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What comes to mind when you hear the word PEPPER. For me, it takes me back to my childhood and the lyrics from the 1970’s Dr. Pepper commercial that invited you to join the Dr. Pepper “crowd” with the jingle:

“I’m a Pepper, he’s a Pepper,
She’s a Pepper, we’re a Pepper,
Wouldn’t you like to be a Pepper, too?
Be a Pepper. Drink Dr. Pepper.”

Fast forward a few decades to 2002 and PEPPER takes on a whole new meaning. This is when the TMF Health Quality Institute developed the Program for Evaluating Payment Patterns Electronic Report (PEPPPER) for short-term acute care hospitals in support of the Center’s for Medicare and Medicaid Services (CMS) Hospital Payment Monitoring Program (HPMP).

In 2008 HPMP ended but just as the famous Dr. Pepper jingle lives on, TMF was once again contracted by CMS through the Office of Financial Management Provider Compliance Group to develop, produce and distribute PEPPERs to all short- and long-term hospitals in the nation.

This article focuses on the Short-Term Acute Care Hospitals PEPPER. Specifically, the changes in the recently released Fiscal Year (FY) 2017 Q3 Short-Term Acute Care PEPPER and the PEPPER User’s Guide 23rd Edition. But first, for those not familiar with the PEPPER, let’s take a look at what it is and why it is a valuable resource for hospitals.

Background

What is PEPPER?

The PEPPER contains statistics for specific “Target Areas” that have been identified as being “at risk for improper payment due to billing, coding and/or admission necessity issues.” The Centers for Medicare & Medicaid Services (CMS) approves the Short Term PEPPER target areas.

The PEPPER compares you to other hospitals in your state, Medicare Administrative Contractor (MAC) Jurisdiction and to the nation. “Comparisons enable a hospital to determine if it is an outlier, differing from other short-term acute care hospitals.” Reports are delivered to a hospital electronically, are hospital specific, and provide the most recent twelve federal fiscal quarters for each target area.

In addition to your hospital specific report, the PEPPER Resources National-level Data Reports webpage includes a Target Area Analysis that provides claims volume, average length of stay and average Medicare Payment for each of the target areas.

Why is this a Valuable Resource for your Hospital?

The PEPPER User’s Guide notes that the Office of Inspector General (OIG) “encourages hospitals to develop and implement a compliance program to protect operations from fraud and abuse. As part of a compliance program, a hospital should conduct regular audits to ensure charges for Medicare services are correctly documented and billed.”

It is important to understand that “PEPPER does not identify the presence of payment errors, but it can be used as a guide for auditing and monitoring efforts. A hospital can use PEPPER to compare its claims data over time to identify areas of potential concern:

• Significant changes in billing practices,
• Possible over- or under-coding,
• Changes in lengths of stay.”

PEPPER User’s Guide, 23rd Edition, Effective with Q3FY 2017 Release, What’s Changed?

Defibrillator Implant Target Area Discontinued

Defibrillators as a “Target Area” was initially added to the PEPPER with the release of the 3rd Quarter FY 2015 Report Release.

The 20th User’s Guide indicated that the Comprehensive Error Rate Testing (CERT) contractor had identified a high error rate (58%) for defibrillator implants (DGs 226-227) in the Supplementary Appendices for the Medicare Fee-for-Service 2014 Improper Payments Report. This “Target Area” was “structured to compare the number of defibrillator implants performed on an inpatient basis, as compared to all defibrillator implants performed at the hospital (inpatient or outpatient).”

Interestingly, the Department of Justice (DOJ) posted a notice on October 30, 2015 that they had reached settlements with 457 hospitals in 43 states for more than $250 million related to defibrillators being “implanted in Medicare patients in violation of Medicare coverage requirements.” Coincidence? I will leave that up to you to decide.

This target area has been discontinued due to a continued decrease in the number of hospitals with sufficient data to generate statistics.

Septicemia Target Area Denominator Revised

“In general, the target areas are constructed as ratios and expressed as percents, with the numerators representing discharges that have been identified as problematic… and the denominator includes these DRGs as well as DRGs to which the original DRG is frequently changed.”

The Septicemia target area has been revised to include the following DRGs in the denominator:

• DRG 193: Simple Pneumonia and Pleurisy with MCC,
• DRG 194: Simple Pneumonia and Pleurisy with CC,
• DRG 195: Simple Pneumonia and Pleurisy without CC/MCC,
• DRG 207: Respiratory System Diagnosis with Ventilator Support 96+ Hours, and
• DRG 208: Respiratory System Diagnosis with Ventilator Support <96 Hours.

“This change was made following an analysis of DRG changes for septicemia claims, which identified a relatively large number were changes to simple pneumonia and respiratory system diagnosis DRGs.”

“One-day Stays for Medical DRGs,” “One-Day Stays for Surgical DRGs,” Two-Day Stays for Medical DRGs” and “Two-Day Stays for Surgical DRGs” Revised

This group of target areas have all been revised to exclude claims with the following patient discharge status codes:

• 02: Discharged/Transferred to a Short-Term General Hospital for Inpatient Care,
• 82: Discharged/Transferred to a Short Term General Hospital for Inpatient Care with a Planned Acute Care Hospital Inpatient Readmission,
• 07: Left Against Medical Advice, and
• 20: Expired.

“This change was made to strengthen the statistics by excluding the same claims from the numerator and denominator, thereby focusing solely on the length of stay in the numerator.”

Short-Term Acute Care hospitals are part of the PEPPER crowd and PEPPER can be a valuable resource for your hospital. I encourage you to spend some time on the PEPPER Resources website where you can find a copy of the most recent User’s Guide, Training and Resources available to you including testimonials and training sessions.

The Office of Inspector General (OIG) Work Plan was originally published once a year around October or November. Healthcare compliance officers across the nation pay special attention to this document as it highlights issues considered at high risk of overpayments and/or fraud for federal healthcare payers. In 2015, the OIG began publishing a second “mid-year update” in April or May. When it came time for this year’s mid-year update, the OIG made major changes to the way they present the Work Plan. Instead of once or twice a year, beginning in June 2017, the Work Plan is updated monthly with new additions posted on the Recently Added Items webpage.  Completed items are removed from the Work Plan and there are webpages for recently published reports and a complete listing of Active review topics. The OIG made this change to how the Work Plan is presented to “ensure that it more closely aligns with the work planning process” which “is dynamic and adjustments are made throughout the year to meet priorities and to anticipate and respond to emerging issues with the resources available.”

The OIG added four new Work Plan topics for November 2017. Three of the four apply to Medicaid: Opioid Use, Telemedicine, and Medicaid Managed Care Organizations. The other topic focuses on hospital Medicare services, specifically hospital inpatient billing for severe malnutrition.

Elderly patients are often at risk of being malnourished. Hospitals are allowed to bill for the treatment of malnutrition on the basis of the severity of the condition -- mild, moderate or severe, and whether it affects patient care. Severe malnutrition can significantly affect the resources and time required in treating a hospital inpatient. Medicare recognizes this by classifying it as a major complication or comorbidity (MCC) and makes a higher payment when a diagnosis of severe malnutrition appears on an inpatient claim. Because of this higher payment, the OIG will review hospital inpatient claims “to determine whether providers are complying with Medicare billing requirements when assigning diagnosis codes for the treatment of severe types of malnutrition on inpatient hospital claims.”

Even before making this a new addition to their Work Plan, the OIG has already published reports from two audits of Severe Malnutrition. In these audits they reviewed for I-10 diagnosis codes E41 (Nutritional Marasmus and Severe Malnutrition with Marasmus) and E43 (Unspecified Severe Protein-Calorie Malnutrition). The sample size was small but 89% and 98% of 100 claims reviewed for each audit respectively did not comply with Medicare billing requirements. And adding insult to injury, of the combined approximately $865,000 actual overpayments, the OIG extrapolated to estimated overpayments for both hospitals combined to over $2.6M.  For more information on the OIG prior severe malnutrition audits, see our previous article on the MMP website.

The OIG has another Work Plan issue related to malnutrition that focuses specifically on claims billed with a diagnosis of Kwashiorkor, a form of severe protein malnutrition that is typically not found in the United States. So far, findings from OIG audits for Kwashiorkor have shown that almost all (if not all) claims with this diagnosis are incorrectly coded and billed. Sometimes the code for Kwashiorkor results in an overpayment and sometimes it does not affect the final Medicare MS-DRG payment since other MCCs are appropriately coded on the claim. The ICD-10 diagnosis codes for Kwashiorkor are E40 and E42.

The topic of correct billing for severe malnutrition is also a pending Targeted Probe and Educate (TPE) issue for the Novitas Medicare Administrative Contractor (MAC) for Jurisdiction H and Jurisdiction L. The topic is listed specifically as “E41 and E43 – Severe Malnutrition.” With two Medicare review entities already looking at this topic, it would not be surprising if other reviewers, such as other MACs, the Recovery Auditors (RACs) or the Supplemental Medical Review Contractor (SMRC) also selected this review issue.

Hospitals should watch our newsletter for updates from all the review contractors to see if anyone else begins reviews of malnutrition. In the meantime, I recommend hospitals perform self-reviews with internal or contracted resources to ensure proper coding of severe malnutrition on their inpatient claims before a Medicare reviewer comes knocking.

Q:

Can we report the NIHSS stroke score with our hemorrhagic strokes, code ranges I61 – I62?

A:

Only assign the NIHSS stroke scale score with category

I63 - Cerebral Infarction. The Inpatient ICD-10-CM Coding Guidelines, Coding Clinic 4th Qtr. 2016 page 61, and The AHA’s Coding Handbook FY 2018 all specify to use with category I63. The subcategory, NIHSS score, R29.7-, has an instructional note to code first the type of cerebral infarction (I63-), and does not include hemorrhagic infarctions.  The I63 subcategory also has an instruction note to add a code for the NIHSS score, if known, whereas, the subcategory for the hemorrhagic infarctions does not.

Resources:

FY 2018 Inpatient ICD-10-CM Coding Guidelines
Coding Clinic, 4th Quarter 2016, page 61
The AHA’s Coding Handbook FY 2018

I love a beautiful sunset, especially those where low level clouds in the western sky catch the rays of the waning sun and light up the sky with an orangish, pinkish, reddish glow. It always brings to mind a saying I learned as a child – “red sky at night, sailors delight; red sky at morning, sailors take warning.” For providers approved to participate in a study and bill Medicare for NaF-18 PET scans for bone metastasis, there is a warning for the upcoming sunset of NCD 200.6.19.

Although Medicare generally does not cover experimental or investigational items and services, the National Coverage Determination (NCD) Coverage with Evidence Development (CED) process allows Medicare coverage for some items and services on the condition they are furnished in the context of approved clinical studies or with the collection of additional clinical data. CMS performs an initial review of medical literature to determine if CED coverage is appropriate with the expectation the studies conducted under a CED NCD will produce evidence that will lead to revisions of Medicare coverage policies.  The CED process allows patients earlier access to innovative technology while ensuring patient safeguards. CED NCDs usually list the specific questions CMS expects the study or data collection to answer.

In February 2010, CMS approved coverage of NaF-18 Positron Emission Tomography (PET) to identify bone metastasis of cancer under the CED process. Specifically, under NCD 220.6.19, Medicare covers “NaF-18 PET imaging when the beneficiary’s treating physician determines that the NaF-18 PET study is needed to inform the initial antitumor treatment strategy or to guide subsequent antitumor treatment strategy after the completion of initial treatment, and when the beneficiary is enrolled in, and the NaF-18 PET provider is participating in, (a specified) type of prospective clinical study.”  Medicare expected the clinical studies to answer the following questions:

Does the addition of NaF-18 PET imaging lead to:

• A change in patient management to more appropriate palliative care; or
• A change in patient management to more appropriate curative care; or
• Improved quality of life; or
• Improved survival?

In 2015, the National Oncologic PET Registry (NOPR), which is the approved study for NaF-18 PET, asked CMS to reconsider NCD 220.6.19, end the CED data collection requirements, and authorize national coverage of NaF-18 PET for bone metastasis of all oncologic indications. On December 15, 2015, CMS issued a Decision Memo that did not end the CED data collection requirements for NaF-18 PET, but extended coverage under the CED process for an additional 24 months. This means the current NCD and Medicare coverage for NaF-18 PET (under CED) will sunset on December 14, 2017. NOPR has sent notices concerning the expiration of this NCD to the participating facilities and also has an announcement on their website, but I was unable to locate any information on Medicare’s websites concerning this.

I reached out to Medicare and have received confirmation that this is indeed correct. For dates of service on and after December 15, 2017, Medicare will no longer cover NaF-18 PET scans to identify bone metastasis of cancer. There have not been any published studies that conclusively answer the study questions. Medicare denials will likely be based on the presence of HCPCS code A9580 (Sodium fluoride F-18, diagnostic, per study dose, up to 30 millicuries) on the claim.    

It is likely CMS will receive another request for reconsideration of this policy from NOPR or other stakeholders. Be on the lookout for further guidance from CMS in the future as to whether they will reinstate coverage of NaF-18 PET to identify bone metastasis of cancer under CED, cover the service outright without CED, or continue to not cover the service at all. Until that time, providers take warning – this sunset isn’t pretty since it takes away your Medicare reimbursement for NaF-18 PET.

Last week’s Wednesday@One newsletter contained an article about the new laboratory date of service policy and the molecular diagnostic services (MolDX) program.  In that article, I made this statement:

“Since CPT/HCPCS codes are not reported and separately reimbursed (on inpatient claims), the Z-codes are not required on inpatient claims.”

I thought about this before I wrote it – individual HCPCS codes are not reported or separately reimbursed on Medicare hospital inpatient claims (type of bill 11x). The inpatient stay is paid a composite payment for all inpatient services provided based on the MS-DRG assignment determined by the ICD-10 diagnosis and procedure codes reported. Since the purpose of the MolDX program is to determine coverage, coding, and pricing for molecular diagnostic tests and other molecular pathology services which are not relevant to inpatient claims and since the MolDX manual instructions state, “When (a test-specific identifier – a DEX Z-Code is) reported in conjunction with the appropriate CPT/HCPCS code, …” which also does not seem to apply to inpatient claims, I felt confident with my statement about Z-codes not being required on inpatient claims.  It seems absolutely unnecessary and makes no sense that they should be reported.

However, I could not find this definitively spelled out on the MolDX website, so I decided to submit a question to the MolDX email address. I did not receive the answers in time to make a correction to last week’s article prior to publication. Below are my questions and the answers I received from MolDX team.

Q: Since individual CPT/HCPCS codes are not submitted on inpatient claims, are DEX Z-codes required to be reported on inpatient claims when molecular pathology tests are performed on an inpatient?

A: Yes. You will need to register with DEX and obtain the Z-code for all Molecular tests performed at your location.

Q: Could you please clarify further as to where the Z-codes would be reported on the inpatient claim since individual HCPCS codes are not reported on inpatient claims?

A: DEX Z-Code identifiers need to be added in block 80 of the UB04 claim form or on line SV202-7 of the 8371 electronic claim.

Well – there you go. Even though it still makes no sense to me, these answers contradict the statement I made in last week’s article. I have removed the ‘erroneous’ statement from the article on our website. Unless there is ever definitive guidance to the contrary, it seems that the Z-codes are indeed required on inpatient claims.

That will teach me to deduce Medicare rules based on what makes sense.

Ambulance Inflation Factor for CY 2018 and Productivity Adjustment

The Calendar Year (CY) 2018 Ambulance Inflation Factor (AIF) for determining the payment limit for ambulance services is 1.1 percent.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10323.pdf

Correction to Prevent Payment on Inpatient Information Only Claims for Beneficiaries Enrolled in Medicare Advantage Plans

Sets system edits to zero out payment on inpatient information only claims billed with condition codes 04 and 30 for Investigational Device Exemption (IDE) Studies and Clinical Studies Approved Under Coverage with Evidence Development (CED).

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10238.pdf

New Common Working File (CWF) Medicare Secondary Payer (MSP) Type for Liability Medicare Set-Aside Arrangements (LMSAs) and No-Fault Medicare Set- Aside Arrangements (NFMSAs) - RESCINDED

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM9893.pdf

Clarifying Signature Requirements

Medicare requires that services provided/ordered/certified be authenticated by the persons responsible for the care of the beneficiary in accordance with Medicare’s policies. Claim denials shall be limited to those instances in which signatures that are required by Medicare policies are flawed or missing.

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R751PI.pdf

Clinical Laboratory Improvement Amendments of 1988 (CLIA); Fecal Occult Blood (FOB) Testing

Clarifies CLIA regulations that the waived test categorization applies only to non- automated fecal occult blood tests.

https://www.gpo.gov/fdsys/pkg/FR-2017-10-20/pdf/2017-22813.pdf

Calculating Interim Rates for Graduate Medical Education (GME) Payments to New Teaching Hospitals – REVISED

Re-issued to revise several policy statements and to address how to handle certain impacted claims.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM10240.pdf

New Common Working File (CWF) Medicare Secondary Payer (MSP) Type for Liability Medicare Set-Aside Arrangements (LMSAs) and No-Fault Medicare Set-Aside Arrangements (NFMSAs) – REPLACED

Removes provider education requirements from original transmittal.

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R1954OTN.pdf

Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs Final Rule

Revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2018.

https://www.gpo.gov/fdsys/pkg/FR-2017-11-13/pdf/2017-23932.pdf

Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2018

Addresses changes to the Medicare physician fee schedule (PFS) and other Medicare Part B payment policies to update payment systems to reflect changes in medical practice and the relative value of services, as well as changes in the statute. In addition, this final rule includes policies necessary to begin offering the expanded Medicare Diabetes Prevention Program model.

https://www.gpo.gov/fdsys/pkg/FR-2017-11-15/pdf/2017-23953.pdf

Implementation of the Award for the Jurisdiction Part A and Part B Medicare Administrative Contractor (JJ A/B MAC)

Announces CMS has awarded the JJ A/B MAC contract for the administration of the Part A and Part B Medicare fee-for-service claims in the states of Alabama (AL), Georgia (GA) and Tennessee (TN) to Palmetto GBA LLC.

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R1960OTN.pdf

Update to Pub 100-04, Chapter -18 Preventive and Screening Services -Screening for Lung Cancer with Low Dose Computed Tomography (LDCT)

Adds ICD-10 diagnosis codes: F17.210 (Nicotine dependence, cigarettes, uncomplicated), F17.211 (Nicotine dependence, cigarettes, in remission), F17.213 (Nicotine dependence, cigarettes, with withdrawal), F17.218 (Nicotine dependence, cigarettes, with other nicotine-induced disorders), or F17.219 (Nicotine dependence, cigarettes, with unspecified nicotine-induced disorders), for LDCT coverage.

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R3901CP.pdf

Billing Requirements for Ophthalmic Bevacizumab

Clarifies HCPCS code for billing ophthalmic bevacizumab.

https://www.palmettogba.com/palmetto/providers.nsf/ls/JM%20Part%20A"ASURVC5135?opendocument&utm_source=J11AL&utm_campaign=JMALs&utm_medium=email

Notification of the 2018 Dollar Amount in Controversy Required to Sustain Appeal Rights for an Administrative Law Judge (ALJ) Hearing or Federal District Court Review

ALJ hearing requests amount for 2018 will remain at $160. Federal District Court appeals amount will increase to $1,600 for 2018.

https://www.palmettogba.com/palmetto/providers.nsf/ls/JM%20Part%20A"97KFK41765?opendocument&utm_source=J11AL&utm_campaign=JMALs&utm_medium=email

Accepting Payment from Patients with a Medicare Set-Aside Arrangement

Explains what a MSA is and explains why it is appropriate to accept payment from a patient that has a funded MSA.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/SE17019.pdf

CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2018

Fact Sheet describing VBP program and updates. Estimates the total amount available for value-based incentive payments for FY 2018 discharges will be approximately $1.9 billion.

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-11-03.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=descending

Additional Appeals Settlement Option

CMS will make available an additional settlement option for providers and suppliers (appellants) with appeals pending at the Office of Medicare Hearings and Appeals (OMHA) and the Medicare Appeals Council (the Council) at the Departmental Appeals Board.

https://www.cms.gov/Medicare/Appeals-and-Grievances/OrgMedFFSAppeals/Hospital-Appeals-Settlement-Process-2016.html

ICD-10 and Other Coding Revisions to National Coverage Determinations (NCDs)

NCD coding changes the result of newly available codes, coding revisions to NCDs released separately, or coding feedback received.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10318.pdf

CMS Posts RAC Review Topics

CMS has begun to post a list of review topics that have been proposed, but not yet approved, for RACs to review. These topics will be listed, on a monthly basis, on the Provider Resources page.

https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Provider-Resources.html

Partial Settlement of 2-Midnight Policy Court Cases

Provides instructions to Medicare Administrative Contractors (MACs) on how to ensure hospitals receive additional payments due to a partial settlement agreement regarding the 0.2 percent downward adjustment beginning in Fiscal Year ("FY") 2014.

https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R1969OTN.pdf

New Waived Tests

New Clinical Laboratory Improvement Amendments of 1988 (CLIA) waived tests approved by the Food and Drug Administration (FDA).

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10321.pdf

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

Provides the 2018 annual update to the list of Healthcare Common Procedure Coding System (HCPCS) codes used by Medicare systems to enforce consolidated billing of home health services.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10308.pdf

Remittance Advice Remark Code (RARC), Claims Adjustment Reason Code (CARC), Medicare Remit Easy Print (MREP), and PC Print Update

Updates the Remittance Advice Remark Codes (RARC) and Claims Adjustment Reason Code (CARC) lists and instructs Medicare Shared System Maintainers (SSMs) to update Medicare Remit Easy Print (MREP) and PC Print.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10270.pdf

Claim Status Category Codes and Claim Status Codes Update

MAC and shared systems changes will be made as necessary as part of a routine release to reflect applicable changes such as retirement of previously used codes or newly created codes.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10271.pdf

Therapy Cap Values for Calendar Year (CY) 2018

For physical therapy and speech-language pathology combined, the CY 2018 cap is $2,010. For occupational therapy, the CY 2018 cap is $2,010.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10341.pdf

New Positron Emission Tomography (PET) Radiopharmaceutical/Tracer Unclassified Codes

CMS has created two new PET radiopharmaceutical unclassified tracer codes that can be used temporarily pending the creation/approval/implementation of permanent CPT codes that would later specifically define their function: A9597 - Positron emission tomography radiopharmaceutical, diagnostic, for tumor identification, not otherwise classified; A9598 – Positron emission tomography radiopharmaceutical, diagnostic, for non-tumor identification, not otherwise classified.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10319.pdf

2018 Medicare Parts A & B Premiums and Deductibles

On November 17, 2017, the Centers for Medicare & Medicaid Services (CMS) released the 2018 premiums, deductibles, and coinsurance amounts for the Medicare Part A and Part B programs. The standard monthly premium for Medicare Part B enrollees will be $134 for 2018, the same amount as in 2017. The annual deductible for all Medicare Part B beneficiaries will be $183 in 2018, the same annual deductible in 2017. The Medicare Part A annual inpatient hospital deductible that beneficiaries pay when admitted to the hospital will be $1,340 per benefit period in 2018, an increase of $24 from $1,316 in 2017.

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-11-17.html

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

Provides the quarterly update of HCPCS codes used for HH consolidated billing effective April 1, 2018.

https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM10374.pdf

Q:

Will Medicare payments be reduced for 2018 for X-rays taken using computed radiography imaging?  If so, why?

A:

Yes, payments for imaging services taken using computed radiography imaging will be reduced for CY 2018 and subsequent years. The Consolidated Appropriations Act, 2016, which was enacted on December 18, 2015, contains provisions to incentivize the transition from traditional X-ray imaging to digital radiography by reducing payment for older imaging technology. 

The reduction for computed radiography (CR) will be phased in over several years. The Act requires that payments for CR services furnished during CY 2018, 2019, 2020, 2021, or 2022, be reduced by 7%, and if such services are furnished during CY 2023 or a subsequent year, by 10%. Computed radiography technology is defined as cassette-based imaging which utilizes an imaging plate to create the image involved.

CMS created a new modifier – modifier “FY” (X-ray taken using computed radiography technology/cassette-based imaging) to be reported on claims to identify those HCPCS codes that describe X-rays taken using CR technology. The payment reduction (7% for 2018) will be taken when this modifier is reported with the applicable HCPCS code(s) to describe imaging services that are taken using CR technology.

Already implemented beginning in 2017 as a requirement of the Act, payment for X-rays taken using film is reduced by 20 percent. Providers are required to report modifier “FX” (X-ray taken using film) with the appropriate HCPCS codes to identify x-rays taken using film.  The 20% payment reduction is taken when this modifier is reported with the applicable HCPCS code(s) for film x-rays. This 20% reduction began in January 1, 2017 and continues for subsequent years.

Due to increased packaging of payment for ancillary services over the past few years, payment for some x-ray services is packaged into the payment for the primary service. When payment for an X-ray service taken using film or computed radiography imaging is packaged into the payment for another item or service under the OPPS, no separate payment for the X-ray service is made. Therefore, there will be no payment reduction for packaged x-ray services.

An addendum to this article can be found by clicking here.

Background

The MolDX program requires billing laboratories to register in the DEX Diagnostics Exchange and apply for and obtain a unique test identifier (a Z-code) for each molecular diagnostic test (MDT) or lab developed test (LDT) they perform. If the billing laboratory does not perform the test but instead sends it to an outside laboratory to be performed, it is still the billing laboratory that must submit the Z-code on its claim. In this case, the billing lab obtains the DEX Z-CodeTM for the molecular test(s) from the performing laboratory, either directly or through the DEX system. Only certain MAC jurisdictions participate in the MolDX program. Since Palmetto is a MAC that participates, Jurisdiction J providers must follow the rules of the MolDX program sometime after transition (effective date to be announced by Palmetto but no earlier than March 2018).

Because of the unique nature of the tests in the MolDX program, hospital laboratories often do not perform these tests, but send most or all of them to an outside reference laboratory to be performed. Currently, Medicare’s laboratory billing and date of service rules require hospitals to bill Medicare directly for tests performed by another laboratory on hospital inpatients or outpatients. The hospital lab has to then pay the testing lab “under arrangements” for performing the test. The only current exception to this requirement is the laboratory date of service 14-day rule, which only applies when the test is ordered at least 14 days after discharge along with other criteria. This can be a burden on hospitals because sometimes the Medicare reimbursement to the hospital is less than the reference lab’s charge for the test. The MolDX program adds the additional burden of having to obtain and submit the Z-code on the Medicare claim in order to be paid.

So how does the new lab DOS policy affect the MolDX program?

In the 2018 OPPS final rule, CMS finalized a new laboratory date of service rule for hospital outpatients for molecular pathology and advanced diagnostic laboratory tests (ADLTs).  These are MDTs and ADLTs that are not packaged under OPPS but are paid separately under the lab fee schedule with an OPPS Status Indicator of “A.”  Basically, beginning January 1, 2018, if these types of tests are collected from a hospital outpatient but the test is not performed until after the patient’s discharge, then under the new rule, the testing lab must bill Medicare directly. The hospital lab cannot bill Medicare for molecular pathology tests and ADLTs performed after discharge unless they actually perform the test.

Because of this new rule, hospital laboratories will not be billing for molecular diagnostic tests and ADLTs with an SI of “A” that they do not perform in their own laboratory if all the requirements of the new date of service rule are met. This means they will not have to obtain or report a unique test identifier (a Z-code) for these tests that are sent to outside laboratories. In this case, the new rule relieves both of the burdens mentioned above.

There are some tests within the MolDX program that do not meet the definition for separately payable MDTs or ADLTs. These tests are conditionally packaged under OPPS with a status indicator of “Q4.” Medicare packages payment for the “Q4” lab tests when reported on a claim with other outpatient services, but pays hospitals separately for these tests if only laboratory tests are billed on the claim. When billing for these tests, the hospital will need to include a Z-code on the claim even if the test was performed under arrangements by an outside laboratory.

There are numerous local coverage determinations (LCDs) for the MolDX tests in the MAC jurisdictions that participate in the MolDX program. Providers should be familiar with the covered indications for the tests they furnish, whether they perform the test themselves or send it to an outside lab for testing. These outside testing labs will not be happy to be denied their Medicare reimbursement for lack of medical necessity because your hospital did not follow the LCD requirements.

The new rule does not apply to tests performed on inpatients. For inpatient testing sent to outside laboratories, the hospital bills Medicare directly and the testing lab receives payment from the hospital.  The only exception would be for tests that meet the lab DOS 14-day rule. Hospitals submit an inpatient claim to Medicare and are paid a MS-DRG payment for inpatients so individual lab CPT/HCPCS codes are not reported on the claim.

Figuring It Out

1. Performing laboratory bills; hospital doesn’t need Z-code: All hospital laboratories will want to identify the molecular pathology and ADLTs with an SI of “A” that they send to an outside lab for testing. Providers can determine the Status Indicator of laboratory tests by referring to Addendum B of the final rule. If the testing meets the new date of service rules (which it should), the testing lab must bill Medicare directly for these tests. Per the OPPS final rule, “hospital laboratories cannot bill for these tests unless they perform them.” Since the hospital will not be billing for tests sent out for testing that meet the new lab date of service rule, the hospital will not need to obtain a Z-code for these tests.

2. Hospital bills for tests performed by another lab and reports Z-code: Hospitals also need to identify the MolDX tests they send to an outside lab for testing that have a status indicator of “Q4.” Providers can determine the Status Indicator of laboratory tests by referring to Addendum B of the final rule. The hospital will bill Medicare directly for these tests and will need to obtain a Z-code from either the performing lab directly or through the DEX system. The Z-code must be submitted on the claim when billing Medicare for these tests.

3. Hospital performs and bills for tests and reports Z-code; And finally, hospitals need to identify the MolDX tests they perform in the hospital lab. The hospital will need to apply for and obtain the DEX Z-CodeTM before performing these tests. The Z-code must be submitted on the claim when billing Medicare for these tests.

Hospital labs need to be aware of both the new date of service rule and the reporting requirements for MolDX tests, and how one rule affects the other.  Review and follow the steps above to determine which molecular pathology and ADLTs your hospital must bill and when Z-code reporting is required.

Resources:
MolDX website - https://www.palmettogba.com/moldx
OPPS Addendum B - https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html
Watch for Medicare Transmittals that give more information on the new Laboratory Date of Service rule.

Finally fall weather has arrived in the South. The days are not too hot or too cold, so it is the perfect season to spend some time outdoors. Yesterday my dog and I went walking through the woods. Many of the paths had obstacles such as fallen trees or low hanging branches, so we would have to adjust and try a different route. This is also the time of year to get ready to adjust your paths with Medicare due to policy changes finalized in the 2018 Outpatient Prospective Payment System (OPPS) Final Rule that will become effective January 1, 2018.

Two of our Wednesday@One articles last week addressed finalized policies from the 2018 OPPS Final Rule – changes to the inpatient only list and payment reduction for separately payable drugs purchased through the 340B program.  This week we will examine some of the other significant policy changes from the 2018 OPPS final rule that will require some provider adjustments.

Drug Administration

Over the past several years, CMS has taken numerous actions to move the OPPS more toward an actual prospective payment system as the name indicates.  To this end, “the OPPS packages payments for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility.”  Specifically, over the past few years CMS has created and expanded comprehensive APCs which bundle payment for all adjunctive services into the payment for the primary service, packaged add-on codes, and conditionally packaged payment of ancillary services with a geometric mean cost of $100 or less.

Drug administration services have, up until this year, escaped the packaging concept as CMS examined various alternative payment policies for drug administration, including the associated drug administration add-on codes.  Finally, in 2018 CMS takes a baby step toward packaging of some drug administrative services.  They are conditionally packaging payment for some Level 1 and Level 2 drug administration services with a status indicator (SI) of “Q1” (see table below). Vaccine administration codes for preventive services (influenza, pneumococcal, and hepatitis B) and add-on drug administration codes, which still have an SI of “S,” are not packaged and will continue to be paid separately.  Vaccine admin codes 90471 and 90473, that are for administration of vaccines other than preventive services, are conditionally packaged. Since the Level 1 and 2 drug admin codes are conditionally packaged, they will be separately payable when not billed on the same claim as a HCPCS code with status indicator “S”, “T”, or “V”. The main impact from this drug admin packaging for hospitals will be for CPT code 96372 (therapeutic SQ/IM injection), and CPT codes 96401 and 96402 (chemotherapy SQ/IM injection codes).

As usual for packaged codes, CMS reminds hospitals that they are expected to report all HCPCS codes that describe the services provided, regardless of whether or not those services are separately paid or their payment is packaged. Although CMS did not package payment for add-on drug administration codes for 2018, they discussed the comments received and may propose more drug administration packaging in future years.

Lab Date of Service Policy

Probably the most difficult revised policy to explain and understand is the lab date of service policy. Laboratory date of service (DOS) rules start simple:

1. The DOS for clinical diagnostic laboratory services generally is the date the specimen is collected.
2. For archived lab specimens that are stored for more than 30 days before testing, the DOS is the date the specimen was obtained from storage.

Now this is where it starts getting complicated with what is known as the 14-day rule.

3. The DOS is the date the test was performed (instead of the date of collection) if the following conditions are met:
4. The test is ordered by the patient’s physician at least 14 days following the date of the patient’s discharge from the hospital;
5. The specimen was collected while the patient was undergoing a hospital surgical procedure;
6. It would be medically inappropriate to have collected the sample other than during the hospital procedure for which the patient was admitted;
7. The results of the test do not guide treatment provided during the hospital stay; and
8. The test was reasonable and medically necessary for the treatment of an illness.
9. Another 14-day rule applies to chemotherapy sensitive tests performed on live tissue under the same conditions as described above with only slight variation to the first condition:
10. The decision regarding the specific chemotherapeutic agents to test is made at least 14 days after discharge;

Both of these 14-day rules apply to hospital inpatients and outpatients and the key point is that the test is ordered at least 14 days after discharge.  These DOS requirements determine whether the hospital bills Medicare for a clinical diagnostic laboratory test (CDLT) or whether the laboratory performing the test bills Medicare directly. When the 14-day rule applies, laboratory tests are not bundled into the hospital stay, but are instead paid separately under Medicare Part B to the testing laboratory.

Stakeholders expressed concerns about the current DOS policy because it requires hospitals to bill for tests they did not perform and that may have no relationship to or bearing on treatment received by the patient while in the hospital and it creates billing difficulties for the hospital. CMS agreed with these concerns and modified the date of service rule for hospital outpatients for molecular pathology tests and advanced diagnostic laboratory tests (ADLTs) that are not packaged under OPPS.  These types of lab test have a Status Indicator of “A” on Addendum B.

The new rule states that in the case of a molecular pathology test or an ADLT, the DOS of the test must be the date the test was performed only if—

• The test was performed following a hospital outpatient’s discharge from the hospital outpatient department;
• The specimen was collected from a hospital outpatient during an encounter (as both are defined in 42 CFR 410.2);
• It was medically appropriate to have collected the sample from the hospital outpatient during the hospital outpatient encounter;
• The results of the test do not guide treatment provided during the hospital outpatient encounter; and
• The test was reasonable and medically necessary for the treatment of an illness.

This new exception to the laboratory DOS policy does not apply to ADLT or molecular pathology tests when performed on a specimen collected from a hospital inpatient.

This new laboratory DOS policy will enable laboratories performing ADLTs and molecular pathology tests excluded from the OPPS packaging policy to bill Medicare directly for those tests, instead of requiring them to seek payment from the hospital outpatient department.  In fact, for molecular pathology tests and ADLTs meeting the above requirements, the DOS must be the date the test was performed and the test must be billed by the performing laboratory. Hospital laboratories cannot bill for these tests unless they perform them.

Supervision of OP Therapeutic Services

In the 2009 OPPS final rule, CMS clarified that direct supervision is required for hospital outpatient therapeutic services covered and paid by Medicare that are furnished in hospitals as well as in provider-based departments (PBDs) of hospitals.  They further clarified in the 2010 rule that this supervision requirement also applies to Critical Access Hospitals (CAHs).  Beginning in March 2010 and extending through December 31, 2016, CMS or Congress implemented and extended nonenforcement of this supervision requirement for CAHs and small rural hospitals having 100 or fewer beds.  Due to concerns that some small rural hospitals and CAHs have insufficient staff available to furnish direct supervision, CMS is reinstating the non-enforcement instruction for CYs 2018 and 2019.  This nonenforcement again applies to CAHs and small rural hospitals with 100 or fewer beds to give them more time to comply with the supervision requirements for outpatient therapeutic services and to submit specific services to be evaluated by the HOP Panel for a recommended change in the supervision level.

Other 2018 OPPS Updates

• Skin Substitutes – CMS will continue to assign skin substitutes as low cost or high cost based on their unit or per day cost. In addition, a skin substitute product that does not meet high cost criteria for CY 2018, but was assigned to the high cost group for CY 2017, will remain assigned to the high cost group for CY 2018 in order to maintain payment consistency.
• Comprehensive APCs – There are no new C-APCs for 2018.
• Brachytherapy – CMS decided not to finalize a proposed policy to establish an edit that requires a brachytherapy treatment code when a brachytherapy insertion code is billed. They are deleting Composite APC 8001 (LDR Prostate Brachytherapy Composite) and assigning HCPCS code 55875 to existing C-APC 5627 (Level 7 Radiation Therapy). 
• SRS Treatment – CMS is deleting modifier CP for services that are adjunctive to the primary stereotactic radiosurgery services (SRS) treatment described by HCPCS codes 77371 and 77372, but reported on a different claim. They will continue to make separate payment for the 10 planning and preparation codes adjunctive to the delivery of SRS treatments when furnished within one month of treatment.
• Bone Marrow Aspiration and Biopsy – CMS is deleting the add-on code G0364 and creating a new code (38222) to describe a diagnostic bone marrow with both aspiration and biopsy. The new code is assigned a status indicator of “J1” to the same APC as the codes for a bone marrow aspiration or a bone marrow biopsy performed separately.

This is not of course all of the policy changes from the 2018 OPPS final rule, but maybe the ones you should consider first and make process changes if necessary. The path to billing for Medicare services continually requires adjustments.

Over the past several weeks, our newsletter has focused attention on the transition of the Jurisdiction J (Alabama, Georgia, and Tennessee) Medicare Administrative Contractor (MAC) from Cahaba to Palmetto GBA.  For those providers affected by this transition, please pay special attention to this article as you will be required to participate in this program under the Palmetto contract.  Special information affecting Jurisdiction J is included at the end of this article.

If you are a regular reader of our Wednesday@One newsletter, you may already know that my original role in healthcare was as a clinical laboratory scientist (CLS) or Medical Technologist (MT). I loved working in the clinical laboratory, but my detail oriented brain also loves my current work with Medicare regulations. In the realm of healthcare compliance, I keep up with the rapid and never-ending changes of Medicare healthcare regulations.  Unfortunately, since Compliance is now my focus, I no longer keep up with the also rapid and never-ending changes to laboratory medicine. 

Molecular diagnostic testing (MDT) is one area of laboratory advancements that is having a tremendous impact on the practice of medicine overall.  Human genomics is reshaping the medical approach to therapy and diagnosis in areas such as inherited genetic diseases, infectious disease, oncology, human leucocyte antigen typing to predict immune function, coagulation, and pharmacogenomics—the genetic prediction of which drugs will work best.  As this testing has become more common, healthcare payers have struggled with determining the appropriate coverage and payment for these tests.

Some of the challenges for Medicare related to molecular diagnostic testing were:

• HCPCS and CPT descriptions for these codes describe the pathology and laboratory categories but do not identify a specific test.
• The Clinical Laboratory Fee Schedule pricing methodology does not account for the unique characteristics of these tests.
• Who determines if the tests fall within a Medicare benefit category?
• Some tests have not been assessed for clinical and analytical validity and clinical utility.

Medicare’s solution was the Molecular Diagnostic Services (MolDX) Program, which was developed by Palmetto GBA in 2011 to identify and establish coverage and reimbursement for molecular diagnostic tests. Palmetto GBA currently administers the MolDX Program and all its information. 

The program applies to all private, reference, and hospital laboratories that perform molecular diagnostic testing and submit claims to Medicare Part A or Part B.  The following molecular diagnostic assays/tests are included in MolDX.

How does the MolDX Program address the above challenges?

The MolDX program performs the following functions, which solve the challenges noted above concerning molecular diagnostic tests:

• Facilitates detailed and unique identification through registration of molecular diagnostics tests to facilitate claims processing and to track utilization.
• Establishes clinical utility expectations
• Completes technical assessments of published test data to determine clinical utility and coverage
• Establishes reimbursement

How does the MolDX Program work?

Obtain a DEX Z-Code

Laboratories must apply for and obtain a unique test identifier for each MDT or LDT (lab developed test) they perform.

Attention Hospitals - You are NOT expected to submit tests to obtain Z-Codes for tests sent to another laboratory to perform.  You submit tests to obtain a Z-code only for those tests you perform in-house.  However, the MolDX FAQs state it is the responsibility of the billing provider to obtain a DEX Z-Code™ identifier, such as in cases where the performing lab is not in a jurisdiction under the MolDX program. Since reference labs performing genetic testing generally offer services across the nation, most will have already obtained the necessary Z-codes.

These are the steps required for participation in the MolDX program:

• You are required to register your organization in the DEX Diagnostics Exchange if you plan to submit claims for the MolDX codes to MACs participating in the MolDX program (see list of Participating MACs below). 
• Providers billing Part A for molecular tests performed by a proprietary or reference laboratory will “Request Sharing” in DEX, from your reference lab, to get access to the Z-Code for billing purposes. You must obtain the DEX Z-CodeTM for the molecular test(s) from the performing laboratory, either directly or through the DEX system. 
• Hospital providers billing for molecular services performed by their hospital-based laboratory must register and obtain a unique DEX Z-CodeTM for each molecular test in the MolDX code ranges designated above. 

Obtain a Technical Assessment Approval (Coverage Determination)

Once a Z-code is assigned, coverage is determined through a technical assessment (TA). Established FDA-approved tests with proven utility that are performed within labeling indications may not require a technical assessment. A TA is required for molecular assays that are laboratory developed tests (LDT), employ new or novel technology, or have undefined or unproven clinical utility. For these tests, labs/developers must submit a detailed dossier of clinical data to substantiate the test meets Medicare’s requirements for coverage. The Technical Assessment Submission Instructions (M00115) provides the steps to submit a dossier.

All new test services will be denied as noncovered until the test completes the TA process and reasonable and necessary criteria is established. Claims submission for tests in the TA process should be suspended until a final coverage determination is made. Labs should not provide lab tests pending a TA approval until coverage is approved and appropriate billing and coding guidelines are published.

Once a coverage determination has been established, the results will be published to the provider community. A Local Coverage Determination (LCD) or Coverage Article may be developed if the test requires administration of reasonable and necessary limitations.

Report Z-Code on Claim

When the unique test identifier (DEX Z-Code™) is reported in conjunction with the appropriate CPT/HCPCS code on the claim, it allows Medicare to determine the exact test that has been performed, facilitating the process of making pricing and/or coverage determinations. The MolDX Manual provides instructions on the claim line detail fields for reporting the Z-codes.

• Part B providers – Paper claim - Block 19 of the CMS 1500 claim form; electronic claims (837P) - SV101-7 field adjacent to the applicable CPT code.
• Part A providers – Paper claim - block 80 of the UB04 claim form; electronic claims (837I) - line SV202-7.
• Part A providers will need to specify which lines are billed for MolDX and the appropriate DEX Z-Code per line within the remarks section of the claim.

Adjudication

The molecular test is adjudicated in accordance with the MAC’s LCDs and coverage articles.

Palmetto GBA’s “Molecular Diagnostic Tests (MDT)” LCD provides coverage for MDTs and LDTs that are identified as covered in the LCD. Palmetto has also developed and published specific LCDs, and/or coverage articles for some MolDX tests. MDTs and LDTs not identified as covered in an NCD, LCD, or coverage article are not covered.  Palmetto GBA will continue to accept and consider requests on excluded genetic tests.  You can find a link to Palmetto’s LCDs, as well as list of covered and excluded tests, on Palmetto’s MolDX website.

Participating MACs

Although Palmetto “owns” the MolDX program, several other MACs also participate in the program.  These include Noridian JE and JF, CGS J15, and WPS J5 and J8.  Each of these MACs have coverage policies and websites dedicated to the MolDX program.  If you are a provider in one of these jurisdictions, please check you MACs website for more information.  At this time CMS has not determined how MolDX will be expanded.

Jurisdiction J Transition

Medicare Part A and Part B providers in the Palmetto GBA Jurisdiction J will be required to register all molecular tests with the Diagnostics ExchangeTM (DEX), an online test registry.  There will be a phase in for Jurisdiction J to allow time for test providers to obtain their Z-codes. We strongly suggest labs and other test providers begin the process now to avoid any claim processing delays once the Z-code is required on the claim, which is currently projected to be no later than claims submitted on or after June 1, 2018 (note this is not Date of Service driven). 

Refer to the Steps for Participating in the MolDX Program listed above to determine exactly what actions are needed for JJ providers billing for molecular diagnostic testing.  JJ providers should carefully study all the information on the MolDX website and become familiar with Palmetto’s MolDX LCDs.  This is a necessary piece of the JJ transition.