Knowledge Base - Full Library

Q:

Do the same guidelines in ICD-10-CM apply to chronic pain and chronic pain syndrome as they did in ICD-9? In ICD-9 coders were instructed not to code chronic pain (338.29) if a definitive diagnosis was documented but chronic pain syndrome (338.4) could be reported with a definitive diagnosis.

A:

No, the guidelines in ICD-10 are different than that in ICD-9.

Section I.C.6.a.1 of the (ICD-9) Official Coding Guidelines state “A code from subcategories 338.1 and 338.2 should not be assigned if the underlying (definitive) diagnosis is known, unless the reason for the encounter is pain control/management and not management of the underlying condition.

As you can see the code 338.4 was not included in with that particular guideline so it was therefore assumed that it could be assigned with a documented definitive diagnosis.

The codes in ICD-10 are chronic pain G89.29 and chronic pain syndrome (G89.4).

Section I.C.6.b.1 of the (ICD-10-CM) Official Coding Guidelines state “A code from category G89 should not be assigned if the underlying (definitive) diagnosis is known, unless the reason for the encounter is pain control/management and not management of the underlying condition.

Given that both conditions begin with the category G89, the guideline would include both diagnoses and chronic pain syndrome should not be reported when there is a known definitive diagnosis documented.

TRANSMITTALS

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

• MLN Matters® Number: MM9909
• Related Change Request (CR) #: CR 9909
• Related CR Release Date: December 29, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3687CP
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9909.pdf
• Affects clinical diagnostic laboratories submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.

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

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

• MLN Matters® Number: MM9945
• Related Change Request (CR) #: CR 9945
• Related CR Release Date: January 13, 2017
• Effective Date: April 1, 2017
• Related CR Transmittal #: R3692CP
• Implementation Date: April 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9945.pdf
• Affects physicians, providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.

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

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

• MLN Matters® Number: MM9934
• Related Change Request (CR) #: CR 9934
• Related CR Release Date: January 13, 2017
• Effective Date: October 1, 2016
• Related CR Transmittal #: R3691CP
• Implementation Date: April 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9934.pdf
• Affects physicians, other providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.

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

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

• Related Change Request (CR) #: CR 9978
• Related CR Release Date: January 11, 2017
• Effective Date: January 19, 2017
• Related CR Transmittal #: R280FM
• Implementation Date: January 19, 2017
• https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R280FM.pdf
• Affects Medicare providers

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

Medicare Outpatient Observation Notice (MOON) Instructions

• MLN Matters® Number: MM9935
• Related Change Request (CR) #: CR 9935
• Related CR Release Date: January 20, 2017
• Effective Date: February 21, 2017
• Related CR Transmittal #: R3695CP
• Implementation Date: February 21, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9935.pdf
• Affects hospitals, including Critical Access Hospitals (CAHs) submitting claims to Medicare Administrative Contractors (MACs) for outpatient observation services provided to Medicare beneficiaries.

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

OTHER MEDICARE ANNOUNCEMENTS

January 2017 Medicare Quarterly Provider Compliance Newsletter

• Guidance to address billing errors
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/MedQtrlyComp-Newsletter-ICN909313.pdf

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

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

• Federal Register, January 12, 2017
• Effective: February 13, 2017
• https://www.gpo.gov/fdsys/pkg/FR-2017-01-12/pdf/2016-31390.pdf

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

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

• Federal Register, January 3, 2017
• Effective: February 18, 2017
• https://www.federalregister.gov/documents/2017/01/03/2016-30746/medicare-program-advancing-care-coordination-through-episode-payment-models-epms-cardiac

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

When a Medicare contractor, such as the Comprehensive Error Rate Testing (CERT) contractor, reviews your claims, they look for all the required documentation elements to support the medical necessity and performance of the services billed. And I mean ALL the elements. Indications and documentation requirements to support services are detailed in the Medicare manuals and coverage policies, both National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs). Missing even one required element could result in a payment denial for your services.

One way Medicare assists providers in meeting documentation requirements is to publish examples of risk areas and their associated denial reasons in the Medicare Quarterly Compliance Newsletter. The January 2017 Newsletter is now available and there are several topics relevant to acute care hospitals.

Facet Joint Destruction (CPT 64635)

CPT 64635 is the destruction of lower or sacral spinal facet joint nerves using imaging guidance. Documentation requirements in general include:

• Documentation supporting the need for the procedure which includes any physician office notes, diagnostic findings, and other documentation that helps meet the indications for the procedure;
• A procedure note that adequately describes the service defined by the CPT/HCPCS code(s) billed; and
• Valid and legible physician signatures, including a signature log or attestation if needed.

In the examples given in the newsletter, the documentation failed to support that the patients received and failed conservative treatment as required by the LCD. Appropriate conservative treatments for this procedure may include local heat, traction, non-steroidal anti-inflammatory medications, and an anesthetic. There was also lack of a physician evaluation that included review of diagnostic or therapeutic procedures to diagnose facet joint pain and rule out other etiologies for the patient’s symptoms. In the end, these were determined to be insufficient documentation errors and the payments were recouped from the providers.

Radiation Therapy, CPT 77300 and 77301

For radiation therapy, the newsletter cited instances of insufficient documentation where the medical record was missing one or more of the following:

• Radiation oncologist's IMRT order/prescription;
• Radiation treatment plan including specifically planning notes with treatment fields, physics, and dosimetry calculations signed by the radiation oncologist and the medical physicist;
• Documentation to support review of the CT or MRI based images of the target and all critical structures;
• Weekly physics consult review with calculations for treatment delivery;
• A description of the service provided that matches the CPT code(s) billed; and
• Valid and legible physician signatures.

The missing documentation again led the CERT contractor to recoup the payment for the radiation services.

Stem Cell Transplant

An OIG review of claims from 2012 found 133 errors in appropriate patient setting for stem cell transplants that resulted in over $6 million in overpayments. Stem cell transplantation is not an inpatient only procedure and is often performed on an outpatient basis. The Geometric Mean Length of Stay (GMLOS) for the MS-DRGs primarily billed for stem cell transplants is 10-21 days. The errors identified by the OIG were for 1-2 day stays that could have appropriately been performed as outpatient. Although the criteria for inpatient admission has changed since 2012, hospitals and physicians still need to carefully evaluate if the patient meets the requirements to be an inpatient for stem cell transplant services, which would be an expectation that the patient will require care in the hospital beyond a second midnight.

So whether you are performing facet joint destruction, radiation therapy, stem cell transplants, or other services, when it comes to documentation for Medicare services, be sure you check all the boxes. 

Q:

What is required if a hospital wants to outsource its Medicare appeals?

A:

The hospital will need to follow the instructions in Section 270, Chapter 29, Medicare Claims Processing Manual.
Some key points from these instructions include:

• A specific individual must be named as the representative. An organization or entity may not be named as a representative, but rather a specific member of that organization or entity must be named. This ensures that confidential beneficiary information is released only to the individual so named.
• A written appointment of the representative must be submitted: the hospital can use Form CMS-1696 or a written instrument which must contain:
• A statement appointing the representative to act on behalf of the hospital, and authorizing the adjudicator to release identifiable health   information to the appointed representative;
• A written explanation of the purpose and scope of the representation;
• Dated, handwritten ink signatures of both the hospital signee and the individual accepting the appointment (both must sign the request within 30 days of each other);
• The name, phone number and address of both the hospital and the representative;
• The representative’s professional status and relationship to the appointing party; and
• The hospital’s NPI number.
• Appointed representatives are responsible for submitting a valid appointment instrument to the contractor with each new appeal request.
• A photocopy of the original may be submitted as long as the original is available upon request.
• Resubmission of the instrument at subsequent levels of appeal for the item(s)/service(s)/claims(s) at issue is encouraged though not required.
• The hospital may appoint a representative to assist with filing an appeal at any time during the course of an appeal.

“If an individual is attempting to act as a representative of a party that is not the beneficiary (such as a hospital) and fails to include an appointment instrument with the appeal request, the individual lacks the authority to act on behalf of the party, and is not entitled to obtain or receive any information related to the appeal. The MAC shall notify the   individual that no redetermination will be performed until a valid request is received from the party or a valid appointment instrument is resubmitted with the redetermination request.”

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

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

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

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

The provider, physician, or supplier:

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

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

Know the Rules

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

Keep Up with Rule Changes

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

Understand the Rules

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

Know Your Facility History of Billing Compliance

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

Have Appropriate Processes

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

Internal Communication

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

Checks and Rechecks

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Q:I am confused about how to charge and bill for inhalation treatments, CPT code 94640. I heard the Correct Coding Initiative (CCI) information changed, but I notice the MUE limit is still 2. Could you please explain what the rule is and how hospitals should handle this? 

A:
You are correct that the CCI information changed for 2017. In the 2017 CCI Policy Manual, the wording for how often CPT code 94640 can be reported changed from “once during a single patient encounter” to “once during an episode of care” regardless of the number of separate inhalation treatments that are administered. The manual further clarifies exactly what is meant by an episode of care.“An episode of care begins when a patient arrives at a facility for treatment and terminates when the patient leaves the facility.

If a patient receives inhalation treatment during an episode of care and returns to the facility for a second episode of care that also includes inhalation treatment on the same date of service, the inhalation treatment during the second episode of care may be reported with modifier 76 appended to CPT code 94640.

If inhalation drugs are administered in a continuous treatment or a series of “back-to-back” treatments exceeding one hour, CPT codes 94644 (continuous inhalation treatment with aerosol medication for acute airway obstruction; first hour) and 94645 (...; each additional hour) should be reported instead of CPT code 94640.”

Based on this information, the MUE limit of 2 would be appropriate to accommodate those patients that return to the facility for a second episode of care.

Now let’s address “charging” versus “billing:”

This is a “billing” rule for Medicare, and it is specific to outpatient “billing”. The hospital may “charge” for one treatment for each face-to-face encounter with the patient, but when the bill drops for outpatient Medicare, the hospital would have to apply a “billing” rule of reporting a quantity of 1 for each episode of care.

If a hospital does not charge for each treatment, their gross revenue will be affected; it is important to report charges for all services to Medicare so total cost is accurately reflected regardless of the number of units reported in accordance with Medicare requirements. Other payers may not have quantity limits for 94640 in which case billing more than one would be appropriate. Your hospital should check with each payer to determine their requirements.

Also remember, that under Medicare outpatient payment (OPPS), CPT code 94640 is conditionally packaged with a Status Indicator of “Q1.” These means Medicare does not provide separate payment if the code is on a claim with other outpatient services with status indicators of S (significant procedures), T (mostly surgical procedures), or V (visit codes including ED visits). 

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

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

Applying the rule

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

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

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

Inappropriate inpatient short stays

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

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

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

Inappropriate long outpatient stays

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

Valid reasons for long outpatient stays

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

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

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

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

TRANSMITTALS

Update to Medicare Deductible, Coinsurance and Premium Rates for 2017

• MLN Matters® Number: MM9902
• Related Change Request (CR) #: CR 9902
• Related CR Release Date: December 2, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R103GI
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9902.pdf
• Affects physicians, providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs), including Home Health & Hospice MACs and Durable Medical Equipment MACs, for services provided to Medicare beneficiaries.

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

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

• MLN Matters® Number: MM9613
• Related Change Request (CR) #: CR 9613
• Related CR Release Date: August 5, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R1704OTN
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9613.pdf
• Affects hospitals with off-campus outpatient departments submitting claims to Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries.

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

HCPCS Code Update for Preventive Services

• MLN Matters® Number: MM9888
• Related Change Request (CR) #: CR 9888
• Related CR Release Date: December 2, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3669CP
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9888.pdf
• Affects physicians and providers submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries.

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

Update to Editing of Therapy Services to Reflect Coding Changes

• MLN Matters® Number: MM9698
• Related Change Request (CR) #: CR 9698
• Related CR Release Date: December 1, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3670CP
• Implementation Date: April 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9698.pdf
• Affects providers submitting claims to Medicare Administrative Contractors (MACs) for physical and occupational therapy services provided to Medicare beneficiaries.

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

New Revenue Code 0815 for Allogeneic Stem Cell Acquisition Services

• MLN Matters® Number: MM9674
• Related Change Request (CR) #: CR 9674
• Related CR Release Date: July 29, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3571CP
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9674.pdf
• Affects physicians, other providers, and suppliers submitting claims to Medicare Administrative Contractors (MACs) for stem cell transplant services provided to Medicare beneficiaries.

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

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

• MLN Matters® Number: SE1626
• Article Release Date: December 9, 2016
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1626.pdf
• Affects Skilled Nursing Facilities (SNFs) submitting claims to Medicare Administrative Contractors (MACs) for services to Medicare beneficiaries in the Comprehensive Care for Joint Replacement (CRJ) model. Although this article applies to SNFs, hospitals participating in the CRJ model may be interested in this information.

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

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

• MLN Matters® Number: MM9892
• Related Change Request (CR) #: CR 9892
• Related CR Release Date: December 9, 2016
• Effective Date: January 1, 2017
• Related CR Transmittal #: R3674CP
• Implementation Date: January 3, 2017
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9892.pdf
• Affects providers who submit institutional claims to Medicare Administrative Contractors (MACs), including Home Health and Hospice (HH+H) MACs, for services provided to Medicare beneficiaries.

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

OTHER MEDICARE ANNOUNCEMENTS

FY 2015 Medicare FFS RAC Report to Congress

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

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

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

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

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

Effective date: January 6, 2017

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

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

Effective date: January 6, 2017

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

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

Earlier this year I wrote about the new CPT codes for physical therapy and occupational therapy evaluations.  Documentation to support therapy services, especially evaluations and plans of care, has always been arduous.  With the new evaluation codes, there is even more to consider – enough to give a therapist a breakdown.  Hopefully this breakdown of the components of the new evaluation codes will help prevent some breakdowns of the psychological type.

CPT is deleting the current PT and OT evaluation and re-evaluation codes (97001-97004) and creating three-tiered codes for the evaluations and one new code per discipline for re-evaluations.  I am including the same evaluation code tables as I posted in my original article and the re-evaluation code descriptions at the end of this article for both physical and occupational therapy.  There are similarities but also differences between the PT and OT evaluation codes.  In general the long descriptions of the new OT codes contain more details of the expected elements.  Both the American Physical Therapy Association (APTA) and the American Occupational Therapy Association (AOTA) have excellent resources on their websites concerning the new code descriptors and required elements.  In this article I want to examine each component of the new physical therapy evaluation codes in more depth.

History

The therapist determines if and if so, how many, personal factors and/or comorbidities the patient has that impact the therapy plan of care (POC).  Personal factors include sex, age, coping styles, social history, education level, profession, lifestyle, character, attitudes, etc.  The therapist will consider the personal factors that could affect the patient’s ability to reach their therapy goals.  Personal factors that exist but do not impact the physical therapy plan of care are not to be considered when selecting an evaluation level.

The patient’s past medical history may identify comorbidities that could impact the patient’s function and ability to progress through a POC.  For example, chronic conditions such as obesity, diabetes, hearing loss, visual deficits, or cognitive deficits could affect the patient’s functional abilities.  A lack of personal factors and/or comorbidities that could impact the POC would be expected in a low complexity evaluation (CPT 97161); 1-2 personal factors and/or comorbidities for a moderate complexity eval (CPT 97162), and 3 or more for a high complexity eval (CPT 97163).

Examination of Body Systems

The therapist uses standardized tests and measures in the examination of body systems.  The evaluation complexity level is associated with the number of elements addressed related to body structures and functions, activity limitations, and/or participation restrictions: 1-2 elements for low complexity; 3 or more elements for moderate complexity; and 4 or more elements for high complexity.  Some important definitions necessary to understand related to the Examination components include:

• Body systems include the circulatory, skeletal, muscular, nervous, respiratory, immune, excretory, integumentary, lymphatic, cardiovascular, reproductive, and digestive systems.  Per information from the APTA website, system reviews for PT evaluations include the following:
• For the cardiovascular/pulmonary system: the assessment of heart rate, respiratory rate, blood pressure, and edema
• For the integumentary system: the assessment of pliability (texture), presence of scar formation, skin color, and skin integrity
• For the musculoskeletal system: the assessment of gross symmetry, gross range of motion, gross strength, height, and weight
• For the neuromuscular system: a general assessment of gross coordinated movement (eg, balance, gait, locomotion, transfers, and transitions) and motor function (motor control and motor learning)
• For communication ability, affect, cognition, language, and learning style: the assessment of the ability to make needs known, consciousness, orientation (person, place, and time), expected emotional/behavioral responses, and learning preferences (eg, learning barriers, education needs)
• Body structures refers to the body’s structural or anatomical parts (e.g., organs or limbs), which are classified according to body systems.
• Body functions are the physiological functions of body systems.
• Activity limitations are difficulty executing tasks, actions or activities.
• Participation restrictions are related to participation in life situations (for example, inability to engage in community social events due to exhaustion).
• The Domains of Activity and Participation as determined by the International Classification of Functioning, Disability, and Health (ICF) include but are not limited to:
• Mobility
• Self‐care
• Domestic life
• Interpersonal interactions and relationships
• Major life areas
• Community, social and civic life

Documentation for the examination of body systems should include objective findings and the expected progression of the patient.  Descriptions of the patient’s specific limitations in activities of daily living (ADLs) also support this element.

Clinical Presentation of the Patient

This addresses the status and mechanism of the patient’s current condition.  Is the clinical presentation of the patient’s condition stable and uncomplicated (low complexity), evolving with changing clinical characteristics (moderate complexity) or evolving with unstable and unpredictable characteristics (high complexity)?

Clinical Decision Making

Based on the composite of the patient’s presentation, the therapist uses his/her clinical judgment to develop the plan of care with goal establishment, prognosis, and probable outcomes.  This component should correlate with the other components already discussed as all of these elements are considered in establishing the POC.  The patients’ condition, personal factors, comorbidities, limitations, and restrictions will relate to how complex the judgment and decision making are that is required to develop a plan and prognosis for the patient. 

Time

Note that this is the “typical time” spent face-to-face with the patient and/or family and is to be used for guidance only.  Low complexity is typically 20 minutes of face-to-face time, moderate complexity 30 minutes and high complexity 45 minutes.  This makes sense as more complex patients should require a longer amount of time to evaluate.

It is also important to note that for now, Medicare does not make a payment difference in the evaluation levels – they are all paid at the same rate.

Good luck to the therapists as they adjust to yet another change in their documentation, coding and billing requirements.  With a successful transition, maybe they will feel like break dancing.

A table breaking down the criteria for these new codes can be found by clicking here.

Reevaluation Codes

PT Revaluation

• 97164 - Re-evaluation of physical therapy established plan of care, requiring these components:
• An examination including a review of history and use of standardized tests and measures is required; and
• Revised plan of care using a standardized patient assessment instrument and/or measurable assessment of functional outcome.
• Typically, 20 minutes are spent face-to-face with the patient and/or family.

OT Revaluation

• 97168 - Re-evaluation of occupational therapy established plan of care, requiring these components:
• An assessment of changes in patient functional or medical status with revised plan of care;
• An update to the initial occupational profile to reflect changes in condition or environment that affect future interventions and/or goals; and
• A revised plan of care. A formal reevaluation is performed when there is a documented change in functional status or a significant change to the plan of care is required.
• Typically, 30 minutes are spent face-to-face with the patient and/or family.