While many providers are still digesting the IPPS Final Rule, muddling through how the OPPS Proposed Rule might impact their bottom line, and kicking rocks because the 2-midnight rule was not chucked, President Obama signed a bill into law on August 6, 2015—and it’s one providers should note. Unanimously approved by both the House and Senate earlier this year, the Notice of Observation Treatment and Implication for Care Eligibility Act, otherwise called the NOTICE Act, will not take effect until August 2016, but will certainly add one more layer to the administrative burden associated with outpatient observation services when it does.
Public Law 114-42 will amend the Social Security Act and require a hospital or critical access hospital (CAH) to provide the beneficiary with a written notice when they receive outpatient observation services for more than 24 hours. The notice must be provided within 36 hours of the start of observation, which would coincide with the order for such service, or prior to discharge or transfer, whichever occurs first after the initial 24 hours has been reached.
Hospitals and CAHs currently provide many “notices” to the patient, including a financial consent, consent to treatment (procedure, anesthesia, blood transfusion, etc.), release of information, Important Message from Medicare (IM), Detailed Notice of Discharge (DND), Advance Beneficiary Notice (ABN), and the Hospital Issued Notice of Noncoverage (HINN)—just to name a few. The regulation clarifies that this notice will not be in “hit and run” form, as it requires hospital staff to provide an oral explanation of the implications of remaining in outpatient status.
As hospitals begin to draft the notice and develop a process for issuing it, they should also consider who will be responsible to eloquently explain the situation to the patient. Key elements of the notice must include a written and oral explanation stating:
- The patient is an outpatient and not an inpatient of the hospital and the reasons why;
- The implications of remaining in outpatient status, primarily the related financial issues including deductible, coinsurance, and items or services not covered by Medicare, such as self-administered drugs; and,
- All time spent as an outpatient, including observation services provided on the inpatient floor, will not count towards the 3-day acute care qualifying stay required for coverage of a subsequent skilled nursing facility (SNF) stay, if appropriate.
The notice must be written in easy-to-understand language and available in “appropriate languages.” This requirement is not further specified in the law, although the IM, DND and ABN notices can only be provided in English or Spanish versions, so more clarification will be needed. At this point in time, it is unclear if CMS will provide standardized language similar to that used to inform the beneficiary and the provider about the financial liability protections under the Fee-for-Service (FFS) Medicare and, in certain cases, the Medicare Advantage (MA) Programs.
The notice must also be signed by the patient or the person acting on behalf of the patient and the hospital staff member who presented the notice. If the patient or his or her authorized representative refuses to sign the notice acknowledging their outpatient status, the hospital must indicate on the refusal on the form and include the name, title, and signature of the staff member issuing the notice, as well as the date and time of the refusal. This procedure is similar to recommendations CMS has provided when a patient refuses to sign an ABN. However, refusing to sign the new notice does not release the beneficiary from any financial obligation.
As hospitals incorporate the new regulation into their current processes, they should also be acutely aware of the 2-midnight benchmark and the implications of keeping patients in outpatient status receiving observation services for more than 24 hours. CMS has stated that they do not expect a Medicare patient receiving medically necessary hospital care to pass a second midnight without an order for inpatient care. Providing the new notice to the patient should not only serve to inform them of their potential financial liability as an outpatient but also to put the hospital and the attending physician on notice regarding the correct application of the 2-midnight rule.
Note from the instructor: CMS issues proposed Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rule for calendar year (CY) 2016, Part IIThis week’s note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.
On July 1, 2015, CMS released proposed CY 2016 changes to payment policies, rates, and quality initiatives for the majority of Medicare outpatient facility services, including services provided in hospital outpatient departments (HOPD), generally payable under the OPPS, and those provided in ASCs, generally payable under the ASC Payment System. In last week’s note, we focused on key proposed changes to the OPPS. The proposed rule also recommended changes to the so-called “2-Midnight Rule,” the primary criteria for determining coverage under Part A for inpatient hospital discharges on and after October 1, 2013. In this week’s note, we will discuss the proposed changes to the 2-Midnight Rule.
Background on Part A reimbursement and coverage policy, in general
In contrast to reimbursement under Part B, which continues to permit multiple separate payments for individual HOPD covered services payable under the OPPS (and other fee schedules), payment for most inpatient hospital services covered under Part A is made in the form of a single payment under the inpatient prospective payment system (IPPS).
Payment for a particular Part A covered inpatient stay is based upon the payment group (referred to as the “Medicare Severity Diagnosis-Related Group” or “MS-DRG”) to which the stay is assigned. MS-DRG assignment is based primarily upon the patient’s diagnoses (principal and secondary), procedures performed, and certain demographic factors (e.g., age, sex). Like the OPPS, the IPPS is a prospective payment system, which provides for a predetermined MS-DRG-based average payment amount for each inpatient stay.
Prior to CMS’ implementation of the 2-Midnight Rule, hospitals and other stakeholders made repeated requests for additional clarification of inpatient coverage criteria under Part A. This became an even greater concern following the introduction of the permanent Recovery Audit (RA) Program in January 2009. Prior to the implementation of the RA Program, certain contractors (referred to as “Quality Improvement Organizations” or “QIOs”) had primary review responsibility to determine whether inpatient stays were medically necessary, and, therefore, met Medicare’s Part A coverage criteria. In doing so, the QIOs integrated peer review into the process, applying relatively specific criteria (e.g., Interqual, Milliman) to each case. They also took a collaborative approach, providing significant guidance in the form of related education and training to healthcare providers.
As part of the RA Program, contractors referred to as “Recovery Auditors” replaced the QIOs as the primary contractors responsible for post-payment reviews. As part of their authority, Recovery Auditors were given broad discretion to determine whether prior paid inpatient hospital stays met applicable Part A coverage criteria. Moreover, they were also given the latitude to apply different coverage criteria from those originally used to adjudicate the claim for that stay. In addition, the Recovery Auditors were reimbursed on a contingency basis; the higher the amount of overpayments identified, the higher their reimbursement, incentivizing them to focus on higher cost services (e.g., inpatient stays) and to apply stringent coverage criteria when performing related post-payment reviews.
This resulted in a much higher percentage of post-payment inpatient hospital denials under Part A, which led to significant increases in the number of related appeals, overwhelming the Medicare appeals process. Hospitals were able to recover some of their costs by rebilling under Part B, but it was often too late for them to do so. In any event, these denials also led to significant adverse consequences to beneficiaries, including the following:
- Additional cost sharing responsibility in the form of Part B deductible and coinsurance amounts when services were rebilled under Part B; and/or
- Denial of Medicare coverage under Part A for subsequent inpatient skilled nursing facility (SNF) admissions based on failure to meet the three-day qualifying inpatient hospital stay requirement.
To address all of the above-noted concerns and repeated stakeholder requests for clarification of Part A inpatient coverage criteria, CMS created and implemented the 2-Midnight Rule.
Coverage under the 2-Midnight Rule, as initially implemented
As part of the fiscal year (FY) 2014 IPPS Final Rule, CMS established the following Part A coverage criteria for inpatient hospital discharges on and after October 1, 2013:
- An inpatient order signed or authenticated by the ordering physician or other authorized practitioner; and
- An expectation that the patient will require hospital care for at least two midnights; and
- A physician certification for cases that either
The most significant requirement is the 2-Midnight Rule, which actually encompasses two different standards, depending upon when the rule is applied. At the time that the physician makes the decision to admit the patient, he or she should apply the 2-Midnight Benchmark. Under the benchmark, the physician must determine whether he or she reasonably expects the patient to require medically necessary hospital care for at least two midnights.
In determining whether the patient is expected to receive hospital care for two midnights, the practitioner may consider not only care anticipated after inpatient admission, but also hospital care received prior to admission, either at a transferring hospital before transfer or in the HOPD (e.g., the emergency department, observation). In determining whether the patient reasonably requires medically necessary care for two midnights, the physician must exercise his or her independent medical judgment, based on relevant complex medical factors (e.g., patient history and comorbidities, severity of signs and symptoms), all of which should be carefully documented in the medical record to support the reasonableness of the admission decision. At the time of the rule’s implementation, CMS also acknowledged certain exceptions to the requirement of a two-midnight stay (e.g., inpatient-only procedure, initiation of mechanical ventilation).
Under the 2-Midnight Rule, once the patient has remained for at least two midnights after the inpatient order, Medicare will apply a different standard, referred to as the 2-Midnight Presumption. That is, absent evidence of gaming or a record of prior inappropriate status determinations, contractors should assume that the inpatient stay was medically necessary and, therefore, covered.
For hospital discharges from October 1, 2013, through September 30, 2015, Recovery Auditors are prohibited permanently from conducting post-payment status reviews. During this period, MACs have been directed to conduct initial (and, if issues are identified, subsequent) prepayment “probe and educate” audits for each hospital with stays of fewer than two midnights. If results are negative and the stay is denied, hospitals may rebill under the AB rebilling rules. In addition, any such denials give rise to appeal rights under the regular Medicare appeals process.
Proposed changes to the 2-Midnight Rule
Not surprisingly, despite CMS’ efforts to ease the transition to the new inpatient coverage rules, hospitals and other stakeholders continue to have concerns, most of which focus on requests for more specific guidance on the factors physicians need to document in order to support the reasonableness of their length-of-stay expectations.
In an attempt to address some of these concerns, CMS is recommending several changes to the 2-Midnight Rule, which would become effective for discharges on and after January 1, 2016. Most of the recommendations focus on process, rather than substance, with renewed emphasis on the importance of physicians in making the initial status decisions, and the role and approach of contractors in reviewing those decisions.
To emphasize the importance of the physician’s role in the status decision, CMS is proposing the following clarifications:
- For stays expected to last fewer than two midnights (in circumstances not listed as a national exception), an inpatient admission would be payable under Medicare Part A on a case-by-case basis, based on the judgment of the admitting physician, as supported by documentation in the medical record, and subject to medical review.
- CMS believes it would be rare for a beneficiary to require inpatient hospital admission for a minor surgical procedure or other treatment in the hospital expected to keep him or her in the hospital for less than 24 hours; CMS will monitor the number of these types of admissions and plans to prioritize these cases for medical review.
- For hospital stays that are expected to last two midnights or longer, CMS’ policy is unchanged; if the admitting physician expects the patient to require hospital care that spans at least two midnights, the services are generally appropriate for Medicare Part A payment, as long as the record supports that expectation. This includes stays in which the physician’s expectation is supported, but the length of the actual stay was less than two midnights due to unforeseen circumstances such as unexpected death, transfer, clinical improvement, or departure against medical advice.
- The QIOs will conduct first line medical reviews of providers who submit claims for inpatient admissions, rather than MACs or Recovery Auditors. QIO patient status reviews will focus on educating physicians and hospitals about the Part A payment policy for inpatient admissions.
- The Recovery Auditors will conduct patient status reviews only for those hospitals that have consistently high denial rates, based on QIO patient status review outcomes.
CMS’ proposed changes in enforcement policy are encouraging and likely to be viewed positively by the healthcare community, based on providers’ prior experience with the QIOs. In the past, both hospitals and physicians appreciated the QIOs’ integration of peer review into the review process, as well as their collaborative approach. The relationships between providers and the QIOs were generally collegial, rather than adversarial. In particular, the QIOs past focus has been to provide significant guidance in the form of related education and training on accepted standards of medical practice and identification of factors supporting the appropriateness of inpatient admission, from a medical perspective. This is exactly the kind of guidance providers have been requesting for years.
Opportunity for public comment For additional information on the proposed changes or to provide comments to CMS, please refer to the following websites: View CMS-1633-P. View the fact sheet. View the fact sheet on the 2-Midnight Rule. Leave a comment.
- Payment update. CMS proposes to update OPPS rates by -0.1% based on the projected hospital market basket increase of 2.7% minus both a 0.6% adjustment for multifactor productivity and a 0.2% adjustment required by the Affordable Care Act. CMS is also proposing an additional 2% reduction to address inflation in the APC payment rates for separately payable OPPS services. These rates were originally calibrated to cover the costs of packaging the majority of clinical diagnostic laboratory services (CDLS) with dates of service on and after January 1, 2014. In reality, however, a significantly higher proportion of laboratory tests than expected continue to be paid separately under the clinical diagnostic laboratory fee schedule (CDLFS) rather than being packaged into applicable OPPS payment rates.
- OPPS spending for CDLS. CMS is proposing to reduce the CY 2016 conversion factor to account for roughly $1 billion in inflation in OPPS payments resulting from a significant overestimate of the costs of packaging CDLS, beginning in CY 2014. In anticipation of the packaging of most CDLS performed on and after January 1, 2014, CMS shifted $2.4 billion previously paid under the CDLFS into APC payments for the services into which the laboratory services were expected to be packaged. As noted above, however, a much higher than expected portion of CDLS continues to be paid separately under the CDLFS, requiring CMS to address the inflated OPPS payment rates.
- Chronic Care Management (CCM) Services. In response to hospital requests for clarification, CMS is proposing further guidance on coverage, billing, and payment rules for outpatient hospital CCM services. CCM services are non-face-to-face care management services for Medicare beneficiaries who have two or more significant chronic conditions. To be covered, hospital CCM services must be performed under the direction of a physician or authorized non-physician practitioner.
- CAPCs for CY 2016. As noted above, a C-APC is an APC that provides for an encounter-level payment for a designated primary procedure and most adjunctive and secondary services provided in conjunction with the primary procedure. During CY 2015, there are 25 C-APCs, which primarily involve device-dependent procedures. For CY 2016, CMS is proposing nine new C-APCs, including several surgical APCs and a new C-APC for comprehensive observation services.
- Expanded packaging. In CY 2015, CMS conditionally packaged many ancillary services. For CY 2016, CMS is proposing to conditionally package a limited number of additional ancillary services, including certain minor procedures and pathology services. CMS is also proposing to package payment for a few drugs that function as supplies during a surgical procedure. These changes were initially proposed in the CY 2014 OPPS/ASC rule, but were not finalized at that time.
- OPPS device pass-through process. Medicare prefers to package payment for implantable devices into the payment for the procedures that utilize them. CMS currently provides separate pass-through payments, however, for newly FDA-approved implantable devices for a period of at least two, but not more than three, years. This gives CMS the opportunity to track utilization of those devices in order to determine which procedures to package them into. CMS is proposing to make some changes to the current process in response to stakeholders’ requests for more transparency and to align the outpatient process more closely to a similar process used for evaluating new technology add-on payment requests under the inpatient prospective payment system (IPPS).
- Changed the status indicators (SIs) for the following two drugs:
- For HCPCS code J7315, effective January 1, 2014, through March 31, 2015; and
- For HCPCS Code C9447, effective January 1, 2015, through March 31 2015
- Hospitals may report C2625 (Stent, non-coronary, temporary, with delivery system) when utilizing the Propel™ and Propel Mini™ drug eluting sinus implants by Intersect ENT; and
- Hospitals are reminded to report two claim lines when billing for cystoscopy procedures using Cysview® (hexaminolevulinate hydrochloride):
- The patient died prior to being admitted to the inpatient setting; and
- On the same date of service, the hospital performed another procedure (SI of “J1”) for the same patient that would otherwise qualify for payment under a comprehensive APC
This note from the instructor is written by Kimberly Anderwood Hoy Baker, JD, CPC, regulatory specialist for HCPro.
CMS released the OPPS final rule. There are three significant changes I wanted to discuss in my note this week. First, CMS finalized the packaging of most ancillary services. They also finalized the Comprehensive APC (C-APC) policy. Lastly, certification for most inpatient cases was eliminated.
For CY2015, CMS eliminated the ancillary services status indicator X and conditionally packaged most of these services, reassigning them to status indictor Q1. Status indicator Q1 triggers packaged payment if any other code with a status indictor S (significant procedure), T (surgical procedure) or V (visit) is reported on the claim. The service is only paid separately if no other service with an S, T, or V status indicator is reported. This separate payment will be made based on the codes reported on the claim and no additional action will be required by the provider, unlike the laboratory packaging for CY2014 which requires application of the modifier L1 for labs to be paid separately.
Under this new increased packaging policy, CMS conditionally packaged services with a geometric mean cost of $100 or less, except preventative services, psychiatry–related services, and drug administration services. The number of services assigned status indicator Q1 increased from 11 to 538. Newly conditionally packaged services include minor procedures such as foreign body removals, application of splints and strapping; diagnostic procedures such as x-rays and ECGs; and pathology and blood product– related services along with many others.
Continuing the increased level of packaging under OPPS, CMS finalized 25 C-APCs that make a single comprehensive payment for expensive primary procedures and all the related and “adjunctive” services reported on the claim with them. There are 248 primary procedures, identified by status indicator J1. CMS ranked each of the primary procedure codes in a table in Addendum J. The assignment of the final C-APC is controlled by the highest ranking primary procedure code reported on the claim.
CMS finalized a “complexity adjustment” allowing the C-APC to be increased one level if specific secondary or add-on codes are reported on the claim with the primary procedure. CMS finalized 63 complexity adjustment pairs affecting only 29 of the 248 primary procedure codes. The complexity adjustment pairs are published in a table in Addendum J.
CMS also published a list of services that will be excluded from the C-APC payment in Table 6 of the final rule. In general, services required to be paid separately by statute continue to be paid separately, including: preventative services; pass-through drugs, biologicals and devices; brachytherapy seeds and sources; and cost based services such as vaccines. Also excluded are services paid on other fee schedules, including ambulance services, mammography services, and therapy provided under a plan of care and reported on a separate monthly claim.
Lastly, CMS finalized their revised proposal to exclude self-administered drugs from packaging to the C-APC unless they function as supplies integral to the procedure. In CY2014, CMS had originally proposed to package the self-administered drugs into the C-APC. The finalized rule means patients will still be responsible for most self-administered drugs in hospital outpatient departments.
Also included in this otherwise outpatient rule was a change to the requirements for certifications for hospital inpatients. CMS eliminated the need for certification for most inpatients, with the requirement now only applying to patient stays of 20 days or greater and cost outlier cases. This change provides relief from a very onerous requirement for providers. However, the requirement for a certification prior to billing an outlier case will require hospitals to be diligent in monitoring for cases that hit outlier. These cases can be difficult to identify because it requires you know the final DRG as well as all the charges on the case, some of which may be added later.
Additionally, I had hoped that CMS would allow inpatient status orders to be signed in the same manner as other orders. They had previously taken the position that the order had to be signed before discharge because it was the first element of the certification which had to be signed before discharge. Now that certification is not required in most cases, I was hoping they would loosen this requirement to match the requirements for other kinds of orders. In the preamble commentary to the rule, however, they reiterated the requirement that the inpatient order must be signed before discharge, even if the case does not require a certification.
Providers interested in these new rules should review the comment and response sections of the CY2015 OPPS Final Rule preamble because they contain good clarifications and information. Additionally, the Addenda contains detailed information on the status indicators for codes and the rankings and complexity adjustments for the C-APCs, and can be found on the final rule home page.
Note from the instructor: CMS’ Advisory Panel on Hospital Outpatient Payment seeks input on chemotherapy supervision rules
This week’s note from the instructor is written by Debbie Mackaman, RHIA, CPCO, regulatory specialist for HCPro.
Hospital outpatient therapeutic services paid under OPPS or paid to critical access hospitals (CAH) on a cost basis must be furnished “incident to” a physician’s service to be covered. There are four elements to meet incident to; however, furnishing the service under the appropriate level of supervision by a physician or non-physician practitioner has become the most complex.
In most circumstances, CMS has designated direct supervision to be the default level of supervision for hospital outpatient therapeutic services. CMS has also designated general supervision as appropriate for specific services that have been identified through a sub-regulatory process. The Advisory Panel on Hospital Outpatient Payment–called the Panel—which has included representation from CAHs since 2010, considers recommendations from providers and its own members.
The Panel meets in March and August, and CMS prioritizes requests for consideration by the Panel based on service volume, total expenditures, and frequency of requests. Hospitals may request that the Panel review a particular service and recommend to CMS that it be approved to be provided under general supervision. Following the Panel meeting, CMS posts their preliminary decisions on the Panel’s recommendations for a 30-day comment period. After the comment period, they will issue their decisions effective July 1 following the March meeting or January 1 following the August meeting.
On March 10, 2014, the Panel met and reviewed the supervision levels of eight HCPCS codes related to the administration of chemotherapy, complex drugs, or biologic agents. At that meeting, the Panel recommended that these codes be changed from direct to general supervision. However, CMS “believed that the appropriate supervision level for these services is inherently a clinical issue” and they decided not to change the supervision requirement. Although CMS solicited public comments regarding the clinical standards for supervision for both initial and subsequent administrations of these drugs, it appeared to CMS that the commenters misunderstood their intent of suggesting a different supervision level for the initial administration and when that same drug is being given in a subsequent encounter. Instead, CMS decided to refer these services back to the Panel for further deliberations at the August 2014 Panel meeting.
CMS explained that current clinical guidelines suggest that a general level of supervision is unsafe. They are asking for more input whether the supervision level should be direct for the initial administration followed by general for subsequent administrations of the same drug. CMS also stated that they “welcome other suggested approaches that balance professional and hospital viewpoints” and asked the Panel to weigh supervision levels as recommended by clinical guidelines from professional associations with the realities of hospital operations and patient care in rural areas.
On CMS’ hospital OPPS website, hospitals can also find the current list of hospital outpatient therapeutic services that are either designated as non-surgical extended duration therapeutic services (NSEDTS or “extended duration services”) or those that may be furnished under general supervision in accordance with applicable Medicare regulations and policies. When hospitals review the list, they may find a surprise that will go into effect on July 1, 2014. CMS’ preliminary decision on one of the recommendations from the March 10 Panel meeting stated that they would not move transfusion of blood or blood products (HCPCS 36430) from direct to general supervision.
“While we would not accept the Panel’s recommendation that CMS change the supervision level to general for CPT code 36430, we would designate this code as a Non-Surgical Extended Duration Therapeutic Services (or “extended duration services”), which would require an initial period of direct supervision with potential transition of the patient to general supervision. We believe blood transfusion warrants direct supervision initially to manage potential adverse events and reactions.”
In looking at the updated list, hospitals will find that HCPCS 36340 will change from direct supervision to general supervision which is contradictory to their March statement. For hospitals that struggle with meeting direct supervision for certain outpatient services, like blood transfusions, that are often provided by nursing staff and sometimes “after usual department hours,” this may be the solution they have been looking for.
Note from the instructor: CMS Releases Guidance on Modifier L1 and Clarifies Lab Payment for TOB 12X
A few weeks ago, CMS released the recurring OPPS update Transmittal 2971, as well as the recurring Integrated Outpatient Code Editor (I/OCE) specifications Transmittal 2957 for dates of service beginning July 1. In these transmittals, CMS officially announces the new modifier L1 for use by PPS hospitals when submitting claims for separate payment of outpatient lab tests that are paid under the Clinical Laboratory Fee Schedule (CLFS). In previous issues of the Medicare Insider, I wrote about the concerns surrounding billing for unrelated lab on Type of Bill (TOB) 14X and the lack of additional reimbursement for sole community hospitals (SCH).
As of January 1 date of service, hospitals have been reporting separately payable labs on TOB 14X which created confusion and controversy for facilities and the National Uniform Billing Committee (NUBC). Historically and by definition, TOB 14X was for non-patient (specimen only) lab services where the patient did not receive outpatient services on the same date of service. These types of labs were easy for hospitals to identify and systematically direct the claim to process under TOB 141X. In order to comply with the new billing guidance, hospitals have had to create back-end processes and, in some cases, separate review by staff to identify if the outpatient lab should be billed on TOB 14X to receive separate reimbursement under the “exceptions” guidance provided by CMS.
Transmittal 2971 announces that beginning July 1 date of service, separately payable labs should be billed on TOB 13X and with modifier L1. This guidance directs all hospitals to revert back to billing non-patient lab tests on TOB 14X which is consistent with the NUBC’s definition of this bill type—just when hospitals finally have their registration and billing staff re-trained one way.
According to Transmittal 2971, modifier L1 will be used with lab services only in either of these two circumstances:
- When the hospital collects the specimen and only provides lab services on that date of service; or,
- When the hospital provides outpatient lab services and they are clinically unrelated to other hospital outpatient services furnished on the same day.
In order to apply the second circumstance correctly, hospitals need to understand that “unrelated means the laboratory test is ordered by a different practitioner than the practitioner who ordered the other hospital outpatient services, for a different diagnosis.” If the definition is met, the lab test would be eligible to be reported with modifier L1 to trigger separate payment. If the definition is not met, modifier L1 would not be reported and the lab payment would be packaged into another separately payable service. PPS hospitals do not have to resubmit claims for lab tests that had previously been billed using TOB 14X prior to July 1 date of service.
But what about those SCHs that have not been receiving their add-on payment since January 1 for separately payable lab billed on TOB 14X? SCHs have to go back to MLN Matters Article SE1412 that was published March 5 for additional guidance as Transmittal 2971 does not provide this information.
MLN Matters Article SE1412 explains that TOB 14X does not trigger the differential payment rates (CLFS amount/0.6 X 0.62) for SCHs with qualified laboratories. Unfortunately, MACs will not reprocess claims for SCHs because the MACs have no way of knowing which labs should have been paid the add-on payment vs. which labs should have been paid as true non-patient labs. These providers may need to cancel or adjust claims that were submitted without the modifier L1 prior to July 1 and then submit a new TOB 13X with the appended modifier after July 1 in order to receive the corrected reimbursement.
Also in Transmittal 2971, CMS expounds and clarifies its current payment policy regarding the limited set of Part B inpatient services that a hospital may bill for when a beneficiary is either not eligible for or not entitled to Part A coverage or when a beneficiary has exhausted their Part A benefits. Included in that short list of services is lab service paid under the CLFS.
CMS clarifies that in these scenarios, lab testing is excluded from OPPS packaging rules if the primary service with which the lab would have been bundled into is not a payable Part B inpatient service. CMS has adjusted its claims processing logic to make separate payment for laboratory services paid under the CLFS that would otherwise be packaged under OPPS beginning in 2014.
For those hospitals that billed under TOB 12X and were denied payment for lab services, they have to read the fine print in the transmittal to identify the next step:
“Medicare contractors shall adjust 12X claims for beneficiaries who are either not entitled to Part A at all, or are entitled to Part A but have exhausted their Part A benefits where the laboratory services were packaged for 2014 dates of service that are brought to their attention.”
In other words, if hospitals want to collect their separate reimbursement for lab services that were denied on TOB 12X, they must take the initiative to rebill for those services. Hospitals should contact their MACs for additional guidance on how to appropriately resubmit claims to prevent further delays in payment.
In addition to guidance for new modifier L1, both of these transmittals have other details that facilities should review regarding brachytherapy services, new HCPCS codes for drugs and biologicals, and payment updates for specific HCPCS codes that facilities should consider rebilling for the appropriate reimbursement.
Note from the instructor: Devices and Anesthesiologist/CRNA Payments – Clarification of Two CMS Transmittals
This week’s note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro.
In the Medicare Claims Processing Transmittal 2903, April 2014 Update of the Hospital Outpatient Prospective Payment System (OPPS), CMS discusses the current policy regarding billing for certain devices that are received by facilities at no cost, full credit, or partial credit. As of January 1, 2014, the modifiers “FB” or “FC” that were previously used to identify these devices are no longer accepted by Medicare Administrative Contractors (MAC), and providers should now be reporting value code “FD” with the amount of the credit. This is not anything new, but I wanted to point out a percentage that was used in the transmittal that may be confusing to facilities.
In the transmittal, CMS states:
Also effective January 1, 2014, for claims with APCs that require implantable devices and have significant device offsets (greater than 40%), the amount of the device credit will be specified in the amount portion for value code “FD” (Credit Received from the Manufacturer for a Replaced Medical Device) and will be deducted from the APC payment from the applicable procedure. The OPPS payment deduction for the applicable APCs referenced above will be limited to the total amount of the device offset when the FD value code appears on a claim. The offset amounts for the above referenced APCs are available on the CMS Web site.
The “greater than 40%” referenced above is actually a threshold used to identify ambulatory payment classifications (APC) that will be affected by the policy. CMS uses this percentage to identify an APC where at least 40% of the payment rate is determined by the cost of the device itself. In theory, if the APC does not meet that device cost threshold, a facility would not have to report a credit regardless of the amount. A list of the affected APCs can be found in Table 30 of the 2014 OPPS Final Rule.
The actual reporting policy for facilities is still based on at least a 50% credit of the cost of the device. Specifically, page 75006 of the Federal Register states that hospitals are required to report the amount of the credit with value code ‘‘FD’’ (Credit Received from the Manufacturer for a Replaced Medical Device) when the hospital receives a credit for a replaced device listed in Table 31 that is 50% or greater than the cost of the device. Although MLN Matters article MM8653 somewhat clarifies the confusion that Transmittal 2903 created, hospitals will continue to use the 50% credit as their reporting threshold for complying with this CMS policy.
To further clarify the remainder of the device credit policy, the OPPS payment deduction for the APCs referenced above is limited to the total amount of the device “offset” when the FD value code appears on a claim. The offset amounts are available under the Annual Policy Files link on the on the CMS OPPS website and can help facilities identify the maximum amount by which the APC payment may be reduced.
In an unrelated transmittal, One Time Notification 1379, CMS published a clarification for certified registered nurse anesthetist (CRNA) and anesthesiologist payments made to a Method II Critical Access Hospital (CAH). For those readers that may not be familiar with this cost based reimbursement system, the following is a brief explanation.
- Anesthesiologists and CRNAs may reassign their billing rights to a CAH.
- The CAH may bill under Method II (optional method) by billing the facility outpatient service and the related professional fee on the same outpatient claim by reporting specific revenue codes.
- In most instances, this allows the CAH to receive reimbursement at 115% of what the Medicare Physician Fee Schedule (MPFS) would have paid the physician or CRNA if they had billed independently on the 1500 claim form.
- Under certain qualifying circumstances, a CAH can receive cost based reimbursement for its CRNA services rather be paid under the MPFS. This type of payment is called a pass-through payment.
On June 7, 2013 in previously released Transmittal 2719, CMS announced that effective January 1, 2013, qualifying CAHs and rural hospitals were eligible to receive pass-through payments for services that CRNAs are legally authorized to perform in the state in which the services are furnished (see amended 42 CFR 410.69(b)). The pass-through payments included those procedures outside of the anesthesia HCPCS codes (00100-01999) that were billed using revenue code 964 on the CAH’s outpatient claim (TOB 085X).
Although this information was first released in June 2013, CMS is now clarifying in One Time Notification Transmittal 1379 that the effective date for payment of CRNA service outside of the anesthesia code range is January 1, 2013, and includes payment made under pass-through and Method II reimbursement methodologies. Unfortunately, CAHs have to read the entire transmittal to understand that if they want the proper Method II reimbursement for procedures performed by CRNAs outside of the anesthesia code range, the CAH is responsible to resubmit claims to their MAC. CMS also instructs MACs to bypass timely filing so that facilities can rebill claims back to the January 1, 2013 date of service based on this more recent clarification. This transmittal goes on to announce that effective January 1, 2014, a Method II CAH can also receive reimbursement for anesthesiologist services identified by revenue code 963 on the CAH’s outpatient claim.
Unfortunately, in the current Medicare claims editing and processing systems, the only HCPCS codes 00100–01999 performed by an anesthesiologist (revenue code 963) or CRNA (revenue code 964) that can be reimbursed under Method II. The claims processing system will not be updated until October 6, 2014, as identified by the implementation date on this transmittal. Again, the CAH is responsible to resubmit claims to their MAC once this policy is implemented.
To prevent lost reimbursement, CAHs may want to consider reviewing claims data from January 1, 2013, to the current period that were billed with revenue code 964 and a HCPCS code outside of the anesthesiology code range. These claims may need to be resubmitted to receive proper Method II reimbursement and CAHs should consult their MACs for further guidance.
CAHs may also want to review claims data from January 1, 2014, to the current period that were billed with revenue code 963 and a HCPCS code outside of the anesthesiology code range. If the service was not paid appropriately under Method II reimbursement methodology, hold the claim and resubmit after October 6, 2014. For outpatient claims that have not been billed yet and for which the facility will report revenue code 963 with a HCPCS code outside of the anesthesiology code range, hold the claim and submit after October 6, 2014, keeping in mind that timely filing requirements must be met.
Note from the instructor: CMS reassigns packaged skin substitute products approved for payment in CY 2014 based upon updated payment information
This note from the instructor is written by Judith Kares, JD, regulatory specialist for HCPro.
One of the more complex aspects of coding, billing, and payment for covered drugs and biologicals relates to skin substitute products. Under the CY 2014 OPPS/ASC final rule (CY 2014 final rule), CMS is packaging most skin substitute products into the application procedures that utilize them. Per CMS policy, there is no separate payment for packaged items and services; the payment for packaged items and services is included in the payment for the separately payable procedures of which they are an integral part.
Special billing rules for packaged skin substitute products
For packaging purposes, CMS created two groups of application procedures: application procedures that use high-cost skin substitute products (billed using CPT codes 15271–15278) and application procedures that use low-cost skin substitute products (billed using HCPCS codes C5271–C5278).
In making its decision as to whether a skin substitute product will be assigned to the high cost or low cost group, CMS did a comparison of the July 2013 payment rate for the skin substitute product to $32, which is the weighted average payment per unit for all skin substitute products. In doing so, CMS used skin substitute utilization data from CY 2012 claims and the July 2013 payment rate for each product. For CY 2014, skin substitute products with a July 2013 payment rate that was more than $32 per square centimeter are packaged into the payment for the high-cost application procedures, and those with a July 2013 payment rate that was equal to or less than $32 per square centimeter are packaged into the low cost application procedures.
A listing of the respective high- and low-cost skin substitute products, as well as the high- and low-cost skin application procedures into which they will be packaged, is set out in the CY 2014 Final Rule, Tables 13 and 14 respectively. A few skin substitute products (e.g., skin substitute products that are applied as either liquids or powders per milliliter or per milligram and are currently employed in procedures outside of the CPT code range of 15271–15278) are not designated as either high or low cost. They should be billed with the applicable surgical procedures that use them rather than the skin application procedures noted above (that is, they should not be reported with CPT codes15271–15278 or HCPCS codes C5271–C5278). Payment for these skin substitutes will be packaged into payment for the related surgical procedures.
Reassignment of new CY 2014 skin substitute products
Under the CY 2014 final rule, CMS also finalized a policy that for any new packaged skin substitute products approved for payment during CY 2014, CMS will use the $32 per square centimeter threshold to determine mapping to the high- or low-cost skin substitute group, as soon as sufficient pricing information becomes available. Any new packaged skin substitute products without pricing information were assigned originally to the low-cost category. There were nine new packaged skin substitute products that were covered as of January 1, 2014, and that were assigned to the low-cost payment group because pricing information was not available for these products at the time of the January 2014 update.
As reported in CMS’ April quarterly OPPS update (Transmittal R2903CP), there is now pricing information available for three of these nine products. Table 7 below shows the three new products and their updated low/high cost status based on the comparison of the price per square centimeter for each product to the $32 square centimeter threshold for CY 2014.
Table 7—Updated Payment Rates for Certain HCPCS Codes Effective April 1, 2014
Low/High Cost Status
Repriza, Per Square Centimeter
Architect Extracellular Matrix, Per Square Centimeter
Neox 1k, Per Square Centimeter
Billing and payment for pass-through skin substitute products
Although most skin substitute products are packaged, for CY 2014 five skin substitute products have been granted pass-through status and are separately payable. Skin substitutes with pass-through status have a status indicator of “G,” as set out in Table 13. Pass-through skin substitutes should be reported with CPT codes 15271–15278. Payment for pass-through skin substitutes is subject to an offset based on the amount of packaged skin substitute that is already included in the payment for the related skin application procedure. During CY 2014, for those skin application procedures assigned to APC 0328, the offset amount is 56.77%, and for those skin application procedures assigned to APC 0329, the offset amount is 15.93%.
There are several practical implications for hospitals under these complex billing rules. First, for dates of service on and after January 1, the Integrated Outpatient Code Editor will return to provider (Edit 87) any claim with an appropriate skin application procedure that does not also include an appropriate skin substitute product. This applies to both packaged and pass-through skin substitute products. In order to receive payment for the skin application procedure (as well as any pass-through skin substitute product, if applicable), the hospital will need to add the appropriate skin substitute product to the claim.
Second, effective April 1, based upon the reassignment of two skin substitute products—Q4147 and Q4148—from the low to the high-cost group, hospitals will need to revise their billing policies to ensure that these skin substitute products are billed with the applicable skin application procedures. Hospitals will also need to keep an eye out for potential reassignment of the remaining six new skin application procedures so that appropriate changes in billing policy can be implemented.
- Non-patient laboratory specimen tests; non-patient continues to be defined as a beneficiary that is neither an inpatient nor an outpatient of a hospital, but that has a specimen that is submitted for analysis to a hospital and the beneficiary is not physically present at the hospital;
- Beginning in 2014, when the hospital only provides laboratory tests to the patient (directly or under arrangement) and the patient does not also receive other hospital outpatient services during that same encounter; and
- Beginning in 2014, when the hospital provides a laboratory test (directly or under arrangement) during the same encounter as other hospital outpatient services that is clinically unrelated to the other hospital outpatient services, and the laboratory test is ordered by a different practitioner than the practitioner who ordered the other hospital outpatient services provided in the hospital outpatient setting. In this case the lab test would be billed on a 14X claim and the other hospital outpatient services would be billed on a 13X claim.
- “…writing on behalf of the members of the National Uniform Billing Committee (NUBC) to express our concern about a recent Centers for Medicare & Medicaid (CMS) action that alters the official definition and purpose of an NUBC data element (as indicated in the Official UB-04 Data Specifications Manual (UB-04 Data Set)).“
- “Unless the situation is corrected, the NUBC plans on filing a HIPAA complaint with CMS OESS for failure to adhere to the HIPAA standards.”
- “Even if CMS had done so, the rule making process is not applicable to an external code list that is not within the purview of CMS to arbitrarily change. The NUBC has a change request process that CMS, in this instance, did not follow.”