part A to Part B rebilling process. CMS has extended this process to “self-denials,” which are those instances where the hospital determined after the patient has been discharged that the patient should not have been admitted as an inpatient. This will be different than the current interim rule that allows facilities to only rebill for Part B services for denials received by Medicare contractors and includes claims that were filed more than one year prior. The IPPS Final Rule will implement the one-year timely filing deadline, which all claims currently fall under, for the rebilling process when identified through self audits. The one-year timely filing deadline for Part B rebilling runs from the date of discharge, not from the date the Part A claim was denied, if applicable. In other words, the Part B rebilling claim is not viewed as an adjustment claim when a prior Part A claim was originally billed. The interim rule that was issued on March 13 will remain in place for claims that have a date of admission before October 1, 2013, but are denied after September 30, 2013.
This process will allow hospitals the ability to bill and get paid for all Part B services, rather than the “short list” under the current guidance for TOB 121, when the facility has determined that the stay did not meet medical necessity criteria or could apply when the patient did not stay two midnights and the documentation is not strong enough to support the short stay. Even though the inpatient hospital stay is paid under Part B, the hospital stay remains inpatient from the time of admission and may continue to count toward qualification for skilled nursing facility coverage. However, the patient will be responsible for outpatient coinsurance, deductible and out-of-pocket expenses, even for services that occurred prior to the inpatient order being written because the three-day payment window will not apply for PPS hospitals. CMS also stated in the final rule that the decision by a hospital to not bill the patient for their portion of the outpatient services may implicate other regulations (e.g., beneficiary inducement and anti-kickback laws) and that hospitals should contact the OIG for more guidance.
CMS expects the “two midnights” rule to reduce the volume of this type of Part A claim denial and the need for hospitals to rebill under Part B. In addition, CMS stated that the current Condition Code 44 regulation will remain intact for those rare occasions that hospitals have to use this process.
Other significant changes include:
- The Hospital-Acquired Condition Reduction Program, which will begin in FY 2015
- Updates to the measures and financial incentives for the Hospital Value-Based Purchasing and Readmissions Reduction programs
- Adjustment to the Medicare Disproportionate Share Hospital payments
- Expiration of the Medicare Dependent Hospital program payment adjustments
- Expiration of the current temporary Low Volume Hospital payment adjustment and return to the previous definition and payment adjustment methodology that was in place prior to FY 2011
Hospitals should review the display copy of the 2014 IPPS Final Rule and begin educating physicians, staff, and patients on the new “two midnights” rule and Part A to Part B rebilling process. These will be major operational changes and challenges for all hospitals, including CAHs.
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.