CMS finalizes self-identified overpayments rule for services including Part B

by Judith L. Kares, JD

The Medicare Reporting and Returning of Self-Identified Overpayments final rule (81 Fed. Reg. 7654?7684), which became effective March 14, is designed to implement Section 1128J(d) of the Social Security Act, which was established under Section 6402(a) of the Affordable Care Act, effective March 23, 2010.

The rule applies only to healthcare providers and suppliers furnishing services under Medicare parts A and B. A separate rule was published in May 2014 that addresses the applicability of similar requirements to overpayments under Medicare parts C and D.

 

Key definitions

Let us begin with the definition of "overpayment" included in the rule. An overpayment means any funds that a person has received or retained under Medicare to which the person, after applicable reconciliation, is not entitled. A "person" means a provider or supplier furnishing services under original Medicare (parts A and B)?not a beneficiary. For purposes of the rule and its underlying statute, a person has an obligation to identify, report, and return overpayments in a timely and effective manner. Failure to do so may subject that person to significant sanctions, including sanctions under relevant federal statutes (e.g., the False Claims Act, Civil Monetary Penalties Law, etc.).

 

Identification

To comply with the regulatory requirements, a person first must be able to identify whether an overpayment has been received:

• A person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined an overpayment was received and quantified the amount of the overpayment.
• A person’ should have determined the receipt of an overpayment and quantified the amount if the person, in fact, received an overpayment, but fails to exercise reasonable diligence.

 

Although the overpayments rule provides an incentive for providers and suppliers to exercise reasonable diligence, the rule does not provide much guidance on what reasonable diligence actually constitutes. CMS simply states that reasonable diligence is fact-specific and must be demonstrated by timely, good faith investigation of credible information, generally within no more than six months. Determining whether information is sufficiently credible is also fact-specific. Examples of circumstances that might justify more than six months to investigate include physician self-referral law violations referred to the CMS Voluntary Self-Referral Disclosure Protocol (CMS SRDP), natural disasters, and states of emergency.

 

Applicable deadlines

A person who has received an overpayment must report and return it by the later of the following:

• The date 60 days after the day the overpayment was identified
• The date any corresponding cost report is due, if applicable

 

The 60-day time period begins either:

• On the day reasonable diligence is c­ompleted and the overpayment is identified (including quantification)
• If the person fails to conduct reasonable diligence, on the day the person received credible information of a potential overpayment

 

Absent extraordinary circumstances, in cases where there is credible information of a potential overpayment, the provider or supplier has up to eight months to report and return the overpayment (six months for timely investigation and two months [60 days] for reporting and returning). An example of credible information would be a Medicare contracto’?s determination of an overpayment, based on medical review.

An otherwise applicable deadline, however, will be suspended in any of the following circumstances:

• OIG acknowledges receipt of an OIG Self-Disclosure Protocol (OIG SDP) submission, until settlement or the perso’?s withdrawal or removal from the OIG SDP
• CMS acknowledges receipt of a CMS SRDP submission, until settlement or the perso’?s withdrawal or removal from the CMS SRDP
• The person requests an extended repayment schedule, until the contractor rejects the request or the person fails to comply

 

Applicable reconciliation generally enables a person to identify funds to which the person is not entitled.

In the context of cost reporting, applicable reconciliation is the provide’?s year-end reconciliation of payments and costs to create the cost report. The cost report is due within five months of the end of the provide’?s fiscal year. Overpayments identified prior to submission of the cost report should be reflected in and returned at the time of filing. For example, overpayments as a result of periodic interim payments should be reported and returned at the time the initial cost report is due. 

Certain cost report overpayments cannot be identified until the Medicare contractor provides relevant information (e.g., payments in excess of certain caps, overpayments as a result of cost report outlier reconciliation, etc.). If a provider self-identifies an overpayment after submission and reconciliation of the initial cost report, the provider must report and return the overpayment within 60 days of identification. The applicable reporting process is to submit an amended cost report, along with the overpayment refund.

If the contractor identifies the overpayment during the cost report audit, it will determine the overpayment amount at the time of final cost settlement.

 

Six-year lookback period

Under the overpayments rule, an overpayment must be reported and returned if a person identifies the overpayment within six years of the date of its receipt. The otherwise applicable lookback period may be subject to certain limitations based on whether, and to what extent, the requirements of the rule and the ­underlying statute are retroactive.

The underlying statute (section 1128J[d] of the Social Security Act) is not retroactive. Therefore, failure to comply with its specific requirements prior to its effective date (March 23, 2010) is not a violation of the statute. Providers and suppliers, however, must report and return any overpayments not returned prior to March 23, 2010, in compliance with the statut’?s specific requirements, even if those overpayments were received prior to that date.

Similarly, the overpayments rule is not retroactive. Overpayments reported and returned prior to its effective date (March 14, 2016) are not expected to comply with the rule. For the time period from March 23, 2010, through March 13, 2016, however, providers and suppliers must make a good faith effort to comply with the specific requirements of the underlying statute, even if those overpayments were received prior to March 23, 2010. All providers and suppliers reporting or returning overpayments on or after March 14, 2016?including those received prior to March 14, 2016?must comply with the rule.

For example, Provider A receives an overpayment on March 22, 2010, which is identified, reported, and returned on March 10, 2016. In that case, the provider must make a good faith effort to comply with the specific requirements of the underlying statute.

Another example: Provider B receives an overpayment on March 22, 2010, which is identified, reported, and returned on March 15, 2016. In this case, the provider must comply with the specific requirements of the rule. 

 

Reporting options

CMS has indicated that the obligations of the overpayments rule are satisfied when a person follows the appropriate process to report and return the overpayment in good faith, including quantification. If a person calculates the overpayment amount using a statistical sampling methodology, the person must describe it in the report. Under the overpayments rule, providers and suppliers have a broad array of reporting processes from which to choose. These choices include certain existing processes and other processes that may be established in the future, including the following:

• Voluntary refund process
  • This is generally only used when a refund is made by check and the overpayment was calculated using a sampling methodology
  • A person may also meet the rul’?s refund obligation by requesting a voluntary offset by the contractor
• Claims adjustment and reversal process for Part A and B claims
  • For Part A claims, electronically processed through access to the FISS and recorded on the PS&R"
  • For Part B claims, paper-based
• Credit balance report process
  • Hospitals must submit the Medicare Credit Balance Report (CMS-838) within 30 days of the close of each calendar quarter to disclose any credits to Medicare as a result of patient billing or claims processing errors
  • Any amounts due to Medicare must be repaid or claims adjusted at the time the report is filed
• Disclosure under the OIG SDP or CMS SRDP resulting in a settlement agreement, using the process described in the respective protocol
• Other reporting processes set forth by the applicable contractor to report overpayments; Medicare wants to reserve the right to modify existing or create new processes in the future

In addition to the options identified above, overpayments associated with cost reports generally should be reported through the existing cost report reconciliation process:

• If identified prior to submission of the initial cost report, the overpayment should be reported and submitted along with the transmittal of the cost report
• If identified in connection with cost-based reimbursement paid to a provider during a previous cost reporting period, the overpayment should be reported by reopening or amending the cost report and returned by submitting payment along with the amended or reopened cost report

 

One additional caveat: CMS agrees that where the contractor identifies a payment error by the contractor and notifies the provider or supplier that the contractor will adjust the claim""" to correct the error, the provider or suppler does not need to report and return the overpayment separately.

 

Edito’?s note

Kares is an expert on Medicare rules and regulations and is an instructor for HCPr’?s Medicare Boot Camp?Hospital Version®. She spent a number of years in private law practice, representing hospitals and other healthcare clients, then served as in-house legal counsel prior to her current legal/consulting practice. She is also an adjunct faculty member at the University of Phoenix, teaching courses in business and healthcare law and ethics.

 

Linking diagnoses and procedures to documentation in outpatient settings

by Lori-Lynne A. Webb, CPC, CCS-P, CCP, CHDA, COBGC, CDIP

In the outpatient setting, we have a different set of rules to follow in regard to the ICD-10-CM Official Guidelines for Coding and Reporting compared to those that follow the guidelines for inpatient care. The ICD-10-CM guidelines for outpatient coding are used by hospitals and providers for coding and reporting hospital-based outpatient services and provider-based office visits.

 

Following the guidelines

In addition, the terms "encounter" and "visit" can be used interchangeably. As a reminder, the guidelines for outpatient coding are different from inpatient coding because the term "principal diagnosis" is only applicable to inpatient services, as is coding diagnoses as probable, suspected, ruled out, and inconclusive.

For those who report outpatient or office-based services, instead of reporting a principal diagnosis, you would code the first-listed diagnosis, as well as signs and symptoms that are documented by the provider of care. In some cases, it may take more than one visit or encounter to arrive at and/or confirm a specific diagnosis. ICD-10-CM guidelines allow us to continue to report signs and symptoms over the course of the outpatient workup. The majority of the sign and symptom codes are found in Chapter 18 of ICD-10-CM; however, other sign and symptom codes can be found in many of the other sections and chapters of ICD-10-CM.

When assigning an ICD-10-CM diagnosis code for an outpatient or same-day surgery, it is appropriate to code the reason for the surgery as the first-listed diagnosis (i.e., reason for the encounter). When coding for an outpatient hospital observation stay, it is appropriate to code the current medical condition as the first-listed diagnosis (e.g., pregnant patient with decreased fetal movement).

In addition, it is appropriate to code for all additionally documented conditions. If the patient has chronic diseases noted, the chronic disease or disease status may be coded in addition to the primary reason the patient is seeking treatment, but only if the physician documents the chronic condition as impacting the current care or medical decision-making of the presenting problem or illness.

 

Dealing with documentation

Diagnosis codes are to be used and reported at the highest possible number of characters and specificity. However, sometimes all we have to go by is provider documentation of signs and symptoms. If the provider has not referenced a clinical significance to complaints or has only documented ill-defined symptoms, we have to code the documentation as a sign or symptom from the ICD-10-CM code set. It is the provider’s responsibility to clearly document a patient’s diagnosis.

Coders are not allowed to infer or code directly from an impression on diagnostic reports such as an x-ray, ultrasound, or pathology report. In the outpatient setting, the provider of care must confirm the diagnosis in the body of the patient’s visit note, procedure/operative note, or progress note.

For example, in the provider notes, the documentation states the patient has an "elevated blood pressure" of 160/90. As a coder, this does not mean the provider has diagnosed the patient with hypertension; it simply means the patient’s blood pressure is elevated today. However, if the provider notes that the patient has an elevated blood pressure of 160/90 today and will begin treatment for hypertension, the coder can code the ­specific hypertension diagnosis rather than the sign and symptom code of elevated blood pressure. If the coder does not have more specific information than "hypertension" written in the record, he or she should query the provider to get the most clarity possible, ensuring good clinical documentation and overall quality of medical care.

When assigning codes for an outpatient or ambulatory surgery case, code the diagnosis for which the surgery was performed. However, if the postoperative diagnosis is different than the preoperative diagnosis listed by the surgeon, code what is reported as the postoperative diagnosis. In reviewing or auditing an operative record, the surgeon should give both diagnoses. The rule of thumb is that the coder will code the diagnosis based on the postoperative notation or most definitive clinical documentation recorded in the patient’s medical chart.

When coding a diagnosis for ambulatory or same-day surgery, the urge to rely on the absolute information from a pathology report can be hard to resist. As coders, we have been trained to hold or delay submitting the insurance claim pending more information from a pathology report. Pathology reports contain great information on sizes, weights, measurements, cell types, malignancies, infections; they can house even more extensive clinical information than is normally reported in an operative/procedure record.

However, within the guidelines of coding, coders should not assign codes based on the pathology report unless the physician has confirmed the diagnosis within the operative, procedure, or progress notes. For example, if the physician notes within the documentation the removal of a "breast lesion/mass" and the pathology record documentation states "breast carcinoma," the coder should not code a breast carcinoma until the surgeon clarifies or adds the information from the pathology report to the operative and/or progress note.

Pathology reports can help us paint the picture of a patient’s status, but they can also be a hindrance. When coding for a lesion removal with CPT® codes, understanding how lesions are measured is vital to good documentation of the procedure. According to the CPT Manual, the measurements of the lesion need to include the size of the lesion itself and the margins for medical necessity prior to excision.

As part of good clinical documentation, the provider should document and include an accurate measurement of the lesion itself, and of the margins to be included. If the coder relies on only the pathology report, the sizing may not be accurate. Unfortunately, when excising specimens, it is common for the procured tissue to shrink or the specimen to be fragmented upon arriving at the pathology department. Measurement of the defect size post-excision may also be incorrect, as the excision site may expand once the tissue has been incised or excised. Either way, the result is incorrect documentation and coding.

The documentation bottom line is this:

• Measurement of the lesion, plus the margins, should be made prior to the excision
• Pathology reports should not be used in lieu of physician documentation
• Query the physician regarding the size of the lesion, as well as the margins, excised if not clearly noted in the operative/procedure note

 

Using queries

Below is a generic lesion excision query form you can use to communicate to your provider the information you need to accurately code the encounter.

Excision of lesion(s) clarification

• Patient name:
• DOB:
• DOS:
• MR #:
• Query date:
• Requested by:

 

Documentation clarification is required to meet medical record documentation compliance, medical necessity, and accuracy of diagnosis and procedure coding.

In the medical record/operative procedure note, the following information is needed to assign the correct ICD-10-CM and CPT code(s). Please provide the following:

• SIZE of the greatest clinical diameter in centimeters plus margins for each lesion excised
• DEPTH of the tissue involved for each lesion (e.g., skin, fascia, muscle, or bone)
• Type of CLOSURE for each lesion (e.g., simple, intermediate, or complex)

Please document and/or addend the patient’s operative/procedure record to include the requested information above. This information can be noted in the electronic medical record, or noted on this form in the area below. If you are using this form, please sign and date the attestation/addendum.

 

Following a checklist

The relationship between documentation and coding is intricate and often confusing. Every chart note, or piece of clinical documentation in the record, must stand on its own merit. If the record is audited, the coding should accurately reflect what was noted by the provider.

The documentation should always clearly reflect the following criteria:

• Clinical evaluation and workup, including any pertinent history
• Diagnostic and/or therapeutic treatment(s) carried out or ordered (e.g., lab tests, x-rays)
• Continued plan of care or follow-up plans
• Clinical diagnosis of disease, signs, and/or symptoms
• Documentation of patient education provided in regard to the above

 

Electronic medical records for outpatient care and office-based services have also been instrumental in giving coders a clearer picture of the overall care and services provided to patients. Many electronic medical records allow the physician to choose the ICD-10-CM diagnosis code and include the additional supplies or procedures performed during the visit. If the provider documents a diagnosis for any performed procedures via an electronic record, the coder now has the additional role of auditing the patient record and the actual diagnosis codes chosen by the provider prior to billing the third-party insurance payers.

If upon review the coder (or auditor) sees the physician or provider has not chosen the most specific codes, the coder can easily review, clarify, and/or correct any errors quickly and easily prior to a claim being sent out. In addition, some payers have the capability to accept electronic copies of patients’ clinical documentation for their review or pre-authorization to expedite payment of services rendered.

Outpatient and office-based services are not always about illness. Wellness services, preventive care, pre- and postoperative care, and specialty-specific diagnosis care are all part of outpatient and office-based services. ICD-10-CM has accounted for these encounter types. If these encounters are well documented, they also need to be coded, billed, and incorporated into the claim. Many third-party payers are now providing coverage for payment of screening services.

The ICD-10-CM coding guidelines give clear instruction for how these types of services are to be reported. Again, it is the physician’s role to clearly state within the clinical documentation that the patient has presented for a wellness exam or a screening for specific illnesses or diagnoses (e.g., a pap test for cervical cancer, a colonoscopy to screen for colon cancer, lab tests for elevated blood sugar/diabetes). In these cases, the coding should reflect a clear diagnosis of screening. The screening diagnosis may be the only diagnosis assigned, as it may be the only reason for the patient visit.

It is becoming more common for physicians to follow and provide care for an established chronic problem while also screening for other issues during the encounter for that problem. If this is the case, the coder needs to audit and review the notes carefully to ensure the record clearly denotes what has been performed as follow-up care and what has been performed as screening (for either wellness or a suspected illness). If the record does not clearly show these as separately identifiable services, a physician query and/or addendum is in order.

Last but not least, always code what the record shows. If in doubt, query. Many coders rely on the old adage of "if it wasn’t documented, it wasn’t done." This type of coding should no longer be the rule of thumb or status quo. If a service or procedure appears in the clinical documentation but is poorly documented, good coders will find it well worth their time to investigate, confirm, have the record amended, and then code with accuracy. 

 

Editor’s note

Webb is an E/M and procedure-based coding, compliance, data charge entry, and HIPAA privacy specialist with more than 20 years of experience. Her coding specialty is OB/GYN office/hospitalist services, maternal fetal medicine, OB/GYN oncology, urology, and general surgical coding. She can be reached via email at [email protected] or http://lori-lynnescodingcoachblog.blogspot.com. Opinions expressed are that of the author and do not represent HCPro or ACDIS.

 

Overcome billing and coding challenges for comprehensive observation services

by Janet L. Blondo, LCSW-C, MSW, CMAC, ACM, CCM, C-ASWCM, ACSW

Billing correctly for observation hours is a challenge for many organizations. Getting it right requires knowing how to calculate observation hours for each patient, which is far from straightforward.

According to CMS, observation hours start accruing not when the patient comes into the hospital, but when the physician writes the order for observation. Observation hours end when all medically necessary services related to observation are complete. In some cases, this means that you can still bill for time spent completing the patient’s care after the physician writes the ­discharge order.

For example, a physician comes in to see the patient at 7:30 a.m. and writes the discharge order, which states discharge will occur pending the completion of tasks X, Y, and Z. The nursing staff finishes up those three tasks and the patient is finally ready to leave the hospital at 11 a.m. The hours between 7:30 a.m. and 11 a.m. are potentially billable observation hours because they were used to complete the patient’s medical care. Observation hours therefore end not with the discharge order, but with the completion of medical services.

In addition, because observation services are considered a temporary period to aid in decision-making, CMS states in the Medicare Benefit Policy Manual that only in rare and exceptional cases should observation services last more than 48 hours.

If a case reaches the 48-hour mark and the physician still hasn’t made a decision to discharge or admit the patient for inpatient care due to instability or risk of an adverse event if discharged, nor has any documentation made a compelling case for the need to continue observation, the services no longer meet the definition of observation care and the hospital should not bill for future hours. Hospitals should also not report observation hours after the physician has decided to send the patient home or to a lower level of care if the patient is receiving no active treatment and is just in a holding pattern until he or she moves to the next level of care or goes home.

 

Coding for comprehensive observation services

The 2016 OPPS final rule implemented changes for coding and billing for observation services. Among the changes made by CMS was the creation of a new comprehensive APC (C-APC) for comprehensive observation services.

Specifically, hospitals will now bill all qualifying extended assessment and management encounters, including observation services, through the newly created comprehensive observation services C-APC code 8011. A new status indicator, J2, was also created to specify that more than one service was provided.

CMS now requires hospitals to bundle services provided and previously billed separately?services such as level 3 ED visits, IV infusions, echocardiograms, speech therapy, and similar services. CMS pays a flat rate for the comprehensive observation services, which includes the bundled services.

Hospital staff should bill all hours of observation for a single encounter on one line under revenue code 0762. If the hospital provided observation care to a patient over multiple days, the date of service should be the date that observation care began. Although one rate is now paid for comprehensive observation services, HCPCS code G0378 is still used to bill observation services by the hour. When using this code, the organization should round to the nearest hour. For example, eight hours and 20 minutes in observation would round to eight hours, whereas nine hours and 40 minutes would round to 10 hours. If the hospital ­provided observation care to a patient over multiple days, the date of service should be the date that observation care began.

The second HCPCS level II code for observation is G0379. This code is used for a direct admission or referral for observation care from a physician in the community. Note that this code is not used if an ER physician or a physician from a provider-based department or clinic makes the referral. This code previously allowed hospitals to bill for costs associated with the visit, including registration and collecting clinical information about the patient, but costs are now bundled with the payment for the comprehensive observation services.

Claims that meet the following criteria will be paid under C-APC code 8011:

• Claims that do not contain a procedure with HCPCS code with status indicator T (indicates a surgical procedure)
• Must show eight or more hours of service under HCPCS code G0378
• No other services on the claim must have a status indicator of J1

 

Services must be provided the day of or one day prior to the date of service for the following visit codes:

• All ED visit levels, CPT codes 99281?99285 or HCPCS codes G0381?G0384 and critical care services CPT code 99291
• HCPCS code G0463 (hospital outpatient clinic visit)
• Same date of service for HCPCS code G0379 (referred by physician outside of hospital)

 

Hospitals can no longer bill separately for observation if these services are required after an outpatient surgical procedure. If a patient meets criteria for observation monitoring after the standar

HCPro.com – Briefings on APCs