In-Office Labs with CAP Accreditation… A Juxtaposition?

More in-office labs are getting CAP accreditation even though the College of American Pathologists is vigorously lobbying Congress to exclude anatomic pathology from the in-office ancillary services exception to the Stark rules that prohibit self-referral. CAP states that when physicians order on the basis of financial interest, there is enormous potential for over-utilization of testing.  Ironically though, more and more labs are getting CAP accreditation.

CAP clarifies its position on In-Office labs in October’s issue of Laboratory Economics…

In regard to in-office laboratory business arrangements, the CAP’s fundamental concern is that under the Stark in-office ancillary services self-referral exception, the incentive—regardless of accreditation—is to order and provide more testing services than are necessary, leading to overutilization of services and higher costs to the system. The incentives in these arrangements are misaligned, as is made clear by Congress’s current efforts to move away from these types of payment incentives.

The CAP accreditation process focuses on ensuring that ever lab we accredit meets the highest possible standards for operation under the law. Through the process, we verify what testing and services are provided, and ensure that they comply with CLIA. However, the accreditation process does not include scrutinizing or collecting information on a lab’s business arrangements.

Due to the requirement that CAP-accredited labs provide like-teams to participate in the accreditation of other labs, it is rare for an in-office lab to quality for CAP accreditation. However, it can happen if the lab meets all of CAP’s requirements, or if CAP review is requested by CMS, which does happen from time to time.

Electronic Submission of Medical Documentation

As you know, CMS has employed several types of Review Contractors to review and recoup improper payments each year. The Contractor’s role is to review, measure, prevent, identify, and correct any improperly paid claims. This is done by selecting a sample of claims, requesting medical documentation from the provider who submitted the claims, and manually reviewing the claims against the medical documentation to verify the provider’s compliance with CMS rules.

The documentation is currently requested by sending a paper letter to the provider and the provider has two options for submitting the requested records – mail paper or send a fax.

CMS intends to give providers a new mechanism for submitting medical documentation. They are calling this mechanism Electronic Submission of Medical Documentation (esMD). During Phase 1 of implementation, the Review Contractors will continue to send medical documentation requests via paper and provider will have the option to electronically send medical documentation to the Review Contractor that requested it. CMS esMD Gateway went live on September 15, 2011.

Several Review Contractors have already been APPROVED to participate in the esMD pilot effective September 2011:

·         Recovery Audit Contractor (RAC) A

·         RAC B

·         Medicare Administrative Contractor (MAC) J1

·         MAC J3

·         MAC J4

·         MAC J5

·         MAC J9

·         MAC J11

·         MAC J12

·         MAC J13

·         MAC J14

·         Comprehensive Error Rate Testing (CERT) Contractor

·         Program Error Rate Measurement (PERM) Contractor

·         DME MAC A

·         DME MAC B

·         DME MAC D

Look for more Review Contractors to be added as the program progresses.

For more information, search CMS’ website: www.cms.gov

Local Coverage Determination: KY and OH

Coverage Determination (LCD) Local Changes for Immunohistochemistry and Flow Cytometry

The recent change of Medicare Part B contractor from Palmetto to Cigna Government Services that took place in July 2011 also brought about changes to the LCD for IHC’s and Flows for Ohio and Kentucky.

An LCD, Local Coverage Determination, is the guideline that is required by CMS for fiscal intermediaries, MAC contractors, and carriers to issue to direct providers how to submit claims for certain services. LCDs also designate diagnosis codes needed to justify medical necessity for services, establish billing guidelines, and include limits on frequency and patient eligibility.

Below are the changes for Immunohistochemistry and Flow Cytometry for CGS that pathologists need to be aware of moving forward. Your billing service should also be aware of the new policies.

LCD L31873 for code 88342 Immunohistochemistry, each antibody

This LCD includes a list of diagnosis codes that CGS feels supports the medical necessity for reimbursement for this service. The list is rather extensive and pertains to many conditions across the organ systems but excludes many common signs & symptoms often associated with pathology billing such as nausea, vomiting, diarrhea, and abdominal pain.

The LCD also imposes limits on the number of payable units per specimen. CGS states that it would be unusual for more than ten (10) units to be medically necessary for one sample of tissue. Units reported above this threshold should be supported in the pathology report.

LCD L31870 for codes 88182 – 88189 Flow Cytometry

The LCD for flow Cytometry also includes a list of diagnosis codes felt to support medical necessity for reimbursement. The list mostly includes neoplasms, conditions of the endocrine, nutritional and metabolic systems, and diseases of the blood and blood-forming organs.

For more information, contact us at 517.486.4262.

The Retroactive Cheeseburger Tax

Medi-Cal the California Medicaid program is proposing cutting payments 10% and is also looking back retroactively to June 1, 2011 for recoupments. 

This means that if you provided treatment to patients between June 1, 2011 and now Medi-Cal will take back 10% of those payments.  In simple terms it is like going to a restaurant for a cheeseburger today only to be told you owe an extra $.40 for the burger you bought back in June as the price for the past eaten cheeseburger has now been increased.   

Of course there will be some legal actions and the subsequent fight but what about the principle of the idea.  The Department of Health Care Services, DHCS noted that “there will be no appreciable impact on beneficiary access to providers after these reimbursement reductions.” Really, do you think providers are going to scramble for more Medicaid patients knowing that at any time the state can say “we changed our minds; you now owe us 10% of the payments that we paid you over the past four months?”

5010 Deadline is Looming!

January 1, 2012 is closer than you think. If you haven’t had an opportunity to focus on the changes that are required for electronic claims effective on this date, you should make that your number one priority over the next 90 days to ensure no disruption in cash flow. This is critical because cash flow is already lower at the beginning of each year due to ‘deductible season.’

The AMA has listed the following steps to protect your cash in its “5010 Implementation Steps: Getting the Work Done in Time for the Deadline:”

• Submit as many transactions as possible before January 1, 2012.
• Decrease expenses before 1/1/12 to increase cash reserves.
• Consider establishing a line of credit with a financial institution.
• Research payers’ advance payment policies.
• Consider using manual or paper processes to complete transactions until the electronic transactions are fixed.

Note that the HIPAA standards, including Version 5010, are national standards and apply to your transactions with all payers, not just with FSS Medicare. That means you need to be prepared to implement these changes and transactions across the board.

Some improvements in Version 5010 electronic data transfer are:

• Standardized business information related to the transaction.
• Utilization of Technical Report Type 3 (TR3) guidelines that represent data consistently and are less confusing.
• More specific definition of the data that needs to be collected and transmitted.
• Accommodation of the reporting of clinical data such as ICD-10 diagnosis codes.
• Distinguishes between principal diagnosis, admitting diagnosis, external cause of injury, and patient reason for visit codes.
• Monitoring of certain illness mortality rates, outcomes for specific treatment options, some hospital length of stays, and clinical reasons for care.
• Addresses indicators on institutional claims for conditions that were “present on admission.”

If you can answer NO to any of the following questions, you are at risk for not being able to meet the January 1, 2012 deadline and not being able to submit claims:

1. Have you contracted your software vendor or billing agency to ensure they are on track to meet the deadline?
2. Have you identified changes to data reporting requirements?
3. Have you started to test files with software vendors, clearinghouses, or billing services?
4. Have you started testing with your MAC, which is required before being able to submit claims, with Version 5010?
5. Have you updated MREP software to view and print compliant HIPAA 5010 835 remittance advices?

Resources: MLN Matters Number: SE1131

What's Next...Medicaid RAC Audits?

Yes! That’s exactly what’s next. On September 14, 2011, CMS (Centers for Medicare &Medicaid Services) released their final rule detailing the implementation of the Medicaid Recovery Audit Contractor program.  Similar to Medicare RACs, states will contract with RACs who will search paid claims for fraud, waste and abuse. The auditors will be compensated based on a percentage of the funds that are recovered. The auditors will also be searching for underpayments that must be paid out.

Physicians and hospital organization are concerned about the amount of administrative burden from yet another regulatory agency placed on doctors and facilities.  They have asked for an explanation of the types of claims or billing situations that would attract Medicaid RAC review so as to avoid errors that could trigger unnecessary audits. The AMA remains concerned about the incentive-based payment structure in place for Medicaid Recovery Audit Contractors. Their belief is that the best way to reduce improper coding is through education and outreach.

There are several rules that differ from the current Medicare RAC rules. Some of the key differences are listed below.  

·         Prohibiting audits of Medicaid claims more than three years old.

·         Requiring each auditor to hire a licensed physician as medical director.

·         Requiring states to coordinate their Medicaid RAC activities with those of other auditors. Claims that are being investigated by another company may not be included in a RAC review.

·         Calling on states to set limits on the number of medical records a RAC can review and the frequency with which they can request records.

·         Requiring RACs to return their fee if an overpayment determination is reversed at any level of appeal.

The Medicaid RAC program follows in the footsteps of the Medicare RAC implemented in 2010. From January to June 2011, Medicare RACs have recovered $451 million in overpayments and $78.5 million in underpayments according to CMS. As lucrative as this may sound, CMS has not reported how much of the recovered overpayments have been ‘refunded’ back to the physicians due to reversal of the audit on appeal.

As an afterthought… if state budgets are already maxed or at deficit levels, how can they possibly afford to hire an auditor? Will they be doing so with dollar signs in their sights? It is well-known that state Medicaid programs are in need of an overhaul in claims processing.  Keep your ears open for more to come on this program implementation.

6th Annual Business of Pathology Review

The year 2011 has been an interesting year for healthcare and for physicians in general. It marked the beginning of the national healthcare plan and all the good, bad, and indifferent things that come with this change. The changes to pathology payments were affected also.

There are three main issues that are directly affecting pathologists’ incomes. They are increasing self-pay billing, managed care denial tactics, and poor billing practices.

The billing world is only now feeling the effects of the unemployment market. The COBRA 1 coverage offered by large employers covers 18 months of healthcare. Only now are we seeing these patients in the system as true self-pay. In some cases, hospitals and health systems, and even labs, are paying a patient’s extended CORBA 1 coverage as this allows them to bill the patient’s insurance company versus billing the patient directly. Another important factor in play here is the ever-increasing personal deductible. Just five years ago many employees had a $500.00 deductible; now more and more employees have a $5,000.00 deductible. Since the patient is directly responsible for more health care dollars, the account becomes much harder to collect and more likely to move to the collection bucket in the end.

It is more important now more than ever to have a clean self-pay demographic file, and an efficient self-pay billing process. This should include credit card payments and a strong collection process. The bottom line is that in many areas of the country the self-pay collection rates have dropped from 11%-8% to around 5%. 

The managed care billing world has become more complex as the industry matured. There are numerous tactics that these plans use to force the work to their “approved” labs and to keep payments in check.

Several national payers have made it very clear that they want all work that is leaving the network to be pre-approved; without pre-approval these claims are automatically denied. Some payers now require a group to bill under two separate tax identification numbers if they are billing from two sites or types of service and one of them is non-participating.

Another favorite tactic is to deny or reduce payment to the referring physician if they send work outside the network. Another trick is for the managed care plan to black-ball a provider if they leave their provider network. Some have taken to sending letters out to all the employers in the area telling them that a provider is no longer participating and telling their enrollees to use a different hospital or provider.

There is also an increasing trend for insurance plans to deny claims. Many national plans deny over 15% of all the claims that are billed. This means billers have to work harder to appeal these cases and gather payment. The payment rates now offered by managed care plans are reaching new lows. Several plans have offered their clinical lab fee schedule to hospital pathologists and independent labs. Also, many offer these rates directly through the group’s PHO or MSO and never tell them this is their competitive national fee schedule at about one-third of the CMS physician fee schedule. This is equal to getting paid $18.00 for an 88305-26.

More and more of these managed care insurance plans are now routinely denying any clinical charges including the CMS approved clinical charges. Many practices have negotiated carve-outs for clinical pathology or improved anatomic pathology rates to compensate for this loss. 

Finally, 2011 seems to be the year for many catastrophic billing failures. In review of over 70 pathology practices, laboratories, and hospitals, it seems we have found a new genesis of billing errors. As billing becomes more complex, the failures only compound the lost revenue.

For hospital-based groups we see numerous billing errors made on the payment side as the billing entities struggle to keep up with network and affiliate arrangements. Often groups think they are getting paid one rate only to find that they are getting paid a much lower rate through a silent PPO or network arrangement.

Many hospital based groups own a small private independent lab. In some cases these groups bill both professionally and globally under the same tax identification number. It is inevitable that in this arrangement the payers choose the lowest rate. It is quite common to see global bills paid at a professional rate.

For independent labs the main struggle is to build and maintain a strong list of managed care plans.  Sometimes this means lowering their expected payment rate to gain a managed care contract.

Some hospitals are now bringing their pathology groups in-house and putting them on salary. In this case we see the hospitals paying a fixed salary to the pathologists but not truly understanding how much revenue they are bring in to cover these costs. We are working with more and more hospitals nationally to help them bill and collect for these services correctly. 

The year 2011 has been an interesting year for pathologists’ payment arrangements. The year 2012 will see an even bigger change as we expect to see ACO’s take bigger stage and fully expect to see more bundling of services by both CMS and the commercial payers.  Stay tuned…