All Entries in the "OPPS" Category

CMS clarifies regulations for outpatient rehabilitation and respiratory services

CMS  did not publish any major regulatory changes this week, which can be good news for providers who are so busy with other agenda items such as resolving 5010 conversion issues, addressing ICD-10 implementation delay concerns, and applying the various CMS incentive programs.

I will take this time to review a transmittal that came out several weeks ago about a topic that I learned  has been discussed in the provider community since last November. On March 23, CMS issued Transmittal 81 removing controversial language from Appendix A of the State Operations Manual for Hospitals. The Interpretive Guidelines and Survey Procedures language that was removed had stated that the ordering practitioner must have medical staff privileging to write the orders for rehabilitation and respiratory services. There had been concern in the provider community that this language limited the individuals that could order these services on an outpatient basis and thereby restrict the beneficiary’s access to them. The applicable regulations – §482.56(b) and §482.57(b)(3) – remain the same without further guidance.

During the February 22, Hospital Open Door Forum (ODF) call, CMS clarified that its May 2011 guidance was intended to expand the categories of practitioners who could order rehabilitation and respiratory care services to include nurse practitioners, physicians’ assistants, and clinical nurse specialists as long as the hospital grants “privileging” in a manner consistent with its policies and procedures. However, the way the language was written, it actually had the opposite effect and was interpreted by providers and surveyors to mean that the ordering physician had to be on the medical staff of the facility, which is not always the case for outpatient services.

During the ODF call, the CMS representative clarified that:

“outpatient services may be ordered by a practitioner who has medical staff privileges or alternatively may also be ordered by a practitioner who doesn’t have medical staff privileges but who is responsible for the care of the patients, licensed in or holds a license recognized by the jurisdiction where the practitioner sees the patient, is acting within his or her scope of practice under state law and is authorized by the hospital’s medical staff policy.”

For example, a patient is treated in one state and returns to the state where he lives with a referral for services ordered by the treating physician from the other state. CMS stated this was allowable as long as the written hospital policy addressed these types of scenarios and how the license of the ordering practitioner would be verified.

The Hospital State Operations Manual sections have not been updated as of yet; however, the language change was effective March 23.  You can also review the February 17 CMS Survey and Certification Letter for more discussion on this change.

NCCI edits more user-friendly despite some modifier confusion

CMS has recently made a number of improvements to the usefulness of the NCCI edits including a new format to the files effective this month.  Additionally, there have been some changes to the modifiers used to override NCCI edits, which warrants discussion of the 76, 77, 78, and 79 modifiers.

CMS has consolidated the NCCI edit files available for hospitals from 24 separate files into a single file.  Previously, CMS maintained 11 separate files for the distinct sections of the CPT (e.g. Surgery: Integumentary, Radiology Services, etc.), as well as a file for the HCPCS codes.  For each of these areas, they also maintained two files: one for the column 1/column 2 (bundling edits) edits and one for the mutually exclusive edits.  This was perhaps because Excel, the program used to publish the edits, limits number of lines in a worksheet.

The April 1 version of the hospital edits is available as a single file with 784,900 lines/edits.   This number of lines exceeds the Excel 2003 limit of approximately 65,000 lines.  Therefore, providers with Excel 2003 may not be able to view all the lines of the file.  The file is available on a distinct site set up just to explain the change to the format.

Consolidating the multiple files into a single file makes searching for edits much easier. Formerly, you had to open potentially four files to determine if an NCCI edit applied to a pair of codes.  Now you can simply search this one file.

This change follows another recent helpful change, effective January 1. For that version of the files, CMS made the hospital version of the files current, rather than being one quarter behind as they had been since the implementation of the edits for hospitals in CY 2000.  Read my October 31, 2011 blog post for more detail on how the delayed NCCI implementation caused problems for hospitals.

New NCCI manual

Another change that providers should be aware of initially slipped past unnoticed.  With all the other changes, CMS published a new version of the NCCI Policy Manual for Medicare Services, effective January 1, 2012.  The manual is downloadable as a zip file of several PDFs of individual chapters at this website.

In Chapter 1 of that manual, titled “General Correct Coding Policies”, they note that modifiers 76 (“Repeat Procedure or Service by the Same Physician or Other Qualified Health Care Professional”) and 77 (“Repeat Procedure or Service by Another Physician or Other Qualified Health Care Professional”) do not bypass the NCCI edits.  In looking at the 2010 version of the manual, this statement is not new, however, it is in contrast to FAQ 3739, last updated April of 2011, that included these two modifiers in a list of modifiers that did override NCCI edits.  Interestingly, the apparently incorrect FAQ was removed from the CMS website at some point in the last year rather than being updated with the new information.

Although modifiers 76 and 77 no longer appear to bypass NCCI edits, modifiers 78 (“Unplanned Return to the Operating/Procedure Room…for a Related Procedure in the Post-Operative Procedure”) and 79 (“Unrelated Procedure or Service by the Same Physician During the Post-Operative Period”) are still listed.   These two modifiers have a dual use for hospitals paid under the OPPS.  They bypass NCCI edits, but they also turn off the multiple procedure reduction logic which is not applicable if the two procedures were provided in separate surgical encounters on the same day.

For hospitals, modifier 59 (“Distinct Procedure Services”) seems to be used as a default modifier for multiple surgical procedures, particularly in separate departments or encounters.  Modifier 59 bypasses NCCI edits but it does not turn off the multiple procedures reduction and therefore it is not the best modifier if the two procedures occurred in separate surgical sessions.  If modifier 79 is used when the services occur in separate encounters, it will not only turn off the NCCI edit allowing both codes to be paid,  as does modifier 59, but it also allows the two codes to be paid at 100% per the applicable multiple procedure reduction policy.

For example, a patient presents to a provider based clinic for a small mole removal (11400) and later that day presents to the emergency department with a wound requiring repair of subcutaneous tissue (12031).   There is an NCCI edit bundling 12031 into 11400 and therefore if these two codes are billed on the same claim they will hit an edit and only the mole removal (11400) will be paid at $309.46.  If modifier 59 is applied to 12031 indicating the wound repair is separate from the mole removal, the mole removal (11400) will be paid at $309.46 and the wound repair (12031) will be paid at $113.90. The wound repair is paid at half the applicable rate because of the multiple procedure reduction.  However if modifier 79 is used, the procedures will both be paid at 100% (i.e., $309.46 for the mole removal (11400) and $227.80 for the wound repair (12031)) as is appropriate under the multiple procedure reduction policy because these two procedures were performed in separate surgical encounters.

There may be some concern with using modifier 79 because of the term “same physician” in the description.  In relationship to CPT codes, CMS states in section 20.2 Chapter 4 of the Medicare Claims Processing Manual:

 “the usage of the term ‘physician’ does not restrict the reporting of the code…to physicians only, but applies to all practitioners, hospitals, providers or suppliers eligible to bill the relevant CPT codes”.

Additionally, use of modifier 79 for unrelated procedures or services ‘by the same hospital’ in the post-operative period is consistent with correct payment under the multiple procedure reduction policy, which allows for 100% payment when two procedures occur in separate surgical encounters.

I encourage hospitals to take a look at how they are using the NCCI edits and modifiers. For many hospitals the above changes will be built into systems you already use.  However, pay special attention to the information about the modifiers, because it is up to the coders to select the correct modifier as appropriate when systems indicate a modifier is necessary.

New procedure, drugs and edits in the April quarterly hospital outpatient guidance

CMS released the April quarterly OPPS and I/OCE updates, and there are several items of interest that may require updates to your chargemasters.

CMS has adopted a new HCPCS code C9733, effective April 1, for non-ophthalmic fluorescent vascular angiography.  CMS indicates the code is used to report SPY ® Fluorescence Vascular Angiography.

CMS also added four new pass-through drugs, effective April 1:

• C9288 (injection, centruroides (scorpion) immune f(ab)2 (equine), 1 vial)
• C9289 (injection, asparaginase erwinia chrysanthemi, 1,000 iu)
• C9290 (injection, bupivacaine liposome, 1 mg)
• C9291 (injection, aflibercept (Eylea), 2mg vial)

Additionally, CMS adjusted payment rates for four drugs for the July 1, 2011–September 30, 2011 timeframe and four drugs for the October 1, 2011–December 31, 2011 timeframe.  If providers wish to receive any additional amounts due to the corrected rates, they must request reprocessing of their claims.

The April OPPS transmittal also discusses a new edit for skin substitutes which requires providers report them with certain application procedures (CPT codes 15271–15278) in order to be paid separately.  See the transmittal or the I/OCE for the updated list of 27 skin substitute codes.   In the special processing logic of the April I/OCE, it makes clear that if the skin substitute codes are reported without one of the application procedure codes, they will be packaged rather than the claim being returned to the provider for correction.

This is actually implementing edits for longstanding, but confusing guidance CMS had given for biologicals that could be used either in an application procedure or implanted during a surgical procedure.  As with other implants, when the skin substitute is implanted, it is packaged into the surgical procedure implanting it, but when applied as a skin substitute it is paid separately.

Previously, the guidance relied on hospitals properly reporting the HCPCS codes, and in some cases not reporting a HCPCS code, to ensure separate payment was not made inappropriately.  This edit ensures that skin substitute will get packaged appropriately by packaging it whenever the application procedure is not present.   This new edit is effective April 1, but providers should review prior claims submission and coding policies to ensure they have been submitting claims appropriately prior to implementation of the new edit.

One final edit that was updated related to cardioverter-defibrillator system implants.  Formerly, when CPT code 33249 (Insertion or replacement of permanent pacing cardioverter-defibrillator system with transvenous lead(s), single or dual chamber) was billed there was an edit allowing device code C1882 (Cardioverter-defibrillator, other than single or dual chamber (implantable)).  However, due to a January 1 change in the description of the procedure code, this is no longer correct, and CMS is removing the edit effective retroactively to January 1.

CMS sends notice to providers about overlapping dates of service

On February 24, CMS sent a notice to providers about claims inappropriately overlapping when billed with a 12X and 13X type of bill with the same date of service. CMS announced that these claims would no longer overlap inappropriately, and providers can begin to resubmit claims that were rejected because of these edits. The claims would be identified with reason codes 38038, 38074, 38151, 38033, and 38154, overlapping dates of services and 12X and 13X type of bills. View a copy of the notice in the “Other issuances” section of the February 28 issue of Medicare Weekly Update.

This became an issue following the January 2012 OPPS Update (Claims Processing Manual Transmittal 2386), which clarified that providers could separately bill outpatient services prior to a non-covered inpatient admission. This is a logical extension of the fact that the three day payment window is a feature of the Part A payment system, and if no Part A payment is made, the payment window is inapplicable.

The new manual language and transmittal, effective January 1, do not distinguish between reasons for non-coverage. Presumably, the policy would apply whether the patient simply did not have Part A or the particular admission was not considered medically necessary either by internal review or external audit. These situations are all billed with a 12X type of bill.

Also the new manual language makes it clear that the dividing line for services billed on the inpatient and outpatient claims is the inpatient order. The services “prior to the point of admission (i.e. the admission order)” are to be billed as outpatient services with a type of bill 13X type of bill. This would include services in the outpatient and emergency departments (e.g. diagnostics, outpatient surgery, drug administration, and observation) prior to the non-covered inpatient admission.

Therefore, if a provider is billing an inpatient stay using 12X type of bill, in most cases the provider should also have a 13X type of bill for the outpatient services the patient received prior to the non-covered admission. The only exception would be if the patient was directly admitted to inpatient status without any prior outpatient services.

However, contractors put edits in place to deny outpatient services (billed on a 13X claim) provided on the same day as an inpatient admission. This was likely done to avoid overpayments following the June 2010 change to the three day payment window. However, apparently the contractors did not distinguish between covered and noncovered admits, and the edit inappropriately extended to noncovered inpatient cases (billed on a 12X claim).

HHS confirms ICD-10 delay: What does it mean for you?

by Andrea Kraynak, CPC

It’s no longer a mere possibility; HHS has confirmed its intent to delay the ICD-10 compliance deadline, according to its latest press release.

“We have heard from many in the provider community who have concerns about the administrative burdens they face in the years ahead,” HHS Secretary Kathleen G. Sebelius said in the press release. “We are committing to work with the provider community to reexamine the pace at which HHS and the nation implement these important improvements to our healthcare system.”

It is “premature” to speculate on the rulemaking process or the eventual ICD-10 implementation deadline, a CMS spokesman told HCPro earlier today.

The American Medical Association (AMA) supports the delay. “The timing of the ICD-10 transition could not be worse for physicians as they are spending significant financial and administrative resources implementing electronic health records in their practices and trying to comply with multiple quality and health information technology programs that include penalties for noncompliance,” Peter W. Carmel, MD, president of the AMA, said in a February 16 press release.

Though the new deadline remains unclear, CMS previously confirmed CMS Acting Administrator Marilyn Tavenner’s statement that the agency will use the rulemaking process when revisiting the ICD-10 implementation timeline. The rulemaking process can be lengthy, so it may well be awhile before a firm date is established.

For those who may not agree that a long delay—or any at all—may be the best course of action, continue to monitor the rulemaking and take advantage of any comment period.

“Make CMS well aware of the facts regarding your current ICD-10 progress and the overwhelming burdens that any delay would create,” said Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc., in Danvers, MA.

In the meantime, providers are left scratching their heads regarding their own next steps.

The advice from the American Health Information Management Association (AHIMA) is clear: Keep moving forward. Per AHIMA’s February 14 press release, the organization “encouraged the healthcare community to continue to prepare for the ICD-10 transition and not delay or suspend efforts to meet the ICD-10 current compliance deadline.”

AHIMA’s press release came out prior to today’s official confirmation that it is definitely HHS’ intention to delay the ICD-10 deadline. With this latest development, does AHIMA maintain that continued preparation is the best course of action in light of the delay?

The answer is yes, according to Dan Rode, MBA, CHPS, FHFMA, vice president for advocacy and policy at AHIMA. “It is still important for organizations to move forward,” Rode told HCPro. “This delay should not stop implementation…”

Rode also indicates that, even with a delay, providers should continue to consider ICD-10 when it comes to matters such as purchasing new systems. If they don’t have the capability to handle ICD-10, the costs of implementation will continue to mount, he said.

Others agree that forward progress is essential.

“I agree with the position to continue efforts until which time we get an actual date change,” said Gloryanne Bryant, RHIA, CCS, CCDS, regional managing director of HIM, NCAL revenue cycle, at Kaiser Foundation Health Plan, Inc. & Hospitals in Oakland, CA. “There is much to keep us busy with ICD-10 readiness, thus staying with your plan is the best approach for now.”

Specifically, hospitals should continue to ensure they will be able to handle all documentation collection and use associated with ICD-10, Rode said. “The real question is should those who are trained to train others and our many academic programs stop their training and retain their knowledge during this time period,” he says. “In the end, this will greatly expand the cost of conversion.”

Some have suggested that perhaps there is wisdom in waiting until the rest of the world implements ICD-11, simply skipping over ICD-10 entirely. Rode disagrees with this notion. “We are not close to ICD-11 and we can’t afford to wait until the end of the decade to have the data we need today to improve health and healthcare,” he said.

Nor is it possible to delay enforcement of the deadline, as CMS did with the HIPAA version 5010 implementation deadline that passed earlier this year. There can’t be two vocabularies in use at the same time, he said. “Allowances could be made for those who have to hold data until their system is in place, but there has to be a certain date.”

And that implementation date should be sooner rather than later, according to AHIMA.

“The longer [the delay,] the worse the problem becomes for many of HHS’ projects across the board,” Rode said.

Editor’s note: Visit www.hcpro.com for the latest information on the delay of the ICD-10 compliance deadline.

Corrections to January Quarterly OPPS Update; January OCE Review

Editor’s note: This post was originally published with an error in the first bullet point. The following sentences “The outpatient outlier fixed-dollar threshold was corrected to $1,900. It was originally published as $2,025.” have been deleted and replaced with “ The outpatient outlier fixed-dollar threshold was corrected from $1900, as published originally, to $2025.”

This week CMS rescinded and replaced the January (outpatient prospective payment system) OPPS Update Transmittal with three important changes and/or corrections for affected providers:

• The outpatient outlier fixed-dollar threshold was corrected from $1900, as published originally, to $2025.  CMS used the same figure last year, meaning there was no effective change in the threshold from CY2011 to CY2012. CMS officially published this correction in a correction notice to the CY2012 OPPS Final Rule on January 4.
• Code Q0179 was corrected from Q1079 (an invalid code).  Code Q0179 is being replaced in 2012 by Q0162 (Ondansetron 1 mg, oral, fda approved prescription anti-emetic, for use as a complete therapeutic substitute for an IV anti-emetic at the time of chemotherapy treatment, not to exceed a 48 hour dosage regimen).
• CMS added instructions to contractors with regards to the extension of the transitional outpatient payments (TOP) to rural hospitals with 100 or fewer beds and sole community hospitals (SCH) and essential access community hospitals (EACH) regardless of bed size.  The Temporary Payroll Tax Cut Continuation Act of 2011 extended these payments until February 29.  They had been set to expire December 31, 2011.

I also wanted to review a few of the changes in the January 2012 Outpatient Code Editor (OCE), which contains the companion implementation instructions for the information contained in the January OPPS Update Transmittal.

First, CMS clarified several aspects of the processing of the new quasi-composite payment for cardiac resynchronization therapy with defibrillator (CRT-D).   When CRT-D is billed using code 33249 (for the cardioverter-defibrilator and pulse generator) with code 33225 (for the insertion of pacing electrodes at the same time), APC 108 is paid.  CMS has specified that when a provider bills 33225 with 33249, it converts the status indicator of 33225 to N (packaged). In these cases, if 33225 is billed with an FB or FC modifier (meaning the provider received the electrodes at reduced or no cost), the OCE specifies that no payment reduction is made.  Normally, an offset would apply if a provider uses modifier FB or FC in order to account for the reduced cost of the electrodes to the provider.

CMS also implemented a new edit that requires certain primary codes be reported when 33225, which is an add-on code, is billed.  Edit 84 is a return to provider (RTP) edit when 33225 is reported without one of following procedure codes: 33206, 33207, 33208, 33212, 33213, 33214, 33216, 33217, 33221, 33222, 33230, 33231, 33233, 33234, 33235, 33240, 33249.

CMS also added edit 85, an RTP edit, to ensure C9732 (insertion of ocular telescope prosthesis including removal of crystalline lens) is reported with C1840 (lens, intraocular (telescopic)).   Code C9732 is a new code for 2012.  Code C1840 is a pass-through device code, approved and paid at cost to providers since October 2011.  The edit appears to apply whether the procedure is reported without the device or the device is reported without the procedure.  It is unclear why CMS did not simply add this code pair to the procedure-to-device and device-to-procedure edits that currently exist in the OCE/OPPS processing systems. As with other procedure-to-device edits, the edit will not be triggered if the procedure is reported with one of the discontinued procedure modifiers (73 or 74).

The last big change I wanted to highlight is that the correct coding initiative (CCI) edits will no longer be one quarter behind.  Up to this point, CMS has delayed implementation of the CCI edits by one quarter for hospitals.  This created a substantial compliance issue for hospitals as highlighted in a previous post on this blog.   This change will make sure that the CCI edits will apply to the new codes at the time the codes become effective and not one quarter later.  This was a very helpful change for providers in ensuring compliance with bundling rules.

This year, a careful review of the OPPS transmittal and the OCE changes is essential to ensure that necessary chargemaster and other changes are made to systems.

Claims processing and payment changes under the CY 2012 OPPS final rule

In this week’s note I will continue the discussion about key changes to the outpatient prospective payment system (OPPS) that became effective January 1, 2012. The OPPS is the primary payment methodology for outpatient hospital services and certain inpatient hospital services that are covered under Medicare Part B. As noted in last week’s issue, CMS released two transmittals, in the form of quarterly recurring update notifications (RUN), to explain the calendar year (CY) 2012 OPPS changes. One of the transmittals (R152BP) focused on related changes to the Medicare Benefit Policy Manual (MBPM), and the other (R2376CP) focused on relevant changes to the Medicare Claims Processing Manual (MCPM). In this week’s Note, we will focus on CY 2012 OPPS claims processing and payment changes/clarifications.

Claims Processing and Payment Changes/Clarifications

The January 2012 quarterly update to the MCPM provided the usual updates and reminders, including the following:

• Updates on devices, radiopharmaceuticals, and contrast agents eligible for pass-through payment, including applicable Ambulatory Payment Classification (APC) offset amounts, and related coverage and billing requirements
• Creation, revision and deletion of certain procedure, drug, biological and radiopharmaceutical codes, and related coverage and billing requirements
• Updates to APC assignment and other payment changes, including those for separately payable drugs, biologicals and radiopharmaceuticals
• Continuation of 7.1% payment increase for most services provided by sole community hospitals and essential access community hospitals in CY 2012
• Continuation of 1.75 as the multiplier threshold used to determine whether certain OPPS services are eligible for an outlier payment
• Decrease in the fixed-dollar threshold for CY 2012—from $2025 down to $1900—also used to determine whether certain OPPS services are eligible for an outlier payment
• Adoption of FY 2012 IPPS Wage Index Tables for calculation of OPPS payments during CY 2012

The January update also included a discussion of the following changes/clarifications, along with revised substantive language incorporating them into relevant sections of the manual:

• Composite payment for cardiac resynchronization therapy
• Payment window for outpatient services treated as inpatient services
• Use of modifiers for discontinued services

Composite Payment for Cardiac Resynchronization Therapy.

For CY 2012, CMS introduced a new surgical composite APC for cardiac resynchronization therapy (CRT).  Composite APCs provide for a single payment when multiple outpatient services, coded with specified HCPCS codes, meet certain criteria and are reported together on the same claim.  Payment under the new CRT composite APC will be made when CRT involving an implantable cardioverter defibrillator procedure (CPT 33249) and a pacing electrode insertion procedure (CPT 33225) are performed on the same date of service.  If they are performed on separate dates of service, or if one is performed without the other, they will be paid on the basis of the individual APC to which they are otherwise assigned, not the composite APC.

CMS is also implementing claims processing edits that will return to providers incorrectly coded claims on which a pacing electrode insertion procedure (CPT 33225) is billed without a CPT code describing the insertion of an implantable cardioverter defibrillator or pacemaker.  See MCPM, Chapter 4, Section 10.2.2 for the list of applicable CPT codes, one of which must be reported along with CPT 33225 in order for the claim to process.

Payment Window for Outpatient Services Treated as Inpatient Services.

CMS added some interesting language to the MCPM, Chapter 4, Section 10.12 relating to outpatient services subject to the three-day payment rule.  This rule generally requires that certain outpatient services (all diagnostic services and most nondiagnostic services) provided by the admitting hospital (or an entity wholly owned or wholly operated by the admitting hospital) on the day of a subsequent inpatient admission (or within three calendar days preceding the date of that admission) are to be bundled into and reported on the inpatient admission. They are not separately reportable and payable as outpatient services. This rule could transfer payment for these outpatient services from Part B to Part A.

In its recent revision, CMS provided an exception for scenarios when there is no Part A coverage for the subsequent inpatient stay.  Thus, there would be no covered inpatient services into which bundle the outpatient services. In that case, the hospital may separately bill outpatient services provided to the beneficiary prior to the point of admission to Part B as outpatient services on a 013X type of bill.

Use of Modifiers for Discontinued Services.  CMS revised MCPM, Chapter 4, Section 20.6.4 to expand the circumstances in which modifier -74 may be used to report discontinued or terminated services when anesthesia was planned or provided.  Ordinarily, modifier -74 may be used to report services only if the procedure was discontinued or terminated after

1. The patient was prepped and taken to the procedure room; and
2. Anesthesia was induced or the procedure was started; and
3. There were extenuating circumstances or circumstances that threatened the well being of the patient.

In its CY 2012 expansion, CMS extended the circumstances, and justified the reporting of modifier -74 to those situations when  “a planned surgical or diagnostic procedure was discontinued, partially reduced or cancelled at the physician’s discretion after the administration of anesthesia.”  (Emphasis added.)

Hospitals are encouraged to carefully review the above-noted changes to determine whether any of their existing policies and procedures need to be revised accordingly.  This is particularly important because a number of these changes impact coverage and/or payment of related services and, therefore, have compliance implications.

Benefit policy changes under the CY 2012 OPPS final rule

The most significant changes to coverage and reimbursement under the Outpatient Prospective Payment System (OPPS) are implemented at the start of each calendar year.  In addition to the final rule, CMS publishes its first quarter updates to the OPPS in January of each year.  These updates are published in the form of recurring update notification (RUN) transmittals. This year, CMS published two RUN transmittals incorporating changes under the calendar year (CY) 2012 OPPS final rule.  One of the transmittals (R152BP) focuses on related changes to the Medicare Benefit Policy Manual (MBPM), and the other (R2376CP) focuses on relevant changes to the Medicare Claims Processing Manual (MCPM).  In this week’s Note, I will focus on benefit policy changes and clarifications.

Benefit policy changes/clarifications

The only benefit policy change/clarification addressed in the January update relates to physician supervision requirements for outpatient hospital therapeutic services provided directly, or under arrangements, by hospitals or critical access hospitals (CAH).

In CY 2010, the required level of supervision by an appropriate physician or non-physician practitioner was “direct supervision”. In addition to immediate availability, direct supervision included specific location requirements depending upon whether the services were performed (i) in the hospital or in an on-campus provider-based department; or (ii) in an off-campus provider-based department.  Please note that these specific supervision requirements were waived with respect to CAHs for CY 2010.

However, in CY 2011, CMS removed the specific location requirements and simply stated that the supervising physicians or non-physician practitioners must be “immediately available” and able to provide direction and assistance throughout the performance of the procedure.  They also introduced a second level of physician supervision—general supervision—which, during CY 2011, applied only to a limited number of services referred to as non-surgical extended duration therapeutic services.  During the initial phase of these services, direct supervision would apply, but only during the initial phase of the service. After that was completed general supervision would be sufficient. The definition for general supervision followed the definition described in regulations regarding physician supervision requirements for outpatient diagnostic services.  Please note that these specific supervision requirements were also waived with respect to CAHs and certain small rural hospitals for CY 2011.

In CY 2012, CMS is reserving the right to extend its assignment of two alternative levels of supervision—“general supervision” and “personal supervision”—to certain outpatient hospital therapeutic services.  In doing so, CMS has also defined these terms to match the regulations that provide guidance for physician supervision of outpatient diagnostic services.

• General supervision “means the definition specified at 42 CFR 410.32(b)(3)(i), that is, the procedure or service is furnished under the physician’s overall direction and control, but the physician’s presence is not required during the performance of the procedure.”
  

• Similarly, personal supervision “means the definition specified at 42 CFR 410.32(b)(3)(iii), that is, the physician must be in attendance in the room during the performance of the service or procedure.” 

As Kimberly pointed out in last week’s note, CMS is scheduled to announce, effective July 1, 2012, a list of services with alternative levels of supervision based on recommendations from the Advisory Panel on Hospital Outpatient Payment.  In any event, hospitals and CAHs are encouraged to review their existing policies, including policies for credentialing and documenting the assignment of appropriate practitioners to assure compliance with applicable supervision requirements.

Stay tuned for next week’s note, which will focus on CY 2012 claims processing changes/clarifications.

Looking Back at 2011

I hope you had a wonderful holiday and are getting ready to start the New Year running!  Things have been pretty quiet at CMS in the last few weeks so I thought this would be a good time to reflect on some of the major healthcare changes that occurred in 2011.

In the calendar year 2011 OPPS final rule, CMS gave us hope that it understood that hospitals should not fall under the same billing rules as physicians when it comes to billing critical care (99291) and ancillary services. Hospitals can now separately bill the services listed as inclusive in the CPT definition; however, payment would be packaged into the critical care composite and charges for the ancillary services would be considered for future rate setting. CMS also made more clarifications and changes to the physician supervision rules for coverage of hospital outpatient therapeutic services. CMS eliminated the boundaries for off-campus departments and made meeting the “immediately available” requirements became the responsibility of the hospital regardless of where the service was performed.  Critical access hospitals (CAHs) and small rural hospitals (100 beds or fewer) were given one more year of non-enforcement in regards to meeting physician supervision requirements for their outpatient services.

In February, CMS issued the Medicaid healthcare acquired conditions (HCAC) proposed rule. We learned that Medicaid programs could adopt an expanded version of the acute hospital acquired conditions (HACs) which would encompass HCACs and other provider preventable conditions (OPPCs) that reach beyond the hospital walls and into physicians’ offices and ambulatory surgery centers (ASC). This rule became final and was implemented on July 1 but CMS pushed the compliance date to July 1, 2012 to allow time for the Medicaid programs to create their systems and educate providers.

In March, we saw another three-month delay in the implementation of the requirement that lab requisitions must be signed by a physician or non-physician practitioner. The provider community was very vocal about the paperwork burden this would create in addition to the signed order or documentation in the ordering physician’s medical record that is already required. We all breathed a sigh of relief when this regulation was later rescinded.

April brought about the IPPS proposed rule where several clarifications were announced. CMS clarified that the three-day payment window applies to physicians’ clinics that are wholly owned and operated by a hospital. CMS also made the inpatient device replacement policy consistent with the outpatient policy; however, the process of payment reduction is very different. The IPPS replacement policy will apply where “the hospital received a credit equal to 50 percent or more of the cost of the replacement device.”  The final rule was published in August announcing a 1.1% increase in DRG payments.

In May, CMS published the Accountable Care Organization (ACO) final rule. ACOs are designed to help physicians, hospitals, and other healthcare providers coordinate care for Medicare patients. The ACO model creates incentives for providers to work together to treat an individual patient across the care settings. We were also introduced to hospital value-based purchasing, which will use quality standards, performance measures and specific scoring to create incentive payments in fiscal year 2013.  In a related August announcement, CMS published details on a new initiative to lower costs and help all healthcare providers coordinate care for the growing number of Medicare beneficiaries.  The new initiative, known as the Bundled Payments for Care Improvement Initiative (the “Bundled Payments Initiative”), was launched by the new Center for Medicare and Medicaid Innovation.

In July, CMS announced a provider friendly change that allows hospitals to use average times when determining the amount of time to subtract from observation time for other procedures. The Medicare manuals indicated that the beginning and end times of observation and procedures would have to be documented in order to calculate the total observation time; however, hospitals found it difficult to calculate the exact performance time for some bedside procedures. Hospitals who took advantage of this announcement saved time and money by creating a policy that included average times for common procedures without splitting hairs to get an exact minute calculation.  Unfortunately, CMS also announced mandatory OPPS and IPPS market basket update reductions of .25 percentage points made possible by the Affordable Care Act (ACA).

In August, CMS also published a very clear transmittal on how and when to bypass medically unlikely edits (MUEs), which could save hospitals time and money by avoiding unnecessary appeals. Another transmittal added MS-DRG 265 to a list of MS-DRGs where the DRG payment would be reduced when the hospital received a partial or full credit for discharges on or after October 1, 2008.. This DRG was inadvertently missed and went retro back to 2008 so facilities needed to audit those DRGs to prevent overpayments.

Several final rules were published in November and the Medicare physician fee schedule (MPFS) brought about the new PD modifier, which indicates services provided in a physician’s clinic that is wholly owned and operated by a hospital and fall within the three day payment window. This modifier will go into effect on July 1, 2012. The OPPS final rule announced a 1.9% payment increase as well as an extension of non-enforcement of physician supervision for CAH and small rural PPS hospitals.

If would like to read more about the items I have mentioned above, you can see the entire articles as well as others at the Medicare Mentor Blog. We are quickly heading into another busy year with many more changes and clarifications coming from Congress and CMS.  Thanks to our many readers over the past year. We look forward to providing you important information in 2012!

Physician supervision clarification still causing confusion

In the calendar year (CY) 2012 OPPS Final Rule, CMS once again amended the regulations for supervision of hospital services, and once again CMS seems to have made unclear clarifications that are stirring up controversy.  The crux of the confusion is around its amendment of 410.27, the regulation containing coverage requirements for hospital outpatient therapeutic services furnished incident-to a physician’s service. CMS expanded the definition of incident-to services to include all services that are not diagnostic.

Previously, the regulation appeared to be limited to services provided incident to a physician’s service and covered under a specific provision of the Social Security Act that describes coverage of hospital outpatient departments services provided incident to.  This limitation seemed to indicate that other services such as physical therapy (PT), occupational therapy (OT) , speech language pathology and radiation therapy, which are covered under other provisions, did not have to meet the requirements in 410.27, most notably the supervision requirements.

However, in the OPPS final rule, CMS discussed its belief that all covered outpatient therapeutic services are provided incident to a physician’s service and therefore the requirements in 410.27 would apply to all therapeutic services regardless of which section of the Social Security Act covers them.  CMS indicates this is a longstanding position that is founded in guidance that pre-dates OPPS; however, it has been a common source of debate amongst healthcare lawyers and providers for some time.

So does this mean that PT, OT, and speech therapy (ST) have to meet the direct supervision requirements in 410.27? Well, not exactly.  CMS said in the OPPS final rule commentary section, that the requirements only apply to services paid under OPPS or paid to critical access hospitals (CAH) on a cost basis. This is good news for prospective payment system hospitals because PT, OT, and ST are paid under the Medicare Physician Fee Schedule and not OPPS.  Radiation therapy on the other hand is paid under OPPS, so those services have to meet the supervision and other requirements of 410.27.

But that good news was not shared by CAHs. CMS’ commentary indicates it would apply the requirements to PT, OT, and ST provided in CAHs because these services are paid on cost basis similar to all other CAH outpatient services.  This creates inconsistency and CMS seems to even acknowledge this in their commentary on pages 74369-70 of the rule.  CAHs have one additional year to come into compliance, because CMS extended the non-enforcement letter one more year; however, that does not resolve the issue of the inconsistency in supervision requirements.

In talking with colleagues recently, there is a concern that we can’t rely on the CMS commentary in the final rule because the plain text of the regulation indicates supervision requirements apply to all non-diagnostic services.  Regardless of how clear that commentary seems now, we have seen this sort of commentary be the subject of CMS clarification in the past and thus totally changing how the commentary was understood by the provider community. Examples include physician supervision within the hospital, critical care billing, lab signatures, observation billing, inpatient-only billing, the three day payment window, etc.

With all that in mind, I think the concern is well-founded. So what’s a provider to do?  For now, I think providers can proceed with the understanding that the requirements don’t apply to fee schedule services, with the exception of our poor friends in the CAH environment.  But providers should also make requests directly to CMS and through hospital associations to amend the regulation if it is truly CMS’ intention to exclude these services from the requirements.