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Dilemma:

An elderly female presented to the hospital with shortness of breath and chest pain. The patient was admitted and Acute Coronary Syndrome was ruled out.   The patient was also noted to have a Hematocrit of 26.4, Acute Renal Failure, Diabetes Mellitus, Hypothyroidism, and Diverticulosis with recent hemorrhage. The attending physician documented Anemia of Chronic Disease to be the reason for admission and the principal diagnosis. Can Anemia of Chronic Disease (D63.8) be sequenced as a principal diagnosis in this case?

Solution:

No, Anemia of Chronic Disease has been designated as a manifestation; therefore, D63.8 cannot be sequenced as a principal diagnosis. Coding instructions state to code the underlying disease first. Therefore, if the documentation of the cause of the anemia is not clear, then querying the physician is recommended.

Resource: ICD-10-CM Codebook, TruCode

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

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

Demonstration Code 75

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

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

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

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

Billing and Paying for Post-Discharge Home Visits

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

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

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

Billing and Payment for Telehealth Services

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

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

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

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

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

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

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

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

Meaning of Identification

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

Reasonable Diligence

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

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

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

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

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

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

Overpayment

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

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

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

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

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

Lookback Period

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

Reporting and Returning Overpayments

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

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

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

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

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

Cost Reporting, PIP, Outliers, and Overpayments

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

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

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

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

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

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

Provider Liability

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

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

Medicare transmittals from February include four transmittals based on updates to National Coverage Determinations (NCDs). As a reminder, the NCD process is described in the Medicare Program Integrity Manual, chapter 13.

National Coverage Determinations (NCDs) are developed by CMS and outline the conditions for which an item or service is considered to be covered (or not covered) by Medicare nationally. Initially a decision memorandum is posted on the CMS Web site that describes the clinical position which CMS intends to implement. CMS implements the coverage decision through transmittals generally within 180 days of the end of the calendar quarter in which the memo was posted. Implementation often includes both an update to the NCD manual and the Claims Processing Manual to provide claims processing instructions related to the new coverage requirements.

Such is the case for the February updates with a new NCD for human Papillomavirus (HPV) and a revision to the NCD for Human Immunodeficiency Virus (HIV).

February 2016 Transmittals

Screening for Cervical Cancer with Human Papillomavirus (HPV) Testing – National Coverage Determination (NCD)

• Numbers:Transmittal R189NCD, Transmittal R3460CP, Change Request 9434,MLN Matters MM9434
• Dates:Issued: February 5, 2016; Effective: July 9, 2015; MLN: February 18,2016;   Implementation: January 3, 2017
• Affects: Physicians and other providers who submit claims to Medicare Administrative Contractors
• Updates: National Coverage Determinations Manual, Chapter 1, Section 210.2.1; Medicare Claims Processing Manual, Chapter 18, Sections 30.2.1, 30.5, 30.6, 30.7, 30.8, and 30.9

Summary of Changes: The purpose of this Change Request (CR) is that CMS has determined that for dates of service on or after effective July 9, 2015, evidence is sufficient to add HPV testing under specified conditions.

Screening for the Human Immunodeficiency Virus (HIV) Infection

• Numbers: Transmittal R190NCD; Transmittal R3461CP, Change Request 9403, MLN Matters MM9403
• Dates: Issued: February 5, 2016; Effective: April 13, 2015; MLN: February 17, 2016; Implementation: January 3, 2017
• Affects: Physicians, other providers, and suppliers who submit claims to Medicare Administrative Contractors
• Updates: National Coverage Determinations Manual, Chapter 1, Section 210.7; Medicare Claims Processing Manual, Chapter 18, Sections 130.1, 130.2, 130.3, 130.4, 130.5 and 130.6

Summary of Changes: The purpose of this CR is to inform MACs that CMS has determined that the evidence is adequate to conclude that screening of HIV infection for all individuals between the ages of 15-65 years is reasonable and necessary for early detection of HIV and is appropriate for individuals entitled to benefits under Part A or enrolled in Part B.

“Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction and skillful execution; it represents the wise choice of many alternatives.”- William A. Foster

The Office of Inspector General (OIG) began releasing Hospital Medicare Compliance Review (Compliance Reviews) Reports in early 2011. In Fiscal Year (FY) 2012 Compliance Reviews became part of the OIG’s Work Plan. Although the name of the project may have changed since 2012, Compliance Reviews remain a part of the Work Plan in FY 2016.

FY 2012 OIG Work Plan Project

• Medicare Inpatient and Outpatient Payments to Acute Care Hospitals (New)

We will review Medicare payments to hospitals to determine compliance with selected billing requirements. We will use the results of these reviews to recommend recovery of overpayments and identify providers that routinely submit improper claims. Prior OIG audits, investigations, and inspections have identified areas that are at risk for noncompliance with Medicare billing requirements. Based on computer matching and data mining techniques, we will select hospitals for focused reviews of claims that may be at risk for overpayments. Using the same data analysis techniques, we will identify hospitals that broadly rank as least risky across compliance areas and those that broadly rank as most risky. We will then review the hospitals’ policies and procedures to compare the compliance practices of these two groups of hospitals. We will also survey or interview hospitals’ leadership and compliance officers to provide contextual information related to hospitals’ compliance programs. (OAS; W-00-11-35538; various reviews; expected issue date: FY 2012; work in progress; and OEI; 00-00-00000; expected issue date: FY 2012; new start)

FY 2016 OIG Work Plan Project

• Selected inpatient and outpatient billing requirements

We will review Medicare payments to acute care hospitals to determine hospitals’ compliance with selected billing requirements and recommend recovery of overpayments. Prior OIG audits, investigations, and inspections have identified areas at risk for noncompliance with Medicare billing requirements. Our review will focus on those hospitals with claims that may be at risk for overpayments. (OAS; W-00-12-35538; W-00-13-35538; W-00-14-35538; W-00-15-35538; various reviews; expected issue date: FY 2016)

Compliance Reviews by the Numbers

As of February 2016, the OIG has released over 140 Compliance Reviews. According to these reviews, collectively this group of hospitals was overpaid $76,447,380.00. Adding insult to injury, in 2013 the OIG began extrapolating their findings. To date, 21 hospitals have been subject to extrapolation, including the most recent hospital Compliance Review released on February 3, 2016 for the University of Minnesota Medical Center for 2012 and 2013.

Extrapolating overpayments has exponentially increased the amount hospitals are to refund to the Contractor. Collectively, the $7,780,049.00 overpaid by 21 hospitals was extrapolated to $66,495,541.00. When you add this subset of hospitals to the overall amounts, the $76,447,380.00 that all hospitals were overpaid increased to $135,262,862.00 to be refunded to the Contractor. Now let’s take a closer look at the most recent Report released.

Medicare Compliance Review of University of Minnesota Medical Center for 2012 and 2013

The objective of this review was to “determine whether University of Minnesota Medical Center (the Hospital) complied with Medicare requirements for billing inpatient and outpatient services on selected types of claims.”

Audit Scope

This Compliance Review covered $24,360,864 in Medicare payments to the hospital for 3,351 claims potentially at risk for billing errors. The OIG selected a stratified random sample of 255 claims with payments totally $2,370,592. Claims consisted of 75 inpatient and 180 outpatient claims with dates of service in Calendar Year 2012 and 2013.

Risk Areas

Specific “risk areas” identified as being at risk for noncompliance with Medicare billing requirements included:

• Inpatient Rehabilitation Claims,
• Inpatient claims billed with high-severity-level DRG codes,
• Inpatient and Outpatient manufacturer credits for replaced medical devices,
• Outpatient dental claims,
• Outpatient claims billed with modifier -59,
• Outpatient claims billed for Doxorubicin Hydrochloride; and
• Outpatient claims billed for Herceptin.

Note that manufacturer credits for replaced medical devices and outpatient dental claims are also stand-alone projects within the FY 2016 Work Plan. This should be a red flag for hospitals to make sure you are in compliance with these two “risk areas.” A valuable resource is readily available in the specific findings in the report where the OIG provides references such as the Code of Federal Regulations (CFR) and the CMS Provider Reimbursement Manual (PRM) as guidance for compliance with billing requirements.

Audit Findings

The Hospital complied with Medicare billing requirements for 125 of the 255 inpatient and outpatient claims reviewed. The remaining 130 claims resulted in overpayments of $565,286, specifically:

• 29 Inpatient claims had billing errors, resulting in overpayments of $261,886, and
• 101 Outpatient claims had billing errors, resulting in overpayments of $303,400.

The OIG indicated that “these errors occurred primarily because the Hospital did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors.” On the basis of this sample, the OIG extrapolated that the hospital received overpayments of at least $3,266,841 for the audit period and recommended that the Hospital refund this amount to the Medicare contractor.

Looking at the dollars to be refunded, it is easy to see why Compliance Reviews continue to be a part of the OIG’s annual Work Plan. While Compliance Reviews are a part of the OIG Work Plan, hospitals should consider closely monitoring “risk areas” in these reports as an additional tool in your annual and ongoing compliance assessment, plan and actions.

The Centers for Medicare and Medicaid Services (CMS) posted an update to the Therapy Cap webpage on February 9, 2016. CMS indicates that the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), signed into law on April 16, 2015 impacted Therapy Caps by extending the “exception process” and making changes to the manual medical review process.

Therapy Cap Exception Process Extension

Therapy caps are a financial limitation on the amount Medicare allows for outpatient therapy services for a single Medicare patient in a given calendar year. The therapy cap amount for each patient starts over each January 1st. The therapy caps for Calendar Year 2016 are $1,960 for Physical Therapy (PT) and Speech-Language Pathology (SLP) combined and $1,960 for Occupational Therapy (OT).

An exception process to the therapy caps for reasonable and necessary services beyond the cap was initially required by section 5107 of the Deficit Reduction Act of 2005. Congress has continuously extended the exception process through legislation. The most recent extension can be found in section 202 of MACRA that extended the therapy caps exception through December 31, 2017.

Manual Medical Review of Therapy Claims

Along with the ability for a provider to receive money beyond the therapy caps came the manual medical review of the claims to ensure that Medicare dollars were being spent appropriately. Initially, the Medicare Administrative Contractors (MACs) conducted pre-payment reviews with dates of service January 1, 2013 to March 31, 2013. The Recovery Auditors assumed responsibility for reviews on April 1, 2013.

MACRA included key changes to this process. First, it shifted the review requirement from ALL records to a “targeted review process.” Second, it prohibits the continued use of Recovery Auditors to conduct the review.

“CMS has tasked Strategic Health Solutions as the Supplemental Medical Review Contractor (SMRC) with performing this medical review on a post-payment basis.

CMS indicates that claims selection will be based on:

• Providers with a high percentage of patients receiving therapy beyond the threshold as compared to their peers during the first year of MACRA.
• Therapy provided in skilled nursing facilities (SNFs), therapists in private practice, and outpatient physical therapy or speech-language pathology providers (OPTs) or other rehabilitation providers.”

This medical review process will be paying close attention to evaluating the number of units/hours of therapy provided in a day.”

Information about the number of units/hours of therapy provided in a day can be found in a related article Rehabilitation Therapy Documentation, Part 2.

Resources for More Information

Therapy Caps has been a “hot topic” for several years now. Additional articles on therapy caps/manual review can be accessed on our website – just use the subject search function with subject “therapy”.

In addition to the CMS Therapy Cap web page there is also a Therapy Services webpage, which includes links to the Medicare Manual sections that address rehabilitation therapy services as well as a link to the Beneficiary Fact Sheet Medicare Limits on Therapy Services.

Last, we strongly encourage you to visit the Strategic Health Solutions, LLC website at http://strategichs.com/smrc/ to view their prior reviews of Medicare Part B Outpatient Rehabilitation Therapy Services found on their Completed Projects webpage. Pay close attention to the “Denial Reasons” and “How to Prevent Denial” sections of the Project detail.

If you are involved at all with issues relating to the Hospital Outpatient Prospective Payment Rule (OPPS), you likely already know that payment for observation services changed from a composite payment to a comprehensive payment for 2016. But what does this really mean for hospitals?   Whether you are paid more or less than last year for a particular claim depends on the number and types of services being performed. As Medicare intends when creating payment bundles, there are “winners” and “losers” when looking at individual claims – that is, some claims will receive higher reimbursement and some lesser than the previous year.

That said, I still thought it would be interesting to look at some individual observation claims and the differences in Medicare payment amounts from 2015 to 2016. First, a review of the rules for observation services:

The purpose of observation services has not changed in many years. As stated in the Medicare Benefits Policy Manual, Chapter 2, section 60.1 – “Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital.” In simpler language – the patient is too sick to be sent home and not sick enough to expect a two-midnight hospital stay (inpatient admission), so they are kept in a hospital bed for treatment and tests to determine if they need to be admitted or may safely be sent home. Under the two-midnight rule, patients receiving necessary hospital care that will pass a second midnight should be admitted as inpatients. A physician’s order is required for a patient to receive observation services.

Observation services are billed per hour with HCPCS code G0378. In order to receive separate payment for observation services, the following criteria must be met:

• The patient must receive 8 or more hours of observation services,
• Observation hours must be billed on the day of or the day after certain visit codes:
• An ED visit, type A or type B (CPT codes 99281-99285 or HCPCS codes G0380-G0384) – this requirement was changed for 2016 to include all ED visit levels; previously only high level ED visits qualified for observation payment.
• Critical care services (CPT 99291)
• A clinic visit (HCPCS code G0463)
• A direct referral to observation (HCPCS code G0379) on the same day as observation hours
• There must be no other services on the claim that have an OPPS status indicator (SI) of “J1” (services paid under comprehensive APCs).
• There must be no other services on the claim that have an OPPS status indicator (SI) of “T” (surgical services) – another change from previous years where observation was not paid if there was a T status procedure on the day of or the day before observation hours. For 2016 the observation payment will not be made if there is a T status procedure on any day on the claim.

As a Comprehensive APC, observation now has a status indicator of “J2” and the Medicare unadjusted comprehensive observation payment amount is $2,174.14. Since it is a comprehensive APC, the payment for all adjunctive services is bundled into the observation payment with only a few exceptions. This means for a claim that contains observation services that meets the above criteria, your hospital will receive one payment of approximately $2,174 for the entire claim. Other services on the claim will not be paid separately. As stated above, this is the Medicare national unadjusted payment rate; most hospitals will receive less based on their wage index and a portion of the adjusted payment (around $430) is the patient’s co-pay. Let’s look at some examples.

These are just some general examples about observation payments. These examples do not include discussion of services that were packaged in 2015, such as labs and routine, lower-cost ancillary services since this has not changed in 2016. All references to payment are based on the Medicare unadjusted fee schedules for 2015 and 2016.

Example 1: A level 4 ED visit with an ensuing 17 hours of observation services. Patient received a CTA of the lower extremity and two IV push injections. Total Medicare unadjusted payment for 2015 equals " $1657. 2016 Comprehensive Observation payment " $2,174. Increase for 2016 of $517.

Example 2: A level 5 ED visit with an ensuing 35 hours of observation services. Patient received two CTs (with contrast), a chest x-ray, a vaccine injection, an EEG, an IV infusion and an IV push. Total Medicare unadjusted payment for 2015 equals " $2,044. 2016 Comprehensive Observation payment " $2,174. Increase for 2016 of $130.

Example 3: A level 3 ED visit with an ensuing 10 hours of observation services. Patient received a CTA of the heart, a chest x-ray, and an hour of hydration. Remember that in 2015 a Level 3 ED visit did not qualify for an observation composite payment. Total Medicare unadjusted payment for 2015 equals " $582. 2016 Comprehensive Observation payment " $2,174. Increase for 2016 of $1592.

Example 4: A level 5 ED visit with an ensuing 18 hours of observation services. Patient received a CTA of the chest, a chest x-ray, an IV push, an hour of hydration, a myocardial SPECT study, and an Echo. Total Medicare unadjusted payment for 2015 equals " $3,280. 2016 Comprehensive Observation payment " $2,174. Decrease for 2016 of $1106.

Example 5: A level 5 ED visit with an ensuing 26 hours of observation services. Patient received several MRAs and MRIs without contrast, three hours of hydration, an Echo, a Duplex scan of extracranial arteries, and a CNS visual evoked potential. Total Medicare unadjusted payment for 2015 equals " $2,787. 2016 Comprehensive Observation payment " $2,174. Decrease for 2016 of $613.

So what is a hospital to make of this and are there actions that need to be taken? First, hospitals simply need to be aware of this change in payment structure. The only actions hospitals can take concerning comprehensive observation payments, increased packaging in general, the overall shift to prospective payment systems, and the transition to value-based payments instead of fee-for-service is to operate more effectively and efficiently. Focus on the best outcomes for the least amount of cost. Control utilization of services – do the necessary things that affect patient outcomes, but don’t overdo testing or treatments that are not necessary. Make sure you are treating and testing the patient in the appropriate setting – don’t perform tests that could and should be provided as outpatient services on an observation patient or an inpatient. The healthcare world is changing rapidly and only those providers who rise to the challenge of better outcomes in a cost-effective manner will survive. There will be winners and losers…

Dilemma:

How to interpret the Excludes1 notes in ICD-10-CM when the conditions are unrelated to one another.

Solution:

On October 26, 2015 the Centers for Disease Control and Prevention (CDC) posted the following Excludes1 notes guidance on their ICD-10-CM webpage. This guidance was originally posted on October 19, 2015. The Updated information appears in bold).

There are circumstances that have been identified where some conditions included in Excludes1 notes should be allowed to both be coded, and thus might be more appropriate for an Excludes2 note. However, due to the partial code freeze, no changes to Excludes notes or revisions to the official coding guidelines can be made until October 1, 2016. This new guidance concerning Excludes1notes is intended to allow conditions to be reported together when appropriate even though they may currently be subject to an Excludes1 note. This coding advice has been approved by the four Cooperating Parties – the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), the Centers for Medicare and Medicaid Services (CMS), and the National Center for Health Statistics (NSHC).

This advice was published in the 4th Quarter 2015 issue of Coding Clinic for ICD-10-CM and ICD-10-PCS.

Question:
We have received several questions regarding the interpretation of Excludes1notes in ICD-10-CM when the conditions are unrelated to one another. How should this be handled?

Answer:
If the two conditions are not related to one another, it is permissible to report both codes despite the presence of an Excludes1 note. For example, the Excludes1 note at code range R40-R46, states that symptoms and signs constituting part of a pattern of mental disorder (F01-F99) cannot be assigned with the R40-R46 codes. However, if dizziness (R42) is not a component of the mental health condition (e.g., dizziness is unrelated to bipolar disorder), then separate codes may be assigned for both dizziness and the mental health condition.

In another example, code range I60-I69 (Cerebrovascular Diseases) has an Excludes1 note for traumatic intracranial hemorrhage (S06.-). Codes in I60-I69 should not be used for a diagnosis of traumatic intracranial hemorrhage. However, if the patient has both a current traumatic intracranial hemorrhage and sequela from a previous stroke, then it would be appropriate to assign both a code from S06- and I69.

Note: This information was discussed by MMP’s AHIMA Approved ICD-10-CM/PCS Trainer Coding Professionals in our 2016 IPPS Coding Updates Webinar last fall. If you missed the opportunity to join us live, this session will be available on our Classes page as an On-Demand Webinar soon.

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

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

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

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

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

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

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

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

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

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

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

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

Did you know that Section 6401 of the Affordable Care Act (ACA) provides that a “provider of medical or other items or services or supplier within a particular industry sector or category” shall establish a compliance program as a condition of enrollment in Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP)? Although an enforcement date has yet to be issued, the Secretary of Health and Human Services (HHS), in consultation with the HHS Office of Inspector General (OIG) have established seven core or key elements of an effective compliance program as required by the ACA.

The 5th core element is Auditing and Monitoring. CMS indicated in an Affordable Care Act Provider Compliance Programs: Getting Started Webinar that “a system for auditing and monitoring must be implemented to measure the effectiveness of the compliance program, ensure compliance with CMS requirements, and identify compliance risks.”

Ensuring compliance with CMS requirements is a full time job in and of itself and we recognize that our clients are busier than ever. As Making HealthCare Make Sense is what we are about, we have added a standing article the last week of each month spotlighting key Medicare Transmittals released by CMS during the month.

January 2016 Transmittals

January 2016 Integrated Outpatient Code Editor (I/OCE) Specifications Version 17.0

• Numbers: Transmittal R3437CP, Change Request 9459, MLN Matters MM9459
• Dates: Issued: 01/06/2016, MLN: 1/11/2016, Implementation: 1/4/2016
• Affects: Providers who submit claims to Medicare Administrative Contractors, including Home Health and Hospice MACs (HH+H MACs) for services provided to Medicare beneficiaries
• Updates: Medicare Claims Processing Manual, Chapter 4, Section 40.1

Summary of Changes: This notification provides the Integrated OCE instructions and specifications for the Integrated OCE that will be utilized under the OPPS and Non-OPPS for hospital outpatient departments, community mental health centers, all non-OPPS providers, and for limited services when provided in a home health agency not under the Home Health Prospective Payment System or to a hospice patient for the treatment of a non-terminal illness.

Notice of New Interest Rate for Medicare Overpayments and Underpayments -2nd Qtr Notification for FY 2016

• Numbers: Transmittal R258FM, Change Request 9532, MLN not released at time of this article
• Dates: Issued: 01/12/2016, Implementation 01/19/2016
• Affects: Medicare Providers
• Updates: Medicare Financial Management Manual, Chapter 3, Section 10

Summary of Changes: Medicare Regulation 42 CFR Section 405.378 provides for the charging and payment of interest on overpayments and underpayments to Medicare providers. The Secretary of Treasury certifies an interest rate quarterly. Treasury utilized the most comprehensive data available on consumer interest rates to determine the certified rate. Interest is assessed on delinquent debts in order to protect the Medicare Trust Funds.

Award of Durable Medical Equipment (DME) Medicare Administrative Contractor (MAC) Contract for Jurisdiction D

• Numbers: Transmittal R1592OTN, Change Request 9453, MLN not released at time of this article
• Dates: Issued: 01/15/2016, Implementation: 03/01/2016
• Affects: Providers submitting DME claims for Medicare beneficiaries inJurisdiction D (U.S. Territories of Alaska, Arizona, California, Hawaii, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, Nevada, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming, American Samoa, Guam, and Norther Mariana Islands.
• Summary of Changes: The purpose of this change request is to announce the award of the Durable Medical Equipment (DME) Medicare Administrative Contractor (MAC) Jurisdiction D contract to Noridian Healthcare Solutions, LLC for the administration of Medicare DME Fee-for-Service (FFS) claims.