Industry News Category
In a proposed rule published in the Federal Register May 10, the Centers for Medicare & Medicaid Services (CMS) clarifies the rules governing physician orders of hospital inpatient admissions for payment under Medicare Part A. If finalized, hospital inpatient admissions spanning two midnights in the hospital would generally qualify as appropriate for payment under Medicare Part A. Anything less would be considered observation and paid under Part B, unless the physician could prove otherwise.
The purpose of this provision in the hospital Inpatient Prospective Payment System (IPPS) proposed rule for fiscal year 2014 is to resolve ongoing confusion as to when a patient should be admitted to inpatient status.
CMS states in the proposed rule, “The majority of improper payments under Medicare Part A for short-stay inpatient hospital claims have been due to inappropriate patient status (that is, the services furnished were reasonable and necessary, but should have been furnished on a hospital outpatient, rather than hospital inpatient, basis).”
Will the clarification be enough to resolve the longstanding dilemma for providers as to when it is appropriate to order an inpatient stay? Some are inclined to agree. Stacy Harper, JD, MHSA, CPC, of Lathrop & Gage LLP, is one of them.
“The current subjective guidelines for inpatient admission have resulted in numerous appeals and disputes regarding necessity of inpatient status. If the proposed two-midnight objective presumption is finalized, hospitals will have a new guide available to assist in these decisions,” Harper said.
But the American Hospital Association (AHA) has a difference of opinion. In a public statement released April 26, the AHA said it is more inclined to believe that the proposal will allow Medicare contractors to continue second-guessing physicians’ judgment.
“While we appreciate CMS’ efforts to provide clarity around when an inpatient admission is appropriate – such as for a patient on observation status – we are concerned that this could be applied in a way that undermines medical judgment,” Rick Pollack, AHA executive vice president, said in the statement.
According to CMS, however, review contractors won’t deny short-stay inpatient claims as long as they are documented correctly. “It is the documentation of the reasonable basis for the expectation of a stay crossing 2 midnights that would justify the medical necessity of the inpatient admission, regardless of the actual duration of the hospital stay and whether is ultimately crosses 2 midnights.”
To support an inpatient claim, in addition to the physician’s order and certification, the provider must document complex medical factors such as:
- Beneficiary medical history and comorbidity
- Severity of signs and symptoms
- Current medical needs
- Risk of an adverse event
Other Considerations
In a related matter, CMS recently announced that it would allow hospitals to resubmit claims for payment under Part B after being initially denied by Part A (Read “CMS Addresses Part B Inpatient Billing Controversy,” AAPC Cutting Edge, June 2013, for details).
Unfortunately, this creates another cause for concern, according to the American Medical Association (AMA). “For patients, reclassification as ‘observation’ rather than admitted can result in unanticipated costs and co-payments,” the AMA stated in an Aug. 31 letter to CMS. For example, Medicare covers skilled nursing facility (SNF) care when a patient spends at least three days as an inpatient, but not as an outpatient under observation status. If a patient were to spend three days as an inpatient and then be transferred to an SNF, that individual would be charged the full shot for the SNF stay in the event the inpatient claim is denied and subsequently paid under Part B.
More Changes on the Horizon
Also in the IPPS proposed rule, CMS would:
- Implement statutory provisions contained in the Affordable Care Act of 2010;
- Update rate-of-increase limits for hospitals excluded from the IPPS and paid on a reasonable cost basis;
- Update IPPS payment policies and annual payment rates;
- Make changes relating to direct and indirect graduate medical education payments; and
- Update policies relating to the hospital value-based purchasing program and the hospital readmissions reduction program, as well as revise the conditions of participation.
The IPPS proposed rule is open for comment until June 25. For complete details, download the proposed rule from the Federal Register website (www.federalregister.gov). The final rule is expected Aug. 1, with most of the provisions going into effect Oct. 1.
May 21st, 2013
A physical therapy (PT) operation in Tennessee has agreed to pay the federal government for medically unnecessary services.
Therapists have struggled with payment policies over the last three decades as legislative efforts have employed methods that “supposedly” aim to bring the cost of services down by paying for the quality, rather than quantity, of care. Lynn S. Berry, PT, CPC, said “Therapists must juggle clinical concerns with documentation burdens to meet the challenge” of reimbursement.
While most therapists are meeting these challenges, a few have bent under the pressure of lowered payments. For example, Grace Healthcare, LLC and its affiliate Grace Ancillary Services, LLC (Grace) in Chattanooga, Tenn. On March 8, the Department of Justice (DOJ) and Office of Inspector General (OIG) announced that Grace’s therapy providers agreed to pay $2.7 million, plus interest, to resolve allegations of false billing for medically unnecessary therapy services.
According to the DOJ press release:
“The settlement resolves claims that in ten nursing home facilities in which Grace provided physical, occupational, and speech therapy for periods ranging from 2007 through June of 2011, Grace pressured therapists to increase the amount of therapy provided to patients in order to meet targets for Medicare revenue that were set without regard to patients’ individual therapy needs and could only be achieved by billing for a large amount of therapy per patient.”
Don’t let this happen to you. While waiting for more positive changes in the reimbursement system, there are things therapists can do to improve the current situation.
Properly Document when Using New G Codes and Severity Modifiers
To ensure you are compliant when rendering PT services, Berry’s recommendation is to “provide an audit trail by documenting in the medical record the G codes and severity modifiers, their rationale for use, and the pertinent tests provided. After the primary impairment goal is reached, a secondary impairment may be noted and treatment continued until the goal for that impairment is met or final discharge occurs. The G codes and modifiers apply to all claims in which Medicare is the primary or secondary payer.” The G codes and severity modifiers for PT, occupational therapy, and speech-language pathology are noted in the 2013 Medicare Physician Fee Schedule (MPFS) Final Rule.
Will Payment Challenges Get Better for PTs?
There is positive action taking place on the horizon. According to Berry:
“For PT, the American Physical Therapy Association (APTA) is already working on a new payment system. Their draft of an Alternative Payment System (APS), or the Physical Therapy Classification and Payment System (PTCPS), was released to members for comment March 15, 2012. The CPT® Editorial Panel in Memphis, Tenn., Oct. 2-3, 2012, fully supported their efforts. A workgroup will be started that is open to all advisors to rewrite the Physical Medicine and Rehabilitation Section of CPT®. This is a two-part, per session payment system: One set of codes for evaluations, and another set of per-session codes for treatments. Each combines consideration of the complexity of the visit and the severity or complexity of the patient’s condition. APTA expects this system to begin Jan. 1, 2015.”
When that system goes into effect, “therapists can then move forward to provide efficient, effective care for their patients and meet the challenge of high quality care at reasonable cost,” said Berry.
For more information on capturing proper reimbursement for therapy services, read the articles “Therapy Services: The Uphill Climb to Better Codes and Reimbursement” and “PTs Rise to 2013 G code Challenge” in March 2013 Cutting Edge.
March 14th, 2013
By Dixon Davis, MBA, MSHA, CPPM
The most important fa
ctor in achieving financial success in a clinic is productive providers. Higher productivity results in higher revenue, while lower productivity results in less revenue. This is a simple concept, but we often don’t give it the proper attention. Effectively monitoring provider productivity helps manage the provider’s expectation of compensation and the business’s bottom line.
Those responsible for bringing in revenue must understand the correlation between productivity and financial outcomes beyond the concept to literal correlations. A manager always should look for ways to enhance revenue streams through creating more efficient processes and additional services. Too many times we find ourselves looking at where to cut costs rather than where to increase revenue. Maximizing revenue is number one for financial strength.
A fairly common scenario involves a provider who thinks he or she should be making more money. The provider explains that the practice (schedule) is full and yet the provider is not making as much as a colleague down the street. Upon review, the provider believes seeing 25 patients per day is a full day. Yet the provider down the street is seeing 35 patients per day, and national benchmarks for the same specialty is over 28 patients per day.
The next calculation is very important to understand. For this practice, the average revenue per patient visit is about $100. For a provider who takes off three weeks per year, seeing one additional patient per day equates to about $25,000 per year. Ten more patients per day equates to $250,000 per year. We know that as we apply financial calculations to this revenue there will be associated overhead costs (all of the revenue will not hit the bottom line); however, also remember that once the fixed costs and certain level of variable costs are incurred, the incremental overhead allocation to additional revenue will usually be a lower percentage. This means that a greater percentage of revenue brought in from increased productivity will find its way to the bottom line.
Make Providers Accountable
When we think of productivity in a medical practice, the majority of billable production is performed by the provider (physician, mid-level provider, etc). For this reason, it is very important that providers are given the information, know how to interpret it, and understand how it will affect them personally and as a practice.
To effectively use productivity numbers, a business must first identify what productivity measurements will be tracked. Possibilities include total number of patient visits, total evaluation and management visits versus procedure visits, the number of units for each CPT® code billed, total work relative value units (wRVU) earned, amount of collections received, and hours worked. Measurements may vary depending on the specialty or culture of the practice. It is important to identify a metric that can be consistent and one that is understood by the provider.
Identify Target Goals
Once a productivity metric is identified, the report, or dashboard, needs to provide a clear picture of how productivity numbers influence financials. For identifying target goals, historical productivity and financial data can be used as a starting place. External benchmark data can also be used effectively as a tool to identify target numbers. The following illustrates a simple example of how both net revenue (collections) and wRVUs are tracked on a monthly basis and are compared to an internal goal and to a national benchmark.
In an effort to get providers invested in productivity, some provider compensation models are built on a straight productivity formula. Examples include paying providers a dollar value for every wRVU earned or paying based on an identified percentage of collections. If the provider knows he or she will make $51 per wRVU, then there is a clear understanding of how the level of work (productivity) will directly tie to total compensation. Likewise, if a provider is paid 48 percent of total collections, there is clarity of how providing more billable services will directly affect compensation. Utilizing this type of compensation model makes it clear that when a provider sees more patients, or provides more billable services, compensation increases.
Set Reasonable Expectations
Utilizing and comparing benchmarks, either internal or external, can provide additional information for setting goals or expectations. For example, a provider may know that she will be compensated $51 for every wRVU personally generated, but providing her with a benchmark that the average provider in the specialty is earning 4,200 wRVUs per year (350 per month) and is making $214,000, can create an expectation of where productivity should be.
We start to accomplish our objectives when the provider understands how much he or she is paid for each wRVU, where the total number of wRVUs should be, what compensation is expected at that level of production, and that the level of compensation for the associated level of productivity is equitable.
Similar models can be set up using varied metrics. If revenue numbers are identified as the metric, will it be gross revenue (charges) or net revenue (collections) that is measured? If a practice uses a fixed fee schedule, charges may represent pure production better, but will not represent actual money received.
Effective productivity reports that tie to provider compensation will include the following components:
- Identify the metric(s) that will be measured.
- Associate a conversion factor that relates to compensation or practice profits.
- Benchmark productivity numbers to either internal or external benchmarks.
- Create clear goals and expectations of productivity and financials.
Production measures can be reported to create competition among a group or to just motivate providers on an individual level. However, that should not be the end of the productivity monitoring.
Maximize Productivity Report Benefits
Productivity reports can also be a valuable tool for practice managers to increase revenue streams. By reviewing productivity reports and benchmarking them against better performers, managers become aware of opportunities for greater productivity and increased revenue.
For example, the manager of a neurology practice is made aware that providers in the practice are not making as much as other community physicians or as much as national salary benchmarks. It’s up to the manager to help discover why this may be the case. The providers are working from 8 am to 6 pm, the same as other providers in the area. The office work flow appears to be efficient within the office ,with full schedules and patients moving through their visits in a timely fashion. However, further review of a good productivity report identifies that the providers in this office see a higher percentage of E/M visits compared with industry benchmarks where providers do more office-based procedures such as EEGs, nerve conduction tests, and spinal taps.
The manager can track these trends, educate the providers on the missed opportunities to provide more office-based procedures, illustrate how revenue would be affected by making the change, and then let the physicians determine if this is something they are comfortable doing. Using productivity reports provides the manager with good data on how changes in productivity patterns can affect revenue streams.
The effective use of productivity reports by managers can help them to:
- Identify opportunities for work flow efficiency to increase the number of patients seen per day.
- Identify information technology tools that improve productivity.
- Modify scheduling models to increase patient volumes.
- Identify opportunities for offering new services in the office.
- Benchmark to better performing offices for new opportunities.
- Identify ways to utilize staff differently to increase billable services.
By keeping close tabs on productivity measurements in the practice, managers identify opportunities for revenue that can be shared with physicians. Sharing productivity numbers with providers helps them understand how the work done in the office relates to financial outcomes and can provide the impetus to make good business decisions on how work is performed to maximize revenue opportunities.
February 18th, 2013
Deciding between two types of malpractice insurance—either an occurrence based policy or a claims-made policy—can save you tens of thousands of dollars in legal bills and settlements.
An occurrence based policy provides coverage against incidents that occurred during the term of the policy, regardless of when the claim is made. The physician can submit a malpractice claim while the insurance policy is active or after it has expired, as long as the physician was covered with an active policy at the time the actual incident occurred.
A claims-made policy refers to a policy covering the insured for any incidents that occur during the policy period. Claims filed after the policy ends will not be covered, even if the actual event occurred during coverage.
Neither of the policies will provide coverage for incidents occurring before the inception date of the policy (also known as the retroactive date).
There is a way, however, to maintain coverage after a claims-made policy ends. Tail insurance refers to a policy the insured provider can purchase when he or she discontinues the claims-made policy. Tail insurance permits the physician to report claims after the policy expires for incidences that occurred during the time the policy was active (from the retroactive date to the policy expiration date). Tail insurance is generally purchased with a onetime payment that can be fairly expensive.
Based on this information alone, you might conclude that an occurrence based policy is the best option because it provides coverage for incidents that occurred during the time the physician had insurance, without the need to buy tail coverage. However, a significant difference between the two policies is the premium cost. Occurrence based insurance is generally more expensive than claims-made insurance. Most physicians purchasing their own insurance will opt for claims-made policies because the premiums are less expensive. If a physician stays in the same practice his or her whole career, most claims-made policies will provide “free” tail insurance at retirement.
If it can be determined that a physician will be eligible for “free” tail coverage, claims-made insurance is usually most cost beneficial. One time a physician may want to consider an occurrence-based policy is if he or she is working at a location for a short time, will not be able to take coverage to a new job, and does not want to buy tail insurance when starting a new job. If a physician is employed by a hospital, the hospital may also provide occurrence-based insurance.
When deciding on which malpractice insurance to purchase, review the overall costs, as well as the type of coverage that will be best for the physician’s situation.
January 16th, 2013
Your practice can no longer brush off breaches of electronic patient health information (ePHI) files if fewer than 500 patients are exposed. Small breaches carry the same risk for all providers, according to HIPAA and HITECH regulations.
The Hospice of North Idaho’s recent breach settlement with the Department of Health & Human Services (HHS) of $50,000 is the first case settled involving fewer than 500 patients. In the Idaho case, a laptop with 441 records was stolen in 2010. During its review, HHS’ Office for Civil Rights (OCR) determined the hospice failed to conduct a risk analysis to safeguard ePHI, and had no policies or procedures to address mobile device security. According to HHS, ePHI breaches nearly doubled last year, mostly as the result of lost or stolen laptops.
A breach is defined by HHS as “the unauthorized acquisition, access, use, or disclosure of protected health information, which compromises the security and privacy such that the use of the information poses significant risk of financial, reputational, or other harm to the affected individual.” Regarding electronic PHI, only breaches of “unsecured” ePHI trigger the notification requirement.
When a breach occurs, a notice must be sent to all affected individuals within 60 days. The notice can be sent by regular mail or email (if permission was given)—or, if this information is outdated, by alternative methods such as the web or print advertisement. If the breach involves PHI for more than 500 individuals, the breach must also be reported to a major media outlet serving the affected individuals. You must include the following in the notice:
- The date of the breach and when it was discovered
- A brief description of the incident that led to the breach
- Description of the unsecured PHI involved
- Suggested steps individuals should take to protect themselves against any problems stemming from the breach
The best strategy is to avoid a breach. Include mobile device security in your compliance plan, and take the time to analyze what practices put your data at risk. Can risks be eliminated? A hospice or home health agency, for example, needs its staff to carry laptops to patients’ houses. Use of the Cloud for ePHI storage rather than the computer’s hard disk, along with extensive training about computer security might prevent similar breaches.
Perform a thorough assessment of potential risks to the confidentiality, integrity, and availability of ePHI your practice holds, and implement security measures that are reasonable and appropriate to reduce risks and vulnerabilities to an acceptable level.
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