Provider-based Clinics - West Virginia Healthcare Financial

Navigating Coding & Billing Compliance
in Outpatient Departments
WVHFMA Fall Revenue
November 27, 2012
Jill Newberry, CPA, CPC
Arnett Foster Toothman, PLLC
OPPS Coding and Billing Hot Topics
2013 Proposed OPPS Rule
October, 2012 APC Charge Edit
Physician Supervision
Coding for Clinic and ED Facility E&M Services
Emergency Department Services
EHR Dangers for E&M Professional Codes
Observation Services
Injections & Infusions
Wound Care
What is a HOT Topic and Why is it Hot?
Something that puts the institution at risk
 Regulatory risk
 Financial risk
Recent audit activity, increased regulatory review
 Recovery Audit Contractors (RAC)
 Office of Inspector General (OIG)
Billing and coding compliance is dynamic with constant
changes to regulations and interpretations and/or
"clarifications" of long standing rules
Individual organizations will experience different hot
topics based on service lines, internal systems and
controls and methods of communication involved in
generating a “clean claim”
Not intended to be an all inclusive list of hot topics (i.e.
high risk) billing and coding issues
How Do Billing and Coding Issues
Become Hot Topics?
New requirement
New interpretation of long standing practice or
Requires coordination -> 1 group involved
Issue under investigation or review by external
agencies ex: OIG, RAC etc
2013 OPPS Final Rule
Approximately half the size of the 2012 rule
Proposing two major changes:
 CMS proposes to change the way it calculates APC relative
 Has used median cost data since inception to create APC
 Suggesting using the geometric mean cost to create APC
 CMS released a file so hospitals can look at impact
 2013 Geometric Mean Median Change (different view of
addendum B
2013 OPPS Final Rule
Proposing two major changes (Cont):
 Separately payable drugs
 CMS Proposes to reimburse hospitals for separately payable
drugs and biologicals without pass-through status at average sales
price (ASP) plus 6%, a 2% increase from 2012.
No policy changes
 No additional composite APCs
 No changes to drug administration
Hospitals should take a note of the payment rate shifts due to
proposed new process for weighting of APC’s
October 1, 2012 APC Edit
Transmittal 2463, May 4, 2012
SUMMARY OF CHANGES: Effective for claims received on or after October
1, 2012, contractors shall verify claims with OPPS Payments that meet a
reimbursement amount greater than submitted charges.
Background: The U.S. Department of Health and Human Services (HHS),
Office of Inspector General (OIG), recently issued several final audit reports
regarding the “Review of Medicare Payments Exceeding Charges for
Outpatient Services Processed” to various A/B Medicare Administrative
Contractors (A/B MACs).
Audit findings in these reports include: providers reporting incorrect units of
service and/ or incorrect HCPCS codes, or use of HCPCS codes that do not
reflect the procedures performed.
Based on findings in these reports, the Center for Medicare & Medicaid
Services (CMS) is implementing a verification policy when the Outpatient
Prospective Payment System (OPPS) payment is greater than the billed charges.
October 1, 2012 APC Edit
Policy: When the OPPS reimbursement is greater than the claim charges,
verification will be needed to ensure that a billing error has not caused this
Effective for claims received on or after October 1, 2012, FISS shall install a
verification edit for claims with OPPS Payments that meet a reimbursement
amount greater than submitted charges. The edit shall be applied to the following
providers and bill types:
Provider Type Types of Bills
Hospitals 12X, 13X, 14X
Contractors shall suspend those claims receiving the verification edit for
development and contact providers to resolve billing errors. If the contractor
determines that the reimbursement is excessive and claim corrections are required,
the contractor shall return the claim to the provider. If the contractor determines
that the billing is accurate and the reimbursement is not excessive, the contractor
shall override the FISS edit and submit the claim to the Common Working File
Physician Supervision - Review
Many hospital outpatient therapeutic services are covered under the “incident to a
physician’s service” provision of the SSA. Physician “incident to” provisions are contained at
SSA §1861 (a)(2)(A)
“This provision does not apply to services covered under other benefit categories.” 72 Fed.
Reg. 66580, 66818 (November 27, 2007)
Supervision “assumed” for on-campus hospital departments per CMS language in the April
2000 OPPS final rule
CMS issued a “restatement and clarification” in the 2009 OPPS final rule that its always
expected “direct supervision” for incident-to outpatient therapeutic services in both on- and
off- campus departments
Providers raised concerns regarding the CMS “clarification” during 2009 and 2010
CMS will not withdraw what it considers longstanding physician supervision policies for
hospital outpatient services, but has acknowledged that there has been some confusion prior
to January 1, 2009
CMS finalized physician supervision requirements for 2010 but in March 2010, agreed to nonenforcement for CAHs.
2011 Physician Supervision - Review
CAHs and rural hospitals commented that the direct supervision
requirements conflicted with CAHs CoPs
CMS argued there is a difference between CoPs and payment policy
However – CMS then announced that physician supervision
requirements would not be enforced for CAHs and also for small rural
hospitals with less than 100 beds in CY 2011 & also 2012
CMS continues to emphasize need for consistent quality and safety for
outpatient services provided all facilities
CMS likely to revise supervision rules for all facilities to include CAHs
and small rural hospitals
2011 Physician Supervision - Review
CMS designated 16 services as “non-surgical extended duration services” where
direct supervision is required for the initiation of the service followed by minimum
standard of general supervision for the duration of the service
CMS revised the definition of direct supervision by removing all references to “on
the same campus” or “in the off-campus provider-based department of the
hospital” or “in the hospital or CAH”
By removing specific boundaries, CMS provided “flexibility” while holding the facility
and practitioner accountable for determining how to be physically and immediately
available when supervising services provided “incident to” a physician’s service in
the outpatient setting
The new definition applies equally in the hospital or in an outpatient department of
the hospital both on-and off- campus
The new definition of direct supervision simply requires immediate availability
which means physically present, interruptible, and able to furnish assistance and
direction throughout the performance of the procedure
2011 Physician Supervision - Review
Supervisory practitioner must be immediately available to furnish assistance and
direction throughout the procedure
Temporal requirement, no specific physical boundary requirement
Supervisory practitioner cannot be so physically distant that he/she could not intervene
right away
Supervisory practitioner cannot be performing another procedure or service that
he/she could not interrupt
Supervisory practitioner must have within his/her State scope of practice and hospital
granted privileges the knowledge, skills, ability, and privileges to perform the service
Supervisory practitioner must be clinically able to furnish the service himself/herself
Supervisory responsibility is more than the capacity to respond to an emergency and
includes the ability to take over the performance of the procedure or provide additional
2011 Physician Supervision - Review
Supervision may be performed by a physician or by a certain non-physician
practitioner (clinical psychologist, licensed clinical social worker, physician
assistant, nurse practitioner, clinical nurse specialist, or certified nurse midwife)
Hospital should have in place credentialing procedures, bylaws and other
policies to ensure that outpatient services furnished to beneficiaries are
provided only by qualified practitioners
For therapeutic services furnished under arrangement outside the hospital to
patients, CMS expects that the services are being supervised appropriately
2011 Physician Supervision - Review
Direct supervision – immediately available to furnish assistance and
direction throughout the procedure. Does not mean in the room; but
CMS makes it clear must be physically present. Available thru phone
does not meet the requirement. In a clinic within close proximity, is
considered to be immediately available.
General supervision – services are furnished under the overall
direction and control of the physician but his presence is not required
during the procedure.
Personal supervision – physician is present in the room when
procedure is performed.
2012 Physician Supervision
During the 2012 OPPS rulemaking cycle, CMS finalized plans to augment the scope and membership of the
APC Advisory Panel to include supervision levels and members of rural and CAH providers, respectively
Evaluation Criteria:
Complexity of the service;
Acuity of the patients receiving the service;
Probability of unexpected or adverse patient event;
Expectation of rapid clinical changes during the therapeutic service or procedure; and
Recent changes in technology or practice patterns that affect a procedure’s safety.
CMS will prioritize requests based on:
service volume,
total expenditures for the service, and
frequency of requests.
Priority to services that the public has requested for evaluation in the CY 2010 through CY 2012
OPPS/ASC rules & to services not previously been evaluated by the Panel.
Baseline supervision level is direct & requests require justification for change in supervision level, supported
with clinical evidence and at the CPT/HCPCS code level.
2013 Physician Supervision – Proposed
Enforcement Instruction for the Supervision of Outpatient Therapeutic Services in CAHs and
Small Rural Hospitals:
In this proposed rule, we are requesting that CAHs and small rural hospitals submit to
CMS for potential evaluation by the Panel at the summer meeting any services for which
they anticipate difficulty complying with the direct supervision standard in CY 2013.
In developing evaluation requests, hospitals should refer to the evaluation criteria that we
finalized in the CY 2012 OPPS/ASC final rule with comment period.
We recognize that hospitals have had little experience in submitting evaluation requests to
CMS for consideration by the Panel.
In order to give hospitals additional opportunity this year to become familiar with the
submission and review process at the summer Panel meeting, and to allow hospitals time
to meet the required supervision levels for services that may be considered for CY 2013,
we anticipate extending the non-enforcement instruction one additional year through CY
We expect that this will be the final year for the instruction, regardless of the services
reviewed by the Panel during its summer meeting.
2013 Physician Supervision – Sept 24 Preliminary
Decisions on Recommendations
Hospital OP Payment Panel meeting August 27-28, 2012
Decisions are preliminary and were open to public comment through October 24, 2012
Final decisions will be posted after considering any comments and those decisions will be
effective on January 1, 2013
Panel recommended change from direct supervision to general supervision for the following
G0008 – flu
G0009 – pneumoncoccal vaccine
G0010 – Hepatitis B vaccine
G0127 – Trimming of dystrophic nails
11719 – Timming of nondystrophic nails
36000 – Introduction of needle or intracatheter, vein
36591 – Collection of blood specimen from a completely implantable venous access device
36592 – Collection of blood specimen using established central or peripheral cathether, venous
51072 – Insertion of temporary indwelling bladder catheter; simple
51705 – Change of cystostomy tube; simple
51798 – Measurement of post-voiding residual urine and/or bladder capacity by ultrasound, non-imaging
2013 Physician Supervision – Sept 24 Preliminary
Decisions on Recommendations
Panel recommended change from direct supervision to general supervision for the following services
96360 – IV infusion, hydration; initial
96361 – IV infusion, hydration; each additional hour
96561 – Refilling and maintenance of portable pump
96523 – Irrigation of implanted venous access device for drug delivery systems
G0379 – Direct Admit for hospital observation care
The following codes remain “extended duration” meaning general after the initiation of
service under direct supervision:
G0378 Hospital observation services per hour
G9141 – Infuenza A
29580 – Strapping, unna boot
29581 – Application of multi-layer compression system, leg (below knee)
96365 – 96368 – IV infusion, therapy codes
96372 – 96376 – Therapeutic or diagnostic injections
Physician Supervision – CMS - FAQs
FAQ #5 – Can an emergency department physician or NPP
directly supervise therapeutic outpatient services while in
the emergency department?
 “In most cases the emergency physician or NPP can
directly supervise outpatient services so long as the
emergency physician in the ED of the campus is
immediately available, meaning that, if needed, he or she
could reasonably be interrupted to furnish assistance
and direction in the delivery of therapeutic services
provided elsewhere in the hospital…We believe that
most emergency physicians can appropriately supervise
many services within the scope of their knowledge, skills,
licensure, and hospital-granted privileges…”
Physician Supervision – CMS - FAQs
FAQ #6 – Does a physician need to directly supervise
therapeutic services delivered to hospital outpatients or
can other NPPs directly supervise as well?
 “Beginning in CY2010, NPPs, including nurse
practitioners, physician assistants, clinical nurse
specialists, certified nurse-midwives, and licensed clinical
social workers may directly supervise the provision of all
hospital therapeutic services that they may perform
themselves within their state scope of practice and
hospital-granted privileges, provided that they continue
to meet all the requirements for directly providing
services, including any collaboration or supervision
Physician Supervision – Enforcement
If you are audited by any government agency who
is questioning physician supervision at your
hospital, the first step is to figure out what period
is under review in order to determine what the
rule was at the time!
Be sure to get policies in place for provider based
locations as well as any other departments where
you perform these services.
Coding for Clinic and ED facility E&M
Technical Component Coding – Hospital level of care provided. Hospital
must have a policy for determining level of care.
 Time
 Staff intervention
 Point system
Professional Component Coding – Based on E&M rules
 History
 Exam
 Medical Decision Making
Both technical and professional coding should be monitored by reviewing
frequency and distribution of codes.
Emergency Department
Facility E&M Determination
 Five levels –
CPT 99281 – 99285
 Critical care – CPT 99291 – code also any procedures
 Third party payers may not pay additional ½ hours of critical
care on the facility side
 All procedures performed by physicians and ancillary staff
must be coded
 Review nursing notes for procedures performed
Clinic Departments
Facility E&M Determination
 New Patient CPT 99201 – 99205
 Established Patient – CPT 99211 – 99215
 All procedures performed by physicians and ancillary staff
must be coded – ancillary staff services determine facility level
 Review nursing notes for procedures and E&M services
Coding for Clinic and ED facility E&M
Evaluation and Management (E&M) services are coded on
the technical (hospital) component side based on
resources utilized
CMS states in several OPPS rules that they do not intend
to tell us how to code these levels, in fact, in the 2009
OPPS final rule, they state that hospitals are doing well by
using their own policies
Most hospitals use a “scorecard” approach to determine
the correct level
Be careful not to include “separately billable” services on
the “scorecard” to prevent duplication
Coding for Clinic and ED facility E&M
Methodologies for Determining E&M Level (Scorecard type)
 Staff time – based on the time staff spent with the patient. Higher
levels are reported based on increments of time beyond baseline care.
Staff intervention – based on the number or type of staff interventions
performed by nursing or ancillary staff. Higher levels are reported
based on the number and/or complexity of staff interventions.
Resource intensity point scoring – based on points assigned to each
staff intervention based on time, intensity and staff type required. The
service level is determined by the sum of the points for all services
ED & OP Visit Coding (Facility)
CMS E&M Facility Guidelines
Based on hospital facility resources
Clear and usable for compliance purposes and audits
Meet the HIPAA requirements
Require documentation that is clinically necessary for patient care
Should not facilitate upcoding or gaming
Written or recorded, well-documented, and provides the basis for selection of
a specific code
Applied consistently across patients in the clinic or ED to which they apply
Should not change with great frequency
Readily available for fiscal intermediary (or, if applicable, Medicare
Administrative Contractor) review
Should result in coding decisions that could be verified by other hospital staff
members, as well as outside sources.
ED & OP Visit Coding (Facility)
2013 Proposed Rule
“…we are continuing to instruct hospitals to report facility
resources for clinic and emergency department hospital
outpatient visits using the CPT E/M codes and to develop
internal hospital guidelines for reporting the appropriate visit
level. We note that our continued expectation is that
hospitals' internal guidelines will comport with the principles
listed in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66805). We encourage hospitals with specific
questions related to the creation of internal guidelines to
contact their servicing fiscal intermediary or MAC. We refer
readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74338 through 74346) for a full historical
discussion of these longstanding policies.”
Emergency Department
ED Treatment Rooms
Do not bill E/M with drug administration charge when an
infusion is the sole reason for the visit
2007 OPPS Final Rule – “Providers should bill a low-level visit
code in such circumstances only if the hospital provides a
significant, separately identifiable low level visit in association
with the packaged service.”
Medical Necessity
Medically Necessary means that a service, supply or medicine
is necessary and appropriate and meets the standards of good
medical practice in the medical community for the diagnosis or
treatment of a covered illness or injury, as determined by the
insurance company
Review National Coverage Decisions (NCD)
Review Local Medical Review Policies (LMRP)
NCDs take precedence over LMRPs
Medical Necessity - ED
Code Signs and Symptoms to support test
 May code diagnoses from the Radiology
 “Rule out” or “probable” diagnose not
 May not code results from Lab tests
Split/Shared Visit
Qualified Non Physician Providers (NPPs) who are permitted to assist a physician
during a shared visit are:
 Nurse practitioners
 Physician assistants
 Clinical nurse specialists
 Certified nurse midwife
Medicare reimburses services provided by an NPP alone at 85% of the rate it
reimburses physicians. However, CMS reimburses visits shared between the
physician and the NPP at 100% of the allowed amount to the physician.
To obtain the full reimbursement allowed, the physician must document his or her
participation in the care of the patient along with the NPP’s documentation of his
or her portion of the care. If the documentation does not support the physician’s
presence and the portion of work the physician performed, the NPP should report
the care alone.
Reporting Split/Shared Visits to Medicare
The split/shared visit rules state that both the NPP and the physician must have a
face-to-face encounter with the patient on the day the facility or practice reports
the service. (The Handshake Rule)
Both the physician and the NPP should document their own participation in the
medical record.
The physician practice employs the NPP. Warning - do not report a shared
visit when a hospital facility or other entity employs the NPP.
The physician cannot simply co-sign the chart and state “reviewed and agree” in the
record without seeing the patient personally.
The physician must perform and document at least some of the three
key components of E/M services (i.e., the history, the exam, and the
medical decision-making)
OIG Report: Coding Trends of Medicare
E&M Services
Similar trends held true across 13 different categories of E/M services.
The jump from 99213 to 99214 yielded a handsome increase in compensation. In 2010,
Medicare paid on average $97.35 for a 99214 visit, which is 50% more than the $64.80 for a
As a result of this study, OIG turned the names of 1,700 physicians over to CMS and
suggested review.
The OIG states that it did not determine whether physicians who chose more 99214’s and
other higher-level E/M codes in 2010 billed Medicare inappropriately or fraudulently. That line
of inquiry, it says, will be the focus of future reports.
The following month (June 2012) the OIG issued a Memorandum Report – Use of Electronic
Health Record Systems in 2011: Among Medicare Physicians Providing Evaluation and
Management Services.
The survey concluded that physicians do not trust their EHR’s to assign billing codes. Of the
2,000 physicians surveyed, 88% manually assign the codes for E&M services and the remaining
12% use professional billers to do so.
The message is crystal-clear, OIG has specifically targeted billing fraud perpetuated by reliance
on EHR coding/documentation.
OIG Memorandum Report: Use of EHR Systems in 2011
Among Medicare Physicians Providing Evaluation and
Management services
 This memorandum report responds to a request from
officials of the Office of the National Coordinator for
Health Information Technology (ONC), who expressed
interest in information about physicians’ reported use of
electronic health record (EHR) systems
 ONC officials made this request in connection with an
ongoing evaluation on the extent of documentation
vulnerabilities of evaluation and management services
using EHR systems
OIG Memorandum Report: Use of EHR Systems in 2011
Among Medicare Physicians Providing Evaluation and
Management services
OIG Findings:
 57% of Medicare Physicians used EHR at primary practice
location in
 95% of physicians who used EHR for E&M began between 2001
 Of these physicians, 22% began using EHR in 2011, the year
commenced the incentive program
 3 of every 4 Medicare physicians with an EHR system used a certified
system to document E&M services
 Although many EHR systems can assist physicians in assigning codes for
E&M services, we found that most Medicare physicians manually assigned
E&M codes
NY Times: Medicare Bills Rise as Records
Turn Electronic
New York Times Article September 21, 2012
“the move to electronic health records may be contributing to billions of dollars in higher
costs for Medicare, private insurers and patients by making it easier for hospitals and
physicians to bill more for their services, whether or not they provide additional care.”
“one contractor, National Government Services, recently warned doctors that it would refuse
to pay them if they submitted “cloned documentation”.”
Trailblazer Health Enterprises in Texas “found that 45 out of 100 claims from Texas and
Oklahoma emergency department doctors were paid in error. Patterns of over-coding E.D.
services were found in template-generated records”.
One patient came to Virginia hospital ED with kidney stones. When he received the bill from
the ED doctor, his medical record, produced electronically, reflected a complete physical exam
that never happened.
Record showed his extremities had been examined, however patient’s legs were wrapped
in a blanket.
Patient alleges “most logical conclusion was [the doctor] went to a menu and clinked
standard exam and the software filled in a examination of all of his system.
 After he complained, the physician group reduced his bill.
Letter From US AG and US DHHS Secretary
Dated September 24, 2012 to 5 Trade Associations.
“55% of hospitals have already qualified for incentive payments authorized by Congress for adopting
and meaningfully using electronic health records.”
“Used appropriately, electronic health records have the potential to save money and save lives.”
“Troubling indications that some providers are using this technology to game the system, possibly to
obtain payments to which they are not entitled”.
“These indications include potential “cloning” of medical records in order to inflate what providers
get paid.”
“There are some reports that hospitals may be using electronic health records to facilitate “upcoding” of the intensity of care or severity of patient’s condition as a means to profit with no
commensurate improvement in the quality of care.”
“A patient’s care information must be verified individually to ensure accuracy: it cannot be cut and
pasted from a different record of the patient, which risks medical errors as well as overpayments.”
“CMS is initiating more extensive medical reviews to ensure that providers are coding evaluation and
management services accurately.”
“This includes comparative billing reports that identify outlier facilities.
The Dangers of Copy and Paste
The practice goes by several names:
Copy and paste
Carrying forward
Carrying forward information without careful review can cause contradictions in a patient’s
chief compliant documentation or history of present illness.
If a clinician is carrying forward information unless they read the information word for word,
line for line and re-evaluate, the information carried forward may be inaccurate.
Documentation may show physicians performing services they only performed once in the
past, leading to over reimbursement.
Documentation must be recorded for each specific encounter
Once copy and paste gets in to the record, its credibility may be compromised
Copying forward a previous review of systems without reviewing changes in the patient’s
health status is noncompliant.
Many MAC’s are now requesting multiple visits of the same patients E&M record and
reviewing for cloning, upon finding it, the entire amount of payment is rescinded.
CMS Allows RAC to Add E&M Services to
Approved List
In September, 2012, CMS made the decision to allow RACs to begin
reviewing the billing codes for office visits for healthcare providers.
Specifically the codes at issue are evaluation and management codes (E&M).
These claims had previously been off-limits to RACs.
Connolly, Inc., the contractor for RAC audit services in 15 states (including
WV) will sort through claims filed by doctors and hospitals from as far
back as October 1, 2007.
The plan is to conduct limited reviews using statistical sampling to project
how many physician claims that used the high level, established patient E&M
code 99215 were paid correctly.
Other RACs are expected to follow Connolly’s lead.
Steps to Take Now to Lower Your Risk Profile
Be Proactive – Start Now!
Compliance Program – if you don’t have an effective compliance program,
get one now.
If you have not already purchased an EHR, shop carefully and be wary of
vendors who promise your patient encounters will come out at a higher
level after you adopt their system.
Run a baseline CPT frequency report of your E&M services for each
provider before you implement EHR. Continue to monitor the frequency of
the distribution of E&M code levels after implementation and look for
significant changes.
Understand EHR functionality – determine where in workflow “cloning”
can occur.
Provider regular consistent training to physicians regarding the appropriate
use of EHR.
Steps to Take Now to Lower Your Risk Profile
If you have already implemented an EHR, calculate any improved net
revenue directly associated with higher E&M coding levels.
Review any variations among providers (i.e., some physicians billing
mostly level 4 or 5).
Perform a documentation review to look for evidence of cloning or
carrying forward notes on history, exam or medical decision making.
Review current documentation policies and consider turning off
ability to cut and paste.
Consider not allowing EHR to select level; either move that practice
back to the physician or to certified coders.
Method II Billing – CAH’s
DEFINED: An increased payment to a Critical Access Hospital for
outpatient physician services
Attributes of Method II Billing:
 Must be elected by a CAH within 30 days of start of fiscal year
 Once elected it remains in effect until CAH cancels
 Physicians can be employed or contracted by hospital
 Any outpatient hospital department qualifies: ED, Radiology,
Laboratory, Hospital-based physician clinics, etc.
 Method II Clinic = (Hospital-based clinic) + 15% increase for
physician services
 Increased payment = 15% increase to the physician payment for a
hospital-based clinic (see next slide)
 Physician Prof. Fees are billed on a UB…NOT on a 1500
Method II Billing – CAH’s
Method II Payment Formula (Physician Services):
CPT 99213 – Medicare Facility Payment (SOS 22)
Reduce for Patient Coinsurance
Net Medicare Facility Payment
Increase for Method II
Medicare Facility Payment – Method II
x 80%
x 1.15
CPT 99213 – Medicare Phys. Office Payment
(SOS 11)
Reduce for Patient Coinsurance
x 80%
Medicare Phys. Office Payment
Method II Billing – CAH’s
The Medicare Internet Only Manual (IOM) 100-04, Chapter 4, Section 250 states
that a CAH billing for the non-physician practitioner (NPP) services under Option
II must report a CPT modifier describing the credentials of the performing
This reference further explains that payment for non-physician practitioners will be
made at 115 percent of the allowable amount payable under the Medicare physician
fee schedule; in other words at a reduced rate of 115% of the 85% (NPP rate).
The non-physician practitioner professional services require one of the following
 GF – Service rendered in a CAH by a nurse practitioner (NP), clinical nurse
specialist (CNS), certified registered nurse (CRN) or physician assistant (PA).
 SB - Services rendered in a CAH by a nurse midwife.
 AH - Services rendered in a CAH by a clinical psychologist.
 AE - Services rendered in a CAH by a nutrition professional/registered
Definition has not changed since Day 1
 “Observation services are those services furnished on a hospital’s premises,
including use of a bed and periodic monitoring by nursing or other staff, which are
reasonable and necessary to evaluate an outpatient’s condition or determine the
need for a possible admission as an inpatient”.
 APC regulation (FR 11/30/01, pg 59881)
“Observation is an active treatment to determine if a patient’s condition is going to
require that he or she be admitted as an inpatient or if it resolves itself so that
the patient may be discharged.”
Expanded 2006 Federal Register Information
“Observation is a well defined set of specific, clinically appropriate services, which
include ongoing short-term treatment, assessment and reassessment, before a
decision can be made regarding whether a pt will require further treatment as
hospital inpts or if they are able to be discharged from the hospital.”
Note: No significant 2007, 08 ,09 , 10, 11, 12 reg changes
Other 2006 Federal Register info:
 Pt must be under the care of a physician….as documented
in the medical record by admission, discharge and other
appropriate progress notes that are timed, written and
signed by the physician.
 The medical record must include documentation that the
physician explicitly assessed patient risk to determine
that the beneficiary would benefit from observation care.
(pg 68694)
Transmittal 1745/1760 July 2009
Meant to clarify OBS language on patient
status. However, nothing changed regarding
“active physician involvement, assessment
and reassessment to determine if the patient
needs admitted or safely discharged home” =
Billable hour.
Transmittal 1745/1760 July 2009
Editorial change to remove references to “admission” and “observation status”
in relation to outpt observation services and direct referrals for observation
services. These terms may have been confusing to hospitals. The term
‘admission’ is typically used to denote an inpt admission and inpt hospital
services. For payment purposes, there is no payment status called
Observation care is an outpt service, ordered by a physician and billed with a
HCPCS code.
Revenue code 762 or 760 is acceptable.
Rounding of hrs. Hospitals should round to the nearest hr. (EX 3:03 to 9:45
= 7 hrs)
Standing orders for obs services following outpt surgery are not recognized.
Recovery room services billed separately (4-6 hrs)
References: 290.1; 290.2.1; 290.2.2/ Transmittal 1745
Medicare Claims Processing Manual Chpt 4, 290; Pub 100-02 Medicare Benefit Policy
Manual Chpt 6, 29.6
When a patient is “converted” from observation to inpatient,
the following is needed:
 New set of orders
 New H&P
 New set of orders
 Copy of observation H&P plus last progress note outlining
reason for need to convert to inpatient
 Inpatient visit must stand along for coding and billing
When time begins “at the clock time documented in the
medical record, which coincides with the time the
patient is placed in a bed for the purpose of initiating
observation care in accordance with a physician’s
Observation time ends “at the clock time when all clinical or
medical interventions have been completed, including any
necessary follow-up care furnished by hospital staff and
physician that may take place after a physician has ordered
that the patient be released or admitted as an inpatient”
In situations where a procedure interrupts observations services,
hospitals would record for each period of observation services the
beginning and ending times during the hospital encounter and add
the length of time for the periods of observation together to reach
the total number of units reported on the claim.
Patient placed in observation bed following ER visit with
diagnosis of GI bleeding at 6:00 a.m. At 10:00 a.m., patient has
EGD procedure and finished recovery from EGD at 3:00 p.m.
Patient discharged at 10:00 p.m
• Bill only 11 hours of observation
• Patient is at the facility for 16 hours, but patient
spends 5 hours undergoing procedure in a separate
unit and recovering from procedure
Continuous Monitoring: May a hospital report drug
administration furnished during the time period when obs services
are being reported? CMS FAQ 1-27-10
“Observation services should not be billed concurrently with diagnostic or
therapeutic services for which active monitoring is a part of the procedure
(e.g colonscopy, chemotherapy). “ In situations where such a procedure
interrupts observation services and results in two of more distinct periods of
obs services, hospitals should record for each period of obs services the
beginning and ending times during the hospital outpt encounter. Hospitals
should add the length of time for the periods of obs services together to
determine the total number of units reported on the claims for the hourly obs
services under HCPCS code G0378 (hospital obs service, per hr.)
Continuous monitoring = billed 1st, then ‘earn’ OBS hrs
Medicare Claims Processing Manual, Pub 100-4. Chpt 6, Section 290.2.2
Continued answer to CMS FAQ 1-27-10
The hospital must determine if active monitoring is a part of all or a portion of the
time for the particular drug administration services received by the patient.
Whether active monitoring is a part of the drug administration service may depend
on the type of drug administration service furnished, the specific drug administered,
or the needs of the patient. For example, a complex drug infusion titration to
achieve a specified therapeutic response is reported with HCPCS codes for a
therapeutic infusion may require constant active monitoring by hospital staff. On the
other hand, the routine infusion of an antibiotic, which may be reported with the same
HCPCS codes for a therapeutic infusion, may not require significant active
monitoring. For concerns about specific clinical situations, hospitals should check
with their Medicare contractors for future information. If the hospital determined that
active monitoring is part of a drug adm service furnished to a particular patient and
separately reported, then OBS services should not be reported with HCPCS G0378
for that portion of the drug adm time when active monitoring is provided.
FAQ 9974:
"It is an unacceptable practice to automatically place a patient in observation for the
sole purpose of providing Chemotherapy, or other therapeutic intravenous
infusions. If any complex therapeutic intravenous infusions are given during a
patient’s observation hours these service hours must also be deducted. Hydration is
not considered as therapeutic active monitoring." An example: “a complex drug
infusion titration to achieve a specified therapeutic response that is reported with
HCPCS codes for a therapeutic infusion may require constant active monitoring by
hospital staff. On the other hand, the routine infusion of an antibiotic, which may be
reported with the same HCPCS codes for a therapeutic infusion, may not require
significant active monitoring.” (Source: FAQ 9974 active monitoring and drug
Report G0379 with revenue code 762 for a direct
admit to observation. A direct admit occurs when
the admission is NOT related to:
• An ER visit
• A hospital outpatient clinic visit
• Critical Care
• Hospital outpatient surgical procedure
Inappropriate Uses of Observation (non covered)
• General standing orders following outpatient surgery
• Postoperative monitoring during a standard recovery
period (4-6 hours)
• Develop a hospital policy regarding # of hours
• Routine preparation services furnished prior to
diagnostic testing and recovery
• Diagnostic testing services for which active monitoring is
part of the service
• For patient, facility, or physician convenience
Condition Code 44
Original transmittal 81 (effective 4-1-04) Updated transmittal 299,
dated 9-10-04. (FL 24-30)
Further clarity on physician review: Q&A,
March 2006
Use ‘when the physician ordered inpatient, but upon UR review
performed before the claim was originally submitted, the hospital
determined that the service did not meet it’s inpatient criteria.’
New MLN Matters Q&A – ‘UR must consult with the practitioners
responsible for the care of the patient and allow them to present their
views BEFORE making the determination”
Review and final decision must be made while the patient is still in the
More CMS clarity on CC 44 FAQ
Q: May a hospital change a patient’s status using CC 44 when a physician
changes the patient’s status without UR committee involvement?
A: No, the policy for changing a patient’s status using CC44 requires that
the determination to change a pt’s status be made by the UR
committee with physician concurrence. The hospital may not change a
pt’s status from inpt to outpt/OBS without UR committee involvement.
The conditions for use of CC 44 require physician concurrence with
the UR committee decision. For CC 44 decisions, in accordance with
42 CFR 482.30 (d 1), one physician member of the UR committee may
make the determination for the committee that the inpt admission is
not medically necessary. (cont)
More CMS clarity on CC 44 Cont.
This physician member of the UR committee must be a different person
than the concurring physician for CC 44 use who is the physician
responsible for the care of the pt.
Noridan/MAC states in their FAQ:
Q37: If the attending physician AGREES with the status change from
INPT to Outpt/OBS , do we need to involve the UR physician also? Or
is it only required with the attending does not agree?
A37: In order to change the beneficiary’s status from inpt to outpt/OBS ,
the attending physician must concur with the UR committee.
More CMS clarity on CC 44 - Patient
Palmetto/MAC, issued “Observation and CC 44 Discussion Items.”
Power Q&A as a result from NC work group, 4th Q 2009.
Q: A Medicare pt is admitted as an inpt. Case Mgt/UR does not believe meets
inpt/Interqual requirements. The physician agrees. The pt status is changed
back to OBS; however, the hospital failed to inform the pt of the status
change. How is this situation billed? Should the pt remain an inpt and not
be charged OBS?
A: Should the pt’s status change at any time during the hospital stay, it is
imperative that the pt be notified of this change in a timely manner (prior to
discharge). In this particular situation, this notification should have occurred
at the point when the pt was identified as not being eligible..
More CMS clarity on CC 44 - Patient
..for an inpt stay they could have been entitled to information regarding the
change in status and impact to coinsurance. According to Medicare Claims
Processing Manual , Publication 100-04, Chapter 30, Section 20: “ When the
beneficiary did not know or could not have reasonably expected to know
that the items or services were not covered, but the provider knew or could
have been expected to know, of the exclusion of the items or services, the
liability for the charges for the denied items or services rests with the
..Because the pt was not notified of his/her change in status, the provider will be
required to bill the claim AS AN INPT type of bill (11x) in spite of the fact
that the stay does not meet inpt criteria. The claim should be filed as a “no
More CMS clarity on CC 44 - Patient
.. type of bill (110) with all days and charges as non-covered. Since the
beneficiary was not given a notice of non-coverage before discharge, the stay
should be billed as provider liability using a M1 occurrence span code in
form locator 35 or 36. This will cause the claim to process in FISS as noncovered with no payment and no pt liablity reports on the remittance advice
or the beneficiary’s Medicare Summary Notice (MSN).
..After the no pay claim (TOB 110) is processed, you may then file an inpt
ancillary claim (TOB 12x) to seek payment for the eligible ancillary provided
during the stay. The eligible ancillary services are outlined in Medicare
Claims Processing Manual , publication 100-04, chapter 4, section 240.1.
Injections & Infusions
What’s New/Revised in 2012:
 Instructional notes revised to clarify when appropriate to
report more than one initial service
 Includes definitions for sequential and concurrent infusions
 Includes example of infusion crossing calendar days –
depends on whether service was continuous or not
 96367 revised to specify “new” drug/substance in
Injections & Infusions
What’s Bundled?
 If performed to facilitate the infusion or injection, the
following services are included and are not reported
 Use of local anesthesia
 IV start
 Access to indwelling IV, subcutaneous catheter or port
 Flush at conclusion of infusion
 Standard tubing, syringes, and supplies
Injections & Infusions
What’s Not Bundled (CAH cost)
 Specific materials or drugs (e.g., HCPCs Level II Jcodes)
 Significant, separately identifiable E&M service append modifier “-25” to E&M code
Injections & Infusions
Reporting Hierarchies/Sequencing
 Report as the “initial” code that which best describes the key or
primary reason for the encounter, irrespective of the order in which
the infusions or injections occur
 Chemo primary to tx/pro/dx
 Tx/pro/dx primary to hydration
 Infusions primary to pushes
 Pushes primary to injections
Hierarchy supersedes parenthetical instructions for add-on codes
Injections & Infusions
Multiple Administrations
 Only one “initial” service code should be reported for
each encounter unless protocol requires that two separate
IV sites must be used
 If injection or infusion is subsequent or concurrent in
nature, even if it is the first such service within that group
of services, report subsequent or concurrent code from
appropriate section
Injections & Infusions
Multiple Administrations
More than one initial service appropriate when:
 Separate Site
 IV Right Hand
 IV Left Hand
 Separate Encounter
 Visit at 8:00 am
 Return visit same day at 4:00 pm and new line started
 Append -59 modifier to 2nd initial code to identify distinct
procedural service
Injections & Infusions
Infusion Time
 Use the actual time over which the infusion is administered if infusion
time is a factor
 Measured when infusate is actually running – do not count pre- and
post time
 Infusion time must be documented (start and stop)
 If health care professional administering substance/drug is continuously
present to administer injection and observe the patient, bill as a Push
 If infusion time is 15 minutes or less, bill as a Push
 Infusion intervals of > 30 minutes beyond 1-hour increments required
to report additional hour codes
Injections & Infusions
Chemotherapy & Other Highly Complex Drug or Biologic Agent
 The chemotherapy administration CPT codes (96401–96549):
Are used to report the administration of certain non-radionuclide drugs when
the infusion requires physician work or clinical staff monitoring well beyond that
of therapeutic drug agents (CPT codes 96360–96379).
Apply to parenteral administration of non-radionuclide antineoplastic drugs,
antineoplastic agents provided for the treatment of non-cancer diagnoses (e.g.,
cyclophosphamide for autoimmune conditions), substances such as monoclonal
antibody agents and other biologic response modifiers.
Injections & Infusions
The chemotherapy administration CPT codes (96401–96549) may
not be used to report administration of:
 Substances used as diagnostic agents such as radio-opaque dyes.
 Therapeutic radionuclides (use CPT codes 79101, 79403 or 79999).
 Anti-anemia drugs.
 Anti-emetic drugs.
 Hydration fluids.
 Drugs that appear on the “usually self-administered” drug exclusion
Injections & Infusions
Chemo/Complex/Biologic Techniques
 SQ or IM (96401-96402)
 Intralesional (96405-96406)
 IV Push (96409, 96411)
 IV Infusion (96413, 96415)
 More than 8 Hours w/portable or implantable pump (9641696417)
 IA Push (96420)
 IA Infusion (96422-96423, 96425)
Injections & Infusions
Therapeutic, Biologic, Diagnostic
 Codes 96365-96379
 Used for the administration of substances or drugs
 Not used for administration of vaccines/toxoids, allergen
immunotherapy, antineoplastic hormonal or nonhormonal
therapy, or hormonal therapy that is not antineoplastic
 Not used for chemo, highly complex drugs, or highly
complex biologic agents
Injections & Infusions
Therapeutic, Biologic, Diagnostic
 Require direct physician supervision for patient assessment,
provision of consent, safety oversight, and intraservice staff
 Infusions require special consideration to prepare, dose or
dispose of
 Require practice training and competency for staff who
administer infusions
 Periodic patient assessment with vital sign monitoring
required during infusions
Injections & Infusions
Therapeutic, Biologic, Diagnostic
 Intravenous infusion (96365-96368)
 Subcutaneous infusion (96369-96371)
 Injection; subcutaneous or intramuscular (96372)
 Injection; intra-arterial (96373)
 Injection; intravenous push (96374-96376)
Injections & Infusions
Hydration (Codes 96360-96361)
Used to report a hydration IV infusion to consist of pre-packaged fluid &
electrolytes (eg, normal saline, D5W), but not drugs or other substances
Do not report if infusion time is 30 minutes or less
Report add on code 96361 for hydration intervals of > 30 minutes beyond 1
hour increments
Report 96361 if hydration provided as secondary or subsequent service after a
different initial service administered through same IV access. Can also be
performed prior to another infusion
Do not report if performed concurrently with other infusion services or to
“keep open” line between infusions or when freeflowing during chemo or
tx/pro/dx infusions
Hydration separately reportable if medically necessary (e.g. dehydration, N/V)
and not part of regular infusion protocol
Wound Care
Billing Guidelines
Wound Care (CPT Codes 97597, 97598 and 11042-11047)
 Active wound care is performed to remove devitalized and/or necrotic
tissue to promote healing of a wound on the skin. These services are billed
when an extensive cleaning of a wound is needed prior to the application of
dressings or skin substitutes placed over or onto a wound that is attached
with dressings.
 Debridement is the removal of foreign material and/or devitalized or
contaminated tissue from or adjacent to a traumatic or infected wound
until surrounding healthy tissue is exposed.
 CPT 97597 and/or CPT 97598 are typically used for recurrent wound
 CPT 97597 and/or CPT 97598 are not limited to any specialty.
Wound Care
Coding Guidelines
 Active wound care, performed with minimal anesthesia is billed with
either CPT code 97597 or 97598.
 Debridement of a wound, performed before the application of a topical
or local anesthesia is billed with CPT codes 11042 - 11047.
 CPT code 11043, 11046 and 11044, 11047 may only be billed in place
of service inpatient hospital, outpatient hospital or ambulatory care
center (ASC).
Wound Care
Coding Guidelines
The following HCPCS codes are considered a dressing and therefore bundled into the procedure.
Integra BMWD skin sub
Integra DRT skin sub
Graftjacket skin sub
Integra matrix skin sub
Primatrix skin sub
Gammagraft skin sub
Cymetra allograft
Graftjacket express allograf
Integra flowable wound matri
Alloskin, per square centimeter
Alloderm, per square centimeter
Hyalomatrix, per square centimeter
Matristem micromatrix, 1 mg
Matristem wound matrix, per square centimeter
Matristem burn matrix, per square centimeter
Theraskin, per square centimeter
Wound Care
Reasons for Denial
 Performing deep debridement in POS other
than inpatient hospital, outpatient hospital
or ASC
 Billing of debridement by unqualified personnel
Wound Care
Documentation Requirements
The medical record must clearly show that the medical necessity criteria have been met.
There must be a documented plan of care with documented goals and documented provider followup present in the patient's medical record. Wound healing must be a medically reasonable
expectation based on the clinical circumstances documented.
Documentation of the progress of the wound’s response to treatment must be made for each service
billed. At a minimum this must include current wound size, wound depth, presence and extent of or
absence of obvious signs of infection, presence and extent of or absence of necrotic, devitalized or
non-viable tissue, or other material in the wound that is expected to inhibit healing or promote
adjacent tissue breakdown.
When debridements are performed, the debridement procedure notes must document tissue
removal (i.e. skin, full or partial thickness; subcutaneous tissue; muscle; and/or bone), the method used
to debride (i.e., hydrostatic versus sharp versus abrasion methods), and the character of the wound
(including dimensions, description of necrotic material present, description of tissue removed, degree
of epithelialization, etc.) before and after debridement.
When, the documentation does not meet the criteria for the service rendered or the documentation
does not establish the medical necessity for the services, such services will be denied as not
reasonable and necessary under Section 1862(a)(1) of the Social Security Act.
Wound Care
Can an E&M be billed on the same date as a debridement or
other wound care service?
Only if there is a separately identifiable and significant service that is
performed on the patient can an E&M be billed the same day as a
procedure code.
This is an OIG, CMS and now RAC Hot Topic
Data mine your Wound Care department billing and be sure that any
E&M codes billed with a -25 modifier includes documentation to
support a significant, separately identifiable service.
Jill Newberry
[email protected]
Phone No. 1-800-642-3601

similar documents