When submitting claims involving unlisted services or procedures, you may experience claim denials routinely, even when special reports are included. Very often, you can avoid these denials by knowing your payers’ specific requirements. For example, some payers have forms specifically for review of special reports when unlisted services or procedures have been rendered. This helps the payer to direct the claim properly.

You may receive an ambiguous denial, even when the payer requires very specific information. For example, your denial may state, “medical records needed.” You send the office notes associated with the visit, only to have the claim denied again because it was actually an X-ray report that was needed. Don’t get caught in that confusion: Ask the payer to explain exactly what’s needed.

Regardless of what your payer’s requirements are, follow them “to the letter” to make sure your provider is appropriately reimbursed—or at least to establish that the service/procedure has become an industry standard (more on this, later).

Know Necessary Requirements

Rendered services commonly require a special report because the CPT® and HCPCS Level II code sets do not specifically describe what was done. When submitting reports, consider highlighting or underlining the section that most identifies the procedure related with the unlisted code.

For example, Table A is a sample laboratory requisition in which the ordering physician has requested a prothombin time with international normalized ratio (PT/w INR) as a STAT. This will justify the use of CPT® 99199 Unlisted special service, procedure or report.

Table A: Laboratory Requisition

Sample Order

By highlighting this information and including it with your UB-04/CMS-1500, the payer is able to validate your reimbursement request. Consider also the category upon which the documentation requirements may fall, as shown in Table B.

Table B: Documentation Required for Codes

 

The new year is nearly here. Time to get a fresh start on your payer contracts. Gather your year-end data and prepare yourself to approach payers for new agreements or rate updates.

Start with a High-level Perspective

After you’ve gathered the contracts and information from payer websites or their toll-free numbers (see Part 1, “Contracts: Start by Gathering Data,” October 2012, pages 34-36), summarize the information at a high level. I recommend a summary format similar to the one shown in Table 1.

In this example, the payer, Alpha, is contracted with the practice through an independent practice association (IPA). The fees are 130 percent of a fixed base year of 2007 Medicare resource-based relative value system (RBRVS). The contract has been effective since Jan. 1, 2008, and this payer represents 17 percent of the practice’s revenue.

You should gather similar information for each payer with whom you are contracted.

Next, Analyze Reimbursement Details

Using this high-level summary, you can easily determine the base years of Medicare RBRVS you’ll need to know to analyze current fees versus upcoming payer proposals.

The base years for this practice would be 2005 (non-Geographic Price Cost Indexed), 2007 (GPCI), 2012 (GPCI) Medicare RBRVS, and the 2011 state workers’ compensation fee schedule. The Medicare fee schedules are available on the Centers for Medicare & Medicaid Services (CMS) website (www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/PhysicianFeeSched/index.html).

With this data, complete a spreadsheet, which you can call the “Payer Resource Manual,” and use the base year allowable and the current contracted payer amounts for our hypothetical practice, as shown in Table 2.

Each payer will likely address lab, X-ray, and supply codes differently. If no RBRVS payment exists, you could contact each payer for your contracted allowed amounts or pull explanation of benefits (EOBs) to find the paid amount. If the practice is heavily dependent on revenue from HCPCS Level II codes (such as durable medical equipment (DME), supplies, or injectables), it’s worth gathering the invoices to know the acquisition costs.

Verify predicted payment on your Payer Resource Manual by code, and validate it against payer EOBs to confirm your spreadsheet is accurate. The confidence that comes with knowing as much as the payer does about your current contracted rates is the best way to start. In other words, don’t trust what an old, filed contract says your rates are: Verify the amounts against current payments.

Learn by Example

Here’s an example of how getting organized before you approach the payers pays off. Knowing what 100 percent of the RBRVS is for codes that matter to the practice gives you a powerful position to counter payer fee schedule “updates.”

In this client example, a radiation oncology practice was approached by a payer that represented a significant portion of the practice’s revenue. The payer wanted to update the contracted rates from a 2005 agreement, and proposed 2010 Medicare rates. A quick glance at the difference between 2005 and 2010 base year Medicare allowables for codes that were important to the practice enabled us to determine that 2005 was a much better paying base year (compared to 2010). Table 3 shows how the update would impact several codes commonly reported by the practice.

Learn from History: It’s the Best Predictor

You should know the most current period’s utilization data for each payer by CPT® code. In the above client example, we used the practice’s billing software to pull the past year’s utilization of procedure codes for the payer in question. With the frequency count for each of these codes, the current payer’s allowed amount, and the most current year (at the time) of Medicare, we could see how the payer’s attempt to “update” the practice using a more recent year’s Medicare fee schedule would cost the practice a lot of money: an average 15 percent reduction. Using actual utilization, based on historical data from the practice (which is the best predictor of future utilization), the weighted impact averaged out to a 22 percent loss (because some high-volume codes had large decreases under the proposed rate).

Such a comparison isn’t easy to set up in a spreadsheet, but having the data allows you to go back and forth as many times as necessary to convince the payer not to subject the practice to such a loss after being a loyal network provider for so many years. Using this method, we were able to correct what would have been a $33,000 loss to the practice and turn it into a $4,000+ annual gain. This $37,000 swing was well worth the time and effort to pull the data—and that was just one payer agreement!

Be Prepared for the Long Haul

When you have your current rates and past utilization defined, you’re almost ready to approach the payers and begin the contracting process. Negotiations are an endurance test with many important steps. If you start naively, with no idea of the scope of the critical tasks and phases of the process, you’re bound to burn out and give up. And any corners you cut in preparing will raise time-consuming issues later.

In the next installment of our contracts series, we will identify your practice’s counterparts at your payers’ and learn how to create an “alpha payer contact list” for your practice.

Marcia Brauchler, MPH, CPC, CPC-H, CPC-I, CPHQ, is the founder and president of Physicians’ Ally, Inc., a health care consulting firm and concierge billing company for specialty physician practices. She works with physicians on managed care contracts, reimbursement, and practice administration. Her experience includes hospital, health plan, and independent practice association administration. Her firm sells updated HIPAA policies and procedures and online staff training. She is a published researcher and a frequent public speaker.

As Medicare-managed care health plans (Medicare Advantage (MA) plans) expand—especially in the past five years—providers are more regularly affected by “risk adjustment.” When done properly, the risk adjustment model has great potential to enhance the quality of patient care. Unfortunately, risk adjustment is also susceptible to fraud by the proverbial “bad apple.”

Risk Adjustment Basics

Risk adjustment is a modified version of the traditional capitation system. Under traditional capitation, a managed care organization or provider group is paid a fixed amount per member per month (PMPM) to pay for all services the member requires during that period. Traditional capitation sets the PMPM rate based on demographic factors such as the member’s age, gender, and geographic location.

Risk adjustment enhances traditional capitation by adding payments for patients who are being actively treated for certain diseases and conditions known to be expensive to treat. Risk adjustment classifies patient sickness using hierarchical condition categories (HCCs), which are groups of related diagnosis codes. HCCs are similar to diagnosis-related groups (DRGs) or ambulatory payment classifications (APCs) used for hospital reimbursement, but they are based on diagnosis codes rather than procedure codes. Individual patients may fall into multiple HCCs. For each additional HCC, the MA plan is paid an extra amount.

Unlike traditional managed care, where there is a strong financial incentive to seek out only healthy members, the risk adjustment model rewards managed care organizations and provider groups to care for sick members, as well. They can see a significant financial reward if they actively manage those sick members to reduce health care costs.

Risk Adjustment Fraud: “Upcoding” DxCodes

The current design of the risk adjustment system largely relies on MA plans to police themselves. MA plans are responsible for determining which diagnosis codes its members were treated for in the prior year, using a combination of traditional claims data and other medical documentation (such as the patients’ medical charts). The plan then submits the diagnosis codes to the Centers for Medicare & Medicaid Services (CMS) to get the increased risk adjustment capitation payments.

Unethical MA plans and vendors take advantage of the system’s structure to essentially “upcode” the diagnoses they submit to CMS. They do this by submitting a risk adjustment claim to CMS for a diagnosis the member either did not have or was not treated for in the year in question. In such cases, “risk adjustment” may be offered as an explanation for why patient medical records should be changed or “supplemented” (sometimes a year or more after the patient was treated). Or the MA plan, or its vendor, may suggest that a provider call a patient in for an office visit so certain diagnosis codes can be “captured” for “risk adjustment purposes” (regardless of whether the patient actually needed any medical treatment).

CMS rules are clear that a risk adjustment claim may be submitted only if the diagnosis meets ICD-9-CM standards and there is documentation in the medical record that the member was treated face-to-face by a qualified provider in the year questioned.

Common schemes used to upcode diagnoses for risk adjustment purposes include the following:

Coding from Problem Lists: CMS rules explicitly state that a “problem list” may be used only to code a diagnosis if it is “comprehensive and show[s] evaluation and treatment for each condition that relates to an ICD-9-CM code on the date of service.” It is improper to submit risk adjustment claims for diagnoses that are merely mentioned in the member’s problem list if the diagnoses were not treated or considered by the provider during that visit.

Improper Linkages: The risk adjustment system pays MA plans a higher capitation rate when certain conditions are “linked.” For example, a patient may have both diabetes and nephropathy. CMS will pay the MA plan more if the diabetes caused the nephropathy because diabetes with renal complications is generally significantly more severe than diabetes without complications. Diabetes without complications, which falls within HCC 19, has an average value of $1,500 per year. In contrast, diabetes with renal manifestations, which falls within HCC 15, is valued at over $4,500 per year.

For an MA plan to submit a linked diagnosis code to CMS, the provider must document the linkage between the two conditions in the medical record. It is improper for an MA plan or vendor to assume the two conditions are linked.

Coding from Test Results or Prescriptions: CMS prohibits the submission of risk adjustment claims based solely on laboratory or radiology test results, drug prescriptions associated with particular diagnoses, or durable medical equipment (DME) services. Nonetheless, certain MA plans and vendors include diagnosis codes in their risk adjustment submissions even though they appear only on those invalid sources of documentation.

Chronic Conditions: While it is true that some conditions (such as Parkinson’s) never go away, this does not mean that the diagnoses can be submitted to CMS every year. Risk adjustment rules explain that a condition may only be submitted for reimbursement if it is actively treated (or affects other treatment) in the year in question. It is not enough that the patient was diagnosed or treated for the condition at some point in the past.

Targeted Coding: Some organizations pressure coders to focus on identifying high-value diagnoses, rather than coding just what is in the medical record. Some common high-value targets include:

• Cachexia/Malnutrition (HCC 21) – value of $7,800 per year
• Old myocardial infarction (MI) (HCC 83) – $2,200 per year
• Diabetes with complications (HCC 15) – $4,600 per year
• Major depression (HCC 55) – $3,200 per year

Know the Red Flags

If a coder involved in chart reviews or an audit related to risk adjustment sees any of these activities, there is a strong likelihood the coder is dealing with fraud. If someone tells a coder to use a diagnosis code that doesn’t meet ICD-9-CM standards and says it is OK because “risk adjustment coding is different than regular coding,” that is a major red flag indicating the health plan or vendor is engaged in fraud.

At its core, risk adjustment coding is “regular coding,” but stricter. Even where a diagnosis meets traditional ICD-9-CM standards, it may not be submitted for risk adjustment purposes unless the diagnosis is: (1) documented by the provider in the medical record as having been treated or as affecting the patient’s treatment; (2) made during a face-to-face encounter; (3) submitted to the MA plan from a qualified provider type; and (4) made during the specified calendar year.

Risk Adjustment Fraud and the False Claims Act

At a May 31, 2012 MA compliance conference, federal prosecutor Robert Trusiak noted that MA fraud—in particular risk adjustment fraud—is a “hot button issue” for the Department of Justice (DOJ). Trusiak further noted that MA plans face potential liability under the federal False Claims Act (FCA) for false risk adjustment claims, even when the upcoding or other fraud was perpetrated by a vendor on the plan’s behalf.

The FCA says any person who submits a false or fraudulent claim to the United States or causes someone else to submit a false or fraudulent claim may be liable for three times the amount of the false claim, plus an additional penalty of up to $11,000 for each false claim. To encourage whistleblowers to report fraud, the FCA contains a qui tam provision awarding whistleblowers 15-30 percent of what the government recovers as a result of whistleblower lawsuits they file against individuals and entities committing fraud.

The government has already begun enforcement against unscrupulous MA plans attempting to game the risk adjustment system. In United States v. Janke, the government sued an MA plan under the FCA for submitting upcoded (or non-existent) diagnosis codes for risk adjustment payments. The DOJ settled with the MA plan and its owners for $22.6 million in November 2010.

Be Cautious and Speak Up

As Trusiak cautions, the FCA targets not only the person or organization submitting a false claim, but also anyone who “causes the submission” of a false claim. This means that MA plans are not the only ones who face potential liability under the FCA for false or fraudulent risk adjustment claims. Hospitals or physician groups could be liable, as well, if they submit false information about their MA patients’ diagnoses to MA plans and that false information is used to submit a false risk-adjustment claim to CMS.

To avoid this risk, you should ask to review rules used by vendors when those vendors are identifying “new” diagnoses. Don’t hesitate to speak up if the standards being used by an outside reviewer don’t line up with the established CMS coding rules your organizations are using. Providers should insist on reviewing any code submissions made for their patients—especially when an MA plan or vendor has reviewed the providers’ medical record and identified new diagnoses—to ensure the patient actually had that particular diagnosis and was treated for it during the visit. Coders, administrators, and providers can all take steps to prevent or stop risk-adjustment fraud.

Mary A. Inman, JD, and Timothy P. McCormack, JD, are partners at Phillips & Cohen LLP, a law firm representing whistleblowers (www.phillipsandcohen.com). Whistleblower cases brought by the firm involving Medicare and Medicaid fraud, and other types of fraud against the government, have returned more than $8.5 billion in civil settlements and related criminal fines to federal, state, and local governments.

Susan Edwards, CPC, CEDC, is a coding specialist at Copley Hospital in Morrisville, Vt. She is the president of the Newport, Vt. chapter, and she teaches Medical Terminology at the local adult learning center. Ms. Edwards is Northeast region one representative for AAPCCA, and secretary on the Board of Directors. She is also on the AAPC Ethics Committee.