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Case Mix Index

Question:

What is Case Mix Index (CMI)?

Answer:

CMI is the sum of the relative weights of all DRGs assigned to Medicare inpatient cases, billed by the hospital in a given time-frame, divided by the total number of cases.

Formula for CMI:Total Relative Weights ÷ Total DRGs Coded = CMI

CMI:

•Measures the cost or resources needed to treat patients

•Calculated from billed data

•Reveals how sick your patients really are

•The higher the CMI the more complex the patients are, indicating that they have utilized costly and/or complex resources

How many times have you heard someone say that complete and accurate medical record documentation and quality improvement efforts are vitally important because they impact what is being publically reported about your hospital? Well, it’s true. But who exactly is looking at you?

The Centers for Medicare and Medicaid Services (CMS) has provided an educational tool for hospitals titled Contractor Entities At A Glance: Who May Contact You About Specific Centers for Medicare & Medicaid Services (CMS)

• Program Integrity Contractors (i.e. Recovery Auditors, Zone Program Integrity Contractors (ZPICs), Comprehensive Error Rate Testing Review Contractor (CERT RC) and Medicaid Integrity Contractors (MICs)),
• Quality Contractors (i.e. Quality Improvement Organizations (QIOs)),
• Specialized Work Contractors (i.e. Medicare Coordination of Benefits Contractor (COBC)),
• Claims Administrative Contractors (i.e. MACs, DME MACs); and
• Appeals Contractors and Entities (i.e. Qualified Independent Contractors (QIC) and Administrative Law Judge (ALJ).

While this is a great tool for hospitals to understand who may contact them, what sources are available for the public to use to select a physician, a hospital, a nursing home, etc.?

In June of 2011 the Robert Wood Johnson Foundation launched a

National Directory that is a compilation of state, federal, hospital and health plan quality data from across the country. The Foundation indicates that “our directory provides access to publicly available, free reports with information about the process of delivery care (for example, did patients get all the recommended care?), actual outcome for patients (for example, did patients die or have to return to the hospital?), what patients said in surveys about their experience with physicians or hospitals, and/or cost.” In the 16 months since the Directory was launched the list of public reports has increased from 224 separate sites to 258.

Below is a much smaller list of sites compiled by MMP, Inc. to provide you with an idea of who is publicly reporting data about your hospital and information about each report.

We believe that focused efforts on complete and accurate medical record documentation, quality improvements efforts and understanding what is being publicly reported about your efforts are positive steps towards clients embracing the shift in health care away from the traditional Fee-for-Service model towards payment for Quality Care as evidenced by current initiatives such as the 30 Day Readmission Reduction Program, Value-Based Purchasing and Accountable Care Organizations.

Clarification of Thoracentesis CPT Codes 32421 and 32422

Question:

When reporting CPT code 32422 “thoracentesis with insertion of tube including water seal when performed”, is this referring to a chest tube that is left in place after the thoracentesis is completed?

Answer:

The key to answering this question is to look back at the November 2003 CPT Assistant addressing coding guidelines for CPT codes 32000 and 32002. (In 2008, these CPT codes were revised to 32421 and 32422, respectively. The code descriptions remained the same, but the codes were renumbered in CPT.)

In the article, it is noted that CPT code 32002 (now 32422) “thoracentesis with insertion of tube including water seal when performed” represents a procedure where tube is removed at the end of the thoracentesis.

Therefore, 32422 would not be appropriate for reporting a thoracentesis where a chest tube was left in after the procedure. This information is supported by a 2009 SIR article and a 2007 article from Chest Journal.

In most of the procedure reports seen by MMP, Inc., the physician indicates a thoracentesis was performed with drainage occurring through a “catheter” – with the catheter removed at the end of the procedure. CPT code 32422 is the appropriate CPT code for this procedure.

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Question:

When should CPT code 32421 be used (thoracentesis, puncture of pleural cavity for aspiration)?

Answer:

CPT code 32421 describes a procedure where a needle is inserted and a smaller amount of fluid is aspirated, usually for diagnostic purposes (whereas CPT code 32422 is for therapeutic purposes). Again, in 32421, the needle is removed at the end of the aspiration procedure. SIR 2009 indicates the difference between CPT code 32421 and 32422 is -32421 is thoracentesis performed with a needle, usually for diagnostic purposes to obtain pleural fluid for analysis and diagnosis

-32422 is thoracentesis performed via catheter, usually for therapeutic purposes of relieving a pleural effusion. Pleural fluid may also be submitted for analysis.

Edits for outpatient ESRD dialysis HCPCS code G0257 went into effect October 1, 2012. See MLN Matters Article MM7762. Claims will be returned if G0257 is reported on a Type of Bill (TOB) other than 13x or 85x.

• HCPCS code G0257 should only be reported for dialysis performed on hospital outpatients who have ESRD (TOB 13X or 85X) that meet the criteria as described in the Medicare Claims Processing manual, chapter 4, section 200.2.
• CPT code 90935 is reported for:
• Part B services (TOB 12x) for dialysis for hospital inpatients (with or without ESRD) who do not have Part A coverage, and for
• hemodialysis performed on non-ESRD hospital outpatients (TOB 13x or 85x).

The OIG “is an independent and objective oversight organization that promotes economy, and effectiveness in the programs and operations of the U.S. Department of Health and Human Services (HHS or the Department).” In 1997 the Health Care Fraud and Abuse Control (HCFAC) was created. Since HCFAC’s creation “approximately 80 percent of OIG’s annual funding and workload have been dedicated exclusively to oversight and enforcement activities with respect to health care fraud and abuse in the Medicare and Medicaid Programs” (Source: Fiscal Year 2013 Office of Inspector General Justification for Estimates for Appropriations Committees)

Did you know?

• The OIG has been on the forefront of the Nation’s fight against waste, fraud and abuse in Medicare, Medicare and over 300 other HHS programs since 1976?
• In 2011 the OIG launched a “Most Wanted Fugitives” list seeking over 170 fugitives on charges for healthcare fraud and abuse.
• In 2011 the OIG announced that during the first half of 2007 Medicare spent $95 million on claims for power wheelchairs that were either medically unnecessary or there was insufficient documentation to determine medical necessity.
• The OIG has a Compliance 101 web page offering “free educational resources to help health care providers,practitioners, and suppliers understand the health care fraud and abuse laws and the consequences of violating them.”
• When settling Federal health care program investigations the OIG will negotiate Corporate Integrity Agreements (CIA) with providers and in exchange the OIG agrees to not seek provider exclusion from participation in Medicare, Medicaid, or other Federal health care programs.
• In 2012 the OIG introduced a “Most Wanted” list of Deadbeat Parents
• In the Semiannual Report to Congress for October 1, 2011 – March 31, 2012 the Inspector General, Daniel R. Levinson indicated that:
• “Over the past 6 months, OIG has stepped up our focus on data analytics as a critical tool for enhanced fraud, waste, and abuse activities.”
• “OIG’s data warehouse is a key component of our strategic use of information technologies. Among other things, the warehouse integrates data from Medicare Parts A, B, and D so we can develop a more comprehensive picture of beneficiaries’ histories of medical care and providers’ billing patterns.”
• In the first half of Fiscal Year 2012 the OIG reported expected recoveries of about $483.1 million in audit receivables.

Is your Hospital prepared for an On-Site OIG Compliance Audit?

Medicare compliance reviews are listed in the 2012 OIG Work Plan as a new aspect of the plan under “Medicare Inpatient and Outpatient Payments to Acute Care Hospitals.” The first of these audits began in 2011 and have continued in earnest in 2012. The OIG is required to make all hospital audit results publically available at http://oig.hhs.gov. The OIG has indicated that the objective of these audits is “to determine whether the Hospital complied with Medicare requirements for billing inpatient and outpatient services on selected claims.” The good news is that it is possible that the OIG will complete a review and make no recommendations as was the case with the review of Regional Medical Center at Memphis for calendar years 2009 and 2010. The bad news is that they can also find just over $1 million in overpayments as was the case in the review of Boston Medical Center for calendar years 2009 and 2010. Common items in all of these audit reports include:

OIG Examples of Risk Areas:

• Inpatient short stays,
• Inpatient same-day discharges and readmissions,
• Inpatient claims billed with high severity level DRG codes,
• Inpatient and outpatient claims paid in excess of charges,
• Inpatient hospital-acquired conditions and present on admission indicator reporting,
• Inpatient and outpatient manufacturer credits for replaced medical devices,
• Outpatient claims billed for Lupron injections,
• Outpatient claims billed with evaluation and management (E&M) services,
• Outpatient claims billed with modifiers, and
• Outpatient claims billed on the date of an inpatient admission.

OIG Audit Methodology:

• Review applicable Federal laws, regulations and guidance,
• Extract Hospital inpatient and outpatient paid claim data from CMS’s National Claims History File for the time period of the review,
• Use computer matching, data mining, and analysis techniques to identify claims potentially at risk for noncompliance with selected Medicare billing requirements,
• Select a judgmental sample for detailed review,
• Review available data from CMS’s Common Working File for sampled claims to determine whether or not the claims had been cancelled or adjusted,
• Review itemized bills and medical record documentation provided by the Hospital to support the paid claims,
• Request the Hospital conduct its own review of the sampled claims to determine whether or not the services were billed correctly,
• Utilize Medicare contractor medical review staff to determine whether a limited selection for sampled claims met medical necessity requirements,
• Review Hospital procedure for assigning HCPCS codes and submitting Medicare claims,
• Discuss incorrectly billed claims with Hospital personnel to determine the underlying causes of noncompliance with Medicare requirements,
• Calculate the correct payments for those claims requiring adjustment; and
• Discuss the results of the review with Hospital officials.

Billing Errors Associated with Inpatient Claims:

• Billing Medicare Part A for stays that should have been billed as outpatient or outpatient with observation services.
• Billing Medicare separately for related discharges and readmissions within the same day.
• Billing Medicare for incorrect DRG codes.
• Hospitals reporting medical device credit for a replaced device from a manufacturer without adjusting its inpatient claims with the proper value and condition codes to reduce payment as required.

Billing Errors Associated with Outpatient Claims:

• Drug injections
• Billing incorrect number of units of service
• Billing incorrect HCPCS codes

• Billing Medicare for E&M services that arepart of the usual preoperative and postoperative care associated with aprocedure.
• Incorrect use of the -59 and -91 Modifiers
• Billing for services without sufficient documentation in the medical record to support the service.

OIG Recommendations:

• Refund to the Medicare contractor identified overpayments, and
• Strengthen controls to ensure full compliance with Medicare requirements.

At the end of each audit is an Appendix that include the Hospital’s comments regarding the report.

Next steps for Hospitals:

• Review your PEPPER Reports for any outlier areasspecific to Inpatient Short Stays and Medical and Surgical DRGs with CC andMCC.
• Consider Emergency Department Case Management to assist Physicians 7 days a week.
• Provide Coding staff with continuing education opportunities and the resources (i.e. Coding Clinic and the most current ICD Official Guidelines for Coding and Reporting) needed to remain current in
  coding updates and revisions. This will be especially important with the transition to ICD-10-CM/PCS on October 1, 2014.
• Verify that outpatient drugs are billed with the correct HCPCS codes and units.
• Educate staff on the correct application of modifiers.
• Work with physicians and ancillary departments to obtain complete documentation to support the services provided and billed.

I remember from my days in Hospital Compliance that one of the most difficult issues was billing the correct drug units. This evidently continues to be a challenge for facilities based on the ongoing reminders from CMS and the numerous OIG audits that find errors in the billing of drug units.

Some of the issues that make this such a challenging area are:

• Drug HCPCS codes must be billed based on the amount, such as milligrams (mgs) in the HCPCS code description, not on standard usage or packaging amounts.
• Most hospitals accomplish this by using a “multiplier” in their charge description master (CDM), which presents the challenges of making sure all drugs that need a multiplier have one, there are no errors or typos in the multiplier amounts, and the multipliers are kept updated with code description changes.
• CMS often changes drug HCPCS codes and/or the HCPCS description. This is especiallychallenging when the amount in the description changes.
• Medical record documentation should include the dosage amount in the physician’s order and in the administration record.
• If the dose administered does not match the dosage amount the physician ordered, a corrected order should be obtained from the ordering physician.
• If the drug dose is based on the patient’s weight, there should be documentation in the medical record of the patient’s weight.
• Medicare does not allow providers to bill for wastage of multi-dose vials.
• When billing for wastage associated with single-dose vials, there should be documentation in the medical record of the dose given and the amount wasted.
• Medicare is applying Medically Unlikely Edits (MUEs) to a number of drug quantities. Although there are no published MUEs for drugs (HCPCS “J” codes), it is the understanding of MMP, Inc. that the quantity limitations are based on manufacturer package inserts. Providers should carefully review Medicare remittances to determine which drugs are being denied for MUEs and the likely MUE quantity.

Recent OIG audits have identified some drugs that have had repeated billing errors by multiple facilities. The first has to do with the billing of the drug Herceptin (J9355- Injection, trastuzumab, 10 mg). It is the understanding of MMP, Inc. that Herceptin is only available in a multi-dose vial of 440 mg (44 units). There have been problems with a number of facilities billing for entire vials of Herceptin instead of the dosage administered to the patient. Since Herceptin is a multi-dose vial, it is not appropriate to bill for drug wastage. MMP, Inc. recommends that providers review any claims with Herceptin units in multiples of 44 (such as 44, 88, etc.) and verify that the units billed match the dosage administered to the patient. Note that in addition to the OIG audits, this issue is also targeted by Recovery Auditors (RAs) and Medicare Administrative Contractor (MAC) pre-payment audits.

Another interesting drug issue has to do with the drug Lupron. There are two HCPCS codes for Lupron Depot –

• HCPCS code J1950 injection, leuporlide acetate (for depot suspension), per 3.75 mg)
• FDA approved specifically for uterine disorders
• Medicare ASP payment rate July 2012 of $653.299
• HCPCS code J9217 (Leuporlide acetate (for depot suspension), 7.5mg).
• FDA approved solely for advanced prostatic cancer
• Medicare ASP paymentrate July 2012 of $216.750

Since the payment amount for the smaller dosage amount is over 3 times the amount of the payment for the larger dosage, using the incorrect HCPCS code can result in significant over or under-payment. Reference OIG report A-04-11-03069 for further discussion.

Other drugs that have been noted in recent OIG reports for incorrect units include:

• adenosine
• alpha 1–proteinase inhibitor
• baclofen
• bortezomib
• cetuximab
• doxorubicin HCl liposome
• epoetin alfa
• immune globulin
• paclitaxel
• pemetrexed
• rituximab

MMP, Inc. encourages providers to be diligent in your reporting of the correct drug units by staying up to date on HCPCS code descriptions and changes, verifying correct multipliers in your CDM and by reviewing OIG, RA, and MAC audits to be aware of problem-prone drugs. For MMP, Inc. clients, note that we data-mine your 835 files for possible errors with high-risk, high-dollar drug units. Please contact MMP, Inc. if you have further questions concerning the billing of drug units.

Transcatheter Aortic Valve Replacement (TAVR - also known as TAVI or Transcatheter Aortic Valve Implantation) is a new technology for use in treating certain patients with aortic stenosis. A bioprosthetic valve is inserted percutaneously using a catheter and implanted in the orifice of the native aortic valve.

Effective for dates of service on or after May 1, 2012, Medicare will cover TAVR under Coverage with Evidence Development (CED) when specific requirements are met.

1. CMS covers TAVR for the treatment of symptomatic aortic valve stenosis under CED with the following conditions:
2. there is FDA approval of the indication and corresponding system,
3. two cardiac surgeons are involved,
4. the patient is under the care of a heart team, and
5. the hospital and heart team meet certain requirements including participation in a prospective, national, audited registry.
6. For indications that are not approved by the FDA, CMS covers TAVR under CED when patients are enrolled in qualifying clinical studies.

Currently, CMS has approved only one registry and two clinical studies. The approved registry is the Transcatheter Valve Therapy Registry operated by the Society of Thoracic Surgeons and the American College of Cardiology. Approved registries and qualifying clinical studies can be viewed at TAVR CED.

Inpatient Hospital Claims Coding/Billing Requirements

Note that the TAVR procedures are all on the Medicare inpatient-only list and therefore should only be performed on patients formally admitted as inpatients.

• Type of Bill (TOB): 11X
• Effective date: for discharges on or after May 1,2012
• ICD-9 procedure codes: 35.05(Endovascular replacement of aortic valve) or 35.06(Transapical replacement of aortic valve)
• Secondary diagnosis code: V70.7(Examination of participant in clinical trial)
• Condition code: 30 (qualifying clinical trial).

There are numerous, detailed requirements for coverage for this procedure. For complete information regarding the NCD requirements and Claims Processing instructions please refer to MLN Matters Article MM7897.

For the first time, beginning with dates of service October 1, 2012 through December 31, 2012, therapy caps apply to patients treated in a hospital outpatient setting. Also, for the same time frame, CMS will be implementing automatic manual review of therapy services exceeding a set threshold.

Are you aware of the new regulations; do you understand them and is your hospital ready for therapy caps and thresholds?

What is the therapy cap?

The therapy cap is a financial limitation on the amount Medicare will pay for therapy services for an individual patient in any given calendar year. Medicare allowable charges, which include both Medicare payments to providers and beneficiary coinsurance, are counted toward the therapy cap. The therapy cap for 2012 is $1880 for occupational therapy (OT) and $1880 for physical therapy (PT) and speech language pathology (SLP) therapy combined. There is an exception process for medically necessary therapy services above the cap, which is explained below.

What has changed?

Previously the therapy cap did not apply to hospital outpatient therapy services, but as stated above, beginning October 1, 2012 through December 31, 2012, it will. Also beginning October 1, 2012, Medicare payment amounts for all therapy services provided in hospital outpatient departments from January 1, 2012 through September 30, 2012 will be included in patients’ total therapy amounts for 2012.

CMS will also implement an automatic manual review of therapy services that exceed a threshold of $3,700. Just like the therapy caps, there is one $3,700 threshold for occupational therapy and another $3,700 threshold for physical therapy and speech therapy services combined. As described below, CMS will allow providers to request a pre-approval exception from the automatic manual review.

How do you know how much therapy the patient has received so far?

Providers can use the Medicare ELGA or HIPAA Eligibility Transaction System (HETS) to determine the dollar amount of therapy the patient has had so far for 2012. Remember that prior to October 1, 2012, the amount shown does not include therapy performed in a hospital outpatient setting, but beginning October 1st, that amount for all of 2012 will be included.

Once I know the patient’s amount, what do I have to do?

It depends on where the patient is in his or her Medicare therapy spending for the year. Let’s consider each scenario separately.

Less than the therapy cap of $1,880
If your patient is far enough below the therapy cap amount of $1,880 that the services for which you will be billing will not push him/her above the cap, then you continue to provide services, document, and bill as you are currently doing. Remember, therapy furnished by providers must always be reasonable and medically necessary, require the specialized skills of medical professional, and be justified by supporting documentation in the patient’s medical record.

Nearing or above the therapy cap of $1,880 but less than threshold of $3,700
If your patient is above the $1,880 cap for the discipline(s) you are providing or the services you will be billing will put the patient above that cap, but below the $3,700 threshold, then you can request an exception by appending the KX modifier to the therapy services. The KX modifier is only to be used for therapy services that are reasonable and medically necessary, require the specialized skills of a therapist, and are justified by supporting documentation in the patient’s medical record.

Providers should refer to the Medicare Claims Processing Manual, Chapter 5, sections 10.3-10.5 for complete information concerning the automatic exceptions process to exceed the therapy cap. Some of the key points from the manual are:

• Medicare will make exceptions from the therapy caps for therapy evaluations (CPT codes 92506, 92597, 92607, 92608, 92610, 92611, 92612, 92614, 92616, 96105, 97001, 97002, 97003, 97004) when evaluation is necessary, e.g., to determine if the current status of the beneficiary requires therapy services.
• An exception may be made when the patient’s condition is justified by documentation indicating that the beneficiary requires continued skilled therapy, i.e., 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.
• Clinicians may utilize the automatic process for exception for any diagnosis or condition for which they can justify services exceeding the cap. Regardless of the diagnosis or condition, the patient must also meet other requirements for coverage.
• The condition or complexity that caused treatment to exceed caps must be related to the therapy goals and must either be the condition that is being treated or a complexity that directly and significantly impacts the rate of recovery of the condition being treated such that it is appropriate to exceed the caps. Documentation for an exception should indicate how the complexity (or combination of complexities) directly and significantly affects treatment for a therapy condition.
• Factors that influence the need for treatment beyond the cap should be supportable by published research, clinical guidelines from professional sources, and/or clinical or common sense.
• The KX modifier, is added to claim lines to indicate that the clinician attests that services billed 1) are reasonable and necessary services that require the skills of a therapist; and 2) are justified by appropriate documentation in the medical record; and 3) qualify for an exception using the automatic process for 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.
• In addition to the KX modifier, the GN, GP and GO modifiers and any other applicable modifiers shall continue to be used. Providers may report the modifiers on claims in any order.
• No special documentation is submitted to the contractor for automatic process exceptions.
• Use of the automatic process for exception does not exempt services from manual or other medical review processes.
• It is very important to recognize that most conditions would not ordinarily result in services exceeding the cap. Use the KX modifier only in cases where the condition of the individual patient is such that services are APPROPRIATELY provided in an episode that exceeds the cap. Routine use of the KX modifier for all patients with these conditions will likely show up on data analysis as aberrant and invite inquiry. Be sure that documentation is sufficiently detailed to support the use of the modifier.
• If the attestation is determined to be inaccurate, the provider/supplier is subject to sanctions resulting from providing inaccurate information on a claim.
• If a claim is submitted without KX modifiers and the cap is exceeded, those services will be denied.

Notifying the Medicare Beneficiary about the Therapy Cap

Since the therapy financial limitation is a statutory limitation, the patient (Medicare beneficiary) is financially liable for payment of therapy services that exceed the therapy cap that do not meet an exception. Medicare advises providers to notify beneficiaries of the therapy financial limitations at their first therapy encounter with the beneficiary. Since the therapy cap has not previously applied to hospital outpatient services, but will beginning October 1, 2012, hospital therapy departments may want to notify their Medicare patients expected to be receiving services beyond that date of the therapy financial limitations soon. Providers can use an Advance Beneficiary Notice (ABN) as a general notification to patients about the cap. And although not required to assign financial liability to the patient, the ABN can also be used for patients wanting to continue therapy that does not meet the exceptions process beyond the cap.

Nearing or above the therapy threshold of $3,700
Your patient is above the $3,700 threshold for the discipline(s) you are providing or the services you will be billing will put the patient above that threshold. This threshold triggers automatic manual review, but CMS is implementing a phase-in for the manual review and a pre-approved exception process.

Providers will be divided into three Phases. Providers will be notified via US Mail before September 1, 2012 about the process to request an exception to the threshold and which Phase the provider is assigned. According to the CMS Special Open Door Forum on the manual review process for therapy services, a list of providers and their phases will also be posted on the CMS therapy website. So providers will not have to worry about the therapy threshold until the beginning date of their Phase. The phases are as follows:

• Phase I Oct 1, 2012 to December 31, 2012
• Phase II Nov 1, 2012 to December 31, 2012
• Phase III Dec 1, 2012 to December 31, 2012

Once a provider’s phase starts, they will be required to submit requests for exceptions to the threshold in advance of furnishing therapy services above the threshold. Each MAC will have detailed instructions posted to their websites on how to submit a request for an exception to the threshold before September 1, 2012. Refer to the resources below for more information and watch for additional information to come soon, but key points from the information already available are:

• Requests for exceptions will be manually medically reviewed. Providers will have to submit documentation to support their requests, such as orders, plan of
  care, and any other supporting documentation.
• Requests for exceptions can be made in increments of 20 treatment days.
• Contractors will have 10 business days to review the request for exception to the threshold using the manual medical review process. The 10-day timeframe starts when the contractor has obtained all necessary documentation from the provider. If a contractor fails to make a decision within 10 business days of receiving a request containing all the required documentation the request will be automatically approved.
• Claims received for therapy services above the threshold which have not been approved for a provider assigned within a specific phase, shall be subject to prepayment review upon receipt for payment.
• Prior to the start date of your facility’s phase, you may continue to use the automatic exception process (KX modifier) for therapy services above the cap and threshold amounts that are medically necessary and meet the necessity and documentation requirements.

Obviously this is a complex and evolving process. This article attempts to include the major points facilities need to consider in their preparations for the new rules, but all details are important. Therefore, we strongly encourage those affected by the new rules to review all of CMS’s information found at the links below.

Resources:

Medicare Therapy Billing Webpage

Medicare Claims Processing Manual, Chapter 5 (section 10)

Medicare Benefits Policy Manual, Chapter 15 (sections 220 and 230)

Medicare Therapy Cap Fact Sheet

Special ODF Therapy Manual Review Tanscript

Therapy Manual Review Q&As

In December 2011, CMS released Transmittal 2373, CR 7502 MLN Matters MM7502) concerning the 3-day payment window and wholly owned or operated physician practices.In June 2012, CMS published a list of 43 Questions and Answers related to this transmittal.Although several of the questions are focused on the billing by a physician practice or other Part B entity that is wholly owned or operated by a hospital, there is also general information about the 3-day window that all hospitals might find beneficial, even if they do not own/operate Part B entities.

The general information includes definitions of the 3-day rule (Q1), related services (Q2, 16 & 17), and diagnostic services (Q3); it also includes the types of hospitals affected (Q4 & 5), services excluded from the 3-day payment policy (Q39) and the effective dates of the rule (Q42). Of particular interest are the following points:

• The rule is based on 3 calendar days, not 72 hours (Q6)
• All services on the day of admission must be bundled to the inpatient claim, related or not (Q24)
• All diagnostic services within the payment window must be bundled, even if they are not related to the inpatient admission (Q25)
• The 3-day rule does not apply if there is no Part A coverage the inpatient admission (Q40)

As stated above, the majority of the questions and answers are specifically related to wholly owned or operated physician practices or other Part B entities. The hospital’s responsibilities if they own/operate Part B entities are:

• To determine (collectively with the Part B entity) if that entity meets the definition of wholly owned or operated (Q12)
• To notify the physician practice or other Part B entity of the patient’s admission to the hospital (Q15)
• To determine if non-diagnostic services are clinically related to the inpatient admission (Q18)

Wholly owned/operated physician practices or other wholly owned/operated Part B entities should refer to the complete list of questions and answers for detailed billing information, including guidance on the use of modifier PD. Note that:

• Modifier PD is to be appended to HCPCS codes subject to the payment window (Q20)
• Modifier PD may be used for dates of service beginning January 1, 2012, but must be used beginning July 1, 2012 (Q21
• Practices should only bill for the professional component of diagnostic services subject to the payment window. Append modifiers -26 and –PD (Q26)
• Physician practices will be paid the professional component only of diagnostic services subject to the payment window; non-diagnostic services subject to the payment window will be paid at the facility rate (Q34)
• Refer to the document for information concerning evaluation and management (E&M) services, “incident to” services, and global surgical services.

Modifier PD is not for use by hospitals and CR 7502 does not provide billing instructions for hospitals – it provides billing instructions for Part B 1500 claims. However, hospitals are to include the cost of the technical component of diagnostic services and those direct practice costs (clinical staff, equipment and supplies) for non-diagnostic services related to the inpatient admission on the hospital’s bill for the inpatient stay (Q19). This transmittal refers hospitals to CR 7142 (MM7142) for instructions on hospital implementation of this provision and to Medicare Claims Processing Manual, pub. 100-04, Chapter 4>, Section 10.12 for billing instructions

For more information see

• the Medicare Claims Processing Manual, Publication 100-04, Chapter 12, Sections 90.7 and 90.7.1
• CY 2012 MPFS final rule, published November 28, 2011 (76 FR 73279 -73286)
• Three_Day_Payment_Window webpage

As the summer winds down and school is fast approaching, it takes me back to all the hours of taking notes, studying and then having to take tests. Just like a test in school is a reflection of
how well you have learned what you are being taught, in the world of Medicare & Medicaid Review Contractors the Comprehensive Error Rate Testing (CERT) Contractor performs audits to see how well Medicare Administrative Contractors (MACs) are adjudicating claims.

Error Rate Testing, a Historical Perspective:

• From 1996 through 2002 the HHS Office of Inspector General (OIG) estimated the Medicare Fee-for-Service (FFS) error rate.
• The Centers for Medicare and Medicaid Services (CMS) took over responsibility for the error rate measurement programs in FY 2003. At this time the sample size for the program increased from approximately 6,000 claims to approximately 120,000 claims thus allowing for the projection of a national error rate and for the first time for contractor and service level error rates.

CERT Review Process:

• The purpose of CERT reviews is to measure improper payments.
• The volume of claims reviewed is small.
• Claims are randomly selected from all claims submitted for payment.
• Claims reviewed are only post-payment complex reviews.
• The CERT Documentation Contractor requests medical records.
• If a provider does not submit the requested record, this counts as an improper payment and the payment is recouped from the providers.
• At least one nurse at the CERT Review Contractor will review the claim.
• Claims that are determined to be incorrect are scored as an error and payments are adjusted.
• Major Causes of Improper Claims includes:
• Missing Physician orders
• Illegible or missing signatures
• National Coverage Determinations (NCDs) or Local Coverage Determinations (LCDs) not being met; and
• The medical record does not support the medical necessity.

2010 CERT Report by the Numbers:

The CERT publishes an annual Improper Payment Report. The most recent report released November 22, 2011 reports the error rate and findings for 2010.

• The 2010 Medicare Fee-for-Service (FFS) paid claims error rate was 10.5% which equates to $34.3 billion in improper payments.
• Improper payments for inpatient hospital claims increased significantly from 2009 with inappropriate “place of service” errors accounting for a projected $5.1 billion.
• The Medicare Part B error rate decreased from 18.9% in 2009 to 12.9% in 2010.
• The Medicare Part A non-inpatient hospital claims decreased from 8.8% in 2009 to 4.2% in 2010.

What does the Medicare Administrative Contractor (MAC) do with the CERT Findings?

• Utilizes the findings to determine issues for Provider Education and Pre-Payment Reviews.

To learn more about the CERT visit the CMS CERT web page.