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The Useful 5: Regulatory Roundup for Rev Cycle Leaders

Analysis  |  By Amanda Norris  
   July 07, 2022

HealthLeaders' regulatory round up series highlights five essential governing updates that cover every aspect of the revenue cycle that leaders need to know. Check back in each month for more regulatory updates.

The revenue cycle is complex, detailed, and always changing, so staying on top of regulatory updates and latest best practices requires revenue cycle leaders' constant attention in this ever-changing industry.

In this revenue cycle regulatory roundup, there were an ample number of updates published by CMS and the Office of Inspector General in June, including code updates and audits of Medicare Advantage organizations.

Here are the five updates you need to know.

There were thousands of reasons for your coding departments to be overwhelmed in June.

A total of 1,176 new diagnosis codes were finalized within the fiscal year (FY) 2023 ICD-10-CM code update. The CDC also posted the FY 2023 coding guidelines along with the code update.

In addition to the 1,176 new diagnosis codes, the update also includes 28 codes that had revisions to their descriptors, and 287 codes deemed invalid.

On top of this, the FY 2023 ICD-10-PCS procedure code set and the ICD-10-PCS Official Guidelines for Coding and Reporting were released by CMS. The procedure code update includes 331 new codes.

Both updated ICD-10-CM and ICD-10-PCS code sets are to be used for discharges occurring from October 1, 2022, through September 30, 2023.

The coding department is one of the most critical parts of the revenue cycle. Because coding occurs mid-cycle, it provides an opportunity to catch errors introduced earlier in the process, as well as preventing similar errors in the future.

Staying abreast of these regulatory coding updates is important for revenue cycle leaders as coding—and its completeness and accuracy—has a profound impact on an organization's bottom line.

Tighten up your revenue cycle to avoid major penalties as the Office of Inspector General (OIG) takes aim at Medicare Advantage organizations (MAO).

On June 3, the OIG published a review of whether select diagnosis codes that Peoples Health Network, a MAO, submitted to CMS for use in the risk adjustment program complied with federal requirements.

The OIG conducted the audit by selecting 242 enrollee-years with the high-risk diagnosis codes for which Peoples Health received higher payments for in 2015-2016. The OIG found that 144 of the 242 enrollee-years had diagnosis codes that were not supported in the medical records and resulted in $412,938 in overpayments.

The OIG estimated that Peoples Health received at least $3.3 million in overpayments for these high-risk diagnosis codes in 2015 and 2016.

The OIG recommended that Peoples Health refund the federal government for the estimated $3.3 million in net overpayments, identify similar instances of noncompliance that occurred outside the audit period and refund any resulting overpayments, and enhance its existing compliance procedures to identify areas where improvements can be made to ensure high-risk diagnosis codes comply with federal requirements. 

Peoples Health did not concur with any recommendations and said the OIG used flawed audit and extrapolation methodologies, did not evaluate the overall enrollee-year payments or risk scores, and failed to follow CMS' risk adjustment audit rules. The OIG says it stands by its original findings.

The Spring 2022 Semiannual Report to Congress was sent out by the OIG.

On June 6, the OIG published the Spring 2022 Semiannual Report to Congress, which reviews OIG work from October 1, 2021 through March 31, 2022.

Some of the findings in the report include COVID-19 tests driving an increase in total Part B spending on lab tests, state performance in oversight of nursing homes, a study of Medicare beneficiaries utilizing telehealth services, and more. The OIG published a press release on the same date to accompany the report.

Medicare and beneficiaries paid substantially more to provider-based facilities in eight states than they paid to freestanding facilities in the same states for the same services.

On June 13, the OIG published a report of how much Medicare paid for certain services performed at provider-based facilities in 2010-2017 compared to what Medicare and beneficiaries would have paid for the same type of services performed at freestanding facilities during that same time period.

The OIG focused this review in eight states. It found that Medicare paid $3.1 billion and beneficiaries paid $794 million for E/M services at provider-based facilities when the same type of services at a freestanding facility would have cost $1.8 billion for Medicare and $460 million for beneficiaries during this time period.

In addition to the significant payment differential, beneficiaries would have only had to make one coinsurance payment if the services were performed at a freestanding facility rather than two that they had to make for the services at the provider-based facility. Cost-sharing generally would have been lower because it would have only been based on the freestanding facility rate. 

The OIG noted that while CMS has taken some steps to equalize payments, those changes would not have completely leveled costs during the audit period. The OIG recommends CMS pursue legislative or regulatory changes to lower costs both for Medicare and for beneficiaries by equalizing payments as appropriate between provider-based and freestanding facilities for E/M services. CMS did not agree or disagree with the recommendations but noted that any changes now may require legislative action. 

Inaccuracies in Medicare's race and ethnicity data hinder the ability to assess health disparities.

On June 15, the OIG published a review of the accuracy of Medicare's enrollment data on race and ethnicity. The OIG said this data, which currently only comes from the enrollment database, is key to ensuring that Medicare is able to assess health disparities appropriately.

The OIG found that the data is less accurate for some groups–particularly beneficiaries identified as American Indian/Alaska Native, Asian/Pacific Islander, or Hispanic beneficiaries. It noted that there are limited race and ethnicity categories and missing information, and while there are algorithms meant to improve the existing data, that falls short of self-reported data.

The OIG also said Medicare's enrollment data on race and ethnicity are inconsistent with federal data collection standards. 

The OIG recommends CMS develop its own source of race and ethnicity data, use self-reported race and ethnicity information to improve data for current beneficiaries, develop a process to ensure that the data is as standardized as possible, and educate beneficiaries about CMS' efforts to improve race and ethnicity information. CMS did not explicitly concur with the first recommendation but concurred with the other three recommendations. 

Special addition this month: The 2023 end-stage renal disease prospective payment system proposed rule is here.

On June 21, CMS published a draft copy of the 2023 end-stage renal disease prospective payment system proposed rule, which was published in the Federal Register on June 28.

Proposals include a change to the methodology for calculating outlier threshold for adult patients, rebasing and revising of the end-stage renal disease bundled market basket, and a permanent 5% cap on decreases in the end-stage renal disease prospective payment system wage index beginning in 2023.

CMS also proposed changing the definition of “oral-only drug” to include wording stating that it’s a drug or biological product with no injectable functional equivalent or other form of administration, and it proposed clarifying the descriptions of the end-stage renal disease prospective payment system functional categories to help ensure CMS supports innovation of completely new drugs and not variations of existing drugs. 

CMS estimates payment updates in the rule will increase end-stage renal disease payments for freestanding clinics by 3.1% and increase payments for hospitals by 3.7%. The proposed CY 2023 end-stage renal disease prospective payment system base rate is $264.09. CMS published a fact sheet on the proposed rule on the same date. Comments are due by August 22.

Amanda Norris is the Associate Content Manager of Finance, Payer, Revenue Cycle, and Strategy for HealthLeaders.

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