1. Physician Coding I Billing Basics and Procedure Codes
E. Douglas Norcross, MD FACS
Professor of Surgery
Medical University of South Carolina

2. How does the payor know how much to pay me?

3. I set a fee for the service I am going to provide and the patient or payor pays me that charge.

4. Charge ≠ Payment (Except in a few circumstances)

5. How much do you get paid for doing something?
Practices set a charge up for each service they provide.
However, payors establish fee schedules to determine what they will actually pay for a service.
Charges, therefore, apply only to services provided to patients not covered either by an insurer with whom the practice has a contract, or by federal medical insurance plans (Medicare, Medicaid and a few others)

6. How much do you get paid for doing something?
Practices negotiate and contract with private insurance companies to establish a fee schedule so that the same service is paid the same amount every time they are billed for that service by that payor
Medicare and some state Medicaid programs, including South Carolina’s, have fixed fee schedules based on a “Resource Based Relative Value Scale”

7. Resource Based Relative Value Scale (RBRVS)
The system used by the Centers for Medicare and Medicaid Services (CMS), a Division of the federal Department of Health and Human Services, to determine reimbursement.
Every procedure and service is assigned a specific number of “Relative Value Units” (RVU’s)

8. Resource Based Relative Value Scale (RBRVS)
RVU’s based on three separate factors
Physician work RVU’s (W RVU’s) account for the time, technical skill and effort, mental effort and judgment, and stress to provide a service (Approximately 52% of average total RVU’s for procedure or services)
Practice expense RVU’s (PE RVU’s) account for the nonphysician clinical and nonclinical labor of the practice, as well as expenses for building space, equipment, and office supplies(Approximately 44% of average total RVU’s for procedure or services)
Professional liability insurance RVU’s (PLI RVU’s)account for the cost of malpractice insurance premiums(Approximately 4% of average total RVU’s for procedure or services

9. Practice Expense RVU’s An additional factor
For some services and procedures there is a difference in the number of PE RVU’s assigned based on whether the procedure or service was done in the hospital (Facility RVU’s) or in an office (Non facility RVU’s).
This accounts for the additional expenses incurred when the physician, through their office expenses, must pay the costs of supplies, labor, etc.
Facility RVU’s are typically lower then Non facility RVU’s
CMS determines which to use based on a location code submitted to CMS with the charge

10. Politics
There is currently a recommendation that CMS eliminate the distinction between facility and non facility RVU’s and just use the facility RVU values
This would make the calculation easier, but will decrease physician reimbursement for minor office based procedures
Given that this will decrease Medicare expenses, this recommendation is likely to pass!

11. How do you convert RVU’s into payment?
Each of the three RVU components is adjusted for region (ie a procedure in New York would receive more reimbursement than the same procedure in Atlanta). Referred to as the Geographic Practice Costs Index. (GPCI)
The adjusted total RVU’s are then multiplied by a “conversion factor” determined by congress annually (Dollars per total adjusted RVU) to arrive at reimbursement level.

12. The formula!
{(W RVU x W GPCI) + (PE RVU x PE GPCI) + (PLI RVU x PLI GPCI)} x Conversion factor = Payment

13. An example You do a laparoscopic Cholecystectomy at MUSC in 2011 on a patient with Medicare
2011 Conversion factor = $
For South Carolina
W GPCI
PE GPCI
PLI GPCI
For Laparoscopic Cholecystectomy
W RVU’s
Non facility PE RVU’s 8.05
PLI RVU’s

14. An example W RVU’s x W GPCI 11.76 x 0.976 12.04 PE RVU’s x PE GPCI
7.54
PLI RVU’s x PLI GPCI
2.48 x 0.482
1.20
Total Adjusted RVU’s
20.78
Total Adjusted RVU’s x Conversion Factor X
Payment
$706.03

15. The Medicare Fee Schedule
The formula just discussed is then used to develop a “fee schedule” which represents the maximum Medicare reimbursement for each CPT code
Each geographic region has its own “fee schedule” based on the Geographic Practice Costs Index for that particular region.
So, basically, you are paid what the Medicare Fee Schedule says you are to be paid.

16. The Medicare Fee Schedule
The “conversion factor” is adjusted annually as part of federal budget negotiations in order to balance predicted Medicare charge submissions for the year with the funding appropriated to meet those costs.
For example, if Medicare charges are expected to remain stable for the budget cycle, but spending limits are lowered, the conversion factor is lowered so that the predicted total Medicare payout stays within the budgeted amount.
This formula, and its annual adjustment, explains the annual battle between congress and medical organizations over the “conversion factor”

17. Remember, this applies to Medicare
Remember, this applies to Medicare. The situation differs with other payors
Medicaid
Each state has its own methodology
South Carolina uses a percentage of the Medicare Fee Schedule to determine Medicaid reimbursement each CPT code
Private Insurers
Each practice within an insurers network of providers negotiates with the insurer to determine payment for each CPT code
Some use a multiple of the Medicare Fee Schedule
Some use a percentage of their charges
Some might negotiate a fee for each specific code

18. How do we standardize terminology so that payors know how much to pay us?
CPT Codes

19. What are CPT codes?
Essentially all physician billing is based on numeric codes contained in the document “Current Procedural Terminology” published by the American Medical Association (Thus the term “CPT” Codes)

20. What are CPT Codes?
A listing of 5 digit numeric codes with descriptive terms for each code.
Codes are used for reporting medical services performed by physicians.
Intended to provide a uniform language to describe physician services

21. Types of CPT Codes Procedure codes
Evaluation and Management Codes (E & M codes)

22. CPT Codes
Evaluation and Management Codes (E & M codes) are those used to describe patent encounters
Procedure codes are descriptors of specific procedures and activities
Surgical Procedures/Bedside Procedures
Management of specific medical conditions (Ex. Dialysis)
Various medical diagnostic and therapeutic procedures
Radiology procedure supervision and interpretation
Services involving administration of anesthesia
Laboratory services provided by a physician (Including physician supervision of services performed by technologists)

23. CPT Codes CPT codes Category Evaluation and Management 99201-99499
Anesthesiology ,
Surgery
Radiology
Pathology and Laboratory Services
Medicine ,

24. Procedure Codes Fairly straightforward to use
Simply select the code for the procedure performed.

25. Global Fee Period
Many procedural codes, including nearly all significant surgical procedures, are associated with a “global fee period” (usually 90 days for major operative procedures).
For procedures with a “global fee period”, the fee paid for the procedure includes the routine pre and post-operative care associated with that procedure

26. Global fee period
During the global period E and M codes will not be paid if the service provided was:
Part of the routine post operative care of the patient
A preoperative visit within 24 hours of surgery UNLESS the decision to perform surgery was made during that visit.

27. For most surgeons, procedure codes provide the bulk of physician reimbursement.

28. Rules for procedure codes
Can not bill for routine post operative care. It is included in the “global fee period”
Preoperative care within the 24 hours of surgery can not be billed. It is included in the “global fee period”. (Exception is if the decision to go to surgery occurs during that 24 hour period…. More on that in the next presentation, Physician Coding II)
Code assumes a single billing physician for each procedure
Code assumes typical difficulty for that procedure

29. Rules for procedure codes
Code assumes a single procedure is performed per billing episode
The code assumes the physician provided the routine pre and post op care.
The code assumes a unilateral procedure
The code assumes that a procedure was not done during the global fee period for another procedure

30. So what do I do if I perform two procedures during one trip to the operating room?

31. Modifiers!

32. What are modifiers?
Payment systems know the rules for payment and will not allow a payment to be made if one of those rules is violated
There are times, however, when exceptions to the usual rules can be applied
Computers look for “modifiers” to identify when one of those exceptions applies.
Failure to use the appropriate modifier will cause a failure to receive payment

33. Commonly used modifiers applied to procedure codes by surgeons
22 Modifier: Increased Procedural Services
50 Modifier: Bilateral procedure
51 Modifier: Multiple procedures
52 Modifier: Reduced services
53 Modifier: Discontinued procedure
54 Modifier: Surgical Care only
58 Modifier: Staged or related procedure or service by the same physician during the postoperative period

34. Commonly used modifiers applied to procedure codes by surgeons
59 Modifier: Distinct procedural service
62 Modifier: Two surgeons
66 Modifier: Surgical Team
76 Modifier: Repeat procedure or service by the same physician
77 Modifier: Repeat procedure by another physician
78 Modifier: Unplanned return to the operating/procedure room by the same physician following initial procedure for a related procedure during the postoperative period
79 Modifier: Unrelated procedure or service by the same physician during the postoperative period

35. Let’s do a few procedural coding examples

36. You do a routine laparoscopic cholecystectomy on a 25 year old female
You do a routine laparoscopic cholecystectomy on a 25 year old female. There are no intraoperative complications

37. Look up the procedure in the CPT manual

38. Reading the CPT manual
Icons for other stuff spelled out in CPT manual introduction
CPT Code
Global Fee Period
Total Facility RVU’s
Total Non Facility
RVU’s

39. So we code this as 47562

40. But what if the patient develops an arrhythmia during the procedure and we abandon the case before completing it?

41. We need to use a modifier!
22 Modifier: Increased Procedural Services
50 Modifier: Bilateral procedure
51 Modifier: Multiple procedures
52 Modifier: Reduced services
53 Modifier: Discontinued procedure
54 Modifier: Surgical Care only
58 Modifier: Staged or related procedure or service by the same physician during the postoperative period
59 Modifier: Distinct procedural service
62 Modifier: Two surgeons
66 Modifier: Surgical Team
76 Modifier: Repeat procedure or service by the same physician
77 Modifier: Repeat procedure by another physician
78 Modifier: Unplanned return to the operating/procedure room by the same physician following initial procedure for a related procedure during the postoperative period
79 Modifier: Unrelated procedure or service by the same physician during the postoperative period

42. So we code this as

43. You perform a left hemicolectomy and open cholecystectomy during the same procedure. How do you code this?

44. Colectomy CPT Code
Open Cholecystectomy CPT Code
Colectomy Facility RVU’s
Open Cholecystectomy Facility RVU’s

45. How do we tell the payor what to pay us?
So we have two codes
Code
Description
Facility RVU’s
44140
Colectomy, partial; with anastamosis
39.18
44600
Cholecystectomy
31.54
How do we tell the payor what to pay us?

46. FACT to know!
In general, payors will not pay for two procedures performed at the same time through the same incision. They reason that the amount of work required for the additional procedure(s) is less because there is no need for additional incisions, additonal post op care, etc.

47. FACT to know!
However, payors recognize that additional procedures are often indicated and need to be compensated. So they will pay for additional procedures, but at a discounted rate for those procedures

48. Fact to know So we need to add a modifier to one of the procedures explaining that it is an additional procedure performed along with the other procedure so that we will be paid for it, albeit, at a lower rate than for that procedure performed alone (generally 50% discount).

49. There is a modifier for that!
22 Modifier: Increased Procedural Services
50 Modifier: Bilateral procedure
51 Modifier: Multiple procedures
52 Modifier: Reduced services
53 Modifier: Discontinued procedure
54 Modifier: Surgical Care only
58 Modifier: Staged or related procedure or service by the same physician during the postoperative period
59 Modifier: Distinct procedural service
62 Modifier: Two surgeons
66 Modifier: Surgical Team
76 Modifier: Repeat procedure or service by the same physician
77 Modifier: Repeat procedure by another physician
78 Modifier: Unplanned return to the operating/procedure room by the same physician following initial procedure for a related procedure during the postoperative period
79 Modifier: Unrelated procedure or service by the same physician during the postoperative period

50. But which code gets the modifier applied to it?
The primary procedure does not get a modifier
All secondary procedures get a 51 modifier applied.
In general, but not always, the procedure with the highest number of RVU’s is the “primary procedure”.

51. So the billing codes look like this
So for our example
The right hemicolectomy is the primary procedure (the thing we went to the OR to do) and the cholecystectomy is the additional procedure.
Code
Description
Facility RVU’s
44140
Colectomy, partial; with anastamosis
39.18
44600
Cholecystectomy
31.54
So the billing codes look like this
44140

52. The codes apply to “typical” procedures including the routine pre and post op care. What if the case is not “typical”?
What if the case is more complicated or took significantly more time than usual. For example, a patient with dense adhesions that took hours to take down?
Modifier 22
You do the case, but don’t provide the pre or post op care.
Modifier 54
The case does not require all of the usual steps because part of it was previously performed.
Modifier 53

53. There are modifiers to cover just about every unusual situation one might encounter.

54. Are there special rules for teaching hospitals?

55. Of course there are! This is the government after all!

56. Rules for Teaching Physicians General Concepts
Services furnished in teaching settings are paid under the Medicare Physician Fee Schedule (MPFS) if the services are:
Personally furnished by a physician who is not a resident or
Furnished by a resident when a teaching physician is physically present during the critical or key portions of the service

57. Rules for Teaching Physicians Documentation Requirements
Documentation may be dictated, handwritten, or computer-generated, and must be dated and include a legible signature. In addition, the documentation must identify, at a minimum:
The service furnished
The participation of the teaching physician in providing the service
Whether the teaching physician was physically present

58. Rules for Teaching Physicians Surgical Procedures
In order to bill for surgical, high-risk, or other complex procedures, the teaching physician must be present during all critical and key portions of the procedure and be immediately available to furnish services during the entire procedure.

59. Rules for Teaching Physicians Surgical Procedures
The teaching physician may determine what constitute the “critical or key portions of a procedure”
The teaching physician’s presence is not required during the opening and closing of the surgical field unless these activities are considered to be critical or key portions of the procedure.
If the teaching physician is not present for the entire procedure, the teaching physician should document what they consider the key portions of the procedure and their presence during those portions of the procedure.

60. Rules for Teaching Physicians Surgical Procedures
During non-critical or non-key portions of the surgery, if the teaching surgeon is not physically present, he or she must be immediately available to return to the procedure, i.e., he or she cannot be performing another procedure.
If circumstances prevent a teaching physician from being immediately available, then he/she must arrange for another qualified surgeon to be immediately available to assist with the procedure, if needed.

61. Rules for Teaching Physicians Endoscopy
To bill Medicare for endoscopic procedures (excluding endoscopic surgery that follows the surgery policy in subsection a), the teaching physician must be present during the entire viewing. The entire viewing starts at the time of insertion of the endoscope and ends at the time of removal of the endoscope.

62. Rules for Teaching Physicians Minor Procedures
For procedures that take only a few minutes (5 minutes or less) to complete and involve relatively little decision making once the need for the procedure is determined, the teaching surgeon must be present for the entire procedure in order to bill for the procedure.

63. Medicare and Medicaid Comparison Minor Procedures
Medicare defines “presence” as being in the same room, or partitioned portion of a room, as the patient on whom the minor procedure is being performed.
South Carolina Medicaid defines “presence” as being on the same premises as the patient upon whom the procedure is being performed and being immediately available to assist with that procedure.

64. Medicaid Minor Procedure Billing MUSC policy
MUSC has defined the premises as any building physically connected to the building in which the procedure is performed.
For MUH this includes the hospital, Library building, Rutledge Tower, Hollings Cancer Center, and the Basic Science Building
For ART, the billing physician must be within the ART building
This applies only to Medicaid patients. For Medicare patients the requirement for presence in the room remains.

65. What about private insurers?
Variable rules with each provider
Safest approach is to use Medicare/Medicaid guidelines.

66. Summary
Physicians are paid for their services using different methods depending upon the payor
Medicare and Medicaid use the RBRVS methodology to determine payment for services rendered by physicians
CPT codes are used to describe services provided by physicians to patients
Modifiers are used to describe atypical situations where the usual billing rules do not apply
There are specific supervision requirements for teaching physicians for services that will be billed to Medicare or Medicaid.