C O D I N G & B I L L I N G F O R

HMI Cor poration First Quarter 2008 March 20, 2008 C O D I N G & B I L L I N G F O R P R O S P E C T I V E P A Y M E N T S Y S T E M S Inside This Issue: 2008 Update to the OPPS 1 New HCPCS C Codes 4 2008 UPDATE TO THE OPPS Payment for Alcohol and/or Substance Abuse Assessment and Intervention Services Medicare contractors shall make payment under the OPPS for HCPCS codes G0396 and G0397 only when appropriate, reasonable and necessary (i.e., when the service is provided to evaluate patients with signs/symptoms of illness or injury) as per section 1862(a)(1)(A) of the Act. Billing for Smoking and Tobacco-Use Cessation Counseling Visit 4 Payment for Cardiac Rehabilitation Services Effective January 1, 2008, Medicare contractors shall allow payment for more than one session of cardiac rehabilitation services per day. Astigmatism Correcting Intraocular Lens are not Separately Covered by Medicare Reporting of Hematocrit or Hemoglobin Levels on all Claims for the Administration of Erythropoiesis Stimulating Agents New and Reinstated Codes Effective April 1, 2008 Replacements for Discontinued Modifiers 6 Medicare Makes Changes to the Benefit Policy Manual 7 Q & A Corner 5 5 6 8 Payment for Extended Assessment and Management Composite APCs Observation services are reported using HCPCS code G0378 (Hospital observation service, per hour). Effective for dates of service on or after January 1, 2008, HCPCS code G0378 for hourly observation services is assigned status indicator N, signifying that its payment is always packaged. In certain circumstances when observation care is provided as an integral part of a patient s extended encounter of care, payment may be made for the entire extended care encounter through one of two composite APCs when certain criteria are met. Payment for Direct Admission to Observation For CY 2008, direct admission to observation care continues to be reported using HCPCS code G0379 (Direct admission of patient for hospital observation care). G0379 has a status indicator of Q so, payment for direct admission to observation will be made either separately as a low level hospital clinic visit under APC 604, packaged into payment for composite APC 8002 (Level I Prolonged Assessment and Management Composite), or packaged into payment for other separately payable services provided in the same encounter. Changes to Packaged Services for CY 2008 OPPS Effective for services furnished on or after January 1, 2008, CMS has packaged seven additional categories of HCPCS codes describing ancillary and supportive services, either conditionally or unconditionally, and CMS has created four new composite APCs. Table 10 in the CY 2008 OPPS/ASC final rule with comment period contains the HCPCS codes in these categories and the packaging status indicators that apply to them. The tables from the final rule are available in an Excel file on the OPPS webpage under supporting documentation for the CY 2008 OPPS/ASC final rule. Continued on page 2

First Quarter 2008 Page 2 2008 UPDATE TO THE OPPS (cont) Billing for Wound Care Services Medicare contractors shall update the list of therapy revenue codes that may be reported with wound care services provided under a certified plan of care to include all revenue codes in the 42x, 43x, and 44x series. Billing for Bone Marrow and Stem Cell Processing Services Medicare contractors shall ensure providers are billing CPT codes: 38207-38215 to report bone marrow and stem cell processing services. Coding & Billing for Prospective Payment Systems Newsletter contributors and editorial board: Thomas P. Holliday, RN, PA, MHA G. Maria Caston, CCS, CPC-H, CCS-P, CPC, CPS, CFS William G. Cox, William RHIA G. Cox, RHIA Kim Y. Huddleston, Mary CCS Quimby, CPC-H, CPS, CFS Sheila Wallace, RHIT, Luci CCS Atencio RHIT Heather M. Williams, Vickie CCS Faler, RHIT, CPC Billing for Implantable Cardioverter Defibrillators (ICDs) Medicare contractors shall ensure providers are billing CPT code 33240 or 33249, as appropriate, to report ICD insertion procedures. Adjustment to Payment in Cases of Devices Replaced with Partial Credit for the Replaced Device Effective for services furnished on or after January 1, 2008, hospitals are required to report HCPCS modifier FC on the procedure code for all cases in which the device being implanted is on the list of creditable devices, the procedure code in which the device is used is on the list of creditable APCs, and the hospital receives a credit of 50 percent or more of the cost of the new replacement device. Changes to Device Edits for January 2008 Claims for OPPS services must pass two types of device edits to be accepted for processing: procedure-to-device edits and device-to-procedure edits. Procedure-to device-edits, which have been in place for many procedures since 2005, continue to be in place. These edits require that when a particular procedural HCPCS code is billed, the claim must also contain an appropriate device code. Payment for Brachytherapy Sources The codes for separately paid brachytherapy sources, long descriptors, status indicators, and APCs for CY 2008 are listed in Table 5, the comprehensive brachytherapy source table. Note that when billing for stranded sources, providers should bill the number of units of the appropriate source HCPCS C-code according to the number of brachytherapy sources in the strand, and should not bill as one unit per strand. Billing for Drugs, Biologicals, and Radiopharmaceuticals C-codes: C9237, C9240, C9354, and C9355 are included in the January 2008 I/OCE update. However, these codes do not appear in the 2008 HCPCS file. Contractors shall manually add these codes to their systems. Continued on page 3

First Quarter 2008 Page 3 2008 UPDATE TO THE OPPS (cont) I/OCE Edits for Diagnostic Radiopharmaceuticals Medicare contractors shall return to the provider claims that report a nuclear medicine service but do not also report a diagnostic radiopharmaceutical. Drug Administration For CY 2008, hospitals are reminded to use the full set of CPT codes for billing drug administration services provided in the hospital outpatient department setting. This includes new CPT codes for CY 2008 as listed in Table 13. In addition, hospitals are to report all drug administration services, regardless of whether they are separately paid or are packaged. Billing for Cardiac Echocardiography Services Hospitals are instructed to bill for echocardiograms without contrast in accordance with the CPT code descriptors and guidelines associated with the applicable Level I CPT code(s) (93303-93350). Codes in Table 14 should be read as either with contrast studies or without followed by with contrast studies. CPT codes should be used for without contrast studies only. In the without contrast followed by with contrast case, hospitals should not bill the CPT code for a without contrast study in addition to the C-code when they provide a without contrast followed by with contrast study. OPPS Outlier Payments Medicare provides OPPS outlier payments for unusually costly or complex services that separately exceed the fixed-dollar and multiple thresholds. The current and historical outlier thresholds are posted online along with the payment percentage that determines the magnitude of an outlier payment. Modification of Methodology for Calculation of Hospital Overall Cost-to-Charge Ratio (CCR) for Hospitals that Have Nursing and Paramedical Education Programs CMS is updating section 10.11.8 of the manual to correct an error in the methodology of the calculation of the hospital overall CCR for hospitals that have nursing and paramedical education programs. Specifically, the instructions for calculating the CCR for cost center 6200, non-distinct unit observation beds are being modified. This is a prospective change that is effective January 1, 2008. Updating the Outpatient Provider Specific File (Effective January 1, 2008) For January 1, 2008, contractors shall maintain the accuracy of the provider records in the Outpatient Providers Specific File (OPSF). This includes updating the Core-Based Statistical Area (CBSA) in the provider records, as well as updating the special wage index value for those providers who qualify for the 505 adjustment as annotated in Table 15. Changes to OPPS PRICER logic Updates to CBSA designations, new OPPS payment rates and coinsurance, no change in the multiple threshold and a change to fixed dollar for outlier payments, charges included in composite payment will be aggregated to one line using payment adjustment flags, CMHC multiple threshold will remain the same, and OPPS pricer will apply payment adjustment flags to lines containing the FB and FC modifiers. Continued on page 4

First Quarter 2008 Page 4 2008 UPDATE TO THE OPPS (cont) OCE Logic Change for Partial Hospitalization Program (PHP) Services Effective January 1, 2008, the Integrated Outpatient Code Editor (I/OCE) will begin using List A and List B as described in Appendix C-a of the CMS Specifications V9.0. List A is a subset of List B and contains only psychotherapy codes, while List B includes all PHP codes. January 2008 revisions to the I/OCE data files, instructions, and specifications are provided in CR 5865. Coverage Determinations The fact that a drug, device, procedure or service is assigned a HCPCS code and a payment rate under the OPPS does not imply coverage by the Medicare program, but indicates only how the product, procedure, or service may be paid if covered by the program. Fiscal Intermediaries (FIs)/Medicare Administrative Contractors (MACs) determine whether a drug, device, procedure, or other service meets all program requirements for coverage. To view Transmittal 1417 in its entirety, go to: http://www.cms.hhs.gov/transmittals/downloads/r1417cp.pdf New HCPCS C Codes Medicare has announced four C codes that have been added to the Addendum B as they were not published in the Federal Register with the release of the 2008 OPPS Final Rule. HCPCS CODE SHORT DESCRIPTOR APC SI C9237 Injection, Lanreotide Acetate K C9240 Injection, Ixabepilone K C9354 Veritas Collagen Matrix, cm2 G C9355 Neuromatrix Nerve Cuff, cm G Remember that new drugs and products introduced into the healthcare market are often assigned to a temporary HCPCS C code (indicating new technology) allowing CMS to collect billing data. Then at a future date and time CMS may make the decision to assign to a permanent HCPCS code. It is important that providers monitor these changes closely to ensure appropriate reporting and reimbursement. For the entire transmittal, visit: http://www.cms.hhs.gov/transmittals/downloads/r1415cp.pdf Billing for Smoking and Tobacco-Use Cessation Counseling Visit When providing Smoking and Tobacco cessation counseling services report: 99406 Smoking and tobacco-use cessation counseling visit; intermediate, greater than 3 minutes up to 10 minutes 99407 Smoking and tobacco-use cessation counseling visit; intensive, greater than 10 minutes These codes are assigned a status indicator of X and have an approximate national payment of $10.50. Previously, G0375 and G0376 were utilized to report these services and can be used for services performed March 22, 2005 - December 31, 2007. For more information visit regarding these codes, visit: http://www.cms.hhs.gov/transmittals/downloads/r1433cp/pdf

First Quarter 2008 Page 5 Astigmatism Correcting Intraocular Lens are not Separately Covered by Medicare CMS has instructed providers to use V2632 to report the IOL for which payment is now packaged into the reimbursement for the cataract procedure. Use HCPCS code: V2787 (A-C IOL) - after January 1, 2008, services should be billed to report non-covered charges for A-C IOL for ASCs, hospital outpatient departments, or physician offices V2788 is no longer valid to report non covered charges associated with the A-C IOL, but is still valid to report non-covered charges associated with Posterior Chamber IOL (P-C IOL). The claim should also contain a CPT code (66982 66986) representing the procedure performed. Although there is no device-to-procedure/procedure-to-device edits in place for these services, it is necessary to monitor billing to ensure that these services are being appropriately reported. For information in its entirety, visit: http://www.cms.hhs.gov/transmittals/downloads/r1430cp.pdf Reporting of Hematocrit or Hemoglobin Levels on all Claims for the Administration of Erythropoiesis Stimulating Agents Effective January 1, 2008, contractors shall require the most recent hematocrit or hemoglobin test results to be reported on all non-esrd claims for the administration of Part B anti-anemia drugs OTHER THAN ESAs used in the treatment of cancer that are not self-administered. Providers must report the most recent H/H levels on any claim for a Medicare patient receiving: ESA Part B anti-anemia drugs other than ESA used in the treatment of cancer that are not self-administered. When reporting J0881, J0882, J0885, J0886, and Q4081, use the most recent Hematocrit or Hemoglobin reading available when the ESA dose was administered. Institutional claims must be reported with one of the following value codes: 48 49 Hemoglobin Hematocrit If ESA claims are not reported with a value code 48 or 49, they will be returned to the provider. All non-esrd ESA claims reporting HCPCS J0881 and J0885 must begin using one (and only one) of the following three modifiers on the same line as the ESA HCPCS code: EA: ESA, anemia, chemo-induced; EB: ESA, anemia, radio-induced; or EC: ESA, anemia, non-chemo/radio Claims that do not have one of these modifiers will be returned to provider. Hospital outpatient departments will continue to report EPO with HCPCS code J0885 or Aranesp with HCPCS code J0881 with revenue code 636. For more information, visit: http://www.cms.hhs.gov/transmittals/downloads/r1412cp.pdf

First Quarter 2008 Page 6 New and Reinstated Codes - Effective April 1, 2008 CMS has posted quarterly updates for HCPCS codes. The updates that providers should be aware are as follows: New codes effective April 1, 2008 Q4096 - Injection, Von Willebrand Factor Complex, Human, Ristocetin Cofactor (Not Otherwise Specified), Per I.U. Vwf:Rco Q4097 - Injection, immune globulin (privigen), intravenous, non-lyophilized (liquid) 500mg Q4098 - Injection, Iron Dextran, 50mg Q4099 - Formoterol Fumarate, inhalation solution, DME, non-compounded, administered unit dose form, 20 micrograms Reinstated codes effective April 1, 2008 J7611 - Albuterol Inhalation solution, non-compounded, DME, concentrated form, 1mg J7612 - Levabuterol, inhalation solution, non-compounded, DME, concentrated form, 0.5mg J7613 - Albuterol, inhalation solution, DME, non-compounded, unit dose, 1mg J7614 - Levabuterol, inhalation solution, non-compounded, DME, unit dose, 0.5mg To view the quarterly HCPCS code updates, go to: http://www.cms.hhs.gov/hcpcsreleasecodesets/02_hcpcs_quarterly_update.asp Replacements for Discontinued Modifiers CMS has discontinued the use of the following modifiers: QA - FDA investigational device exemption QR - Item or service provided in a Medicare specified study QV - Item or service provided as routine care in a Medicare qualifying clinical trial The replacement modifiers effective for use January 1, 2008 are as follows: Q0 - Investigational clinical service provided in a clinical research study that is in an approved clinical research study. (This modifier replaces QA and QR) Q1 - Routine clinical service provided in a clinical research study that is in an approved clinical research study. (This modifier replaces QV) Investigational clinical services are defined as those items and services that are being investigated as an objective within the study. Investigational clinical services may include items or services that are approved, unapproved, or otherwise covered (or not covered) under Medicare. Continued on page 7

First Quarter 2008 Page 7 Replacements for Discontinued Modifiers (cont.) Routine clinical services are defined as those items and services that are covered for Medicare beneficiaries outside of the clinical research study; are used for the direct patient management within the study; and, do not meet the definition of investigational clinical services. Routine clinical services may include items or services required solely for the provision of the investigational clinical services (e.g., administration of a chemotherapeutic agent), clinically appropriate monitoring, whether or not required by the investigational clinical service (e.g., blood tests to measure tumor markers), and items or services required for the prevention, diagnosis, or treatment of research related adverse events (e.g., blood levels of various parameters to measure kidney function). To read the full instruction for using these modifiers, see: http://www.cms.hhs.gov/transmittals/downloads/r1418cp.pdf Medicare Makes Changes to the Benefit Policy Manual Medicare s limitation on Coverage of Certain Services Furnished to Hospital Outpatients Outpatient Defined A hospital outpatient is a person who has not been admitted by the hospital as an inpatient but registered as an outpatient and receives services from the hospital or Critical Access Hospital. In the case where a tissue or blood specimen by personnel that are not employed by the hospital and the specimen is sent to the hospital for performance, these tests are not hospital outpatient services unless, The patient is also a registered hospital outpatient receiving outpatient services from the hospital on the same day and the hospital is not a Critical Access or Maryland waiver hospital Supplies provided by the hospital for use by the physician in the treatment of private patients are not covered as an outpatient service since the patients are not hospital outpatients. A patient defined as a Day Patient by a hospital, such as a patient that is not expected to be there at midnight, is considered an outpatient. A SNF inpatient might be considered an outpatient of a hospital, but an inpatient of a hospital cannot be considered an outpatient of any other hospital. Outpatient services provided in the Emergency Room are covered until the pronouncement of death. This coverage does not apply if the patient was pronounced dead prior to arrival at hospital. Encounter Defined A hospital outpatient encounter is a direct personal contract between a patient and a physician or other person who is authorized by state licensure law, by hospital or Critical Access staff bylaws, to order or furnish hospital services for diagnosis or treatment of a patient. Outpatient Observation Status Defined Outpatient 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 inpatient or if they are able to be discharged. To view the manual changes in their entirety, go to: http://www.cms.hhs.gov/transmittals/downloads/r1445cp.pdf

First Quarter 2008 Newsletter Prepared By: 155 Franklin Road, Suite 190 Brentwood, TN 37027 Phone: (800) 659-5145 Fax: (615) 661-5147 http://www.hmi-corp.com/ Page 8 Since 1989 HMI Corporation, a Healthcare Management Company, has been assisting acute care, teaching, critical access, long term care, nursing home, home health, and skilled nursing facilities, as well as physician groups, with clinical reimbursement through accurate coding and billing for all financial classes as well as maintaining compliance with Federal payers. HMI s consultant specialists perform compliance reviews, billing, and coding medical reviews, as well as other revenue improvement services, utilizing the provider s chargemaster. HMI also provides physician education to strengthen the medical staff's E/M coding for compliance and to improve reimbursement. HMI offers a full-service program to assist providers in positioning themselves to meet federal compliance guidelines, with an emphasis on PPS reimbursement. This process also includes inpatient and outpatient record review, on-going chargemaster maintenance, and on-site education/training of clinical staff and physicians. Our fifteen-year success has been primarily founded on facilitating quality consulting service, on-going accountability through management plan objectives and guaranteed service based on our ability to deliver results. Do you have a specific coding question or topic that you would like to see addressed in our next newsletter? You may fax your question to (615) 661-5147 or go to contact us on our website at www.hmicorp.com. We would like to hear from you. Q & A Corner HMI would like to express our gratitude to those serving our country here and abroad. Thank you! The information contained herein is solely for the purpose of informing you the health care professional of current changes. Every effort has been made to ensure the accuracy of the contents. However, this newsletter does not replace policies or guidelines set by your Medicare FI or replace the ICD-9-CM or CPT/ HCPCS coding manuals. It serves only as a resource. Q. Our hospital has been experiencing a significant number of claims line items (e.g., CPT codes 90761, 90766, and 90772) being returned with an explanation that the number of units exceeds the MUE value. Do you know what we can do to correct this? A. Many hospitals have been experiencing similar edits. In 2007, CMS implemented the Medically Unlikely Edits (MUE) for units of service reported with many CPT codes. Hospitals should validate the units billed against the documentation in the patient medical record. We have been made aware that CMS plans to review and update the MUE values for CPT codes 90761, 90766, and 90772. Once hospitals have validated the units of service, they will need to be prepared to resubmit those line items when CMS has issued a notification.