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Updates to the OIG Work Plan
Published on Aug 01, 2017
20170801
 | FAQ 
 | OIG 
 | Outpatient Services 

Back in June when the Office of Inspector General (OIG) changed the process and publication of their Work Plan, they used the word “dynamic” to describe their work planning process.  The Merriam-Webster dictionary defines dynamic as “marked by usually continuous and productive activity or change.”  So far, the OIG is remaining true to this definition by posting numerous new issues each month.  For July, the OIG posted 14 new issues all focused on the CMS agency.  The OIG is responsible for oversight for all agencies of Health and Human Services (HHS), but a review of active issues shows that most of their efforts are related to CMS.

I understand the OIG’s responsibility “to provide independent and objective oversight that promotes economy, efficiency, and effectiveness in the programs and operations of HHS.” But having worked in hospitals for years, I also understand the challenges of complying with all of the Medicare rules. If it were easy we might not need the OIG, but it is definitely not an easy task. 

Since MMP’s focus is hospital Medicare issues, I will only describe the new OIG Work Plan items related to hospitals and Medicare.  For a list of all the new issues, see the OIG’s Recently Added updates.

Nationwide Medicare Electronic Health Record Incentive Payments to Hospitals

Hospital can receive incentive payments for adopting electronic health record (EHR) technology. The OIG is concerned about potential incentive overpayments. Their concerns are based on the following:

  • The Government Accountability Office (GAO) identified improper incentive payments as the primary risk to the Medicare EHR incentive program.
  • An OIG report found CMS faces obstacles in oversight of the EHR program.
  • OIG reviews showed that State agencies have and will continue to overpay hospitals millions of dollars due to inaccuracies in the hospitals’ calculations.

The OIG will be reviewing hospitals’ incentive payment calculations to ensure appropriate payment amounts and prevent future overpayments.  This is a hospital finance issue which is not my area of expertise, but I bet it is not that easy.  Calculations never are.

Review of Medicare Payments for Nonphysician Outpatient Services Provided Under the Inpatient Prospective Payment System

Medicare pays hospitals a prospective payment amount for inpatient services – we know this as the DRG payment.  The DRG payment is payment for all the hospital’s operating costs associated with the inpatient admission. This also includes diagnostic and related therapeutic outpatient services provided the day of admission or within the 3 days prior to admission under Medicare’s 3-day payment window rule.  Identifying those outpatient services that should be bundled with the inpatient claim and then billing correctly in compliance with the 3-day payment window is not an easy task either. Prior OIG reviews have found overpayments where hospitals billed inappropriately and Medicare contractors paid for outpatient services provided during or before the inpatient admission. The OIG will review to determine if outpatient payments during an inpatient admission and under the payment window rule were correct.

Medicare Payments for Unallowable Overlapping Home Health Claims and Part B Claims

Home Health (HH) agencies are also paid a Medicare prospective payment which covers all of their costs for providing services to the patient.  This includes services furnished by the home health agency and certain items or services provided under arrangement. The home health consolidated billing requirements mandate that certain items, supplies, and services are part of the home health payment and should not be billed separately to Medicare Part B from other entities. The OIG will be looking to see if Part B payments were allowable and followed the consolidated billing requirements.  From my experience, the major area of concern related to HH consolidated billing for hospitals is rehabilitative therapy services.  Medicare patients may present to a hospital’s therapy department for services even though they are receiving HH services. Hospitals should check Medicare eligibility systems and question the patient carefully to determine if they are currently under a home health plan of care.

Medicare Payments for Unallowable Overlapping Hospice Claims and Part B Claims

Once a Medicare beneficiary elects hospice care, all services related to the terminal illness are handled by the hospice.  Hospitals must seek payment for services provided to a hospice patient and related to the terminal illness from the hospice agency and not from Medicare. The OIG is reviewing to make sure any separate Part B payments were appropriate. Hospitals are often caught unaware when a hospice patient shows up in their emergency department. The hospital must determine if the patient has elected hospice and if so, is the medical condition for which they are seeking treatment related to the terminal illness.  If the answer to both is yes, the hospital must coordinate with the hospice agency to determine appropriate treatment and billing.  Not an easy task, especially in an emergency department setting. The same applies to non-emergency hospital services – reference laboratory testing is one example, but your clue here should be that the specimens are brought in by a hospice nurse.  In MMP’s experience, edits in the Medicare claims processing system catch most of these overlaps with hospice agencies and deny the hospital’s payment. It is then up to the hospital to spend extra time and effort to determine the circumstances and obtain payment from the hospice agency.  Not an easy task on the back end either.

One last issue somewhat related to hospitals:

Review of Medicare Payments for Telehealth Services

One of the Medicare requirements for telehealth payment is that the services be between a beneficiary located at a rural originating site and a practitioner located at a distant site.  An eligible originating site must be the practitioner’s office or a specified medical facility, such as a hospital.  The OIG will be looking for telehealth payments where there was not a corresponding claim from the originating site to ensure the payments were correct.  More information on billing telehealth services can be found in the Medicare Telehealth Fact Sheet.

Not much about health care and hospital services is easy, but the OIG work plan gives us some areas on which to focus our scrutiny when it comes to billing Medicare.

Debbie Rubio

Pathology Tests Violate False Claims Act
Published on Jun 06, 2017
20170606
 | FAQ 
 | OIG 
 | Outpatient Services 

How do you go from laboratory technologist to compliance professional? You see it often because the detail oriented mind of laboratorians fits well into the myriad details of compliance requirements. For me, I happened to be the manager of a hospital outpatient laboratory at the time the Office of Inspector General (OIG) released the Compliance Program Guidance for Clinical Laboratories. In short order, it fell upon my shoulders to “do something” about this Compliance Guidance. The OIG guidance was in part a response to recent concerns about laboratory billing practices. A prominent national laboratory had at the time been under scrutiny for adding one more laboratory test to a large, frequently ordered lab profile that consisted of a significant number of different lab tests. According to the government, this caused physicians to unknowingly (or at least without careful consideration of medical need) order “medically unnecessary” lab tests.

I often refer to this as “the original compliance sin” and the issue of medical necessity is still a major concern for compliance, and not only for laboratory tests. Medical necessity now involves various types of medical services – from ambulances, to cardiology procedures, to high-cost drugs, to joint replacements, to many other services and even back to laboratory tests. Two recent enforcement actions posted on the OIG’s website are related to medically unnecessary laboratory pathology services.

The first case involves Poplar Healthcare located in Memphis, Tennessee, which paid nearly $900,000 to resolve False Claims Act allegations. According to the Department of Justice (DOJ) Press Release, “The government alleges that Poplar, directly and through a subsidiary known as GI Pathology, promoted and billed the government for diagnostic tests that the government contends were not medically necessary.” Poplar conducted an extensive, multi-year promotional campaign promoting the use of a special pathology stain they claimed could definitively diagnose “mast cell enterocolitis.” The government contended Poplar’s claims about the stain were not supported by scientific evidence and were not consistent with FDA approval requirements.

A similar case against Piedmont Pathology in Hickory, N.C also involves the medically unnecessary use of pathology stains. In this case, the pathology laboratory was performing and billing for special stains on certain gastric biopsies. The special stains were performed before a pathologist reviewed routinely stained specimens to determine if there was a medical need for the additional special stains. Piedmont Pathology has agreed to pay the United States $601,000 to settle allegations that it violated the False Claims Act by submitting false claims to Medicare and Medicaid for medically unnecessary procedures. The DOJ press release provides further details.

Another similarity between these two cases is that both were “whistleblower” cases where a private citizen can bring suit on behalf of the government for false claims under provisions of the False Claim Act. The government can decide to take over the case and the whistleblower shares in any monetary recovery. In these cases, the relator’s share was $205,841 and approximately $120,200, respectively.

There are important take-aways for all providers from these settlements:

  • The government is serious about the medical necessity of services (for all types of healthcare services);
  • No service is too big or too small for government attention;
  • Be careful what a vendor tries to sell you;
  • Verify the medical need for the services you provide; and
  • Watch out for the whistleblowers!

Debbie Rubio

OIG Report on Outpatient Dental Services
Published on Mar 20, 2017
20170320
 | FAQ 
 | OIG 
 | Outpatient Services 

A recent television commercial shows an older gentleman with whom all the older ladies want to dance. He attributes his popularity with the ladies to his beautiful smile and perfect dentition. Unfortunately, older Americans will not be getting that perfect smile paid for by Medicare. Medicare does not cover dental services except in rare circumstances. That is a shame, because good dental health affects much more than just a person’s popularity. Poor dental hygiene also contributes to an increased risk for heart disease, stroke, dementia, respiratory problems, and diabetic complications.

Per the Social Security Act, Medicare does not cover items and services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting the teeth (e.g., preparation of the mouth for dentures). Coverage is not determined by the value or the necessity of the dental care but by the type of service provided and the anatomical structure on which the procedure is performed. Medicare only covers dental services if they are incident to and an integral part of a procedure or service that is covered by Medicare. For example, tooth extractions performed in preparation for radiation treatment for jaw cancer would be covered, but tooth extractions because of tooth decay are not.

The Office of Inspector General (OIG) has identified improper payments for non-covered dental services as a topic in their annual Work Plan since 2012. This March, the OIG released their report summarizing the results of audits of dental services’ payments for six Medicare Administrative Contractors (MACs). Those MACs are CGS, First Coast, NGS, Noridian, Novitas, and WPS. The audit report also includes recommendations CMS could implement to help ensure that future claims for hospital outpatient dental services meet Medicare coverage requirements.

The OIG selected a sample of 600 claims from a total of 15,690 hospital outpatient dental services for the six contractors, totaling $10,874,814 paid to providers during the period January 1, 2011, through December 31, 2014.  They did not include dental services associated with a diagnosis related to cancer or physical trauma because those services are generally eligible for Medicare payment. On the basis of their results, the OIG estimated that the six contractors improperly paid providers an estimated $9,783,023 for hospital outpatient dental services that did not comply with Medicare requirements. This is approximately 90% of the total dental service payments considered. The types of dental services performed and paid that are not covered by Medicare included:

  • tooth socket repairs, generally performed in preparation for dentures,
  • routine oral evaluations, x rays, and tooth extractions,
  • excisions and gum repair (performed when removing inflamed gums and when reshaping healthy gums for a cosmetic or functional purpose), and
  • periodontal osseous surgery (performed when treating gum disease).

The OIG recommended the implementation of national edits for hospital outpatient dental claims, but CMS did not concur with this recommendation since dental coverage is based on the specific clinical needs of the beneficiary. CMS does agree to work with its contractors to develop and strengthen local edits to help ensure that payments made to providers for dental services comply with Medicare requirements.

It pays to take care of your teeth when you are young, because once you reach Medicare age, you are on your own.

Debbie Rubio

January Medicare Transmittals and Other Updates
Published on Jan 31, 2017
20170131
 | Recovery Auditor 
 | Coding 
 | OIG 
 | Outpatient Services 
 | Patient Status 

TRANSMITTALS

 

Calendar Year (CY) 2017 Annual Update for Clinical Laboratory Fee Schedule and Laboratory Services Subject to Reasonable Charge Payment

Summary: Provides instructions for the Calendar Year (CY) 2017 clinical laboratory fee schedule, mapping for new codes for clinical laboratory tests, and updates for laboratory costs subject to the reasonable charge payment. This update applies to Chapter 16, Section 20 of the “Medicare Claims Processing Manual.”

April 2017 Quarterly Average Sales Price (ASP) Medicare Part B Drug Pricing Files and Revisions to Prior Quarterly Pricing Files

Summary: Provides the April 2017 quarterly update Average Sales Price (ASP) drug pricing files for Medicare Part B drugs.

Changes to the Laboratory National Coverage Determination (NCD) Edit Software for April 2017

Summary: Changes that will be included in the April 2017 quarterly release of the edit module for clinical diagnostic laboratory services.

Notice of New Interest Rate for Medicare Overpayments and Underpayments - 2nd Qtr Notification for FY 2017

Summary: Medicare Regulation 42 CFR Section 405.378 provides for the charging and payment of interest on overpayments and underpayments to Medicare providers. The Secretary of Treasury certifies an interest rate quarterly. The Medicare contractors shall implement an interest rate of 9.50 percent effective January 19, 2017 for Medicare overpayments and underpayments.

Medicare Outpatient Observation Notice (MOON) Instructions

Summary: Updates Chapter 30 of the “Medicare Claims Processing Manual” to include the Medicare Outpatient Observation Notice (MOON), CMS-10611, and related instructions. Providers should use the MOON to inform Medicare beneficiaries when they are an outpatient receiving observation services, and are not an inpatient of the hospital or a Critical Access Hospital (CAH). The instructions included in Chapter 30 provide guidance for proper issuance of the MOON.

OTHER MEDICARE ANNOUNCEMENTS

January 2017 Medicare Quarterly Provider Compliance Newsletter

Summary: Provides education on how to avoid common billing errors and other erroneous activities when dealing with the Medicare Fee-For-Service (FFS) Program. It includes guidance to help health care professionals address and avoid the top issues of the particular quarter. Hospital topics this quarter include facet joint injections, radiation therapy, stem cell transplants, and long-term acute care (LTAC) stays.

Final Rule: Revisions to the Office of Inspector General’s Exclusion Authorities

Summary: This final rule amends the regulations relating to exclusion authorities under the authority of the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS or the Department). The final rule incorporates statutory changes, early reinstatement provisions, and policy changes, and clarifies existing regulatory provisions.

Final Rule: Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR)

Summary: This final rule implements three new Medicare Parts A and B episode payment models, a Cardiac Rehabilitation (CR) Incentive Payment model and modifications to the existing Comprehensive Care for Joint Replacement model under section 1115A of the Social Security Act. Acute care hospitals in certain selected geographic areas will participate in retrospective episode payment models targeting care for Medicare fee-for-service beneficiaries receiving services during acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment episodes. All related care within 90 days of hospital discharge will be included in the episode of care. We believe these models will further our goals of improving the efficiency and quality of care for Medicare beneficiaries receiving care for these common clinical conditions and procedures.

Provider Liability for Overpayments
Published on Jan 24, 2017
20170124
 | Billing 
 | Documentation 
 | Medicare Coverage 
 | OIG 
 | Outpatient Services 

My grandson is in elementary school and the first thing he reports to his parents each afternoon is how he behaved in school. His teacher uses a color scale, on which the student moves up or down depending on good or bad behavior – green is good, blue is better, but red – oh no! The one excuse I am sure his parents would never accept for bad behavior is that he did not know the rules. From an early age, life has rules and it is our responsibility to know, understand, and follow those rules. Such is the case when submitting claims and accepting payment from Medicare for healthcare services.

In November 2016, CMS released a transmittal that updates the section on Provider Liability in Chapter 3 of the Medicare Financial Management Manual. Specifically, the update adds new reasons for why a provider, physician, or supplier should have known certain services were noncovered. Section 90 of this chapter begins by stating “A provider is liable for overpayments it received unless it is found to be without fault.” To be without fault, the provider must have:

  • Exercised reasonable care in billing for, and accepting Medicare payment,
  • Made full disclosure of all material facts,
  • Had a reasonable basis for assuming payment was correct based on Medicare instructions, regulations, and other facts, and/or
  • Promptly communicated with the Medicare contractor if there was a reason to question the payment.

A provider may know or should have known a payment is incorrect if there is a Medicare policy or rule that specifically prohibits the payment. Prior to this updated transmittal, the reasons listed in the manual when a provider should have known about a policy or rule were 1) the policy or rule is in the provider manual or in Federal regulations, 2) the Medicare contractor provided general notice to the medical community concerning the policy or rule, or 3) the Medicare contractor gave written notice of the policy or rule to the particular provider. Transmittal 275 (MLN Matters Article MM9708) expands the term provider to be “provider, physician, or supplier” and adds the following reasons they should be aware of a particular Medicare policy or rule.

The provider, physician, or supplier:

  1. Was previously investigated or audited as a result of not following the policy or rule;
  2. Previously agreed to a Corporate Integrity Agreement as a result of not following the policy or rule;
  3. Was previously informed that its claims had been reviewed/denied as a result of the claims not meeting certain Medicare requirements which are related to the policy or rule; or
  4. Previously received documented training/outreach from CMS or one of its contractors related to the same policy or rule.

As a provider, what is your responsibility related to overpayments and ensuring reasonable care in billing and accepting Medicare payment?

Know the Rules

If the rules were static, this would still be a huge challenge. There are laws, regulations (e.g. Code of Federal Regulations), and sub-regulatory guidance (e.g. Medicare policy manuals). Medicare has an expansive website with information in every corner, including an educational section (Medicare Learning Network – MLN). I recommend providers subscribe to the CMS and OIG (Office of Inspector General) list serves at a minimum. Also providers should have a thorough knowledge of the Medicare Benefit Policy, Claims Processing, and National Coverage Determination (NCD) manuals. Then there is the website of your Medicare Administrative Contractor (MAC) and their Local Coverage Determinations (LCDs) and coverage articles. It is an overwhelming amount of information to digest so I also recommend subscribing to newsletters from some reputable healthcare consultants/educators who can target key issues and provide relevant information in an easy to read, understandable format. Hopefully you find this Wednesday@One newsletter serves this function well.

Keep Up with Rule Changes

Unfortunately, the rules are not static – they are ever changing at a rapid pace. The list serves, websites, and newsletters mentioned above should address the changes also. More specifically, watch the Medicare transmittals, most of which are converted into the easier to read and understand format of MLN Matters articles. The transmittals provide updates of Medicare sub-regulatory guidance. All the MACs have a news section on their websites for updates and specific webpages related to coverage policies and medical review. There are major rule changes on an annual basis for the Inpatient Prospective Payment System (IPPS), Outpatient Prospective Payment System (OPPS), Physician Fee Schedule, etc. Medicare provides fact sheets related to these rules and numerous independent newsletters also offer summaries and in-depth analyses of the key issues.

Understand the Rules

Interpreting the rules correctly is no small task. Once again all of the references mentioned above are helpful but a focus on Medicare review activities to understand Medicare expectations is extremely helpful here. The medical review webpage areas of the MAC websites, OIG reports, the Medicare Quarterly Compliance Newsletter, etc. often provide more granular details on what is expected to comply with certain rules. These issues are also the more “at risk” issues and a good place to focus your internal efforts as well.

Know Your Facility History of Billing Compliance

Notice that the third existing reason why providers “should have known” and all four of the new reasons relate to the provider’s own history of compliance. Facilities need to know if they have been notified, investigated, audited, had claims denied, or educated due to noncompliance with a particular policy or rule. This also includes having been put under a Corporate Integrity Agreement (CIA). If so, your facility has no excuse for not knowing these rules.

Have Appropriate Processes

Knowing the rules is of no benefit unless you correctly apply the rules to your facility’s practices. I will not say much about this, because after all, this is what providers do, so you know how to address it. Internal policies and procedures to ensure appropriate processes are necessary as is employee education and training.

Internal Communication

The importance of communication between departments cannot be overemphasized. For example, who within the facility knows the compliance history referenced above and who within the facility is responsible for keeping up with rule changes and disseminating that information to the affected departments? A team approach is required for education and establishing processes. Be sure to include all key stakeholders.

Checks and Rechecks

Oversight of processes and compliance with the rules is also necessary. Such oversight can be in the form of internal monitoring, internal audits, or audits with contracted external consultants or auditors. This process should start by identifying risk areas and developing an overall compliance audit plan. I recommend considering the issues Medicare agencies and entities are reviewing (such as the OIG Annual Work Plan, MAC medical review topics, etc.)

The tasks of knowing, understanding and implementing processes to keep up with all of the Medicare policies and rules may seem overwhelming, but it is the cost of doing business with Medicare. Like in elementary school, you have to know the rules and you have to comply or you do not get a star for the day.

Debbie Rubio

OIG Reviews of Device Credits
Published on Jan 17, 2017
20170117
 | Billing 
 | OIG 

It is officially winter in North America, although the temperatures here in the South last week were in the mid-70’s. But we were glad to see winter come this year because it finally brought the rains to provide some relief from a devastating drought. The drought affected crops, resulted in mandatory limits on water usage, dried up small lakes, and allowed numerous wildfires throughout the region. Firefighters struggled to keep the blazes under control. There always seems to be that one hot spot that won’t go away. It continually smokes and burst into flames again and again. Issues within the OIG hospital compliance audits are often the same – they just won’t go away, reappearing again and again. One such issue is the lack of appropriate reporting of manufacturer device credits.

This is the topic we want to focus on this month for our Medicare medical review article. You can find a list of the latest medical review topics for the Medicare Administrative Contractors (MACs) at the end of this article.

In November 2016, the Office of Inspector General (OIG) released a new report concerning device credit reporting for cochlear implants.   The OIG review looked at 78 hospitals and focused solely on outpatient cochlear implant claims (149 claims). The review identified 116 incorrectly billed claims resulting in over $2 million in overpayments. The issue of failure to correctly report device credits appears in almost all of the OIG’s hospital compliance reviews. In each report, the number of erroneous claims is small (usually 1-7 each for outpatient and inpatient) and the dollar amounts are modest. But since this issue appears repeatedly and often, over time the numbers and dollars add up.

This cochlear implant review was different than usual, since the OIG has previously focused on credits for defective cardiac devices. This is a reminder that the policy for reporting device credits applies to all devices whose cost exceeds 40% of the payment amount for the procedure (devise-intensive procedures). Determining which devices require credit reporting is one step in the extremely complex process of appropriately reporting manufacturer device credits. Challenges for an error-proof process include:

  • Knowing which devices are part of the policy, as stated above;
  • Identifying patients having a devise-intensive procedure that are receiving a no-cost or discounted device;
  • Determining when a device credit is due from the manufacturer, even when not offered (prudent-buyer principle); and
  • Getting the correct reporting information on the claim.

As if the process wasn’t complex enough, it is further complicated by changes in the rules and requirements from CMS. The policy has been in place since 2007 and for that year applied only to no-cost or full-credit devices for specified device-dependent APCs. In 2008, the policy was expanded to include partial-credit devices where hospitals receive partial credit of 50 percent or more of the cost of a specified device. Originally, outpatient device credits were reported for no-cost/full-credit devices with modifier FB on the procedure line and modifier FC on the procedure line for partial credit devices. In January 2014, the FB and FC modifiers were deleted and credits were reported with value code FD, the exact amount of the credit, and condition codes that describe the reason for the credit (49 – early replacement, 50 – device recall, and 53 – initial free device).

 

CMS used to publish a list of the affected devices each year in the OPPS Final Rule. Beginning in 2016, CMS discontinued the device list and providers had to apply the APC payment adjustment to all replaced devices furnished in conjunction with a procedure assigned to a device-intensive APC when the hospital receives a credit for a replaced specified device that is 50 percent or greater than the cost of the device. For 2017, CMS is applying the 40% threshold at the HCPCS level instead of the APC level.

With all of these changes, what are the device-credit rules for 2017?

  • The policy applies to device-intensive procedures that
  • require the implantation of a device that remains in patient after the conclusion of the procedure and
  • have an individual HCPCS code-level device offset of greater than 40 percent, regardless of the APC assignment.

Addendum P of the OPPS Final Rule is a list of the device-intensive procedures. (Select 2017 Final Rule OPPS Addenda in the Related Links section on this webpage.) The lists contains 213 procedures including procedures involving such devices as pacemakers, AICDs, neurostimulators, prostheses, intraocular lens, GI stents, cochlear devices, and more.

  • Hospitals continue to report on the claim the credit amount with value code “FD” when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device. The hospital also reports the applicable condition code. (see the Medicare Claims Processing Manual Chapter 4, section 61.3.5 for outpatient instructions and Chapter 3, section 100.8 for inpatient instructions. )
  • Medicare payment for inpatient and outpatient claims is reduced by the amount of the device credit reported with value code “FD” but is limited to the device offset amount for outpatient procedures.
  • For inpatients, the policy only applies to certain MS-DRGs. See Transmittal 1494 for the latest updated list.

In order to have an effective device credit reporting policy, hospitals must know the most current rules and have a process in place to identify when and how to report device credits. This is no easy task, but you must try … again and again. 

Debbie Rubio

Applying the Two-Midnight Rule
Published on Jan 10, 2017
20170110
 | FAQ 
 | OIG 
 | Patient Status 

It is hard to believe it is 2017. Time flies when you are having fun and when you are not. It is also hard to believe it has been over three years since Medicare changed the definition of what supports an inpatient admission to the two-midnight rule. This occurred in October, 2013 because CMS was concerned about the number of inappropriate inpatient admissions being denied by review contractors, by the large number of extended outpatient/observation stays that had potential financial impacts for the Medicare beneficiary (co-pays and liability for skilled nursing home stays), and the inconsistent practices between hospitals for inpatient and outpatient status. The policy establishes that inpatient payment is generally appropriate if physicians expect patients’ care to last at least 2 midnights; otherwise, outpatient payment would generally be appropriate.

Unfortunately, the two-midnight policy was not the magic bullet Medicare thought it would be and a recent report by the Office of Inspector General (OIG) finds that there are still inconsistencies and issues with the application of the rule. So let’s examine what might be “right” and what might be “wrong” related to the two-midnight rule. Here I must apologize ahead of time – determining and getting a patient in the correct status is not as simple and straight-forward as this discussion may make it sound. I have the utmost respect and admiration for the physicians and utilization review staff that work very hard daily to interpret and apply Medicare’s guidelines.

Applying the rule

One thing hospital staff has struggled with since implementation of the two-midnight rule is where does admission criteria (such as InterQual and Milliman) fit in this model? The first question that has to be asked related to patients presenting to the hospital is whether they need extended care (such as beyond an ER visit) in a hospital setting and this is a good place to utilize commercial criteria. These criteria can help determine if care in a hospital setting is appropriate.

Once it is determined that care in a hospital setting is necessary, the next task is to determine if the physician believes the patient will need such care beyond a second midnight. If yes, then an inpatient admission is appropriate; if no or if unsure, outpatient with observation is likely the correct status. For inpatient admissions, the medical record should reflect that care beyond a second midnight is expected – for example, the admission orders and plan of care should support that the patient will be receiving tests and/or treatments beyond a second midnight.

And, as a hospital, if you want to be paid for your services and avoid a technical denial, make sure there is an inpatient admission order signed by a practitioner with admitting privileges prior to the patient’s discharge.

Inappropriate inpatient short stays

The OIG reported that overall inpatient admissions have decreased since the implementation of the two-midnight rule by 2.8% and short inpatient stays have decreased by 9.9%. Although this is good news, the OIG also reported that 39% of short inpatient stays “were potentially inappropriate for payment under the 2-midnight policy because the claims did not appear to meet any of CMS’s criteria for an appropriate short inpatient stay.” These accounted for $2.9 billion in payments. We must consider however that the OIG estimated the number of inappropriate inpatient short stays based on claims’ data without actually reviewing the medical records. This assessment was based on inpatient stays with inpatient-only procedures; mechanical ventilation; an unforeseen circumstance such as the beneficiary’s death, transfer to another hospital, or departure against medical advice; or a duration of 2 midnights or longer in the hospital when outpatient time prior to admission is added to inpatient time. Using only claims data, the OIG would be unable to identify appropriate inpatient admissions where the patient experienced clinical improvement after the physician documented an expectation of a 2-midnight stay. This could explain some of the volume of potentially inappropriate short inpatient stays but I understand the OIG’s concern.

Also of concern are the most common reasons for short inpatient stays cited by the OIG report: coronary stent insertion, fainting, digestive disorders, and chest pain. Again the decision to admit is complex and the admitting physician must consider several clinical factors including the beneficiary’s medical history, the severity of the beneficiary’s symptoms, and the expected care. There are patients that will require longer stays, say for coronary stent insertion, due to co-morbidities and overall risk, but most Medicare patients are able to have this procedure and be discharged after one midnight.

This is where it is critical to apply the rule correctly – at the time of admission, did the physician expect the patient to require hospital care beyond a second midnight? Does the patient’s condition and the expected treatments as evidenced in the admission orders and plan of care in the medical record support that expectation? If it is a condition or procedure that can usually be treated in less than two-midnights, does the medical record explain what is different for this patient or for this case?

Inappropriate long outpatient stays

The OIG report did find a slight decrease in the number of long outpatient stays (2.8%) but there were still almost 750,000 long outpatient stays. At MMP, Inc., we also notice that some of our clients continue to have long observation stays going beyond a second midnight. If a Medicare outpatient needs medically necessary care beyond a second midnight, then it is appropriate to admit the patient as an inpatient. This means that as an outpatient receiving observation services is approaching a second midnight, it is time to get an inpatient order or evaluate the need for continued medically necessary care (see the next section for valid reasons for long outpatient stays). These patients do not have to meet any commercial inpatient criteria to be admitted – they only have to continue to need medically necessary care in a hospital setting beyond that second midnight.

Valid reasons for long outpatient stays

But what if after evaluation it is determined that the patient doesn’t continue to need medically necessary care in a hospital setting? What if there are other reasons the patient cannot be sent home at this time that have to do with the convenience of the patient, physician or facility? This is much more common than one might think – certain diagnostic testing is not offered on weekends; testing is not completed until late in the day and the physician will not round until the next morning to discharge the patient; the patient has to wait until the next day to get a ride home from the hospital; etc. In these cases, it is acceptable to keep the patient in the hospital one more midnight as an outpatient.

However, observation services are likely not medically necessary in these cases anymore than inpatient services would be. If continued medically necessary care was appropriate past a second midnight, an inpatient admission would be correct. Therefore, there may be valid reasons for a long outpatient stay, but not really for observation services beyond a second midnight. When medically necessary care in a hospital setting is no longer needed and the patient remains due to convenience factors, the hospital should no longer report covered observation hours on the claim. At this point, observation hours should not be charged or should be reported on the claim as not medically necessary with a GZ modifier. If the hospital is ready for the patient to be discharged, but the patient refuses to leave or the patient’s physician refuses to discharge the patient, it is acceptable to issue an advanced beneficiary notice (ABN) to the patient making them financially responsible for the continued hospital care.

The last things of concern to the OIG are the continued variation in use of inpatient and outpatient status among hospitals and ultimately the financial impact on Medicare and Medicare beneficiaries. Short inpatient stays ranged from around 1% to above 5% and long outpatient stays were from 2% to above 11% between different hospitals. It is not surprising that all hospitals are not applying the rules the same, as Medicare reviewers have even struggled to get it right. This is evidenced by the starts, stops, delays, and transitions of short-stay reviews within Medicare.

Good luck to all the utilization reviewers out there. Maybe a crystal ball or Ouija board would help…

Debbie Rubio

December Medicare Transmittals and Other Updates
Published on Jan 02, 2017
20170102
 | FAQ 
 | Billing 
 | Coding 
 | OIG 
 | Outpatient Services 

TRANSMITTALS

Update to Medicare Deductible, Coinsurance and Premium Rates for 2017

Summary: The new Calendar Year (CY) 2017 Medicare deductible, coinsurance, and premium rates.

 

Implementing Provider File Updates and PECOS to FISS Interface Via Extract File Updates to Accommodate Section 603 Bipartisan Budget Act of 2015

Summary: All off-campus outpatient departments of a hospital provider are required to be correctly identified.

 

HCPCS Code Update for Preventive Services

Summary: Effective for dates of service on and after January 1, 2017, CPT code 76706 replaces HCPCS code G0389. MACs will apply all editing that was applied to HCPCS code G0389 to CPT code 76706, including the waiver of deductible and coinsurance.

Update to Editing of Therapy Services to Reflect Coding Changes

Summary: Instructs the MACs to apply certain coding edits to the new Current Procedural Terminology (CPT) codes that are used to report physical and occupational therapy evaluations and re-evaluations, effective January 1, 2017.

New Revenue Code 0815 for Allogeneic Stem Cell Acquisition Services

Summary: Medicare systems will accept revenue code 0815 (Allogeneic Stem Cell Acquisition/Donor Services), recently created by the National Uniform Billing Committee (NUBC), effective January 1, 2017, when submitted on hospital claims (Types of Bill (TOB) 011x, 012x, 013x, or 085x)

Comprehensive Care for Joint Replacement (CJR) Model: Skilled Nursing Facility (SNF) 3-Day Rule Waiver

Summary: This article informs SNFs of the policies surrounding use of the 3-day stay waiver available for use under the CJR Model and to provide instructions on using the demonstration code 75 on applicable CJR claims submitted on or after January 1, 2017.

January 2017 Integrated Outpatient Code Editor (I/OCE) Specifications Version 18.0

Summary: Provides instructions and specifications for the Integrated Outpatient Code Editor (I/OCE) used for Outpatient Prospective Payment System (OPPS) and non-OPPS claims.

 

OTHER MEDICARE ANNOUNCEMENTS

FY 2015 Medicare FFS RAC Report to Congress

On December 7, CMS posted the Fiscal Year 2015 Recovery Audit Program Report to Congress. CMS has also published the related FY 2015 Recovery Audit Program Appendices.

Final Medicare Outpatient Observation Notice (MOON) (CMS-10611) Available

On December 8, CMS published a Fact Sheet regarding the release the final OMB-approved Medicare Outpatient Observation Notice (MOON) along with instructions for the form. Hospitals and critical access hospitals (CAH) must begin using the MOON no later than March 8, 2017. The Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act) requires hospitals and CAHS to provide notification to individuals receiving observation services as outpatients for more than 24 hours explaining the status of the individual as an outpatient, not an inpatient, and the implications of that status.

Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements

On December 7, the OIG published a final rule in the Federal Register, amending the safe harbors to the anti-kickback statute by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the anti-kickback statute. This rule updates the existing safe harbor regulations and enhances flexibility for providers and others to engage in business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse.

Effective date: January 6, 2017

Revisions to the Office of Inspector General's Civil Monetary Penalty (CMP) Rules

On December 7, the OIG published a final rule in the Federal Register, amending its CMP rules to incorporate new CMP authorities, clarify existing authorities, and reorganize regulations on civil money penalties, assessments, and exclusions to improve readability and clarity.

Effective date: January 6, 2017

Policy Statement Regarding Gifts of Nominal Value To Medicare and Medicaid Beneficiaries

On December 7, the OIG published a Policy Statement on what it considers to be a gift of nominal value. The OIG is adjusting the previous amounts, now interpreting “nominal value” as having a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis. As with its previous interpretation, the items may not be cash or cash equivalents.

November Medicare Transmittals and Other Updates
Published on Nov 29, 2016
20161129
 | Billing 
 | Coding 
 | OIG 
 | Outpatient Services 
 | Recovery Auditor 

TRANSMITTALS

New Physician Specialty Code for Hospitalist

Summary: The Centers for Medicare and Medicaid Services (CMS) has established a new physician specialty code for Hospitalist (C6).

Modifications to the National Coordination of Benefits Agreement Crossover Process

Summary: Modifies the Part A shared system to ensure that all 837 institutional Coordination of Benefits (COB) claims will contain a Claim Adjustment Reason Code and Remittance Advice Remark Code combination, that hospital day counts may not be entered duplicatively on incoming claims submissions to Medicare, and that Present on Admission (POA) indicators are only permitted on incoming inpatient hospital-oriented claims.

Instructions to Process Services Not Authorized by the Veterans Administration (VA) in a Non-VA Facility Reported with Value Code (VC) 42

Summary: Clarifies how Medicare contractors shall process inpatient claims for services in a Non-VA facility that were not authorized by the VA.

Issuing Compliance Letters to Specific Providers and Suppliers Regarding Inappropriate Billing of Qualified Medicare Beneficiaries (QMBs) for Medicare Cost-Sharing

Summary: Federal law bars Medicare providers from charging individuals enrolled in the Qualified Medicare Beneficiary Program (QMB) for Medicare Part A and B deductibles, coinsurances, or copays. Change Request (CR) 9817 instructs MACs to issue a compliance letter instructing named providers and suppliers to refund any erroneous charges and recall any past or existing billing with regard to improper QMB billing.

Therapy Cap Values for Calendar Year (CY) 2017

Summary: Describes the amounts and policies for outpatient therapy caps for CY 2017. For physical therapy and speech-language pathology combined, the 2017 therapy cap will be $1,980. For occupational therapy, the cap for 2017 will be $1,980.

Quarterly Update to the Correct Coding Initiative (CCI) Edits, Version 23.0, Effective January 1, 2017

Summary: Instructs MACs of the normal update to the Correct Coding Initiative (CCI) Procedure to Procedure (PTP) edits, effective January 1, 2017.

Payment Reduction for X-Rays Taken Using Film

Summary: Reduces the technical component (TC) (including the TC portion of a global service) of X-ray imaging services provided using film.

2017 Annual Update to the Therapy Code List

  • MLN Matters®Number: MM9782
  • Related Change Request (CR) #: CR 9782
  • Related CR Release Date: November 10, 2016
  • Effective Date: January 1, 2017
  • Related CR Transmittal #: R3654CP
  • Implementation: January 3, 2017
  • Affects physicians, therapists, and other providers, including Comprehensive Outpatient Rehabilitation Facilities (CORFs), submitting claims to Medicare Administrative Contractors (MACs), including Home Health & Hospice MACs, for outpatient therapy services provided to Medicare beneficiaries.
  • https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9782.pdf

Summary: Updates the therapy code list for Calendar Year (CY) 2017 by adding eight “always therapy” codes (97161 – 97168) for physical therapy (PT) and occupational therapy (OT) evaluative procedures and deletes the four codes currently used to report these services (97001 – 97004).

ICD-10 Coding Revisions to National Coverage Determination (NCDs)

Summary: The 10th maintenance update of ICD-10 conversions and other coding updates specific to national coverage determinations (NCDs). These NCD coding changes are the result of newly available codes, coding revisions to NCDs released separately, or coding feedback received.

Annual Update of HCPCS Codes Used for Home Health Consolidated Billing Enforcement

Summary: 2017 annual update to the list of HCPCS codes used by Medicare systems to enforce consolidated billing of home health services.

Office of Inspector General Report: Stem Cell Transplantation

Summary: Addresses issues of incorrect billing as a result of the February 2016 OIG report and clarifies coverage of stem cell transplantation.

 

MEDICARE HOSPITAL PAYMENT RULES

Hospital Inpatient Prospective System (IPPS) Final Rule Correction Notice

Summary: This document corrects a typographical error in the final rule that appeared in the August 22, 2016 Federal Register as well as additional typographical errors in a related correction to that rule that appeared in the October 5, 2016 Federal Register.

Hospital Outpatient Prospective System (OPPS) and ASC Final Rule

Summary: This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2017 to implement applicable statutory requirements and changes arising from CMS’s continuing experience with these systems.

 

OTHER MEDICARE ANNOUNCEMENTS

2017 Medicare Parts A & B Premiums and Deductibles Announced

Summary: The 2017 premiums for the Medicare inpatient hospital (Part A) and physician and outpatient hospital services (Part B) programs.

New Recovery Auditor Contracts Awarded

  • October 31, 2016 – CMS has awarded the next round of Medicare Fee-for-Service Recovery Audit Contractor (RAC) contracts to:
  • Region 1 – Performant Recovery, Inc.
  • Region 2 – Cotiviti, LLC
  • Region 3 – Cotiviti, LLC
  • Region 4 – HMS Federal Solutions
  • Region 5 – Performant Recovery, Inc
  • RAC Recent Updates webpage

The RACs in Regions 1-4 will perform postpayment review to identify and correct Medicare claims that contain improper payments (overpayments or underpayments) that were made under Part A and Part B, for all provider types other than Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and Home Health/Hospice. The Region 5 RAC will be dedicated to the postpayment review of DMEPOS and Home Health/Hospice claims nationally.

CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2017

  • November 1, 2016
  • Adjustments to Medicare hospital payments based on the quality of care they provide to patients as determined by quality reporting
  • 2017 VBP Fact Sheet
  • Includes link to FY2017 Hospital VBP incentive payment adjustment factors

Fiscal Year 2017 HHS OIG Work Plan

Summary: The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) Work Plan for fiscal year (FY) 2017 summarizes new and ongoing reviews and activities that OIG plans to pursue with respect to HHS programs and operations during the current fiscal year and beyond.

Review Findings of Sleep Study Services
Published on Jul 19, 2016
20160719
 | FAQ 
 | OIG 

In late summer, the corn stalks grow tall and full across our nation. I love the rustle of a cornfield as the stalks move in the summer breeze. But have you ever been lost in a cornfield or a maze? There is this moment of panic when you think you may not be able to find your way out. The maze of Medicare requirements and reviews can also create feelings of panic. For example, a recent OIG review focused on sleep study services; at least nine Medicare Administrative Contractors (MACs) have local coverage determinations (LCDs) or Articles for sleep studies; and sleep study services have also been the focus of reviews by a Recovery Auditor (Region D HDI) and the Supplemental Medical Review Contractor (SMRC).

Based on the findings from the recent Sleep Study Review, the OIG estimated overpayments of over $1 Million for the audit period for this particular independent sleep study provider. The LCD for the provider’s jurisdiction required that prior to sleep testing, the patient must have a face-to-face clinical evaluation by the treating physician that must include, among other requirements:

  • the patient's sleep history and symptoms,
  • a physical examination that documents body mass index, neck circumference, and
  • a focused cardiopulmonary and upper airway evaluation.

Out of 130 lines of services, 50 had no documentation for the face-to-face clinical evaluation, attending physician's orders, technician's report, or interpretation report and 80 failed to include one or more of the following requirements of the face-to-face clinical evaluation: patient's sleep history and symptoms, Epworth sleepiness scale, body mass index, or neck circumference.

A previous OIG report on sleep studies from 2013 found that Medicare paid nearly $17 million for polysomnography services that did not meet one or more of three Medicare requirements – inappropriate diagnosis codes, duplicate studies for the same date of service, or invalid NPI numbers. According to the report, “Payments for services with inappropriate diagnosis codes composed a majority of these payments. Eighty-five percent of claims with inappropriate diagnosis codes came from hospital outpatient departments.”

The SMRC review from 2014 found that sixty-three percent (63%) of denials were because providers did not provide a History and Physical or other documentation to support medical necessity for polysomnography testing.

Providers need to be familiar with their MAC’s requirements for sleep testing. Hospital-based and independent sleep clinics should verify they are following the Medicare requirements and including appropriate documentation in their records. This is the best way to avoid the panic and ensure a good night’s sleep for you and your patients.

A summary of some Medicare medical review updates from last month are listed below.

Medicare Administrative Contractor (MAC) Review Updates

MAC J15 CGS

  • Cataract Removal (HCPCS 66984, 66983, 66982)
  • Error rate of 61.5% - 68.5%
  • Review to continue

MAC JF Noridian

  • Facet Joint Injections, CPT 64493
  • Error rate 37% - 54%%
  • Review to continue

MAC JE Noridian

  • Brotezomib (Velcade), HCPCS J9041
  • Error rate 10.7%
  • Review to continue

MAC JM Palmetto

  • Infliximab, HCPCS J1745
  • Error rate 44% - 54%
  • Review to continue
  • HCPCS G0424, Outpatient Pulmonary Rehabilitation
  • Error rate 26.3% – 55.3%
  • Discontinued
  • HCPCS Code J2505, Pegfilgrastim, 6 mg
  • Error rate – 15.2% - 41.2%
  • Discontinue in VA and WV, continue in NC and SC
  • HCPCS Code J9035, Bevacizumab, 10 mg
  • Error rate – 26.3% - 37.6%
  • Discontinue in SC; continue in NC and VA/WV

Debbie Rubio

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