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It is hard to believe it is 2017. Time flies when you are having fun and when you are not. It is also hard to believe it has been over three years since Medicare changed the definition of what supports an inpatient admission to the two-midnight rule. This occurred in October, 2013 because CMS was concerned about the number of inappropriate inpatient admissions being denied by review contractors, by the large number of extended outpatient/observation stays that had potential financial impacts for the Medicare beneficiary (co-pays and liability for skilled nursing home stays), and the inconsistent practices between hospitals for inpatient and outpatient status. The policy establishes that inpatient payment is generally appropriate if physicians expect patients’ care to last at least 2 midnights; otherwise, outpatient payment would generally be appropriate.

Unfortunately, the two-midnight policy was not the magic bullet Medicare thought it would be and a recent report by the Office of Inspector General (OIG) finds that there are still inconsistencies and issues with the application of the rule. So let’s examine what might be “right” and what might be “wrong” related to the two-midnight rule. Here I must apologize ahead of time – determining and getting a patient in the correct status is not as simple and straight-forward as this discussion may make it sound. I have the utmost respect and admiration for the physicians and utilization review staff that work very hard daily to interpret and apply Medicare’s guidelines.

Applying the rule

One thing hospital staff has struggled with since implementation of the two-midnight rule is where does admission criteria (such as InterQual and Milliman) fit in this model? The first question that has to be asked related to patients presenting to the hospital is whether they need extended care (such as beyond an ER visit) in a hospital setting and this is a good place to utilize commercial criteria. These criteria can help determine if care in a hospital setting is appropriate.

Once it is determined that care in a hospital setting is necessary, the next task is to determine if the physician believes the patient will need such care beyond a second midnight. If yes, then an inpatient admission is appropriate; if no or if unsure, outpatient with observation is likely the correct status. For inpatient admissions, the medical record should reflect that care beyond a second midnight is expected – for example, the admission orders and plan of care should support that the patient will be receiving tests and/or treatments beyond a second midnight.

And, as a hospital, if you want to be paid for your services and avoid a technical denial, make sure there is an inpatient admission order signed by a practitioner with admitting privileges prior to the patient’s discharge.

Inappropriate inpatient short stays

The OIG reported that overall inpatient admissions have decreased since the implementation of the two-midnight rule by 2.8% and short inpatient stays have decreased by 9.9%. Although this is good news, the OIG also reported that 39% of short inpatient stays “were potentially inappropriate for payment under the 2-midnight policy because the claims did not appear to meet any of CMS’s criteria for an appropriate short inpatient stay.” These accounted for $2.9 billion in payments. We must consider however that the OIG estimated the number of inappropriate inpatient short stays based on claims’ data without actually reviewing the medical records. This assessment was based on inpatient stays with inpatient-only procedures; mechanical ventilation; an unforeseen circumstance such as the beneficiary’s death, transfer to another hospital, or departure against medical advice; or a duration of 2 midnights or longer in the hospital when outpatient time prior to admission is added to inpatient time. Using only claims data, the OIG would be unable to identify appropriate inpatient admissions where the patient experienced clinical improvement after the physician documented an expectation of a 2-midnight stay. This could explain some of the volume of potentially inappropriate short inpatient stays but I understand the OIG’s concern.

Also of concern are the most common reasons for short inpatient stays cited by the OIG report: coronary stent insertion, fainting, digestive disorders, and chest pain. Again the decision to admit is complex and the admitting physician must consider several clinical factors including the beneficiary’s medical history, the severity of the beneficiary’s symptoms, and the expected care. There are patients that will require longer stays, say for coronary stent insertion, due to co-morbidities and overall risk, but most Medicare patients are able to have this procedure and be discharged after one midnight.

This is where it is critical to apply the rule correctly – at the time of admission, did the physician expect the patient to require hospital care beyond a second midnight? Does the patient’s condition and the expected treatments as evidenced in the admission orders and plan of care in the medical record support that expectation? If it is a condition or procedure that can usually be treated in less than two-midnights, does the medical record explain what is different for this patient or for this case?

Inappropriate long outpatient stays

The OIG report did find a slight decrease in the number of long outpatient stays (2.8%) but there were still almost 750,000 long outpatient stays. At MMP, Inc., we also notice that some of our clients continue to have long observation stays going beyond a second midnight. If a Medicare outpatient needs medically necessary care beyond a second midnight, then it is appropriate to admit the patient as an inpatient. This means that as an outpatient receiving observation services is approaching a second midnight, it is time to get an inpatient order or evaluate the need for continued medically necessary care (see the next section for valid reasons for long outpatient stays). These patients do not have to meet any commercial inpatient criteria to be admitted – they only have to continue to need medically necessary care in a hospital setting beyond that second midnight.

Valid reasons for long outpatient stays

But what if after evaluation it is determined that the patient doesn’t continue to need medically necessary care in a hospital setting? What if there are other reasons the patient cannot be sent home at this time that have to do with the convenience of the patient, physician or facility? This is much more common than one might think – certain diagnostic testing is not offered on weekends; testing is not completed until late in the day and the physician will not round until the next morning to discharge the patient; the patient has to wait until the next day to get a ride home from the hospital; etc. In these cases, it is acceptable to keep the patient in the hospital one more midnight as an outpatient.

However, observation services are likely not medically necessary in these cases anymore than inpatient services would be. If continued medically necessary care was appropriate past a second midnight, an inpatient admission would be correct. Therefore, there may be valid reasons for a long outpatient stay, but not really for observation services beyond a second midnight. When medically necessary care in a hospital setting is no longer needed and the patient remains due to convenience factors, the hospital should no longer report covered observation hours on the claim. At this point, observation hours should not be charged or should be reported on the claim as not medically necessary with a GZ modifier. If the hospital is ready for the patient to be discharged, but the patient refuses to leave or the patient’s physician refuses to discharge the patient, it is acceptable to issue an advanced beneficiary notice (ABN) to the patient making them financially responsible for the continued hospital care.

The last things of concern to the OIG are the continued variation in use of inpatient and outpatient status among hospitals and ultimately the financial impact on Medicare and Medicare beneficiaries. Short inpatient stays ranged from around 1% to above 5% and long outpatient stays were from 2% to above 11% between different hospitals. It is not surprising that all hospitals are not applying the rules the same, as Medicare reviewers have even struggled to get it right. This is evidenced by the starts, stops, delays, and transitions of short-stay reviews within Medicare.

Good luck to all the utilization reviewers out there. Maybe a crystal ball or Ouija board would help…

TRANSMITTALS

Update to Medicare Deductible, Coinsurance and Premium Rates for 2017

• MLN Matters® Number: MM9902
• Related Change Request (CR) #: CR 9902
• Related CR Release Date: December 2, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R103GI
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9902.pdf
• Affects physicians, providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs), including Home Health & Hospice MACs and Durable Medical Equipment MACs, for services provided to Medicare beneficiaries.

Summary: The new Calendar Year (CY) 2017 Medicare deductible, coinsurance, and premium rates.

 

Implementing Provider File Updates and PECOS to FISS Interface Via Extract File Updates to Accommodate Section 603 Bipartisan Budget Act of 2015

• MLN Matters® Number: MM9613
• Related Change Request (CR) #: CR 9613
• Related CR Release Date: August 5, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R1704OTN
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9613.pdf
• Affects hospitals with off-campus outpatient departments submitting claims to Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries.

Summary: All off-campus outpatient departments of a hospital provider are required to be correctly identified.

 

HCPCS Code Update for Preventive Services

• MLN Matters® Number: MM9888
• Related Change Request (CR) #: CR 9888
• Related CR Release Date: December 2, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3669CP
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9888.pdf
• Affects physicians and providers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.

Summary: Effective for dates of service on and after January 1, 2017, CPT code 76706 replaces HCPCS code G0389. MACs will apply all editing that was applied to HCPCS code G0389 to CPT code 76706, including the waiver of deductible and coinsurance.

Update to Editing of Therapy Services to Reflect Coding Changes

• MLN Matters® Number: MM9698
• Related Change Request (CR) #: CR 9698
• Related CR Release Date: December 1, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3670CP
• Implementation Date: April 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9698.pdf
• Affects providers submitting claims to Medicare Administrative Contractors (MACs) for physical and occupational therapy services provided to Medicare beneficiaries.

Summary: Instructs the MACs to apply certain coding edits to the new Current Procedural Terminology (CPT) codes that are used to report physical and occupational therapy evaluations and re-evaluations, effective January 1, 2017.

New Revenue Code 0815 for Allogeneic Stem Cell Acquisition Services

• MLN Matters® Number: MM9674
• Related Change Request (CR) #: CR 9674
• Related CR Release Date: July 29, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3571CP
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9674.pdf
• Affects physicians, other providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for stem cell transplant services provided to Medicare beneficiaries.

Summary: Medicare systems will accept revenue code 0815 (Allogeneic Stem Cell Acquisition/Donor Services), recently created by the National Uniform Billing Committee (NUBC), effective January 1, 2017, when submitted on hospital claims (Types of Bill (TOB) 011x, 012x, 013x, or 085x)

Comprehensive Care for Joint Replacement (CJR) Model: Skilled Nursing Facility (SNF) 3-Day Rule Waiver

• MLN Matters® Number: SE1626
• Article Release Date: December 9, 2016
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1626.pdf
• Affects Skilled Nursing Facilities (SNFs) submitting claims to Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries in the Comprehensive Care for Joint Replacement (CRJ) model. Although this article applies to SNFs, hospitals participating in the CRJ model may be interested in this information.

Summary: This article informs SNFs of the policies surrounding use of the 3-day stay waiver available for use under the CJR Model and to provide instructions on using the demonstration code 75 on applicable CJR claims submitted on or after January 1, 2017.

January 2017 Integrated Outpatient Code Editor (I/OCE) Specifications Version 18.0

• MLN Matters® Number: MM9892
• Related Change Request (CR) #: CR 9892
• Related CR Release Date: December 9, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3674CP
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9892.pdf
• Affects providers who submit institutional claims to Medicare Administrative Contractors (MACs), including Home Health and Hospice (HH+H) MACs, for services provided to Medicare beneficiaries.

Summary: Provides instructions and specifications for the Integrated Outpatient Code Editor (I/OCE) used for Outpatient Prospective Payment System (OPPS) and non-OPPS claims.

 

OTHER MEDICARE ANNOUNCEMENTS

FY 2015 Medicare FFS RAC Report to Congress

On December 7, CMS posted the Fiscal Year 2015 Recovery Audit Program Report to Congress. CMS has also published the related FY 2015 Recovery Audit Program Appendices.

Final Medicare Outpatient Observation Notice (MOON) (CMS-10611) Available

On December 8, CMS published a Fact Sheet regarding the release the final OMB-approved Medicare Outpatient Observation Notice (MOON) along with instructions for the form. Hospitals and critical access hospitals (CAH) must begin using the MOON no later than March 8, 2017. The Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act) requires hospitals and CAHS to provide notification to individuals receiving observation services as outpatients for more than 24 hours explaining the status of the individual as an outpatient, not an inpatient, and the implications of that status.

Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements

On December 7, the OIG published a final rule in the Federal Register, amending the safe harbors to the anti-kickback statute by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the anti-kickback statute. This rule updates the existing safe harbor regulations and enhances flexibility for providers and others to engage in business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse.

Effective date: January 6, 2017

Revisions to the Office of Inspector General's Civil Monetary Penalty (CMP) Rules

On December 7, the OIG published a final rule in the Federal Register, amending its CMP rules to incorporate new CMP authorities, clarify existing authorities, and reorganize regulations on civil money penalties, assessments, and exclusions to improve readability and clarity.

Effective date: January 6, 2017

Policy Statement Regarding Gifts of Nominal Value To Medicare and Medicaid Beneficiaries

On December 7, the OIG published a Policy Statement on what it considers to be a gift of nominal value. The OIG is adjusting the previous amounts, now interpreting “nominal value” as having a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis. As with its previous interpretation, the items may not be cash or cash equivalents.

Earlier this year I wrote about the new CPT codes for physical therapy and occupational therapy evaluations.  Documentation to support therapy services, especially evaluations and plans of care, has always been arduous.  With the new evaluation codes, there is even more to consider – enough to give a therapist a breakdown.  Hopefully this breakdown of the components of the new evaluation codes will help prevent some breakdowns of the psychological type.

CPT is deleting the current PT and OT evaluation and re-evaluation codes (97001-97004) and creating three-tiered codes for the evaluations and one new code per discipline for re-evaluations.  I am including the same evaluation code tables as I posted in my original article and the re-evaluation code descriptions at the end of this article for both physical and occupational therapy.  There are similarities but also differences between the PT and OT evaluation codes.  In general the long descriptions of the new OT codes contain more details of the expected elements.  Both the American Physical Therapy Association (APTA) and the American Occupational Therapy Association (AOTA) have excellent resources on their websites concerning the new code descriptors and required elements.  In this article I want to examine each component of the new physical therapy evaluation codes in more depth.

History

The therapist determines if and if so, how many, personal factors and/or comorbidities the patient has that impact the therapy plan of care (POC).  Personal factors include sex, age, coping styles, social history, education level, profession, lifestyle, character, attitudes, etc.  The therapist will consider the personal factors that could affect the patient’s ability to reach their therapy goals.  Personal factors that exist but do not impact the physical therapy plan of care are not to be considered when selecting an evaluation level.

The patient’s past medical history may identify comorbidities that could impact the patient’s function and ability to progress through a POC.  For example, chronic conditions such as obesity, diabetes, hearing loss, visual deficits, or cognitive deficits could affect the patient’s functional abilities.  A lack of personal factors and/or comorbidities that could impact the POC would be expected in a low complexity evaluation (CPT 97161); 1-2 personal factors and/or comorbidities for a moderate complexity eval (CPT 97162), and 3 or more for a high complexity eval (CPT 97163).

Examination of Body Systems

The therapist uses standardized tests and measures in the examination of body systems.  The evaluation complexity level is associated with the number of elements addressed related to body structures and functions, activity limitations, and/or participation restrictions: 1-2 elements for low complexity; 3 or more elements for moderate complexity; and 4 or more elements for high complexity.  Some important definitions necessary to understand related to the Examination components include:

• Body systems include the circulatory, skeletal, muscular, nervous, respiratory, immune, excretory, integumentary, lymphatic, cardiovascular, reproductive, and digestive systems.  Per information from the APTA website, system reviews for PT evaluations include the following:
• For the cardiovascular/pulmonary system: the assessment of heart rate, respiratory rate, blood pressure, and edema
• For the integumentary system: the assessment of pliability (texture), presence of scar formation, skin color, and skin integrity
• For the musculoskeletal system: the assessment of gross symmetry, gross range of motion, gross strength, height, and weight
• For the neuromuscular system: a general assessment of gross coordinated movement (eg, balance, gait, locomotion, transfers, and transitions) and motor function (motor control and motor learning)
• For communication ability, affect, cognition, language, and learning style: the assessment of the ability to make needs known, consciousness, orientation (person, place, and time), expected emotional/behavioral responses, and learning preferences (eg, learning barriers, education needs)
• Body structures refers to the body’s structural or anatomical parts (e.g., organs or limbs), which are classified according to body systems.
• Body functions are the physiological functions of body systems.
• Activity limitations are difficulty executing tasks, actions or activities.
• Participation restrictions are related to participation in life situations (for example, inability to engage in community social events due to exhaustion).
• The Domains of Activity and Participation as determined by the International Classification of Functioning, Disability, and Health (ICF) include but are not limited to:
• Mobility
• Self‐care
• Domestic life
• Interpersonal interactions and relationships
• Major life areas
• Community, social and civic life

Documentation for the examination of body systems should include objective findings and the expected progression of the patient.  Descriptions of the patient’s specific limitations in activities of daily living (ADLs) also support this element.

Clinical Presentation of the Patient

This addresses the status and mechanism of the patient’s current condition.  Is the clinical presentation of the patient’s condition stable and uncomplicated (low complexity), evolving with changing clinical characteristics (moderate complexity) or evolving with unstable and unpredictable characteristics (high complexity)?

Clinical Decision Making

Based on the composite of the patient’s presentation, the therapist uses his/her clinical judgment to develop the plan of care with goal establishment, prognosis, and probable outcomes.  This component should correlate with the other components already discussed as all of these elements are considered in establishing the POC.  The patients’ condition, personal factors, comorbidities, limitations, and restrictions will relate to how complex the judgment and decision making are that is required to develop a plan and prognosis for the patient. 

Time

Note that this is the “typical time” spent face-to-face with the patient and/or family and is to be used for guidance only.  Low complexity is typically 20 minutes of face-to-face time, moderate complexity 30 minutes and high complexity 45 minutes.  This makes sense as more complex patients should require a longer amount of time to evaluate.

It is also important to note that for now, Medicare does not make a payment difference in the evaluation levels – they are all paid at the same rate.

Good luck to the therapists as they adjust to yet another change in their documentation, coding and billing requirements.  With a successful transition, maybe they will feel like break dancing.

A table breaking down the criteria for these new codes can be found by clicking here.

Reevaluation Codes

PT Revaluation

• 97164 - Re-evaluation of physical therapy established plan of care, requiring these components:
• An examination including a review of history and use of standardized tests and measures is required; and
• Revised plan of care using a standardized patient assessment instrument and/or measurable assessment of functional outcome.
• Typically, 20 minutes are spent face-to-face with the patient and/or family.

OT Revaluation

• 97168 - Re-evaluation of occupational therapy established plan of care, requiring these components:
• An assessment of changes in patient functional or medical status with revised plan of care;
• An update to the initial occupational profile to reflect changes in condition or environment that affect future interventions and/or goals; and
• A revised plan of care. A formal reevaluation is performed when there is a documented change in functional status or a significant change to the plan of care is required.
• Typically, 30 minutes are spent face-to-face with the patient and/or family.

Q:

If a patient is admitted and documented with a condition in which laterality can be distinguished such as bilateral osteoarthritis of the knees, and only one side is being treated, would you report a diagnosis code only for the side receiving treatment?

 

A:

No.
You would assign the “bilateral” code.

• When a patient has a bilateral condition and the condition still exists on both sides, then a bilateral code is reported.
• Once one side has been treated and that condition no longer exists on that particular side then the appropriate “unilateral” code would be assigned.
• If treatment does not completely resolve the condition for the first side treated, then the “bilateral” code would continue to be reported.

Example #1: Patient is documented with bilateral osteoarthritis of the knees (stage IV of the right and stage III of the left) and is admitted for total knee replacement of the right knee.

ICD-10-CM code assignment would be:

M17.0 for Bilateral Primary OA of Knee

Example #2: H&P states patient with history of bilateral senile nuclear sclerosis cataract. Patient had great success with cataract surgery for the left eye 3 months prior and is now admitted for surgery on the right eye.

ICD-10-CM code assignment would be:

H25.11 for Age-related Nuclear Cataract, Right Eye

Example #3: Documentation shows patient with history of bilateral osteoarthritis of the hip. Total hip arthroplasty was performed on the left side 9 months prior successfully eliminating all pain and symptoms on that side. Patient is admitted now with continued pain on the right side which has been interfering with her daily activities.

ICD-10-CM codes assigned would be:

M16.11 for Unilateral Primary OA, Right Hip and
Z96.642 for Presence of Left Artificial Hip Joint

Q:

What is new for outpatient rehabilitative therapy services for 2017?

 

A:

Answer: CPT is deleting the existing rehabilitative therapy evaluation codes 97001-97004 and replacing them with eight new codes, CPTs 97161-97168. The new codes include complexity levels of low, moderate, and high for the evaluation codes for physical therapy (PT) and occupational therapy (OT) respectively and one re-evaluation code for each. Below are the new codes with their short descriptors, but the long descriptors can be found in the table at the end of MLN Matters Article MM9782 which also adds the new codes as “always therapy” codes to the therapy code list.

• CPT 97161 – PT Evaluation, Low Complexity, 20 minutes
• CPT 97162 – PT Evaluation, Moderate Complexity, 30 minutes
• CPT 97163 – PT Evaluation, High Complexity, 45 minutes
• CPT 97164 – PT Revaluation of Established Plan of Care

• CPT 97165 – OT Evaluation, Low Complexity, 30 minutes
• CPT 97166 – OT Evaluation, Moderate Complexity, 45 minutes
• CPT 97167 – OT Evaluation, High Complexity, 60 minutes
• CPT 97168 – OT Revaluation of Established Plan of Care

Medicare has also released the Therapy Cap Values for 2017 in MLN Matters Article MM9865. For physical therapy and speech-language pathology combined, the 2017 therapy cap will be $1,980. For occupational therapy, the cap for 2017 will be $1,980. As a reminder, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) extended the therapy caps exceptions process through December 31, 2017 and also extended the application of the therapy caps, and related provisions, to outpatient hospitals until January 1, 2018. The exceptions process allows billing of therapy services exceeding the limit with the KX modifier if the services are medically necessary.

TRANSMITTALS

New Physician Specialty Code for Hospitalist

• MLN Matters® Number: MM9716
• Related Change Request (CR) #: CR 9716
• Related CR Release Date: October 28, 2016
• Effective Date: April 1, 2017
• Related CR Transmittal #: R3637CP and R274FM
• Implementation Date: April 3, 2017
• Affects physicians, other providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9716.pdf

Summary: The Centers for Medicare and Medicaid Services (CMS) has established a new physician specialty code for Hospitalist (C6).

Modifications to the National Coordination of Benefits Agreement Crossover Process

• MLN Matters® Number: MM9681
• Related Change Request (CR) #: CR 9681
• Related CR Release Date: October 27, 2016
• Effective Date: April 1, 2017
• Related CR Transmittal #: R1733OTN
• Implementation Date: April 3, 2017
• Affects providers, including hospices, submitting institutional claims to Medicare Administrative Contractors (MACs) requiring Coordination of Benefits (COB) for services provided to Medicare beneficiaries.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9681.pdf

Summary: Modifies the Part A shared system to ensure that all 837 institutional Coordination of Benefits (COB) claims will contain a Claim Adjustment Reason Code and Remittance Advice Remark Code combination, that hospital day counts may not be entered duplicatively on incoming claims submissions to Medicare, and that Present on Admission (POA) indicators are only permitted on incoming inpatient hospital-oriented claims.

Instructions to Process Services Not Authorized by the Veterans Administration (VA) in a Non-VA Facility Reported with Value Code (VC) 42

• MLN Matters® Number: MM9818
• Related Change Request (CR) #: CR 9818
• Related CR Release Date: October 28, 2016
• Effective Date: October 1, 2013
• Related CR Transmittal #: R3635CP
• Implementation Date: April 3, 2017
• Affects hospitals and skilled nursing facilities who submit inpatient claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9818.pdf

Summary: Clarifies how Medicare contractors shall process inpatient claims for services in a Non-VA facility that were not authorized by the VA.

Issuing Compliance Letters to Specific Providers and Suppliers Regarding Inappropriate Billing of Qualified Medicare Beneficiaries (QMBs) for Medicare Cost-Sharing

• MLN Matters®Number: MM9817
• Related Change Request (CR) #: CR 9817
• Related CR Release Date: November 4, 2016
• Effective Date: December 6, 2016
• Related CR Transmittal #: R1747OTN
• Implementation Date: March 8, 2017
• Affects providers submitting claims to Medicare Administrative Contractors (MACs) and Durable Medical Equipment MACs (DME MACs) for services provided to certain Medicare beneficiaries.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9817.pdf

Summary: Federal law bars Medicare providers from charging individuals enrolled in the Qualified Medicare Beneficiary Program (QMB) for Medicare Part A and B deductibles, coinsurances, or copays. Change Request (CR) 9817 instructs MACs to issue a compliance letter instructing named providers and suppliers to refund any erroneous charges and recall any past or existing billing with regard to improper QMB billing.

Therapy Cap Values for Calendar Year (CY) 2017

• MLN Matters® Number: MM9865
• Related Change Request (CR) #: CR 9865
• Related CR Release Date: November 4, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3644CP
• Implementation Date: January 3, 2017
• Affects physicians, therapists, and other providers submitting claims to Medicare Administrative Contractors (MACs), including Home Health & Hospice MACs, for outpatient therapy services provided to Medicare beneficiaries.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9865.pdf

Summary: Describes the amounts and policies for outpatient therapy caps for CY 2017. For physical therapy and speech-language pathology combined, the 2017 therapy cap will be $1,980. For occupational therapy, the cap for 2017 will be $1,980.

Quarterly Update to the Correct Coding Initiative (CCI) Edits, Version 23.0, Effective January 1, 2017

• MLN Matters®Number: MM9847
• Related Change Request (CR) #: CR 9847
• Related CR Release Date: November 4, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3646CP
• Implementation Date: January 3, 2017
• Affects physicians, providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9847.pdf

Summary: Instructs MACs of the normal update to the Correct Coding Initiative (CCI) Procedure to Procedure (PTP) edits, effective January 1, 2017.

Payment Reduction for X-Rays Taken Using Film

• MLN Matters®Number: MM9727
• Related Change Request (CR) #: CR 9727
• Related CR Release Date: August 12, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3583CP
• Implementation Date: January 3, 2017
• Affects physicians, other providers, and suppliers who submit Part B claims to Medicare Administrative Contractors (MACs) for X-ray imaging services provided to Medicare beneficiaries.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9727.pdf

Summary: Reduces the technical component (TC) (including the TC portion of a global service) of X-ray imaging services provided using film.

2017 Annual Update to the Therapy Code List

• MLN Matters®Number: MM9782
• Related Change Request (CR) #: CR 9782
• Related CR Release Date: November 10, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3654CP
• Implementation: January 3, 2017
• Affects physicians, therapists, and other providers, including Comprehensive Outpatient Rehabilitation Facilities (CORFs), submitting claims to Medicare Administrative Contractors (MACs), including Home Health & Hospice MACs, for outpatient therapy services provided to Medicare beneficiaries.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9782.pdf

Summary: Updates the therapy code list for Calendar Year (CY) 2017 by adding eight “always therapy” codes (97161 – 97168) for physical therapy (PT) and occupational therapy (OT) evaluative procedures and deletes the four codes currently used to report these services (97001 – 97004).

ICD-10 Coding Revisions to National Coverage Determination (NCDs)

• Transmittal 1755
• Date: November 18, 2016
• Change Request 9861
• https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R1755OTN.pdf

Summary: The 10th maintenance update of ICD-10 conversions and other coding updates specific to national coverage determinations (NCDs). These NCD coding changes are the result of newly available codes, coding revisions to NCDs released separately, or coding feedback received.

Annual Update of HCPCS Codes Used for Home Health Consolidated Billing Enforcement

• MLN Matters®Number: MM9771
• Related Change Request (CR) #: CR 9771
• Related CR Release Date: October 7, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3618CP
• Implementation Date: January 3, 2017
• Affects Home Health Agencies (HHAs) and other providers submitting claims to Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries in a home health period of coverage.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9771.pdf

Summary: 2017 annual update to the list of HCPCS codes used by Medicare systems to enforce consolidated billing of home health services.

Office of Inspector General Report: Stem Cell Transplantation

• MLN Matters®Number: SE1624
• Article Release Date: November 22, 2016
• Affects providers billing Medicare Administrative Contractors (MACs) for services related to stem cell transplantation.
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1624.pdf

Summary: Addresses issues of incorrect billing as a result of the February 2016 OIG report and clarifies coverage of stem cell transplantation.

 

MEDICARE HOSPITAL PAYMENT RULES

Hospital Inpatient Prospective System (IPPS) Final Rule Correction Notice

• October 31, 2016
• https://www.gpo.gov/fdsys/pkg/FR-2016-10-31/pdf/2016-26182.pdf

Summary: This document corrects a typographical error in the final rule that appeared in the August 22, 2016 Federal Register as well as additional typographical errors in a related correction to that rule that appeared in the October 5, 2016 Federal Register.

Hospital Outpatient Prospective System (OPPS) and ASC Final Rule

• November 1, 2016
• http://tinyurl.com/gvm4vor

Summary: This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2017 to implement applicable statutory requirements and changes arising from CMS’s continuing experience with these systems.

 

OTHER MEDICARE ANNOUNCEMENTS

2017 Medicare Parts A & B Premiums and Deductibles Announced

• November 10, 2016
• https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-11-10-2.html

Summary: The 2017 premiums for the Medicare inpatient hospital (Part A) and physician and outpatient hospital services (Part B) programs.

New Recovery Auditor Contracts Awarded

• October 31, 2016 – CMS has awarded the next round of Medicare Fee-for-Service Recovery Audit Contractor (RAC) contracts to:
• Region 1 – Performant Recovery, Inc.
• Region 2 – Cotiviti, LLC
• Region 3 – Cotiviti, LLC
• Region 4 – HMS Federal Solutions
• Region 5 – Performant Recovery, Inc
• RAC Recent Updates webpage

The RACs in Regions 1-4 will perform postpayment review to identify and correct Medicare claims that contain improper payments (overpayments or underpayments) that were made under Part A and Part B, for all provider types other than Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and Home Health/Hospice. The Region 5 RAC will be dedicated to the postpayment review of DMEPOS and Home Health/Hospice claims nationally.

CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2017

• November 1, 2016
• Adjustments to Medicare hospital payments based on the quality of care they provide to patients as determined by quality reporting
• 2017 VBP Fact Sheet
• Includes link to FY2017 Hospital VBP incentive payment adjustment factors

Fiscal Year 2017 HHS OIG Work Plan

• November 10, 2016
• https://oig.hhs.gov/reports-and-publications/workplan/index.asp

Summary: The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) Work Plan for fiscal year (FY) 2017 summarizes new and ongoing reviews and activities that OIG plans to pursue with respect to HHS programs and operations during the current fiscal year and beyond.

There are some things in America’s healthcare system that just seem wrong – for example, the unreasonable and escalating price of prescription drugs and the significant increase in healthcare premiums. But like Newton’s third law, for every opinion of wrong, there is an equal and opposite opinion that it is not wrong. Neither the drug companies nor healthcare insurers think their prices or premiums are unreasonable or wrong. There have been concerns over the past few years about the rates Medicare and Medicare patients pay for services furnished in provider-based departments (PBDs) of hospitals. Medicare, Congress, and many others think it is wrong that services in PBDs cost significantly more than the same services provided in a physician’s office setting. Hospitals, on the other hand, understand that these PBDs must comply with the myriad of regulations that apply to hospitals which increases the costs of operation of these locations.

But Congress has the power to make laws and in Section 603 of the Bipartisan Budget Act of 2015, the law requires that “new” off-campus hospital provider-based departments no longer be paid the higher payment rates of the Outpatient Prospective Payment System (OPPS), but instead be paid under a different payment system whose rates are more equitable with physician office rates. In the 2017 OPPS Final Rule, CMS provides instructions on the implementation of this requirement to be effective January 1, 2017 as mandated by the Act.

Before getting into the instructions, here is a reminder of the “new” words CMS is using to describe these services. Services and facilities that are an exception from the new payment requirements – that is the new payment system does not apply to them and they will continue to be paid under OPPS are referred to by CMS as “excepted” services/facilities. “Nonexcepted” services are services without an exception to the new rule, so the new payment method applies to nonexcepted services and nonexcepted locations.

The first thing to consider is to what facilities and services does the law apply and what facilities and services are excepted from the requirements. Excepted facilities will continue to be paid under the OPPS payment system and include:

• On-campus hospital provider-based departments
• Provider-based departments on the campus of or within 250 yards of a remote location of a hospital
• Services provided at a dedicated emergency department
• Off-campus hospital provider-based departments that were furnishing services prior to November 2, 2015 and billed for those service within timely filing limits – note that this is a change from the wording of the proposed rule which stated that only off-campus PBDs that were billing for services prior to November 2, 2015 were exempt.

So this means the new payment system applies to new off-campus hospital provider-based departments that began furnishing and billing for services on or after November 2, 2015.

There are some circumstances where an off-campus PBD that is currently excepted could lose its exception status. If an existing off-campus PBD relocates, it will no longer be excepted and will be paid under the new payment system. The only rare and limited exception to this relocation rule is if the relocation is due to extraordinary circumstances outside the hospital’s control such as natural disasters. CMS did not finalize the rule that PBDs would lose their exception status if they expanded their service line and offered new types of services. Also the excepted status for an off-campus PBD can be transferred to a new owner if ownership of the main provider is also transferred and the Medicare provider agreement is accepted by the new owner.

One of the biggest issues that CMS had to work out was how to pay for services provided at non-excepted off-campus PBDs. You may remember they proposed to pay only the physicians at a non-facility rate for these services and provide no payment to the hospital. Due to concerns about this proposal resulting in potentially inappropriate hospital/physician financial relationships that might implicate the physician self-referral law and Federal anti-kickback statute, they came up with another option. Hospitals will continue to bill on an institutional claim form (UB) and will append a “PN” modifier to services provided in a non-excepted off-campus PBD. Medicare will make payment to the hospital under the Medicare Physician Fee Schedule (MPFS) at new rates established for this purpose. These rates are set at 50% of the OPPS payment rates. The packaging requirements of OPPS will apply to these services (such as comprehensive APCs, packaged and conditionally packaged services). Also services assigned to an OPPS status indicator of “A” will continue to be paid under the “other” fee schedule by which they are currently paid. This includes therapy services paid under the MPFS, laboratory services when separate payment criteria is met under the Clinical Lab Fee Schedule, separately payable drugs at ASP + 6%, preventive services, etc.

A few other things to know about the new payment system are:

• Partial hospitalization program (PHP) will be paid at the same rate as Community Mental Health Centers (CMHCs)
• Physicians will be paid their professional fee at facility rates
• Hospitals will bill clinic visits at nonexcepted off-campus PBDs with HCPCS code G0463 which will be paid at 50% of the OPPS rate
• Hospitals will report radiation treatment delivery procedures with the HCPCS “G” codes appended with the PN modifier, which will be paid at the MPFS technical component rate
• The following adjustments are not being adopted into the new payment system - outlier payments, the rural sole community hospital (SCH) adjustment, the cancer hospital adjustments, transitional outpatient payments, the hospital outpatient quality reporting payment adjustment, and the inpatient hospital deductible cap to the cost-sharing liability for a single hospital outpatient service
• The supervision rules that apply for hospitals will continue to apply for off-campus PBDs that furnish nonexcepted items and services
• Beneficiary cost-sharing under MPFS of 20% will apply

CMS states they will likely continue this payment method through 2018. At that time, they may develop a different payment methodology, likely similar to their original proposal.

Whether you think it is wrong or right, this is the payment method for new off-campus PBDs we are stuck with for now. I encourage all affected providers to read the details in the final rule (beginning on page 569 of the display copy) and submit comments to CMS when allowed. CMS did make several concessions based on the comments they received from the proposed rule and submitting comments is one way to let your opinion be known and hopefully heard.

“Inpatient only” services are generally, but now always, surgical services that require inpatient care because of the nature of the procedure, the typical underlying physical condition of patient who require the service, or the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged.-Source: Medicare Claims Processing Manual, Chapter 4 – Part B Hospital

Annually, CMS releases an updated Inpatient Only (IPO) List in the Calendar Year (CY) Outpatient Prospective Payment System (OPPS) Final Rule. CMS is removing seven CPT codes from this list for CY 2017. This article reminds the reader of two important principles of the IPO list, outlines the criteria for potential removal from the list, lists the codes being removed and their new status indicator assignment, and ends with public comments regarding the removal of Total Knee Arthroplasty (TKA) CPT code 22447 from the IPO list. 

Important Principles of the IPO List

CMS notes in the 2017 OPPS Final Rule that it is not uncommon to receive questions about the IPO list leading them to believe there may be a misunderstanding by some regarding certain aspects of the IPO list. Specifically, the following two aspects:

• “First, just because a procedure is not on the IPO list does not mean that the procedure cannot be performed on an inpatient basis. IPO list procedures must be performed on an inpatient basis (regardless of the expected length of the hospital stay) in order to qualify for Medicare payment, but procedures that are not on the IPO list can be and very often are performed on individuals who are inpatients (as well as individuals who are hospital outpatients and ASC patients).
• Second, the IPO list status of a procedure has no effect on the MPFS professional payment for the procedure. Whether or not a procedure is on the IPO list is not in any way a factor in the MPFS payment methodology.”

Established Criteria for Procedure Removal from Inpatient Only (IPO) List

The criteria for consideration of removal of a CPT code from the IPO list includes the following:

• Most outpatient departments are equipped to provide the services to the Medicare population.
• The simplest procedure described by the code may be performed in most outpatient departments.
• The procedure is related to codes that we have already removed from the IPO list.
• A determination is made that the procedure is being performed in numerous hospitals on an outpatient basis.
• A determination is made that the procedure can be appropriately and safely performed in an ASC, and is on the list of approved ASC procedures or has been proposed by us for addition to the ASC list.

CY 2017 Procedures Removed from the IPO List

‍Codes Removed from IPO List assigned Status Indicators

The spine procedure codes removed from the IPO list are add-on codes to procedures currently performed in the Hospital Outpatient Department and describe variations of (including additional instrumentation used with) the base code procedure. As add-on codes, these codes will be assigned to status indicator “N.”

“The Laryngoplasty codes are related to and clinically similar to CPT code 21495 (Open treatment of hyoid fracture), which is currently not on the IPO list. The two laryngoplasty procedure codes will be assigned to APC 5165 (Level 5 ENT Procedures) with status indicator “J1.”

Response to Solicitation of Public Comments on the Possible Removal of Total Knee Arthroplasty (TKA) Procedure from the IPO List

In the 2017 OPPS Proposed Rule CMS solicited comment from the public on a list of questions relating to the removal of TKA from the IPO list in the future. They also acknowledged the fact that “TKA candidates, although they all have osteoarthritis severe enough to warrant knee replacement, are a varied group in which the anticipated length of hospitalization is dictated more by comorbidities and diseases of other organ systems. Some patients may be appropriate for outpatient surgery while others may be appropriate for inpatient surgery.” But before we review comments received and CMS’s response, let’s look at knee CPTs by the numbers.

Knee CPTs by the Numbers

• 2000: CPT 27447 (Arthroplasty, knee, condyle and plateau; medial and lateral compartments with or without patella resurfacing (total knee arthroplasty)) was placed on the original IPO list in the 2000 OPPS Final Rule (65 FR 18781)
• 4.6 days: The geometric mean average length of stay (GMLOS) in 2000 for the DRG to which uncomplicated TKA procedures were assigned.
• 2.8 days: The GMLOS for the MS-DRG in 2016
• 2002: A similar procedure described by CPT code 27446 (Arthroplasty, knee, condyle and plateau; medial OR lateral compartment) (unicompartmental knee replacement) was removed from the IPO list.
• 2008: CPT code 27446 was added to the ASC covered surgical procedures.
• 2013: CMS Proposed to remove the procedure described by CPT code 27447 from the IPO List in the CY 2013 OPPS/ASC proposed rule. After consideration of public comments, this proposal was not finalized.

The Public Weighs in on Removing CPT 27447 from the IPO List

The following are comments were published in the 2017 OPPS Final Rule.

• “The overwhelming majority of the commenters…supported removing TKA from the IPO list.”
• Those supporting the removal of TKA included “ASCs, therapeutic professional associations, hospital associations, as well as many surgeons.”
• Most supporters “noted that an appropriate patient selection protocol should be used to determine the patients who are best suited for outpatient joint replacement.”
• A few commenters opposing the removal of a TKA procedure represented professional organizations, health systems, and hospital associations. “The comments believed that the increased likelihood that Medicare patients have comorbidities that require the need for intensive rehabilitation after a TKA procedure preclude this procedure from being performed in the outpatient setting. They also state that most outpatient departments are not currently equipped to provide TKA procedures to Medicare beneficiaries, which require exceptional patient selection, exceptional surgical technique, and a carefully constructed postoperative care plan
• Commenters expressed concern about the implications that the removal of this procedure would have for pricing methodologies, target pricing, and reconciliation process in the Comprehensive Care for Joint Replacement and Bundled Payments for Care Improvement Models currently in place through the CMS Innovation Center.

CMS responded to comments in typical CMS fashion by indicating that they “thank the stakeholder public for the many detailed comments on this topic. We will consider all of these comments in future policy making.”

So for now, 27447 remains on the IPO List. The Final Rule and IPO list in Addenda E can be accessed on the CMS Hospital 2017 OPPS web page. Additional guidance about Inpatient-only Services in general can be found in the Medicare Claims Processing Manual, Chapter 4 – Part B Hospital, Section 180.7.

As the holiday season approaches, most of us excitedly anticipate gifts and packages from our friends and relatives for Christmas. In fact, the anticipation is often more thrilling than the actual gift. For those of you who deal with Medicare outpatient services, you may have been, like me, anxiously anticipating the release of the 2017 OPPS Final Rule. The wait is over as CMS released the Final Rule on November 1st. As has been the trend for many years now, CMS continues to increase the packaging of outpatient services under OPPS into more bundled payments. CMS “packages payment for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility.” Our article today examines the new packaging rules for 2017 from the OPPS Final Rule.

Comprehensive APCs

A comprehensive APC (C-APC) results in one bundled payment for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. The C-APC payment policy was finalized in the 2014 OPPS Final Rule but implementation was delayed until January 2015. For 2017, CMS is adding 25 more C-APCs bringing the total number of C-APCs to 62. Since most of us think more in terms of HCPCS codes (includes CPT codes) rather than APCs, it is easier to understand the impact of this increase in C-APCs by looking at the numbers of HCPCS codes assigned to Status Indicator “J1” which denotes a comprehensive APC primary service.

• January 2015 – 219 HCPCS codes
• January 2016 – 872 HCPCS codes
• January 2017 – 2,737 HCPCS codes

In 2016, CMS added another type of comprehensive APC for a specific combination of services performed in combination with each other and named observation services as this type of C-APC. To accomplish the comprehensive payment for observation, visit codes (all ED visits, critical care, clinic visit, and direct referral to observation) were assigned a Status Indicator of “J2.” A comprehensive APC payment is made for the visit codes when all of the criteria for observation services are met – 8 or more hours of obs reported on the day of or day after the visit code, no services with an SI of “J1” on the claim, and no services with an SI of “T” on the day of or day after observation.

The adjunctive services whose payment is bundled with C-APCs includes just about everything –

• diagnostic procedures,
• lab tests,
• other diagnostic tests and treatments,
• visits and evaluations,
• therapeutic services such as injections and infusions,
• other non-primary surgical procedures and add-on procedures,
• prosthetics, orthotics and other durable medical equipment,
• outpatient department services similar to therapy services (PT, OT, SLP), and
• drugs, biologicals and radiopharmaceuticals.

Only a few services not covered or paid under OPPS are excluded from the C-APC policy. The following services are paid separately in addition to the C-APC payment – mammograms, ambulance services, brachytherapy seeds, pass-through drugs and devices, and preventive services. Self-administered drugs (SADs) that are not otherwise packaged as supplies are also excluded from the C-APC policy; hospitals may hold the patient financially responsible for SADs since Medicare does not cover them.

Medicare makes a complexity adjustment for certain comprehensive services. This means they may increase the payment rate of a C-APC to the next higher paying C-APC in the same clinical family in some incidences

• when more than one service with a “J1” status indicator is reported on the same claim or
• when certain add-on codes are reported with a “J1” service.

Medicare bases the decision to apply a complexity adjustment on frequency and cost thresholds. They modified their criteria for complexity adjustments this year which will result in more code combinations being eligible for the increased payment. Addendum J to the Final Rule includes a listing of the code combinations that will receive a complexity adjustment.

One 2017 C-APC of note is the new Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC. Per the FR, “The creation of a new C-APC for allogeneic HSCT and the assignment of status indicator “J1” to CPT code 38240 would allow for the costs for all covered OPD services, including donor acquisition services, included on the claim to be packaged into C-APC payment rate.” To appropriately capture costs, CMS is creating a new cost center and a new revenue code, 0815, for reporting all services required to acquire stem cells from a donor, such as National Marrow Donor Program fees, tissue typing, donor evaluation, collection procedures, and the preparation and processing of stem cells. CMS is also putting in place a claim edit that will require revenue code 0815 to be present on the claim if CPT code 38240 is reported.

Laboratory Packaging

Since 2014, Medicare has packaged most clinical diagnostic laboratory tests. They have only paid laboratory tests separately if:

• they are the only services provided to a beneficiary on a claim,
• they are “unrelated” laboratory tests (ordered by a different physician for a different diagnosis and reported with the L1 modifier),
• they are molecular pathology tests, or
• they are considered preventive services.

For 2017, CMS is eliminating the L1 modifier and will no longer pay separately for “unrelated” lab tests. Medicare will continue to pay separately when lab tests are the only services reported on a claim. In addition to the exclusion of molecular pathology tests from laboratory packaging, for 2017 Medicare will also exclude advance diagnostic laboratory tests (ADLTs) from lab packaging. The ADLTs will be assigned to status indicator “A” and paid under the Clinical Lab Fee Schedule (CLFS). ADLTs are defined as tests that provide an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result.

Per Claim Packaging

Most clinical laboratory tests are assigned to a Status Indicator of “Q4” and, as mentioned above, are sometimes packaged and sometimes eligible for separate payment. This is known as conditional packaging and there are two other status indicators that also indicate conditionally packaged services – “Q1” and “Q2” which prior to 2017 were packaged based on date of service. For 2017, these conditionally packaged status indicators will be packaged on a per claim basis, like lab tests with a “Q4” SI already are. “Q1” services will be packaged if they are reported on the same claim with services with status indicators of “S”, “T”, or “V.” “Q2” services will be packaged if they are on the same claim with services with an SI of “T.”

As you can see, Medicare is a generous gifter – there is not just one package for providers for the New Year, but a whole bunch of them. Unfortunately, you can’t just choose one; you have to take them all.

Q:

Given the new Coding Guidelines for FY 2017 that went into effect October 1, 2017, do we automatically assume a causal relation between two diagnoses associated with the term “with”?

 

A:

Yes. You may interpret “with” to mean “due to” or “associated with” when it appears in a code title, the Alphabetic Index, or an instructional note in the Tabular List. A relationship may be assumed even without a physician’s documentation linking the conditions together. In the Alphabetic Index, the term “with” is sequenced immediately following the main term instead of alphabetic order.

To name a few, this new rule will effect conditions such as hypertension, diabetes and congestive heart failure.

Examples:

1. Code I11.0 would be assigned for hypertension with heart failure along with an additional code to identify the type of heart failure (I50._)
2. Code E11.43 would be reported for type 2 diabetes with gastroparesis.
3. Codes I13.2, I50.22, E11.22 and N18.6 would be the codes to report for a patient with hypertension, chronic systolic heart failure, type 2 diabetes and ESRD.

This guideline was actually effective in March 2016 but the Official Coding Guidelines were not updated until October 2016. You can refer to Section I.A.15 of the Official Coding Guidelines for FY 2017 and Coding Clinic 1st Qtr. 2016 page 11, 2nd Qtr. 2016 page 36 and 4th Qtr. 2016 page 141.