EisnerAmper Blog

An EisnerAmper Health Care Services Blog

Countdown to ICD-10-CM

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August 27, 2015
Clark_NancyNancy Clark, CPC, COC, CPB, CPMA, CPC-I

ICD-10 implementation is only one month away!  The Centers for Medicare and Medicaid Services (CMS) recently posted clarifications to commonly asked questions.   The countdown begins!

5. Is there a delay in implementation?

No.  Per CMS, “Medicare claims with a date of service on or after October 1, 2015, will be rejected if they do not contain a valid ICD-10 code. The Medicare claims processing systems do not have the capability to accept ICD-9 codes for dates of service after September 30, 2015, or accept claims that contain both ICD-9 and ICD-10 codes for any dates of service.”

4. What is a valid ICD-10 code?

Per CMS, “ICD-10-CM is composed of codes with 3, 4, 5, 6 or 7 characters.”  It is required that all ICD-10 codes be coded to the highest level of specificity, or the claim will not be processed by Medicare.  A complete list of 2016 ICD-10-CM valid codes and code titles is posted on the CMS website.

3. What are the recently announced “flexibilities”?

CMS indicated that “for 12 months after ICD-10 implementation, Medicare review contractors will not deny physician or other practitioner claims billed under the Part B physician fee schedule through either automated medical review or complex medical record review based solely on the specificity of the ICD-10 diagnosis code as long as the physician/practitioner used a valid code from the right family.” 

“Family of codes” indicates that the codes are in the same ICD-10 three character category and are clinically related.  For example, if the code documented is “Crohn’s disease of small intestine without complications” K50.00, and the code billed is “Crohn’s disease, unspecified, without complications” K50.90, then the code will not be denied in an audit because it is in the same family, “K50”.  This is referred to as “audit flexibility”.  CMS emphasizes that every code must be valid. 

2. Local Coverage Determinations (LCD) and National Coverage Determinations (NCD) frequently indicate medically necessary diagnosis code requirements.  Does the recent guidance mean the published NCD’s and LCD’s will be changed to include families of codes rather than specific codes?

Per CMS, No. The flexibility determination will be used when Medicare review contractors audit claims.   Medicare review contractors include the Medicare Administrative Contractors, the Recovery Auditors, the Zone Program Integrity Contractors, and the Supplemental Medical Review Contractor.  There will be no leniency in NCD and LCD interpretation.

1. What is the ICD-10 Ombudsman?

CMS will have an ICD-10 Ombudsman to help receive and triage physician and provider issues.  The Ombudsman will work closely with representatives in CMS’s regional offices to address physicians’ concerns. As we get closer to the October 1, 2015, compliance date, CMS will issue guidance about how to submit issues to the Ombudsman.”

CMS’s Home Health Care Ratings

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August 6, 2015

Bisciello_StevenBy Steven Bisciello, MBA, CMPE

In today’s world of shopping for goods and services, there is a plethora of websites and applications that can assist the consumer in narrowing down their choices by providing an abundance of information. This information includes historical and financial facts about the company producing the goods or services and, most importantly, user reviews and feedback from consumers who have already purchased/utilized the goods or services. Popular examples of these websites/applications include Trip Advisor and Angie’s List.

In health care, consumers utilize similar website and applications (examples include ZocDocs and WebMD) when choosing a health care provider. Centers for Medicare and Medicaid Services (“CMS”) also provides consumers with their own version of reviews and ratings for Medicare providers through resources such as Physician Compare and Hospital Compare, grading these providers utilizing CMS’s “Five Star Rating System.”

CMS has created a similar resource to assist Medicare/Medicaid recipients in choosing home health care. Recently, and for the first time, CMS published their “star ratings” on Home Health Compare, CMS’s public information website for Home Health Agencies.

Two recent articles on CMS’s website, “CMS Releases First Round of Home Health Compare Quality of Patient Care Star Ratings”  and “Special Notice Regarding the Second Round of Quality of Patient Care Star Rating Provider Preview Reports”  go into great detail regarding these ratings. The first article reviews the measures utilized in grading the home health agencies as well as the first “round” of ratings provided on home health care agencies. The second article talks about the forthcoming release of “the second round” of scores to be published in October 2015 as well providing a “provider Preview report.”

According the first CMS article, “Star ratings can help consumers more quickly identify differences in quality and make use of the information when selecting a health care provider. In addition to summarizing certain data about Home Health Agency performance for consumers, star ratings can also help the agencies identify areas for improvement.”

Some of the measures each home health care agency will be graded on include 

  • How often the home health team began their patients’ care in a timely manner;
  • How often the home health team made sure that their patients have received a flu shot for the current flu season; 
  • How often the home health team taught patients (or their family caregivers) about their prescribed drugs;
  • How often home health patients got better at bathing; and
  • How often home health patients’ breathing improved.

This is another great step by the Department of Health and Human Services (“HHS”) to better equip today’s patients with the transparency and information they/their caregivers require when choosing their health care providers

New Jersey State Court Rules Not-for-Profit Hospital Must Pay Property Taxes

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July 14, 2015

McLafferty_MikeBy Michael J. McLafferty, CPA, MBA, FACHE, FHFMA, FACMPE

In a June 25, 2015 opinion in AHS Hospital Corp. v. Town of Morristown, Judge Bianco of the New Jersey Tax Court ruled that the Morristown Medical Center ("MMC"), a not-for-profit hospital, does not qualify for a property tax exemption. This decision could mean that MMC would be liable for millions of dollars in local property taxes, and the logic of the decision could apply to other not-for-profit hospitals throughout New Jersey.

The case arose when AHS Hospital Corporation, the parent company of MMC, challenged Morristown Township’s denial of its property tax exemption for 2006-2008. The Tax Court ruled that to get a property tax exemption, the hospital must meet the profit test – the entity’s "operation and use of its property must not be conducted for profit."

Judge Bianco’s ruling stated that it was impossible to determine what parts of MMC were used for not-for-profit activities and which parts were used for for-profit activities. If a not-for-profit hospital used property in for-profit purposes, such as renting space to a private restaurant chain, the hospital would be charged property taxes on that portion of its property.

Judge Bianco described how MMC was using voluntary physicians in the community to service its patients. There were also references to some of MMC’s for-profit entities.

Judge Bianco’s description of how MMC treats patients by interacting with voluntary community physicians is the basis for most not-for-profit hospital business models. The State of New Jersey also exempts not-for-profit hospitals by statute. This makes Judge Bianco’s ruling surprising and could establish the need for further New Jersey legislation for non-profit hospitals.

The New Jersey Tax Court acted as a trial-level court. An appeal from Judge Bianco’s decision would go to the Appellate Division of the Superior Court, and from there to the New Jersey Supreme Court.


Prepare for ICD-10 Documentation Changes

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June 25, 2015

Physicians need to understand the increased documentation requirements of ICD-10 prior to the October 2015 implementation date. Preparing now allows practitioners time to adjust to the increased specificity requirements. If providers’ documentation does not support the detail of the ICD-10 codes billed, they are at high risk of not being reimbursed and being penalized in the event of an audit. Future audits will likely focus on documentation support of the more detailed code set.

One new concept is laterality. This refers to the left or right side of the body and related organ structures. Currently, there is no such concept in ICD-9. In ICD-10, the following rules generally apply:

  • For bilateral sites, the final character of the codes in the ICD-10-CM indicates laterality.
  • The right side is usually character 1.
  • The left side is usually character 2.
  • If a bilateral code exists, the bilateral character is usually 3.
  • The unspecified side is either a character 0 or 9.

An example is the diagnosis of “shoulder pain.”  In ICD-9, there is only one applicable code, 719.41, Pain in joint, shoulder region. In ICD-10, there are 3 possible choices:

  • Pain in right shoulder, M25.511
  • Pain in left shoulder, M25.512
  • Pain in unspecified shoulder, M25.519

A significant concern arises when utilizing billing software conversion tools. In most software, the conversion of the ICD-9 code for Pain in joint, shoulder region will yield an ICD-10 code of Pain in unspecified shoulder. The physician may well know which shoulder is bothering the patient; however, if the doctor is not aware of this new concept in ICD-10 and relies on software conversion, the billing diagnosis may appear as though the practitioner is unaware of which shoulder he is treating. When insurance companies review claims, medical necessity for the procedure is one of the criteria for payment. It is unlikely that an insurance company will reimburse a claim for treatment of shoulder pain if the physician does not indicate which shoulder is being treated.

Prepare now to incorporate these new concepts into documentation. Failure to do so may result in denied claims or adverse audits in the future.

Medicare Hospital Settlements

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June 22, 2015

McLafferty_MikeBy Michael J. McLafferty, CPA, MBA, FACHE, FHFMA, FACMPE

The Centers for Medicare and Medicaid (CMS)  announced that approximately 300,000 Medicare claims have been settled for more than 1,900 hospitals in the amount of $1.3 billion dollars. There was a backlog of almost 800,000 claims that were being appealed by hospitals with an 18-month backlog waiting for a resolution of their cases. These claims were the result of audits by Recovery Audit Contractors (“RACs”). The settlement offered 68% of the amount due for hospitals that provided reasonable and necessary medical services but necessarily on an inpatient basis (RACs contended the patients should have been treated on an outpatient basis). The cases that qualified for consideration were hospital admissions prior to October 1, 2013. Hospitals could submit their cases for the settlement until October 1, 2014 with some additional extension dates.

The American Hospital Association reported that hospitals spend hundreds of thousands to millions of dollars each year to respond to RAC audits. This money could be better spent improving patient care.

Our hospital clients are burdened with annual audits on behalf of Medicare and Medicaid and the overregulation unique to the health care industry. The combination of both these items puts tremendous pressure on hospital management to effectively plan for the future of their organizations.

Medicare Charges and Payments

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June 12, 2015

McLafferty_MikeBy Michael McLafferty, CPA, MBA, FACHE, FHFMA, FACMPE

Medicare has released data regarding charges and the payment of claims to hospitals and physicians as of June 1, 2015. The data is being released as part of Medicare’s effort to be transparent regarding the payments amount for claims.

The latest data release provides charges for similar services in all 50 states and Washington D.C. The data covers annual periods of 2013, 2012 and 2011.

Medicare hopes that this data will provide Medicare beneficiaries and providers with the information they need to better understand the cost of various services. There is also a listing of the top 100 inpatient services that Medicare has paid for over the three year period.

The effort to provide charge and cost information to Medicare beneficiaries and providers is part of the Affordable Care Act legislation. The sharing of this data is seen as one of the many steps the Centers for Medicare and Medicaid is taking to reduce costs.

The more direct efforts to reduce costs and improve quality of services on the provider side include the Medicare Shared Savings Program, the Physician Quality Reporting System, Meaningful-Use, and the Value-Based Modifier. All of these programs are at different stages of implementation and success at reducing costs and improving quality. A new Merit-Based Incentive Payment System will be introduced in 2019.

Merit-Based Incentive Payment

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June 1, 2015

McLafferty_MikeBy Michael McLafferty, CPA, MBA, FACHE, FHFMA, FACMPE

The Merit-Based Incentive Payment (MIPS) system was set up as a compromise by the Health and Human Services Department to replace the current Medicare Part B Sustainable Growth Rate (SGR). The MIPS system is based on aggregating annual levels of activities for eligible providers.

MIPS annually measures Medicare Part B providers in four performance categories to derive a score from 0 to 100 points, which can significantly change a provider's Medicare reimbursement in each payment year.  The performance categories are: Value-Based Modifier (VBM)-measured quality (up to 30 points), VBM-measured resource use (30 points), Meaningful-Use (MU) (25 points), and a new category named "clinical practice improvement" (15 points).  The MIPS score's maximum impact on reimbursement increases from +/- 4% for the 2019 payment year to +/- 9% for the 2022 and subsequent payment years. 

 The measurement or performance period determining the MIPS score should end prior to and as close as possible to the provider’s payment year.  Based on our past experience with Medicare programs such as MU and VBM, there is typically a two-year lag from performance year to payment year, making 2017 the anticipated first performance year—the MIPS score would then adjust reimbursements in the 2019 payment year. 

The payment adjustments that could be made to the reimbursement levels of a practice are potentially significant. Providers and their business management team needs to be compliant with the requirements of the MIPS program.

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