© 2015

Principles of Healthcare ReimbursementFifth Edition

Chapter 9: Revenue Cycle Management

Objectives

• To recall and describe the components of the revenue cycle

• To define revenue cycle management• To describe the importance for a

provider’s fiscal stability

Revenue Cycle Management

• Revenue cycle: Revenue is regular income, and the cycle is the regularly repeating set of events that produces it

• Revenue cycle management (RCM): All administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue

Revenue Cycle Management (cont.)

• Manager of Revenue Management, Reimbursement and Contracting

• Divisional Director of Revenue Management

• Revenue Cycle Director

• Ideal candidate

o Knowledge of registration process, HIM/coding expertise, finance experience, clinical knowledge, operational skills, and leadership ability

RCM Old vs. New Approach

• OLDo Two-part process

• Front end

• Back end

• Linear and unidirectional

• Not all areas of RC are involved

o Silo approach• Each department is

responsible for its functions

• Promotes hostility among departments

o Reactive

• NEWo Multidisciplinary approach

• RCM team consists of representative from all RC areas

• Promotes teamwork• Promotes education• Cyclical and dynamic• Easily incorporates changing

market forceso Payer trendso Government/regulatoryo Organizational strategy

o Proactive

Basic Revenue Cycle Components

Pre-Claims Submission

Claims Processing

Accounts Receivable

Claims Reconciliation

and Collections

The Revenue Cycle involves many departments and units in the healthcare facility

Each component in this graph has sub-processes and/or cycles

A key to good revenue cycle management is having all areas and units understand the entire cycle; not just the pieces or parts for which a particular unit is responsible

AND good communication and teamwork is required!

Preclaim Submission Operations

• Objectives of preclaim submissiono Collect the patient’s and/or responsible party’s

information completely and accuratelyo Determine the appropriate financial class or

account typeo Educate the patient as to his/her ultimate

financial responsibility for services rendered and obtain written waivers when necessary to support future collections

o Verify all data collected prior to rendering services or submitting claims

Preclaim Submission Operations (cont.)

• Appointments/preregistration/registrationo Registration clerk (admitting) collects patient demographic and

insurance billing data

• Demographic and insurance coverage verificationo Patient accounts area

o Determines insurance verification• Insurance cancelled

• Patient not covered for dates of service

• Preauthorization required

• Length-of-stay authorization

• Patient involved in an accident

o Identify patients who need financial counseling or assistance

Preclaim Submission Operations (cont.)

• Patient education of payment policieso Copayment/Coinsurance

• The amount determined for each service that a patient must pay to the health care provider as determined by the insurance policy

o Deductible• Annual out-of-pocket expenses incurred for covered medical

services that insured must pay each policy year before the insurance company will pay benefits

o Advance Beneficiary Notice (compliance issue)• Advise beneficiaries, before items or services actually are

furnished, when Medicare is likely to deny payment for them

• Allow beneficiaries to make informed consumer decisions about receiving items or services for which they may have to pay out-of-pocket

Claim Processing Operations• Begins after the patient is moved from

registration to treatment room

• Ends when the patient claim (bill) is transmitted to the payer

Patient Perspective

Patient admitted and might pay co-payment or

coinsurance

Treatment is provided

(supplies are used, resources

consumed)

Patient is discharged

Patient receives explanation of

benefits or Medicare

Summary Notice

Patient receives bill

What is the difference between co-payment

and coinsurance?

Facility Perspective

Orders are produced

and treatment provided

Medical records are

reviewed and coded

Claim is produced

Claim is audited

(scrubbed)

Claim is corrected

Claim is transmitted

to Payer

Does the facility use electronic order entry? Or paper order sheets?

HARD CODING!!

SOFT CODING!!!

By combining hard coded and soft

coded data elements together

Changes to coding related data elements must be performed by

qualified person

What is Hard Coding?• Order entry (think supplies, drugs, bandages, etc.) of non-

coded items and services

o IF electronico Order entry system

o Bar-coded supplies systems

» In order to remove a drug vial from the supplies case, a patient account number must be entered. This generates a charge which is posted to the patient’s account.

Charge has many meanings1. Entry of a service or supply

being rendered2. The dollar amount requested

from the payer

What is Hard Coding?• Order entry (think ancillary services that are

coded)o IF electronic

• Via chargemastero Example: physician orders a CBC lab test

o Nurse draws blood and indicates this in order entry system which triggers line item charge for 36415 from CDM to post to patient account

o Med tech performs CBC and indicates this in order entry system which triggers line item charge for 85025 from CDM to post to patient account

What is Hard Coding?• Paper based system

• Via chargemastero Physician writes order in medical record for CBC

o Nurse draws blood and indicates service on paper charge ticket, charge tickets collected at end of day and sent to patient accounts

o Med tech performs CBC and indicates service on paper charge ticket, charge tickets collected at end of day and sent to patient accounts

o Patient account representative manually posts charges to patient account by typing in the service number, which grabs line item charge from CDM and applies codes to patient’s account

Charge Description Master

• Chargemaster (CDM)

• Charge compendium

• Service master

• Price compendium

• Service item master

• Charge list

Charge Description Master (cont.)

• The CDM is a translation table that puts the appropriate data elements on the HIPAA 837I or UB-04 (HCFA 1450) billing form and that categorizes services and supplies for accounting purposes

• The various supplies and services listed on the chargemaster for the average facility drives reimbursement for the majority of the UB-04 claims for outpatient services alone

Charge Description Master (cont.)• Simply put, the CDM is a list of supplies and

services with corresponding data elements and charges for each of those items

o Usually grouped together by departments

o Maintenance shared between finance and individual departments

• Traditionally housed in the finance department

o Great opportunity for HIM professionals to exert their coding/management expertise

CDM Uses

• Claim production

o Translate the services rendered to patients into standardized data elements required for reporting to the payer

• Pricing

o Price or charge – what is the preferred terminology at your facility?

• Is charge/price the same as cost?

CDM Uses (cont.)• Utilization Management

o The number of services performed or the number of units rendered can be calculated

• Example: Radiology Managemento Manager tracks how many chest x-rays are performed

each month

o Compare that to how many chest x-rays were billed

o Compare that to how many chest x-rays were reimbursed

Is there a charge capture issue?

Is there a billing, coding or medical necessity issue?

CDM Uses (cont.)

• Resource Consumptiono CDM uses standardized code sets that allow a facility

to track the type of services utilized by a specific patient population

• Exampleso Cardiac Cath Lab manager wants to know what drugs

were given to patients who underwent catheterization in May.

o Administrator wants to know the average length of time a patient spends in recovery room post colonoscopy services

Have you heard this

term before??

Without having to manually review medical records!

CDM Unit• Size and structure varies from facility to facility• CDM Coordinator or Manager

o Requirements vary • Considerable knowledge of the revenue cycle• Good communication skills, both verbal and written• Basic understanding, if not advanced, of coding and

reimbursement systems• Management experience

o Also• Detail oriented• Be able to strike a balance between control and delegation

HIM-CDM Connection• Most often then CDM is housed in Finance

o So where does HIM come into the picture?• Coding and reimbursement expertise of HIM professionals

is sought after by CDM teamo Understanding the intent of a CPT or HCPCS codeo Understanding new coding guidelineso Understanding impact of new CMS guidelineso Communication coding rules and regulations to clinical or ancillary

departments

• HIM Department and CDM Unit are both part of the revenue cycle

o Work together on key performance indicators (KPI)o Improve the efficiency of providing quality service for all patients

Coding by HIM• Soft Coding

• When is soft coding performed?o Inpatient

o Complex ambulatory surgery

• Identify all diagnoses and procedures

o Coded by trained coding professional

o Abstracted into HIM coding system

o Interfaced with patient accounting system

• Posted to patient’s account prior to submission for payment

There is a lot of variation in the types

of records that are soft coded

Auditing and Review• Claims Processing

o Claim is generatedo Processed through internal auditing system

• Scrubber• Hand audit

o Errors that cause claim rejections or denials• Incompatible dates of service• Nonspecific or inaccurate diagnosis and

procedure codes• Lack of medical necessity• Inaccurate revenue code assignment• Failure to follow contract-specific requirements

Auditing and Review (cont.)

• Corrections are made

o Any code and/or modifier changes should be verified by trained coding professional

• “Clean claim” is submitted for payment

Submission of Claims

• The Final Rule on Standards for Electronic Transactions and Code Sets—Administrative Simplification

o Eight electronic transactions

o Six code sets

o Ensures that all providers, TTPs, claims clearinghouses, etc. use the same sets of codes to communicate coded health information

o Improve efficiency and effectiveness of healthcare delivery

Accounts Receivable

• Management of the amounts owed to a facility by customers who received services and plan to pay later

• Days in accounts receivable =

Ending accounts receivable balance for the period

Average revenue per day

Accounts Receivable (cont.)• AR starts the day the bill is submitted for payment

(dropped)o Most common start date for acute care facilities

• Discharge to bill completion delayso Delay in coding

o Delay in charge entry

o Delay in bill processing

o Bill holds• Pathology reports

• OR report to be dictated

• Completion of D/C summary

• Missing charges

• Incomplete record

Accounts Receivable (cont.)

• Aging of accounts

o 30-day increments

o The older the account the less chance that the claim will be reimbursed

Insurance Processing

• Medicare A/B Carriers or MACso Process Part A and B claims for services by

physicians, medical suppliers and hospitals• Determine the charges allowed by Medicare• Make payments to physicians and suppliers for

Part-B covered services• Determine costs and reimbursement amounts• Conduct reviews and audits• Make payments to providers for covered services

Benefits Statements• Explanation of Benefits (EOB)

o Statement that describes services rendered, payment covered, and benefit limits and denials

• Medicare Summary Notice

o Notice sent after the provider files a claim that details amounts billed by the provider, amounts approved by Medicare, how much Medicare paid, and what the patient must pay

o Formerly known as explanation of Medicare benefits (EOMB)

Remittance Advice

• Remittance advice (RA)

oExplains payments made by third-party payers

• Reports claim

oRejections

oDenials

oPartial payment

o Full payment

Collections and Reconciliation• EOB, MSN, and RA should be used to reconcile accounts

o Write-offs• Partial payment or no payment received and all avenues of

collecting have been exhausted

o Adjustment• Contractual allowances• Participation agreements• Non-covered services without ABN

o Re-submit• Coding change• FL correction

• Changes/adjustments should be recorded in decision support system

CDM Structure

• Each CDM is unique to a hospital or hospital system

o Standard data elements included in each CDM

CDM Structure – Charge Code

• Charge code [service code, charge description number, charge identifier]

o A hospital-specific internally assigned code (usually numeric) used to identify individual items or services

Charge

Code

Depart.

Number

Revenue

Code

CPT -

HCPCS

Code

Charge

Description

Charge

12345 601 360 49180 Mass, bx,

surgery

$535.00

CDM Structure – Charge Code (cont.)

• Charge code numbers are assigned or distributed by a designated person, IT department or the CDM coordinator. o The methodology for distribution depends on the

facility. Similar to typical medical record number schemes, the charge code number may be distributed in straight numerical order, or a facility may reserve numerical sections by ancillary service.

o For example: charge code set 100000-199999 is reserved for physical therapy.

CDM Structure – Charge Code (cont.)

• Regardless of the distribution methodology,

each charge code number must be unique.

o The CDM coordinator must assure that there are not

duplicate charge code numbers in the CDM.

o The CDM Coordinator should schedule and

complete duplicate service number audits

throughout the year.

CDM Structure – Department Code

• Department code [general ledger number, GL#]

o A hospital-specific number which is assigned to each ancillary department that provides services to patients

Service

Code

Depart.

Code

Revenue

Code

CPT -

HCPCS

Code

Charge

Description

Charge

12345 601 360 49180 Mass, bx,

surgery

$535.00

CDM Structure – Department Code (cont.)

• This code is used to identify the area within the healthcare facility that is providing the service.

o The codes may be assigned by ancillary service

• speech therapy

o The codes may be assigned by physical area

• emergency department

CDM Structure – Department Code combined with Charge Code

• Some facilities accomplish having multiple line items for the same service that are performed in different area by combining the department# and charge code to create the unique identifier

For example, venipunctures are performed in various areas for the healthcare facility

Venipuncture service code Department code Unique charge code

12345 123 - ED 12312345

12345 124 – Clinic 12412345

12345 125 – Amb Surg 12512345

• By using this methodology, charge entry users within the healthcare facility can look at the unique charge code and know that the venipuncture (12345) was performed in the ED (123) when the charge code 12312345 appears on the claim

CDM Structure – Revenue Code• Revenue Code

o A four digit numeric code that is required for billing on the UB04 or the 837I ETS. The revenue code is set by the DHHS and is the same at all facilities. The revenue code reported on individual claims is utilized at the end-of-year cost reporting process. Revenue code assignment is usually driven by the ancillary department or location where the service was rendered.

Service

Code

Depart.

Code

Revenue

Code

CPT -

HCPCS

Code

Charge

Description

Charge

12345 601 0360(operating

room)

49180 Mass, bx,

surgery

$535.00

CDM Structure – Revenue Code (cont.)

• Medicare and other TPPs issue transmittals and bulletins that provide instruction for revenue code use with specific CPT/HCPCS codes

• The Medicare Code Editor (MCE) and the Outpatient Code Editor (OCE) used by the Medicare Administrative Contractors (MACs) contain revenue code/CPT-HCPCS code edits to ensure that appropriate combinations are reported on the claim

CDM Structure – Revenue Code (cont.)• In addition to identifying the service area or type of service

performed, revenue codes are used by TPPs to identify payment methodologies for services in their contracts.

o Example:• Payer One specifies in their contract that they will pay 60% of billed

charges for MRI services identified by revenue code 610

• Medicare specifies that the most specific revenue code be used for MRI services, and facilities should report the applicable code in range 610-614

• Payer Two specifies that they will reimburse MRI based on the CPT code

o The CDM Coordinator must work closely with hospital contract managers in ensure that the CDM is meeting the reporting needs for all payers, not just Medicare.

CDM Structure – CPT/HCPCS• CPT/HCPCS Code

o The current code assigned by the AMA or CMS to be reported for individual services, procedures, and supplies rendered to the patient

o Codes may be payer-specific, i.e. Medicare, Medicaid, Blue Cross, etc. CPT/HCPCS codes are not provided for all line items

o Several services or supplies billed to the patient do not have associated CPT/HCPCS codes (room rates, general supplies)

Service

Code

Depart.

Code

Revenue

Code

CPT -

HCPCS

Code

Charge

Description

Charge

12345 601 360 49180 Mass, bx,

surgery

$535.00

CDM Structure – CPT/HCPCS (cont.)

• The CPT/HCPCS code delineates several data pieces within the line item (rev code, dept number, etc.)

• The CPT/HCPCS code sets were established by the Health Information Portability and Accountability Act of 1996 (HIPAA) as the designated code set to be used by all healthcare facilities and insurers for the services, procedures, and supplies rendered in the outpatient settings

• Therefore, the reporting of CPT/HCPCS codes is mandatory when available

CDM Structure – CPT/HCPCS (cont.)

• There are instances where Medicare and other third party payers (TPPs) may require different codes to report a service

• Medicare maintains the HCPCS Level II system which contains temporary codes they have developed for use in various Medicare Prospective Payment Systems (PPS)

• In these instances, the facility must make accommodations in the chargemaster for both codes for that specific service

CDM Structure – CPT/HCPCS (cont.)

EXAMPLE:

CMS requires different codes for some (but not all) intracoronary stent placements. CMS created “C-codes” for hospital outpatient departments to use for Medicare patients as outlined below. Other TPPs required the CPT codes rather than the C-codes.

2015 CPT Codes 2015 Medicare Required Codes92928 – Intracoronary stent, single artery 92928 – Stent placement non-drug eluting stent

92929 – Each additional branch or artery 92929 – Stent each add’l non-drug eluting stent

C9600 – Stent placement drug eluting stent

C9601 – Stent each add’l drug eluting stent

CDM Structure – CPT/HCPCS (cont.)• Therefore, facilities serving

both a Medicare and commercial patient population have to be able to report the correct code for services based on the patient financial class.

• Some facilities accomplish this by creating different line item charges based on financial class.

Line One

Service code: 12345

Dept #: 501

Description: Stent Drug Eluting MCR

HCPCS Code: C9600

Rev Code: 480

Charge: $7,550

Line Two

Service code: 12346

Dept #: 501

Description: Stent Drug Eluting non-MCR

HCPCS Code: 92928

Rev Code: 480

Charge: $7,550

CDM Structure – CPT/HCPCS (cont.)• Other facilities may add a data element to the line item

charge for “Medicare CPT/HCPCS code”

Service Code: 12345301

Dept.#: 501

Description: Stent drug eluting

HCPCS Code: 92928

HCPCS Code – CMS: C9600

Rev Code: 480

Charge: $7,550

• Either way, the facility must have a procedure in place to ensure that the required code is placed on the claim in order to prevent rejections and denials issued by the payer

CDM Structure – Charge Description• Charge description

o An explanatory phrase that has been assigned to describe the procedure, service or supply rendered

o The description is usually based on the official CPT/HCPCS description, but the data field is often limited by the character length allowed by the financial system so shorter descriptions are utilized at most facilities

Service

Code

Depart.

Code

Revenue

Code

CPT -

HCPCS

Code

Charge

Description

Charge

12345 601 360 49180 Mass, bx,

surgery

$535.00

CDM Structure – Charge Description (cont.)

• The AMA and CMS provide an official long description for each code

• Additionally, a short description is provided for use in space limited fields within hospital systems

CDM Structure – Charge Description (cont.)

• The CDM Coordinator or team must decide if the short description of the code should be used as the hospital description or if a modified description would better suit their facility

o The dilemma lies in the fact that most practitioners are not familiar with the official CPT/HCPCS code description, rather they use working lay titles for the procedures and services in everyday practice. Therefore, using the official short descriptions on in the computerized/manual order entry system or CDM may be confusing for the service providers.

o On the flip side, consumers of healthcare may better understand the official short or long description than the lay term used by practitioners. As hospitals work to improve customer service with their patients, they are striving to produce a patient bill that they patient can easily comprehend.

CDM Structure – Charge Description (cont.)• Let’s compare a few official short descriptions to some lay descriptions to illustrate this point:

Charge Description Code Short Description

A. SLP TREATMENT 92507 Speech/language therapy

B. CPM SET-UP 97001 PT evaluation

C. TREATMENT AIDS-INTERM 77333 Radiation treatment aid(s); intermediate

D. SP ARTERIO RENAL BILATERAL 36246 Place catheter in artery; initial 2nd order

• In examples A and B, do you think the average patient would be able identify the service they received from the charge description?

• If you didn’t know coding would you know what “SLP treatment” represented?

• Likewise, in examples C and D perhaps only radiology technicians, radiologists, physicians and coders may understand the hospital lay descriptions for these services.

• Do you think that the average patient would be able to connect “SP Arterio Renal Bilateral” to the catheterization that they received?

• There are no hard and fast rules regarding the description that must be used in the CDM field. Each facility must determine which methodology works best for their facility.

CDM Structure - Charge• Charge

o The hospital price for the item or service rendered to the patient

• Charge does not equal cost! o The difference is product mark-up

Service

Code

Depart.

Code

Revenue

Code

CPT -

HCPCS

Code

Charge

Description

Charge

12345 601 360 49180 Mass, bx,

surgery

$535.00

CDM Structure – Active Indicator• Some facilities use an active/inactive indicator

o Identifier used to indicate if a line item charge is currently being used by the facility to report a service or supply

o Most facilities will not delete line items from their CDM in order to preserve historic practices, and therefore, use an active/inactive status indicator instead

o This allows the facility to maintain the integrity of line items that have been used in the past and may be reviewed at later dates by Medicare and other TPPs

o It is also a way to identify whether new line items are needed • In the line item charge addition process, the requested line item

can be compared to inactive line item charges. If there is a match, the appropriate discussions can then take place about why the line item was moved to inactive status and to determine whether the new line is necessary.

CDM Structure - Modifier

• Modifiero Used to flag a service that has been modified in some

way or to provide more specific information about the procedure or service• CPT modifiers• HCPCS Level II modifiers

• Hard coding is rareo If used, the modifier is placed on the bill EVERY TIME

the charge code is activated in the order entry processo If used, must consider all the compliance implications

CDM Structure – Payer Identifier

• Payer identifier

o Codes that are used to differentiate among payers that may have specific or special billing protocol

• Each time a payer contract is revised, the CDM team must determine if changes in payer identifier assignment are warranted

CDM Maintenance

• On-going, often throughout the yearo CPT/HCPCS code updateso Billing and coding guidance

• Payer Billing and Reimbursement Manuals• Medicare transmittals and updates to the Medicare Claims

Processing Manual• CPT Assistant and Coding Clinic for HCPCS

o Payer contracts• Have a good understanding of the hospital’s financial

calendar for effective planningo Contract updates may follow facility fiscal year or may follow

payer fiscal year

CDM Maintenance (cont.)• Resources

o Code books

o UHDDS information

• UB-04 Editor (published by Ingenix)

o State specific requirements

• Paper vs. On-line

o Shared folder

• Consistency

CDM Maintenance (cont.)• Cannot and should not be one person’s

responsibility!

o Team approach brings varying perspectives and expertise

• Where do you start

o Policies and Procedures

CDM Maintenance (cont.)• Policies and Procedures

o Do our policies cover how coding and billing regulations are communicated within the organization? Do we expect a response?

o Do our policies address resources and instructions for code updates?

o Do our policies require coders and billers to document any advice received from the Medicare Administrative Contractor and other payer representatives?

o Are we addressing CDM risk areas in our policies and procedures?

o Do our policies defend how consultants may be used in CDM maintenance? Should they?

CDM Maintenance Plan• Use a project plan format

o Allows all individuals and departments to understand how their components fit into the larger picture

o Participants will understand their duties and be fully aware of the expected timeline for completion• Very beneficial to new employees who may not be

familiar with the facility’s internal process

Working with Hospital Departments

• Ancillary and clinical departments must work together with the CDM team to ensure complete and accurate maintenance of the CDM

o Remember the primary focus of ancillary department is patient care

• CDM team will need to engage the clinical area

• Be respectful of ancillary and clinical staff’s time

• But also effectively communicate due dates and explain ramifications of failure to update

Working with Hospital Departments

Understanding services

• Clinicians can explain services, service components, delivery techniques

Understanding the CDM

• Explain compliance and billing implications

• Always easier to get buy-in when employees understand the reasoning behind a set process or protocol

Components of CDM Maintenance Plan

• Reviews will take place through-out the year

o Each review should have a scope

• Scope will allow each participant the intent and extent of the review

• Scope will help with communications to other departments or units such as Finance or RC team

CDM Maintenance Plan• Technical activities that should be in the

maintenance plano Review of current statisticso CPT/HCPCS code reviewo Revenue code reviewo Modifier reviewo Charge/price review

• Mapping out all tasks that need to be completed for each review will force the reviewer to complete all planned activities

CPT Updates• CPT Update

o New codes are effective January 1• Update CDM

• Update order entry – electronic or papero Provide education about changes

• Ensure CDM to finance system interface remains intact

o November and December are busy!• Monitor time off requests

• Schedule activities in advance (way in advance) with IT and ancillary areas

CPT Code Update Example• ERCP Procedures

• (Endoscopic retrograde cholangiopancreatography)

• 2013 43267-43269, 43271-43272 o 5 codes

• Code also any sphincterotomy when performed

• 2014 43274-43278o 5 codes

• Codes 43274-43276 are re-sequenced and follow code 43265

• Codes 43277-43278 are re-sequenced and follow code 43273

o Code includes sphincterotomy (cannot code separately)

CPT Code Update Example (cont.)• Re-sequencing

o 43255

o 43266

o 43257

o 43270

o 43259

• Re-sequencing

o 43265

o 43274

o 43275

o 43276

o 43277

o 43278

o 43273

Watch out for resequencing of

codes in CPT

CPT Code Update Example (cont.)

2013 ERCP Codes

Charge Code

Rev Code

CPTCode

Description

361234 0360 43267 ERCP endoscopic retrograde insertin of nasobiliary or nasopancreaticdrainage tube

361235 0360 43268 ERCP endoscopic retrograde insertion of tube or stent into bile or pancreatic duct

2014 ERCP Codes

Charge Code

Rev Code

CPTCode

Description

362345 0360 43274 ERCP endoscopic stent into biliary or pancreatic duct

How does your facility handle going from 2 codes to 1 codes?Do you deactivate the 2013 line items and create a new line item for the 2014 code?Do you update the 1 line item with 2014 information and then deactivate or delete the other line item?

HCPCS Level II Code Updates

• HCPCS Codes

o Permanent codes are updated annually

• Effective January 1

o Temporary codes are updated quarterly

HCPCS Code Update Example

• 2014 CMS added code J9306 for pertuzumab, 1mg (Perjeta)

• On September 30, 2013, the Food and Drug Administration (FDA) granted accelerated approval to pertuzumab injection (Perjeta®, made by Genentech, Inc.) for use in combination with trastuzumab and docetaxel for the neoadjuvant treatment of patients with HER2-positive, locally advanced, inflammatory or early-stage breast cancer (either greater than 2 cm in diameter or node positive) as part of a complete treatment regimen for early breast cancer

HCPCS Code Update Example (cont.)

• Questions for the CDM Coordinator

o Is this drug currently used by the facility?

• Did we use this drug during clinical trials at our facility?

• If so, how was it being charged?

o What is the policy for updating?

• Do you deactivate and create a new charge item?

• Do you update the line item with the new data elements?

Prospective Payment Systems

• Each Medicare PPS is updated at a different time during the facility’s fiscal year

oWhich types of facilities does you CDM serve?

Prospective Payment Systems Schedule

Service Site Abbreviation Relative Weighted Group Abbreviation Annual Update

Ambulatory Surgical Center ASC Ambulatory Payment

Classifications

APCs January 1

Home Health Agency HHPPS Home Health Resource

Group

HHRG October 1

Hospital Outpatient Facility OPPS Ambulatory Payment

Classifications

APCs January 1

Inpatient Acute IPPS Medicare Severity

Diagnosis Related Groups

MS-DRGs October 1

Inpatient Psychiatric

Facility

IPF PPS Per diem payment n/a October 1

Inpatient Rehabilitation

Facility

IRF PPS Case Mix Group CMG October 1

Long-Term Care Facility LTCH PPS Medicare Severity

Diagnosis Related Groups

MS-DRGs October 1

Skilled Nursing Facility SNF PPS Resource Utilization Group,

Version III

RUG III July 1

Payer Updates

• Payer Updates

o Important to have a schedule

• Policy alerts

o Issued throughout the year

• Compliance guidance

o Issued throughout the year

Payer Distribution

Distribution of health insurance coverage, percentage of population covered by payer, 1990, 2007, and 2008: AHA 2009

Other Maintenance• Monitoring rejections and denials

o Putting out fires

o You still need a plan and scope for the review

• Human errorso We all make mistakes!

o Once an issue is identified what steps do you take to correct the issue? What is your procedure?

• System errorso CDM representative must participate in testing

Human Error Example

Charge Code 8756214 with Incorrect CPT Code

Charge Code

Revenue Code

CPT Code Charge Description Charge/Price FS Rate

8756214 0300 80048 Aldosterone suppression eval panel $350.00 $179.76

8756849 0300 80048 Basic metabolic panel $55.00 $12.12

Charge Identifier 8756214 with Correct CPT Code

Charge Code

Revenue Code

CPT Code Charge Description Charge/Price FS Rate

8756214 0300 80408 Aldosterone suppression eval panel $350.00 $179.76

8756849 0300 80048 Basic metabolic panel $55.00 $12.12

Systems Error Example

• Revenue code transmission

o Think about preceding zero

• 360 to 3600 – INVALID revenue code!

o Correct transmission

• 0360 to 0360

Automation of CDM Maintenance• Identify issues surrounding

o Revenue code

o CPT/HCPCS code

o Compliance issues

• Most include Medicare regulations – but what about your payer specific rules? How do you ensure that the software does not auto update your customized line items?

Compliance Plan

• Every facility has a compliance plan

o The CDM unit’s policies and procedures must be in alignment with the facility's compliance plan

o Coding and billing impact reimbursement

• Highly regulated area

o CDM establish protocols that ensure compliance with the laws, regulations and requirements for all payers

Compliance Guidance

• Medicare Claims Processing Manual

o #100-04; internet only manual

o Day-to-day operating instructions, policies and procedures based on statues, regulations, guidelines, models and directive are included in the manual

o Changes are made throughout the year

Compliance Guidance (cont.)

• CMS Program Transmittals

o Used by Medicare to communicate policies and procedures for specific prospective payment systems

Program Transmittal’s Role in CMS Communication Strategy

LawRule (Federal

Register)Program

Transmittal

Medicare Claims

Processing Manual

Compliance Guidance (cont.)• National coverage determinations (NCDs)

o Describe the circumstances under which specific medical supplies, services or procedures are covered nationwide by Medicare.

o Binding for all MACs, DMERCs, QIOs, ZPICs, etc.

• Must notify the hospital community of the release of a new NCD

• Cannot deviate when absolute words are used o “Never” or “only if”

Compliance Guidance (cont.)• Local coverage determinations (LCDs)

o Provide facilities and physicians with the circumstances under which a service, procedure or supply is considered medically necessary.

o Determine coverage on a MAC-wide basis • Not nationwide• Differences among MACs

o Educational materials that have the intent to assist facilities and providers with correct billing and claim processing

o Listing of ICD-10-CM codes that indicate what is covered and what is not covered

o May be a listing of HCPCS codes for which the LCD applies

Coverage vs. Medical Necessity• What is the difference?

• Example: Chest x-rayso There is a NCD that states that chest x-rays are covered –

that is they are included in the Medicare benefit package

o There are LCDs that state when a chest x-ray is medically necessary• Physician must provide sufficient medical documentation, through

ICD-9-CM diagnosis coding, to substantiate that the service is warranted for diagnostic or therapeutic treatment of the patient

o Medicare DOES NOT pay for services that are not medically necessary

Compliance Guidance (cont.)• LCD

o Policy – contains only the reasonable and necessary provision regarding the supply, procedure or service• List of codes describing which conditions provide for medical

necessity and which conditions do not warrant medical necessity

o Article – provide guidelines about the benefit category, statutory exclusions and coding provisions• Coding guidelines relating to the diagnosis codes in the

medical necessity code list would be in an article

• Must read both the policy and the article

Compliance Guidance (cont.)• NCD

o Medicare National Coverage Determinations Manual

• #100-03; internet only manual

• LCD

o Additional information about LCDs is located in the Medicare Program Integrity Manual

• #100-08; internet only manual

Compliance Guidance (cont.)• National Correct Coding Initiative (NCCI)

o In place since 1996• Two sets

o Physician

o Facility – included in the Outpatient Code Editor under OPPS

o Ensure proper CPT and HCPCS coding• Audit based on CPT coding conventions, national and

local policies and edits, coding guidelines developed by national societies, analysis of standard medical and surgical practices, review of current coding practices

Compliance Guidance

• NCCI edits

o Two types (included in one file)

• Comprehensive code edits

• Mutually exclusive code edits

o Published on a quarterly basis

o NCCI Policy manual available on-line

Compliance Guidance (cont.)

Compliance Guidance (cont.)Medicare Summary Notice (MSN)

Message 16.8 - Payment is included in another service received on the same day

Message 16.9 - This allowance has been reduced by the amount previously paid for a related

procedure

Remittance Notice Messages

Claim adjustment reason code 97 – The benefit for this service is included in the

payment/allowance for another service/procedure that has already been adjudicated.

Claim adjustment reason code 231 – Mutually exclusive procedures cannot be done in the same

day/setting

Remark code M80 – Not covered when performed during the same session/date as a

previously processed service for the patient

Compliance Guidance (cont.)

• NCCI edits and modifiers

o CPM – Chapter 23 Section 20.9.1

• Correct coding modifier indicators and HCPCS codes modifiers

• Discusses NCCI edits that allow for modifiers to be used by providers to indicate special circumstances when the code edit should be bypassed based on the patient’s specific course of treatmento Approved list of CPT and HCPCS II modifiers

Compliance Guidance (cont.)

• Outpatient Code Editor

o Software program designed to process data for OPPS pricing and to audit facility claims data

• Device-Procedure/Procedure-Device editso Forces facility to submit a code for the surgery and for the

implantable device

Compliance Guidance (cont.)• Payer specific requirements

o WC may not cover preventive immunizations

• May only cover tetanus shots post injury

o Advise facilities to report the immunization in RC 450 (emergency department) not 770-779 (preventive care services)

Revenue Cycle Management Team• Improve the efficiency and effectiveness

of the revenue cycle process

• Each facility will have different goals and objectives based on their current RC processes

• Each facility will have different team members based on their operations and management

Why Improve RCM?• Decrease payment delays and lost revenue

o Poor clinical documentation

o Poor coding

o Need for better contract negotiations

o Out of date chargemaster

o Inadequate precertification/eligibility processes

o Numerous denials and appeals

• Improve patient satisfaction

• Re-work at the end costs more than implementing quality controls throughout

• Each year the HC industry spends about $26 billion on hospital RCM operations

RCM Team Members - Sample

• Major functions of revenue cycleo Admittingo Case managemento Charge captureo Codingo Patient financial serviceso Financeo Complianceo Information technology

• Each area should have a representative on the RCM team

RCM Team—First Steps• Assess the knowledge level of individual

memberso Determine if initial education is required

o Why?

• Define goals and objectives

• Identify data needs

• Establish standard language and format for data reporting

• Establish key measurements or key performance indicators

RCM Team Objectives• Identify issues to improve AR• Communicate issues with appropriate areas• Develop educational material such as a revenue cycle

manual • Create a map or blueprint on how to bring up new

services• Review denials and actively discuss the appeal process

and success• Discuss key performance indicators and measures• Coordinate upgrades or updates to all interrelated

systems (ICD-9-CM, OCE editor)

Sample Facility KPI – Table 9.14

Sample RCM Measurements• Value and volume of discharged not final billed

encounters

• Number of AR days

• Number of bill hold days

• Percentage and amount of write offs

• Percentage of clean claims

• Percentage of claims returned to provider

• Percentage of denials

• Percentage of accounts missing documents

Sample RCM Measurements (cont.)• Number of query forms

• Percentage of late charges

• Percentage of accurate registrations

• Percentage of increased point-of-service collections for elective procedures

• Percentage of increased DRG payments due to improved documentation and coding

• Percentage of increased APC payments due to improved documentation and coding

Revenue Cycle Analysis

• Determine focus areas

o OIG Workplan

o CERT findings

o National Audit Recovery reports

Revenue Cycle Analysis (cont.)

• Review case studies presented in the textbooko Case-Mix Index Analysis (CMI) page 277

o MS-DRG Relationship Reporting page 278

o Site of Service: Inpatient versus Outpatient page 278

o Evaluation and Management Facility Coding in the Emergency Department page 280

o Outpatient Code Editor Review for Hospital Outpatient Services page 280