Knowledge Base Category -

There are some things in America’s healthcare system that just seem wrong – for example, the unreasonable and escalating price of prescription drugs and the significant increase in healthcare premiums. But like Newton’s third law, for every opinion of wrong, there is an equal and opposite opinion that it is not wrong. Neither the drug companies nor healthcare insurers think their prices or premiums are unreasonable or wrong. There have been concerns over the past few years about the rates Medicare and Medicare patients pay for services furnished in provider-based departments (PBDs) of hospitals. Medicare, Congress, and many others think it is wrong that services in PBDs cost significantly more than the same services provided in a physician’s office setting. Hospitals, on the other hand, understand that these PBDs must comply with the myriad of regulations that apply to hospitals which increases the costs of operation of these locations.

But Congress has the power to make laws and in Section 603 of the Bipartisan Budget Act of 2015, the law requires that “new” off-campus hospital provider-based departments no longer be paid the higher payment rates of the Outpatient Prospective Payment System (OPPS), but instead be paid under a different payment system whose rates are more equitable with physician office rates. In the 2017 OPPS Final Rule, CMS provides instructions on the implementation of this requirement to be effective January 1, 2017 as mandated by the Act.

Before getting into the instructions, here is a reminder of the “new” words CMS is using to describe these services. Services and facilities that are an exception from the new payment requirements – that is the new payment system does not apply to them and they will continue to be paid under OPPS are referred to by CMS as “excepted” services/facilities. “Nonexcepted” services are services without an exception to the new rule, so the new payment method applies to nonexcepted services and nonexcepted locations.

The first thing to consider is to what facilities and services does the law apply and what facilities and services are excepted from the requirements. Excepted facilities will continue to be paid under the OPPS payment system and include:

• On-campus hospital provider-based departments
• Provider-based departments on the campus of or within 250 yards of a remote location of a hospital
• Services provided at a dedicated emergency department
• Off-campus hospital provider-based departments that were furnishing services prior to November 2, 2015 and billed for those service within timely filing limits – note that this is a change from the wording of the proposed rule which stated that only off-campus PBDs that were billing for services prior to November 2, 2015 were exempt.

So this means the new payment system applies to new off-campus hospital provider-based departments that began furnishing and billing for services on or after November 2, 2015.

There are some circumstances where an off-campus PBD that is currently excepted could lose its exception status. If an existing off-campus PBD relocates, it will no longer be excepted and will be paid under the new payment system. The only rare and limited exception to this relocation rule is if the relocation is due to extraordinary circumstances outside the hospital’s control such as natural disasters. CMS did not finalize the rule that PBDs would lose their exception status if they expanded their service line and offered new types of services. Also the excepted status for an off-campus PBD can be transferred to a new owner if ownership of the main provider is also transferred and the Medicare provider agreement is accepted by the new owner.

One of the biggest issues that CMS had to work out was how to pay for services provided at non-excepted off-campus PBDs. You may remember they proposed to pay only the physicians at a non-facility rate for these services and provide no payment to the hospital. Due to concerns about this proposal resulting in potentially inappropriate hospital/physician financial relationships that might implicate the physician self-referral law and Federal anti-kickback statute, they came up with another option. Hospitals will continue to bill on an institutional claim form (UB) and will append a “PN” modifier to services provided in a non-excepted off-campus PBD. Medicare will make payment to the hospital under the Medicare Physician Fee Schedule (MPFS) at new rates established for this purpose. These rates are set at 50% of the OPPS payment rates. The packaging requirements of OPPS will apply to these services (such as comprehensive APCs, packaged and conditionally packaged services). Also services assigned to an OPPS status indicator of “A” will continue to be paid under the “other” fee schedule by which they are currently paid. This includes therapy services paid under the MPFS, laboratory services when separate payment criteria is met under the Clinical Lab Fee Schedule, separately payable drugs at ASP + 6%, preventive services, etc.

A few other things to know about the new payment system are:

• Partial hospitalization program (PHP) will be paid at the same rate as Community Mental Health Centers (CMHCs)
• Physicians will be paid their professional fee at facility rates
• Hospitals will bill clinic visits at nonexcepted off-campus PBDs with HCPCS code G0463 which will be paid at 50% of the OPPS rate
• Hospitals will report radiation treatment delivery procedures with the HCPCS “G” codes appended with the PN modifier, which will be paid at the MPFS technical component rate
• The following adjustments are not being adopted into the new payment system - outlier payments, the rural sole community hospital (SCH) adjustment, the cancer hospital adjustments, transitional outpatient payments, the hospital outpatient quality reporting payment adjustment, and the inpatient hospital deductible cap to the cost-sharing liability for a single hospital outpatient service
• The supervision rules that apply for hospitals will continue to apply for off-campus PBDs that furnish nonexcepted items and services
• Beneficiary cost-sharing under MPFS of 20% will apply

CMS states they will likely continue this payment method through 2018. At that time, they may develop a different payment methodology, likely similar to their original proposal.

Whether you think it is wrong or right, this is the payment method for new off-campus PBDs we are stuck with for now. I encourage all affected providers to read the details in the final rule (beginning on page 569 of the display copy) and submit comments to CMS when allowed. CMS did make several concessions based on the comments they received from the proposed rule and submitting comments is one way to let your opinion be known and hopefully heard.

As the holiday season approaches, most of us excitedly anticipate gifts and packages from our friends and relatives for Christmas. In fact, the anticipation is often more thrilling than the actual gift. For those of you who deal with Medicare outpatient services, you may have been, like me, anxiously anticipating the release of the 2017 OPPS Final Rule. The wait is over as CMS released the Final Rule on November 1st. As has been the trend for many years now, CMS continues to increase the packaging of outpatient services under OPPS into more bundled payments. CMS “packages payment for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility.” Our article today examines the new packaging rules for 2017 from the OPPS Final Rule.

Comprehensive APCs

A comprehensive APC (C-APC) results in one bundled payment for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. The C-APC payment policy was finalized in the 2014 OPPS Final Rule but implementation was delayed until January 2015. For 2017, CMS is adding 25 more C-APCs bringing the total number of C-APCs to 62. Since most of us think more in terms of HCPCS codes (includes CPT codes) rather than APCs, it is easier to understand the impact of this increase in C-APCs by looking at the numbers of HCPCS codes assigned to Status Indicator “J1” which denotes a comprehensive APC primary service.

• January 2015 – 219 HCPCS codes
• January 2016 – 872 HCPCS codes
• January 2017 – 2,737 HCPCS codes

In 2016, CMS added another type of comprehensive APC for a specific combination of services performed in combination with each other and named observation services as this type of C-APC. To accomplish the comprehensive payment for observation, visit codes (all ED visits, critical care, clinic visit, and direct referral to observation) were assigned a Status Indicator of “J2.” A comprehensive APC payment is made for the visit codes when all of the criteria for observation services are met – 8 or more hours of obs reported on the day of or day after the visit code, no services with an SI of “J1” on the claim, and no services with an SI of “T” on the day of or day after observation.

The adjunctive services whose payment is bundled with C-APCs includes just about everything –

• diagnostic procedures,
• lab tests,
• other diagnostic tests and treatments,
• visits and evaluations,
• therapeutic services such as injections and infusions,
• other non-primary surgical procedures and add-on procedures,
• prosthetics, orthotics and other durable medical equipment,
• outpatient department services similar to therapy services (PT, OT, SLP), and
• drugs, biologicals and radiopharmaceuticals.

Only a few services not covered or paid under OPPS are excluded from the C-APC policy. The following services are paid separately in addition to the C-APC payment – mammograms, ambulance services, brachytherapy seeds, pass-through drugs and devices, and preventive services. Self-administered drugs (SADs) that are not otherwise packaged as supplies are also excluded from the C-APC policy; hospitals may hold the patient financially responsible for SADs since Medicare does not cover them.

Medicare makes a complexity adjustment for certain comprehensive services. This means they may increase the payment rate of a C-APC to the next higher paying C-APC in the same clinical family in some incidences

• when more than one service with a “J1” status indicator is reported on the same claim or
• when certain add-on codes are reported with a “J1” service.

Medicare bases the decision to apply a complexity adjustment on frequency and cost thresholds. They modified their criteria for complexity adjustments this year which will result in more code combinations being eligible for the increased payment. Addendum J to the Final Rule includes a listing of the code combinations that will receive a complexity adjustment.

One 2017 C-APC of note is the new Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC. Per the FR, “The creation of a new C-APC for allogeneic HSCT and the assignment of status indicator “J1” to CPT code 38240 would allow for the costs for all covered OPD services, including donor acquisition services, included on the claim to be packaged into C-APC payment rate.” To appropriately capture costs, CMS is creating a new cost center and a new revenue code, 0815, for reporting all services required to acquire stem cells from a donor, such as National Marrow Donor Program fees, tissue typing, donor evaluation, collection procedures, and the preparation and processing of stem cells. CMS is also putting in place a claim edit that will require revenue code 0815 to be present on the claim if CPT code 38240 is reported.

Laboratory Packaging

Since 2014, Medicare has packaged most clinical diagnostic laboratory tests. They have only paid laboratory tests separately if:

• they are the only services provided to a beneficiary on a claim,
• they are “unrelated” laboratory tests (ordered by a different physician for a different diagnosis and reported with the L1 modifier),
• they are molecular pathology tests, or
• they are considered preventive services.

For 2017, CMS is eliminating the L1 modifier and will no longer pay separately for “unrelated” lab tests. Medicare will continue to pay separately when lab tests are the only services reported on a claim. In addition to the exclusion of molecular pathology tests from laboratory packaging, for 2017 Medicare will also exclude advance diagnostic laboratory tests (ADLTs) from lab packaging. The ADLTs will be assigned to status indicator “A” and paid under the Clinical Lab Fee Schedule (CLFS). ADLTs are defined as tests that provide an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result.

Per Claim Packaging

Most clinical laboratory tests are assigned to a Status Indicator of “Q4” and, as mentioned above, are sometimes packaged and sometimes eligible for separate payment. This is known as conditional packaging and there are two other status indicators that also indicate conditionally packaged services – “Q1” and “Q2” which prior to 2017 were packaged based on date of service. For 2017, these conditionally packaged status indicators will be packaged on a per claim basis, like lab tests with a “Q4” SI already are. “Q1” services will be packaged if they are reported on the same claim with services with status indicators of “S”, “T”, or “V.” “Q2” services will be packaged if they are on the same claim with services with an SI of “T.”

As you can see, Medicare is a generous gifter – there is not just one package for providers for the New Year, but a whole bunch of them. Unfortunately, you can’t just choose one; you have to take them all.

TRANSMITTALS

Implementation of New Influenza Virus Vaccine Code

• Transmittal R3617CP, Change Request 9793, MLN Matters Article MM9793
• Issued September 30, 2016, Effective August 1, 2016, Implementation January 3, 2017
• Affects physicians and providers submitting claims to Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries.
• Summary of Changes: Provides instructions for payment and edits for the common working file (CWF) to include influenza virus vaccine code 90674.

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

• Transmittal R3614CP, Change Request 9806, MLN Matters Article MM9806
• Issued September 23, 2016, Effective October 1, 2016, Implementation January 3, 2017
• Affects physicians, other providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.
• Summary of Changes: Quarterly updates to the national coverage determinations (NCDs) for clinical diagnostic laboratory services.

Update to Hepatitis B Deductible and Coinsurance and Screening Pap Smears Claims Processing Information

• Transmittal R3615CP, Change Request 9778, MLN Matters Article MM9778
• Issued September 23, 2016, Effective December 27, 2016, Implementation December 27, 2016
• Affects physicians, providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.
• Summary of Changes: Updates erroneous information regarding coinsurance and deductible for hepatitis B virus vaccine and screening Pap smears.

Notice of New Interest Rate for Medicare Overpayments and Underpayments -1st Qtr Notification for FY 2017

• Transmittal R273FM, Change Request 9863
• Issued October 12, 2016, Effective October 18, 2016, Implementation October 18, 2016
• Summary of Changes: Quarterly update of the interest on overpayments and underpayments to Medicare providers

OTHER UPDATES

BFCC-QIOs Resuming Short-Stay Reviews

• Inpatient Hospital Reviews
• Effective September 12, 2016
• Summary of Changes: BFCC-QIOs will resume initial patient status reviews of short stays in acute care inpatient hospitals, long-term care hospitals, and inpatient psychiatric facilities to determine the appropriateness of Part A payment for short stay hospital claims.

Hospital Appeals Settlement

• Inpatient Hospital Reviews
• Issued September 28, 2016
• Summary of Changes: CMS has decided to once again allow eligible providers to settle their inpatient status claims currently under appeal using the Hospital Appeals Settlement process. Specific details of the settlement will be released in the near future. Please continue to monitor CMS’ website for additional information.

KEPRO, BFCC-QIO Releases Short Stay Reviews FAQ #1

KEPRO, the BFCC-QIO for Area’s 2, 3 and 4, provided a Short Stay Review webinar for key stakeholders on September 19 and 20, 2016. In October they released a pdf document titled FAQ #1: Short Stay Reviews which includes a first round portion of questions submitted during the webinars. An updated documented will be posted to their website once all remaining questions are answered.

Adjustment to the amount in controversy threshold amounts for calendar year (CY) 2017 for Medicare appeals

• Federal Register notice
• September 23, 2016
• Summary of Changes: Announcement of the annual adjustment in the adjustment to the amount in controversy (AIC) threshold amounts for ALJ hearings and judicial review under the Medicare appeals process for 2017. The CY 2017 AIC threshold amounts are $160 for ALJ hearings and $1,560 for judicial review.

 Notice of interim final rule adjusting Civil Monetary Penalties (CMP)

• Survey and certification letter
• September 8, 2016
• Summary of Changes: Announces adjustments for inflation of the CMP amounts authorized under the Social Security Act.

Partnership for Patients and the Hospital Improvement Innovation Networks: Continuing Forward Momentum on Reducing Patient Harm

• CMS Fact Sheet
• September 29, 2016
• Summary of Changes: CMS) awarded $347 million to 16 national, regional, or state hospital associations and health system organizations to serve as Hospital Improvement Innovation Networks (HIINs).

October 2016 Medicare Quarterly Provider Compliance Newsletter Released

• October 2016 Quarterly Compliance Newsletter
• Summary of Changes: Addresses Comprehensive Error Rate Testing (CERT) review of Transluminal Balloon Angioplasty, Venous; Endovenous Ablation Therapy of Incompetent Vein; Blepharoplasty; and Transurethral Resection of the Prostate and Recovery Auditor findings regarding Post-Acute Care Transfer and Skilled Nursing Facility (SNF) Coding Validation.

News related to the Zika virus has slipped from the headlines as the United States deals with a major hurricane and the upcoming presidential election, but the Zika virus hasn’t gone away. According to the Center for Disease Control and Prevention (CDC), as of October 5, 2016, there were 3,818 cases of Zika Virus disease cases in the United States with most of these cases being travel-associated. However, 105 cases in South Florida (Miami and Miami Beach area) are locally acquired mosquito-borne cases. Zika infection during pregnancy can cause serious birth defects and other pregnancy problems, and a small proportion of people with recent Zika virus infection may develop Guillain-Barre syndrome. You can learn more about the Zika virus on the CDC Zika Virus website.

In order to properly treat Zika virus infection, a diagnosis must first be established. According to Medicare MLN Matters Article SE1615, “Currently there are a few diagnostic tests that can determine the presence of the virus. These tests are available through the CDC and CDC-approved state health laboratories. A small number of tests have been issued an Emergency Use Authorization by the Food and Drug Administration (FDA) and may be available through commercial laboratories.”

Medicare Part B will pay for testing for the Zika virus that is reasonable and necessary for diagnosis or treatment. Since there are currently no specific HCPCS codes for Zika virus testing, Article SE1615 directs laboratories to obtain guidance on appropriate billing codes from their local Medicare Administrative Contractors (MACs). The MACs may require resource and costs information from the testing labs in order to establish appropriate payment rates.

In reviewing the websites of the different MACs and the Medicare Coverage Database, I was able to locate the following MAC specific instructions for billing for Zika virus testing.

NGS - http://tinyurl.com/hpp7zhe

“Testing for the Zika virus may be considered medically necessary when a beneficiary’s clinical history and symptoms indicate the possibility of infection with the virus. Coverage for this testing is not available on a screening basis, but only for situations in which there is valid medical reason to suspect Zika infection.

Providers billing for Zika viral testing may submit claims using the following codes:

• CPT Code 87798 (infectious agent detection by nucleic acid (DNA or RNA), not otherwise specified; amplified probe technique, each organism)
• ICD-10 Code A92.9 (through 9/30/2016)
• ICD-10 Code A92.5 (10/1/2016 and thereafter)”

Noridian - http://tinyurl.com/zc4kxu7

Noridian has issued Coverage Articles (see the one for Noridian JE at the link above) for Zika Virus Testing by PCR and ELISA Methods (A55326 and A55327). These articles list several billing codes that may be appropriate based on the type of test performed.

Novitas – http://tinyurl.com/zuxqf3v

“Presently, there are no specific HCPCS (Healthcare Common Procedure Coding System) codes for testing of the Zika virus; however, Novitas recommends that laboratories refer to coding resources such as the HCPCS and Current Procedural Terminology manuals to select the most appropriate unlisted code. Please keep in mind that medical documentation must support the services billed. To establish appropriate payment amounts for the tests, laboratories should provide resources and cost information upon request.”

Palmetto - http://tinyurl.com/hslt92h

“To bill for Zika virus testing, submit the claims with CPT 87999. Please keep in mind that medical documentation must support the services billed. Clinical laboratories may be asked by Medicare administrative contractors to provide resources and cost information to establish appropriate payment amounts for the tests.”

If your MAC is not listed above, you should contact them for billing information.

“Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment, that are furnished while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital.”

Under the two-midnight rule, hospitals may approach the decision for observation services a little differently. When a patient presents to the hospital, the first decision for the physician is, “does the patient require care in a hospital setting?” If the answer to this question is yes, then for patients with an expectation of a two-midnight stay an inpatient admission is appropriate. If the physician does not think the patient will require two midnights of care in the hospital or is unsure, then observation services are generally appropriate. When a patient who is receiving observation services approaches a second midnight in the hospital, a change to inpatient status is appropriate if the patient still requires care in a hospital setting. Considering this, it should be rare that a patient receives observation services beyond a second midnight.

Observation services are not appropriate for preparation time for outpatient testing, or for routing pre-op or post-operative services. Even with the two-midnight rule, observation services still remain a period of treatment or monitoring in order to make a decision concerning the patient’s admission or discharge.

When to Start

“Observation time begins at the clock time documented in the patient’s medical record, which coincides with the time that observation care is initiated in accordance with a physician’s order.”

What does this mean exactly? First, there must be a physician’s order for observation before observation services can begin. Observation orders cannot be back-dated. For example, when condition code 44 is used to change a patient’s status from inpatient to outpatient, observation services do not begin until there is an order for observation (which would be after the change to outpatient status). Observation services would begin at the time that order was written.

If the patient is already actively receiving care, such as in the example above, then observation begins at the time the observation order is written. For patients being transferred to a room after an observation order is written, observation care may not begin until the patient begins to receive evaluation and/or care in the hospital room.

Rounding

Observation hours are rounded to the nearest hour. This means everything from 9:01 through 9:29 is rounded to 9:00 and from 9:31 to 9:59 is rounded to 10:00. 9:30 is ambiguous and could be rounded either way. The example in the Medicare manual is a patient receiving observation services from 3:03 p.m. until 9:45 p.m. – this equals 7 hours of obs.

Concurrent Active Monitoring

“Observation services should not be billed concurrently with diagnostic or therapeutic services for which active monitoring is a part of the procedure (e.g., colonoscopy, chemotherapy).”

Medicare does not provide a list or any examples beyond the two noted in the statement above for what constitutes a procedure with “active monitoring.” This is something the hospital will have to determine, but generally includes near-constant monitoring by a nurse or other health care professional. If such a procedure occurs during a period of observation, the hospital must subtract or “carve out” that time from the total observation hours. This could be accomplished by using the beginning and ending time of the procedure, or Medicare allows hospitals to use an “average length of time” for interrupting procedures and deduct that amount of time from the observation hours.

When to End

“Observation time ends when all medically necessary services related to observation care are completed.”

Observation ending time may not coincide with the time of the physician’s discharge order. Sometimes necessary medical care may end prior to the discharge order or care may extend beyond the time of the discharge order. If after care has ended, the patient is waiting for transportation home, the waiting time should not be included in observation time.

Observation hours end when an order is written to admit the patient as an inpatient. The observation services will be bundled into the inpatient claim, but for accurate records this is when observation counting stops.

Why Bother?

Isn’t observation packaged, so why does the counting of observation hours matter? Well, yes, but no. The outpatient claim line item for observation services, billed with HCPCS code G0378, is a packaged service and receives no separate payment. However, if certain criteria are met, an observation comprehensive APC is paid for the associated visit code, such as any level ED visit, an outpatient clinic visit, or a direct referral for observation services. If 8 or more hours of observation are billed with a visit code and without a primary procedure (status indicator J1) on the claim or surgical procedure (status indicator T) on the day of or before obs, then the claim qualifies for an observation comprehensive APC payment. For 2016, the unadjusted national Medicare payment for the obs C-APC is $2174.14. Definitely worth following the rules.

Hospitals have been dealing with observation services for a long time and most providers probably have their systems down on how to accurately count and report observation services. But a reminder of the rules never hurts. 

Influenza Vaccine Payment Allowances - Annual Update for 2016-2017 Season

• Transmittal 3611, Change Request 9758, MLN Matters Article MM9758
• Issued 9/9/2016, Effective 8/1/2016, Implementation by 11/1/2016
• Affects physicians and other providers submitting claims to Medicare Administrative Contractors (MACs) for influenza vaccines provided to Medicare beneficiaries.

Summary of Changes: Provides the availability of payment allowances for the following seasonal influenza virus vaccines.

Coding Revisions to National Coverage Determination (NCDs)

• Transmittal 1708, Change Request 9751, MLN Matters Article MM9751
• Issued 8/19/2016, Effective 1/1/2017, Implementation 1/3/2017
• Affects physicians and other providers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.

Summary of Changes: The 9th maintenance update of ICD-10 conversions and other coding updates specific to national coverage determinations (NCDs).

October 2016 Update of the Hospital Outpatient Prospective Payment System (OPPS)

• Transmittal 3602, Change Request 9768, MLN Matters Article MM9768
• Issued 8/26/2016, Effective 10/1/2016, Implementation 10/3/2016
• Affects providers and suppliers who submit claims to Medicare Administrative Contractors (MACs), including Home Health and Hospice (HH&H) MACs, for services provided to Medicare beneficiaries and which are paid under the Outpatient Prospective Payment System (OPPS)..

Summary of Changes: This Recurring Update Notification describes changes to and billing instructions for various payment policies implemented in the October 2016 OPPS update.

Claim Status Category and Claim Status Codes Update

• Transmittal 3599, Change Request 9680, MLN Matters Article MM9680
• Issued 8/26/2016, Effective 1/1/2017, Implementation 1/3/2017
• Affects physicians, providers, and suppliers who submit claims to Medicare Administrative Contractors (MACs), including Durable Medical Equipment (DME) MACs, and Home Health & Hospice (HH&H) MACs for services provided to Medicare beneficiaries.

Summary of Changes: Updates, as needed, the Claim Status and Claim Status Category Codes used for the Accredited Standards Committee (ASC) X12 276/277 Health Care Claim Status Request and Response and ASC X12 277 Health Care Claim Acknowledgment transactions.

Annual Clotting Factor Furnishing Fee Update 2017

• Transmittal 3607, Change Request 9759, MLN Matters Article MM9759
• Issued 8/26/2016, Effective 1/1/2017, Implementation 1/3/2017
• Affects physicians and other providers billing Medicare Administrative Contractors (MACs) for services related to the administration of clotting factors provided to Medicare beneficiaries.

Summary of Changes: This annually recurring CR announces the update to the Clotting Factor Furnishing Fee.

JW Modifier: Drug /Biological Amount Discarded/Not Administered To Any Patient - Frequently Asked Question

• Issued 8/26/2016, Effective 1/1/2017,FAQs
• Affects Providers and suppliers submitting claims for Part B drugs.

Summary of Changes: An FAQ document concerning use of the JW modifier

End of Temporary Suspension of the BFCC-QIO Short Stay Reviews

• Inpatient Hospital Reviews
• Effective 9/12/2016
• Affects acute care inpatient hospitals, long-term care hospitals, and inpatient psychiatric facilities.

Summary of Changes: BFCC-QIOs will resume initial patient status reviews of short stays to determine the appropriateness of Part A payment for short stay hospital claims.

Medicare Fee for Service National Recovery Audit Program   (April 1, 2016 – June 30, 2016) Quarterly Newsletter              

• Recovery Auditor 3rd Qtr 2016 Newsletter

Summary of Changes: Overpayment and underpayment correction amounts for each RA region and the top issue per region.

Notification of Final Rule Published- Emergency Preparedness

• Survey-and-Cert-Letter-16-38
• Issued 9/8/2016, Effective 11/16/2017
• Affects Medicare and Medicaid Participating Providers and Suppliers.

Summary of Changes: The Emergency Preparedness Rule outlines the requirements for all providers and suppliers in regards to planning, preparing and training for emergency situations.

Do you sometimes feel that your life is a circus? Does this especially apply at times to your role in healthcare? The circus often includes people and animals jumping through hoops – lions, small dogs, clowns - through big hoops, small hoops, or flaming hoops. In Medicare’s clarification concerning reporting “therapy-like” services that appeared in the October 2016 OPPS Update, providers have a choice of hoops.

Before we choose a hoop, let’s consider what exactly Medicare means when they refer to “non-therapy outpatient department services that are similar to therapy services.” Rehabilitative therapy services, that is physical therapy, occupational therapy, and speech language pathology services, are provided by therapists under a plan of care in accordance with Section 1835(a)(2)(C) and Section 1835(a)(2)(D) of the Act and are paid for under Section 1834(k) of the Act. These services require functional limitation reporting and are subject to the therapy cap. Sometimes, hospital outpatients will be provided therapy-like services during the perioperative period of a Comprehensive APC (C-APC) procedure without a certified therapy plan of care. When non-therapy outpatient department services are included on the same claim as a C-APC procedure (status indicator (SI) = J1) or the specific combination of services assigned to the Observation Comprehensive APC 8011 (SI = J2), these services are considered adjunctive to the primary procedure and their payment is included as a packaged part of the payment for the C-APC procedure.

Hoop One

In the July 2016 OPPS Update, CMS put forth a requirement to be effective July 1, 2016, for these non-therapy outpatient department services adjunctive to a C-APC to be reported without HCPCS codes and with revenue code 0940. In comments on the June 8, 2016 Hospital Open Door Forum, CMS stated this change in reporting requirements was due to provider concerns about having to report functional limitation G codes and modifiers with these packaged “therapy-like” services. Provider response to CMS’s explanation was that this solution simply created different problems from the one it solved. Shortly after, CMS delayed the implementation of the reporting change for therapy-like services until October 1, 2016. The October OPPS update gives provider two options for claims received on and after October 1, 2016 for dates of services on and after January 1, 2015. One option continues to be reporting these “non-therapy” therapy services with revenue code 0940 and no HCPCS codes. Hopefully CMS has made modifications to claim processing systems to allow the reporting of revenue code 0940 without HCPCS codes, since this revenue code historically has required the presence of HCPCS codes.

Hoop Two

The second option in the October update for reporting “therapy-like” services adjunctive to C-APCs is that providers can continue to report these with the therapy revenue codes (042x, 043x, and 044x) and with therapy HCPCS/CPT codes. However, if a provider chooses this option, they must follow all the requirements of rehabilitative therapy code reporting, including occurrence codes, therapy modifiers, and the reporting of functional limitation G codes and modifiers. The therapy cap will not be affected since payment for these services is packaged into the comprehensive APC payment.

So do you want to jump through the hoop into the lion’s mouth or the flaming hoop? Your choice, but neither one is without its complications.

The phrase “waste not, want not” means to use one’s resources wisely in order to always have plenty and avoid poverty. Although Medicare pays for drug wastage in certain circumstances, they also expect healthcare providers and suppliers to “use drugs or biologicals most efficiently, in a clinically appropriate manner.” But when waste cannot be avoided, starting next year, CMS is requiring reporting that will allow them to identify and monitor billing and payment for discarded drugs under Medicare Part B.

As promised, CMS has released a list of frequently asked questions concerning the use of the JW modifier. The JW modifier indicates that a portion of a drug or biological was discarded or wasted. Currently the use of the JW modifier is at the discretion of the jurisdictional Medicare Administrative Contractors (MACs). For example, Cahaba GBA, MAC for Jurisdiction JJ (Alabama, Georgia, and Tennessee) does not require the reporting of the JW modifier for wasted drugs/biological. In order to be more consistent and better able to track drug wastage, CMS is requiring the use of the JW modifier nationally effective January 1, 2017, in order for providers/suppliers to seek payment for drug/biological wastage.

The JW modifier is to be used on Part B drug claims for discarded drugs and biologicals (hereafter referred to as drugs) when they are in single-use vials or packaging. If uncertain, the information as to whether a drug or biological is single use can be found in the manufacturer’s packaging insert. The discarded drug amount is the amount of a single use vial or other single use package that remains after administering a dose/quantity of the drug to a Medicare patient. Multiple use vials/packaging are not eligible for Medicare payment for discarded amounts.

The JW modifier will mainly be used for reporting drug wastage in physician offices and hospital outpatient departments (including Critical Access Hospitals (CAHs)). Some suppliers such as pharmacies may need to report the JW modifier, but it is unlikely they will have much, if any, drug wastage. Hospital Part B inpatient claims on a 12X type of bill would also report the JW modifier for separately payable drugs. Eligible and participating 340B providers are not exempt from use of the JW modifier.

One of the main things to remember about the use of the JW modifier is that it only applies to drugs that are separately payable, for example drugs with an OPPS status indicator of G (pass-through drugs) and K (separately payable non-pass-through drugs). In the outpatient hospital setting, this applies to separately payable drugs billed for surgical patients, patients in the emergency room, patients in outpatient clinics, and other outpatients receiving separately payable drugs.

This means that drugs that are not separately paid by Medicare do not require the use of the JW modifier. For example:

• Drugs provided in rural health clinics (RHCs) and federally qualified health centers (FQHCs) since these are not separately paid,
• Drugs provided during hospital inpatient admissions (Part A) that are paid under the Inpatient Prospective Payment System (IPPS),
• Drugs given to an outpatient but combined to an inpatient Part A claim under the 3 day payment window rule,
• Packaged drugs, such as drugs with an OPPS status indicator of “N” or an SI of “K” that are bundled with comprehensive APCs (see OPPS Addendum D1 for explanation of services packaged with comprehensive APCs)
• Overfill wastage (CMS has made it clear in the past that overfill, which is any amount of drug greater than the amount identified on the package, is not billable.)

CMS also exempts drugs paid under the Part B drug Competitive Acquisition Program (CAP) although at this time the CAP remains on hold so there is no current list of CAP medications.)

One of the questions not clearly addressed by the FAQs is whether providers and suppliers are required to report drug wastage or can they elect to absorb the cost of discarded drugs. The guidance states that the JW modifier is used in order to obtain payment for the discarded amount of a drug or biological and is not needed if no discarded drug is being billed to the payer. So IF you are going to bill and expect payment for drug wastage, you must use the JW modifier January 1, 2017 and after.

In using the JW modifier on and after January 2017, providers must report the amount of the discarded drug on a separate claim line with the JW modifier. The unit field should reflect the quantity of drug discarded. If the provider is unable to quantify the amount of drug wasted, the JW modifier is not required. Do not report one claim line with combined units for amount of drug administered and wasted. Also realize if the amount of drug administered or the amount of drug wasted is less than the amount described by one HCPCS billing unit, then it is not necessary to use the JW modifier.

Prior to January 1, 2017, providers must follow the directions of their MACs or they may voluntarily report the JW modifier. Providers should check their MACs websites for any specific direction concerning the reporting of the JW modifier prior to the mandatory January 1, 2017 requirement. For example, here is some guidance from a few MACs and you can see that current instructions differ from MAC to MAC – that is why it is important to determine your MAC’s guidance for use of the JW modifier in 2016.

Cahaba GBA - Cahaba DOES NOT require the use of the JW modifier at this time. If providers wish to designate that a portion of a single dose vial is being discarded, please continue to bill the injection on ONE line and add the JW modifier to the procedure code and document the discarded amount in the patents records. Bill for the complete vial, even though part of the vial is being discarded. DO NOT split the billing to two claim lines: one with the JW and one without.

First Coast - For billing purposes, First Coast does not require the use of modifier JW prior to January 1, 2017. Drug wastage is billed by combining on a single line the wastage and administered dosage amount.

NGS - National Government Services does NOT require the use of the JW modifier at this time but providers may choose to use it. Claims will process appropriately with or without the JW modifier. If the JW modifier is used; it should be appended to a separate line for the HCPCS code (separate from the amount administered) indicating the amount (in units) discarded.

One thing CMS and all the MACs agree on is that wastage of the drug must be documented in the patient’s medical record to support the billing of discarded drugs. Here is CMS’s answer to the FAQ concerning documentation of drug wastage:

“CMS expects that providers and suppliers will maintain accurate (medical and/or dispensing) records for all beneficiaries as well as accurate purchasing and inventory records for all drugs that were purchased and billed to Medicare. General guidance on documentation is available in MLN Matters SE 1316. Providers and suppliers should also check with the MAC that processes their Part B drug claims in case additional information on billing and documentation is available at the local level.”

For complete details concerning the JW modifier, see the following CMS guidance:

• MLN Matters Article MM9603,
• Section 40 of Chapter 17 of the Medicare Claims Processing Manual,
• CMS’s FAQ document
• Any information on the JW modifier on your local MAC’s website

Providers should use drugs wisely and efficiently, but if wastage cannot be avoided and the provider wants to be paid for it, then understanding the proper use, reporting and documentation for the JW modifier is critical.

I absolutely love those television shows of people viewing and buying houses. One doesn’t have to watch many such shows to realize that people have very different taste in the types of houses they prefer. Some like brand-new, sleek and modern homes; some like more traditional homes; and others have a preference for vintage homes with character. But where is the line between “vintage” and just plain old? This distinction may also be applied to other products, items or aspects of our lives – for example, are film x-rays vintage or just old? However you view x-rays (pun intended), film and even computed radiography x-rays are out-of-date. Healthcare payers do not like to pay for out-of-date technology, especially when a newer technology provides more effective and efficient healthcare. As far as x-rays go, we now live in a digital world.

In the 2017 Outpatient Prospective Payment System (OPPS) proposed rule, CMS, in accordance with the Consolidated Appropriations Act of 2016, is proposing to reduce payments for film x-rays. Effective for services furnished during 2017 or any subsequent year, the payment under the OPPS for imaging services that are X-rays taken using film shall be reduced by 20 percent. CMS is also proposing that these services be identified by the use of a new modifier to be appended to imaging services that are X-rays taken using film. The presence of the modifier will result in a 20% reduction in the payment rate for the imaging service. This payment reduction is not considered an adjustment and will not be budget neutral.

For CYs 2018 through 2022, OPPS payments for X-rays taken using computed radiography will be reduced by 7%. Beginning in 2023 and thereafter, this reduction will be increased to 10%. CMS states that they will address the mechanisms for the reductions in OPPS payment for imaging services that are X-rays taken using computed radiography technology (including the imaging portion of a service) in future rulemaking.

The days of attaching a floppy film to an x-ray viewer are behind us or at least not worth what they once were. Marcus Welby, M.D. – you are out-of-date … or maybe vintage.

When my son was in college, he fell and broke his leg while playing a pick-up game of basketball. Last year my elderly father fell and broke his leg. Was their rehabilitative therapy experience the same? Hardly. Was the therapist’s time, effort and consideration for the therapy evaluation the same? Hardly. A physical therapy or occupational therapy evaluation for a young, healthy teenager with no other medical conditions is not the same as a therapy evaluation for an elderly patient who has numerous other medical conditions and pre-existing limitations in functional abilities. Beginning January 2017, that fact is being addressed with new CPT codes for rehabilitative therapy evaluations based on complexity.

CMS is proposing to accept the new CPT codes for physical and occupational therapy evaluation and re-evaluation services for 2017. The new evaluation codes are tiered based on the complexity of an evaluation that may vary due to the severity and complexity of the patient’s condition. The current evaluation codes and their respective replacement codes are:

• 97001, PT evaluation will be replaced with three new codes: 97x61, 97x62, and 97x63
• New PT re-evaluation code 97x64 will replace 97002
• 97003, OT evaluation will be replaced with three new codes: 97x65, 97x66, and 97x67
• New OT re-evaluation code 97x68 will replace 97004

As discussed in the Medicare Physician Fee Schedule (MPFS) Proposed Rule , Medicare will not have tiered payments for the new codes, but will continue to make one payment amount for all three levels of evaluation. CMS states concerns about potential risk of upcoding as therapists are learning to use the new codes, the incentive to upcode differential payment rates would create, and unknown utilization of the various levels. Perhaps CMS will reconsider tiered payment rates in the future once the learning curve is past and they have some historical data on code usage. Until then payment for evaluations and re-evaluations will likely be similar to current payment rates.

CMS also identified several other therapy codes they consider to be “misvalued” that may have a negative payment rate adjustment for next year. We will have to wait on the final MPFS rule to know exact payment rates. Those CPT codes are:

• 97032 – unattended electrical stimulation,
• 97035 – ultrasound therapy,
• 97110 – therapeutic exercises,
• 97112 – neuromuscular re-education,
• 97113 – aquatic therapy/exercises,
• 97116 – gait training,
• 97140 – manual therapy,
• 97530 – therapeutic activities,
• 97535 – self care management training,
• G0283 – unattended electrical stimulation other than wound care

Therapy codes continue to be subject to the Multiple Procedure Payment Reduction (MPPR) which means only one unit of the highest paid code reported for a day of service is paid at 100%. Additional units and codes are paid at a reduced payment rate.

See Table 19 on page 350 of the MPFS proposed rule for the complete long descriptions and specific components of each new code. The PT re-evaluation code, 97x64 requires an examination with review of history, standardized tests and measures, and a revised plan of care. CPT 97x68, OT re-evaluation, also requires a revised plan of care based on assessment of the patient’s functional or medical status with an updated occupational profile. Information on the new evaluation codes is summarized in a table you can dowload by clicking here.

Therapists must educate themselves on how to appropriately use the new codes and the documentation required to support the codes. Therapists are used to scrutiny of their documentation to support the services they provide. These new tiered codes add yet another documentation challenge for therapists.