Knowledge Base Category -

In today’s busy world, calendars and notes help us keep track of all our appointments and to-do’s. But sometimes, I have too many calendars – a hand-written calendar on my refrigerator so I see it daily, an Outlook calendar at work and a calendar on my smart phone. I have to remember to synchronize my various calendars so I am not relying on an incomplete listing. This is a problem of information in too many places – similar to issues that sometimes occur with Medicare’s National Correct Coding Initiative (NCCI or CCI). Is the information in an edit table, the policy manual, or both?

If you are involved in healthcare coding, billing or compliance you best be aware of Medicare’s CCI edits. According to the NCCI webpage, “The CMS developed the National Correct Coding Initiative (NCCI) to promote national correct coding methodologies and to control improper coding leading to inappropriate payment in Part B claims. The CMS developed its coding policies based on coding conventions defined in the American Medical Association's CPT Manual, national and local policies and edits, coding guidelines developed by national societies, analysis of standard medical and surgical practices, and a review of current coding practices.” The NCCI information also applies to Medicaid claims and some other government and commercial insurances also follow some or all of these “correct coding” principles.

There are multiple parts to CMS’s National Correct Coding Initiative – three different types of edits and a policy manual.

Procedure-to-procedure (PTP) Edits

Originally labeled as “comprehensive/component” and “mutually exclusive” code pairs, these have been consolidated into the Column One/Column Two Correct Coding edit file. PTP edits prevent inappropriate payment of services that should not be reported together. There is a PTP file for practitioners and another for hospitals.

Each edit has a column one and column two HCPCS/CPT code. If a provider reports the two codes of an edit pair for the same beneficiary on the same date of service, the column one code is eligible for payment but the column two code is denied unless a clinically appropriate NCCI-associated modifier is also reported.

Medically Unlikely Edits (MUEs)

CMS developed Medically Unlikely Edits (MUEs) to reduce the paid claims error rate for Part B claims. An MUE for a HCPCS/CPT code is the maximum units of service that a provider would report under most circumstances for a single beneficiary on a single date of service. All HCPCS/CPT codes do not have an MUE. Although CMS publishes most MUE values on its website, other MUE values are confidential and are for CMS and CMS Contractors' use only. The latter group of MUE values should not be released since CMS does not publish them. There are MUE files for practitioners, facilities, and DME.

A few years ago, CMS added MUE Adjudication Indicators (MAIs) to the MUE table to indicate whether an MUE was a line item edit (MAI of 1), an absolute date of service edit (MAI of 2), or an appealable date of service edit (MAI of 3).

Add-On Code Edits

Add-on code edits consist of a listing of HCPCS and CPT add-on codes with their respective primary codes. An add-on code is eligible for payment if and only if one of its primary codes is also eligible for payment. See CR7501 for more information.

National Correct Coding Initiative Policy Manual for Medicare Services

The Policy Manual is a reference tool for correct coding and explains the rationale for NCCI edits. Chapter 1 addresses general coding principles, issues, and policies. Subsequent chapters correspond respectively to each CPT Manual section, Level 2 HCPCS codes and Category III CPT codes. These chapters further address the principles, issues, and policies dealing with specific groups of HCPCS/CPT codes.

Providers should carefully review the chapters of the manual that pertain to the code ranges they most often bill. These chapters include detailed information about correct coding and use of NCCI-associated modifiers for separately reportable services, and much more.

Source: MLN Product - How To Use the NCCI Tools

Providers must utilize all of the above tables and manual to ensure they are billing and coding correctly. Sometimes information is in a table or the manual but not in both. For example, there are no CCI edits between a thoracentesis (CPT codes 32554 / 32555) and a chest x-ray. But, in the Radiology chapter of the CCI policy, they include CPT codes 32554 and 32555 as examples of procedures where a chest x-ray should “not” be reported separately in the scenario described below as “usually performed”.

2016 CCI Policy Manual / chapter 9 / page 6: “When a central venous catheter is inserted, a chest radiologic examination is usually performed to confirm the position of the catheter and absence of pneumothorax. Similarly when an emergency endotracheal intubation procedure (CPT code 31500), chest tube insertion procedure (e.g., CPT codes 32550, 32551, 32554, 32555), or insertion of a central flow directed catheter procedure (e.g., Swan Ganz)(CPT code 93503) is performed, a chest radiologic examination is usually performed to confirm the location and proper positioning of the tube or catheter. The chest radiologic examination is integral to the procedures, and a chest radiologic examination (e.g., CPT codes 71010, 71020) should not be reported separately.”

Providers may want to create an internal billing edit to identify claims with CPT codes 32554 / 32555 billed on the same date of service as a chest x-ray in order to comply with the CCI Policy Manual guidance.

So remember to check all your calendars to keep yourself on schedule and check all the NCCI resources to keep your billing and coding on point.

A medical claim is a form of communication with a healthcare payer that request payment and describes the services provided to a patient, plus other pertinent information. Medicare and other payers have detailed specifications about the types of information that must be included on a claim. Modifiers are often used on claims to explain the special circumstances of a particular item or service. In honor of National Occupational Therapy (OT) month, we examine some modifiers that are often required for rehabilitative services.

The American Occupational Therapy Association website states that occupational therapists and assistants are part of a vitally important profession that helps people across the lifespan participate in the things they want and need to do through the therapeutic use of everyday activities. In addition to clinical responsibilities, including complete and thorough documentation of their medical services, OTs and other rehabilitative therapists such as physical therapists (PT) and speech language pathologists (SLP) are required to understand some aspects of Medicare therapy billing. For example, therapists need to understand the proper use of some billing modifiers.

Therapy Discipline Modifiers

Services for Medicare patients provided by rehabilitative therapists must be appended with a modifier that describes the therapy discipline. Modifiers are used to identify therapy services whether or not financial limitations (therapy caps) are in effect. When limitations are in effect, Medicare tracks the financial limitation based on the presence of therapy modifiers. The therapy modifiers are:

• GN – Services delivered under an outpatient speech-language pathology plan of care;
• GO - Services delivered under an outpatient occupational therapy plan of care; or,
• GP - Services delivered under an outpatient physical therapy plan of care.

Modifiers GN, GO, and GP refer only to services provided under plans of care for rehabilitative therapy services. They should never be used with codes that are not on the list of applicable therapy services. For institutional claims, the modifiers must correlate with the respective revenue code (PT – modifier GP with revenue code 42x; OT – modifier GO with revenue code 43x; and SLP – modifier GN with revenue code 44x).

Modifier 59

Modifier 59 is appended to a CPT/HCPCS procedure code to indicate that a procedure or service was distinct or independent from other services performed on the same day. It is used to identify procedures/services that are not normally reported together, but are appropriate under the circumstances.

For PT, OT and SLP services, providers should not report more than one physical medicine and rehabilitation therapy service for the same fifteen minute time period with the exception of “supervised modality” codes. Some National Correct Coding Initiative (NCCI) procedure-to-procedure edits pair a “timed” therapy CPT code with another “timed” CPT code or a non-timed CPT code as services that would not normally be reported together. These edits may be bypassed with modifier 59 if the two procedures of a code pair edit are performed in different timed intervals even if sequential during the same patient encounter. When modifier 59 is used, documentation in the therapy record must support that the services were performed at separate and distinct time periods.

Modifier KX

Medicare sets financial limitations on the amount of therapy services a beneficiary may receive in a calendar year. For 2016 the therapy cap amounts are $1,960 for physical therapy (PT) and speech-language pathology (SLP) services combined and $1,960 for occupational therapy (OT) services. Medicare allows an exception when the patient’s condition requires continued skilled therapy beyond the amount payable under the therapy cap, to achieve their prior functional status or maximum expected functional status within a reasonable amount of time. Documentation in the therapy record must justify a medically necessary need for additional therapy beyond the therapy cap.

When exceptions are in effect and the beneficiary qualifies for a therapy cap exception, the provider must add a KX modifier to the therapy HCPCS code subject to the cap limits. By appending the KX modifier, the provider is attesting that the services billed:

• Are reasonable and necessary services that require the skills of a therapist; and
• Are justified by appropriate documentation in the medical record,; and
• Qualify for an exception using the automatic process exception.

When the cap is exceeded by at least one line on the claim, use the KX modifier on all of the lines on that institutional claim that refer to the same therapy cap (PT/SLP or OT), regardless of whether the other services exceed the cap. For example, if one PT service line exceeds the cap, use the KX modifier on all the PT and SLP service lines (also identified with the GP or GN modifier) for that claim. When the PT/SLP cap is exceeded by PT services, the SLP lines on the claim may meet the requirements for an exception due to the complexity of two episodes of service. In addition to the KX modifier, the GN, GP and GO modifiers shall continue to be reported.

Be sure that services are medically necessary and that documentation is sufficiently detailed to support the use of the modifier. Medicare is aware of the potential for misuse of the KX modifier. Note that:

• Routine use of the KX modifier for all patients with certain conditions will likely show up on data analysis as aberrant and invite inquiry.
• Use of the KX modifier when there is no indication that the cap is likely to be exceeded is abusive.
• If the use of the KX modifier is determined to be inaccurate, the provider/supplier is subject to sanctions resulting from providing inaccurate information on a claim.

For more information on the use of the KX modifier, see the Medicare Claims Processing Manual, Chapter 5 , Section 10.3.

Functional Limitation Modifiers

In 2013, Medicare began requiring the reporting of rehabilitative therapy functional limitation information on claims. Claims for outpatient therapy services are required to include non-payable G-codes and modifiers, which describe a beneficiary’s functional limitation and severity level, at specified intervals during the therapy episode of care. The severity modifier reflects the beneficiary’s percentage of functional impairment as determined by the clinician furnishing the therapy services for each functional status: current, goal, or discharge.

Therapists must document in the medical record how they made the modifier selection so that the same process can be followed at succeeding assessment intervals. For more information on functional limitation codes and modifiers, see the Medicare Benefit Policy Manual, Chapter 15, Section 220.4.

When communicating with Medicare and other payers, providers must know the specifics of the service and claim requirements. Proper use of modifiers to provide additional information about the services rendered is necessary for clear communication.

The Comprehensive Care for Joint Replacement Model (CJR) is set to begin in just thirty days on April 1, 2016. For the first time, hospitals paid under the Inpatient Prospective Payment System (IPPS) in select Metropolitan Statistical Areas (MSAs) are required to participate in this model, with limited exceptions. Medicare beneficiaries electing to undergo any lower extremity joint procedure that is assigned to MS-DRG 469 or 470 will be included in this model.

CMS released Change Request (CR) 9533 on February 19th and related MLN Matters® article MM9533. Both are aimed at Provider Education with emphasis on the need for Providers to make sure that billing staff is aware of the changes.  

Demonstration Code 75

CMS will automatically apply the CJR Demonstration Code 75 to claims that meet criteria for inclusion in this project. Medicare beneficiaries to be included in this model must meet the following criteria:

• Enrollment in Medicare Part A and Part B;
• Medicare eligibility is not based on the End-Stage Renal Disease benefit;
• Not being enrolled in any managed care plan;
• Not being covered under a United Mine Workers of America health plan; and
• Medicare is the primary payer.

CMS notes that, if at any time during the episode the beneficiary no longer meets all of these criteria, the episode is cancelled.

CMS instructs that they will automatically apply Demonstration Code 75 when the inclusion criteria are met and that “participant hospitals need not include demonstration code 75 on their claims.” They go on to note that instructions for submission of claims for Skilled Nursing Facility (SNF) services will be communicated when the waiver of the three-day stay requirement is operationalized.

Billing and Paying for Post-Discharge Home Visits

In the CJR Final Rule, CMS finalized their proposal “to waive the “incident to” direct physician supervision requirement set forth at §410.26(b) (5), to allow a CJR beneficiary who does not qualify for home health services to receive up to 9 post-discharge visits in his or her home or place of residence any time during the episode following discharge from an anchor hospitalization.”

This service will be billed under the Medicare Physician Fee Schedule (MPFS) with a HCPCS G-Code (G9490). This G-Code will be payable for CJR model beneficiaries beginning April 1, 2016. “Claims submitted for post-discharge home visits for the CJR model will be accepted only when the claim contains the CJR specific HCPCS G-Code. Although CMS is associating the Demonstration Code 75 with the CJR initiative, no demonstration code is needed or required on Part B claims submitted with the post-discharge home visit HCPCS G-Code.

Additional information on billing and payment for the post-discharge home visit HCPCS G-Code will be available in the April 2016 release of the MPFS Recurring Update. Future updates to the relative value units (RVUs) and payment for this HCPCS code will be included in the MPFS final rules and recurring updates each year.”

Billing and Payment for Telehealth Services

CMS also finalized to waive the geographic site requirement and the originating site requirement to permit telehealth visits to originate in the beneficiary’s home or place of residence. Waiver of the telehealth requirements will be subject to certain conditions that have been detailed in CR 9533 and MLN MM9533.

As with the Post-Discharge Home Visits, Telehealth Services will also be billed under the MPFS using one of nine HCPCS G-codes (G9481, G9482, G9483, G9484, G9485, G9486, G9487, G9488, and G9499). Attachment A of CR 9533 provides the long descriptors of these codes. These codes will also be payable beginning April 1, 2016.

“Claims submitted for telehealth home visits for the CJR model will be accepted only when the claim contains one of nine of the CJR specific HCPCS G-Code.” Similar to guidance for post-discharge home visits, no demonstration code is needed or required on Part B claims submitted with a post discharge telehealth visit HCPCS G-code. “Additional information on billing and payment for the telehealth home visit HCPCS G-Codes will be available in the April 2016 release of the MPFS Recurring Update. Future updates to the RVUs and payment for these HCPCS codes will be included in the MPFS final rules and recurring updates each year.”

This model is set to run for five years, ending December 31, 2020. Hospitals, providers and suppliers will continue to be paid as usual. At the end of each Performance Year, Medicare will reconcile claims paid and hospitals will receive a reconciliation payment or be responsible for repayment to Medicare depending on how actual spending compared to an established target price. Additional information about the CJR model can be found in a related article, Comprehensive Care for Joint Replacement Model Finalized or by visiting the CMS CJR Model web page.

Before the era of most moms working outside the home and pre-school daycare, the school playground was the first place for serious socialization outside of family for many American children. All over the nation, the school playground foretold of the inevitable societal cliques – there were city kids, country kids, in-crowd, outsiders, do-gooders, trouble makers, and even bullies. One scene that played out during numerous recesses was the bully taking lunch money from a less rambunctious playmate. If the victim wasn’t the pushover the bully thought, he or she might raise their clenched fist and yell, “Give it back now!” Hopefully this outburst attracted the attention of teachers or classmates, a fight was averted, and the wrong righted.

The Centers for Medicare and Medicaid Services (CMS) may seem more like the bully than the victim to many in healthcare, but sometimes providers and suppliers receive monies from CMS to which they are not entitled. In a recent Final Rule, CMS clarified the requirements of their version of “give it back now” or at least within 60 days.

The requirement for refund of overpayments within 60 days of identification has been a law since enactment of the Affordable Care Act (ACA) on March 23, 2010. The sub-regulatory guidance explaining and defining the requirements was finalized in a Final Rule published in the Federal Register on February 12, 2016. According to CMS, this rule provides needed clarity and consistency in the reporting and returning of self-identified overpayments.

Even without this rule, providers and suppliers are subject to the statutory requirements of the Act and could face potential False Claims Act (FCA) liability, Civil Monetary Penalties Law (CMPL) liability, and exclusion from federal health care programs for failure to report and return an overpayment. The ACA requires a person (defined as a provider or supplier) who has received an overpayment to report and return the overpayment by the date which is 60 days after the date on which the overpayment was identified (for claims-based overpayments) or the date any corresponding cost report is due (for cost reporting issues) and to notify Medicare in writing of the reason for the overpayment. Any overpayment retained by a person after the deadline for reporting and returning the overpayment is an obligation that has the potential to trigger FCA liability.

Meaning of Identification

The rule clarified that a provider/supplier has identified an overpayment when they have or should have, through the exercise of reasonable diligence, determined they received an overpayment and quantified the amount of the overpayment. This definition of “identified” allows time for an investigation and quantification of the overpayment amount before the 60 day clock begins. CMS expects a period of six months is sufficient for most investigations unless there are extraordinary circumstances which would be rare. Not all inquires should take six months – providers should prioritize these inquires and complete as soon as possible.

Reasonable Diligence

The definition of “identified” includes an expectation of “reasonable diligence” on the part of providers. CMS discusses two aspects of reasonable diligence - investigations in response to credible information of a potential overpayment and proactive compliance activities.

If a provider obtains credible information concerning a potential overpayment, they should investigate to determine whether an overpayment has been received and to quantify the amount. Credible information supports a reasonable belief that an overpayment may have been received. Examples of information that may be credible and support an investigation to determine if an overpayment occurred include but are not limited to:

• Hotline complaints
• A significant increase in Medicare revenue
• Knowledge of violation of the anti-kickback statute
• RAC audit findings, as well as other Medicare contractor and OIG audit findings

According to CMS, “failure to make a reasonable inquiry, including failure to conduct such inquiry with all deliberate speed after obtaining the information, could result in the provider or supplier knowingly retaining an overpayment because it acted in reckless disregard or deliberate ignorance of whether it received such an overpayment….The 60-day time period begins when either the reasonable diligence is completed or on the day the person received credible information of a potential overpayment if the person failed to conduct reasonable diligence and the person in fact received an overpayment.”

CMS advises providers to maintain documentation of their reasonable diligence efforts to demonstrate their compliance.

The second aspect of reasonable diligence is proactive compliance activities. CMS states that “providers and suppliers have a clear duty to undertake proactive activities to determine if they have received an overpayment or risk potential liability for retaining such overpayment.” A robust and active Compliance Program would include this in the form of an annual compliance risk assessment and compliance work plan. CMS encourages providers to use publicly available information to assist in planning their compliance monitoring activities and reviews, such as the OIG’s annual work plan and CMS notices.

Overpayment

Overpayment is defined as any funds that a person has received or retained under Title XVIII of the Act to which the person, after applicable reconciliation, is not entitled under such title. These funds might be received or retained due to fraud or due to more inadvertent reasons. An overpayment must be reported and returned regardless of the reason it happened – be it a human or system error, fraudulent behavior or otherwise. Overpayment examples given in the rule include:

• Medicare payments for non-covered services
• Medicare payments in excess of the allowable amount for an identified covered service (for example, providers must report and return overpayments resulting from up-coding, whether the inappropriate coding was intentional or not)
• Increases in reimbursement from errors and non-reimbursable expenditures in cost reports
• Duplicate payments
• Receipt of Medicare payment when another payer had the primary responsibility for payment

Overpayment may be the difference between what was paid and the amount that should have been paid or in the case of non-covered services the entire amount. Rules and regulations in effect at the time of the original payment apply, therefore payments that were proper at the time the payment was made do not become overpayments at a later time due to changes in law or regulation, unless otherwise required by law.

Providers may use statistical sampling and extrapolation to calculate an overpayment amount. Where the overpayment amount is extrapolated based on a statistical sampling methodology, the overpayment report must explain how the overpayment amount was calculated.

CMS declined to adopt a minimum monetary threshold related to this rule. They are considering establishing a minimum monetary threshold for cost report-related overpayments that would be published in program guidance or future rulemaking.

Lookback Period

The rule sets the lookback period for self-identified overpayments to six years from the date the overpayment was made. This is a relief from the ten years suggested in the proposed rule, but longer than the lookback period for Recovery Auditors (3 years) or for Medicare contractors (48 months or 4 years). This means that if an overpayment issue is discovered by one of these contractors or through an internal review that could potentially have affected prior claims, providers and suppliers need to determine whether they have received overpayments going back 6 years as stated in this rule.

Reporting and Returning Overpayments

Providers and suppliers may use existing processes, such as an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process to satisfy the obligation to report and return overpayments. Refunds must be sent to the appropriate Medicare contractor according to the applicable administrative process. Overpayment cannot be reported and returned directly to the Department. The reason for the overpayment will likely affect the provider’s decision on which method to use to return the overpayment.

CMS also amended the reopening rules to provide for a reopening period that accommodates the 6-year lookback period for reporting and returning overpayments, and to ensure that the reopening rules do not present an obstacle or unintended loophole to compliance and enforcement of this Act. Providers may request that contractors reopen initial determinations for the purpose of reporting and returning an overpayment.

Medicare contractors are required to process all voluntary refunds and should not return voluntary refund checks. According to CMS there is no reason for a contractor to refuse a refund because a different company was the contractor during the period covered by the refund. CMS may consider a processing deadline for contractors in the future.

CMS accepts the CMS Voluntary Self-Referral Disclosure Protocol (SRDP) and the OIG Self-Disclosure Protocol (SDP) as an appropriate means for returning an overpayment. As indicated in the final rule, “providers and suppliers need to decide who is the most appropriate recipient of the overpayment report and refund as provided in § 401.305(d) – the applicable Medicare contractor, the SDP, or the SRDP. Providers and suppliers should review the SDP and SRDP to determine whether either of those avenues is available.”

In the event that a SDP settlement is not reached, the provider or supplier has the balance of the 60-day time period remaining, from identification to the suspension of that 60-day period when OIG acknowledged receiving the SDP submission, to report and return any overpayment to the contractor.

Cost Reporting, PIP, Outliers, and Overpayments

Below are excerpts from the Final Rule concerning cost reporting and other related overpayment issues.

In the context of cost reporting, the “applicable reconciliation” is the provider's year-end reconciliation of payments and costs to create the cost report. The cost report must be filed within 5 months of the end of the provider's fiscal year end, which allows time to reconcile payments and costs and identify any funds to which the provider is not entitled. This overpayment should be returned at the time the cost report is filed.

If the provider self-identifies an overpayment after the submission and applicable reconciliation of the Medicare cost report, it is their responsibility to follow the procedures in this rule, and report and return the overpayment within 60 days of identification. The provider must use the applicable reporting process for cost report overpayments (submit an amended cost report) along with the overpayment refund. The amended cost report must include sufficient documentation and data to identify the issue in order for the MAC to adjust the cost report.

If the overpayment is identified by the MAC during the cost report audit, the MAC will determine and demand the exact amount of the overpayment at final settlement of the cost report. If the MAC notifies a provider of an improper cost report payment, the provider has received credible information of a potential overpayment and must conduct reasonable diligence on other cost reports within the lookback period to determine if it has received an overpayment.

Overpayments as a result of PIP payments would be reported and returned at the time the initial cost report is due. There is no applicable reconciliation until the PIP payments are dealt with in the cost report process. However, if a provider is aware that their PIP payment may not be accurate, they should continue with normal business practices and inform its MAC of the issue.

An overpayment as a result of an outlier reconciliation would be identified once the provider receives that information from its MAC as part of the cost report settlement process. The provider is not responsible for attempting to identify the cost report outlier reconciliation overpayment in advance of the MAC's reconciliation calculation. However, for claims, if the provider identifies an inaccurate outlier claim payment, the provider must follow the overpayment payment reporting process for claims, as noted in this final rule.

Provider Liability

The Final Rule makes it clear that an overpayment refund does not negate any potential liability the provider or supplier may have for the overpayment issue. Although CMS will not recover an overpayment twice, they do not exempt claims that form the basis for a returned overpayment from subsequent audit by CMS, a CMS contractor or the OIG. In addition Medicare contractors may refer potential fraudulent conduct to law enforcement.

This is certainly a lot of information to simply say “give it back now” but that is the government for you. I have tried to relay some important aspects of the Reporting and Returning Overpayments Final Rule, but encourage financial, compliance and legal personnel of providers and suppliers to read the entire rule for the best understanding.

Did you ever play the game as a child where you were blindfolded, turned around until you were disoriented, and then relied on a sibling or a friend to guide you? This required some trust even though it was just a game. And the more guidance the better – handholding was better than simply being told where to go. We are not quite as trusting as adults, but often our only choice is to rely on the guidance of others. Hospitals have to rely on Medicare guidance for direction in providing and billing for Medicare services. And like that childhood game, more guidance and clearer guidance is always better. So, thanks to CMS for the additional guidance on the use of the PO modifier.

Last week’s edition of the Wednesday@One included an article about recent developments related to Provider-Based Departments (PBDs), one of which was the requirement to report a PO modifier on outpatient services provided in an off-campus provider based department. In the January 26, 2016, Hospital Open Door Forum (ODF), CMS discussed this requirement and referred providers to a recent Modifier PO FAQ document that provides additional guidance on the use of this modifier.

Before getting into the details of the Frequently Asked Questions, here is an excerpt from last week’s article.

This requirement was finalized in the 2015 OPPS Final Rule which allowed voluntary reporting of the PO modifier for 2015 but mandates use of the modifier beginning in 2016. The use of the PO modifier will allow CMS to track the volumes and types of services being provided in off-campus provider based departments. Things to know about reporting the PO modifier include:

• Off-campus means provider based departments located 250 yards or greater from the main provider building.
• Per discussion at a CMS Hospital Open Door Forum, the modifier is only required to be reported for items and services paid under OPPS. Services paid under another fee schedule, such as rehabilitative therapy services, do not require the PO modifier.
• The modifier should not be reported for remote locations of a hospital, satellite facilities of a hospital, or for services furnished in an emergency department.
• Remote location is another main provider furnishing inpatient services under the name, ownership, and administrative and financial control of the main hospital.
• A satellite facility is a part of a hospital that provides inpatient services in a building also used by another hospital, or in a building(s) located on the same campus as buildings used by another hospital.

A lot of the ODF discussion and the FAQs address when the PO modifier is required and when it is not. The CMS representative speaking on the ODF suggested hospitals ask themselves three questions in deciding whether to use the PO modifier:

1. Are the services provided at a provider-based department?
2. Is the provider-based department located off-campus?
3. Are the services “paid” under the Outpatient Prospective Payment System (OPPS)?

If the answer to all three of these questions is yes, then you must use the PO modifier.

The FAQs address a number of scenarios where the PO modifier is not required. For example, the PO modifier is not required for:

• Critical Access Hospitals (CAHs) because CAHs are not paid through the OPPS
• Off-campus rehabilitative therapy services because therapy services have an OPPS status indicator of “A” which means they are paid under another fee schedule (the Physician’s Fee Schedule) and not under OPPS
• Facilities that do not meet the definition of provider-based
• Off-campus dialysis facilities because these are billed and paid under the ESRD PPS and not under OPPS
• Services provided at a remote hospital location of the main hospital or on the campus of a remote location
• Services provided in either Type A or Type B Emergency Departments
• Laboratory services that are paid under the Clinical Laboratory Fee Schedule – This one is tricky because labs provided on the same day of service with other outpatient services are packaged and therefore are “paid” under OPPS – these would require the PO modifier. If only laboratory services are performed - for example, if a hospital has an off-campus PBD laboratory where patients go for only laboratory services (and no other related outpatient services are provided the same day), then these services are paid under the CLFS and would not require a PO modifier.
• Services provided through Medicare Advantage plans

The FAQs also clarify that it is acceptable to have a claim where some HCPCS codes have the PO modifier and some don’t. Separately payable outpatient drugs reported with HCPCS codes (status indicator “K”) do require the PO modifier when provided in an off-campus PBD.

We have no choice but to trust and rely on the guidance from CMS, but it is always good to have more guidance than lesser guidance in trying to interpret and implement Medicare rules.

The words “term paper” can strike fear in the hearts of students everywhere. Research, note cards, bibliography, and the dreaded draft copy a student presents to his or her teacher for corrections prior to the final composition. That draft copy is often returned marked ubiquitously with red ink. This gives the writer one last chance at correction before a grade is assigned and the wise student utilizes this instruction to improve their paper and the resulting score. CMS likes to give providers a chance to improve their performance also. One of the tools CMS uses to guide providers in preventing billing errors is the Medicare Quarterly Provider Compliance Newsletter.

CMS publishes the Quarterly Compliance Newsletter “to provide education on how to avoid common billing errors and other erroneous activities when dealing with the Medicare Fee-For-Service (FFS) Program. It includes guidance to help health care professionals address and avoid the top issues of the particular Quarter.” The newsletter addresses findings from Medicare review contractors and affiliates, such as the Medicare Administrative Contractors (MACs), CERT, Recovery Auditors, and the OIG. The latest edition of this newsletter, the January 2016 Edition, includes several issues that may be of concern to hospitals.

Admission Source for Inpatient Psychiatric Hospitals

This issue is a concern for acute-care hospitals and critical access hospitals (CAHs) that have an inpatient psychiatric distinct part unit. The inpatient psychiatric hospital (IPF) payment generally includes an adjustment for maintaining a qualifying emergency department (ED). Medicare does not make this adjustment however when patients are transferred from the acute-care section of a hospital to an IPF distinct part unit within the same hospital. This is because the costs associated with ED services are already reflected in the Medicare payment to the hospital for the immediately preceding acute care stay.

To prevent this inappropriate additional payment, the transfer to an IPF-distinct part unit from the acute-care section of the hospital should be coded with an admission source of “D” - Transfer from One Distinct Unit of the Hospital to another Distinct Unit of the Same Hospital Resulting in a Separate Claim to the Payer. Failure to use the correct Source of Admission code in these circumstances will result in an overpayment as has been found by Recovery Auditor’s automated reviews.

For more information, see the Medicare Claims Processing Manual, Chapter 3, Section 190.6.4.

Duplicate Claims

Another automated review by Recovery Auditors has identified problems with payments for duplicate services submitted on separate claims. Claims for services should only be submitted one time. Providers should use the claim status inquiry process to determine the status of their claims instead of resubmitting the claim.

If the services are not duplicate services, the provider should use an appropriate modifier to indicate such. The use of modifiers is discussed in the Medicare Claims Processing Manual, Chapter 4, Section 20.6.

Medical Necessity of Rituximab

A number of MACs have a Local Coverage Determination (LCD) or Article for Rituximab that lists appropriate ICD-10 diagnosis codes to support the medical necessity of the drug. Claims for Rituximab must include one of the required ICD-10 diagnosis codes to support payment. Most claims submitted without an acceptable diagnosis code will be denied as “not medically necessary” by claims processing edits. However, an automated review by the Recovery Auditors has identified paid claims where providers are billing for a service of J9310 - Rituximab with an ICD-10 code that is not included in the list of covered ICD-10 codes in applicable Local Coverage Determination documents. Here is a listing of the LCDs and Articles that contain diagnosis code requirements for Rituximab.

‍Outpatient Cardiovascular Nuclear Medicine Procedure Codes

Medical necessity issues were also identified by Recovery Auditor automated reviews related to cardiovascular nuclear medicine tests. This was the result of the same issue as for Rituximab – an ICD-10 diagnosis code approved for coverage as indicated by Local Coverage Determinations was not included on the claim. This includes a large range of services:

• Myocardial perfusion imaging – CPT codes 78451-78454
• Myocardial imaging – CPT codes 78466 and 78468-78469
• Cardiac blood pool imaging – CPT codes 78472, 78473, 78481, 78483, 78494, and 78496
• Cardiovascular stress test – CPT codes 93015-93018

Check your MAC’s LCDs and Articles to see if there are coverage requirements for these tests for your jurisdiction.

Providers need to read and take actions if needed based on the guidance in the Medicare Quarterly Compliance Newsletter. If you don’t learn from this guidance, your claims may end up covered in red marks.

Almost everyone reading this newsletter works in the field of healthcare. But even those of us in healthcare often take for granted the amazing advancements in medicine over the last few centuries. Last fall I visited Yorktown, one of the major cities involved in America’s fight for independence (for fellow history buffs, I highly recommend visiting there). Do you realize that during the Revolutionary War almost three times the number of Americans died from disease as were killed in war? Historians believe around 17,000 deaths occurred from disease compared to 6,800 casualties from battle. Modern medicine involves a variety of things that are put into or onto bodies to heal or improve health. Part 2 of our discussion of the January 2016 OPPS Update looks at Medicare’s latest rules for devices, drugs, biologicals, and blood products.

Devices

The key to understanding the rules for Medicare payment for devices is to know that payment for most devices is bundled into the payment for the associated procedure. Medicare does pay for the device – the payment is just part of the procedure payment. In order to be able to adjust payments when a device is separately reimbursed (pass-through payments) or when the hospital incurs no cost or reduced cost for the device (device credits), Medicare calculates the percentage of each APC that is attributable to the cost of the device. This is known as the device-offset amount.

Certain categories of devices are eligible for transitional pass-through payments for 2-3 years. Effective January 1, 2016, HCPCS code C1822, Generator, neurostimulator (implantable), high frequency, with rechargeable battery and charging system, is being added as a pass-through device. There are a number of considerations related to this new pass-through device.

• Pass-through devices, including C1822, are assigned a status indicator of “H.” This means that the device is reimbursed based on cost. Medicare calculates the payment amount by applying your hospital’s cost-to-charge ratio to the device charge on the claim.
• HCPCS C1822 should always be reported with CPT code 63685 (Insertion or replacement of spinal neurostimulator pulse generator or receiver, direct or inductive coupling) which is assigned to APC 5464.
• Medicare will deduct the device-offset amount for this APC from the pass-through payment amount for the device when HCPCS C1822 is reported.
• The description of HCPCS code C1820 was changed to differentiate it from the C1822. C1820 is Generator, neurostimulator (implantable), non-high frequency, with rechargeable battery and charging system. C1820 is non-high frequency whereas C1822 is high-frequency.

The 2016 APC off-set file can be found at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html .

Another important aspect of understanding device payments is to know that device-intensive APCs are those APCs with a device-offset amount greater than 40%. Over 40% of the APC payment is “payment” for the device. Beginning in 2016, Medicare will make an additional payment adjustment for device-intensive APCs when the procedure is discontinued prior to the administration of anesthesia (reported with modifier -73). Modifier 73 is appended to surgical procedures for which anesthesia is planned, but the procedure is terminated after the patient is prepared and taken to the room where the procedure is to be performed, but prior to the administration of anesthesia. Modifier 73 reduces the procedure payment by 50%. Effective January 1, 2016, the device off-set amount will be deducted from the APC payment and then the 50% reduction will be applied.

Also for 2016, all procedures assigned to a device-intensive APC will require a device code to be present on the claim. Table 42 in the 2016 OPPS Final Rule lists the device-intensive APCs.

Corneal Tissue

In 2016, Medicare will only pay separately for the procurement or acquisition of corneal tissue when it is used in a corneal transplant procedure. Hospitals should only report HCPCS code V2785 (Processing, preserving and transporting corneal tissue) when corneal tissue is used in a corneal transplant procedure described by one of the following CPT codes:

• 65710 (Keratoplasty (corneal transplant); anterior lamellar);
• 65730 (Keratoplasty (corneal transplant); penetrating (except in aphakia or pseudophakia));
• 65750 (Keratoplasty (corneal transplant); penetrating (in aphakia));
• 65755 (Keratoplasty (corneal transplant); penetrating (in pseudophakia));
• 65756 (Keratoplasty (corneal transplant); endothelial);
• 65765 (Keratophakia);
• 65767 (Epikeratoplasty); and
• Any successor code or new code describing a new type of corneal transplant procedure that uses eye banked corneal tissue.

Blood Products

There are three new blood product codes for 2016 for pathogen-reduced blood products – that is blood products treated to eliminate certain pathogens and reduce the risk of transfusion-associated infections, such as those treated with Amotosalen and UVA light. The new codes are:

‍Drugs

Like devices, payments for drugs have special rules under OPPS. Payment for drugs below a threshold per-day cost ($100 for 2016) is packaged; drugs exceeding this threshold are separately reimbursed at average sales price (ASP) + 6%, which provides payment for both the acquisition cost and pharmacy overhead costs associated with the drug, biological or therapeutic radiopharmaceutical. Pass-through drugs, biologicals and radiopharmaceuticals are also paid at ASP+6%.  The January 2016 OPPS Update article lists a number of new and revised drug HCPCS codes plus other information concerning drug payments.

• See the article for the complete lists – Table 7 for new drug codes, Table 8 for changed codes or revised descriptions, and Table 9 for Corrected Effective Dates for Certain Vaccine Codes.
• For the new codes, remember that Status Indicator
• G is a pass-through drug,
• K is a separately paid non-pass-through drug/biological,
• E is not paid by Medicare for outpatients, and
• N is a packaged drug.
• For changed codes and descriptions, pay close attention to the units in the old and new descriptors, for example
• 2015 - C9443, Injection, dalbavancin, 10 mg; 2016 - J0875, Injection, dalbavancin, 5 mg
• 2015 - J1446, Injection, tbo-filgrastim, 5 micrograms; 2016 - J1447, Injection, tbo-filgrastim, 1 microgram
• 2015 - J7506, Prednisone, oral, per 5mg; 2016 - J7512, Prednisone, immediate release or delayed release, oral, 1 mg
• Biosimilars are paid the ASP of the biosimilar(s) described by the HCPCS code + 6% of the ASP of the reference product. Only the first eligible biosimilar biological product to a reference product will be eligible for pass-through status; subsequent biosimilars to a reference product will not meet the newness criterion.
• New FDA approved drugs, biologicals, and therapeutic radiopharmaceuticals without an assigned HCPCS code should be billed with HCPCS code C9399. New diagnostic radiopharmaceuticals and contrast materials are not to be reported with C9399. Until they are granted pass-through status and a new C code is assigned, report new diagnostic radiopharms with the appropriate HCPCS code:
• A4641 (Radiopharmaceutical, diagnostic, not otherwise classified),
• A9599 (Radiopharmaceutical, diagnostic, for beta-amyloid positron emission tomography (PET) imaging, per study dose), or
• J3490 (Unclassified drugs) (applicable to all new diagnostic radiopharmaceuticals used in non-beta-amyloid PET imaging)
• Report new contrast materials with HCPCS code:
• A9698 (Non-radioactive contrast imaging material, not otherwise classified, per study) or
• A9700 (Supply of injectable contrast material for use in echocardiography, per study

Skin substitute products that do not qualify for pass-through status are also packaged. Payment is packaged into the payment for the associated skin substitute application procedure. The skin substitute products are divided into two groups for packaging purposes:

1. High cost skin substitute products - application reported with CPT codes 15271-15278
2. Low cost skin substitute products - application reported with HCPCS code C5271-C5278

See the MLN Matters article for a list of the skin substitute products’ designations as high or low. All pass-through skin substitute products are to be reported in combination with one of the skin application procedures described by CPT code 15271-15278.

As you can tell from the above discussion, even though there are new advancements in technology, devices, and drugs, in the long run, Medicare may bundle the payment.

Do you know the difference in a law and a regulation pertaining to Medicare? Where do rules and sub-regulatory guidance fit in? This is valuable knowledge when dealing with Medicare and trying to figure out how to stay compliant with all the various requirements.

• A law is legislation that is enacted by Congress and signed into law by the President (or overridden by Congressional vote if vetoed by the President).
• Once a law is on the books, the appropriate Federal agency, in this case the Centers for Medicare and Medicaid Services (CMS), creates regulations to implement the provisions of the law. Regulations are generally published for industry and public comment as a “proposed rule” in the Federal Register, followed by a Final Rule, also published in the Federal Register, with response and possible revisions due to the comments received. Regulations in the Final Rule amend the Code of Federal Regulations (CFR).
• After regulations are final, CMS publishes sub-regulatory guidance in transmittals to provide direction, advice and instructions on implementing the regulations. Some transmittals update the Medicare manuals.

To be fully compliant, hospitals should follow Medicare laws, rules, regulations, and guidance. The further down the line you go, the more details there are. But sometimes, it can be like trying to clean eyeglasses with an oily cloth – the more you try to clarify, the cloudier it gets.

These various methods of establishing Medicare requirements often result in multiple publications discussing the same issue. That can be a good thing though, because people learn best through repetition. MLN Matters Article MM9486 (CR 9486) implements changes to and billing instructions for various policies implemented in the January 2016 OPPS update. There is so much information in this MLN article that I will only review some of the issues this week. I will review the rest of the issues in future articles. This week, let’s look at modifiers, observation, lab packaging, lung cancer screening and some items related to radiation therapy.

Modifiers

Modifier CA is not new, but the APC payment method associated with use of this modifier has changed. Modifier CA is used to report an inpatient-only procedure furnished to an outpatient who expires before the patient can be admitted as an inpatient or transferred. For 2016, this will be paid as a comprehensive APC. Medicare will make a single payment for all services reported on the claim, including the “inpatient-only” procedure through APC 5881.

Modifier CT is new for 2016 – it is to be reported on CT services furnished on equipment that does not meet the National Electrical Manufacturers Association (NEMA) Standard XR-29-2013. This applies to CPT codes 70450-70498; 71250-71275; 72125-72133; 72191-72194; 73200-73206; 73700-73706; 74150-74178; 74261-74263; and 75571-75574 and will result in a 5% reduction in payment for 2016. The reduction also applies when multiple CT scans are provided on the same day and paid under a composite payment if the equipment does not meet NEMA standards.

Observation

Payment for observation services is also transitioning from a composite payment to a comprehensive payment which means one bundled payment for all visits, observation services, and all other OPPS payable services and items reported on the claim (excluding all preventive services and certain Medicare Part B inpatient services). Services that were separately paid under the observation composite payment, such as injections, infusions, CTs, and MRIs, will no longer receive separate payment in 2016 when a comprehensive observation payment is made. Any clinic visit, Type A Emergency Department (ED) visit, Type B ED visit, critical care visit, or direct referral for observation services furnished in a non-surgical encounter by a hospital in conjunction with observation services of eight or more hours, will qualify for comprehensive payment through C-APC 8011. Obs is now assigned to Status Indicator J2.

Lab Packaging

The Status Indicator for packaged lab services is being changed from “N” (always packaged) to new SI “Q4” (“J1,” “J2,” “S,” “T,” “V,” “Q1,” “Q2,” or “Q3” packaged). This allows separate payment for lab services on outpatient claims (13x type of bill) that contain only laboratory services without having to use the L1 modifier. The L1 modifier is now only required to report unrelated lab services provided with other outpatient services when ordered by a different practitioner for a different diagnosis.

Lung Cancer Screening

In the Final Rule, CMS announced two newly created HCPCS codes to report lung cancer screening counseling visit (G0296) and annual screening by low-dose CT (G0297). These screening benefits were effective February 5, 2015 through an NCD, but Medicare will not be accepting claims until January 4, 2016. To be eligible for the LDCT lung cancer screening benefit, patients must:

• Be 55-77 years of age
• Be asymptomatic (no signs or symptoms of lung cancer)
• Have a tobacco smoking history of at least 30 pack-years (one pack-year = smoking one pack per day for one year; 1 pack = 20 cigarettes)
• Be a current smoker or one who has quit smoking within the last 15 years; and
• Receive a written order for lung cancer screening with LDCT that meets the requirements described in the NCD. Written orders for lung cancer LDCT screenings must be appropriately documented in the beneficiary’s medical records.

See MLN Matters Article MM9246 for more information.

IMRT Planning Services

Payment for IMRT planning services billed with CPT code 77301 includes payment for the services described by several other CPT codes, whether these services are performed on the same or different dates of service. CPT codes 77014, 77280-77295, 77305-77321, 77331, 77336, and 77370 may only be billed separately in addition to CPT 77301 if they are being performed in support of a separate and distinct non-IMRT radiation therapy for a different tumor.

Sterotactic Radiosurgery

Effective for dates of service on and after January 1, 2016 through December 31, 2017, certain planning and preparation services are not bundled into cranial single session Stereotactic Radiosurgery (SRS) procedures (CPT code 77371 or 77372) and may be reported and paid separately in addition to the SRS procedure. These procedures include:

• 70551 - Mri brain stem w/o dye
• 70552 - Mri brain stem w/dye
• 70553 - Mri brain stem w/o & w/dye
• 77011 - Ct scan for localization
• 77014 - Ct scan for therapy guide
• 77280 - Set radiation therapy field
• 77285 - Set radiation therapy field
• 77290 - Set radiation therapy field
• 77295 - 3-d radiotherapy plan
• 77336 - Radiation physics consult

Hospitals must report modifier “CP” for any other services, aside from the 10 codes above, that are adjunctive or related to SRS treatment but billed on a different date of service and within 30 days prior or 30 days after the date of service for either CPT codes 77371 or 77372.

Be sure to add this sub-regulatory guidance to your stockpile of Medicare knowledge and develop processes to be compliant with these regulations.

The Final Rule for the Comprehensive Care for Joint Replacement (CJR) Model was released on November 16, 2015 and published in the Federal Register on November 24, 2015. Unlike the proposed January 1st start date, the final rule start date is April 1, 2016 and is most definitely not an April Fool’s Day Joke. The model will include five (5) Performance Periods that will run through December 31, 2020. CMS has indicated that through an impact analysis they “expect the CJR model to result in savings to Medicare of $343 million over the 5 performance years of the model.”

Participating hospitals need to familiarize themselves with several new terms specific to the CJR Model as provided in Table 1.

Table 1: Key CJR Model Terms and Acronyms

‍CJR Model: Key Aspects

• For the first time, hospitals in selected MSAs are required to participate. CMS indicates that they “have designed the CJR model to require participation by hospitals in order to avoid the selection bias inherent to any model in which providers may choose whether to participate. Such a design will allow for testing of how a variety of hospitals will fare under an episode payment approach, leading to a more robust evaluation of the model's effect on all types of hospitals.”

• Eligible beneficiaries who elect to receive care at these hospitals will automatically be included in the model. Patients cannot opt out of this model.

• Participant hospitals will be required to supply beneficiaries with written information regarding the design and implications of this model as well as their rights under Medicare, including their right to use their provider of choice.

• Unlike the Total Hip Arthroplasty (THA) and Total Knee Arthroplasty (TKA) 30 Day Readmission Measure, this model will include LEJR procedures that result from hip fracture treatment rather than limiting the model conditions to only elective THA and TKA.

• CMS finalized the inclusion of any lower extremity joint procedure that results in discharge from MS-DRG 469 or 470, including ankle replacement; lower leg, ankle, and thigh reattachment; and hip resurfacing procedures. CSM acknowledges that while this volume of patients is likely to be small at any one hospital, these beneficiaries may also benefit from care redesign resulting in improved care coordination and quality that are goals of this model.

Payment

• During the performance years CMS will continue paying hospitals and other providers and suppliers according to the usual Medicare FFS payment systems.

• The Repayment requirement will not begin until Performance Year 2 (Episodes that end between January 1, 2017, and December 31, 2017).

• After the completion of a performance year, the Medicare claims payments for services furnished to the beneficiary during the episode, based on claims data, will be combined to calculate an actual episode payment. The amount of this calculation, if positive, will be paid to the participant hospital. This payment will be called a reconciliation payment. If negative Medicare will require repayment of the difference between the actual episode payments and the CJR target price from a participant hospital if the CJR target price is exceeded.

• CMS will limit how much a hospital can gain or lose based on its actual episode payments relative to target prices.

Payment and Pricing: Link to Quality

Hospitals will be assigned a composite quality score annually based on their performance and improvement on the following 2 quality measures:

1. Hospital Level Risk Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TAK) measure (NQF #1550); and
2. Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure (NQF #0166)

CMS intends to publicly report this information on the Hospital Compare website. Participating hospitals who successfully submit voluntary THA/TKA patient-reported outcomes and limited risk variable data will receive additional points for their composite quality score.

Program Waivers

“CMS finalized the proposal, without modification, that waivers of Medicare program rules would apply to the care of beneficiaries who are in CJR model episodes at the time the service is furnished to the beneficiary under the waiver, even if the episode is later canceled. This policy would include circumstances where a beneficiary's care is ultimately excluded from the CJR model due to a change in the beneficiary's coverage during the episode.”

CMS proposed and finalized three specific waivers of Medicare Program Rules. “The purpose of such flexibilities would be to increase LEJR episode quality and decrease episode spending or internal costs or both of providers and suppliers that results in better, more coordinated care for beneficiaries and improved financial efficiencies for Medicare, providers, and beneficiaries.”

• Home Visits Waiver
  CMS finalized their proposal, “without modification, to waive the "incident to" direct physician supervision requirement set forth at § 410.26(b)(5), to allow a CJR beneficiary who does not qualify for home health services to receive up to 9 post-discharge visits in his or her home or place of residence any time during the episode following discharge from an anchor hospitalization.”

• Billing and Payment for Telehealth Services Waiver
  CMS finalized without modification to waive the geographic site requirement and the originating site requirement to permit telehealth visits to originate in the beneficiary’s home or place of residence. Under this waiver, telehealth could not be a substitute for in-person home health services paid under the home health prospective payment system. Services must be furnished in accordance with all other Medicare coverage and payment criteria and the facility fee paid by Medicare to an originating site would be waived if the service was originated in the beneficiary’s home.

• Skilled Nursing Facility (SNF) Waiver
  Beginning in performance year 2, the CJR model waives the SNF 3-day rule for coverage of a SNF stay following the anchor hospitalization. A condition to using this waiver is that the beneficiary must be transferred to SNFs rated 3-stars or higher for at least 7 of the previous 12 months on the CMS Nursing Home Compare website. CMS will post the list of qualified SNFs quarterly to the CMS website.

Beneficiary Choice and Beneficiary Notification

CMS finalized the proposal to require that participant hospitals notify beneficiaries of the requirements surrounding the model at the point of admission to the hospital. Additional detail to the content, timing and form of the notification specified in the final rule includes:

• Participant hospitals will be required to provide beneficiaries on admission with a general notice of the existence of the model and of certain beneficiary rights.

• “Participant hospitals must require as a condition of any sharing arrangement that the collaborators must notify beneficiaries of the existence of a sharing arrangement. We are modifying our regulations to specify that, in the case of physicians, this notification must occur at the point of the decision to proceed to surgery, or, in the case of other collaborators, prior to the furnishing of the first service provided by the collaborator that is related to the joint replacement.”

• As part of discharge planning, participant hospitals “must inform beneficiaries of all Medicare participating PAC providers/suppliers in an area but may identify those providers/suppliers that the hospital considers to be preferred…..the participant hospital must also as part of this specific second notice inform the beneficiary of providers/suppliers with whom a sharing arrangement exists.”

• Participant hospitals will be required to reference the most recently published CMS list of SNFs which qualify for the waiver of the 3-day rule.

Participant hospitals have from today until March 31, 2016 to plan for an April 1st, 2016 implementation date of this model. MMP strongly encourages participant hospitals to not only read the Final Rule but become very familiar with the information available on the CJR Web page.

Hospitals are constantly being scrutinized to ensure they are following Federal rules and regulations for billing, coding, referrals, etc. In addition to the host of Medicare claim reviewers, there are also those entities that are specifically looking for fraud and abuse, such as the Zone Program Integrity Contractors (ZPICs) and the Office of Inspector General (OIG). When the rules are unclear or the issue is not specifically addressed, some hospitals prefer to “err on the side of caution” just to make sure there is no chance of bad consequences in the future. Such has been the case with the issue of billing Medicare patients for the self-administered drugs (SADs) they receive as hospital outpatients.

Most SADs are not covered under Medicare Part B but are covered under Medicare Part D. Since most hospital pharmacies do not participate in Medicare Part D, this leaves the Medicare patient liable for the self-administered drugs they receive while a hospital outpatient. Since Medicare does not regulate the billing by hospitals of non-covered drugs to Medicare beneficiaries, their only advice for hospitals has been: “a hospital’s decision not to bill the beneficiary for non-covered drugs potentially implicates other statutory and regulatory provisions, including the prohibition on inducements to beneficiaries, section 1128A (a) (5) of the [Social Security] Act, or the anti-kickback statute, section 1128B (b) of the Act.” This statement is enough to make a hospital nervous for sure.

So until the end of October 2015, the question remained, does CMS require hospitals to bill and collect (or make good faith efforts to collect) their usual and customary charges for SADs that are not covered by Medicare Part B (Noncovered SADs) to comply with OIG’s fraud and abuse authorities? And the answer is …No.

On October 29, 2015, the OIG issued a policy statement assuring hospitals they would not be subject to administrative sanctions for discounting or waiving amounts Medicare beneficiaries may owe for self-administered drugs (SADs) they receive in outpatient settings when those drugs are not covered by Medicare Part B. This is good news for hospitals – it will relieve the time and resources for submitting bills to patients and will allow hospitals to avoid the negative patient perception that results from such bills.

The OIG does include some conditions for this exemption from their general policy*:

• This Policy Statement applies only to discounts on, or waivers of, amounts Medicare beneficiaries owe for Noncovered SADs that the beneficiaries receive for ingestion or administration in outpatient settings;
• Hospitals must uniformly apply their policies regarding discounts or waivers on Noncovered SADs (e.g., without regard to a beneficiary’s diagnosis or type of treatment);
• Hospitals must not market or advertise the discounts or waivers; and
• Hospitals must not claim the discounted or waived amounts as bad debt or otherwise shift the burden of these costs to the Medicare or Medicaid programs, other payers, or individuals.

*(Ordinarily routine discounts and costs waivers of amounts owed by Medicare beneficiaries would potentially implicate the Federal anti-kickback statute, the civil monetary penalty and exclusion laws related to kickbacks, and the Federal civil monetary penalty law prohibiting inducements to beneficiaries.)

This OIG policy statement does not require a hospital to waive the amounts owed by Medicare beneficiaries for SADs. It is still the hospital’s decision whether to waive these charges or to bill the patient. At least now, hospitals will no longer feel obligated to bill the patient to prevent getting in trouble with the government.