Knowledge Base Category -
The mission of the Office of the Inspector General (OIG) is “to protect the integrity of Department of Health & Human Services (HHS) programs as well as the health and welfare of program beneficiaries” with most of their resources focused on oversight of Medicare and Medicaid. I believe this is a noble mission as these programs provide benefits to our elderly and others in need of healthcare. On a personal note, I am getting closer to the day when I will be a Medicare beneficiary and I am even more thankful that agencies such as the OIG have worked hard over the years to protect the Medicare Trust Fund so benefits remain.
Hospitals often feel the sting of OIG investigations, especially when findings indicate a need to refund payments. The benefit of even these investigations, other than protecting the integrity of the programs, is that the reports provide guidance to all hospitals furnishing the same or similar services. The OIG also examines practices of the Medicare and Medicaid agencies themselves and the contractors who administer the programs. The OIG added several new issues to their Work Plan website in January 2019, some of which focus on outcomes from program changes, recommended actions from prior audit findings, and expansion of a prior review in a new direction.
Laboratory Tests Payment Rates
In 2018, CMS began paying for clinical laboratory services under a new system mandated by the Protecting Access to Medicare Act (PAMA) of 2014. Lab payment rates under the new system are set based on the current charges in the private health-care market (as reported to CMS by applicable reporting laboratories). PAMA also requires an annual publicly reported analysis of the top 25 laboratory tests by expenditures by the OIG. In 2019, the OIG will release an analysis of the first year of payments made under the new system for setting payment rates.
Post-Acute-Care Transfer Policy (PACT Policy)
Prior OIG audits identified issues where incorrect discharge dispositions reported on hospital inpatient claims resulted in Medicare overpayments. Under the PACT policy, select Medicare MS-DRG payments for hospital inpatient stays discharged to certain post-acute care settings are paid a prorated rate instead of the full MS-DRG payment amount that would be paid if the patient was discharged to home. Medicare has common working file (CWF) edits that should be able to identify when discharges to these post-acute care settings occur and are reported incorrectly. Then Medicare can notify the hospital to correct the discharge status on the claim so they will receive an accurate payment. The prior audits revealed that Medicare’s edits were not working properly. This follow-up audit will determine whether CMS corrected the CWF edits and ensured they are working properly.
It is important to note that it is not always a coding error that results in an incorrect discharge status code. Often the assigned discharge code matches the documentation in the medical record, but circumstances change at or shortly after discharge that result in the patient going somewhere other than home. This is why it is important to have processes in place to follow up on discharged Medicare patients. For more information on the PACT policy and suggestions on how best to handle this, please see this September 2018 Wednesday@One PACT Article.
Outlier Payments and Device Credit Policy
For years and throughout many different audits, the OIG has found problems with hospitals not reporting appropriately under the device credit policy. The device credit policy requires hospitals to report information on the claim notifying Medicare when they have received certain devices at no or significantly reduced cost. Medicare then reduces the outpatient or inpatient payment amount by the device credit amount reported. This newly announced Work Plan item is a twist on an old issue. For no-cost devices, Medicare instructs providers to report the device line item with a minimal charge (such as $0 or $1), but there is no guidance from Medicare on the charges reported for partial-credit devices. The new OIG audit will look for overstated Medicare charges on outpatient claims with a reported medical device credit that have an outlier payment. Specifically, they would look for elevated charge amounts, such as too large an amount on the partially credited device or device procedure that results in an inappropriate outlier payment. The OIG “will determine whether Medicare payments for replaced medical devices and their respective outlier payments were made in accordance with Medicare requirements.”
For this last issue on the device credit policy, hospitals may want to assess what charges they report for partially credited devices and make sure the charge amounts are appropriate and would not lead to inappropriate outlier payments. Also, this may be a good time to review your entire procedure for complying with the device credit policy, which is a difficult endeavor. The other two new audit issues are more reviews of CMS actions than hospital actions, but again a good time to review your internal policies for determining and reporting discharge status.
There is nothing hospitals can do about the new laboratory prices. It is a good time to remind hospitals that for 2019, CMS changed the definition of an applicable reporting laboratory required to report lab private-payor data to Medicare. This was done to include more hospital laboratories in the reporting. Under the new definition, hospital outreach laboratories that have over $12,500 of Medicare lab revenues in a six-month period under the 14x type of bill (non-patients) are required to report. You can find more information about PAMA and applicable reporting labs at Medicare Lab PAMA webpage.
At this time of year, do you try to get your children or grandchildren to behave better by telling them “Santa Claus is watching?” Santa is watching the kids, but for medical coders, Medicare is watching and not just at Christmas time.
Medicare medical review activity is often the subject of the articles in this newsletter. A lot of the audits and their associated denials focus on the medical necessity of services and documentation to support that. But coders and Medicare reviewers also know that inaccurate coding can often result in improper payments for Medicare services. In November, the Office of Inspector General (OIG) added a new topic to their Work Plan that will examine hospital inpatient coding - Assessing Inpatient Hospital Billing for Medicare Beneficiaries. Here is the OIG’s description of the new Work Plan item:
“In 2016, hospitals billed Medicare $114 billion for inpatient hospital stays, accounting for 17 percent of all Medicare payments. The Centers for Medicare & Medicaid Services and the Office of Inspector General have identified problems with upcoding in hospital billing: the practice of mis- or over-coding to increase payment. We will conduct a two-part study to assess inpatient hospital billing. The first part will analyze Medicare claims data to provide landscape information about hospital billing. We will determine how inpatient hospital billing has changed over time and describe how inpatient billing varied among hospitals. We will then use the results of this analysis to target certain hospitals or codes for a medical review to determine the extent to which the hospitals billed incorrect codes.”
Although this description uses the phrase “the practice of mis- or over-coding to increase payment,” healthcare providers and coders know that usually increased payment from coding errors is just that – an error, without intent to defraud anyone. That is why hospitals need to make sure their coders are knowledgeable, well-trained, and receive appropriate on-going education. They also need to have processes in place for over-sight such as routine internal and/or external audits of coding.
The OIG is not the only Medicare reviewer currently looking at hospital inpatient coding accuracy. All four of the Recovery Auditors (RACs) have an approved issue for MS-DRG Validation audits:
“MS-DRG Coding requires that diagnostic and procedural information and the discharge status of the beneficiary, as coded and reported by the hospital on its claim, matches both the attending physician description and the information contained in the beneficiary's medical record. Reviewers will validate MS-DRGs for principal and secondary diagnosis and procedures affecting or potentially affecting the MS-DRG assignment.”
Medicare Administrative Contractors (MACs) Novitas (Jurisdictions H and L) and WPS (J5 and J8) also have DRG Validation listed as one of their Targeted Probe and Educate (TPE) medical review topics. Palmetto JJ and JM have TPE DRG Validation (coding) reviews for Heart Failure and Shock with MCC or CC (MS-DRGs 291 and 292). The guidelines for inpatient diagnosis coding are found in the ICD-10-CM Official Guidelines for Coding and Reporting and for procedure coding in the ICD-10-PCS Official Guidelines for Coding and Reporting. On-going guidance is provided through updates in the American Hospital Association (AHA)’s Coding Clinic.
Medicare reviewers also examine coding accuracy for outpatient claims. For outpatient diagnosis coding, coders follow the guidance of Diagnostic Coding and Reporting Guidelines for Outpatient Services. Since outpatient claims are paid based on procedure codes, this area is also ripe for audit. Specifically, all four RACs have APC Validation approved audits – “APC coding requires that procedural information, as coded and reported by the hospital on its claim, match both the attending physician description and the information contained in the beneficiary's medical record. Reviewers will validate the APC by reviewing the procedures affecting or potentially affecting the APC assignment.”
Outpatient procedures are reported with CPT and HCPCS codes. The American Medical Association (AMA) CPT Manual, CPT Assistant and the AHA’s Coding Clinic for HCPCS provide guidance on appropriate CPT coding. CMS creates and maintains alpha-numeric HCPCS codes and often provides guidance on their usage through transmittals and manual instructions. In addition, CMS follows the guidance of the National Correct Coding Initiative (NCCI) so coders also have to be aware of these instructions. NCCI instructions may or may not be consistent with CPT instructions making the coder’s job even harder. There are numerous audit issues that look at individual coding requirements from CPT and/or NCCI as evidenced by these RAC issues:
- Shoulder arthroscopy procedures include a limited debridement (e.g., CPT code 29822).
- Reporting multiple cataract removal codes for the same eye.
- Coding right heart catheterization with an endomyocardial biopsy.
- Add-on codes reported without primary code.
- A diagnostic endoscopy HCPCS/CPT code shall not be reported with a surgical endoscopy code. (recently added RAC issue)
As you can see, coders have a lot to keep up with to ensure accurate coding. Santa may be watching all the children to see if they are naughty or nice, but Medicare is watching coders to see if they are coding correctly.
If you are a frequent reader of our newsletter, you often see the acronyms “OPPS” and “IPPS.” These refer respectively to the outpatient and inpatient prospective payment systems. Medicare describes a Prospective Payment System (PPS) as “a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, diagnosis-related groups (DRGs) for inpatient hospital services).” This means for a particular DRG, a hospital always receives the same payment. Well, that is, until they don’t. Under Medicare’s transfer policies, DRG payments are prorated (reduced) when a patient transfers to another hospital or to select post-acute care settings. The specific regulations regarding transfer policies can be found in Chapter 4 of the Medicare Claims Processing Manual, Section 40.2.4.
The transfer policies bring in yet another acronym - the post-acute care transfer (PACT) policy. In recent weeks, two issues have come up related to the PACT policy. Before discussing these issues, let’s do a quick review of the policy.
- PACT policy only applies to certain MS-DRGs. The list of DRGs to which the policy applies is updated annually as Table 5 of the IPPS Final Rule.
- PACT policy only applies when the patient is transferred to certain post-acute care settings:
- Inpatient rehab facilities and units (discharge status code 62)
- Long term care hospitals (code 63)
- Psychiatric hospitals and units (code 65)
- Children’s and Cancer hospitals (code 05)
- Skilled nursing facilities (code 03)
- Home with a home health plan of care that begins within 3 days (code 06)
- Medicare identifies transfers to the affected settings by the discharge status code on the claim. If Medicare receives a claim from a post-acute care provider for days immediately after discharge, they will ask the transferring hospital to adjust their discharge status code as needed.
- Payment is only reduced if a patient stays fewer days than expected in the first (transferring) hospital for a particular DRG (the geometric mean length of stay or GMLOS).
- Payment is reduced to the transferring hospital. A per diem rate is calculated by dividing the MS-DRG rate by the GMLOS. The transferring hospital is paid 2 x the per diem rate for the first day and the per diem rate for subsequent days up to the full MS-DRG payment.
- There are special pay MS-DRGs (also noted in Table 5) that are paid differently, with a higher payment percentage for the first day of hospitalization.
- Transfer cases are eligible for outlier payments
Also see MLN Matters Article SE1411 for more information about discharge status and Medicare transfer policies.
The first new PACT issue is that the 2019 IPPS Final Rule added discharges to hospice to the PACT policy. This change was made in accordance with amendments to the Social Security Act by the Bipartisan Budget Act of 2018. The new law requires a discharge to hospice care provided by a hospice program to be a qualified discharge under PACT. This means qualifying DRGs with a Patient Discharge Status code of 50 (Discharged/Transferred to Hospice—Routine or Continuous Home Care) or 51 (Discharged/Transferred to Hospice, General Inpatient Care or Inpatient Respite) are subject to the post-acute care transfer policy effective for discharges occurring on or after October 1, 2018.
The second issue related to the PACT policy is a new item added to the August update of the Office of Inspector General (OIG) Work Plan:
“Hospitals' Compliance with Medicare's Transfer Policy With the Resumption of Home Health Services and the Use of Condition Codes
Medicare payments to acute care hospitals for inpatient stays under Medicare Part A are made on the basis of prospectively set rates. Normally, Medicare pays a hospital discharging a beneficiary the full amount for the corresponding diagnosis-related group (DRG). In contrast, a hospital that transfers a beneficiary to another facility or to home health services is paid a graduated per diem rate, not to exceed the full DRG payment. When transferring a patient to home health services, the hospital can apply specific condition codes to the claim and receive the full DRG payment. The hospital is responsible for coding the bill on the basis of its discharge plan for the patient or adjusting the claim if it finds out that the patient received postacute care after the discharge. We will determine whether Medicare appropriately paid hospitals' inpatient claims subject to the postacute care transfer policy when (1) patients resumed home health services after discharge or (2) hospitals applied condition codes to claims to receive a full DRG payment.”
The PACT policy applies when patients are discharged to “home under a written plan of care for the provision of home health services from a home health agency and those services occur within 3 days after the date of discharge - Patient Discharge Status Code 06 (or 86 when an Acute Care Hospital Inpatient Readmission is planned)” with some exceptions. One exception is when the home health services are not related to the reason for the inpatient admission hospital stay. In this case, condition code 42 is reported on the claim with a discharge status code 06, and the hospital will receive full payment based on the MS-DRG and not a per diem payment. This may occur when there is a resumption of home care services the patient was receiving before hospital admission, if the reason for the home health services is not related to the reason for hospital care.
A hospital can also receive full payment if the home health services do not begin within 3 days of the inpatient discharge. If home care was started more than three days after discharge from the hospital, the hospital would report condition code 43 on the claim. Again, in this case, the hospital will receive full payment based on the MS-DRG and not a per diem payment.
Hospitals should definitely be reporting these condition codes when applicable so as to receive appropriate Medicare payments. But they also need to be sure they are using the codes correctly and only when the required conditions apply. The tricky part about discharge status coding is that the hospital staff may not always know what actually happens when the patient leaves the hospital. It is a good practice to have someone verify with the patient if and exactly what and when post-discharge care occurred. For example, if home health services were planned to begin on day 4 after discharge, but actually began on day 3, it would not be appropriate to report condition code 43. Or the reverse could happen – home health planned for day 2 but does not begin until day 4 after discharge, in which case reporting condition code 43 could result in a higher, appropriate payment.
Another key is communication between case management/discharge planners, coders, and the billing office. Case management documentation is usually the most reliable source for post-discharge plans. If something changes after discharge, and the case managers have followed up to know that, they need to amend documentation and inform the coders and billers if the account has already been coded and/or billed. One last recommendation is a compliance review of discharge status every now and then. This was a huge issue when I started in hospital compliance many years ago and as you can see by the new OIG Work Plan item, it continues to be so. Here is a list of the tips noted above plus a few more to ensure accurate discharge status coding, billing, and appropriate payments:
- Make sure coders know and understand correct use of the discharge status code,
- Make sure coders know where in the record to find the most accurate information concerning discharge status and whom to ask if they have questions,
- Have a system in place to follow up after discharge to verify what post-discharge care the patient actually received,
- Have processes for clear and timely communication between case management, coders and billers concerning discharge status,
- Have a procedure to handle Medicare requests to change discharge status (this can occur when Medicare receives claims from other hospitals or post-acute care providers for services immediately following a hospital discharge), and
- Perform periodic audits of discharge status.
Following these recommendations may prevent the OIG from NYTTW (nailing you to the wall) should your claims be audited.
Some bundles are great – a bundle may refer to a “bundle” of money; you can have bundles of fun; or expecting parents look forward to their little bundle of joy. Other bundles – not so great. One such bundle that is not a bundle of fun is the bundled payment Medicare makes for Intensity-Modulated Radiation Therapy (IMRT) planning services. Payment bundles are fairly common in the Medicare world, but the onus is on providers to understand appropriate billing rules so they are not overpaid for bundled services. A recent Office of Inspector General (OIG) report found errors in IMRT planning billing that resulted in over $25 million in Medicare overpayments for the audit period (2013-2015). The report recommended education for providers on billing IMRT planning services correctly, and edits in Medicare’s billing system to prevent overpayments.
IMRT uses advanced computer programs to plan and deliver radiation to difficult-to-reach tumors with high precision while reducing exposure to surrounding healthy tissue. IMRT includes planning and delivery services. IMRT planning is a multistep process in which imaging, calculations, and simulations are performed to develop an IMRT treatment plan. Radiation is then delivered to a patient’s tumor at the various intensity levels prescribed in the IMRT treatment plan.
The basic rule for the bundling of IMRT planning services is found in section 200.3.1 of Chapter 4 of the Medicare Claims Processing:
- “Payment for the services identified by CPT codes 77014, 77280, 77285, 77290, 77295, 77306 through 77321, 77331, and 77370 are included in the APC payment for CPT code 77301 (IMRT planning). These codes should not be reported in addition to CPT code 77301 when provided prior to or as part of the development of the IMRT plan. In addition, CPT codes 77280-77290 (simulation-aided field settings) should not be reported for verification of the treatment field during a course of IMRT.”
As evidenced by the OIG’s recommendations, the primary reasons for overpayments were that hospitals were unfamiliar with or misinterpreted CMS guidance and claim processing edits did not prevent overpayments. One of the biggest challenges for both hospitals and CMS is the bundling applies even to services billed on a different date of service than the comprehensive IMRT planning code (CPT 77301). CMS’s NCCI procedure-to-procedure edits applicable to IMRT planning services only applied to planning services billed on the same date of service as the billing of CPT code 77301 for the bundled payment. This application of bundling to different dates of service may also have caused some confusion for hospitals. The services in the OIG sample were billed on a different date of service from the IMRT planning CPT code 77301.
In analyzing payment data, the OIG noted that complex simulations billed using CPT code 77290 made up approximately 84% of the potential overpayments so that is the code they reviewed. They found that “In each case, a complex simulation was billed with CPT code 77290 on a different date of service from the IMRT planning code (i.e., up to 14 days before CPT code 77301 was billed). However, both services were performed for the same treatment site (e.g., the prostate). According to the independent medical review contractor, for each sampled line item, the complex simulation was performed as a part of the beneficiary’s overall IMRT treatment planning and therefore should not have been billed separately.”
The Claims Processing Manual guidance quoted above was updated after the OIG audit period to clarify that complex simulations are included in the APC payment for IMRT planning services “when provided prior to or as part of the development of the IMRT plan” (emphasis added). That was a step in the right direction but the OIG further recommended that CMS:
- Implement an edit to prevent improper payments for IMRT planning services that are billed before (e.g., up to 14 days before) IMRT planning CPT code 77301 is billed, and
- Work with the Medicare contractors to educate hospitals on properly billing Medicare for IMRT planning services.
Hospitals need to evaluate their billing practices for IMRT services now and verify they are not inappropriately billing separately for services included in IMRT planning. After all, a little OIG audit would not be a bundle of joy.
The relationship between physicians and hospitals could be described as a symbiotic partnership, that is, a mutually beneficial relationship between different groups. Physicians need hospitals to provide the resources and personnel to care for their patients and hospitals need physicians to refer patients to the hospitals for such care when medically necessary. Physicians direct a patient’s care and decide when and what services are necessary. It also often falls on the physicians’ documentation to support that services and care provided and paid for by Medicare meet the requirements of being medically necessary. Unfortunately for hospitals, it is often their payment at risk if a physician provides a service in the hospital setting that is not medically necessary or fails to document sufficiently to support the medical necessity of the service. Because directing the patient’s care is the physician’s responsibility, many Medicare education resources about compliance are directed to the physicians. Likewise, hospitals must work with physicians to ensure services are appropriately provided and documented. Such is the case for ophthalmology services.
Though a number of ophthalmology services determined by the Office of Inspector General (OIG) to be at risk of “questionable billing” are more likely to be performed in a physician office setting, there are also services that could be performed in a hospital setting. Hospitals need to be aware of the concerns and requirements for these types of ophthalmology services.
A December 2014 OIG audit found that Medicare paid $22 million for ophthalmology claims in 2012 that were potentially inappropriate, according to national and local coverage requirements. The three eye conditions for which Medicare pays the most each year are cataracts, wet age-related macular degeneration (wet AMD), and glaucoma. The concerns for inappropriate payments related to these conditions are:
- Medicare has a national requirement stating that it will not routinely cover more than one comprehensive eye examination and scan for beneficiaries whose only diagnosis was cataracts.
- It is medically impossible to perform more than one cataract surgery on the same eye because an eye’s natural lens will never grow back.
- Submitting disproportionately more claims for complex than standard cataract surgery.
- Wet AMD
- Some Medicare Administrative Contractors (MACs) have local coverage determinations (LCDs) limiting the number of wet AMD diagnostic or evaluation services for which a provider may bill annually.
- Medicare paid providers substantially more for treating wet AMD with the expensive biologic Lucentis instead of other biologic treatments that are similarly effective.
- Some MACs have LCDs specifying that Lucentis injections are not covered more frequently than once per month per eye. These guidelines are in keeping with the Food and Drug Administration (FDA)-approved dosing guidelines that Lucentis injections should be administered between once monthly and once every 3 months.
- Medicare has a national requirement that it covers each step of ocular photodynamic therapy only when both steps are performed on the same date. These steps are billed separately, but they must be performed within 30 minutes of one another.
- A national requirement states that Medicare covers either of two types of screening services once every 12 months for beneficiaries at high risk for glaucoma.
A September 2015 follow up OIG report found Medicare paid $171 million for services associated with the measures on which certain providers demonstrated questionable billing.
Prior to these OIG reports, the Recovery Auditors identified overpayments associated to outpatient hospital providers billing more than one unit of cataract removal for the same eye for the same date of service. CMS published MLN Special Edition Article SE1319 in response to these findings. It reminded providers,
“According to the “National Correct Coding Initiative (NCCI) Policy Manual for Medicare Services,” Chapter 8, Section D #3, cataract removal codes are mutually exclusive of each other and can only be billed once for the same eye. Because CPT codes describing cataract extraction (66830-66984) are mutually exclusive of one another, providers may not report multiple codes for the same eye even if more than one technique is used or more than one code could be applicable. Only one code from this CPT code range may be reported for an eye.”
The NCCI Policy Manual chapter and section noted above addresses 25 other correct coding guidelines for ophthalmology services of which providers should be aware.
For another ophthalmology service, CMS clarified in a 2005 ruling that a Medicare beneficiary may request insertion of a presbyopia-correcting intraocular lenses (IOLs) in place of a conventional IOL following cataract surgery. However, if the Medicare patient selects a presbyopia-correcting IOL, he/she is responsible for payment of that portion of the charge for the presbyopia-correcting IOL and associated services that exceed the charge for insertion of a conventional IOL following cataract surgery. The MLN Article describing this ruling included payment policies for facilities and physicians. The policy relevant to hospital services states:
- For an IOL inserted following removal of a cataract in a hospital, on either an outpatient or inpatient basis, that is paid under the hospital outpatient prospective payment system (OPPS) or the inpatient prospective payment system (IPPS), respectively;
- Payment for the IOL is packaged into the payment for the surgical cataract extraction/lens replacement procedure. Medicare does not make separate payment to the hospital for an IOL inserted following removal of a cataract.
- For a presbyopia-correcting IOL inserted following removal of a cataract in a hospital, on either an outpatient or inpatient basis, that is paid under the OPPS or the IPPS, respectively;
- The facility will bill for removal of a cataract with insertion of a conventional IOL, regardless of
- whether a conventional or presbyopia-correcting IOL is inserted.
- When a beneficiary receives a presbyopia-correcting IOL following removal of a cataract, hospitals and ASCs shall report the same CPT code that is used to report removal of a cataract with insertion of a conventional IOL.
- There is no Medicare benefit category that allows payment of facility charges for services and supplies required to insert and adjust a presbyopia-correcting IOL following removal of a cataract that exceed the facility charges for services and supplies required for the insertion and adjustment of a conventional IOL.
- There is no Medicare benefit category that allows payment of facility charges for subsequent treatments, services and supplies required to examine and monitor the beneficiary who receives a presbyopia-correcting IOL following removal of a cataract that exceed the facility charges for subsequent treatments, services and supplies required to examine and monitor a beneficiary after cataract surgery followed by insertion of a conventional IOL.
The article also addresses coding requirements, beneficiary liability and notification requirements for these services.
Both hospitals and physicians must be aware of and follow the Medicare requirements for providing and billing ophthalmology services. Working together to “get it right” keeps the relationship between physicians and hospitals mutually beneficial for both parties and for Medicare.
“No payment may be made under (Medicare) part A or part B for any expenses incurred for items or services — which, …, are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member, …”Social Security Act 1862(a)(1)(A)
If your work involves knowledge of Medicare requirements, you are likely very familiar with the above statement that is the basis for the concept of “medical necessity” for covered healthcare services. But do you actually consider the implications of this statement when billing Medicare for services?
It appears a large number of providers did not assess their services against this statement before billing Medicare for specimen validity testing as a recent Office of Inspector General (OIG) report found $66.3 million in overpayments for this type of testing. Specimen validity testing is used to analyze urine specimens prior to drug testing to determine whether the specimens have been adulterated or tampered with. Although necessary to assure the legitimacy of the drug testing, these tests themselves are not used to provide a diagnosis or treatment to a patient.
As the OIG report explains, the requirements for laboratory testing are that tests meet the requirement for medical necessity as described above and more specifically, to be covered under Medicare Part B, clinical laboratory tests must:
- Be ordered by a physician who is treating a beneficiary for a specific medical problem;
- Be related to the patient’s illness, injury, symptom or complaint; and
- The results must be used in the management of the patient’s problem.
The overpayments occurred because the same tests used for specimen validity testing may be medically necessary if used to diagnose certain conditions. “For example, tests for urinary pH and specific gravity may be performed to diagnose diseases of the kidney and urinary system. If these tests are used for diagnosis, treatment, or management, they may be Medicare-covered services. However, when used for the purpose of determining whether a specimen is adulterated, the test results are not being used to manage a beneficiary’s specific medical problem. In these cases, specimen validity testing is not a separately billable Medicare-covered service.”
Providers should have known this because, over the years, Medicare and their contractors have addressed this issue numerous times. Almost all the Medicare Administrative Contractors (MACs) have a Local Coverage Determination (LCD) for drug testing that includes direction that tests to validate urine specimens are not separately billable. The first such LCD instruction was in 2010 and in 2015 the Medicare National Correct Coding Initiative (NCCI) manual included the statement, “Providers performing validity testing on urine specimens utilized for drug testing should not separately bill the validity testing.” Beginning in 2016, new HCPCS codes for urine drug testing include specimen validity testing in their code descriptions and payments, regardless of whether specimen validity testing is performed or not. And in April 2016, NCCI edits were created to prevent payment for the type of lab tests performed for validity testing when billed on the same date of service as a urine drug test unless modified by the provider to indicate a “separate and distinct” service.
Although the number of overpayments dramatically decreased from 2014 to 2016, the OIG thinks further actions by CMS could reduce the risk of estimated overpayments of $12,146,760 over a 5-year period. The OIG recommends CMS “strengthen its system edits to prevent improper payments for specimen validity tests and instruct the Medicare contractors to educate providers on properly billing for specimen validity and urine drug tests.” Also, be warned that CMS may be recouping the overpayments identified in the OIG audit.
Now is a good time to investigate your billing practices for specimen validity testing with the understanding that if you have been separately billing these services, you owe the government some money back. Going forward, be sure to first apply the Social Security Act standard in determining whether to bill for services – i.e., to be paid under Medicare, a service must be reasonable and necessary for the diagnosis or treatment of illness or injury. After that, there are a lot more coverage rules that need to be considered, but it is a good place to start.
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