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Observation Medicare and Medicaid The Ins and Outs of Coding and Billing June 2, 2014 Jean C. Russell, MS, RHIT 518-369-4986

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Presentation on theme: "Observation Medicare and Medicaid The Ins and Outs of Coding and Billing June 2, 2014 Jean C. Russell, MS, RHIT 518-369-4986"— Presentation transcript:

1 Observation Medicare and Medicaid The Ins and Outs of Coding and Billing June 2, 2014 Jean C. Russell, MS, RHIT 518-369-4986

2 Background NY Medicaid Observation Medicare – IPPS 2014 Final Rule Rebilling Denied Part A as Part B Medicare – Current Billing Requirements for Observation Medicare – OPPS 2014 Changes Questions / Discussion Agenda 2

3 Background

4 Outpatient Status – Outpatient care For example – Clinic, Emergency department, Outpatient surgery Extended surgical recovery over-night – Observation service – Medicare Part B – Paid on APCs (Medicare) and APGs (Medicaid) Inpatient Status – Medicare Part A – Paid on MS-DRGs (Medicare) and APR-DRGs (Medicaid) Level of Care

5 Medicare Observation Vs. Inpatient Stay Observation is Part B, Inpatient is Part A – Part A has a single deductible (co-pay) for a hospital stay – Part A covers most of the cost of the stay Part B has individual co-pays for each of the procedures performed (e.g., x-rays, MRIs, ED visit, drug administrations) – The cap on each individual co-pay is set at the Medicare inpatient cap But the sum of the co-pays can be significant Cost to patient may well be higher as observation

6 Medicare Observation Vs. Inpatient Stay Certain services covered in a Part A visit are not covered under Part B – E.g., self-administered drugs – Services that did not meet medical necessity (e.g., radiology) SNF coverage under Medicare requires a medically necessary 3 day admission prior to the SNF

7 Observation Cases Increasing According to a recent article: – The use of observation status has nearly doubled in the past six years – Observation stays of more than 48 hours have increased from 3% to 8% – Number of patients in the hospital for at least three days that could not qualify for SNF due to observation was over 600,000 last year alone Shorter stay inpatients cases are closely scrutinized Sometimes observation is a fallback to ensure the visit will be covered Source:

8 Increasing scrutiny by private payers and auditors Target of Office Inspector General (OIG) and Office of Medicaid Inspector General (OMIG) audit plans Focus of Medicare’s PEPPER Reviewed by Medicaid Integrity Contractors (MIC) and Medicare Recovery Auditors Reviewed by the Medicare Administrator Contractor (MAC) – NGS for New York And now subject to the Two Midnight Rule Short Stay Inpatient Admission Reviews

9 NY Medicaid Observation Coding, Billing and Payment 9

10 Effective April 1, 2011 – Medicaid began coverage of emergency room observation services – However, the requirements for billing for the service were strict, including: Waiver requirement Distinct observation unit NY Medicaid and Observation NY State Medicare Update, May 2011, ay2011mu.pdf

11 Observation Waiver Requirements: – Distinct physical space (not scatter bed model) – Unit can only be used for observation – Patients should require 8-24 hours of care – Overseen by the ER – Patients must come through the ER April 2011 Requirements NY State Medicare Update, May 2011, 011mu.pdf

12 February 2012 Changes Effective January 11, 2012, observation units had to be established in compliance with Title 10, Section 405.19, rather than through a waiver Hospitals that previously provided services under the waiver had 24 months of the effective date of the regulation change (i.e., January 11, 2014) to be in compliance with the regulations NY State Medicare Update, February 2012, 02.htm#health

13 Changes Effective April 1, 2013 Impacts NY Medicaid, including FFS, Medicaid Managed Care and Family Health Plus Expanded coverage of Observation Services Observation services are designed for patients for that cannot be treated and released in the ED, but should reasonably be expected to be discharged within 48 hours A patient must be in observation at least eight hours (with clinical justification) This is in addition to time spent in the ED prior to receiving observation services

14 April 2013 Changes Observation services may now be provided in: – An approved unit that has an existing waiver – An existing observation unit in compliance with 10 NYCRR 405.19 – New distinct observation unit in compliance with 10 NYCRR 405.19 – Inpatient bed (i.e., “scatter bed”) – The ED (for CAH or sole community hospitals) Observation services may be provided up to 48 hours, after which the patient should be admitted or transferred or discharged

15 April 2013 Changes Required documentation for Medicaid payment for observation includes: – A clinical justification for observation status – A working diagnosis – Tests/treatments administered – Progress notes by physician or mid-level, and – Final disposition of the patient

16 April 2013 Changes Must be assigned from the ED or hospital OP department if the facility does not have an ED Service is billed with HCPCS code G0378, hospital observation per hour Groups to APG 450 Units reported should be number of hours, up to 48 Will only be reimbursed if units exceed 8 (that is 8 to 48 hours) – Should still be reported even if less than 8

17 April 2013 Changes Observation ends when patient is either discharged or admitted If patient is admitted, only the inpatient claim should be submitted for payment – Charges from the outpatient part of the visit are included on the inpatient claim If the patient is transferred, the ED and observation services may be submitted for payment

18 April 2013 Changes Time away from observation should be excluded from the observation time Significant procedures such as MRI, PET and CT scans will result in G0378 being packaged (i.e., not paid) Low level ancillaries will allow observation to be paid separately

19 April 2013 Changes Discrete observation unit established in compliance with 10 NYCR 405.19 reported with the UC modifier – reimbursed at an enhanced rate (20% higher) Scatter bed services reported without the UC modifier Order for observation must be clear and must clearly identify observation as outpatient Patient must be advised that they are outpatient and the stay does not meet Medicare inpatient requirements for SNF services Source: May 2013 Medicaid Update, 05.htm#osl

20 3M EAPG October 2013 Changes APGs 500-502 are new in 2013 APG 492 is EAPG Type Incidental APG 450 is EAPG Type Ancillary APGs 500-5012 are EAPG Types Medical

21 APG Logic for New Observation APGs G0378 maps to APG 450 G0379 and other observation CPTs map to APG 492

22 Billed with G0378, Hospital observation service, per hour –Paid with units >= 8, should be <= 48 –UC modifier if discrete unit Typical rate code 1402, Emergency department Must have a medical visit (e.g., 99285) Groups to APG 450, Observation –Relative Weight = 0.1563 (down from 2.1949, but now is per hour) –Payment $24 (upstate) to $31 (downstate) per hour –Paid in addition to ED visit, packaged with significant procedures Ancillary Observation – APG 450

23 Medical Observation – APGs 500, 501, 502 Medical observation APG assignment – Must be reported: A CPT or HCPCS code assigned to APG 492 (e.g., G0379) Plus G0378 which is assigned to ancillary observation APG 450 – EAPG 492 changes to one of three medical EAPGs (if all criteria met) 500 ENCOUNTER/REFERRAL FOR OBSERVATION - OBSTETRICAL 501 ENCOUNTER/REFERRAL FOR OBSERVATION - OTHER DIAGNOSES 502 ENCOUNTER/REFERRAL FOR OBSERVATION - BEHAVIORAL HEALTH – Final medical observation APG assignment is determined by primary dx code APG 450 is packaged Observation is packaged if a significant procedure is reported, e.g., 59025 – Fetal Stress Test

24 Medicare IPPS Final Rule Changes Effective 10/1/2013 24

25 Inpatient Versus Observation Order - Inpatient order must be clear “admit to inpatient” or “admit as an inpatient” – cannot be vague such as “admit to C5” – The word “admit” alone is not sufficient Length of Stay - Presumed to be medically necessary if the stay crossed two midnights for “medically necessary services” – Order must document the expectation – Less than two midnights would be presumed to not meet inpatient criteria

26 Medical Review Policies Two midnight benchmark – Begins when the patient starts hospital care (i.e., comes into the ED) Two midnight presumption – Presumed to meet medical necessity if the stay was at least two midnights Reviews will focus on inpatients with stays less than two midnights

27 Physician Certification Physician certification required – Authentication of the order to admit – Provides the reason for the inpatient services – Estimates the time the patient will need to be in the hospital and – The plans for post-hospital care The physician certification must be completed, signed, and dated and in the medical record prior to discharge A specific format is not required

28 Recent Clarifications For patients transferred in, the receiving hospital can take into account the time spent at the transferring hospital when determining whether the patient met the 2-midnight benchmark Off-campus ED’s are still considered part of the hospital and time spent in these departments would count into the 2-midnight calculation CMS has requested re-reviews of denials made during the probe audit to ensure they are consistent with these clarifications Source: Programs/Medicare-FFS-Compliance-Programs/Medical-Review/InpatientHospitalReviews.html

29 Rebilling Opportunities When an inpatient stay has been deemed not medically necessary after the beneficiary has been discharged – Could be due to a RAC denial, a MAC denial, a prepayment review, or the provider review itself Bill all services up to the inpatient order as Part B OPPS (bill type 13x) Bill all services after the inpatient order as Inpatient Part B (bill type 12x) Source: NGS website release 5/7/2012!ut/p/c4/VU27DsIwDPwWhsxJoRMbdIClHSgSj800pli0cZW65fdJUjEg Sz77znfWdx3KwUwtCLGDTl_17dP02wHkpbINKFMd6hItNeCxYCfo5I9T5oQjT77BUZkzczeqbG3A2QglCHqCwJmiA0_PYIl_ orb0enr0JEKujVs4oj4FXF6Y9PDS0s9SsMWIeZ42Tyk9zkeYk1KxRNjj4i5R9PDerb6jtAtv /

30 Medicare Timely Filing Subject to the Timely Filing Rule Medicare defines the timely filing period as no later than 12 months after the date of service Inpatient claims denied later than this are past the timely filing limit and cannot be corrected and rebilled Unfortunately, many times auditor denials are after the timely filing, in which case the Hospital has no option for recouping payment Changes the March 13, 2013 CMS ruling Chapter 1, Medicare Claims Processing Manual, Section 70 – Time Limits for Filing Part A and Part B Claims

31 Rebilling Steps Steps to follow: 1.Submit an inpatient no-payment claim for the inpatient stay using bill type 110 2.Submit an inpatient Part B claim for the billable services that occurred during the inpatient stay using bill type 12X – That is an Inpatient Part B claim for services provided after the inpatient admit order – Final rule expanded this to include just about all services except services that have to be outpatient such as medical visit services (ED /Observation /G0379), diabetic self management training (DSMT) IP Claim - Cancelled Bill type 110 ICD-9 Dx Codes And Procedures IP Part B Bill type 121 Post IP Order CPT Procedures OP Claim Bill type 13x CPT Pre IP Order Procedures

32 Clarification 3.Submit an outpatient claim(s) for the outpatient preadmission services that occurred prior to the non-covered inpatient stay using bill type 13X – Based on the fact that the submission of outpatient preadmission services is permitted when there is no Part A payment made for the inpatient stay – That is, the outpatient services are not bound by the 72 hour rule – Would include the ED or clinic visit that occurred prior to the order to admit Source: MLN/MLNMattersArticles/downloads/MM7672.pdf and IP Claim - Cancelled Bill type 110 ICD-9 Dx and Procedures IP Part B Bill type 121 Post IP Order CPT Procedures OP Claim Bill type 13x CPT Pre IP Order Procedures

33 The Beneficiary Beneficiaries are entitled to receive information about coinsurance and deductibles Inform beneficiaries in writing that the inpatient stay is not going to be billed to Medicare as a covered claim and why Beneficiary may be responsible for coinsurance (for the 12X bill and for the 13X bill) instead of an inpatient deductible If the inpatient deductible has already been paid, it is the responsibility of the provider to make a refund as appropriate

34 Rebilling for Denied Part A Chapter 3 of the Medicare Claims Processing Manual states that hospitals have to bundle most outpatient services performed within 72 hours of an inpatient stay “when Part A payment can be made on the inpatient stay” But this does not apply when no Part A payment can be made on the inpatient claim Source: MLN/MLNMattersArticles/downloads/MM7672.pdf

35 Inpatient Part B Expansion Expansion of services that can be billed now includes most services, even PT/OT/ST Does not apply for other circumstances when there is no Part A payment such as when Part A benefits have been exhausted Does not include observation since unless there is an order for observation prior to the order for inpatient (in which case it would be billed on the 13x bill) List of rev codes not covered, see MLN Matters SE1333, MLN/MLNMattersArticles/downloads/SE1333.pdf

36 Inpatient Observation Must occur Prior to Discharge – CM / UR physician advisor / Attending physician all involved in decision – Should be relatively rare – Requires signature of both UR and Attending physicians Must notify the patient (signed document suggested) what it means to be an observation case Observation time starts with the observation order change – Often not w/ the required 8 hours Result is a bill type 131 outpatient claim Condition Code 44 Order

37 Current Medicare Rules Observation Coding, Billing and Payment 37

38 Reported by the hour – rounded to the nearest hour Starts: physician order time and date and observation treatment has started – Clear order to admit as inpatient Vs. refer to observation – Nursing documentation indicating observation care has started Ends: physician order time and date to discharge from observation or hospital and medical treatment has ended – Note that “discharge after consult” or other critical, but delayed medical test should be clearly documented – “Waiting for a ride” is not considered part of observation time Observation is a Timed Service Chapter 4, Medicare Claims Processing Manual, Guidance/Guidance/Manuals/Downloads/clm104c04.pdf

39 Does not include time that is: – Concurrent with diagnostic testing or therapeutic services that includes active monitoring, “(e.g., colonoscopy, chemotherapy)”, or – Services that are part of another service (e.g., PACU) Need to implement a system to extract other procedural time from observation hours Observation is a Timed Service

40 Reporting Observation If a period of observation spans more than one (1) calendar day, all of the hours for the entire period of observation must be included on a single line and the date of service for that line is the date that observation care begins Source, Medicare Claims Processing Manual, Chapter 4 - Guidance/Guidance/Manuals/Downloads/clm104c04.pdf

41 Reporting Infusions “Drug administration services are to be reported with a line item date of service on the day they are provided. In addition, only one initial drug administration service is to be reported per vascular access site per encounter, including during an encounter where observation services span more than 1 calendar day.” Source, CMS Medicare Claims Processing Manual, Chapter 4, Section 230.2, Guidance/Guidance/Manuals/Downloads/clm104c04.pdf

42 Medicare reporting – Revenue code 762, observation – G0378, Hospital observation service, per hour – Units - The number of hours Time must be calculated Suggest a documentation review required to ensure accurate reporting of units If calculated automatically, perform an internal audit on at least a select number of cases Reporting Observation

43 Observation Coverage Should not be billed for monitoring and care during standard postoperative recovery period (e.g., 4-6 hrs) Can be billed for complications requiring extended post-surgical recovery care But will not be reimbursed for the composite rate when there is a surgery prior to the observation Needs to be ordered 43

44 Extended Assessment and Management composite payment that covers an episode of care involving more intense assessment and management, includes: – A high-level clinic or ED visit, direct referral to observation, or critical care service – 8 hours or more of observation services – Other associated services (packaged) Observation Payment

45 Observation Changes for 2014 Significant increase in packaged services (e.g., lab and stress tests) Reduction of clinic E/M codes to a single G code (G0463) Required changes to observation composites

46 Extended Assessment and Management Composite (EAM) In 2013 there were two composite EAMs – 8002 and 8003

47 G0378 (8 or more units) Revenue code 762 (observation) Reported with: – G0379 (direct referral) on the same date of service, or – 99205 / 99215 (level V clinic visit) on the same date or day before Reported without a surgical (Status T) procedure on the same day or day before National APC Rate (2013) = $440.70 No diagnosis requirement Level I Extended Assessment and Management - APC 8002

48 G0378 (8 or more units) Revenue code 762 (observation) Reported with: – 99284 / 99285 (high-level ED visit), or – 99291 (critical care), or – G0384 (high level Type B ED visit) – On the same day or day before the observation Reported without a surgical (Status T) procedure on the same day or day before National APC Rate (2013) = $798.47 No diagnosis requirement Level II Extended Assessment and Management APC 8003 High Level E/M

49 Extended Assessment and Management Composite (EAM) Effective 1/1/2014 there will be only one composite EAM – 8009 – G0378 (8 or more units), revenue code 762 (observation) with no diagnosis requirement – Reported with an E/M service: 99284 / 99285 (high-level ED visit)99291 (critical care) G0384 (high level Type B ED visit)G0463 (clinic E/M) Or G0379 (direct referral to observation from physician ofc) On the same day or day before the observation – Reported without a surgical (Status T) procedure on the same day or day before – National APC Rate (2014) = $1,198.91

50 Observation Payment

51 G0379 – Direct Referal G0379 – Direct referral to observation, moved to APC 608, payment increased to $327.85 (2014) from $175.79 (2013) – 2012 - reimbursed as a 99211 (APC 604) – 2013 - reimbursed as a 99205 – new patient clinic level V – 2014 – reimbursed between a level IV and V ED E/M Paid only when observation is not paid Improved reflection of the cost associated with direct referrals to observation

52 What this means to Medicare Observation Increased composite reimbursement Extensive bundling of services Add-ons, ancillaries, lab and drugs not separately paid Composite payment increases, but packaging of services increases as well

53 Summary Observation is payable by both Medicare and Medicaid as an outpatient service Impacts reimbursement for hospital and cost for patients There are specific requirements that must be met to bill observation correctly Significant changes started in October More changes were made in January

54 Questions/Discussion

55 55

56 Contact Us Richard Cooley Phone: 518-430-1144 Email: Matthew Lawney Phone: 845-642-6462 Email: Jean Russell Phone: 518-369-4986 Email:

57 57

58 CPT ® Current Procedural Terminology (CPT®) Copyright 2013 American Medical Association All Rights Reserved Registered trademark of the AMA 58

59 59 Disclaimer Information and opinions included in this presentation are provided based on our interpretation of current available regulatory resources. No representation is made as to the completeness or accuracy of the information. Please refer to your payer or specific regulatory guidelines as necessary.

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