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“Observation care services are covered only when provided by the order of a physician or another individual authorized by state licensure law and hospital staff bylaws to admit patients to the hospital or to order outpatient tests. These services must be deemed reasonable and necessary to be covered by Medicare. Please share with appropriate staff.”

• Source: Palmetto GBA JJ April 10, 2018 Daily Newsletter

Palmetto GBA, the Jurisdiction J (JJ) Medicare Administrative Contractor (MAC) included the above statement in their April 10, 2018 Daily Newsletter. The reminder also included a link to an article about Observation Care on the Palmetto GBA website.

Given that Palmetto GBA started the conversation, MMP would also like to make appropriate staff aware of the fact that there is a new JJ Outpatient Observation Bed/Room Services (L34552) Local Coverage Determination (LCD). This article will walk you through LCD L34552.

LCD Coverage Indications, Limitations and/or Medical Necessity

Observation Services: What it is?

• “Observation services are defined as the use of a bed and periodic monitoring by a hospital's nursing or other ancillary staff, which are reasonable and necessary to evaluate an outpatient's condition to determine the need for possible inpatient admission.”

• “The services may be considered covered only when provided under a physician's order (or under the order of another person who is authorized by state statute and the hospital's bylaws to admit patients or order outpatient testing).”

• “Outpatient observation services must be patient specific and not part of the facilities standard operating procedure or protocol for a given diagnosis or service. Observation services, generally, do not exceed 24 hours.”

Observation Services: What it is not?

• “Outpatient observation services are not to be used as a substitute for medically necessary inpatient admissions. Outpatient observation services are not to be used for the convenience of the hospital, its physicians, patients, or patient's families, or while awaiting placement to another health care facility.”

Documentation Palmetto expects to find in the Medical Record

LCD L34552 includes the following five elements that need to be included in the medical record when a patient is receiving Observation Services:

1. “The attending physician's order including “clock time” for the observation service or “clock time” can be noted in the nursing admission notes/observation unit notes outlining the patient’s condition and treatment.

2. Observation time which begins at the clock time documented in the patient’s medical record, and which coincides with the time the patient is placed in a bed for the purpose of initiating observation care in accordance with a physician’s order.

3. The ending time for observation occurs either when the patient is discharged from the hospital or is admitted as an inpatient. The time when a patient is “discharged” from observation status is the clock time when all clinical or medical interventions have been completed, including any necessary follow-up care furnished by hospital staff and physicians that may take place after a physician has ordered that the patient be released or admitted as an inpatient. However, observation care does not include time spent by the patient in the hospital subsequent to the conclusion of therapeutic, clinical, or medical interventions, such as time spent waiting for transportation to go home.

4. The beneficiary is under the care of a physician during the period of observation as documented in the medical record by admission, discharge, and appropriate progress notes.

5. Risk stratification criteria (such as intensity of service and severity of illness) were used in considering potential benefits of observation care.”

Observation Services Triggering Medical Review

Tucked between the Coverage Indications, Limitations and/or Medical Necessity and the Categories of Observation Services is to me one of the most important sentences in this LCD: 

“Observation claims exceeding 48 hours may be subject to medical review.”

So why 48 hours, in the related Observation Care article mentioned previously? Palmetto notes that CMS has indicated that “In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours.”

Additionally, with the implementation of the 2-Midnight Rule effective October 1, 2013, outpatient observation services spanning greater than 48 hours should be closely followed to convert to Inpatient when appropriate or work with the Physician to determine why he/she believes the patient is continuing to require observation care.

 

Outpatient Observation Services Categorized

The LCD indicates that outpatient observation services fall into one of three categories.

1. Diagnostic Testing

Under this category, for scheduled invasive outpatient diagnostic tests, routine preparation and immediate recovery after the test is not considered to be an observation service. If further monitoring is required as a result of a significant adverse reaction from the test then outpatient observation services may be reasonable and necessary.

“Observation services begin at that point in time when the reaction occurred and would end when it is determined whether or not the patient required inpatient admission. Medical review decisions will be based on the documentation in the patient’s medical record.”

2. Outpatient Therapeutic Services

“Observation status does not apply when a beneficiary is treated as an outpatient for the administration of blood only and receives no other medical treatment. The use of the hospital facilities is inherent in the administration of the blood and is included in the payment for administration.

When the patient has been scheduled for ongoing therapeutic services as a result of a known medical condition, a period of time is often required to evaluate the response to that service. This period of evaluation is an appropriate component of the therapeutic service and is not considered an observation service.

The observation service begins at that point in time when a significant adverse reaction occurred that is above and beyond the usual and expected response to the service.”

3. Patient Evaluation
   “When a patient arrives at the facility with an unstable medical condition (generally via the Emergency Department), observation services may be reasonable and necessary to evaluate the medical condition to determine the need for a possible admission to the hospital as an inpatient.
   
   An unstable medical condition can be defined as:
   · variance from generally accepted normal laboratory values; and
   · clinical signs and symptoms present that are above or below those of normal range (for the patient) and are such that further monitoring and evaluation is needed. Changes in the patient's status or condition are anticipated and immediate medical intervention may be required.
   
   Documentation in the patient's medical record must support the medical necessity of the observation service.

 

Inpatient Status Changed to Observation Status is a No Go without Condition Code 44

While this LCD does not mention Condition Code 44, it does include the following statement:
“Upon internal review performed before the claim was initially submitted and upon the hospital determining that the services did not meet its inpatient criteria, an inpatient status may not be automatically changed to observation status. An observation stay must adhere to the criteria as described in the “Coverage Indications, Limitations and/or Medical Necessity” section of this LCD.”

Documentation Requirements

When reading an LCD I often jump to the end where you find the “Documentation Requirements” detailing what the MAC expects to find when reviewing a record for medical necessity of the services provided. Specific to this LCD, “documentation must be legible, relevant and sufficient to justify the services billed. The documentation for Outpatient Observation must include:

1. The attending physician's order including “clock time” for the observation service or “clock time” can be noted in the nursing admission notes/observation unit notes outlining the patient’s condition and treatment.
2. The physician's admission/progress note which clearly indicates the patient's condition, signs and symptoms that necessitate the observation stay.
3. Supporting ancillary reports such as laboratory and diagnostic test reports.

Legible documentation in the medical record must clearly support the medical necessity and reasonableness of the observation services. The documentation should clearly state the method of assessment during observation and, if necessary, treatment in order to determine if the patient should be admitted or may be safely discharged.”

Key Takeaways for Providers

The three major points Providers need to be mindful of when internally reviewing outpatient claims where the beneficiary was receiving observation services are: 

• To support medical necessity of an outpatient stay receiving observation services, the medical record should include the following elements:

1. A timed order for observation services,
2. Physician documentation indicating a patient’s condition, signs and symptoms necessitating observation services.
3. All ancillary reports supporting the patient evaluation (i.e. labs and diagnostic test results).

• An inpatient status may not automatically be changed to an “observation stay.” If the patient was still in house at the time this determination was made you would need to follow Condition Code 44 guidance. You can access further guidance specific to Condition Code 44 in MLN Matters Article SE0622.

• “Observation claims exceeding 48 hours may be subject to medical review.” Make patients receiving observation services a priority for your Utilization Review staff.

Q:

We understand that effective January 1, 2018, hospital outpatient facilities are required to use the “FY” modifier with the applicable HCPCS code(s) to describe an imaging service that is an X-ray taken using computed radiography technology. Do we need to report the “FY” modifier if an imaging study includes computed radiography x-rays and digital radiography images?

A:

No.  CMS clarified in the April 2018 OPPS Update Transmittal that the “FY” modifier is not required when the imaging service is comprised of multiple images that include both X-rays taken using computed radiography technology and images taken using digital radiography.

Modifier “FY” (X-ray taken using computed radiography technology/cassette-based imaging) is to be used with the applicable HCPCS code(s) to describe an imaging service that is an X-ray taken using computed radiography technology.  The application of the modifier results in a payment reduction of 7% for calendar years 2018-2022, and 10% in 2023 and after. The payment adjustment applies to an imaging service that is an X-ray taken using computed radiography technology where the X-ray taken using computed radiography technology is not combined with digital radiography in the same imaging service.

The payment reduction is a result of provisions of the Consolidated Appropriations Act, 2016 designed to incentivize the transition from traditional X-ray imaging to digital radiography.

What do you have on your bedside table - an alarm clock, a lamp, perhaps a good book to lull you to sleep? A new addition to many bedside tables over the past few decades is a C-PAP (continuous positive airway pressure) machine for the treatment of sleep apnea. In recent years, the incidence of sleep apnea and C-PAP usage in the United States has increased significantly, likely due in part to the obesity epidemic, increased sleep testing, and the coming of age of the more health-conscious baby boomers. Sleep apnea is not to be taken lightly – the cost in health effects, productivity, and healthcare dollars is staggering.  Some fascinating information on these topics from an internet search include:

American Academy of Sleep Medicine (AASM) 2014 Article

• Sleep apnea afflicts at least 25 million adults in the U.S., according to the National Healthy Sleep Awareness Project. It is now estimated that 26 percent of adults between the ages of 30 and 70 years have sleep apnea.
• Obstructive sleep apnea increases the risk of high blood pressure, heart disease, Type 2 diabetes, stroke and depression.

AASM 2018 Article

• More than 37% of workers (are) sleep-deprived (contributing to) cognitive declines, heightened safety risks and increased economic costs.
• According to the National Safety Council (NSC), sleepy workers are estimated to cost employers $136 billion a year in health-related lost productivity.
• About 13% of work injuries are attributable to sleep deprivation.
• The National Transportation Safety Board (NTSB) estimates that fatigue has been a contributing factor in 20 percent of its (driving-related) investigations over the last two decades.

Wiley Online Library "The Laryngoscope" 2017 Article

• In 2014, 845,569 sleep studies were completed by 1.4% of Medicare beneficiaries for a total of $189 million.
• Since 2010, the number of studies performed has increased by 9.1%.

Sleep Review Journal 2017 Article

• The sleep testing services market is expected to be valued at $8,395.7 million by the end of 2021, reflecting a compound annual growth rate of 12.9% during the forecast period (2016–2021), according to a report by Persistence Market Research.
• The growth of the North America sleep services market is driven by favorable reimbursement policies and high awareness of sleep disease.

Another recent trend related to sleep apnea and sleep testing is the change in credentialing requirements by some Medicare Administrative Contractors (MACs) for hospital-based sleep centers. Prior to the recent changes almost all MACs required sleep testing centers to be certified by the American Academy of Sleep Medicine (AASM), The Joint Commission (formerly known as JCAHO), or Accreditation Commission for Health Care, Inc. (ACHC).  Accreditation by either the Joint Commission Hospital or Ambulatory Care Accreditation programs was acceptable for hospital-based sleep centers. If the Joint Commission survey of the general hospital accreditation included the hospital-based sleep lab, an additional accreditation was not needed.

Things began to change in 2017 when 3 MACs, Wisconsin Physician Services (WPS), CGS, and Noridian changed their sleep lab certification requirements so that Joint Commission’s Hospital Accreditation was no longer sufficient to meet the credentialing requirements for a hospital sleep center. The new/revised Local Coverage Determinations (LCDs) require certification by the Joint Commission’s Ambulatory Care Accreditation Program or one of the other approved accreditors (AASM and ACHC). Although the WPS, CGS, and Noridian policies were effective in February, March and June of 2017 respectively, they all issued clarification statements allowing 90 days from the date of the statement to apply for accreditation and 1 year to obtain an accreditation award. This means the accreditation due date for WPS is May 12, 2018; for CGS, May 11, 2018; and June 22, 2018 for Noridian. Hospitals can elect to have all their ambulatory services accredited through the Joint Commission’s Ambulatory Care Accreditation Program or just specifically sleep services only.  You can find more information in a Joint Commission Fact Sheet.

In March 2018, Palmetto GBA followed suit and sleep facilities in the Palmetto Jurisdictions J and M must have sleep-specific accreditation to be eligible for coverage. Palmetto is allowing a much shorter time frame for sleep centers to comply. Here is an excerpt from a future effective Palmetto Article that explains the new requirements and the timeline for compliance.

“As noted above in section 1, outpatient sleep centers affiliated with a hospital which is currently accredited by The Joint Commission (formerly JCAHO) through the hospital’s accreditation will now be required to obtain separate ambulatory care accreditation for the sleep center if ambulatory services accreditation for the sleep center is not currently in place. This accreditation must be obtained by October 1, 2018 in order to continue to render services to Medicare beneficiaries and submit claims to Palmetto GBA.”

This could be bad news for hospitals – if your sleep center is not accredited by The Joint Commission’s Ambulatory Care Accreditation Program or one of the other approved accreditors (AASM and ACHC), your claims for services rendered past the above noted MAC-imposed deadlines may be denied. Enough to make hospital administrators, finance, and sleep lab managers toss and turn and lose sleep.

Facility accreditation is not the only credentialing requirement for sleep centers. Sleep centers must be under the supervision or direction of a physician who meets certain certification requirements. And there are also requirements for the credentials and training of sleep technologists and technicians. Hospital offering sleep testing should carefully review the requirements of their Medicare contractors and other payers. Here is a list of the various coverage policies for sleep testing /polysomnography of the MACs.

Q:

On February 15, 2018, CMS issued a final Decision Memo that included revised criteria for Medicare coverage of Implantable Cardioverter Defibrillators. When should our hospital start following the new criteria such as the requirement for the shared decision-making visit and the end of the requirement for registry data collection and submission?

A:

There are differences in the expected compliance with a coverage decision memorandum and a National Coverage Determination (NCD).  CMS addresses this in the Medicare Program Integrity Manual, Chapter 13, section 13.1.1:

“CMS prepares a decision memorandum before preparing the national coverage decision. The decision memorandum is posted on the CMS Web site, that tells interested parties that CMS has concluded its analysis, describes the clinical position, which CMS intends to implement, and provides background on how CMS reached that stance. Coverage Decision Memos are not binding on contractors or ALJs. … The decision outlined in the Coverage Decision Memo will be implemented in a CMS-issued program instruction within 180 days of the end of the calendar quarter in which the memo was posted on the Web site.”

Providers need to bear in mind however, that the final NCD backdates the effective date of the changes to the date of the decision memo. The issue lies with the implementation date which is communicated in a CMS Transmittal once the NCD changes are finalized. Medicare Administrative Contractors (MACs) will not start enforcing the new rules until the implementation date, but then they will enforce rules for dates of service on and after the date of the decision memo. This means once the final update to the NCD is made and manualized, the effective date will revert to the date of the decision memo but following the new rules will be based on an implementation date.  Claims submitted on and after the implementation date, will follow the new guidelines for dates of service on and after February 15, 2018 (decision memo date).

Best practice is for providers to implement new requirements, such as the shared decision-making visit, as quickly as possible. Until an implementation date is communicated, providers should not stop complying with the requirements of the current NCD if they are continuing to submit claims for the service.  For this NCD, continue to report to a registry and submit applicable claims with the Q0 modifier indicating registry submission and abide by the current waiting periods until the revised NCD is released.  Another option for providers is to follow the new criteria in the Decision Memo and hold claims until after the implementation date of the revised NCD.

For more information about the Decision Memo, see the prior Wednesday@One ICD Decision Memo article.

When we think of copycat products, we often picture the nefarious character flipping open his overcoat to reveal a row of “Rolex” watches available at bargain basement prices - in other words, counterfeit products of a lesser quality and illegally bearing a trademark name. But in the world of biological drugs, legitimate but costly copycat products offer physicians and patients other options for treatment. With appropriate payment policies, the United States biosimilar product marketplace can continue to grow resulting in cost savings and those additional treatment options. In the 2018 Medicare Physician Fee Schedule Final Rule (MPFS), CMS changed the payment policy for biosimilars to separately code and determine payment for each biological biosimilar product under Medicare Part B.

The original policy addressing biosimilars was from the 2016 MPFS rule. At that time CMS decided to base the payment amount for a biosimilar biological product on the average sales price (ASP) of all biosimilars for one reference product and to assign one payment code (HCPCS code) to all biosimilars for the same reference product. “In general, this means that products that rely on a common reference product’s biologics license application (that is, FDA’s previous finding of safety, purity, and potency for the common reference product) are grouped into the same payment calculation for determining a single ASP payment limit and that a single HCPCS code is used for such biosimilar products. The regulation went into effect on January 1, 2016.” Biosimilars sharing the same HCPCS code, but produced by different manufacturers, were distinguished by HCPCS modifiers.

There were varying opinions about Medicare’s payment policy for biosimilars from the beginning – some stakeholders supporting the use of one HCPCS code and others opposing it. In the 2018 MPFS FR, CMS notes, “The biosimilar product marketplace has continued to grow, and four biosimilar biological products that are paid under Part B have been licensed, including one product approved in 2017 that is sharing a HCPCS code with another previously licensed biosimilar biological product. Based on the number of biosimilar biological products that are reported to be nearing approval and the approvals made over the past 2 years, CMS anticipates that several more biosimilar biological products will be licensed for use in the United States during the next year and that during the following years, the marketplace will continue to grow steadily, provided that the approved products are marketed without delay. …CMS is aware of concerns that current Medicare policy may discourage development of new biosimilars and other innovation in this area potentially resulting in higher costs over time due to a lack of competition in the market place.”

As usual for CMS rules, the topic was discussed in great detail in the 2018 MPFS Final Rule (starting on page 53182). Some of the more interesting points of the discussion include,

Facts about Biosimilars:

• Biosimilars are similar, but not identical, to their reference products, and due to these subtle differences, they may have different therapeutic and adverse effects on patients, requiring clinical distinctions between the products.
• None of the currently available biosimilars are approved as interchangeable. The current biosimilar approval process does not compare biosimilar biological products to each other, rather, only similarity to a reference product is established and the licensing of a biological product under the biosimilar pathway does not mean that the products are interchangeable.
• Biosimilar biological products may be approved for fewer indications than the reference product and the approved indications within a group of biosimilar biological products with the same reference product may vary.
• These products are likely to be expensive and may have different acquisition costs. The development costs for these products and their manufacturing facilities are estimated to be in the hundreds of millions of dollars.

Stakeholders’ Comments

• Grouping (biosimilars) for payment could lead to prescribing choices based on cost rather than clinical considerations.
• The current policy may impair access to biosimilars, could potentially limit the introduction of biosimilars to the US market, and would fail to maximize competition and savings.
• Grouping products for payment that do not have all the same indications could cause clinicians and patients to think the products are interchangeable or could lead to off-label use.
• Blended payment could be a significant financial risk to the provider because the products that would be the best choice for a patient may not be paid above acquisition cost.
• ‘‘Race to the bottom’’ pricing competition would result from shared codes and lead to prices that could not sustain educational efforts and other activities associated with marketing new and complex biological products, ultimately resulting in manufacturers leaving the United States marketplace.
• Determining a payment for each biosimilar product by using individual HCPCS codes would drive and reward innovators, producing the potential cost savings of at least 10–15 percent compared to the reference biologic ASP necessary for biosimilar products to compete with the reference biological.

Because of the above facts and concerns, CMS has “become increasingly concerned about the relationship between cost, prices and competition; specifically, many commenters’ continued unease regarding the effects of our payment policy on patient and provider choices, as well as the biosimilar marketplace. We have also considered how the payment policy could affect market entry of new biosimilar manufacturers. If payment amounts limit manufacturers’ willingness to invest in the development of new biosimilars, it could in the long term, decrease the number of biosimilar biological products that are available to prescribe and thus impair price competition. Given that the United States’ biosimilar biological product marketplace is still relatively new, we believe that it is important to maintain a payment policy innovation as well as reasonable pricing for consumers. We agree that it is important to consider and effect policy changes early, as this portion of the drug marketplace develops, in order to support a robust marketplace that provides choices for providers and patients while maximizing savings.”

Effective January 1, 2018, newly approved biosimilar biological products with a common reference product will no longer be grouped into the same HCPCS code. Each biosimilar will be assigned a unique HCPCS code and payment will be based on the ASP for that individual biosimilar. Biosimilar HCPCS codes in use prior to January 1, 2018 are being changed and replaced to be in compliance with the new payment policy.  This is described on the Medicare Biosimilar webpage and addressed in the April 2018 OPPS Update MLN Matters Article.  Effective April 1, 2018, the descriptor for HCPCS code Q5101 (filgrastim biosimilar) is being changed to “Injection, zarxio.”  HCPCS code Q5102 (infliximab biosimilar) is being replaced effective April 1, 2018 with HCPCS codes Q5103 (Injection, inflectra) and Q5104 (Injection, renflexis).  The new biosimilar payment policy also makes the use of modifiers that describe the manufacturer of a biosimilar product unnecessary. Therefore, modifiers ZA, ZB, and ZC will be discontinued for dates of service on or after April 1, 2018. However, please note that HCPCS code Q5102 and the requirement to use applicable biosimilar modifiers remain in effect for dates of service prior to April 1, 2018.  

Q:

What codes would be assigned for an endarterectomy of the left common carotid artery, left internal carotid artery and the left external carotid artery?

A:

First let’s review the new Body Parts General Guideline for FY2018:

B4.1c:  If a procedure is performed on a continuous section of a tubular body part, code the body part value corresponding to the furthest anatomical site from the point of entry.

Based on this guideline, procedure codes for endarterectomy of the left internal carotid artery and the left external carotid artery would be assigned because these two arteries are branches of the common carotid artery and the furthest from the point of entry.

Extirpation of Matter from Left Internal Carotid Artery, Open Approach (03CL0ZZ)

Extirpation of Matter from Left External Carotid Artery, Open Approach (03CN0ZZ)

References:

Body Part, General Guidelines, 2018 ICD-10-PCS

Highlights of ICD-10-CM & PCS, Changes for FY 2018 and Other Hot Topics, AAHIM Coding Symposium, Joy King Ewing, RHIA, CCS

In recent news, a pedestrian bridge under construction on the Florida International University campus collapsed killing 6 people and injuring many others - a terrible tragedy and an engineering failure. Humans are fallible, and objects built by man, big or small, are subject to failure. Sadly, medical devices that save millions of lives are not exempt from the propensity to fail.  In February, Medtronic issued a recall for Cardiac Resynchronization Therapy with Defibrillation (CRT-Ds) and Implantable Cardiovert-Defibrillators (ICDs). The Federal Drug Administration (FDA) identified this as a Class I recall, with the potential to cause serious injuries or death. According to the FDA Recall information “a defect in the manufacturing process … may prevent the device from delivering the electrical shock needed to pace a patient’s heartbeat or revive a patient in cardiac arrest. The delay or inability to deliver a shock to a patient in cardiac arrest or pace a patient’s heart whose heartbeat is too slow could result in serious injury and/or death.” This is a scary life-threatening prospect for patients with one of these devices and replacements will be occurring fast and furious.

Though not nearly as concerning as a fatal heart attack, providers must be concerned with the correct reporting to Medicare of the replacement of these devices for their Medicare patients. Reporting of device credits is an area historically fraught with errors. Almost every Office of Inspector General (OIG) Hospital Compliance Review includes a few inpatient and/or outpatient errors associated with device credit reporting.  This trend continued when a September 2017 OIG report identified that Medicare paid for many device replacement procedures incorrectly. And more recently, a March 2018 OIG Report found that “All 296 payments reviewed for recalled cardiac medical devices did not comply with Medicare requirements for reporting manufacturer credits. Medicare contractors incorrectly paid hospitals $7.7 million for cardiac device replacement claims rather than the $3.3 million they should have been paid, resulting in potential overpayments of $4.4 million.”

Why so many errors? The process of identifying patients receiving applicable no-cost or reduced-cost devices, knowing when credits are received or should be received, the amount of such credits, and coordination between various departments to get this information onto the Medicare claim can be daunting. The OIG states that along with lack of hospital policies, procedures and controls, the need to involve various hospital departments and personnel contributes to the lack of identification, tracking, and reporting of these credits on Medicare claims. The March 2018 OIG report identifies the hospital challenges and discusses them in detail. Here are some of the OIG comments, but I encourage providers to read the entire report as the OIG offers specific suggestions, such as holding claims or submitting adjustment claims when it is not known if a credit will be received for a replacement device.

“Different hospital personnel are responsible for contacting the manufacturer, tracking the availability of the credit, and determining whether an adjustment claim needs to be submitted to pass along the credit to Medicare. …Furthermore, hospital staff submitting Medicare claims must

be aware of credits that are at least 50 percent of the price the facility paid for the replacement device, and staff must report the credit as a deduction on a submitted claim. However, hospitals may not know whether they will receive a credit or how much that credit will be at the time of billing for the device replacement procedure. … Specifically, hospitals attributed their incorrect billings to inadequate policies and procedures for reporting manufacturer credits, lack of awareness of warranties and credit availability, and hospital misapplication of the credit amounts.”

Medicare’s device credit policy only applies to implantable, high-cost devices when the OPPS device off-set amount exceeds 40% of procedure payment and for inpatients, select DRGs. This includes, but is not limited to, devices such as cardiac pacemakers and defibrillators, neurostimulators, prostheses, and intraocular lens. For such devices, credit reporting is required when:

• a hospital furnishes without cost an initial placement of a medical device as part of a clinical trial or a free sample medical device or
• when a hospital furnishes a new replacement device due to warranty, recall, or field action
• without cost or
• with a credit of 50% or more of the cost of a new replacement from a manufacturer.

Hospitals must report on the Medicare claim

• Value code “FD” (Credit Received from the Manufacturer for a Medical Device)
• The amount of the device credit in the amount portion for value code FD, and
• One of the following condition codes
• 49 - Product Replacement within Product Lifecycle—Replacement of a product earlier than the anticipated lifecycle.
• 50 - Product Replacement for Known Recall of a Product—Manufacturer or FDA has identified the product for recall and therefore replacement.
• 53 - Initial placement of a medical device provided as part of a clinical trial or free sample—Code is for outpatient claims that have received a device credit upon initial medical device placement in a clinical trial or a free sample.

As complicated as it already is, it may get worse. CMS is concerned about the overall cost and health impact of recalled or prematurely failed medical devices. In the OIG September 2017 report, the OIG determined that Medicare costs related to the replacement of recalled or prematurely failed medical devices could not be identified and tracked using only claim data. They recommended a Device Identifier

(DI) be included on the next version of claim forms which is under consideration as a policy by CMS. The OIG maintains “that by including the DI on claim forms and expanding the use of condition codes, CMS could more effectively identify and track Medicare’s aggregate costs related to recalled or prematurely failed devices, reduce Medicare costs by identifying poorly performing devices more quickly, facilitate device recipients’ chances of receiving timely follow-up care, and protect beneficiaries from unnecessary costs.” It would be hard to argue this is not a good idea, but the additional paperwork burden would fall on hospitals submitting the claims. Hospitals who already are not getting the required reporting right.

It is also worth noting the different approach the OIG took for the March 2018 report referenced above.  For this audit, the OIG obtained a list of warranty credits that two device manufacturers issued to hospitals for five cardiac medical devices that had been recalled or had high failure rates. Auditing the at-risk claims identified based on the list, resulted in the OIG finding errors for all claims reviewed as noted above. Providers may want to follow the OIG’s lead and work with their vendors to obtain lists of credits issued. This could help in initial correct claim reporting and identifying prior reporting errors so a corrected adjustment claim could be submitted.

The best practice first step and necessary action is to bring key stakeholders together to consider all the different factors and develop a process together that includes policies, procedures, and controls. First you have to identify the involved departments and personnel – clinical departments of cardiology and surgery, materials management, accounts payable, billing, physicians who may implant such devices, compliance, and maybe others.

If your facility hasn’t already addressed this issue, it is good to do so now. As long as the OIG can identify over $4 million in overpayments, it is not going away.

Q:

Can we give Medicare patients an Advance Beneficiary Notice (ABN) and bill them when services are denied for exceeding a Medically Unlikely Edit (MUE)?

A:

No. Medically Unlikely Edits (MUEs) define correct coding and therefore the denials are coding denials. This means the provider is liable. Advance Beneficiary Notices (ABNs) are to be used when the provider expects denials related to the medical necessity of services. Since an MUE denial is a coding denial and not a medical necessity denial, an ABN is not appropriate.  The Medicare patient cannot be billed for services denied for exceeding MUE limits.

The MUE program began in January 2007 and was implemented to reduce the Medicare paid claims error rate. The MUE is a limit on the number of units Medicare will adjudicate. MUE values are adjudicated either against units reported on a line item of a claim or on an entire date of service. For date of service (DOS) MUEs, if units reported for a HCPCS code for one day exceed the MUE limit, no payment will be made for that code unless the denial is overturned on a provider-initiated appeal.

The type of MUE can be determined by the “MUE adjudication indicator” (MAI) in the MUE edit table. These indicators describe the type of MUE and how it is adjudicated.

• An MAI of “1” is a claim line edit. The MUE may be by-passed when appropriate by reporting units exceeding the MUE on separate lines with an acceptable modifier.
• An MUE with an indicator of “2” is an absolute date of service edit. Units of service exceeding the MUE value are considered “impossible” because they are contrary to statute, regulation or sub-regulatory guidance, including correct coding policies. Denials for services with an MAI of “2” will not be overturned on appeal.
• MUEs for HCPCS codes with an MAI of “3” are date of service edits based on clinical guidelines. These edits will cause an automatic denial if the units for a date of service exceed the limit, but the denial may be overturned on appeal if there is adequate documentation of medical necessity of correctly reported units.

A recent article by Palmetto GBA (the Medicare Administrative Contractor (MAC) for Jurisdictions J and M) discusses MUE denials and ABNs.  Additional information on MUEs can be found on CMS’s NCCI/MUE website at https://www.cms.gov/Medicare/Coding/NationalCorrectCodInitEd/index.html including an NCCI FAQs download that addresses questions about procedure-to-procedure (PTP) edits and MUEs. Much of the discussion above was from a prior Wednesday@One article that readers may also find helpful. 

For more information on ABNs, see the MLN Booklet Medicare Advance Written Notices of Noncoverage.

MEDICARE TRANSMITTALS

ICD-10 and Other Coding Revisions to National Coverage Determinations (NCDs) – (Revised 3/1/18)

A maintenance update of the ICD-10 conversions and other coding updates specific to National Coverage Determinations (NCDs).

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10473.pdf

Appropriate Use Criteria for Advanced Diagnostic Imaging – Voluntary Participation and Reporting Period - Claims Processing Requirements – HCPCS Modifier QQ

New HCPCS modifier (QQ) that may be reported with CPT code for an advanced diagnostic imaging service when the ordering physician consults appropriate use criteria.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM10481.pdf

April 2018 Integrated Outpatient Code Editor (I/OCE) Specifications Version 19.1

The modifications of the I/OCE for the April 2018 V19.1 update.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM10514.pdf

April 2018 Update of the Hospital Outpatient Prospective Payment System (OPPS)

Changes to the OPPS to be implemented in the April 2018 update.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10515.pdf

Quarterly Healthcare Common Procedure Coding System (HCPCS) Drug/Biological Code Changes - April 2018 Update

The HCPCS code set is updated on a quarterly basis. Change Request (CR) 10454 informs MACs of the April 2018 updates of specific biosimilar biological product HCPCS code, modifiers used with these biosimilar biologic products and an autologous cellular immunotherapy treatment.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM10454.pdf

Clarification of Instructions Regarding the Intensive Level of Rehabilitation Therapy Services Requirements

Instructions for conducting medical review of Inpatient Rehabilitation Facility (IRF) claims when reviewing the requirements for the intensive level of rehabilitation therapy services.

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2018Downloads/R771PI.pdf

Correction to Pub. 100-04, Chapter 5

Updates the list of Types of Bill subject to application of the therapy caps and related policies to Critical Access Hospital (CAH) claims in accordance with CR 8426.

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2018Downloads/R3995CP.pdf

Quarterly Update for Clinical Laboratory Fee Schedule and Laboratory Services Subject to Reasonable Charge Payment – (Revised 3/15/18)

Changes in the April 2018 quarterly update to the Clinical Laboratory Fee Schedule (CLFS).

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM10445.pdf

Internet Only Manual Update to Pub 100-04, Chapter 16, Section 40.8 -Date of Service Policy

Manualizes the additional exception to the current laboratory DOS regulations from the CY 2018 OPPS/ASC final rule published December 14, 2017, so that the DOS for Advanced Diagnostic Laboratory Tests and molecular pathology tests excluded from OPPS packaging policy is the date the test was performed if certain conditions are met. This new exception to the laboratory DOS policy is effective beginning on January 1, 2018.

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2018Downloads/R4000CP.pdf

 

MEDICARE SPECIAL EDITION ARTICLES

Billing Requirements for OPPS Providers with Multiple Service Locations

Enforcement editing requirements for hospitals operating off-campus, outpatient, provider-based departments of a hospital’s facilities (facility address and appropriate modifiers).

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE18002.pdf

 

MEDICARE COVERAGE UPDATES

 

MEDICARE PRESS RELEASES

CMS finalizes coverage of Next Generation Sequencing tests, ensuring enhanced access for cancer patients

CMS finalized a National Coverage Determination that covers diagnostic laboratory tests using Next Generation Sequencing (NGS) for patients with advanced cancer (i.e., recurrent, metastatic, relapsed, refractory, or stages III or IV cancer).

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2018-Press-releases-items/2018-03-16.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=descending

Trump Administration Announces MyHealthEData Initiative to Put Patients at the Center of the US Healthcare System

The MyHealthEData initiative will work to make clear that patients deserve to not only electronically receive a copy of their entire health record, but also be able to share their data with whomever they want, making the patient the center of the healthcare system.

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2018-Press-releases-items/2018-03-06.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=descending

 

MEDICARE EDUCATIONAL RESOURCES

 

OTHER MEDICARE UPDATES

Enforcement Instruction on Supervision Requirements for Outpatient Therapeutic Services in Critical Access Hospitals and Small Rural Hospitals

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/Supervision-Moratorium-on-Enforcement-for-CAHs-and-Certain-Small-Rural-Hospitals.pdf

February Patients Over Paperwork Newsletter

Update on CMS’s initiative to evaluate and streamline regulations with a goal to reduce unnecessary burden, to increase efficiencies, and to improve the beneficiary experience.

https://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/Downloads/FebruaryPoPNewsletter022218.pdf

Website for Providers about New Medicare Cards

New Medicare cards start going out in April and providers must be able to accept them. This website has information and other resources on the new cards.

https://www.cms.gov/Medicare/New-Medicare-Card/Providers/Providers.html

January 1, 2020 – that is the date currently planned for full implementation of the required consultation of Appropriate Use Criteria (AUC) for ordering advanced diagnostic imaging services and the required claim reporting of such. Though that seems a long time away, Medicare is making first steps towards this implementation. And once here, the process will require coordination of several providers, so planning ahead is a good idea for all involved. 2020 will be here before you know it.

This new program was established by the Protecting Access to Medicare Act (PAMA) of 2014, to ensure advanced diagnostic imaging services are being ordered appropriately.  The program will require ordering physicians/practitioners to consult appropriate use criteria (AUC) through a qualified electronic portal (known as a Clinical Decision Support Mechanism (CDSM)) prior to ordering advanced imaging services. The CDSM lets the ordering professional know whether the order adheres, or does not adhere, to AUC, or if there is no AUC applicable. The final part of the requirement is that the furnishing professional (e.g. the radiologist) and the performing facility must report consultation information on their respective claims.  Per CMS, “Ultimately, this program will result in identified outlier ordering professionals being subject to prior authorization.”

The program applies to advanced imaging services –

• Specifically, computerized tomography (CT), positron emission tomography (PET), nuclear medicine (NM), and magnetic resonance imaging (MRI);
• Furnished in physician offices, hospital outpatient departments (including emergency departments), ambulatory surgical centers, and any other outpatient setting determined appropriate in the future; and
• Paid under the physician fee schedule (PFS), the hospital outpatient prospective payment system(OPPS), or the ambulatory surgical center payment system.

There are exceptions to the requirements for ordering professionals with significant hardships, patients with emergency medical conditions, and inpatients paid under Part A.

MLN Matters MM10481 announces a new modifier for voluntary reporting. “Effective July 1, 2018, HCPCS modifier QQ (Ordering Professional Consulted A Qualified Clinical Decision Support Mechanism For This Service And The Related Data Was Provided To The Furnishing Professional) is available for this reporting. The modifier may be:

• Used when the furnishing professional is aware of the result of the ordering professional’s consultation with a CDSM for that patient,
• Reported on the same claim line as the CPT code for an advanced diagnostic imaging service furnished in an applicable setting and paid for under an applicable payment system, and,
• Reported on both the facility and professional claim.”

CMS has not yet provided detailed claim-reporting instructions for the future beyond the voluntary reporting of the QQ modifier.  CMS indicates the ordering practitioner’s National Provider Identifier (NPI) and the specific CDSM consulted will have to be reported once the program is fully implemented. CMS will publish claim instructions prior to any additional reporting requirements. The MLN article includes a list of applicable CPT codes, though for now the modifier may be used on codes outside the specified ranges. The new modifier is voluntary and Medicare will continue to pay for advanced imaging services with or without the modifier.

CMS has a website about the Appropriate Use Criteria program with more information.  The website includes a definition of AUC as “criteria that are evidence-based (to the extent feasible) and assist professionals who order and furnish applicable imaging services to make the most appropriate treatment decisions for a specific clinical condition.”  The website also includes a list of qualified CDSMs and priority clinical areas.

Appropriate consultation and claim reporting will require coordination between the ordering professional, the furnishing physician (radiologist) and the facility providing the service. For example, how will the ordering physician convey to the performing facility and furnishing physician that he/she has consulted a CDSM, which CDSM was consulted, and what the results were? How will the facility and furnishing physician get modifiers and other required information on the claim? A lot to consider and plan – 2020 will be here before you know it.