Briefings on APCs. Confronting new and established challenges with E/M billing INSIDE THIS ISSUE P10

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1 Briefings on APCs Volume 18 Issue No. 7 JULY 2017 INSIDE THIS ISSUE P5 Complying with medical necessity in outpatient hospital and physician clinic settings Confronting new and established challenges with E/M billing Read about how to bill compliantly for medical necessity and when a query may be needed. P8 CMS Quality Payment Program proposed rule deserves consideration from providers and hospitals Jugna Shah, MPH, writes about why the Quality Payment Program proposed rule is now a must-read each year along with the OPPS rules. P10 This month s coding Q&A Our experts answer questions about MUEs on HCPCS codes, appealing claims for noncovered procedures, and more. Copyright: TCMake_Photo. Image Source: istock.com by Debbie Mackaman, RHIA, CPCO, CCDS Every now and then, the HCPro Boot Camp instructors are asked similar questions on a specific billing issue from students and clients across the country. The old saying there must be something in the water often holds true, and it does in this case, especially regarding recent OIG audits. Whether it is the CPT Manual or Chapter 12 of the Medicare Claims Processing Manual, the definition of a new patient is the same for physicians and nonphysician practitioners billing. A patient who has not received any professional services, such as E/M or other face-to-face services, from the same physician or another physician of the same specialty and same group practice within the previous three years is considered to be new from the coding and billing perspective. According to CMS FAQ1969, if a professional component of a previous procedure is billed in a three-year time period (e.g., a lab interpretation is billed and no E/M service or other face-to-face service with the patient is performed), then this patient remains a new patient for the initial visit. An interpretation of a diagnostic test, reading an x-ray or EKG, etc., in

2 2 Briefings on APCs July 2017 the absence of an E/M or other face-to-face service with the patient does not affect designation as a new patient. The AMA CPT instructions for billing a new patient visit includes physicians in the same specialty and subspecialty. However, for Medicare, the same specialty is determined by the practitioner s primary specialty enrollment in the Medicare program. On the other hand, the definition of a new patient in a hospital outpatient department has evolved since the implementation of the OPPS in Initially, CMS had stated that if a patient had a medical record number created, that patient was considered to be established for any and all subsequent visits at that hospital. In calendar year (CY) 2009, CMS announced a change in the definition, wherein an established patient is a patient who has been registered as an inpatient or outpatient of the hospital over the prior three years. In addition, CMS stated that the new versus established determination is made from the perspective of the billing entity. Therefore, when billing for outpatient services, the hospital may appropriately bill a new patient code when the physician bills an established patient code and vice versa. Beginning in CY 2014, hospitals paid under the OPPS were required to report E/M services with a single HCPCS code, G0463 (hospital outpatient clinic visit for assessment and management of a patient), without any reference to new versus established patients. Although only one HCPCS code is reported for Medicare, hospitals are allowed to charge for their costs of care as related to the intensity of services provided, which may be described in the chargemaster using the prior 10 E/M levels (new and established ). Critical access hospitals (CAH) paid under the costbased methodology for the facility fee may continue to report the 10 different levels for E/M services, or they may report G0463 with a varying charge structure like an OPPS hospital. Ironically, CMS has acknowledged from the beginning of OPPS that CPT E/M codes were designed to reflect the activities of physicians and do not effectively describe the range and mix of services provided by hospitals. Although national facility-specific codes and guidelines have yet to be developed, CMS has instructed This document contains privileged, copyrighted information. If you have not purchased it or are not otherwise entitled to it by agreement with HCPro, an H3.Group division of Simplify Compliance LLC, any use, disclosure, forwarding, copying, or other communication of the contents is prohibited without permission. EDITORIAL ADVISORY BOARD Steven Andrews Editor sandrews@blr.com Kimberly Anderwood Hoy Baker, JD, CPC Director of Medicare and Compliance HCPro Danvers, Massachusetts Dave Fee, MBA Product Marketing Manager, Outpatient Products 3M Health Information Systems Murray, Utah Frank J. Freeze, LPN, CCS, CPC-H Principal The Wellington Group Valley View, Ohio Susan E. Garrison, CHCA, CHCAS, PCS, FCS, CPC, CPC-H, CCS-P, CHC, CPAR Executive Vice President of Healthcare Consulting Services Med Law Advisors, Inc. Atlanta, Georgia Diane R. Jepsky, RN, MHA, LNC CEO & President Jepsky Healthcare Associates Sammamish, Washington Lolita M. Jones, RHIA, CCS Lolita M. Jones Consulting Services Fort Washington, Maryland Jugna Shah, MPH President Nimitt Consulting Washington, D.C. Follow Us! Follow and chat with us about all things healthcare compliance, management, and QUESTIONS? COMMENTS? IDEAS? Contact Editor Steven Andrews at sandrews@hcpro.com or , Ext Briefings on APCs (ISSN: [print]; [online]) is published monthly by HCPro, an H3.Group division of Simplify Compliance LLC. Subscription is an exclusive benefit for Basic members of HCPro s Revenue Cycle Advisor. Basic membership rate: $595/year. Briefings on APCs, 35 Village Road, Suite 200, Middleton, MA Copyright 2017 HCPro, a division of BLR. All rights reserved. Printed in the USA. Except where specifically encouraged, no part of this publication may be reproduced, in any form or by any means, without prior written consent of HCPro, a division of BLR, or the Copyright Clearance Center at Please notify us immediately if you have received an unauthorized copy. For editorial comments or questions, call or fax For renewal or subscription information, call customer service at , fax , or customerservice@hcpro.com. Visit our website at Occasionally, we make our subscriber list available to selected companies/vendors. If you do not wish to be included on this mailing list, please write to the marketing department at the address above. Opinions ex pressed are not necessarily those of BAPCS. Mention of products and services does not constitute endorsement. Advice given is general, and readers should consult professional counsel for specific legal, ethical, or clinical questions. Current Procedural Terminology (CPT) is copyright 2011 American Medical Association. All rights reserved. CPT is a registered trademark of American Medical Association; no fee schedules, basic units, relative values, or related listings are included in CPT. The AMA assumes no liability for the data contained herein. Applicable FARS/DFARS restrictions apply to government use.

3 July 2017 Briefings on APCs 3 providers that each hospital s internal guidelines should follow the intent of the CPT code descriptions. In general, the guidelines should be designed to reasonably relate the intensity of hospital resources to the different levels of effort represented by the codes. CMS provided the following general principles for hospitals to use in developing and evaluating their internal guidelines: 1. The coding guidelines should follow the intent of the CPT code descriptor in that the guidelines should be designed to reasonably relate the intensity of hospital resources to the different levels of effort represented by the code. 2. The coding guidelines should be based on hospital facility resources. The guidelines should not be based on physician resources. 3. The coding guidelines should be clear to facilitate accurate payments and be usable for compliance purposes and audits. 4. The coding guidelines should meet the HIPAA requirements. 5. The coding guidelines should only require documentation that is clinically necessary for patient care. 6. The coding guidelines should not facilitate up-coding or gaming. 7. The coding guidelines should be written or recorded, well-documented, and provide the basis for selection of a specific code. 8. The coding guidelines should be applied consistently across patients in the clinic or emergency department to which they apply. 9. The coding guidelines should not change with great frequency. 10. The coding guidelines should be readily available for fiscal intermediary (or, if applicable, MAC) review. 11. The coding guidelines should result in coding decisions that could be verified by other hospital staff, as well as outside sources. Under Method II billing, a CAH may elect to bill its hospital outpatient services and the related professional services on the same UB04 claim form. This allows the CAH to be paid under cost reimbursement for the facility fees and 115% of the Medicare Physician Fee Schedule (MPFS) for the related professional fees. The Medicare Claims Processing Manual, Chapter , states that CAHs using Method II shall bill the appropriate new or established visit code for physicians and nonphysician practitioners who have reassigned their billing rights, depending on the relationship status between the physician and patient. Although this information is listed in the section on consultation services, effective January 1, 2010, the consultation codes are no longer recognized for Medicare Part B payment, and practitioners were instructed to use E/M visit codes that represent where the visit occurred and identify the complexity of the visit performed. Well, so far so good so where is the conundrum? Recently, several CAHs have shared with me that they are under OIG audit for E/M codes. After investigating further with their MACs and after contacting CMS, they have been told that the hospital E/M level should match the professional E/M level billed on the same claim. Unfortunately, this guidance is in direct conflict with all of the CMS instruction that has been provided thus far. If a Method II CAH matches the hospital outpatient and professional E/M levels, the hospital risks being overpaid or underpaid for the facility or professional services. For example, if an established hospital outpatient (i.e., has been registered at the CAH in the prior three years) presents to the provider-based clinic for a visit with a specialist who has not seen the patient before, the hospital would bill the appropriate established patient E/M and the appropriate new patient E/M for the physician. When billing under Method II, the CAH will be reimbursed its interim rate for the hospital outpatient visit and 115% of the MPFS for the physician s fee. If the hospital matches both E/M codes to new, the hospital visit charge would most likely be higher than an established patient, which would inappropriately increase the costs of care on the cost report and result in the patient paying more out of pocket on the coin-

4 4 Briefings on APCs July 2017 surance amount. If the hospital matches both E/M codes to established, the fee schedule amount for the physician s services will be lower and thereby create a loss in revenue under Method II billing. Using the current MPFS national facility payment rate for a Level 3 E/M, this example shows the difference in payment for the professional fees: (new) $77.88 X 1.15 = $ (established) $51.68 X 1.15 = $59.43 The CAHs that are under audit were told by a CMS representative that more information would be forthcoming in August to clarify the matter; in the interim, hospitals that are matching both visits to an established patient level are getting paid. Meanwhile, back at the ranch, several PPS hospitals have also been under an OIG audit for incorrectly billed E/M levels of service. These audits are currently encompassing claims for dates of service prior to the change to billing G0463 for all E/M visit levels. In a recent report, the OIG identified 12 risk areas based on claims data for a particular hospital, which included Outpatient Evaluation and Management Service Billed at a Higher Level than Physician. The title of this risk area is confusing, since both the hospital s E/M and the professional E/M are independently assigned and should be able to stand alone during an audit. In the report, the hospital disagreed with the coding determinations for eight of the 30 claims reviewed where the hospital E/M services were billed at a higher level than physician, stating that nearly all of these claims were disputed by only one level and represent differences of opinion that should not rise to the level of a finding. According to the OIG report: The Hospital had a structured process for determining the appropriate level of E/M service for its Hospital Outpatient Departments and followed these processes to bill compliantly. In all but two of the outpatient departments the Hospital utilized the 1997 CPT E/M guidelines for physician services to determine the appropriate hospital levels taking into account the patient s history, physical examination, medical decisionmaking, counseling, coordination of care, nature of the patient s presenting problem and time spent with the patient. In the other select departments, the Hospital adopted a point system that incorporated the range of services most frequently provided in those clinics and trained the clinicians to mark the specific services provided to each patient as a methodology for documenting the service. Each of these services correlated to a specific number of points depending on the acuity of the service. Both systems were designed to measure the intensity of the services provided to the patient. Moreover, the Compliance department trained the clinicians on the E/M code levels and monitored these services on a regular basis. Two other medical centers have also reached settlement agreements for allegations that the organizations submitted claims for new patient E/M outpatient clinic visits when the patients were actually established patients. No other details were provided on the OIG website; however, the application of the definition for new versus established patient in a hospital outpatient is much more clear than E/M level assignment. Regardless of how a hospital is paid, either via OPPS or cost, internal processes for assigning E/M codes should be evaluated using the 11 guidelines CMS had previously issued. CAHs should follow up with their MACs and CMS Regional Office Rural Health Coordinators for clarification to prevent denied claims, unwanted audit scrutiny, and loss of revenue. EDITOR S NOTE: Mackaman is an instructor for HCPro s Medicare Boot Camp Hospital Version and lead instructor for the Critical Access Hospital Version and Rural Health Clinic Version. She has over 24 years of experience in the healthcare industry, including inpatient and outpatient prospective payment systems; and coding, billing, and reimbursement issues for hospitals, critical access hospitals, and rural health clinics. She has served as compliance officer and director of health information services for healthcare systems.

5 July 2017 Briefings on APCs 5 Complying with medical necessity in outpatient hospital and physician clinic settings As CMS and third-party payers have looked for ways to treat patients in the outpatient setting and reduce inpatient volumes, CMS has used the 2-midnight rule, in addition to other methods, to treat patients as outpatients or in observation whenever possible. In addition, commercial third-party payers have made it more difficult to support or justify an inpatient admission by way of requiring preauthorization/ predetermination, etc. As a result, payers have been focusing on medical necessity and denying payment if the documentation and coding do not support the need for the outpatient services provided. The usage of clinical documentation improvement (CDI) in the inpatient realm is a well-known commodity for ensuring accurate coding and documentation to optimize revenue payment. However, an outpatient CDI process can also help accurately capture reimbursement and quality metrics for documenting medical necessity for outpatient care services rendered to patients in an office setting, an outpatient hospital, an ambulatory care center, or an emergent, nonappointment basis. Accurate clinical outpatient documentation with clear treatment and care plans is a key communication tool for healthcare providers. As we look to improve medical necessity in the outpatient arena, there are essential items that should be included as a standard for an outpatient visit, such as: All diagnoses (e.g., new, chronic, acute, wellness, screening) clearly documented and connected to the patient s chief complaint Avoidance of underdocumenting or of sparse or unclear documentation Clear reason for the visit Clearly established medical necessity in the documentation Clinical assessment and plan of care clearly documented and related to the reason for the visit Clinical notes that contain all the elements required to support the level of service selected Documentation that supports the level of service billed Physician/provider notes reflecting all the elements of history, exam, and medical decisionmaking to support the level of service for the outpatient encounter In addition, to ensure that the medical necessity component is established, the clinical note should contain a clearly stated chief complaint. The chief complaint (sometimes noted within the documentation as the CC) is a concise statement describing the symptom, problem, condition, diagnosis, physician-recommended return, or other factor as the reason for the encounter and is usually stated in the patient s own words. The chief complaint cannot be inferred. The physician/ provider must clearly notate if the patient is there for follow-up visits/treatments, or the physician should document and provide a clear explanation identifying the problem and/or condition that is prompting the patient visit. If the reason for the visit is not provided within the record, a query should be made and an addendum to the note should be created by the physician. In the physician office setting, medical necessity within the medical record requires the documentation to show pertinent facts, findings, and observations about a patient s health history. This documentation of health history should include notation of past and present illnesses (chronic and acute), any medical examinations, all medical/laboratory tests, treatments, and outcomes. The provider should avoid using ambiguous or vague phrases such as doing well, no change, or continuing care. Ambiguous terms, inaccuracies, or omissions in the clinical documentation can result in improper or incorrect medical care being provided, which can result in an adverse event for the patient and could lead to legal ramifications and/or risk management interventions.

6 6 Briefings on APCs July 2017 The lack of medical necessity within the clinical documentation may result in nonpayment to physicians via denied claims. Essentially, the documentation of medical necessity for an inpatient stay means the illness must be severe enough and the required services so intense that care for the patient can be given safely and effectively only in the hospital. The same idea in a reverse fashion is used for medical necessity documentation in the outpatient/physician office. Outpatient services require the illness to be of low enough severity as to not require the intensity of an inpatient stay; however, those services may be a short-stay or observation service at a facility rather than in a physician office. The bottom line is that physicians and care providers need to work hand-in-hand with case managers to ensure that medical necessity criteria and clinical documentation are clearly noted and appropriate for care of the patient. Compliant billing AHIMA is one of the best resources for information regarding compliance billing. However, there is no set criteria as to what should or should not be included in medical records. The compliance policy for any organization must identify and set forth requirements designating which medical record documents and which types of clinical documentation need to be included in the record. These policies should require a mandatory review by an expert coder/coding staff or the usage of outsourced expertise of coding for the organization. AHIMA states that all coders should be skilled in the review process for clinical documentation and have the ability to identify all diagnoses and procedures requiring coding. This will increase the accuracy and specificity of coding. AHIMA also recommends that there should be specific guidelines and tips for coders to follow to be in compliance with the facility s specific compliance policy. Inpatient/outpatient hospitals Below is a listing of common reports used in an inpatient setting. These documents should be reviewed by the coder to ensure compliant coding for reimbursement. In addition to these documents, the coder should be well versed in coding from an encoder and from textbooks, and should know how to use computerassisted coding software. Face sheet: The inpatient coder needs to review the code diagnoses and complications appearing on the face sheet. Electronic medical records make it easier to review this information, as they provide a straightforward and convenient location to review chronic and acute diagnoses, current prescriptions, and drug allergies. History and physical: The history and physical is used to identify any additional conditions and pertinent medical diagnoses that should be coded and/or listed as present on admission. Progress notes: These documents are used by the physicians and/or care providers and should be reviewed by the coder to verify any complications and/ or additional diagnoses that the physician ordered or performed. Physician s orders: These documents are used to code for physician-based services and to uncover missed diagnoses or diagnoses specifically targeted for procedures and therapeutic interventions such as IVs, blood/ lab draws, etc. Consultation report/progress note/care team note: Coders should review these to find additional diagnoses or complications for which the patient was treated by different physician specialists and/or therapists. This will also ensure documentation if additional procedures were ordered or carried out by another physician whose expertise was specifically requested for a targeted diagnosis or symptom. Operative/procedure reports: Coders should thoroughly read all operative procedure reports to accurately diagnose illnesses and accurately document all procedures performed. Pathology reports: These are best used by the coder to review and confirm or obtain more detail regarding the operative procedure reports and notes. However, the

7 July 2017 Briefings on APCs 7 coder should confirm the final diagnoses from the clinical documentation with the attending provider/ physician. Laboratory or imaging reports: Coders may use reports as guides to identify diagnoses but should continue to verify and confirm any diagnoses from this documentation with the attending physician. Discharge summary: The discharge summary should have all listed diagnoses. Coders should code all diagnoses and procedures that are listed on the discharge summary. Professional/physician office outpatient coding In order to accurately use ICD-10-CM and CPT/ HCPCS, the clinical documentation should describe the patient s condition using terminology that includes the specific illness and/or wellness diagnoses as well as language describing symptoms, problems, or a clearly specified reason for the encounter. The following is outpatient/office clinical documentation to include in an outpatient coding compliance policy: A diagnosis or the reason the service was ordered (sign or symptom) A problem list An authenticated (signed) physician order for services Clinician/provider visit notes Medication list Test results (Note: Coders should code only based on a physician s interpretation of test results, not the test results alone) Therapies (such as IV infusion, injections, etc.) In addition to the above-listed items, many offices and clinics use an electronic health record (EHR) in which the above-listed documents are embedded within the software and may or may not be separately identifiable. If this is the case, the EHR software should be reviewed for compliance by the clinic s administration and information technology staff, data privacy staff, and security staff. The query process for medical necessity and compliance As of 2017, the United States has completely switched over to ICD-10-CM/PCS. ICD-10 implementation has affected some reimbursements, but it was not as catastrophic of a transition as some people might have expected. However, the possibility remains that ICD- 10 claims could be denied at a greater rate than previous claims. With this fear, physicians are now faced with providing better clinical documentation than ever before. If their documentation is not clear and concise, they will likely be seeing more queries for clarification by coders. If a medical practice wants to avoid an increase in denials, it needs to help physicians provide more clinical detail to support the proper ICD-10 codes. This can be done through queries, but too many queries can be overwhelming for already-busy physicians. Therefore, coders should try to follow the following guidelines to help make the decision of whether to query: Does the medical record contain conflicting information? Are there elements or information missing from the medical record? Are there conditions or procedures that need more detail to support a specific ICD-10 code? If there is an unspecified diagnosis, is there information that suggests a more specific diagnosis is possible? If a coder decides that a query is necessary, AHI- MA has formalized guidelines for coders to follow to ensure that the query is written in clear, concise, and precise language, contains evidence specific to the case, is nonleading, is an essential part of the clinical documentation, and includes ICD-10 language. EDITOR S NOTE: This article is an excerpt from HCPro s The Complete Guide to Medical Necessity: JustCoding s Training and Education Toolkit by Lori-Lynne A. Webb, CPC, CCS-P, CCP, CHDA, CDIP, COBGC, AHIMA-approved ICD-10-CM/PCS trainer.

8 8 Briefings on APCs July 2017 OPPS ADVISOR by Jugna Shah, MPH CMS Quality Payment Program proposed rule deserves consideration from providers and hospitals Editor s note: Jugna Shah, MPH, president and founder of Nimitt Consulting, writes a bimonthly column for Briefings on APCs, commenting on the latest policies and regulations and analyzing their impact on providers. In late June, CMS released a major proposed rule that hospitals will need to pay attention to and no, I don t mean to say that CMS released the CY 2018 OPPS proposed rule early, though we ve thought that might happen since it s been at the Office of Management and Budget (OMB) for several months. The display copy of the Quality Payment Program (QPP) proposed rule was released June 20. You can think of this rule as a companion to the Medicare Physician Fee Schedule (MPFS) that typically comes out with the OPPS rule around the Fourth of July. That means both rules need to be read, understood, and, ideally, commented on by providers. The QPP provides two pathways for how physicians will get paid in the future, and it comes out of the landmark legislation that provided a fix to the longstanding Sustainable Growth Rate (SGR) payment update and was released as part of the Medicare Access and CHIP Reauthorization Act (MACRA). The QPP impacts all eligible physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists regardless of whether they practice in a freestanding office setting or are employed by a hospital. The bottom line is that all eligible clinicians will be paid differently under the new payment program depending on the track they select. Remember, eligible clinicians can choose one of two pathways to follow CMS refers to this as the pick your pace approach. One of the options is the Merit-Based Incentive Payment System (MIPS); the other is Alternate Payment Models (APM), including Advanced APMs. Performance under MIPS is based on the following four categories. The percentages listed are through performance year 2018, which impacts 2020 payment: Quality measures, which make up 60% of the overall score during the 2017 and 2018 performance years. Cost measures, proposed to make up 0% of the overall score for two years and then to increase to 30% by the 2019 payment year. This would impact the score and payments to eligible clinicians for 2021, but eligible clinicians should be aware that CMS still expects to calculate eligible clinician scores based on this information for educational/informational purposes. Practice improvement measures, which would make up 15% of the overall score. Advancing care information measures, which would make up 25% of the overall score. CMS lists the following as APMs that are automatically part of the QPP. This means physicians participating in one of these have an opportunity for increased reimbursement and would not participate in MIPS: Comprehensive Care for Joint Replacement (CJR) Payment Model (Track 1 CEHRT) Comprehensive ESRD Care (CEC) Two-Sided Risk Comprehensive Primary Care Plus (CPC+) Next Generation ACO Model Oncology Care Model (OCM) Two-Sided Risk Shared Savings Program Track 2 Shared Savings Program Track 3 Eligible clinicians employed by hospital systems are more likely to be participating in these programs, especially in the case of the CJR, which was automati-

9 July 2017 Briefings on APCs 9 cally implemented in 67 geographic areas without giving providers a choice. The details for each pathway are supplied in the 1,058-page proposed rule and should be understood by all eligible clinicians, as they could face positive or negative payment implications starting with the 2019 payment year. The level of financial risk, as well as reward, that is available to eligible clinicians under Advanced APMs compared to MIPS is particularly noteworthy. Additionally, the proposed rule sets forth a number of proposals intended to either slow the implementation or give providers more flexibility and opportunity to adapt to the changing environment. Like all proposed rules, CMS is seeking feedback, and I would encourage providers to weigh in on at least a few aspects of the rule, including: CMS defining the voluntary facility-based scoring mechanism proposal using the Hospital Value-Based Purchasing Program for facility-based clinicians who provide at least 75% of their covered professional services in the inpatient hospital setting or the ED CMS request for input on what thresholds should be used to define eligible clinicians Whether CMS Hierarchical Condition Categories (HCC) should be used to define complex patients Whether the cost category weight should continue to remain at 0% for the 2020 payment year Just this short list provides much opportunity for comment. For example, shouldn t the provision of professional services in the hospital outpatient department count just as much as services provided in the inpatient or ED setting? Do HCCs accurately capture complex patients, or should the definition of complex be refined beyond CMS proposal, and should it remain in effect for longer than the two or so years being proposed? These and other questions require attention and provider input. Additional evidence of CMS continuing to roll out this new payment methodology slowly and methodically is the proposal to raise the threshold required for participating providers. CMS proposes raising it from those providers billing more than 100 Medicare patients and $30,000 in Part B charges annually to providers seeing more than 200 beneficiaries and billing more than $90,000 in Part B charges. Under the QPP, Medicare calculates payment determinations based on the data submitted from two years prior that means providers need to take action before the end of 2017 in order to prevent a negative payment adjustment in 2019, the first year that eligible clinicians payment will be impacted by the program. So while many of the proposals will not take effect until at least 2018, hospitals will still have to be aware of provider requirements under the rule this year. More rules on the horizon By the time this column is out, the CY 2018 OPPS and MPFS proposed rules are expected to be released, but providers may not see CMS propose radical changes in them. Before CMS releases proposed or final rules, it submits them to the OMB for review. Typically, OPPS and MPFS rules are submitted a couple weeks to a month before release in early July. However, the 2018 rules were submitted to the OMB back in April. There is much speculation on what this signifies, including hoping for an early release of the rules, which hasn t occurred. Perhaps this signifies the agency s intent under new HHS Secretary Tom Price to maintain the status quo while it gains an understanding of the nuanced payment policies already in place, as well as to refine and/or develop new payment initiatives. This could include site-neutral payment policies, which have been the subject of much discussion over the years and were notably addressed in the FY 2018 IPPS proposed rule. Other examples include moving toward more episodic payments, which in the outpatient setting can be achieved through the creation of more comprehensive APCs (C-APC).

10 10 Briefings on APCs July 2017 The question isn t whether we ll see this occur, but when. It s not likely we ll see radical additions in this year s proposed rule, as CMS appears to still be getting its arms around things, but providers should fully expect more outpatient episodes in the near future. If we re interpreting actions to date as markers for what to expect, then it is fair to say that providers are likely to see the following usual updates, such as: Additional detail and clarification on site-neutral payments Additional packaging policies Codes removed from the inpatient-only list New C-APCs to cover additional services Reorganization of existing APCs and APC groups Between the IPPS final rule and the OPPS proposed rule, it s likely that we ll see additional changes to policies related to short-stay inpatient cases and tweaks to policies related to the use of modifiers -PN (non-excepted service provided at an off-campus outpatient, provider-based department of a hospital) and -PO (services, procedures, and/or surgeries provided at off-campus provider-based outpatient departments). So from my point of view, providers have two main homework assignments. First, they should comment on the QPP. Second, they should begin compiling data or questions they have for the agency that can be submitted as comments to the proposed rule. For example, many providers have asked questions about modifiers -PN and -PO during Open Door Forums; they could now turn them into written comments/questions that CMS will hopefully address in the final rule. For the latest updates, be sure to check out Revenue Cycle Advisor for a comprehensive breakdown of the 2018 OPPS proposed rule upon its release, expected in early July. Dealing with incorrect MUEs Q We are seeing Medically Unlikely Edits (MUE) on HCPCS J codes, and these are not correct. How do we handle these? A First, you need to double-check to make sure you are correctly calculating the units based on what was ordered and administered to the patient per the HCPCS unit definition. Second, you have to look at whether the code is packaged. If it is being billed correctly with the correct number of units, the units exceed the MUE, and the drug itself is packaged, you do have an alternative to bill that under revenue code 250 and get all your charges in the door. That would recognize the total cost to the claim. But if it is a separately paid drug, the only way to get that recognized is to appeal. A second avenue is to defer to an expert to support the claim. You could have a physician from whichever specialty ordered the drug (e.g., for chemotherapy or a monoclonal antibody), as well as the pharmacist, document why that MUE is wrong. Submit their documentation to the NCCI contractor and to Medicare to say, We ve got our two experts who disagree with this MUE for the following reasons. That will carry some weight with them. First, though, be sure that your units are calculated correctly and that your documentation supports them then figure out what your next step is. Determining setup fees for multiple procedures Q Facilities often have two charges for services performed in an operating room (OR) suite. It s common to charge a flat setup fee (which includes the first 15 minutes of OR

11 July 2017 Briefings on APCs 11 time) as well as a per-minute fee for each additional minute. When multiple procedures are performed, is it appropriate to charge an additional setup fee? For example, a facility performed a colonoscopy and an esophagogastroduodenoscopy, which took a total of 20 minutes in the procedure room. The facility charged two setup fees plus an additional five minutes of OR time. Would this be considered a duplicate charge (two setup/initial 15-minute charges, plus five minutes)? A Facilities often have an initial and each subsequent charge for OR time/resources, and these can be tiered by acuity/resource level. For example: Level 1, first 15 minutes Level 1, each additional 15 minutes Level 2, first 15 minutes Level 2, each additional 15 minutes A facility can have its own charging practices/rules as long as it meets CMS requirements for charges in the Provider Reimbursement Manual. It is atypical to have two initial OR or endoscopy suite charges unless the patient has to return to the endoscopy suite for a second/subsequent procedure on the same day or during the same encounter. Refer to the following excerpts from the manual: , Charges Charges refer to the regular rates established by the provider for services rendered to both beneficiaries and to other paying patients. Charges should be related consistently to the cost of the services and uniformly applied to all patients whether inpatient or outpatient. All patients charges used in the development of apportionment ratios should be recorded at the gross value; i.e., charges before the application of allowances and discounts deductions. 2203, Provider charge structure as basis for apportionment To assure that Medicare s share of the provider s costs equitably reflects the costs of services received by Medicare beneficiaries, the intermediary, in determining reasonable cost reimbursement, evaluates the charging practice of the provider to ascertain whether it results in an equitable basis for apportioning costs. So that its charges may be allowable for use in apportioning costs under the program, each facility should have an established charge structure which is applied uniformly to each patient as services are furnished to the patient and which is reasonably and consistently related to the cost of providing the services. While the Medicare program cannot dictate to a provider what its charges or charge structure may be, the program may determine whether or not the charges are allowable for use in apportioning costs under the program. Hospitals which have subproviders and hospital-based SNFs must also maintain uniform charges across all payer categories, as well as like charges for like services across each provider setting, in order to properly apportion costs. If like charges for like services are not maintained across provider settings, the cost report must not combine charges when calculating cost-to-charge ratios but must report separately, by department, costs and charges for the hospital, subprovider, and skilled nursing facility. An exception to this requirement is if the provider has the ability to gross-up charges described in 2314.B. Appealing claims for noncovered procedures Q Can a claim that is edited for a noncovered procedure be appealed? A If a claim is edited for a noncovered procedure, the claim cannot be submitted to CMS for appeal. Therefore, once the coding of the noncovered procedure is validated, the process to split the noncovered procedure onto a separate claim must be followed so that at least one claim can be submitted and processed. Then an appeal can be filed if the provider actually believes the procedure should be or is covered. With version 33 of the Medicare Code Editor (MCE), the first version of the MCE using the ICD-10 codes, CMS acknowledged errors in this list of noncovered procedures and provided instructions to MACs to process claims having the errors as described in the IPPS.

12 12 Briefings on APCs July 2017 Clarifying partial hospitalization program requirements Q We have some patients in our partial hospitalization program (PHP) who need intensive care but don t always meet the minimum number of hours. We have a weekly meeting with our providers to ensure that the plan of care meets the CMS requirements, and if not, what other options are available. One of our providers insists that some patients need the intensive care, but just not that much time these patients are getting what they need in a smaller amount of time, and there is no need to require them to come for additional services just to meet the 20-hour requirement. A PHPs are designated to be in lieu of inpatient hospitalization for mental health conditions. The regulations state very specifically (42 CFR (c)(1)) that these programs are a replacement for inpatient care and therefore require a substantial time investment. CMS states that PHPs are intended for patients who require a minimum of 20 hours per week of therapeutic services as evidenced in their plan of care. The regulations also require that these services are furnished under a physician certification and plan of care (42 CFR (e)). CMS stated on p. 482 in the 2017 OPPS final rule that, as shown by claims data, patients were not receiving the required minimum number of hours based on the services that were reported. There is a lengthy discussion in the final rule about the impact that this has had on the OPPS payments. CMS also noted that changes would have to be made to ensure the regulation requirements were being met. This issue was still open for comment in the final rule. CMS issued Transmittal 1883 on April 28, stating that the first step will be to notify providers via remittance advice that a patient did not receive the minimum 20 hours per week of therapeutic services. These messages will be implemented on October 1, 2017, for dates of service starting that day, and are intended to increase provider awareness of the regulations at 42 CFR (c)(1) and 42 CFR (a)(3). This will begin with an alert and a change that Edit 95 will now be applied at the line-item level, not at the claim level. Payment will be provided, and the alert will be issued on the remittance advice. CMS notes that in the future, the flag will be changed and the service will no longer be paid if it does not meet the 20-hour minimum requirement; however, the agency has not given a date for this change. Contributors We would like to thank the following contributors for answering the questions that appear on pages Shannon E. McCall, RHIA, CCS, CCS-P, CPC, CPC-I, CEMC, CCDS Director of coding and HIM HCPro Middleton, Massachusetts Laurie L. Prescott, RN, MSN, CCDS, CDIP, AHIMA-approved ICD-10 trainer CDI education specialist HCPro Middleton, Massachusetts Shelley C. Safian, PhD, MAOM/HSM, CCS- P, CPC-H, CHA, AHIMA-approved ICD-10 trainer Safian Communications Services Orlando, Florida Lori-Lynne A. Webb, CPC, CCS-P, CCP, CHDA, CDIP, COBGC, AHIMA-approved ICD-10 trainer President Webb Services Boise, Idaho Denise Williams, RN, CPC-H Senior vice president of Revenue Integrity Services Revant Solutions Fort Lauderdale, Florida