Medicare Desk Reference for Hospitals

Medicare Desk Reference for Hospitals April 2004 Carol F. Endahl, Product Manager

Contents Contents Contents... Contents 1 Index... Index 1 Introduction... Introduction 1 Abortion Services... 1 1 Abuse... 1 2 Acute Care Hospital... 1 3 Additional Documentation Request... 1 6 Adjustment Claims... 1 8 Admission Date... 1 10 Admission Procedures... 1 12 Advance Beneficiary Notice (ABN)... 1 13 Advance Directives... 1 20 Advisory Opinions... 1 27 All-Inclusive Rate... 1 37 Ambulance Services... 1 38 Ambulatory Payment Classification (APC)... 1 44 American Hospital Association (AHA)... 1 44 Antiemetic Drugs... 1 45 Appeals... 1 47 Assignment Agreement... 1 50 Audits... 1 51 Automated Multichannel Chemistry Profiles... 1 54 Bad Debt... 1 56 Bilateral Procedures... 1 58 Billable Services... 1 59 Billing Compliance Plan... 1 59 Billing Frequency... 1 63 Billing Timeliness... 1 65 Biofeedback Therapy... 1 66 Black Lung Program... 1 67 Blood and Blood Products... 1 72 Bone Mass Measurement... 1 75 Canceled Surgical Procedures... 1 77 Cardiac Catheterization Services... 1 78 Cardiac Rehabilitation Services... 1 79 Certificate of Medical Necessity (CMN)... 1 81 Certificate of Need (CON)... 1 83 Chargemaster Maintenance... 1 83 Chemotherapy Administration in a Hospital Setting... 1 88 Claim Changes... 1 90 Claims Filing Standards... 1 91 Clean Claims... 1 91 Clinical Trials... 1 92 2003 Ingenix, Inc. Nov. 03 Contents 1

Contents Positron Emission Tomography (PET) Scans... 4 103 Primary Payer... 4 104 Professional Component... 4 105 Program Integrity... 4 106 Program Safeguard Contractors (PSCs)... 4 106 Progressive Corrective Action (PCA)... 4 110 Prostate Cancer Screening... 4 111 Prosthetic and Orthotic Devices... 4 111 Provider-Based Designation... 4 113 Provider Statistical and Reimbursement System (PS&R)... 4 115 Pulmonary Rehabilitation... 4 116 Qualified Discharge... 4 119 Qualifying Stays... 4 121 Quality Improvement Organization (QIO)... 4 122 Radiology Services... 4 127 Radiopharmaceuticals... 4 130 Readmissions... 4 131 Reasonable Cost... 4 133 Reason Codes... 4 134 Reassignment of Benefits... 4 141 Record Retention... 4 142 Recurring Accounts... 4 143 Registration Procedures... 4 143 Rehabilitation Services... 4 145 Release of Information... 4 153 Remittance Advice... 4 153 Residential Care Facilities... 4 153 Resource Utilization Groups (RUGs)... 4 154 Return to Provider (RTP)... 4 154 Revenue Codes... 4 155 Rural Health Clinic (RHC)... 4 157 Safe Harbors... 4 160 Same-Day Transfers... 4 164 Sanctions and Civil Monetary Penalties... 4 165 Screening Fecal-Occult Blood Test... 4 166 Screening Services/Preventive Care Services... 4 167 Self-Administered Drugs... 4 167 Self-Disclosure... 4 171 Self-Referrals... 4 172 Semiannual Reports... 4 173 Separate Charges for Portable, Stat, Call-Back, and On-Call Services... 4 176 Series Accounts (or Recurring Services)... 4 177 Skilled Nursing Facility (SNF) Services... 4 178 Sleep-Disorders... 4 183 Speech-Language Pathology (SLP)... 4 185 Spell of Illness... 4 187 Spend Down... 4 188 2003 Ingenix, Inc. Nov. 03 Contents 5

Index Index A abortion services 1 1 coding and billing rules 1 1 coverage issues 1 1 modifier 3 120 reimbursement issues 1 1 abuse 1 2 defined 1 2 examples of 1 2 access to emergency services 1 20 accident-related codes 4 32 accommodation revenue codes 4 156 acquisition costs pancreas 5 18 pancreas transplant 3 96 activities of daily living (ADLs) 4 148 acute care hospital 1 3 billing guidelines 1 3 billing policies 1 3 coding rules 1 5 qualification requirements 1 3 reimbursement issues 1 6 acute myocardial infarction 1 80 additional development request (ADR) 1 7, 2 52 additional documentation request 1 6 appeals 1 8 billing providers 1 6 contractor timeliness 1 7 how to respond 1 7 late documentation 1 7 third parties 1 6, 1 7 when is an ADR issued 1 7 adjustment bill SNF 4 181 adjustment claim 1 8, 1 9 claim change reason codes 1 9 types of 1 8 administration of the anticancer drug 1 45 administrative law judge (ALJ) 1 47, 1 49 admission date 1 10 form locator (FL 17) admission/start of care date 1 10, 1 149, 3 28 form locator (FL 6) statement covers period 1 11 home health 1 10 hospice 1 11 outpatient rehabilitation facility 1 10 admission procedures 1 12 admission questionnaire 3 99 admission source (FL 20) 5 22 admitting diagnosis code (UB-92 FL 76) 1 155 admitting process 4 143 admitting, discharge, and transfer (ADT) 4 143 advance beneficiary notice (ABN) 1 1, 1 13, 1 181, 3 25, 3 53, 4 2, 4 117, 5 43 CMS-R-131-G 1 16 CMS-R-131-L 1 15 CMS-R-296 1 19 for home health agency (HHA) services 1 17 for laboratory services 1 17 for observation services 1 17 format 1 15 home health 4 18 how the ABN is delivered 1 17 policies and procedures 1 13 requirements for ABNs 1 13 triggering events for home health 1 18 what is an ABN? 1 13 advance directives 1 20, 1 21 durable power of attorney for health care 1 22 living will 1 21 patient self-determination act checklist 1 27 patient s bill of rights 1 20 advanced life support (ALS) 1 39 advisory opinions Introduction-1, 1 27 01-1 1 29 01-12 1 31 01-13 1 32 01-14 1 32 01-17 1 32 01-19 1 32 01-20 1 33 01-21 1 33 01-3 1 29 01-4 1 29 01-5 1 30 01-6 1 30 01-7 1 30 01-8 1 30 01-9 1 31 2003 Ingenix, Inc. Nov. 03 Index 1

K kidney failure 3 90, 4 41 transplants 4 41 L laboratory billing modifier reporting 3 119 compliance plan 1 116 services 3 53 ABN 1 17 billing and coding rules 3 56 screening Pap smears 3 57 coverage criteria 3 53 diagnostic Pap smears 3 56 handling charges 3 56 modifiers 3 58 national coverage decisions (NCDs) 3 54 nonpatient laboratory 3 56 outpatient pathology 3 57 panel codes 1 55 rebundling provisions 3 57 reimbursement issues 3 59 revenue codes 3 58 skilled nursing facility (SNF) 3 59 travel allowance fees 3 57 specimen 3 56 testing 4 38 laboratory services documentation and recordkeeping 3 54 fee schedule 3 59 late charges 1 90, 4 70 leave of absence 3 60 billing and coding rules 3 60 leaving against medical advice (LAMA) 4 175 lenses intraocular 3 50 billing and coding rules 3 50 coverage criteria 3 50 reimbursement issues 3 50 levocarnitine 2 35, 3 20 liability development 4 110 liability insurance 3 105 life-sustaining treatments 1 21 lifetime reserve (LTR) 4 187 days 1 108, 3 61, 3 66 FL 10 1 148 line-item dates of service 3 61 Index ambulance services 3 61 billing and coding rules 3 61 home health 3 62 medical review 3 62 occupational therapy 4 31 oral antiemetics and chemotherapy drugs 3 62 partial hospitalization 3 62 partial hospitalization services 4 88 rehabilitation services 3 62 reimbursement issues 3 62 skilled nursing facility (SNF) 3 62 line-item denial 3 62, 3 89 line-item denials 4 46 liver transplants 3 94, 4 41, 4 42, 5 17 living will 1 21 local medical review policies (LMRP) reconsideration process 1 49 local medical review policy (LMRP) 1 183, 3 91, 4 2, 4 87 appeals 1 49 cardiac rehabilitation services 1 80 icon Introduction-3 PET scans 4 104 pulmonary rehabilitation 4 116 radiology services 4 129 long-term care hospital (LTCH) 3 63, 3 64 beneficiary liability 3 66 billing and coding rules 3 64 COLA adjustments 3 67 colocated providers 3 67 coverage criteria 3 63 federal rate 3 65 high cost outliers 3 65 inpatient PPS 3 64 interrupted stay 3 63 medical review 3 67 Medicare benefits 3 66 PPS transition percentage 3 65 reimbursement issues 3 64 short-stay outliers 3 66 wage adjustments 3 67 low osmolar contrast material (LOCM) 3 67 billing and coding rules 3 68 coverage criteria 3 67 reimbursement issues 3 69 low utilization payment adjustment (LUPA) 3 28, 3 34 low-level emergency room visit 2 30 LTC-DRG payment 3 66 lung transplants 5 16 2003 Ingenix, Inc. Nov. 03 Index 15

Introduction Introduction and Content Medicare regulations regarding billing rules, compliance issues, coverage criteria, and reimbursement issues have become so complex in recent years that health care providers need a variety of tools to assist them in meeting these standards. Electronic software, the Internet, and reference manuals are a few of those sources available today. Each has a place in the busy hospital director s office. The Medicare Desk Reference for Hospitals focuses on Medicare billing and compliance for hospitals and other institutional providers although many fraud alerts, guidelines, and billing procedures provided are applicable to a number of providers and suppliers of medical items and services rendered in a variety of settings. This book also contains information for home health agencies (HHAs), skilled nursing facilities (SNFs), and rehabilitation facilities, as well as general information that affect all healthcare providers. Covered in the Medicare Desk Reference for Hospitals is a variety of issues that impact billing, reimbursement, and data quality in the Medicare program. The book is organized in an easy-toread A to Z format, which along with an extensive index at the front of the book, allows you to find any topic quickly. Formerly the Medicare Billing Compliance Guide, the Medicare Desk Reference for Hospitals is completely rewritten and reformatted to provide you with a valuable tool to meet Medicare billing, compliance, and reimbursement guidelines. The Medicare Desk Reference for Hospitals provides you with complete information about the Medicare regulations and guidelines, and how to ensure that the services you are billing for follow Medicare billing and coding guidelines. It also includes definitions, processes, and examples of how a particular topic is used. For example, the section titled Advisory Opinions includes a definition of advisory opinions, how the process of obtaining an opinion works, and a brief summary of recent advisory opinions that relate to hospitals. The Chargemaster section provides you with real-life processes and Introduction procedures for keeping your chargemaster current and why this is so important. The Medicare Desk Reference for Hospitals can be used by those new to health care as well as the more seasoned employee. It provides definitions for terms as basic as acute care hospital as well as detailed information on advance beneficiary notices and how to bill for mammograms. The up-front index is intended to be the first quick stop you would make to find the needed topic. The index includes all pages related to a particular topic. Health care providers who are charging and reporting accurate data for inpatient and outpatient services are in compliance with Medicare regulations, obviating the need for concern about unintentional fraud and abuse. However, for hospital, HHA, and other medical services to be paid appropriately and legitimately, they must be coded and billed correctly. Wellinformed providers make the correct coding choices and eliminate the need for claim reviews. The Medicare rules for hospital outpatient services are quite complex, therefore, understanding the payment rules for these services is a mandatory precursor to accurate coding and billing. It is important to keep abreast of the changes occurring in outpatient reimbursement so that the best billing and coding strategies are used to define the services rendered. You will find a detailed section on the outpatient prospective payment system to help you understand this relatively new payment methodology. The same rules apply when coding inpatient services. The proper selection and reporting of diagnostic codes is critical. To accurately report the principal diagnosis and secondary diagnoses and procedures, coding professionals must be aware of current coding guidelines. This information dictates the diagnosis-related group assignment and the Medicare payment amount. Misrepresentation or falsifying essential inpatient coding information that is required for Medicare billing purposes increases a facility s exposure to practices that indicate program abuse. 2003 Ingenix, Inc. Sept. 03 Introduction 1 CPT only 2002 American Medical Association. All Rights Reserved.

Medicare Desk Reference for Hospitals Medicare and many other third-party payers use ICD-9-CM, HCPCS, and CPT coding systems to define health care services rendered, to evaluate utilization of health care services, and to determine payments to providers. ICD-9-CM codes describe diagnoses (the reason for the patient s encounter). HCPCS and CPT codes define the services that were rendered, the procedures that were performed, and sometimes, the resources that were used during the patient encounter (i.e., drugs and supplies). A thorough understanding of Medicare s coverage policies is as important as knowing the correct coding and payment rules for each service provided. The Medicare Desk Reference for Hospitals provides the coverage rules for those services provided most often. Getting accurately paid for the services rendered is critical for a facility s financial viability and complete and thorough medical documentation for support is the key to those accurate payments. As the health care industry continues to change rapidly, we must recognize the changes in payment methodologies and coverage issues that affect the provision of health care in all facilities. Education for the medical staff, medical records, billing, utilization management departments, and the entire health care delivery team must include the message that one size fits all coverage and billing guidelines no longer exist. It is the responsibility of physicians, hospitals, and other facilities and agencies to understand and comply with all regulations related to Medicare coverage of medical services. All providers of services and supplies must continue to be aware of new and updated coding, billing, and coverage policies and procedures to remain in compliance with Medicare guidelines. As the hospital and other providers continue to negotiate contracts, being able to demonstrate billing compliance with effective policies and procedures should be an essential item on the negotiation check list. Organization The Medicare Desk Reference for Hospitals contains an introduction and five chapters. Each chapter provides an alphabetic listing of items, procedures, or services usually covered by Medicare along with discussions of their applicability to hospital billing. Many of these items, procedures, or services have been the target of fraud and/or abuse allegations by Medicare and deserve close scrutiny. The book begins with an extensive index for the quick location of a particular item or service. The remainder of the book is organized in an alphabetic fashion using chapter headings equivalent to how the service or item is most commonly referred. In some instances, you will be referred to a different chapter or section for the information. For example, you will be referred to the section titled Medicare when you look up Supplementary Medical Insurance. Some topics are included in more than one chapter. For example, black lung disease has a section of its own, and also is included under Medicare Secondary Payer. The new very detailed index located in the front of the book references all the chapters with information pertaining to a particular topic. The description of a particular service includes coverage criteria, billing and coding rules, and reimbursement issues along with the list of references. There are billing and coding tips that come from a variety of sources, including the Medicare Hospital Manual, the Medicare Intermediary Manual, the Federal Register, and Medicare provider bulletins that dictate how to be compliant when billing for these services. For updates, the portions of text containing a substantive revision or addition are marked in the margin with a symbol. The source of the change will usually be included at the end of each topic under the heading of References along with all other references used to write the topic s descriptionr. The newest sources are also marked with the symbol. Finally, icons are provided throughout the book to draw attention to potentially significant issues. The definitions of these icons are as follows: 2 The fraud alert icon is used for any subject that is currently under investigation, or has been under investigation in the past or could in the future. This could represent issues outlined in the Office of Inspector General s (OIG s) work plan, semiannual report, or fiscal intermediary Introduction 2 Sept. 03 2003 Ingenix, Inc. CPT only 2002 American Medical Association. All Rights Reserved.

Abortion Services Abortion Services An abortion is any spontaneous or induced termination of a pregnancy before the fetus reaches the point of viability. A spontaneous abortion is often referred to as a miscarriage. Under Medicare, the reference to abortion services typically means induced abortion, either elective, or for medical reasons. Coverage Criteria Effective October 1998, abortions are not covered under the Medicare program unless the pregnancy is the result of an act of rape or incest; or the woman suffers from a physical disorder, physical injury, or physical illness including a life-endangering physical condition caused by the pregnancy itself that would, as certified by the physician, place the woman in danger of death unless an abortion is performed. Billing and Coding Rules Inpatient claims must be billed using UB-92 type of bill (TOB) (FL 4) code 11X and one of the following condition codes, as appropriate: A7 Induced abortion, danger to life AA Abortion performed due to rape AB AC AD AE AF Abortion performed due to incest Abortion performed due to serious fetal genetic defect, deformity, or abnormality Abortion performed due to a lifeendangering physical condition caused by, arising, from, or exacerbated the pregnancy itself Abortion performed due to physical health of mother that is not life endangering Abortion performed due to emotional or psychological health of mother AG Abortion performed due to social or economic reasons AH Elective abortion An appropriate ICD-9-CM principal diagnosis code must be reported in FL 67 that will group to DRG 380 or an appropriate ICD-9-CM principal diagnosis code and one of the following four ICD-9-CM operating room procedure codes must be used to group to DRG 381: 69.01, 69.02, 69.51, or 74.91. Hospital outpatient claims must be billed using UB-92 TOB (FL 4) code 13X or 85X. Abortion services must be billed with modifier G7 (the pregnancy resulted from rape or incest, or pregnancy certified by physician as life threatening) attached to one of the following CPT codes reported in FL 44: 59840, 59841, 59850, 59851, 59852, 59855, 59856, 59857, or 59866. Reimbursement Issues Claims for abortion services submitted without modifier G7 will be denied as not covered. If the abortion is performed for a reason discussed in the coverage issues section, be sure to include modifier G7 on the bill to ensure appropriate reimbursement. If a facility performs an abortion on a Medicare patient for reasons that are not listed in the coverage issues section, the patient should be given an advance beneficiary notice (ABN) that advises her of noncoverage. References Medicare Intermediary Manual, sec. 3652 Medicare Hospital Manual, sec. 457 Medicare Coverage Issues Manual, sec. 35-9 National Uniform Billing Committee UB-92 Manual 2003 Ingenix, Inc. Nov. 03 1 1

Medicare Desk Reference for Hospitals Condition Code Type of Bill Definition How it is Processed D6 XX8 Cancel only to repay a duplicate payment or an OIG-identified overpayment D7 XX7 Change to make Medicare the secondary payer D8 XX7 Change to make Medicare the primary payer E0 XX7 Change in patient status The FI looks at the TOB code that must equal XX8. If the TOB code is incorrect, the adjustment claim will get rejected. An MSP value code of 12 16, 41 43, or 47 must be reported on the adjustment claim along with an appropriate value code amount. If one of these value codes is not present, the adjustment claim will get rejected. An MSP value code of 12 16, 41 43, or 47 must be reported on the adjustment claim along with an appropriate value code amount. If one of these value codes is not present, the adjustment claim will get rejected. The FI compares the patient status code reported in FL 22 on the adjustment claim with the claim to be adjusted in the history files. If the code is the same, the adjustment claim will get rejected. References Medicare Hospital Manual, sec. 411.1 Admission Date Form Locator (FL) 17, Admission/ Start of Care Date The date of the patient s admission or the date of outpatient services seems like it should be clearcut, but is not. For example, in the case of an outpatient laboratory patient that has blood drawn is it the date of admission the date the blood was drawn, the date the laboratory received the blood, the date the blood was tested, or the date the results were finalized? In the case of a hospital outpatient admitted for observation services and subsequently admitted, is the admission date the date the patient arrived at the hospital or the date the physician wrote the order to admit the patient for inpatient care? Over the years Medicare has provided very specific guidance regarding just such issues and expects the providers to know and follow the rules. The Admission or Start of Care Date field contains the date the patient was admitted to the provider for inpatient care, outpatient services or other start of care. The information is entered into FL 17 on the UB-92 claim form. The electronic version of this field requires an eightcharacter date to accommodate the millennium change in the year 2000 as of January 1, 1999. All positions must be fully coded in the CCYYMMDD format (e.g., 20020710). The date must be a valid month, day, and year. This date must be reported for TOB codes (FL 4) 11X, 12X, 18X, 21X, 22X, 28X, 33X, 41X, 51X, 74X, 75, 81X, 82X, and 85X. Admission dates must be entered as follows: For home health (33X) claims, enter the date of the first billable Medicare visit to the patient s home. It must match the start of care date and remain the same from admission through discharge. For outpatient rehabilitation facility (ORF) (74X) and comprehensive outpatient 1 10 Nov. 03 2003 Ingenix, Inc.

Deductibles A deductible is an amount that the beneficiary pays to the insurer; the dollar amount assisted by the hospital to be applied to the patient s deductible for a particular insurance plan. For Medicare inpatient Part A services, payment of the deductible is required upon admission ($840 in 2003). For outpatient Part B services, the deductible is required annually ($100). Deductibles The Medicare Part A deductible is reviewed and updated annually. The Part B deductible has not changed in many years, although there is legislation pending that may cause it to rise slightly. Diabetes Outpatient Self-Management Training Services Diabetes self-management training (DSMT) is a formal program that educates beneficiaries on how to successfully self-manage their diabetes. Diabetic self-management training includes educating the patient on the importance of selfmonitoring blood glucose levels, diet, and exercise self-monitoring; developing an insulin treatment plan specifically for the insulindependent patient; and motivating the patient to use the skills for self-management. Coverage Criteria Diabetic training sessions must be ordered by the physician managing the patient s condition. The physician managing the beneficiary s diabetic condition must certify that the services are needed under a comprehensive plan of care related to the diabetes. Services may be provided only by certified providers and accredited programs as designated by the American Diabetes Association and must meet the National Diabetes Advisory Board standards. Providers billing for these services must provide a copy of the American Diabetes Association s Education Recognition Program (ERP) certificate prior to submitting the first claim. These training services are normally provided in group sessions. However, if medically necessary, individual training sessions can be provided. Diabetic training should be billed in no less than one-half-hour increments. More than 10 hours of initial training is not considered medically necessary. Billing and Coding Rules Diabetes self-management training may be billed using the following type of bill (TOB) (FL 4) codes: 13X and 85X. Providers bill for diabetes self-management training under revenue code 0942 Education/ training (FL 42) with HCPCS codes G0108 or G0109 reported in FL 44. The definition of the HCPCS or CPT code used must be reported also in FL 43, description. The codes are listed below: G0108 Diabetes outpatient self-management training services, individual session, per 30 minutes of training G0109 Diabetes outpatient self-management training services, group session, per individual, per 30 minutes of training Reimbursement Issues Hospitals are paid based on the comprehensive outpatient rehabilitation facility supplementary fee schedule for these outpatient services. These benefits are not payable for hospital or skilled 2003 Ingenix, Inc. Nov. 03 2 1

Medicare Desk Reference for Hospitals Electrical Stimulation for Wound Treatment 2 Effective April 1, 2003, Medicare covers electrical stimulation for the treatment of wounds for chronic stage III or stage IV pressure ulcers, arterial ulcers, diabetic ulcers, and venous stasis ulcers. It is not covered for the treatment of any other types of ailments. The device itself is not covered, only the service. Billing and Coding Rules Coverage Criteria The physician must document that standard wound care was tried for at least 30 days and failed before the use of electrical stimulation is covered. When electrical stimulation is being used, the physician must evaluate the wound at least every 30 days. In addition, there must be documentation that the treatment is showing measurable signs of healing or the coverage is terminated. Type of Bill Applicable Revenue Codes HCPCS Codes 12X Hospital inpatient 0420 Physical therapy G0281 Electrical stimulation, (unattended), to one or more areas, for chronic stage III and stage IV pressure ulcers, arterial ulcers, diabetic ulcers, and venous stasis ulcers not demonstrating measurable signs of healing after 30 days of conventional care, as part of a therapy plan of care 13X Hospital outpatient 0430 Occupational therapy G0282 Electrical stimulation, (unattended), to one or more areas, for wound care other than described in G0281 22X Skilled nursing facility (SNF) 23X SNF Outpatient 71X Rural health clinic 73X Federally qualified health clinic 74X Outpatient rehabilitation facility 75X Comprehensive outpatient rehabilitation facility 0520, 0521 Rural health clinic G0295 Electromagnetic stimulation, to one or more areas (not covered by Medicare) 0977, 0978 Critical access hospital 97014 Electrical stimulation unattended (not covered by Medicare) 97032 Application of a modality to one or more areas; electrical stimulation (manual), each 15 minutes (Note: 97032 should NOT be reported for wound care of any sort because wound care does not require constant attendance) 2 22 Nov. 03 2003 Ingenix, Inc.

HCPCS Level II Codes The Healthcare Common Procedure Coding System or HCPCS is the designated coding system required by the Centers for Medicare and Medicaid (CMS) for billing and reporting all services other than those performed in an acute care inpatient hospital stay. HCPCS Level II codes are created and maintained by CMS. The HCPCS Level II code set is a designated transaction code set under the Health Insurance Portability and Accountability Act (HIPAA) of 1996 regulations. There are three levels of HCPCS codes. The first level of HCPCS is the CPT coding system. CPT codes are copyrighted by and maintained by the American Medical Association. The third level of HCPCS is local codes. Local codes are created and used only by a specific fiscal intermediary (FI) or carrier. Local codes are in the process of being phased out. They will be replaced by HCPCS Level II codes. HCPCS Level II codes are an alphabetic character followed by four digits. CMS created the HCPCS Level II coding system to supplement the CPT HCPCS Level II Codes coding system, which does not include codes for nonphysician procedures such as ambulance services durable medical equipment, specific supplies or the administration of indictable drugs. CMS also created codes to differentiate between Medicare covered uses of certain procedures. For example, screening for prostate cancer is a covered Medicare service. There is a HCPCS code that is specific to this cancer screening. The CPT code does not differentiate between cancer screening digital rectal exams and other types of digital rectal exams. When billing Medicare, use the most appropriate code to describe the service. If a HCPCS Level II code exists that is appropriate to the circumstances, it should be used instead of the CPT code. In some instances, such as the prostate cancer screening discussed above, payment may be denied if the CPT code is used in place of the HCPCS Level II code. HCPCS or CPT codes are updated annually in the fall to be effective January 1; however, new or revised codes are published throughout the year. Health Insurance Claim Number (HICN) Health insurance cards are issued by the Centers for Medicare and Medicaid Services (CMS) (or by the Railroad Retirement Board (RRB) when railroad retirement beneficiaries are involved) to individuals who have established entitlement to Medicare or railroad retirement health insurance. A card is used to identify the individual as being entitled and also serves as a source of information required to process Medicare claims or bills. It displays the beneficiary s name, sex, HICN, and effective date of entitlement to hospital insurance, and/or medical insurance. Medicare Health Insurance Claim Number (HICN) A HICN is a nine-digit number, followed by a letter suffix (e.g., 000-00-0000-A). HCINs may also be a six- or nine-digit number with letter prefixes (e.g., A-000000, A-000-00-0000; or WD-000000, WD-000-00-0000). When the status of a beneficiary changes, it is possible for the prefix or suffix of his or her claim number to change. The numeric portion of the HICN usually consists of the beneficiary s own social security number. The first three digits of the HICN range from 00l 689, 700 730, and from 764 772 (Check with your Social Security Administration 2003 Ingenix, Inc. Nov. 03 3 1

ICD-9-CM Coding System The International Classification of Diseases, Ninth edition, Clinical Modification or ICD-9-CM is the designated coding system required by the Centers for Medicare and Medicaid Services (CMS) for billing and reporting all services performed in an acute care inpatient hospital stay. An ICD-9-CM set is a designated transaction code set under the Health Insurance Portability and Accountability Act (HIPAA) of 1996 regulations. The ICD-9-CM is a modification of the code set created and maintained by the World Health Organization or WHO. The WHO maintains the ICD-9-CM code set for international use in coding diagnoses and procedures. The ICD-9-CM Coding System international code set is modified for use within the United States and the designation of CM added to indicate that it is the modified version. The National Center for Health Statistics (NCHS), a division the Centers for Disease Control (CDC) is responsible for coordination of all official disease classification activities in the United States relating to the ICD-9-CM and its use, interpretation, and periodic revision. Please see the chapter on Coding Systems for further information. References NCHS Web site:http://www.cdc.gov/nchs/ icd9.htm Immunosuppressive Drugs Immunosuppressive drugs are used to prevent the rejection of an organ after a patient has had a transplant. Medicare covers these drugs under certain circumstances and only when medically necessary. Coverage Criteria Medicare pays for Food and Drug Administration (FDA)-approved immunosuppressive drugs following the date of a Medicare-covered organ transplant procedure (e.g., kidney, heart). Coverage of immunosuppressive drugs is contingent on the transplant being covered. The types of immunosuppressive drugs that are covered include: Self-administered immunosuppressive drugs specifically labeled and approved for marketing as such by the FDA Prescription drugs such as prednisone that are used in conjunction with immunosuppressive drugs as part of a therapeutic regimen reflected in FDAapproved labeling Until January 1, 1995, Medicare paid for immunosuppressive drugs after the one-year period if the drugs were covered under inpatient hospital services or are furnished incident to a physician s service. Patients were eligible to receive additional coverage for drugs furnished within 18 months of the transplant in 1995. This coverage was expanded to 24 months in 1996, 30 months in 1997, and 36 months after 1997. As the result of the Balanced Budget Refinement Act of 1999, eligible beneficiaries whose coverage for drugs used in immunosuppressive therapy expires during calendar year 2000 may receive an additional eight months of coverage beyond the 36 months. After 2000, the extension period for individuals whose 36-month period ends in the subsequent four years may be more or less than the eight months. Effective December 21, 2000, there is no longer a time limit for coverage of immunosuppressive drugs under the Medicare program. The physician s prescription for the immunosuppressive drug should indicate the date of the patient s discharge from the hospital 2003 Ingenix, Inc. Nov. 03 3 41

National Committee on Vital and Health Statistics (NCVHS) National Committee on Vital and Health Statistics (NCVHS) The NCVHS consists of 18 people who serve as the public advisory body to the secretary of the Department of Health and Human Services (HHS). The committee specifically targets health data and statistics and provides advice to HHS and serves as a forum for those interested in important health issues. These individuals from the private sector have distinguished themselves in one or more of the following fields: Health statistics Electronic interchange of health care information Privacy and security of electronic information Population-based public health Purchasing or financing health care services Integrated computerized health information systems Health services research Consumer interests in health information Health data standards Epidemiology Health services provision Two of the committee members are appointed by Congress and the other 16 are appointed by the secretary of HHS. The NCVHS plays a key role in the development of the Health Insurance Portability and Accountability Act (HIPAA) of 1996 regulations. Requests for changes to the regulations are first presented to the committee. After discussion and evaluation the committee may or may not make a recommendation to the secretary of the HHS for changes or modifications to the HIPAA regulations. National Coverage Decisions (NCDs) In 1998, Medicare declared its commitment to having an open, understandable, and predictable coverage process for items and services provided by the program. Medicare provides for broad coverage of many medical and health care services, including hospitals services, skilled nursing facilities coverage, home health services, and physician services. Medicare does not provide an all-inclusive list of services covered by Medicare and does not usually specify which medical devices, surgical procedures, or diagnostic services should be included or excluded from coverage. The general guideline is that items and services must be reasonable and necessary for the diagnosis and treatment of illness or injury. A national coverage policy is a statement regarding Medicare coverage. National coverage policy is published in the Centers for Medicare and Medicaid Services (CMS) regulations, contained in a CMS ruling or it is issued as a program instruction. These are located in CMS manuals including the Medicare Hospital Manual, the Medicare Intermediary Manual, the Medicare Carriers Manual, and the Coverage Issues Manual. National coverage policies indicate if, and under what circumstance, a service or item is covered under the Medicare program. Medicare contractors (fiscal intermediaries [FIs] and carriers) are required to apply all statutory provisions, regulations, and national coverage policies during claims processing. The statutory provisions for Medicare coverage are found in section 1862 (a)(1)(a) of the Social Security Act. They exclude from Medicare coverage items and services that are not 2003 Ingenix, Inc. Nov. 03 4 1

Medicare Desk Reference for Hospitals Model Letter of Noncoverage Name of Facility Address Date TO: RE: Name of Beneficiary/Rep. Name of Beneficiary Address Medicare (HIC) No. Date of Admission Specific Services at Issue: The item checked below explains that all or part of the services the Medicare patient received or was to receive at this facility are not covered by Medicare. 1. The medical information available at the time of, or prior to, admission shows that the specific services to be furnished do not meet the requirements for coverage under Medicare. However, should you request us to file a claim with Medicare, you will receive a formal determination from the Medicare intermediary as to noncoverage of stay. 2. The specific services furnished no longer qualify as covered under Medicare beginning. The Medicare intermediary will send you a formal determination as to the noncoverage of the stay. 3. Our Utilization Review Committee advises that the stay in this facility has never been necessary or is no longer medically necessary beginning. The Medicare intermediary will send you a formal determination as to the noncoverage of the stay. 4. The Medicare intermediary advises that the type of services furnished no longer qualify as covered under Medicare beginning. The Medicare intermediary will send you a formal determination as to the noncoverage of the stay. The Medicare intermediary serving this facility is: Name of Intermediary Address 5. We regret this may be your first notice of noncoverage of services under Medicare. Our efforts to con tact you earlier in person and by telephone were unsuccessful. Signature Administrative Officer Verification of Receipt of Notice A. This is to acknowledge that I received this notice of noncoverage of services under Medicare on Date of receipt Signature of beneficiary or person acting on behalf of beneficiary B. This is to confirm that you were advised of the noncoverage of the services by Medicare by telephone on Date of telephone contact Signature of Administrative Officer Keep a copy of this for your records. No action on your part is required. Source: Medicare Part A Line, AdminaStar Federal, vol. VII, no. 1, January 1997 4 16 Nov. 03 2003 Ingenix, Inc.

Teaching Physician Billing 2 Teaching Physician Billing 2 Teaching hospitals across the country provide excellence in health care, as well as learning opportunities for medical student and interns and residents. This combination of fully credentialed physicians, physicians in training, and students makes for a difficult mix when billing for professional services. Coverage Criteria Medicare will provide benefits for professional services provided by attending physicians when they provide personal and identifiable services to patients in conjunction with services provided by interns and residents in teaching facilities. Confusion over the rules related to the billing of services provided by teaching physicians led to the physicians at teaching hospitals (PATH) audits. In 1969, the Bureau of Health Insurance produced a directive known as intermediary letter no. 372 (IL-372) entitled, Part B Payments for Services of Supervising Physicians in a Teaching Setting. This letter established the conditions that must be met for a teaching physician to eligible for Part B reimbursement as an attending physician. Unfortunately, these directives were largely ignored by most in the provider community, and a great deal of billing was ongoing for services not meeting the requirements under IL-372. In 1996, around the same time as the PATH audits began to hit, the Centers for Medicare and Medicaid Services (CMS) (then HCFA) released a new set of more specific instructions related to the services provided by supervising physicians in teaching settings. These new teaching physician rules were very specific and the guidelines were well spelled out, but did cause a great deal of uproar in the academic medicine community. These guidelines were found in sec. 15016 of the Medicare Carriers Manual. In November of 2002, CMS produced a revision of Medicare Carriers Manual, sec. 15016, which altered slightly the current rules regarding services provided by teaching physicians. This revision was made to clarify the documentation requirements for evaluation and management (E/M) services billed by teaching physicians. The revised language makes it clear that for E/M services, teaching physicians need not repeat documentation already provided by a resident. In addition, the revisions clarify policies for services involving students. These rules are detailed below. Most attention is paid to the issues with evaluation and management services, as this seems to be the area with which most teaching facilities have compliance problems. Billing and Coding Rules For purposes of the teaching physician rules, the following definitions apply: Resident: an individual who participates in an approved graduate medical education (GME) program or a physician who is not in an approved GME program but who is authorized to practice only in a hospital setting. The term includes interns and fellows in GME programs recognized as approved for purposes of direct GME payments made by the fiscal intermediaries (FIs). Receiving a staff or faculty appointment or participating in a fellowship does not by itself alter the status of resident. Additionally, this status remains unaffected regardless of whether a hospital includes the physician in its full time equivalency count of residents. Student: an individual who participates in an accredited educational program (e.g., a medical school) that is not an approved GME program. A student is never considered to be an intern or a resident. Medicare does not pay for any service furnished by a student. Teaching physician: a physician (other than another resident) who involves residents in the care of his or her patients. Teaching setting: any provider, hospitalbased provider, or nonprovider setting in which Medicare payment for the services of residents is made by the FI under the direct graduate medical education payment methodology or freestanding skilled nursing 2003 Ingenix, Inc. Nov. 03 5 1

Unlisted Procedure Codes 2 count as long as the assessment activities are incorporated into a visit providing otherwise necessary home health care. References Medicare Hospital Manual, secs. 442.6, 460 Unlisted Procedure Codes 2 Billing an unlisted procedure code when a more appropriate code exists in CPT coding system or the HCPCS Level II coding systems is considered fraud. Not all services and procedures are assigned CPT codes. The CPT code book does not contain codes for infrequently used, new, experimental, and investigational procedures. Before choosing an unlisted procedure code, carefully review the CPT code book and HCPCS Level II code book to make sure that a more specific code is not available. In most cases, unlisted procedure codes may not be used for hospital outpatient services without the prior approval of Medicare and other third-party payers. The use of an unlisted procedure code will delay claims processing, payment, and most likely will result in a denial. Most FIs return claims submitted with an unlisted procedure code and/or require medical documentation to support its use. Medicare bulletins have identified through medical reviews, a large number of services and procedure codes being billed using the 99 (unlisted) codes, most of which were used incorrectly. There exist specific codes in the CPT coding system or the HCPCS coding system that adequately described the services or procedures rendered. In addition, the FIs found many noncovered items and services included in the unlisted HCPCS codes. Ongoing billing problems and the need for consistency in handling unlisted procedure codes has led to a directive by CMS for FIs to validate unlisted codes being billed to Medicare. As a result of these reviews, specific examples of unlisted codes and their descriptions submitted incorrectly by providers have been identified. The examples below represent improper coding and in some cases, attempts by providers to bill Medicare for items and services that are known to be included in a specific HCPCS code (e.g., multiple views or x-rays or computed tomography [CT] scans), included in the administrative expense or room charges (e.g., computer time, nursing care, registered nurse (RN) orientation programs, apnea monitors, cardiac monitors) or not covered by Medicare at all (e.g., STAT fees, on-call fees, after hours services). Code Improper Coding Example 76499 This code is being used inappropriately to bill for oxygen set-up, tech time to push the x-ray to the emergency room, multiformat copy and camera, x-rays taken after hours, the surgery team to insert a catheter, call CT tech charge, nursing care, and monitoring. 78999 This code is being used inappropriately to bill for computer charge, computer processing. 84999 This code is being used inappropriately to bill for multiple component processing, specimen handling charge, laboratory STAT charges. 93799 This code is being used inappropriately to bill for hourly blood pressure, cardiac monitor, blood pressure monitor, RN orientation program, vascular lab emergency call, IV medication administration, hemodyn monitor nursing care, extra 30 minutes cardiovascular nursing. 2003 Ingenix, Inc. Nov. 03 5 29