EisnerAmper Blog

An EisnerAmper Health Care Services Blog

Prepare Now for ICD-10 Implementation

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January 29, 2015

Clark_NancyBy Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I

The Centers for Medicare and Medicaid Services (“CMS”) issued confirmation last week that the compliance date for ICD-10 is October 1, 2015.   CMS has posted ICD-10 timelines and is directing providers to begin or continue implementation efforts now.  Health care providers, payers, clearinghouses, and billing services must be prepared to comply with the transition to ICD-10.

ICD-10 will affect diagnosis and inpatient procedure coding for everyone covered by the Health Insurance Portability and Accountability Act (“HIPAA”). ICD-10 diagnosis codes must be used for all HIPAA entities in the United States, and ICD-10 procedure codes must be used for all hospital inpatient procedures. Claims with ICD-9 codes for services provided on or after the compliance deadline will not be paid by major insurance carriers.

Providers need to continue to work on their implementation strategy, including an assessment of the impact on their organization, a detailed timeline, and a budget.  It is important to check with their billing service, clearinghouse and practice management software vendor to ensure that they are currently testing submissions in both ICD-10 and ICD-9 formats.   Since claims may be submitted or appealed well after the date of service, both types of submissions will need to be available to providers for an extended period of time.

Most personnel will need some type of ICD-10 training.  Coders and billers need detailed code set training.  Office staff responsible for authorizations will need to understand the new code set in order to properly obtain preapproval for procedures.  Clinical personnel will need to be versed in the coding requirements in order to appropriately document services. 

Include staff members involved in medical records, coding, clinical functions, information technology and finance when coordinating transition efforts and training sessions.  Lack of preparation for ICD-10 implementation may result in lack of reimbursement for services rendered on or after October 1, 2015.  For more information on ICD-10 implementation, see the CMS website.

Physician Pay Fix Update

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January 26, 2015

Bisciello_StevenBy Steven Bisciello, MBA, CMPE

As far as health care reform goes, the only item unresolved longer than ICD-10 is the issue regarding the repeal of the sustainable growth (“SGR”) formula. This past week we saw the first efforts to either temporarily or permanently repeal the SGR formula used to calculate Medicare physician payments .

These efforts came in the form of a two-day hearing held by the House Energy and Commerce Health Subcommittee.  This first hearing was entitled “A Permanent Solution to the SGR: The Time Is Now.”

As we know, the current deadline set for the SGR to go forward is March 31.  From the first round of testimony, it was reported that there is an agreement that one of the greatest challenges Congress faces is how to pay for repeal of the SGR--and not with a new Medicare payment policy for physicians. Last year, the committees in charge agreed on a plan which would have instilled a legislative package that would repeal the SGR and replace it with stable rates which could also be altered based upon performance-based incentives. This plan passed the House but went no further due to a lack of consensus about how to offset the cost.

Some suggestions that were provided on how to appropriately pay for SGR reform included the implementation of the new physician incentive payments from 2023 to 2018, allowing non-physician providers to participate, and increasing deductibles.

Subcommittee Chairman Joe Pitts (R-PA) said House leadership has stated that “only an SGR bill that can be paid for will be considered and that efforts to move a bill that is unpaid for is unrealistic.” Other committee members argued that “offsets are not needed for repealing the SGR but that if offsets are used they should come from a combination of tax increases and unused funds from military operations, not from the Medicare program.”

In this first round of meeting, there was no discussion, however, about cutting non-physician Medicare providers although that remains a strong possibility. Some of the provider cuts Congress is considering currently are cuts to graduate medical education, critical access hospitals, inpatient rehabilitation facilities, skilled nursing facilities, long term care hospitals, home health, clinical lab services, Medicare bad debt, and durable medical equipment.

We will continue to stay tuned as the next rounds of talks are completed.

From Volume to Value

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January 12, 2015

Duchak, DougBy Douglas Duchak, MBA

Will 2015 be the year hospital executives begin to experience a significant shift from the traditional fee for service reimbursement to the various forms of risk-based reimbursement that has been talked about and modeled for years? The industry has been conflicted in recent years by the comfort and reality of the volume-driven fee-for-service system and the financial strategies that have evolved from it, and the risk models we all know are coming. Planning and executing strategy that prepares a hospital for the future often come at the expense (and bottom line) of the current period. For hospitals and physicians to aggressively reduce length of stay (patient days), re-admissions and levels of ancillary testing under the current fee-for-service environment not only requires significant behavioral changes, it undermines financial performance during a period where many hospitals can ill afford to do so.

Many executives, while privately acknowledging the need to prepare and create initiatives for the coming risk environment, will privately state they cannot ‘leave money on the table’ and continue to strategize for the three most important factors for financial success: volume, volume and volume.

In preparing for the coming risk environment, it is essential that hospitals and physicians shift their focus from quantity to quality and efficiency. Less admissions, patient days, ancillary tests, and patient encounters will drive financial incentives, while at the same time quality and patient outcomes need to remain the same or improve. The days of the hospital CFO walking through his high census and very busy hospital with a big smile will be replaced by concern and worries as to how to reduce the high activity level. Indeed, that same CFO may have that same smile a few years in the future when he is walking through his near empty hospital.

While still in the early years of formation, it is expected Accountable Care Organizations (ACOs) will be the vehicle by which the objective of less costly and higher quality health care is achieved. The U.S. health care industry continues to spend nearly twice as much (as a % of Gross National Product) as any other country in the world on its health care delivery. Meanwhile, Medicare, the insurance industry, and employers who often foot the bill for their employees’ health care are calling loudly for lower costs and more efficiency in the system. It is this call that is driving the changes from our current system to the ACO model now being developed. Hospitals and physicians know the change is coming--yet realize we’re not ready just yet. The challenge is to prepare for those changes while not harming the current operation.

PQRS Negative Payment Letters Sent

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December 17, 2014

By Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I

Clark_NancyThe Centers for Medicare and Medicaid Services (“CMS”) recently sent letters to group practices and eligible professionals (“EPs”) who did not satisfactorily report PQRS quality data measures in 2013 and will receive a negative 1.5% payment adjustment on their Medicare Part B payments starting Jan. 1, 2015.

PQRS, the Physician Quality Reporting System, is a program that uses a combination of incentive payments and negative payment adjustments to promote reporting of quality information.  Calendar year 2015 will be the first in which a negative impact is noticed.  In 2016, the negative adjustment will be 2% of the allowed fee schedule.

PQRS has also offered incentives for participation, but these incentives are diminishing as the penalties are implemented.  Groups and EPs who believe they are inappropriately penalized have the option of appealing with CMS through an informal review process by Feb. 28, 2015. There’s more information on how to file for an informal review here.

Fingerprint-Based Security Measures for Medicare Providers

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November 25, 2014

By Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I 

Clark_NancyThe recently published 2015 Office of Inspector General (OIG) Work Plan indicates that enhanced provider security screening is now in place and will be reviewed by the OIG.

In August, the Centers for Medicare and Medicaid Services (CMS) began implementation of 42 CFR Part 1007, which was originally published in the Federal Register in 2011.   The new security provision was implemented on August 6, and includes fingerprinting-based background checks.  The contract for fingerprinting was awarded to Accurate Biometrics, in Chicago, Illinois

Medicare Administrative Contractors (MACs) have started sending letters to providers, listing all owners who require fingerprinting.  Providers must respond within 30 days from the date of the letter.  Failure to respond could result in either revocation of Medicare billing privileges or denial of Medicare enrollment applications.

These security background checks are now required for all individuals with a 5% or greater ownership interest in an organization and those that fall into the “high-risk” category.  High risk individuals include newly-enrolled Durable Medical Equipment Prosthetics Orthotics and Supplies (DMEPOS) suppliers and home health care agencies (HHAs).

CMS is implementing other new measures in an effort to prevent fraud, waste and abuse resulting from weaknesses in the Medicare enrollment process.  These include background checks and an automated provider screening process for providers and home health agency workers.  For more information, see MLN Matters® Number SE1417.


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November 12, 2014

By Steven Bisciello, MBA, CMPE

Bisciello_StevenLast week, $840 million dollars was earmarked by the Secretary of Health and Human Services (HHS), Sylvia M. Burwell, toward the Transforming Clinical Practice Initiative. The goal is to create and support networks developed to help physicians have timely access to health information and ultimately result in improved health outcomes. The investment is over the next four years and will support 150,000 clinicians.

Providers are being asked to redesign their practices, getting away from the patient volume model and moving towards a patient health outcome model.

These models will subsequently spawn coordinated health care networks which will include group practices, health care systems and others.

This model is being geared to help providers share patient health information safely within the network, to coordinate care and further improve the quality and delivery of care.  This strategy is also designed to reduce costs through this information sharing and coordination of care amongst the different providers and ultimately reduce hospital readmissions.

Some examples of this strategy include: Creation of shared patient portals where patients can communicate with their “team” of providers; allotting providers more access to pharmacies and patient medication information, to ensure and assist patients in medicating properly; and implementing and utilizing Electronic Medical Records (EMRs) to allow for safe, quicker sharing of patient health information amongst the provider team.

Participating provider practices and health care organizations will receive technical assistance and support from their peers to better provide synergetic patient care in a timely and efficient manner.

This will also prepare providers ahead of time to achieve success in a forthcoming health care arena, one that measure success and reimburse on value and outcomes.

Find out more about the Transforming Clinical Practice Initiative

CMS Introduces Modifiers to Combat Abuse

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October 22, 2014

By Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I

Clark_NancyThe Office of Inspector General (OIG) has identified continued abuse of modifier 59, Distinct Procedural Service.  This modifier indicates when physicians’ services that are usually considered integral to each other may be reported separately for additional payment.  Frequently, this modifier is applied to services that should not be billed separately and the provider inappropriately receives reimbursement.  Transmittal 1422 states that the 2013 Comprehensive Error Rate Testing (CERT) data projected a $320 million error rate in physician claims and $450 million in facility claims appended with modifier 59. The Centers for Medicare and Medicaid Services (CMS) indicate that four new modifiers will be implemented in January 2015 in an attempt to better identify inappropriate claims. 

These new Healthcare Common Procedure Coding System (HCPCS) modifiers, referred to collectively as -X{EPSU} modifiers, are considered subsets of modifier 59:

  • XE indicates a Separate Encounter, A Service That Is Distinct Because It Occurred During A Separate Encounter  
  • XP indicates a Separate Practitioner, A Service That Is Distinct Because It Was Performed By A Different Practitioner    
  • XS indicates a Separate Structure, A Service That Is Distinct Because It Was Performed On A Separate Organ/Structure  
  • XU indicates an Unusual Non-Overlapping Service, The Use Of A Service That Is Distinct Because It Does Not Overlap Usual Components Of The Main Service

CMS believes that by identifying specific reasons for utilizing modifier 59, it will be easier to filter claims that may be billed inappropriately.  Provider education is crucial for submitters to understand when a service can be appropriately “unbundled.”  Nonetheless, we can expect frequent audits of claims with both modifier 59 and the new subset modifiers.  Ensure that documentation substantiates distinct services whenever claims are submitted, or expect to forfeit payment and undergo potentially time-consuming audits.

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