Knowledge Base Category -

School is out for the summer and my youngest grandchild graduated from pre-school, where she learned her ABC’s. There is no summer break from learning in real life and if you work with Medicare outpatient claims, you have to learn your A, C, E1, E2, G, J1, etc. status indicators.

Each quarter, CMS issues an update for the Outpatient Prospective Payment System (OPPS). These updates sometimes include policy changes, but generally consist mainly of coding updates, such as new HCPCS codes and revised OPPS status indicator assignments. The status indicators (SI’s) describe how particular HCPCS codes and APCs are paid (or not paid) under OPPS, so it is important for providers to understand what the various status indicators mean. CMS provides a table of the definitions of the status indicators in Addendum D1 of the OPPS Final Rule each year – the 2019 addenda can be found here.

Below are descriptions of the status indicators that appear in the July 2019 OPPS Update.

SI “A” means the service is paid under a fee schedule or payment system other than OPPS. For example, you see this code in the tables below for laboratory services that are paid under the Clinical Laboratory Fee Schedule (CLFS). Another common type of service with this SI is therapy services (PT, OT and SLP services).

SI “C” is an inpatient only procedure. These codes will not be paid when billed on an outpatient claim with limited exceptions. For inpatient only procedures, the patient should be admitted as an inpatient.

SI “E1” are services that are not covered for outpatients and will not be paid when submitted on an outpatient claim. They are services that are not an outpatient benefit, are statutorily excluded, or are not medically necessary for outpatients.

SI “E2” are not paid under OPPS because pricing information and claims data are not yet available.

SI “G” indicates drugs and biologicals that receive pass-through payment.

SI “J1” indicates the primary procedure of a comprehensive APC. The payment for all adjunctive services on the claim with the J1 service is packaged into the payment for the primary J1 service, with only a few exceptions.

SI “K” are drugs and biologicals eligible for separate payment under OPPS because they exceed the per day cost threshold for separately payable drugs.

SI “L” are for flu and pneumonia vaccines. They are paid at reasonable cost and are not subject to deductibles and co-insurance

SI “M” are services that are not billable to the MAC and are not paid under OPPS. Notice in the tables below that these services say “provided by physician” or “interpretation and report” meaning they are professional (physician or other qualified health care professional) services and not to be billed by the hospital.

SI “N” indicates services for which the payment for the service is packaged into the payment of other services. This means there is no separate payment made for this HCPCS code. Even though these services are not paid separately, it is important to report the codes so CMS can know all of the components of a primary service.

SI “Q1” is a conditionally packaged service which means the payment for this service is packaged in certain circumstances. Q1 services are packaged if they appear on the same claim with services with an SI of S, T, or V (visit). If the Q1 service does not meet packaging criteria (no S, T, or V code on the claim), it is separately paid. It defaults to the status indicator of its APC when paid separately.

SI “Q4” is for laboratory services with packaged payment. These lab services are only paid separately if they are the only type of services provided on the claim. Most clinical lab services have been conditionally packaged since 2014 and have this status indicator.

SI “S” are procedures and service paid under OPPS similar to SI “T” but to which a payment reduction for multiple procedures/services does not apply. All S services on a claim are paid at 100% of the OPPS payment rate.

SI “T” are procedures and services paid under OPPS but to which a reduction applies for multiple procedures. The first T procedure on a claim is paid at 100%, but subsequent T procedures on the same claim are paid at 50% of the OPPS payment rate.

Below are tables of the code additions and changes from the July 2019 OPPS Updates. All changes are effective July 1, 2019.

Table A includes some miscellaneous additions and changes such as a temporary new C-code, some status indicator changes, and the reassignment of a skin substitute. Notice the change of 0541T and 0542T from E1 (non-payable) due to FDA approval in March of the device associated with these codes – the codes are now S and M respectively, to reflect the technical payment to the hospital and the professional payment for the physician report.

Although payment for skin substitutes are packaged with an SI of N, a lower and higher payment for the application of the product is made due to the assignment of the skin substitute to the Low Cost Group or High Cost Group based on product cost. The reporting of different application HCPCS codes for the low and high cost groups drives the appropriate payment.

There were numerous new codes, including several for biosimilars, and some code replacements for drugs and biologicals as shown in Table B.

The American Medical Association (AMA) releases new Category III codes twice a year – in January and July to be effective the following July and January respectively. For the July 2019 update, CMS is implementing 20 CPT Category III codes that the AMA released in January 2019 for implementation on July 1, 2019.

Proprietary Laboratory Analyses (PLA) codes are CPT codes for labs or manufacturers to more specifically identify their test. Tests with PLA codes must be performed on human specimens and must be requested by the clinical laboratory or the manufacturer that offers the test. For July 1, 2019, one PLA code was deleted and 21 new codes were added.

School is never out in the real world, so study the Medicare OPPS status indicator alphabet to know if and how your hospital will be paid for outpatient services.

A healthcare claim form is a form which providers of services (hospitals, physicians, etc.) use to tell payors of services (Medicare, Medicaid, commercial payors, etc.) what items, tests, and services were provided to the patient and to request payment for those services. In other words, it is a communication tool between the provider of services and the payor of services that says, “this is what we did; please pay us.” In addition to this basis request for payment, it is sometimes used to communicate other information about the services that may affect payment immediately, or may allow the payors to gather data they could use to affect payment down the road. Medicare, as the largest healthcare payor, provides lots of claim-processing instructions, such as the quarterly updates to the Medicare Outpatient Prospective Payment System (OPPS).

Two of the bigger news items from the April 2019 OPPS Update are instructions on billing for (CAR) T-cell Therapy and reporting of the ER modifier for services performed in an off-campus provider-based emergency department. Along with these items are the other code updates and changes of the types that usually appear in the quarterly updates.

Chimeric Antigen Receptor (CAR) T- Cell Therapy

Chimeric Antigen Receptor (CAR) T- Cell Therapy is a new cancer treatment. To understand billing, you have to have an idea of how the therapy works. The CMS transmittal describes it as:

(CAR) T-cell therapy is a cell-based gene therapy in which T-cells are collected and genetically engineered to express a chimeric antigen receptor that will bind to a certain protein on a patient’s cancerous cells. The CAR T-cells are then administered to the patient to attack certain cancerous cells and the individual is observed for potential serious side effects that would require medical intervention.

In February, CMS released a proposed decision memo that would allow coverage of (CAR) T-Cell therapy under Coverage with Evidence Development (CED) (see a prior Wednesday@One article for more information on the proposed coverage). Until that decision memo is made final, there is no national Medicare policy for covering CAR T-cell therapy, so local Medicare Administrative Contractors (MACs) have discretion over whether to pay for it. The drugs associated with this treatment are currently payable as pass-through drugs and there is also a payable code for the administration of CAR T-cells in the hospital outpatient setting.

Although there are CPT codes for the collection and preparation of the CAR T-cells, Medicare does not generally pay separately for each step used to manufacture a drug or biological. The drug codes above also clearly specify that leukapheresis and dose preparation are included. Because of this, the collection and preparation codes were assigned a status indicator of “B” (Codes that are not recognized by OPPS) and were not to be reported on an outpatient hospital Part B bill type (12x and 13x). Medicare has now decided that in order to track utilization and cost data, they will allow the reporting of these non-payable codes on the claim as non-covered services.  Effective for claims received on or after April 1, 2019, providers should report the following CPT codes, associated revenue codes, and value code when these services are provided.

These services may be reported as non-covered charges on the outpatient claim. Also, hospitals may report the CAR T-cell related revenue codes 087X (Cell/Gene Therapy) and 089X (Pharmacy) as well as new value code 86 (Invoice Cost) established by the NUBC on hospital outpatient department claims.

The transmittal even gives examples of what should be reported in different scenarios:

• CAR T-cells collected, prepared and given in hospital outpatient department
• Report the appropriate drug code (Q2041 or Q2042) and the administration code (0540T) as covered services
• Report 0537T, 0538T, and 0539T codes and charges as non-covered
• CAR T-cells collected and prepared in hospital outpatient department, but not given
• Report 0537T, 0538T, and 0539T codes and charges as non-covered
• CAR T-cells collected and prepared in hospital outpatient department, given in subsequent inpatient admission
• Report charges associated with services described by CPT codes 0537T, 0538T, and 0539T under revenue code 0891 (Special Processed Drugs – FDA Approved Cell Therapy - Charges for Modified cell therapy) on inpatient claim (11x type of bill)
• Do NOT report drug codes (Q20140 or Q2042) when CAR T-cells are given to inpatients

Modifier “ER”

Another new reporting requirement solely for the benefit of allowing Medicare to collect utilization data is the new modifier “ER.” Hospitals are required to report this modifier on all services provided in an off-campus provider-based emergency department. Additional information about the “ER” modifier:

• Effective January 1, 2019;
• Report on every claim line that contains a CPT/HCPCS code for an outpatient hospital service furnished in an off -campus provider-based emergency department;
• Report on UB-04 (Form 1450) for hospital outpatient services;
• Not required to be reported by critical access hospitals (CAHs);
• For off-campus provider-based emergency departments that meet the definition of “a dedicated emergency department”, that is they are:
• Licensed by the State as an emergency department; OR
• Held out to the public (by name, posted signs, advertising, or other means) as a place that provides care for emergency medical conditions on an urgent basis without requiring a previously scheduled appointment; OR
• They provide at least one-third of all of their outpatient visits for the treatment of emergency medical conditions on an urgent basis without requiring a previously scheduled appointment.

As if it is not hard enough to report all the codes for which you do get paid, Medicare sometimes requires that we report codes for which there is no payment. Bummer! 

If your hospital has a hospital outreach laboratory that furnishes laboratory testing to non-patients, you may be required to collect and report private payor lab rates and volumes to Medicare. A non-patient is a patient that is neither an inpatient nor an outpatient of a hospital.

Non-patients are those patients that:

• Have a specimen submitted for analysis to a hospital and the patient is not physically present at the hospital;
• The patient did not receive other outpatient services at the hospital on the same day the specimen was collected; or
• The specimen was not collected by an employee of the hospital or of a facility provider-based to the hospital.

Hospital laboratories may bill Medicare under their own NPI separate from the hospital NPI. Hospital laboratories that bill under the hospital NPI, bill for non-patient specimens on Form CMS-1450 (UB-04) 14x Type of Bill (TOB).

The Protecting Access to Medicare Act of 2014 (PAMA) made significant changes to the way in which Medicare payments for laboratory tests paid under the Clinical Laboratory Fee Schedule (CLFS) are determined. Under the CLFS final rule “Medicare Clinical Diagnostic Laboratory Tests Payment System Final Rule” (CMS-1621-F), which was published in June 2016 and implemented the PAMA requirements, private payor rates became the basis for the revised CLFS rates beginning January 1, 2018. Medicare obtains the data for the private payor rates from applicable laboratories that are required to report their private payor payments and volumes to CMS. When this rule first came out the definition of applicable reporting labs had to do with the percentage of Medicare services for a particular NPI that were paid under the CLFS or the physician fee schedule. Since hospital Medicare revenues are mainly from inpatient and outpatient prospective payment systems (IPPS and OPPS), most hospital labs did not qualify as an applicable reporting laboratory with the exception of hospital laboratories that had their own NPI number. In the 2019 Medicare Physician Fee Schedule (MPFS) Final Rule, CMS changed the definition of an applicable reporting laboratory to use the Medicare revenue from a hospital 14x type of bill for the data collection period beginning January 1, 2019.

On February 27, 2019, Medicare published MLN Matters Article SE19006 that includes a lengthy discussion of the reporting requirements including “clarifications for determining whether a hospital outreach laboratory meets the requirements to be an “applicable laboratory,” the applicable information (that is, private payor rate data) that must be collected and reported to the Centers for Medicare & Medicaid Services (CMS), the entity responsible for reporting applicable information to CMS, the data collection and reporting periods, the schedule for implementing the next private payor-rate based CLFS update” and information about a condensed data reporting option for reporting entities.

For many hospitals that perform outreach testing, this will be a big deal. The reporting entity is based on the Tax Identification Number (TIN) but data is reported for each individual NPI that meets the definition of an applicable laboratory.  This means the first step is determining if your laboratory meets the definition of an applicable reporting laboratory. If your hospital lab bills under its own NPI, you likely dealt with determining if you were a reporting laboratory for the first reporting period.

Labs are required to report data if they:

• Have more than $12,500 in Medicare revenues from laboratory services on the Clinical Laboratory Fee Schedule (CLFS) during a 6-month data collection period, and
• Receive more than 50 percent of their Medicare revenues from CLFS and physician fee schedule services during a data collection period”

Hospital labs billing under the hospital’s NPI now use the 14x TOB for these calculations. Since 14x revenues are “non-patient” services, they consist exclusively (or mostly) of lab services, meaning the percentage will likely always exceed 50%. The means if your hospital outreach lab’s 14x revenues equal or exceed $12,500 in the 6-month reporting period, then you are required to report the lab private payor data to Medicare.

If you are an applicable laboratory, you must report each private payor rate and volume for each lab test subject to the data collection and reporting requirements. You can find a list of the lab tests subject to reporting in the Downloads section of the Medicare CLFS PAMA webpage – the document is titled CLFS Applicable Information HCPCS Codes. Private payors are defined as a health insurer issuer, a group health plan, a Medicare Advantage plan or a Medicaid Managed Care Organization.  

Labs report the final amount paid by a private payor including patient cost sharing amounts and secondary insurer payments. If an applicable laboratory has more than one payment rate for the same private payor for the same test, or more than one payment rate for different payors for the same test, the reporting lab will report each such payment rate and the volume for the test at each such rate.  There may be some insurances that do not pay individual amounts per HCPCS code, such as an insurance that pays under capitation or under a claim-level payment (such as, EAPGs for example). In this case, if the final private payor rate amount paid by HCPCS code and the associated volume paid at that final rate cannot be determined, the payment amount is not a private payor rate for purposes of applicable information and therefore is not reported to CMS.

Hospital laboratories that meet the applicable reporting status based on billing on the 14X TOB report only applicable information attributed to the lab’s non-hospital patients. This means the hospital must distinguish private payor payments made for lab tests furnished to non-patients from private payor payments made for lab tests furnished to hospital inpatients and outpatients. Only the private payor rates and volumes of laboratory tests furnished to non-patients are to be reported to CMS.

The next data collection period for this reporting began January 1, 2019 and goes through June 30, 2019. Then there is a six-month review and validation period from July 1, 2019-December 31, 2019. Applicable laboratories will report their data between January 1, 2020 and March 31, 2020. This data will be used to set the Clinical Lab Fee Schedule (CLFS) rates beginning in year 2021. The data collection, reporting and setting of new rates occurs every 3 years.

There is a new option available for condensed reporting at the TIN level. The TIN level reporting entity may combine the volume paid at the same private payor rate for the same HCPCS code for its component applicable laboratories. The condensed data reporting is only permitted when a specific lab test HCPCS code is paid at the same private payor rate to more than one applicable lab under the same TIN. The reporting entity must select one NPI as the reporting NPI when using this condensed data reporting. The MLN Matters article gives examples of how the condensed reporting would work. This is only an option if a reporting entity has multiple applicable laboratories for which it is reporting.

This reporting is not voluntary, optional, or discretionary. If your laboratory qualifies as an applicable reporting laboratory, you must ensure accurate collection and reporting of applicable information. There is a lot to consider and a lot of preparation prior to reporting. This article is only a cursory explanation of the process. I encourage hospitals to first determine if the reporting requirements apply to you and if they do, begin by reading all the Medicare information on the data collection and reporting process. I am sure after further study, you will agree, this is a big deal.

Resources:

MLN Matters Article SE19006

Medicare Laboratory PAMA Webpage

FAQs CY 2019 CLFS  

While a majority of the country is in the grips of below freezing weather, here in the South our promised snow did not happen and temperatures by the first of next week are forecast to be in the 70’s. Some flowers, such as jonquils, are beginning to bloom and whether from the changing weather patterns or from early bloomers, I have a sinus headache. This time next year, many hospital laboratories will be in the middle of another large headache – that of reporting private payor data for clinical diagnostic laboratory tests (CDLTs) to Medicare.

The Protecting Access to Medicare Act of 2014 (PAMA) made significant changes to the way in which Medicare payments for laboratory tests paid under the Clinical Laboratory Fee Schedule (CLFS) are determined. Under the CLFS final rule “Medicare Clinical Diagnostic Laboratory Tests Payment System Final Rule” (CMS-1621-F), which was published in June 2016 and implemented the PAMA requirements, private payor rates became the basis for the revised CLFS rates beginning January 1, 2018. Medicare obtains the data for the private payor rates from applicable laboratories that are required to report their private payor payments and volumes to CMS. When this rule first came out the definition of applicable reporting labs had to do with the percentage of Medicare services for a particular NPI that were paid under the CLFS or the physician fee schedule. Since hospital Medicare revenues are mainly from inpatient and outpatient prospective payment systems (IPPS and OPPS), most hospital labs did not qualify as an applicable reporting laboratory with the exception of hospital laboratories that had their own NPI number.

In the 2019 Medicare Physician Fee Schedule (MPFS) Final Rule, CMS changed the definition of an applicable reporting laboratory to use the Medicare revenue from a hospital 14x type of bill for the data collection period beginning January 1, 2019. The official definition for applicable reporting laboratories is:

“Laboratories, including physician offices laboratories and hospital outreach laboratories that bill using a 14X TOB are required to report laboratory test HCPCS codes, associated private payor rates, and volume data if they:

• Have more than $12,500 in Medicare revenues from laboratory services on the Clinical Laboratory Fee Schedule (CLFS), and
• Receive more than 50 percent of their Medicare revenues from CLFS and physician fee schedule services during a data collection period”

As explained in the January 22, 2019 ‘Clinical Diagnostic Laboratories to Collect and Report Private Payor Rates Call’, hospitals will divide the CLFS and PFS revenues attributed to 14x Type of Bill by their total 14x

revenues. Since 14x revenues are “non-patient” services, they consist exclusively (or mostly) of lab services, meaning the percentage will likely always exceed 50%. This means if your hospital outreach lab’s 14x revenues equal or exceed $12,500 in the 6-month reporting period, then you are required to report the lab private payor data to Medicare.

Using Medicare claims data from our sister company, RealTime Medicare Data (RTMD), I looked at the 14x revenue for a number of hospitals and I was surprised that most hospitals easily surpassed the $12,500 per 6-months threshold for reporting. The current data collection period began January 1, 2019 and goes through June 30, 2019. The reporting period for this collection period is January 1, 2020 through March 31, 2020. This gives hospitals time to evaluate their status and prepare for reporting.

I recommend hospitals first verify they are using the 14x type of bill correctly. The 14x type of bill is used to bill non-patient lab services, such as when a specimen is sent to the hospital lab for testing from a physician’s office. Patients that are referred to your laboratory for testing and actually physically come to the hospital lab for specimen collection are outpatients. Outpatient testing is billed to Medicare on a 13x type of bill. Although the data collection period has already begun, if you are not using the 14x bill type correctly, now is the time to correct it.

Hospitals then need to determine the amount of their 14x revenues for a six-month period. The current collection period of January-June 2019 will be the official period for determining 14x lab revenues for reporting purposes, but hospitals can estimate if they will meet the criteria based on prior data. If it appears your hospital laboratory will meet the definition of an applicable reporting lab, someone at your facility needs to learn the requirements for reporting so you are ready next year. Here are some resources to get you started with the process.

• Medicare's Laboratory PAMA webpage – a wealth of information and links to other resources on this page. If you are an applicable reporting lab, you will want to check out the CLFS Data Collection System User Guide.
• Medicare FAQs on the Final Rule (at the time this article was written, these FAQs were not yet updated with the new 2019 applicable lab definition)
• National Provider Call January 22 2019 – this website includes the presentation, audio recording, and transcript of this call. CMS will be having additional calls on this topic so be on the lookout for these.

The January 22, 2019 National Provider Call explained how to determine if you are a reporting laboratory under the new 14x definition. The CMS presenters were unsure exactly what data would be required to be reported to Medicare – was it only 14x data, or was the 14x data only for determining reporting status and all lab non-patient and outpatient data would have to be reported. They promised to clarify this in upcoming sub-regulatory guidance.

In general, reporting labs have to report the private payor rate for each test for which final payment has been made during the data collection period, the associated volume for each test, and the specific HCPCS code associated with the test. If an applicable laboratory has more than one payment rate for the same private payor for the same test, or more than one payment rate for different payors for the same test, the reporting entity will report each such payment rate and the volume for the test at each such rate.

There may be some insurances that pay a lump sum amount per claim, instead of individual line item payments, such as an insurance that pays under EAPGs for example. In this case, if the final private payor rate amount paid by HCPCS code and the associated volume paid at that final rate cannot be determined, the payment amount is not a private payor rate for purposes of applicable information and therefore is not reported to CMS.

Even from this cursory discussion of the required reporting for private payor lab rates, you can tell it will certainly be a huge headache. You cannot change that, but you can start now to know where you stand and what to expect as the reporting period approaches. 

Medicare publishes updates to most of their payment systems on a quarterly basis. In this newsletter, we review the updates related to hospitals, such as the quarterly updates to the Outpatient Prospective Payment System (OPPS). The January OPPS Update always has a long and wordy transmittal since it is the update that incorporates the changes from the annual OPPS Final Rule and CPT/HCPCS coding changes for the calendar year. Many of the issues from the final rule have already been written about and discussed again, again, and again – the January update is just one more repetition of the changes. The good part of all these repeats is that it gives numerous opportunities for providers to see the news, and less chance that they would miss an important update.

So, here again is a summary of the high points of the January 2019 OPPS Update. Since there are so many code updates, please refer to this link to the January 2019 OPPS Update MLN Matters article to see the new and revised codes.

• CMS is establishing one new device pass-through category for January 2019 for Generator, neurostimulator (implantable), non-rechargeable, with transvenous sensing and stimulation leads (HCPCS code C1823). This device will be paid a pass-through payment based on cost-to-charge ratio. The applicable APC 5464 billed with CPT 0424T (Insertion or replacement of neurostimulator system for treatment of central sleep apnea; complete system (transvenous placement of right or left stimulation lead, sensing lead, implantable pulse generator) will have a device off-set amount applied to the payment rate.
• CMS changed the definition of device-intensive procedures this year, lowering the device offset percentage threshold from greater than 40 percent to greater than 30 percent and allowing procedures that involve single-use devices, regardless of whether or not they remain in the body after the conclusion of the procedure, to qualify as device-intensive procedures. See the prior Wednesday@One article for more information on this change.
• CMS created new HCPCS code C1890 for ASC use only, to report with device-intensive procedures when an implantable or inserted medical device is not used.
• There are three new comprehensive APCs (C-APCs) for 2019 - C-APC 5163 (Level 3 Ear, Nose, and Throat (ENT) Procedures), C-APC 5183 (Level 3 Vascular Procedures), and C-APC 5184 (Level 4 Vascular Procedures). C-APC claims are paid one comprehensive payment for the primary procedure with packaging of payment for adjunctive services into the primary procedure payment.
• CMS removed four procedures from the inpatient-only list for 2019 and added one procedure to it. Wednesday@One Article for 2019 IPO List discusses the changes in greater detail.
• New modifier “ER” is to be reported by hospitals (except CAHs) on all line items for services provided in a provider-based off-campus emergency department beginning January 1, 2018. See the MLN Matters article for the criteria for “dedicated emergency department.”
• CMS is reducing the payment rate for clinic visits (G0463) provided in excepted off-campus provider-based departments. Excepted off-campus PBDs are those PBDs that were furnishing and billing for services as of November 2, 2015, report services with a PO modifier, and are still paid OPPS payment rates. Under the new reduction, clinic visits in excepted off-campus PBDs will be paid 70% of the OPPS rate for 2019 and 40% for 2020 and beyond.
• There is a new Revenue-Code-to-Cost‑Center crosswalk for Partial Hospitalization Programs (PHPs) and several deleted and new PHP CPT codes.
• There are a lot of new and changed HCPCS codes for drugs, biologicals, and radiopharmaceuticals. See the MLN Matters article for tables of these codes. Notice particularly new codes that have a different dose description than the old code, such as Rituximab (old code J9310, 100 mg and new code J9312, 10 mg).
• Separately payable drugs will be paid at ASP+6%, except for drugs purchased through the 340B program, which are paid at ASP-22.5%. The reduced payment rate for drugs purchased through the 340B program now applies to such drugs billed by nonexcepted off-campus PBDs of a hospital paid under the PFS. This means nonexcepted off-campus PBDs must report the JG modifier on line items for separately payable (Status Indicator = K) drugs purchased through the 340B program.
• The payment for skin substitute products that do not qualify for pass-through status will continue to be packaged into the payment for the associated skin substitute application procedure. The procedure code is selected based on the designation of the skin substitute as high or low cost. The MLN Matters article includes a table with the 2018 and 2019 high/low skin substitute designations.

These are some of the highlights from the January 2019 OPPS updates. Please refer to MLN Matters Article MM11099 for all the updates and additional details.

One of my grandchildren’s favorite books is “It Could Be Worse.” This book follows the trip home of a young mouse from visiting friends. The mouse experiences one calamity after another – he falls in a hole, tumbles down a bank, falls into a stream, etc. The young mouse believes he is having a very bad day, but the illustrations show that he is actually narrowly escaping real disasters due to his minor mishaps. He falls in the hole just as a large predatory bird swoops down to grab him, for example. Sometimes we think things are bad, but generally they could always be worse.

Over the past couple of weeks, we have included articles in the Wednesday@One about the Outpatient Prospective Payment System (OPPS) Final Rule. For most of our hospital clients and readers, your outpatient services are paid under OPPS. There are some services however that, even for OPPS hospitals, are paid under a fee schedule other than OPPS. These services are identified on the OPPS Addendum B with a status indicator (SI) of “A” – “Not paid under OPPS.  Paid by MACs under a fee schedule or payment system other than OPPS.” Along with the payment systems often come payment rules for these services that also apply to hospital billing. Hospitals have to look to the Medicare Physician Fee Schedule (MPFS) Final Rule for some of these additional requirements. This week we examine some of the rule changes from the MPFS rule for 2019 that affect hospitals, including some changes that will not become effective until next year.

Off-Campus Provider Based Departments

Non-excepted off-campus provider-based departments (PBDs), that is those off-campus PBDs that began billing and furnishing services on or after November 2, 2015, are paid under the MPFS instead of under OPPS due to Section 603 of the Bipartisan Budget Act of 2015. Currently Medicare sets the MPFS rates for non-excepted off-campus PBDs annually in the MPFS final rule. This year, CMS finalized their “proposal to maintain the PFS Relativity Adjuster at 40 percent for CY 2019 and beyond until there is an appropriate reason and process for implementing an alternative to our current policy, at which time we will make a proposal through notice and comment rulemaking.” This means services in a non-excepted off-campus PBD will be paid at 40% of the OPPS payment rate for 2019 and beyond until Medicare elects to use a different payment policy for these services. Currently, OPPS packaging and payment rules also apply, including this year the reduced payment of ASP minus 22.5% for separately payable outpatient drugs (SI=”K”) purchased through the 340B program.

Therapy Services

Medicare is ending the requirements for reporting and documentation of functional limitation G codes (HCPCS codes G8978 through G8999 and G9158 through G9186) and severity modifiers (in the range CH through CN) for outpatient therapy claims with dates of service on and after January 1, 2019. This means physical therapy (PT), occupational therapy (OT), and speech language pathology (SLP) no longer have to report the functional limitation codes and modifiers beginning the first of the new year. CMS is not deleting these G codes until 2020 so that claims will not return or reject if they inadvertently contain these codes.

The Bipartisan Budget Act of 2018 contained requirements for reduced payments for therapy services furnished in whole or in part by therapy assistants. The payment reductions do not begin until 2022 and reporting requirements to identify such services do not begin until 2020. There is nothing to deal with this year, but here are some points to be aware of for the future.

• Reporting and payment reduction will apply to hospital outpatient therapy services (except for critical access hospitals).
• Payment for therapy services furnished on or after January 1, 2022, in whole or in part by a therapy assistant, will be paid at 85% of the otherwise applicable Part B payment amount for the service.
• Since there are no therapy assistants for Speech Language Pathology (SLP) services, this only applies to physical therapy assistants and occupational therapy assistants.
• CMS is creating two new modifiers to be appended to PT and OT line items furnished in whole or in part by a therapy assistant beginning with dates of service on and after January 1. 2020 (although payment reduction will not occur until 2022). The new modifiers, PTA modifier CQ and OTA modifier CO, will be reported alongside of the existing GP and GO modifiers.
• CMS considers a service to be furnished in whole or in part by a PTA or OTA when more than 10% of the service is furnished by the PTA or OTA.

Laboratory Services

Most laboratory services on OPPS Addendum B have an SI of “Q4” due to the OPPS packaging requirements. However, when lab services meet the criteria for separate payment (i.e. they are the only type of service billed on the claim), they are paid separately under the Clinical Lab Fee Schedule (CLFS). The Protecting Access to Medicare Act of 2014 (PAMA), made significant changes to how Medicare pays for clinical diagnostic laboratory tests under the CLFS. Beginning January 1, 2018, CLFS rates are based on private payor rates reported to CMS by applicable laboratories. Not many hospital laboratories met the definition of an applicable reporting laboratory because it was defined as an entity that receives more than 50 percent of its Medicare revenues during a data collection period from the CLFS and/or the Physician Fee Schedule (PFS). Unless a hospital lab had its own NPI separate from the hospital NPI, it was unlikely the percent of CLFS/MPFS revenues was enough to meet the definition.

This year, Medicare is changing the definition to use Form CMS-1450 14x type of bill (TOB) to define applicable laboratories for the next data collection period (January 1, 2019, through June 30, 2019) and the next data reporting period (January 1, 2020, and ends March 31, 2020), subject to other regulatory and subregulatory requirements, such as the regulatory low expenditure threshold. Hospital outreach laboratories that do not receive at least $12,500 in CLFS revenues on the 14X TOB during a data collection period (6 months) would be exempt from the reporting requirements. This means more hospital laboratories will now be required to report private payor lab rates to CMS, specifically those hospital outreach labs with more than $12,500 in CLFS revenues per six months.  Hospitals need to evaluate whether they meet the new criteria for reporting and if so, be prepared to report by 2020.

Appropriate Use Criteria for Advanced Imaging

Imaging services are paid under OPPS, but there are new rules coming for 2020 that affect hospitals also. PAMA also directed CMS to establish a program to promote the use of appropriate use criteria (AUC) for advanced diagnostic imaging services. Under the program, ordering professionals must consult specified applicable appropriate use criteria (AUC) using a qualified clinical decision support mechanism (CDSM) when ordering applicable imaging services, and furnishing professionals must report AUC consultation information on the Medicare claim. Reporting is required beginning January 1, 2020. Year 2020 is an educational and operations testing period during which AUC consultation information is expected to be reported on claims, but claims will not be denied for failure to include the information. Reporting is required across claim types and by both the furnishing professional and furnishing facility, including hospital outpatient facilities (inpatient services paid under Part A are exempted). A lot more details on AUC can be found in the MPFS Final Rule. Since reporting is not required until 2020, hospitals have time to prepare. We will provide more details prior to the 2020 reporting requirement.

That is a summary of some changes from the MPFS Final Rule that affects hospitals. A couple of issues that you do not have to worry about until next year – reporting new modifiers for therapy assistants and reporting AUC information for advanced imaging services. This year your non-excepted off-campus PBDs will continue to be paid at 40% of OPPS rates, functional limitation reporting for therapy services goes away, and you need to decide if your outreach laboratory meets the definition of an applicable lab for reporting private payor lab rates to Medicare. Not a lot of things from the MPFS to consider, …yet – it could be worse.

We at MMP want to wish everyone a Happy Thanksgiving. We are indeed thankful for our clients and our readers. And even though I often complain about the complexities and frustrations of dealing with Medicare, I am thankful for this government health care program that provides coverage of services for elderly and disabled Americans. I see firsthand the tremendous benefit of this program for my parents and in a few years for myself also. Our country is far from perfect, but as Americans we have a lot for which to be thankful.

Since tomorrow is Thanksgiving, many of us are distracted today with thoughts of cooking, spending time with family, Christmas shopping, and of course, eating! With that in mind, this week’s newsletter is intentionally short and to the point. Last week, I addressed some of the changes from the 2019 OPPS Final Rule and promised updates this week on changes in that rule related to off-campus provider-based departments (PBDs). For more background on the PBD issues and what was proposed, please refer to our prior Wednesday@One article. Pulling from that article, here are the proposals and what CMS decided to finalize in the end – some good, some bad, and some in between.

As a reminder, non-excepted off-campus PBDs are those off-campus provider-based departments of a hospital that were not furnishing and billing for services before November 2, 2015. Non-excepted off-campus PBDs are paid under the physician fee schedule (PFS) instead of under OPPS at a rate equal to 40% of the OPPS. Non-excepted services are reported with a PN modifier to trigger the reduced payment. Excepted off-campus PBDs report modifier PO to allow CMS to gather data and monitor billing patterns but continue to be paid under OPPS at regular OPPS payment rates.

The Good

CMS proposed to limit the expansion of services in excepted off-campus PBDs. If an excepted off-campus PBD furnishes services from a clinical family of services that it did not furnish in a baseline period, those new services would be non-excepted and paid at the non-excepted reduced PFS payment rate effective January 1, 2019.

CMS is not finalizing this proposal at this time. CMS did add the following statement – “However, we intend to monitor expansion of services in off-campus PBDs and, if appropriate, may propose to adopt a limitation on the expansion of excepted services in future rulemaking.”

The Bad

CMS proposed to expand the reduced payments for drugs purchased through the 340B Program to non-excepted off-campus PBDs. Separately payable drugs with an OPPS status indicator of “K” furnished and billed by non-excepted off-campus PBDs and purchased through the 340B program would be paid at ASP-22.5% for 2019 instead of the current payment of ASP+6%.

CMS finalized this proposal and beginning January 1, 2019, nonexcepted off-campus PBDs of a hospital paid under the PFS, are required to report modifier “JG” on the same claim line as the drug or biological HCPCS code to identify a 340B-acquired drug or biological.

The In-Between

CMS proposed capping the OPPS payment for clinic evaluation and management (E&M) visits for excepted off-campus PBDs at the PFS-equivalent rate. This means clinic visits (HCPCS code G0463) provided in excepted off-campus PBDs and currently billed with the PO modifier would be paid at the same reduced OPPS rate as those currently billed with the PN modifier by non-excepted PBDs.

CMS will be phasing in the application of the reduction in payment for HCPCS code G0463 in excepted off-campus PBDs over 2 years. These departments will be paid approximately 70% of the OPPS rate for the clinic visit service in CY 2019. In CY 2020, these departments will be paid the site-specific PFS rate for the clinic visit service (currently 40% of OPPS rates). This policy is not budget-neutral and results in an estimated CY 2019 savings of approximately $380 million, with approximately $300 million of the savings accruing to Medicare, and approximately $80 million saved by Medicare beneficiaries in the form of reduced copayments.

There was an announcement in the OPPS Proposed Rule (and restated in the Final Rule) about the creation of a HCPCS modifier (modifier “ER”) to be reported for outpatient hospital services furnished in an off-campus provider-based emergency department. Critical access hospitals (CAHs) would not be required to report this modifier. This modifier is to allow CMS to develop data to assess the extent to which OPPS services are shifting to off-campus provider-based emergency departments.

Again, Happy Thanksgiving and enjoy lots of turkey tomorrow! 

I know this story is an indication of my age but I often mention my grandchildren in my articles, so everyone already knows I am no longer “young.” My grandmother had one of those washing machines with a wringer on top. After the clothes washed, you put them through the two turning rollers (the wringer) to squeeze out excess water before hanging them outside on a clothesline. As a Medicare provider, do you sometimes feel like Medicare is putting hospitals and other providers through the “wringer” to squeeze out additional revenues that we used to get? This article examines the latest squeeze for hospitals from the 2019 Outpatient Prospective Payment System (OPPS) Final Rule.

Comprehensive APCs

One such squeeze in recent years is Comprehensive APCs (C-APCs) where payment for all other services on a claim (with only rare exceptions) is packaged into the payment of the most-costly primary procedure on the claim. CMS’s reasoning is that these other services are adjunctive to the primary service and making one payment for the entire episode of care is in keeping with the prospective payment strategy of OPPS. Primary procedures are designated by a status indicator (SI) of “J1” in OPPS Addendum B. For 2019, CMS is adding three new C-APCs – Level 3 ENT Procedures (levels 4 and 5 ENT procedures were already C-APCs) and Level 3 and 4 Vascular Procedures (a new type of APC group for C-APCs). This brings the total number of C-APCs to 65 involving over 2,900 CPT/HCPCS codes, of which 183 codes are 2019 additions for the APCs noted above.

Some good news is that CMS finalized the proposal to exclude payment for any procedure assigned to a New Technology APC from being packaged when included on a claim with a “J1” service assigned to a C-APC. For more background information on C-APCs, please read the Wednesday@One article about the 2019 OPPS Proposed Rule.

Medicare also pays observation services as a comprehensive APC when reported with visit codes with an SI of “J2” and when certain criteria are met.

Composite APCs

CMS is continuing their composite APC payment policies for mental health services and multiple imaging services for 2019. The mental health composite policy applies when the total payments for specified mental health services for one patient for one day exceed the maximum partial hospitalization (PHP) per diem rate. When this occurs, the services will be paid through a composite APC with a rate set at the maximum PHP per diem payment rate. In other words, the payment for individual mental health services for one day will not be more than the PHP daily rate.

For the imaging composite policy, Medicare makes one payment when more than one imaging procedure within certain imaging families is performed on the same date of service. CMS states these imaging composites “reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session.” There are five multiple imaging composite APCs for CT/CTA with contrast, CT/CTA without contrast, MRI/MRA with contrast, MRI/MRA without contrast and ultrasound services. You can find a listing of the composite CPT codes in the final rule or they are identified on Addendum B with an SI of “Q3.”

Drug/Biological Payments

Currently and continuing for 2019, separately payable drugs, including pass-through drugs, are generally paid at a rate of the average sales price (ASP) plus 6%. The biggest financial hit lately for hospital drug payments was the reduction in payment for drugs purchased through the 340B program beginning in 2018. Drugs purchased at discounted rates through the 340B program will continue to be paid the reduced rate of ASP minus 22.5% (an overall reduction of -28.5%) for 2019. Also, for 2019 CMS expanded the 340B payment reduction to apply to non-excepted, off-campus, provider-based departments (PBDs) of a hospital. The 340B reduced payment applies to drugs with an SI of “K.” These drugs are identified on a claim by the addition of the JG modifier. There are some exceptions to the reduction – vaccines, pass-through drugs, and drugs purchased by rural sole community hospitals (SCHs), children’s hospitals, and PPS-exempt cancer hospitals will be paid at ASP+6%.

CMS did increase the packaging threshold for separately payable drugs from $120 in 2018 to $125 for 2019. This means the payment for drugs, biologicals, and therapeutic radiopharmaceuticals with a per day cost of $125 or less will be packaged and the HCPCS code assigned a status indicator of “N.”

Device-Intensive Procedures

Currently, device-intensive procedures are those procedures that involve surgically inserted or implanted devices that remain in the patient’s body after surgery and for which the portion of the APC payment attributed to the device (device off-set amount) exceeds 40%. Device-intensive procedures require the reporting of a device HCPCS code on the same claim with the procedure. Any device code will satisfy this requirement. Also, device-intensive procedures are subject to the no cost/full credit and partial credit device policy which requires the reporting of value code FD and the dollar amount of the credit when the hospital receives a credit for a replaced device that is 50% or greater than the cost of the device. In this case, the payment is decreased by the credit amount on both inpatient and outpatient claims.

For 2019, CMS finalized their proposals to change the definition of device-intensive procedures to include “procedures that involve surgically inserted or implanted, single-use devices that meet the device offset percentage threshold to qualify as device-intensive procedures, regardless of whether the device remains in the patient’s body after the conclusion of the procedure and to modify criteria to lower the device offset percentage threshold from 40 percent to 30 percent.” This means there will be more procedure codes that require the reporting of a device HCPCS code and to which the device credit policy applies. The larger impact on hospitals may be a decrease in volume of these types of procedures as this policy change will encourage migration of services from the hospital outpatient department into the ambulatory surgery center (ASC) setting. Medicare rates for procedures performed in the ASC setting are generally less than hospital rates, resulting in cost savings to the Medicare program and Medicare beneficiaries.

Speaking of ASC’s, Medicare approved the addition of 12 cardiac catheterization procedures (CPT codes 93451-93462) and five procedures performed during cardiac catheterization procedures (CPT codes 93566, 93567, 93568, 93571, and 93572) to the list of ASC covered surgical procedures.

Other significant changes from the 2019 OPPS Final Rule relate to provider-based departments. We will address those in an article in next week’s newsletter but here is a hint – more squeezing of revenues but some less than proposed and others phased in over time.

If you are a fan of old TV Westerns like I am, the phrase “just passing through” may conjure up the image of the Old West lawman confronting the new, potentially trouble-making, cowboy in town. The Sheriff or Marshall or Ranger often suggests the cowboy pass on through the town quickly without disturbing the peace of the local community. Medicare has items and products that “pass-through” payment wise for a limited amount of time such as pass-through drugs and biologicals.

“For CY 2019, we are proposing to continue to pay for pass-through drugs and biologicals at ASP+6 percent…” 2019 Outpatient Prospective Payment System (OPPS) Proposed Rule

Those of us that deal with Medicare hospital regulations and payments hear a statement similar to the one above every year. Most of us also know that pass-through drugs and biologicals are identified in the OPPS addenda with a payment status indicator of “G.” And somewhere, back in the beginning of OPPS, the requirements and rules of drug pass-through payments were created. But even for those of us that see this annually, do we really know what “pass-through” means, what the rules are, and if those rules are working as intended?

The regulations for pass-through drugs/biologicals can be found in Section 419.64 of the Code of Federal Regulations (CFR) and are summarized in the annual OPPS rule. Basically, Section 1833(t)(6) of the (Social Security) Act provides for temporary additional payments or “transitional pass-through payments” to hospitals for certain drugs and biologicals.

• These payments are for orphan drugs; drugs, biologicals and brachytherapy sources used in cancer therapy; and radiopharmaceuticals – all for which payment has been made since the implementation of OPPS.
• Transitional pass-through payments are also provided for certain “new” drugs and biologicals that were not being paid for as a hospital outpatient service as of December 31, 1996 and whose cost is “not insignificant” in relation to the OPPS payments for the procedures or services associated with the new drug or biological.
• For pass-through payment purposes, radiopharmaceuticals are included as “drugs.”
• Transitional pass-through payments for a drug or biological can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the product as a hospital outpatient service under Medicare Part B.
• The pass-through payment equals the amount determined under section 1842(o) of the Act minus the portion of the APC payment that CMS determines is associated with the drug or biological.
• Prior to CY 2017, CMS expired pass-through status for drugs and biologicals on an annual basis through notice-and-comment rulemaking.
• Beginning CY 2017, CMS accepts applications and begins pass-through payments for newly approved pass-through drugs and biologicals on a quarterly basis. This allows the maximum pass-through payment period for each pass-through drug without exceeding the statutory limit of 3 years.
• When pass-through status expires, drugs and biologicals of certain groups that are “always packaged” become packaged. This includes anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including diagnostic radiopharmaceuticals, contrast agents, and stress agents); and drugs and biologicals that function as supplies when used in a surgical procedure.
• When pass-through status expires for “not always packaged” drugs and biologicals, the standard methodology for providing payment for drugs and biologicals is used. This means drugs/biologicals whose estimated per day cost exceeds the OPPS drug packaging threshold for that calendar year are separately paid at the applicable relative ASP-based payment amount which is currently ASP+6% for drugs not purchased through the 340B program.
• The decreased payment rate for drugs purchased through the 340B program does not apply to pass-through drugs and biologicals. Providers are to report pass-through drugs purchased through the 340B program with the informational only modifier “TB.”

For some reason, in Section 1301(a)(1) of the Consolidated Appropriations Act of 2018 (Public Law 115-141), Congress extended the pass-through status of drugs or biologicals whose period of pass-through payment status ended on December 31, 2017, and for which payment was packaged into a covered hospital outpatient service furnished beginning January 1, 2018. For drugs and biologicals meeting the criteria, the pass-through status is extended for a 2-year period beginning on October 1, 2018, through September 30, 2020. The four products that meet these criteria and with reinstated pass-through status are noted in the table at the end of this article. The law also defines the calculation of the pass-through payment amount for a portion of the extension. It further requires adjustment of the APC payment amount to remove the packaged costs of such drug or biological from the covered outpatient service with which it was packaged. This resulted in new payment rates for 10 APCs from October 1, 2018 through December 31, 2018. The affected APCs and more discussion on Public Law 115-141 can be found in the October 2018 OPPS Update MLN Matters Article.

Section 1301 of the Law also included a requirement for a study and report by the Government Accounting Office (GAO) which may reflect the reasoning for this extension. Congress requests an analysis of the impact of the drug packaging policy on utilization of affected drugs/biologicals, the availability of treatment options, the health outcomes of Medicare beneficiaries, and also the impact on price competition and cost-sharing as a result of these changes to the Law. You can read the complete Section 1301 of the Law at this link - https://www.congress.gov/bill/115th-congress/house-bill/1625/text/enr (Tip: Search for the term “pass-through” in the document to locate the applicable section quickly.)

Since Congress is not known for swift action, it may be years before revisions, if any, are made to the pass-through policy for drugs and biologicals. Until then, these products will only be passing through for a limited period of time.

The table below contains the products with reinstated pass-through status and other code/status changes from the October 2018 OPPS Update.

There is not a lot of activity on the Medicare Administrative Contractor (MAC) medical review front this month. The various MACs are proceeding at different rates and providing information in different formats concerning the new Targeted Probe and Educate (TPE) program. One of the main aspects of the program is to individualize education and present it to providers one-on-one. This has resulted in different interpretations by the MACs on what information to place on their websites:

Palmetto (JJ and JM), CGS (J15) and Novitas (JH and JL): These MACs have listings of active topics and results of some reviews posted on their websites. Results generally include the major errors and suggestions for avoiding denials. Some of this information is confusing, since results include both numbers of compliant/non-compliant providers and error rates by state, but the suggestions for avoiding errors is helpful information for all providers. I, for one, really appreciate this type of detail on the MAC websites.

First Coast (JN) and WPS (J5 and J8): TPE topics listed on their websites, but no review results yet. WPS does offer a number of articles on documentation guidance for their review topics which is also helpful information for all providers.

NGS (J6 and JK) and Noridian (JE and JF): There is general TPE information on their websites, but no specific review topics have been posted.

This week I would like to focus on WPS’s review topic of Facilities Billing Emergency Room Services CPT Codes 99281-99285. I was surprised to see this TPE topic because there are no national visit guidelines for the selection of a specific ER facility level of care CPT code. For years, many thought CMS would eventually publish such criteria, but they have not. CMS instructs individual hospitals to develop internal criteria for charging E&M levels based on the following guidelines that appeared in the 2008 Outpatient Prospective Payment System (OPPS) Final Rule:

• Reasonably relate the intensity of hospital resources to the different levels of effort represented by the code.
• Be based on hospital facility resources, not on physician resources.
• Be clear to facilitate accurate payments and be usable for compliance purposes and audits.
• Meet the HIPAA requirements.
• Only require documentation that is clinically necessary for patient care.
• Not facilitate upcoding or gaming.
• Be written or recorded, well-documented, and provide the basis for selection of a specific code.
• Be applied consistently across patients in the emergency department to which they apply.
• Not change with great frequency.
• Be readily available for MAC review.
• Result in coding decisions that could be verified by other hospital staff, as well as outside sources.

To summarize, the levels should be related to the hospital resources used, be clear and verifiable by outside reviewers, not promote up-coding, be supported by the usual ER documentation, and be consistent.

Also discussed in the 2008 OPPS Final Rule (FR) was the consideration of separately payable services in selecting the ER facility level of care. At one time, assigning your ER level based on procedures for which you also received separate payment was considered “double-dipping” and was discouraged. In the 2008 FR, CMS stated, “In the absence of national visit guidelines, hospitals have the flexibility to determine whether or not to include separately payable services as a proxy to measure hospital resource use that is not associated with those separately payable services. The costs of hospital resource use associated with those separately payable services would be paid through separate OPPS payment for the other services.” The discussion goes on to suggest hospitals contact their local MAC for additional guidance.

Hospitals use different definitions and systems to define their ER visit levels. A number of hospitals use American College of ED Physicians (ACEP) criteria; some use the modified AHA / AHIMA criteria; some hospitals use computer-generated or manually calculated systems based on an intervention point system; other options are patient acuity or time-based. Medicare does not prescribe that a particular system be used as long as the above principles are followed. However your facility chooses to select ER visit facility level codes, how do you and outside reviewers (such as a MAC) evaluate your coding to ensure it is accurate, appropriate, and compliant?

One consideration in evaluating your ER levels is the distribution of the CPT codes. In the 2008 FR, CMS evaluated the use of hospital-specific criteria for ER level selection based on a bell curve for the codes submitted. See a prior Wednesday@One article for more information about the code distribution. CMS stated in that rule, “We would not expect individual hospitals to necessarily experience a normal distribution of visit levels across their claims, although we would expect a normal distribution across all hospitals as currently observed…We understand that, based on different patterns of care, we could expect that a small community hospital might provide a greater percentage of low-level services than high-level services, while an academic medical center or trauma center might provide a greater percentage of high level services than low-level services.” An individual hospital’s ER level distribution does not have to be a bell-curve, but would be expected to be a reasonable graph that fits with the acuity of the facility’s ER patients and services.

Here are some examples of the variation in distribution of ER levels seen in similar types of hospitals. Numbers 1-5 correlate respectively with ER level codes 99281-99285. These volumes were obtained from Medicare data from our sister company RealTime Medicare Data (RTMD). I am not saying any of these distributions are right or wrong – this is something each hospital should evaluate internally. You understand the types of patients coming through your emergency room – practically, does your ER level distribution look appropriate to you?

Along this same line, PEPPER reports (Program for Evaluating Payment Patterns Electronic Report) for short-term acute care hospitals added a new measure related to ED facility levels beginning with the July – September 2017 quarter reports. This Emergency Department Evaluation and Management Visits (ED E&M) measure provides the ratio of Level 5 ED visits to all ED visits reported by a hospital and compares your data to that of other hospitals at your state, MAC jurisdiction and national levels. This will allow you to evaluate if you are reporting a higher or lower percentage of Level 5 ED visits (CPT 99285) than your peers. In some cases, there may be valid reasons for being an outlier, but this is another way to assess the appropriateness of your ED levels. If you cannot think of a reason for being higher or lower than other hospitals, a deeper evaluation of your system for assigning ED levels is warranted. See a prior Wednesday@One article for more information about this PEPPER target.

Think about whether your ER levels correlate with the acuity of a patient’s condition. An ER visit for a minor upper respiratory infection should be a lower visit level than that of a broken bone, which should be less than a possible heart attack. Also, does your internal criteria make sense and flow appropriately from the lowest to the highest levels?

Other considerations for evaluating your ER levels can be found on the WPS website. Hopefully, WPS will publish some results information as they move forward with this review. In the meantime, they have provided some documentation guidance for a successful review of CPT codes 99281-99285. According to their article, documentation should include:

• The number and type of interventions under the facility charge
• The visit record showing the signs/symptoms that support the medical necessity for the interventions
• The internal guidelines used to determine the HCPCS equivalent CPT code (99281-99285) for the hospital resources being billed (HCPCS to CPT conversion guidelines)

It will be interesting (or possibly frightening if your hospital is targeted) to see how the WPS audit plays out.

• Will WPS deny claims they believe are coded at an inappropriate level or adjust the payment to a code they think is more appropriate?
• Will WPS accept hospitals’ criteria at face value or will they question the appropriateness of the criteria itself?
• Will other MACs follow WPS and audit ER facility levels in the future?
• Some commercial insurers have targeted ER facility levels – will they continue, back off like Anthem did, or will this practice expand?
• And most importantly, how should hospitals prepare for these audits?

My suggestions are to make sure you have clear and reasonable ER facility level of care criteria, that you “feel good” about your ER facility levels overall, documentation clearly supports the levels selected, and you think you could defend your level selections to an outside auditor.

MAC medical review activity since last month is listed below.