Medical Billing

Article Autumn Hines

What is Value-Based Care?

The healthcare industry is experiencing a significant shift from traditional volume-based care to value-based care (VBC), which emphasizes patient outcomes and quality of care over the number of services provided. This transition aims to improve patient health, reduce healthcare disparities, and manage the escalating healthcare costs. The success of VBC depends on creating a collaborative environment where healthcare providers are incentivized to deliver the highest quality care, with payments directly linked to patient outcomes.

Understanding Value-Based Payment Models

Value-based payment (VBP) models deviate from traditional fee-for-service models by reimbursing providers based on performance and patient outcomes rather than the volume of services. There are several types of VBP models, including but not limited to:

  • Pay-for-Performance: Providers receive bonuses for meeting quality metrics, such as reduced hospital readmissions or improved patient satisfaction scores.
  • Bundled Payments: A single payment is made for all services related to a specific treatment or condition, promoting efficiency and coordination among providers.
  • Shared Savings Program: Providers share in the savings achieved when they deliver care within a certain cost threshold while meeting quality benchmarks. This VBP model offers a range of risk-based pathways that may allow providers to “lean into” value-based care initiatives. For example, if generated, “Upside Risk” payment arrangements reward a portion of the savings arrangement to the provider. The provider shares no downside risk and can develop critical value implementation workflows while learning and transitioning to VBP model pathways.
  • Capitation and Specialty Subcapitation: Often, the entire payment is a risk, where the payment is tied to the patient or the population, typically referred to as PMPM (per person per month). Providers receive a set amount per patient per month, regardless of the number of services provided, incentivizing preventive care and efficient resource use.

Challenges and Opportunities

Implementing VBP models presents both challenges and opportunities for healthcare providers:

  • Challenges:
    • Data Collection and Analysis: Providers need robust data capabilities to track and improve performance metrics.
    • Risk-Based Contracting: Providers must understand and manage various forms of risk, including financial incentives and penalties.
    • Complexity of Models: Navigating different VBP models and contracts can be complex and resource-intensive.
  • Opportunities:
    • Improved Patient Care: By focusing on quality, providers can prioritize preventative and targeted care, potentially improving patient outcomes and reducing the inappropriate need for costly treatments.
    • Cost Reduction: Efficient care delivery can lead to significant cost savings, benefiting both providers and patients.

How to be Successful

Successful implementation of value-based care requires a strategic and operational shift:

  • Leadership Commitment: Clear communication of leadership’s vision and goals of value-based care is crucial.
  • Provider and Patient Engagement: Both providers and patients must be actively engaged in the transition, with providers involved in planning and implementation and patients educated about the benefits of value-based care.
  • Data-Driven Decision-Making: Effective use of data analytics and performance metrics is essential for tracking progress and driving continuous improvement.

As healthcare costs continue to rise, the shift towards value-based payment models will likely accelerate. Providers who can deliver high-quality, cost-effective care will be well-positioned for success in this evolving landscape. The transition to value-based care is a challenging but necessary step towards a more efficient and effective healthcare system.

For more detailed insights and guidance on navigating value-based payment models, download our comprehensive guide.

Article Autumn Hines

The Department of Health and Human Services’ Office of Inspector General (OIG) calculates the Medicare Fee for Service improper payment rate on an annual basis through its Comprehensive Error Rate Testing (CERT) program. OIG selects and tests roughly 50,000 claims for services each year and publishes detailed testing results. Dean Dorton has developed the following interactive tool to explore the results of the testing and provided commentary to highlight some of the trends and hotspots that have emerged from the CERT results. Healthcare leaders can use this tool to help profile their organization’s service profile and identify areas of operations that may present more risk from an inaccurate coding perspective.

Part A – Hospitals

The overall error rate for hospital services has climbed over the past two years after a slight dip in 2021. Major Hip and Knee Joint Replacements is by far the most reviewed MS-DRG code in the Part A Hospital data set and the results are concerning. In 2019, only 7.7% of hip and knee replacements were found to be in error due to a lack of medical necessity. In 2023, that percentage has grown to over 41%. 

Other findings of note include:

  • MS-DRG 057 – Degenerative Nervous System Disorders without MCC is the second most reviewed MS-DRG in the five-year period—while the main cause of the error has shifted from a lack of medical necessity in 2019 to incorrect coding in 2023.
  • MS-DRG 274 – Percutaneous Intracardiac Procedures without MCC has a high error rate (28.8% of claims versus 13.6% of claims for all codes) and has gone from a relatively low number of claims tested in 2019 to one of the top 10 most tested MS-DRG codes in 2022 and 2023. The vast majority (85.5%) of errors for Percutaneous Intracardiac Procedures without MCC are due to insufficient documentation.
  • MS-DRG 627 – Thyroid Parathyroid and Thyroglossal Procedures without CC/MCC has an overall high error rate (31.8% of claims versus 13.6% of claims for all codes), but further examination shows that both the error rate and the number of claims tested have decreased from 2019 to 2023. Most errors (94.0%) for this MS-DRG were categorized as a lack of medical necessity.

Part A – Laboratory, SNF, CORF

A wide variety of healthcare providers fall under the Part A – Non-Hospital category with the largest provider types by number of claims tested being Laboratories, Skilled Nursing Facilities (SNFs), Home Health Agencies (HHAs), and Hospices. This group of providers has the overall lowest error rate within the five-year period of 11.9%. The number of claims reviewed for laboratories has steadily increased over the five-year period, while the number of claims for SNFs, HHAs, and Hospices decreased during the pandemic while rebounding in 2023. Some highlights for the biggest provider types:

  • Laboratory: Part A Laboratory services have an overall error rate of 14.05% for the five-year period. Most errors (82.9%) for laboratory services were found to be due to insufficient documentation. Some laboratory tests with a large volume of claims tested and error rates include lipid panels (CPT 80061), hemoglobin glycosylated a1c (CPT 83036), and assays of magnesium (CPT 83735).
  • Skilled Nursing Facilities: HIPPS and HCPCS codes covering rehabilitation and therapy services continue to be the most tested codes. The overall error rate for SNF services is 11.7% and the most common reason for an error is insufficient documentation.
  • Home Health Agencies and Hospices: Hospice services provided in the patient’s home continue to be the most tested claims for both HHAs and Hospices. One key difference between the two provider types is the most common error type. For HHAs, lack of medical necessity is the most cited error reason, while insufficient documentation is the main reason for Hospices.

Part B – Durable Medical Equipment

Durable Medical Equipment (DME) providers have the highest overall error rate of the four different provider types in the CERT data at 27.4%–however, that error rate has been decreasing. Insufficient documentation has been cited as the reason for over two-thirds of the errors identified. One particular hot spot within DME is knee orthoses. These items are some of the most frequently tested and have error rates of more than 40%. 

Pharmacies can fall under the DME umbrella as well when they provide lancets, infusion pumps, and other devices used for parental nutrition for use in the patient’s home. Lancets and blood glucose reagent strips are two such items that have been frequently tested and have overall error rates of more than 40%.

Part B – Professional Services

The most common error type found in professional services testing in 2023 continues to be Insufficient Documentation. The highest level of initial and subsequent hospital evaluation and management services were two of the three most reviewed HCPCS codes—and CERT testing reveals high error rates for both. Most of these errors indicate that documentation did not support the level of E/M service billed.

Clinical laboratory services continue to be the most tested professional provider type. Various urine drug testing codes continue to have high error rates. Radiation Oncology services have seen an increase in both the number of claims tested and the error rate over the past five years. 

Article Dean Dorton

Patients have never been more concerned and affected by the cost of their healthcare treatment, as medical debt continues to rise and consumers demand transparency from their medical providers. In December of 2020, President Trump signed into law the No Surprises Act, which establishes the patient with protections against surprise medical bills. This law builds on parts of the Affordable Care Act (ACA) that includes protection for the patient.

What is surprise billing?
Surprise billing happens when a patient unknowingly receives care from a provider that is outside the patient’s health plan network. This scenario can occur for both emergent and non-emergent services. For example, if a patient is having imaging performed at an in-network hospital the radiologist could be out-of-network according to the member’s plan. If not prohibited by state law, the out-of-network provider can bill the patient for the difference between the billed charges and the amount paid by their insurance plan. This type of billing is known as “balance billing” and is prohibited by Medicare and Medicaid. The No Surprises Act will extend this similar protection to employer-sponsored and commercial health plans.

The key provisions of the No Surprises Act to be cognizant of for providers:

  • Balance billing is prohibited for out-of-network emergency care, provider services at in-network Facilities, and air ambulance services. Starting at the beginning of 2022, out-of-network hospitals and emergency facilities are prohibited from billing a patient more than they would pay for an in-network plan. Under this regulation, health plans must apply the member’s cost share for out-of-network care, cannot require a pre-authorization for out-of-network emergency services, and must process a claim within thirty days of receiving an out-of-network claim.
  • Determining cost shares calculation vary by state. The act requires a patient’s in-network co-insurance for out-of-network services to be paid at the “recognized amount”. This is the rate paid for a service under the state’s medical billing law or “All Payer” rate model. If a state does not have these established, the service is paid at the “Qualifying Amount”. This amount is defined as he median of contracted rates for a specific service in the same geographic region within the same insurance market as of January 31, 2019. The rate will be adjusted per the Consumer Price Index for All Urban Consumers (CPI-U).
  • New arbitration and submission process. Healthcare administrators and providers will be required to learn and follow the new guidelines for out-of-network payments. These will be paid in one of three methods. It could be the initial payment the plan reimburses for out-of-network services, negotiated rate from the insurance plan to be completed in 30 days, or through the new independent dispute resolution process.
  • Good faith estimates. Self-pay and uninsured individuals must be provided with a “good faith estimate” of expected charges for items and services that are rendered.
  • Notice and consent exception. The only exception to the balance billing exclusion rule is for certain non-emergency services that the provider gives written notice at least 72 hours in advance and obtains the patient’s written consent.
  • Continuity of care for patients. Continuing care patients will be required to be covered by a plan after giving a timely notice of any alteration in their participation. These services must be covered for the member for up to 90 days until a transition can occur.

As you assess your facility’s preparation for the implementation of the No Surprises Act, please consider the following:

  1. Does your organization have a resource dedicated to negotiating out-of-network bills? Do you have a strong understanding of contract networks, a process for determining allowances for out-of-network services, and a rigorous appeal resolution process? Do you have a plan for creating contacts with out-of-network plans?
  2. Does your organization have a team implemented to create a process around the new dispute resolution process?
  3. Are your customer service, patient access, and billing staff preparing for the regulation change at the beginning of 2022?
  4. Is the patient access team prepared with a new process to track consent forms, create good faith estimates, and apply the appropriate cost-sharing percentages?
  5. Is the billing staff implementing new procedures for not billing patients for out-of-network costs and how to handle these outstanding balances?
  6. Is your customer service team prepared to address questions from patients that may arise due to confusion about surprise billing or balance billing and have the required regulation of disclosure around this law been prepared to provide to patients?
  7. Have current contracts for emergency and ancillary providers been reviewed to determine any areas of concern or exposure?
  8. Has any financial analysis been completed to understand how this new law may impact reimbursement overall and current oversight planning?
  9. Is your organization’s legal or risk management team familiar with state and federal laws around balance and surprise billing?

As more clarification is released around the No Surprises Act, one concept is apparent that current legislation is focusing on transparency for the patient. This new law may have a negative impact on a facility’s ability to obtain payments for services. Our experienced healthcare team can provide insights into the regulatory changes this law will require, aid in being complaint, and provide recommendations into processes to this change not hindering collections. Please contact us to create an action plan that is right for you.

Adam Shewmaker, FHFMA | Healthcare Consulting Director
ashewmaker@ddafhealthcare.com
502.566.1054

Article Dean Dorton

On a monthly basis, athenahealth publishes a Practice Performance Review (PPR) dashboard that details the previous month’s cash collections, accounts receivable (A/R), and other key performance indicators (KPIs). The KPIs are provided as a six-month trend and compared to other peer groups using the athenahealth platform.

The dashboard package, which focuses on more revenue, faster revenue, and less work, is a great insight into your organization’s recent performance, but perhaps more importantly it serves as an opportunity to identify potential improvements across the revenue cycle.

Reviewing your most recent performance report can assist in identifying pockets of opportunity within your revenue cycle that may lead to accelerated cash, reduced A/R, or improved processes.

Key items to review include:

  1. Charge-Entry turnaround time
  2. Hold turnaround time
  3. Manager Hold turnaround time
  4. Client Days in A/R
  5. E/M coding as compared to benchmarks

Is your A/R backlogged? Do you need help or expertise in getting A/R back on track? Our team has the experience to assist your organization with identifying potential improvement opportunities, potential root causes, and A/R cleanup services to get your revenue cycle functioning to its fullest. Ask us how we can help!

Learn More – Medical Billing and Credentialing Services

Article Dean Dorton

Medicare Physician Fee Schedule Final Rule

The Medicare Physician Fee Schedule Final Rule for Calendar Year 2021 was published in the Federal Register on December 28, 2020. This Final Rule went into effect on January 1, 2021 and implemented the following changes:

  • Streamlined the reporting process for office and outpatient evaluation and management (E/M) services and increased the relative value units (RVU) for E/M services. The new Physician Fee Schedule provided significant increases in RVUs for common office and outpatient E/M services such as maternity care bundles, emergency room visits, end-stage renal disease capitated payment bundles and therapy evaluation services. The goal is to reduce billing and coding burdens on physicians and reimburse time spent evaluating and managing a patient’s care.
  • Expanded the list of covered telehealth services specific to the PHE and makes permanent certain codes that were only temporarily added since the onset of the PHE and created a new category (Category 3) of telehealth codes on a temporary basis to the approved list of Part B telehealth codes that will be covered for the duration of the PHE.
  • CMS acknowledged the importance of vaccinations to the public health and proposed increasing payment for vaccinations. On March 15, 2021, CMS increased the Medicare payment for COVID-19 vaccine from about $45 to $80 for a single dose of the vaccine and a payment rate of $80 for the vaccine requiring two doses.  The new and higher payment rate is designed to increase the number of vaccines providers can furnish each day. Vaccine providers are prohibited from charging patients any amount for this vaccine administration as a condition of receiving free COVID-19 vaccines.

Consolidated Appropriations Act

Signed by President Trump on December 27, 2020, this legislation includes the following provisions important to hospitals and health systems.

  • Provider Relief Funds – allows providers to calculate lost revenues using “any reasonable method” for the calculation that include the difference between budgeted and actual revenue if such budget had been established and approved prior to March 27, 2020.
  • Provides a 3.75% increase in payments un the Physician Fee Schedule for 2021.
  • Eliminated the Medicare sequester cuts for the first three months of 2021.
  • Lifts the cap on Medicare-funded physician residency positions in teaching hospitals by 1,000, effective in FY2023.
  • Includes $30 billion for the purchase and administration of COVID-10 vaccines and related therapeutics.
  • Protects patients from surprise medical billing that arise from out-of-network emergency care provided at in-network facilities without the patient’s informed consent (effective 1/1/2022).
  • RHC payments – increases the Medicare cap for independent rural health clinics to $100 beginning on 4/1/2021 and gradually increases the upper limit each year through 2028 until the cap reaches $190. Provider-based RHCs which are provider-based to hospitals with fewer than 50 beds and certified after 12/31/19 also will now be subject to a cap to their reimbursement.  For the provider-based clinics approved prior to 12/31/19, they will have a clinic-specific cap established based on their 2020 all-inclusive rate that will grow annually at the Medicare Economic Index.

Dan Schoenbaechler, CPA, FHFMA
Healthcare Consulting Manager
dschoen@ddafhealthcare.com • 502.566.1097

Article Dean Dorton

Below is an overview of the final rule as well as changes in various categories that may be important to you. There are 490 new, 47 revised, and 58 deleted ICD-10-CM diagnosis codes finalized for fiscal 2021 taking effect October 1, 2020.

The final rule includes hundreds of new ICD-10-CM codes:

  • 128 additions to Chapter 19: Injury, poisoning and certain other consequences of external causes for adverse effects and poisoning by fentanyl and tramadol as well as other synthetic narcotics.
  • 125 additions to Chapter 20: External causes of morbidity, including more specific codes for collisions involving electric scooters and other non-motor vehicle accidents.
  • 57 musculoskeletal codes, including several in category M24.- (other specific joint derangements) for other articular cartilage disorders, disorders of ligament, pathological dislocation, recurrent dislocation, contracture, and ankyloses.
  • 21 codes to describe withdrawal from substances including alcohol, cocaine, and opioids.
  • 18 codes for sickle cell anemia. New codes such as D57.213 (sickle-cell/Hb-C disease with cerebral vascular involvement) and D57.431 (sickle-cell thalassemia beta zero with acute chest syndrome) specify complications related to the condition.
  • Three codes to capture stage 3 chronic kidney disease (CKD) in two new sub-stages.
  • New Chapter 22 Codes for Special Purposes includes two new codes this year: U07.0 (vaping-related disorders) and U07.1 (COVID-19).

Changes can be found in the following categories:

New

  • D57 – sickle-cell disorders
  • D89 – other disorders involving the immune mechanism- not elsewhere classified
  • F10 – Alcohol abuse and use with withdrawal
  • F19 – other psychoactive substance related disorders
  • H18 – other disorders of cornea
  • M05 – rheumatoid arthritis with rheumatoid factor
  • M06 – other rheumatoid arthritis
  • M08 – juvenile arthritis
  • M19 – other and unspecified osteoarthritis
  • M92 – Juvenile osteochondrosis
  • S20- superficial injury of thorax
  • T40- poisoning by- adverse effect of and under-dosing of narcotics and psychodysleptics (hallucinogens)
  • V00-V06 for electric scooter and other micro-mobility pedestrian conveyance injuries

Revised

  • Z68- Body mass index (BMI)
  • Z88- Allergy status codes

Deleted

  • T40- poisoning, under-dosing, and adverse effects of other synthetic narcotics
  • 20- other doubling of the uterus, unspecified

Proposed FY 2021 ICD-10-CM Code Changes

ICD-10-CM chapter New Revised Invalid
Chapter 1: Certain infectious and parasitic diseases (A00-B99) 7 0 2
Chapter 2: Neoplasms (C00-D49) 0 0 0
Chapter 3: Diseases of the blood and blood-forming organs and certain disorders involving the immune mechanism (D50-D89) 43 3 3
Chapter 4: Endocrine, nutritional and metabolic diseases (E00-E89) 6 0 2
Chapter 5: Mental, Behavioral and Neurodevelopmental disorders (F01-F99) 21 0 0
Chapter 6: Diseases of the nervous system (G00-G99) 24 0 5
Chapter 7: Diseases of the eye and adnexa (H00-H59) 29 1 7
Chapter 8: Diseases of the ear and mastoid process (H60-H95) 0 0 0
Chapter 9: Diseases of the circulatory system (I00-I99) 0 0 0
Chapter 10: Diseases of the respiratory system (J00-J99) 6 0 2
Chapter 11: Diseases of the digestive system (K00-K95) 11 0 5
Chapter 12: Diseases of the skin and subcutaneous tissue (L00-L99) 0 0 0
Chapter 13: Diseases of the musculoskeletal system and connective tissue (M00-M99) 57 0 3
Chapter 14: Diseases of the genitourinary system (N00-N99) 15 0 1
Chapter 15: Pregnancy, childbirth and the puerperium (O00-O9A) 5 0 1
Chapter 16: Certain conditions originating in the perinatal period (P00-P96) 4 0 0
Chapter 17: Congenital malformations, deformations and chromosomal abnormalities (Q00-Q99) 0 3 1
Chapter 18: Symptoms, signs and abnormal clinical and laboratory findings, not elsewhere classified (R00-R99) 4 0 2
Chapter 19: Injury, poisoning and certain other consequences of external causes (S00-T88) 128 0 23
Chapter 20: External causes of morbidity (V00-Y99) 125 1 1
Chapter 21: Factors influencing health status and contact with health services (Z00-Z99) 3 39 0
*Chapter 22: Codes for special purposes (U00-U85) 2 0 0
Total 490 47 58

*New Chapter

In addition, CMS proposed new guidelines for Evaluation and Management CPT codes, effective January 1st, 2021. These changes apply to new and established office or other outpatient visits (99201-99215).

  • Code 99201 will be deleted.
  • History and exam will not be used in determining which visit code is supported.
  • Office level will be determined by time or medical decision making.
  • New definitions within MDM are given with slight changes to how MDM is calculated.
  • Visits will have assigned time ranges, defined as total spent on that date of service, including non-face-to-face work.

 Join us on a webinar to talk about the new E/M Codes on October 27!

E/M Coding Webinar Information

Does this seem like a lot to tackle in the midst of the pandemic? Dean Dorton can help by offering comprehensive coding chart audits and provider documentation education to make sure you are in compliance.

Brandy Montgomery
Healthcare Consulting Manager
bmontgomery@ddafhealthcare.com • 502.566.1037