EisnerAmper Blog

An EisnerAmper Health Care Services Blog

Researchers Say High-Deductible Plans (HDHP) Reduce the Dominance of Preferred Provider Organizations (PPO)

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October 6, 2015

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

According to Milliman, many consumers prefer traditional PPO coverage for a host of reasons, mainly because they know they understand how such plans work and are comfortable in the design. There is also the fear of high deductibles. All told, the reluctance by some employees, even when shown the possible financial benefits of moving to an HDHP with higher employer contributions, is a challenge for employers looking at full replacement.

A Kaiser Family Foundation Study indicated that there is an employer shift in health care costs to consumers. According to researchers, only 55% of plans had a deductible as recently as 10 years ago. Now, enrollment in HDHPs has nearly doubled since 2010, up to 24% in 2015. Kaiser said deductibles have increased 67% over the past five years, with the average deductible for single coverage growing from $917 to $1,318.

Mercer expects to see growth continue from the 48% offering HDHPs now for those employers with greater than 500 lives to 66% doing so over the next three years. The increase in HDHP enrollment has been sharp, according to Mercer’s figures, with membership in such plans at 23% in 2014 from just 8% in 2009.

Our own experience agrees with the findings of Milliman, Kaiser Family Foundation and Mercer. The majority of our health care clients now offer HDHP plans and expect to see a higher number of their employees choose these plans going forward.

As cost sharing with employers continues to grow, we expect more employees to start looking at the public exchanges as an option. Eventually we may see only subsidies from employers for the purchase of health care benefits. You can be certain that consumers going forward will be expected to share more of the cost of their health care benefits.

Electronic Health Records – Internal Control Issues

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September 14, 2015

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

The Health Care Compliance Association recently sponsored a webinar in NYC. The webinar highlighted the following features of electronic health records (“EHR”) that can be misused because of a lack of internal controls and training by the users:

  • The “make me an author” tool: It allows physicians to substitute their signature for that of another person who entered notes in the EHR. Some vendors even allow the user to opt out of tracking changes, which makes it impossible to figure out who edited the records. Our experience with audits suggests that the inability to know when edits are entered will cause serious audit issues regarding proper documentation.
  • EHRs with no place for providers to include narratives: If EHRs lack space for providers to write their observations about patients on a given visit, they are at greater risk of appearing identical to each other. When medical records appear identical from one visit to the next, auditors deny claims for the reason that medical necessity cannot be established. Medical necessity is currently the number one reason that payers are requesting refunds.
  • Copy and paste or cloning: Documentation is considered cloned if every entry in the record is worded the exact same way or is very similar to previous entries. When entries are copied and pasted without being edited, this doesn’t meet medical-necessity requirements for Medicare coverage because documentation isn’t specific enough to the patient and his or her experience. This has been a major focus of Medicare Administrative Contractor audits the last two to three years.
  • Failing to enter information in relevant fields: Medicare won’t pay for inpatient admissions without a physician order, but patients may be discharged without a flag in the EHR that it’s missing. Our coders still find missing information during our audit reviews.
  • Templates: Most EHRs have built-in time savers, such as self-populating fields. They insert the patient’s medical history into the record when the physician checks a box. That multiplies the effect of even one incorrect piece of data. Templates can be useful as guides, but staff must be careful to insure the data entered is correct.

Many of our clients and contacts view an EHR as a “black box” that solves all of their coding and documentation problems. We continue to remind our clients and contacts that EHRs are just a tool and that effective training on their software is critical to efficiently and effectively utilizing the software.

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.

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