Knowledge Base Category -

CMS’s Medicare Learning Network publishes quarterly Medicare Compliance Newsletters to address the findings from reviews by Medicare contractors such as MACs, RAs (formerly RACs), ZPICs, CERT and the OIG. A cursory look at the October 2012 newsletter might lead you to believe it is the same old issues with the same old information. But a more thorough reading of the details reveals education and guidance on coding / billing issues and examples of services provided in an inappropriate level of care. And of course the usual information is there also – but in these days of seemingly never-ending recoupment, one more reminder doesn’t hurt.

Coding Issues

Inappropriate secondary diagnosis with major joint replacements that resulted in inappropriate DRG assignment:

• “Moderate protein nutrition” should only be assigned code 263.0, Malnutrition of moderate degree, because this code category includes protein-calorie malnutrition. Code 260, Kwashiorkor, is not appropriate since this condition was not specifically documented. (Coding Clinic: Third Quarter, 2009)
• Code 416.2 was created in October 2009 to describe chronic pulmonary embolism to distinguish these from acute pulmonary emboli. Use this code if the patient did not have an acute PE during the current admission, instead of reporting code 415.19. (Coding Clinic, Fourth Quarter, 2009)

Sequencing errors related to the principal diagnosis with cardiac procedures that resulted in inappropriate DRG assignment.

• Code acute myocardial infarction (410.xx) as the principal diagnosis rather than CAD (414.01) for patients who present with an acute MI and are successfully treated with angioplasty. (Coding Clinic, 4th Quarter 2005 and Coding Clinic, 2nd Quarter, 2001)

Billing Issues

Outpatient within Inpatient Stay

• A separate claim for laboratory services by the same hospital during the time frame of an inpatient admission.
• A separate claim by another hospital for ERCP services during an inpatient admission. If an outside entity provides services to an inpatient, those services are part of the inpatient admission. The inpatient hospital should make arrangements with the outside entity to ensure that a separate outpatient claim is not submitted to Medicare.

Inappropriate Hospital Admissions

Respiratory Conditions

• Patient with mild COPD 2 and costochondritis who presented with chest pain and successfully treated with IV ketorolac; discharged next day. Per Medicare reviewers, services should have been provided at outpatient level of care.
• Patient with wheezing and hypoxemia post EGD; successfully treated with IV Solu-Medrol and IV Protonix and discharged home the next day. Per Medicare reviewers, services should have been provided at outpatient level of care.

DRG 581, Other Skin, Subcutaneous Tissue and Breast Procedures

• Two examples of uncomplicated mastectomies, discharged home the next day. Per Medicare reviewers, services should have been provided at outpatient level of care.

Please read the October 2012 Medicare Quarterly Compliance Newsletter to see the complete examples and other helpful information.

For the first time, beginning with dates of service October 1, 2012 through December 31, 2012, therapy caps apply to patients treated in a hospital outpatient setting. Also, for the same time frame, CMS will be implementing automatic manual review of therapy services exceeding a set threshold.

Are you aware of the new regulations; do you understand them and is your hospital ready for therapy caps and thresholds?

What is the therapy cap?

The therapy cap is a financial limitation on the amount Medicare will pay for therapy services for an individual patient in any given calendar year. Medicare allowable charges, which include both Medicare payments to providers and beneficiary coinsurance, are counted toward the therapy cap. The therapy cap for 2012 is $1880 for occupational therapy (OT) and $1880 for physical therapy (PT) and speech language pathology (SLP) therapy combined. There is an exception process for medically necessary therapy services above the cap, which is explained below.

What has changed?

Previously the therapy cap did not apply to hospital outpatient therapy services, but as stated above, beginning October 1, 2012 through December 31, 2012, it will. Also beginning October 1, 2012, Medicare payment amounts for all therapy services provided in hospital outpatient departments from January 1, 2012 through September 30, 2012 will be included in patients’ total therapy amounts for 2012.

CMS will also implement an automatic manual review of therapy services that exceed a threshold of $3,700. Just like the therapy caps, there is one $3,700 threshold for occupational therapy and another $3,700 threshold for physical therapy and speech therapy services combined. As described below, CMS will allow providers to request a pre-approval exception from the automatic manual review.

How do you know how much therapy the patient has received so far?

Providers can use the Medicare ELGA or HIPAA Eligibility Transaction System (HETS) to determine the dollar amount of therapy the patient has had so far for 2012. Remember that prior to October 1, 2012, the amount shown does not include therapy performed in a hospital outpatient setting, but beginning October 1st, that amount for all of 2012 will be included.

Once I know the patient’s amount, what do I have to do?

It depends on where the patient is in his or her Medicare therapy spending for the year. Let’s consider each scenario separately.

Less than the therapy cap of $1,880
If your patient is far enough below the therapy cap amount of $1,880 that the services for which you will be billing will not push him/her above the cap, then you continue to provide services, document, and bill as you are currently doing. Remember, therapy furnished by providers must always be reasonable and medically necessary, require the specialized skills of medical professional, and be justified by supporting documentation in the patient’s medical record.

Nearing or above the therapy cap of $1,880 but less than threshold of $3,700
If your patient is above the $1,880 cap for the discipline(s) you are providing or the services you will be billing will put the patient above that cap, but below the $3,700 threshold, then you can request an exception by appending the KX modifier to the therapy services. The KX modifier is only to be used for therapy services that are reasonable and medically necessary, require the specialized skills of a therapist, and are justified by supporting documentation in the patient’s medical record.

Providers should refer to the Medicare Claims Processing Manual, Chapter 5, sections 10.3-10.5 for complete information concerning the automatic exceptions process to exceed the therapy cap. Some of the key points from the manual are:

• Medicare will make exceptions from the therapy caps for therapy evaluations (CPT codes 92506, 92597, 92607, 92608, 92610, 92611, 92612, 92614, 92616, 96105, 97001, 97002, 97003, 97004) when evaluation is necessary, e.g., to determine if the current status of the beneficiary requires therapy services.
• An exception may be made when the patient’s condition is justified by documentation indicating that the beneficiary requires continued skilled therapy, i.e., therapy beyond the amount payable under the therapy cap, to achieve their prior functional status or maximum expected functional status within a reasonable amount of time.
• Clinicians may utilize the automatic process for exception for any diagnosis or condition for which they can justify services exceeding the cap. Regardless of the diagnosis or condition, the patient must also meet other requirements for coverage.
• The condition or complexity that caused treatment to exceed caps must be related to the therapy goals and must either be the condition that is being treated or a complexity that directly and significantly impacts the rate of recovery of the condition being treated such that it is appropriate to exceed the caps. Documentation for an exception should indicate how the complexity (or combination of complexities) directly and significantly affects treatment for a therapy condition.
• Factors that influence the need for treatment beyond the cap should be supportable by published research, clinical guidelines from professional sources, and/or clinical or common sense.
• The KX modifier, is added to claim lines to indicate that the clinician attests that services billed 1) are reasonable and necessary services that require the skills of a therapist; and 2) are justified by appropriate documentation in the medical record; and 3) qualify for an exception using the automatic process for exception.
• When the cap is exceeded by at least one line on the claim, use the KX modifier on all of the lines on that institutional claim that refer to the same therapy cap (PT/SLP or OT), regardless of whether the other services exceed the cap.
• In addition to the KX modifier, the GN, GP and GO modifiers and any other applicable modifiers shall continue to be used. Providers may report the modifiers on claims in any order.
• No special documentation is submitted to the contractor for automatic process exceptions.
• Use of the automatic process for exception does not exempt services from manual or other medical review processes.
• It is very important to recognize that most conditions would not ordinarily result in services exceeding the cap. Use the KX modifier only in cases where the condition of the individual patient is such that services are APPROPRIATELY provided in an episode that exceeds the cap. Routine use of the KX modifier for all patients with these conditions will likely show up on data analysis as aberrant and invite inquiry. Be sure that documentation is sufficiently detailed to support the use of the modifier.
• If the attestation is determined to be inaccurate, the provider/supplier is subject to sanctions resulting from providing inaccurate information on a claim.
• If a claim is submitted without KX modifiers and the cap is exceeded, those services will be denied.

Notifying the Medicare Beneficiary about the Therapy Cap

Since the therapy financial limitation is a statutory limitation, the patient (Medicare beneficiary) is financially liable for payment of therapy services that exceed the therapy cap that do not meet an exception. Medicare advises providers to notify beneficiaries of the therapy financial limitations at their first therapy encounter with the beneficiary. Since the therapy cap has not previously applied to hospital outpatient services, but will beginning October 1, 2012, hospital therapy departments may want to notify their Medicare patients expected to be receiving services beyond that date of the therapy financial limitations soon. Providers can use an Advance Beneficiary Notice (ABN) as a general notification to patients about the cap. And although not required to assign financial liability to the patient, the ABN can also be used for patients wanting to continue therapy that does not meet the exceptions process beyond the cap.

Nearing or above the therapy threshold of $3,700
Your patient is above the $3,700 threshold for the discipline(s) you are providing or the services you will be billing will put the patient above that threshold. This threshold triggers automatic manual review, but CMS is implementing a phase-in for the manual review and a pre-approved exception process.

Providers will be divided into three Phases. Providers will be notified via US Mail before September 1, 2012 about the process to request an exception to the threshold and which Phase the provider is assigned. According to the CMS Special Open Door Forum on the manual review process for therapy services, a list of providers and their phases will also be posted on the CMS therapy website. So providers will not have to worry about the therapy threshold until the beginning date of their Phase. The phases are as follows:

• Phase I Oct 1, 2012 to December 31, 2012
• Phase II Nov 1, 2012 to December 31, 2012
• Phase III Dec 1, 2012 to December 31, 2012

Once a provider’s phase starts, they will be required to submit requests for exceptions to the threshold in advance of furnishing therapy services above the threshold. Each MAC will have detailed instructions posted to their websites on how to submit a request for an exception to the threshold before September 1, 2012. Refer to the resources below for more information and watch for additional information to come soon, but key points from the information already available are:

• Requests for exceptions will be manually medically reviewed. Providers will have to submit documentation to support their requests, such as orders, plan of
  care, and any other supporting documentation.
• Requests for exceptions can be made in increments of 20 treatment days.
• Contractors will have 10 business days to review the request for exception to the threshold using the manual medical review process. The 10-day timeframe starts when the contractor has obtained all necessary documentation from the provider. If a contractor fails to make a decision within 10 business days of receiving a request containing all the required documentation the request will be automatically approved.
• Claims received for therapy services above the threshold which have not been approved for a provider assigned within a specific phase, shall be subject to prepayment review upon receipt for payment.
• Prior to the start date of your facility’s phase, you may continue to use the automatic exception process (KX modifier) for therapy services above the cap and threshold amounts that are medically necessary and meet the necessity and documentation requirements.

Obviously this is a complex and evolving process. This article attempts to include the major points facilities need to consider in their preparations for the new rules, but all details are important. Therefore, we strongly encourage those affected by the new rules to review all of CMS’s information found at the links below.

Resources:

Medicare Therapy Billing Webpage

Medicare Claims Processing Manual, Chapter 5 (section 10)

Medicare Benefits Policy Manual, Chapter 15 (sections 220 and 230)

Medicare Therapy Cap Fact Sheet

Special ODF Therapy Manual Review Tanscript

Therapy Manual Review Q&As

In December 2011, CMS released Transmittal 2373, CR 7502 MLN Matters MM7502) concerning the 3-day payment window and wholly owned or operated physician practices.In June 2012, CMS published a list of 43 Questions and Answers related to this transmittal.Although several of the questions are focused on the billing by a physician practice or other Part B entity that is wholly owned or operated by a hospital, there is also general information about the 3-day window that all hospitals might find beneficial, even if they do not own/operate Part B entities.

The general information includes definitions of the 3-day rule (Q1), related services (Q2, 16 & 17), and diagnostic services (Q3); it also includes the types of hospitals affected (Q4 & 5), services excluded from the 3-day payment policy (Q39) and the effective dates of the rule (Q42). Of particular interest are the following points:

• The rule is based on 3 calendar days, not 72 hours (Q6)
• All services on the day of admission must be bundled to the inpatient claim, related or not (Q24)
• All diagnostic services within the payment window must be bundled, even if they are not related to the inpatient admission (Q25)
• The 3-day rule does not apply if there is no Part A coverage the inpatient admission (Q40)

As stated above, the majority of the questions and answers are specifically related to wholly owned or operated physician practices or other Part B entities. The hospital’s responsibilities if they own/operate Part B entities are:

• To determine (collectively with the Part B entity) if that entity meets the definition of wholly owned or operated (Q12)
• To notify the physician practice or other Part B entity of the patient’s admission to the hospital (Q15)
• To determine if non-diagnostic services are clinically related to the inpatient admission (Q18)

Wholly owned/operated physician practices or other wholly owned/operated Part B entities should refer to the complete list of questions and answers for detailed billing information, including guidance on the use of modifier PD. Note that:

• Modifier PD is to be appended to HCPCS codes subject to the payment window (Q20)
• Modifier PD may be used for dates of service beginning January 1, 2012, but must be used beginning July 1, 2012 (Q21
• Practices should only bill for the professional component of diagnostic services subject to the payment window. Append modifiers -26 and –PD (Q26)
• Physician practices will be paid the professional component only of diagnostic services subject to the payment window; non-diagnostic services subject to the payment window will be paid at the facility rate (Q34)
• Refer to the document for information concerning evaluation and management (E&M) services, “incident to” services, and global surgical services.

Modifier PD is not for use by hospitals and CR 7502 does not provide billing instructions for hospitals – it provides billing instructions for Part B 1500 claims. However, hospitals are to include the cost of the technical component of diagnostic services and those direct practice costs (clinical staff, equipment and supplies) for non-diagnostic services related to the inpatient admission on the hospital’s bill for the inpatient stay (Q19). This transmittal refers hospitals to CR 7142 (MM7142) for instructions on hospital implementation of this provision and to Medicare Claims Processing Manual, pub. 100-04, Chapter 4>, Section 10.12 for billing instructions

For more information see

• the Medicare Claims Processing Manual, Publication 100-04, Chapter 12, Sections 90.7 and 90.7.1
• CY 2012 MPFS final rule, published November 28, 2011 (76 FR 73279 -73286)
• Three_Day_Payment_Window webpage

In the January 2012 OPPS Update, CMS revised the guidance for the use of modifiers 52, 73 and 74 for discontinued and reduced services in outpatient hospitals and ambulatory surgical centers. The choice of an appropriate modifier is based on whether the reduced, discontinued or cancelled procedure requires the use of anesthesia or not.

• Modifiers 73 and 74 are used for procedures that require anesthesia.
• Modifier 52 is used for procedures that do not require the use of anesthesia.

Anesthesia is defined to include local, regional block(s), moderate sedation/analgesia (“conscious sedation”), deep sedation/analgesia, or general anesthesia.

Discontinued / Cancelled Procedures

For procedures that are terminated due to extenuating circumstances or circumstances that threatened the well being of the patient,

• Use modifier 73 if:
• Anesthesia is planned for the procedure
• The procedure is terminated prior to the administration of anesthesia,
• The patient had been prepared for the procedure and taken to the room where the procedure was to be performed.
• Use modifier 74 if:
• Anesthesia is planned for the procedure
• The procedure is terminated after the induction of anesthesia or after the procedure has been started (incision made, scope inserted, etc.)
• A planned surgical or diagnostic procedure is discontinued or cancelled at the physician’s discretion after administration of anesthesia
• Use modifier 52 if:
• Anesthesia is not planned for the procedure
• The patient had been prepared for the procedure and taken to the room where the procedure was to be performed.

*Do not report procedures that are electively cancelled.

Note that the patient must be taken to the room where the procedure is to be performed in order to report these modifiers.

Multiple Procedures Planned - If any procedures of multiple planned procedures are completed, report only the completed procedure(s). If none of multiple planned procedures are completed, report only the first planned procedure with the appropriate modifier.

Reduced Procedures

• Use modifier 74 for services that are partially reduced after the administration of anesthesia
• Use modifier 52 for services that are partially reduced for which anesthesia was not planned.

Effect on Payment

Services appended with modifier 73 or modifier 52 will be paid at 50% of the full OPPS payment amount. Services appended with modifier 74 will be paid at the full OPPS payment amount.

In 1999, CMS proposed a policy to pay only the hospital for the technical component (TC) of physician pathology services furnished to hospital patients. However, various legislative provisions since then have continued to delay the implementation of this provision. Under these delays, the independent or pathology laboratories providing the technical component of pathology services for covered hospitals have continued to bill Medicare directly. Covered hospitals are those hospitals that had an arrangement with an independent laboratory that was in effect as of July 22, 1999, under which the laboratory furnished the TC of physician pathology services to fee-for service Medicare beneficiaries who were patients of the hospital.

The Tax Relief Act of 2012 again extended the moratorium on this policy through June 30, 2012. Effective July 1, 2012, the moratorium expires and only hospitals can bill for the TC of physician pathology services furnished to hospital inpatients or outpatients. Pathologists and independent laboratories that provide the TC of physician pathology services furnished to hospital patients may no longer bill for and receive Medicare payment for these services, effective for claims with dates of service on and after July 1, 2012.

Medical Management Plus, Inc. has received numerous questions concerning this requirement. Following are several questions and answers to help hospitals understand the implementation of the rule.

1. Is this change for certain? It is always possible that Congress will pass legislation extending the moratorium again prior to July 1, 2012. However, at this time, the regulation is expected to begin July 1.
   
2. Which hospitals are affected? Hospitals that were covered under the grandfather clause of the original regulation (see definition of covered hospitals above), send their pathology specimens to an independent or pathology laboratory for processing and allow the processing laboratory to bill Medicare directly.
   
   
3. Note that some larger hospitals may provide pathology processing services in the hospital laboratory and bill Medicare directly for these services. Some other hospitals may send pathology specimens out for processing, but may already bill Medicare directly by choice or because they do not meet the definition of a covered hospital.
4. What types of services are involved? Physician cytopathology and surgical pathology technical component services for hospital inpatients and outpatients. Tissue specimens removed during an inpatient or outpatient surgical procedure are processed prior to the microscopic evaluation/interpretation by a pathologist. This processing is the technical component of pathology services and includes such services as embedding the tissue specimen, slicing thin tissue sections, preparing and staining the pathology slides. See the 88xxx CPT codes paid under APCs 0342, 0343, and 0344 on the Outpatient Prospective Payment System (OPPS) Addendum B for the affected codes. Note that pathology TC services provided during surgery, such as frozen sections, would also be included when these are performed and billed to Medicare by the pathology laboratory.
   
5. How will hospitals be reimbursed by Medicare for these services? For hospital inpatients, Medicare payment is made under a DRG payment which includes any pathology services provided to the patient. The pathology services will be paid under the Outpatient Prospective Payment System (OPPS) APCs for hospital outpatient services.
   
6. How will hospitals know what CPT codes to bill for each patient? Since each patient specimen may require different pathology testing, it is best to have the processing laboratory provide the hospital the applicable CPT codes for each case. The hospital and laboratory providing the TC should develop a process for timely exchange of this information in order not to delay hospital billing. Pathologists may request additional testing in order to make a definitive diagnosis of a pathology specimen, so remember to address add-on or late charges.
   
7. How will the independent/pathology laboratory be paid for its services? The hospital and independent/pathology laboratory will have to negotiate a financial agreement where the hospital pays the processing laboratory for its pathology TC services. The hospital will have to consider the reimbursement it will receive for outpatient services versus the cost of TC services plus any other costs for providing the service (such as handling, supplies, billing cost, etc.) The testing laboratory will have to consider its total costs versus the payment amount from the hospital. The parties will also have to consider whether payment is per CPT code, per case, per specimen, etc.
   
8. Does this affect the pathology professional charges? No, pathologists will continue to bill and be reimbursed by Medicare Part B directly for their professional services.

The following flowchart illustrates the process.

Medicare Hospital Dialysis Services 

CMS Transmittal 2455 released April 26, 2012 informs hospitals about the correct billing of acute dialysis services for Medicare inpatients and outpatients.

HCPCS code G0257 is only to be billed for hospital outpatients with ESRD. G0257 is not to be reported for hospital inpatient services billed under Part B (12x type of bill) or for hospital outpatients who do not have ESRD. HCPCS code G0257 is used for hospital outpatients with ESRD when the criteria listed below from the Medicare Claims Processing Manual, chapter 4, section 200.2 is met.

“Payment for unscheduled dialysis furnished to ESRD outpatients and paid under the OPPS is limited to the following circumstances:

• Dialysis performed following or in connection with a dialysis-related procedure such as vascular access procedure or blood transfusions;
• Dialysis performed following treatment for an unrelated medical emergency; e.g., if a patient goes to the emergency room for chest pains and misses a regularly scheduled dialysis treatment that cannot be rescheduled, CMS allows the hospital to provide and bill Medicare for the dialysis treatment; or
• Emergency dialysis for ESRD patients who would otherwise have to be admitted as inpatients in order for the hospital to receive payment.”

HCPCS code G0257 may only be reported on Type of Bill (TOB) 13X (hospital outpatient service) or TOB 85X (Critical Access Hospital). Effective for services on and after October 1, 2012, claims containing HCPCS code G0257 will be returned to the provider for correction if G0257 is reported with a type of bill other than 13X or 85X (such as a 12x inpatient claim).

Hospitals should report HCPCS code 90935 (Hemodialysis procedure with single physician evaluation) for the following hospital dialysis services.

• Hospital inpatients with or without ESRD who have no coverage under Part A, but have Part B coverage. The service must be reported on a Type of Bill 12X or Type of Bill 85X.
• Hospital outpatients who do not have ESRD and are receiving hemodialysis in the hospital outpatient department. The service is reported on a TOB 13X or l 85X.

CPT code 90945 (Dialysis procedure other than hemodialysis (e.g. peritoneal dialysis, hemofiltration, or other continuous replacement therapies)), with single physician evaluation, may be reported by a hospital paid under the OPPS or CAH method I or method II on type of bill 12X, 13X or 85X.

For complete information see the transmittal at the link above or the MLN Matters Article MM7732.