Last month CMS released the inpatient prospective payment system proposed rule for 2012, which contains a vast assortment of inpatient proposals and clarifications for finance and accounting departments, coders and billers, and quality departments, among others. This is the first in a series of three IPPS-related articles covering three of the most significant clarifications. We begin with CMS' three-day payment window rule.
The three-day rule, which was significantly amended in 2010, defines certain preadmission services as inpatient operating costs, meaning they are bundled and billed as part of the inpatient claim and payment is made as part of the applicable DRG payment for the case. While it sounds clear, the rule was widely misunderstood by providers leading to last year's clarifying amendments.
The most recent clarification in the IPPS proposed rule deals with guidance given by CMS in an October 2010 hospital open door forum conference call. During the call, a listener questioned whether different taxpayer identification numbers will have any bearing on whether a physician practice group is wholly owned, and if the three-day payment window applies.
A CMS representative responded that the rule only applies to the technical component services in provider based facilities, but not to freestanding (non-provider based) physician offices wholly owned or operated by a hospital. However this information contradicted prior guidance given in a 1998 clarification of the payment window published in the Federal Register.
In the January hospital open door forum, CMS seemed to have corrected this apparent error, indicating the payment window applied generally to technical services at any physician office wholly owned or operated by a hospital.
CMS further clarified its interpretation in the IPPS proposed rule for 2012, stating that the Federal Registercontainsthe correct interpretation of the statute, specifically applying the rule to non-provider-based hospital-owned practices. The IPPS proposed rule states:
In response to ongoing requests to clarify the applicability of the payment windowpolicy to preadmission non-diagnostic services provided in hospital-owned orhospital-operated physicians' offices or clinics, we are clarifying in this proposed rule that the three-day (or, where applicable, one-day) payment window policy applies to both preadmission diagnostic and non-diagnostic services furnished to a patient at physicians' practices that are wholly-owned or wholly-operated by the admitting hospital.
Though this policy update helps to clarify this aspect of the rule, there are a still a number of issues that need to be addressed, according to Kimberly Anderwood Hoy, JD, CPC,director of Medicare and compliance for HCPro, Inc.
"CMS has not yet addressed the issue of how to separate the charges for the technical portion from the professional [portion] for inclusion on the inpatient claim," she says. "In the interim, I would suggest that providers download the physician fee schedule Excel file and figure a percentage based on the difference between the facility and non-facility rate for the code."
Hoy continues, "Additionally CMS did not indicate how practices should bill for the professional only portion of E/M services, which are not subject to the professional component modifier -26, to ensure they receive proper payment for only the professional portion of the service."
In provider-based locations, this payment adjustment is made based on the location of the service in a hospital outpatient department, but these services would not accurately be reported with that site of service because they occur in a freestanding physician office.
In August, CMS plans to release further clarifying instructions in the physician fee schedule proposed rule. Until then—while providers are waiting for this guidance—Hoy suggests keeping an eye on the issue.
"I would recommend that these cases are tracked internally until the physician fee schedule rule is issued to ensure that hospitals have the information for billing or rebilling the physician portion, as appropriate, under the new guidance in that rule."
The Centers for Medicare & Medicaid Services has released a short, but useful Recovery Audit Contractor update that reports on the total amount of improper payments identified since the RAC demonstration period.
From October 2009 through the end of March 2011, RACs have identified a total of $312.2 million in overpayments and $52.6 million in underpayments, totaling $365.8 million in total improper payments. Compared to the $1.03 billion of improper payments identified in the demonstration program, these numbers are miniscule, but a significant bump last quarter illustrates that these figures will invariably grow.
The doubled amounts ($184.6 million) reflected in the first quarter of 2011 is a true reflection of the rapid expansion of RAC audits, according to Donna D. Wilson, RHIA, CCS, CCDS, senior director at Compliance Concepts, Inc., in Wexford, PA.
"RAC contractors are reviewing a large volume of DRGs for coding and medical necessity," she says. "We are at the point where we want to request that the RACs post only those DRGs not under review!"
In addition to the identification of total improper payments, CMS also highlighted the top RAC issue per RAC region from fiscal year 2010 through March 2011. Of the four issues identified, two are caused by incorrect coding. The other two are caused by billing for bundled services (DME provided during an inpatient stay) separately, which should trigger providers to investigate a potential area of vulnerability, according to Kimberly Hoy, JD, CPC, director of Medicare and Compliance for HCPro, Inc.
"Providers need to be paying attention when they have separate national provider identifiers (NPI) that are providing various pieces of services and billing Medicare separately," she says. "This can begin to cause errors if there is a lack of communication between divisions of the hospital."
While the permanent RAC program has been firing on all cylinders for some time now, this CMS release serves as a reminder that perhaps there is room for improvement when it comes to tightening up internal processes.
Elizabeth Lamkin, CEO of Pace Healthcare in Hilton Head, SC: "This tells me that many facilities may not have a comprehensive process for RACs, starting with their charge master," she says.
CMS' most recent release serves as another reminder to the provider community that there is no rest when it comes to RACs. The most important thing that facilities can take away from this release is the cue to spend the time and effort to train all applicable staff members (including physicians) on the front end. In addition, the release should serve as a stark reminder that RACs are still expanding, according to Lamkin.
"These issues are likely coming to the top because they are very granular and it takes a complete, comprehensive system to be compliant in managing RAC requests."
"Providers should definitely be paying attention to this. Even though it's a short update, it's a huge window into what is coming, so [providers] need to assess their risk and take action," Lamkin adds.
Providers familiar with automated claims reviews and complex claims reviews by the recovery audit contractors (RAC) now face another method of overpayment identification: "Semi-automated" claims review.
Semi-automated review strays a bit from the automated and complex methods of overpayment identification recognized in the RAC statement of work, but is essentially a hybrid of the two primary techniques.
So with this new method, what exactly changes?
Not much, really. CMS breaks this new review process into two parts. The first piece of the two-part review process involves automated review of claims data to identify billing aberrancies with a high index of suspicion of improper payment.
The RAC statement of work says an automated review occurs when a determination of error is made at the system level without human review of the medical record. "The first part of the new process is essentially the data mining the RACs have done all along using their proprietary systems, and is very similar to automated reviews," says Kimberly Hoy, JD, CPC, director of Medicare and compliance at HCPro, Inc.
"The only exception being that identified claims only contain possible errors, rather than assumed errors, as in a standard automated review."
The second part includes a notification letter sent to the provider explaining the potential billing error and giving the provider 45 days to submit documentation to support the original billing, according to CMS. This is the same timeframe given to providers to submit documentation for a claim that has been selected for complex review.
As a whole, "semi-automated" reviews may lead to additional burdens for providers, according to Elizabeth Lamkin, MHA, partner/CEO at Pace Healthcare Consulting, LLC, in Hilton Head Island, SC.
"We've known all along that automated reviews could turn into a complex review, and now they've added a formalized process," she says. "This really emphasizes the risks of automated reviews because the RACs can scan unknown numbers of records for issues to be used for "mining vulnerabilities."
She continued, "These could then become complex reviews and be used for identifying issues for extrapolation. This could be the tip of the iceberg as contractors become more sophisticated."
CMS's three-day payment window rule has perplexed providers nationwide since it was adopted in 1990.The confusion became so heated that last year Congress stepped in and enacted a clarification in the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010.
Kimberly Hoy, JD, CPC, director of Medicare and Compliance at HCPro, Inc. breaks down the government's payment rule, which is the topic of a whitepaper she recently authored.
Why all the confusion?
The three-day rule defines certain preadmission services as inpatient operating costs, which means they are bundled and billed on the inpatient claim and payment is made as part of the applicable DRG payment for the case. CMS guidance on the rule was fairly clear and hadn't changed since 1998, but seemingly unknown to CMS, some of its contractors were misapplying the rule, according to Hoy.
"Fiscal intermediaries and Medicare administrative contractors were giving out wrong information and had edits in place that did not allow correctly billed items to process for payment," she says. "Items were denied that should have been paid according to CMS guidance, which confused providers and caused them to misunderstand the rule."
As a result, recovery audit contractors (RACs) took advantage of this, and found areas where providers were susceptible and pursued those areas. Providers felt these RAC audits were unfair, because they were following the rule as they had been instructed by their contractors.
So what, at this point, are providers to do?
Hoy outlines the ins and outs out of the three-day payment window and provides guidance to implement the recent provisions and avoid compliance risk in a new whitepaper: Master The Intricacies of the Three-Day Payment Window: A Comprehensive Guide to Accurately Operationalize the Rule."
Information within the report will enable readers to:
Identify recent changes to the rule
Understand to which related entities the rule applies when a patient is admitted
Define services subject to bundling or separately billable under the new guidance
Describe how to implement recent billing and coding guidelines for proper reimbursement
Identify prohibited audit activities under the new law
To download this free white paper, visit HCPro's Revenue Cycle Institute. Note: Multimedia requirements: Adobe Reader 9 or later, available for free download.
Kimberly Anderwood Hoy, JD, CPC, is the director of Medicare and compliance for HCPro, Inc. She is a lead regulatory specialist for HCPro's Revenue Cycle Institute and is the lead instructor for HCPro's Medicare Boot Camp®—Hospital Version. She is a national expert in Medicare compliance and regulatory issues. She has experience conducting billing compliance audits and internal investigations.
This past summer when the first Recovery Audit Contractor (RAC) approved the issue "inpatient admissions without a physician's inpatient admit order," it placed an impetus on hospitals to tighten up internal processes to avoid RAC audits and potential recoupments at their facility.
One seemingly prevalent hot-button issue is the date and time for an inpatient/observation admission to an acute-care facility. The admission date and time is determined by the physician's "admit to inpatient," order, but sometimes the correct course of action is not so clear.
For example,ifa physician makes the decision to "admit to inpatient" at 11 p.m. on January 1, 2011, the inpatient admission date would be 11 p.m. But if the patient is in the emergency room at this time and the order is written at 11 p.m. and the patient is not transferred until midnight, what is the proper time to document?
This is not an uncommon scenario according to Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc., who suggests that when it comes to determining the proper course of action, providers should look toward CMS manuals for guidance, in particular the Medicare Claims Processing Manual, Chapter 3, § 40.2.2.
The manual says that a patient is considered an inpatient upon issuance of a written physician's order for inpatient care, and if the patient dies/is discharged prior to being assigned and/or occupying a room, the patient is still considered an inpatient on the date of admission and the hospital may charge for room and board, Mackaman says.
"Presumably, this would also mean that if the admission order is written on one date of service, but the patient is not placed in the inpatient bed until the following date, the date of admission for purposes of assessing room and board charges would be the date of the inpatient order for care," she says.
She continued: "In addition, all orders are required to be timed and dated according to the Medicare Conditions of Participation and JCAHO,therefore the date and time of the actual inpatient order is when the patient becomes an inpatient, regardless if the order was written just prior to midnight or where the care is being given."
In addition, keep in mind that "inpatient" is a status and level of care, and not necessarily a place of service. If the following day is used instead of the actual date as in the above example, other issues may arise and should be considered, according to Mackaman. These include
potentially missing the "three-day qualifying stay" for skilled nursing facility admission;
reporting actual benefit days for the patient;
reporting the actual length-of-stay statistics for the facility;
and application of the MS-DRG transfer and post-acute care transfer (PACT) rules.
Hospitals should be cautious about waiting for the patient to be placed in an inpatient bed in a unit instead of using the actual date of the inpatient order, she added.
Kimberly Anderwood Hoy, director of Medicare and Compliance for HCPro, Inc. answers questions about recovery audit contractor issues. [Sponsored by Emdeon]
Continuing its efforts to publicize valuable information derived from the RAC demonstration, CMS released on December 2 the fourth in a series of MLN Matters articles.
The latest, Special Edition article SE1036, provides education on two high-risk vulnerabilities for physician claims. According to CMS, these claims were denied because the demonstration RACs determined that either a duplicate claim was billed and paid, or the physician reported an incorrect number of units for current procedural terminology (CPT) code billed based on the CPT code descriptor, reporting instructions in the CPT book, and/or other CMS local or national policy. Examples include:
Other services with excessive units—Units billed exceeded the number of units per day based on the CPT code descriptor, reporting instructions in the CPT book, and/or other CMS local or national policy. (Pre-appeal improper payment amount: $6,635,558)
Duplicate Claims—Physician billed and was paid for two claims for the same beneficiary, for the same date of service, same CPT code, and same physician. (Pre-appeal improper payment amount: $1,094,751
What these issues are in actuality—which CMS is not directly stating—are medically unlikely edits (MUEs), which should come as no surprise, according to Elizabeth Lamkin, MHA,president of Dalzell Consulting Group, Inc., in Hilton Head, SC.
"During the demonstration project RACs were very sensitive to physician providers and other small providers, and RAC auditors at this time were also very clear about medically unlikely edits, which is what we see here."
In the case of medically unlikely edits, physician offices, as well as any other type of provider organization, should be able to take notice of these issues prior to receiving a demand letter.
"Physician offices need to be proactively self-auditing their billing process and actively monitoring the RAC websites for medically unlikely edits such as IV hydration, fulvestrant—dose vs. billed units, and so on," says Lamkin. "Issues involving MUEs are often times clerical errors though, so this is an issue that can be avoided with comprehensive review."
While the two vulnerabilities described in SE1036 apply to duplicate payments and services with excessive units, it's clear that RACs and MACs may eventually choose to target physicians for other vulnerabilities as well, according to Michael Taylor, MD, vice president of clinical operations at Executive Health Resources in Newtown Square, PA.
"A clear vulnerability—although not listed in SE1036—involves cases where the physician billing does not match the hospital's billing status," he says. "For instance, when the physician's billing is for an inpatient level of care but the hospital bills for an outpatient observation service. This would be a simple, clear-cut reason for a RAC or MAC to audit and potentially deny cases when the billing is incongruent."
While physicians have not been a primary audit target to date; anything can change in the ever-shifting world of RACs, according to Lamkin.
"Physicians are going to be the next big target for the RACs," she says. "When they do automated reviews, there's no differentiation between provider types, so this is something that physicians are going to have to get their arms around."
To read SE1036, click here. The other articles in the series include:
Nothing is ever easy for providers in the ever-fluctuating realm of recovery audit contractors, and the latest spell of operational hiccups heard nationwide is no exception.
No hospital necessarily wants to receive an additional documentation request (ADR) from the RAC, yet when it arrives, it's essentially not surprising. But when a provider receives a follow-up letter from that RAC informing the facility that the claim is closed and the audit has been rescinded, it may throw that hospital for a loop, according to a revenue integrity auditor from a hospital in Region A (DCS).
"We recently received an automated letter notifying us that Medicare made an overpayment related to a CCI edit with an amount and brief description of the claim associated with the overpayment," she says. "When I called [the RAC] to question the letter, a customer service representative told me that they'd rescinded the audit because it was 'outside their audit scope.' "
She continued, "I had to ask for a rescind letter to be sent to me stating this information. We are monitoring the account to assure that money isn't recouped by NGS on day 41, and this has prompted us to do an internal investigation related to this information."
A fellow revenue integrity auditor from a hospital in Region B (CGI), had a similar situation:
"We received an ADR and on the day we were ready to send out the records, we received an additional ADR from CGI stating 'please discard the previous letter,' " she says. "I believe it was a clerical error because they switched those accounts under 'complex reviews being considered' to 'complex reviews approved,' and those under 'complex reviews approved' to 'complex reviews being considered.' "
Although this issue is trending up as of late, it's something that's been around for a while, according to a compliance officer at a Georgia hospital in Region C (Connolly).
"Out of 187 records requested, we've had six statuses changed to 'claims closed – not eligible for review,' but these came in the early stages of RACs, and we haven't had any over the past few months."
The burning question for these hospitals and any facility that has experienced similar circumstances is "Why are the RACs doing this?" There may in fact be a number of perfectly logical reasons for RACs to rescind requests, says Keisha Patterson, RAC coordinator at Saint Joseph's Hospital of Atlanta.
Untimely review. "If we did not review a request within 60 days of receipt and notify the provider, [the request] would have to be rescinded. We rescinded hundreds of reviews for this reason," she says.
Wrong provider type requested. This happened during the demonstration as well as during the current permanent project, according to Patterson. RACs would request records from critical access hospitals when they are not paid via the same reimbursement methodology as OPPS acute care hospitals. "In my experience, they were inadvertently selected by the RACs as they failed to exclude their provider type for some audits."
Faulty audit concept. "The erroneous selection of claims due to a faulty audit concept or inaccurate data analysis is also something I've witnessed," she says. "For example, one RAC may have incorrectly selected claims for an audit concept that is approved, but was written incorrectly in their query."
Requesting above published limits. During the demonstration, if a RAC requested more than 200 records per 45 days they would have to rescind any requests over that 200 mark, and this would occur due to a number of technical glitches at times, according to Patterson.
Patterson is in a position to know. She worked at a RAC for three years during the demonstration period.
The Centers for Medicare & Medicaid Services released the long-anticipated proposed rule for Medicaid recovery audit contractors (RACs) Friday, setting the stage for the targeted April 2011 implementation date.
The use of Medicaid RACs is another initiative put forth by CMS as part of the Affordable Care Act—implemented earlier this year—designed to identify waste, fraud and abuse in the healthcare system by reducing improper payments. According to the rule, states must establish Medicaid RAC programs by submitting state plan amendments to CMS by December 31, 2010 and fully implement their programs by April 1, 2011.
Providers now need to tighten up their processes for accurate coding and medical necessity as it relates to Medicaid as the latest RAC program begins to take shape.
"Hospitals need to be clear that the Medicaid RAC program does not replace current Medicaid auditing and program integrity efforts," says Joe Zebrowitz, MD, executive vice president for Executive Health Resources. "The additional Medicaid program oversight only makes more clear the need to have robust and compliant real-time processes on both the medical necessity and coding fronts, as well as a structured and scaled approach to defending oneself against inappropriate intermediary denials."
In addition to distinguishing the overall Medicaid RAC program from the Medicare RAC program, providers should take note that the appeals process will be vastly different as well. In the case of Medicare, the appeals process is laid out very clearly no matter what state you are in and you have the opportunity to present the case to an arbiter.
With the Medicaid RAC program, the states manage the appeals process, therefore, there will likely be greater variance between appeals processes, state-to-state, as compared to Medicare, according to Zebrowitz.
"Providers need to prepare to manage the process and be intimately familiar with the many regulations, guidance, and interpretations pertaining to admission review," he says. "With any of the healthcare auditing entities, it's not enough to simply reach the correct medical necessity answer, but that answer must be reached through the implementation of a daily compliant review process. You want to have a process that is so ironclad that auditors—particularly contingency auditors—have nothing to find."
Sara Kay Wheeler, partner at King & Spaulding LLP in Atlanta, concurs it's crucial for providers to know the differences when it comes to Medicaid.
"The partnership between the states and CMS in administering the Medicaid program makes the program so different that while there may be some general lessons to be learned from the Medicare RAC program, the influence of state law and the intricacies of each state's Medicaid program will make these Medicaid RACs function very differently," she says. "When you think about how the country is carved up by the Medicare RACs, there are only four RAC contractors covering the entire nation; but with Medicaid RACs, states can contract with one or more entities, and there may be reason for states to engage companies that are the most knowledgeable with the way the state's reimbursement rules actually work."
So, what is the next step for providers when it comes to preparation for Medicaid RACs? According to Zebrowitz, the answer is two-fold:
1. Create a rigorous Medicaid admission review process. "Recognize that the rules may be different compared to Medicare and familiarize yourself with the specific differences," he says. "Next, you've got to come up with a way to manage the process concurrently and to ensure you are arriving at a compliant admission status up front, and manage retrospectively to ensure your protection of rights within the potentially lengthy appeals process."
2. Be aware of updates from CMS and the eventual Medicaid RAC contractors, Wheeler adds. "There is likely going to be much more legwork on the Medicaid RAC side if there are multiple contractors that the providers will need to monitor, similar to how providers currently monitor the four RAC sites to stay current on developing issues," she says.
And as always, providers will need to ensure that they have their process in check on the front end, according to Zebrowitz:
"If our experience in the world of Medicare erroneous payment auditing is any indicator, the best defense against inappropriate payment audit denials is having a process to achieve an upfront compliant admission status certification."
CMS and the Medicare Learning Network recently released the Medicare Quarterly Provider Compliance Newsletter; the first in a series of publications intended to offer providers guidance on avoiding common Medicare billing and general errors.
The quarterly newsletter will focus on top issues identified through various sources in each edition, according to CMS. While some of the information presented in the newsletter is an overview of existing guidance, there were a handful of items that providers should note, according to Kimberly Anderwood Hoy, JD, CPC, director of Medicare and Compliance for HCPro, Inc.
Hoy says that there is some ambiguity when it comes to certain guidance.
Under the recommendations for inpatient hospital services—respirator system diagnosis with ventilator support: principal diagnosis on the claim did not match the principal diagnosis in the medical record.
CMS provides guidance instructing the provider to consult the Benefit Policy Manual, Chapter 15, Section 50.2, on self-administered drugs, which is not applicable to inpatient hospital services, says Hoy.
"It's not clear whether or not they are suggesting that there were a lot of self-administered drugs in the outpatient environment prior to the inpatient admission being billed on the claims in error."
CMS also provides some indistinct education on the issue of unnecessary inpatient services or inpatient services in the wrong setting.
"In regard to the medical necessity of inpatient pacemaker cases, they indirectly draw attention to condition code 44 by referencing the coinciding transmittal, which suggests that CMS is saying hospitals should be monitoring pacemakers sooner so that they can apply condition code 44 to these cases," she says.
When the newsletter covers the issue of "inpatient hospital services—heart failure and shock (DRG 127) criteria for inpatient care not met," she says. Which is the same issue as the pacemaker cases being not medically necessary—they don't mention condition code 44. Instead they focus on sections of the Program Integrity Manual related to documentation, Hoy adds.
"It seems that CMS is looking at these situations differently even though they are both issues of medical necessity of inpatient care because they reference condition code 44 in the pacemaker section, whereas the heart failure and shock section seems to focus on documentation." Hoy says.
Potentially confusing guidance aside, there is certainly something to be learned from this issue, and from future editions. In this initial release, for example, CMS suggests that providers review Chapter 6, section 6.5 of the Program Integrity Manual,where you can find all the standards for medical review, and is something hospitals should definitely review because it has been amended over the last year, according to Hoy.