dunnR-100Keeping up with the plethora of regulations slamming the healthcare industry today is a challenge for anyone. Here is what we are seeing from our clients and hearing from others in the industry.


Commercial Payers


Aetna: It has been reported that, effective November 2010, Aetna intends to base facility payments on the severity level of the physician E&M code. Of course, this runs contrary to CMS’ OPPS guideline (page 107 of the original APC/OPPS regulations), which appears below. Note the final sentence in the paragraph:


We will hold each facility accountable for following its own system for assigning the different levels of HCPCS codes. As long as the services furnished are documented and medically necessary and the facility is following its own system, which reasonably relates the intensity of hospital resources to the different levels of HCPCS codes, we will assume that it is in compliance with these reporting requirements as they relate to the clinical/emergency department visit code reported on the bill. Therefore, we would not expect to see a high degree of correlation between the code reported by the physician and that reported by the facility.


Since physician services often have no relationship to the intensity of hospital resources and are based on physician documentation, not staff documentation, this change is significant and demands that healthcare facilities address it immediately. Some steps to take include the following:


1.    Inform your CFO. Obtain volume data for ED encounters paid by Aetna. Conduct a vulnerability assessment.

2.    Sample your ED encounters. Assess whether the physician’s documentation adequately addresses the resources utilized by the facility.

3.    Compare the physician E&M levels for the last 90 days to the facility E&M levels during that period and determine the impact on your facility. Don’t have access to the physician’s E&M levels? Obtain them.


Remember, what one commercial payer does likely will be adopted by others.


Medicaid Integrity Contractors


  • Copies of records: When a MIC requests copies of records, which sometimes must be provided on the spot, it is asking for the following:
    • The COMPLETE medical record
    • Admission certification notices/certificates of need
    • Utilization review committee comments
    • Medicaid inpatient invoice(s)/claims and ALL adjustments related to the admission in question
    • Itemized billing statements


Here are the issues:


1.    When the MIC asks for utilization review committee comments, does that require the organization to share minutes relative to the case, or does that just mean the physician advisor comments about a case referred by the UR coordinator? Does the UR coordinator even document his/her discussions with the physician advisor or attending physician? If so, where are those documents maintained? How are they worded? For how long are they retained?

2.    How about ALL adjustments? Consider the notes section of the billing system. How well are adjustments annotated as to their purpose/reason?  Are credits applied to an account without explanation? Is there sufficient space in the “notes” area to capture the full rationale for adjustments? Does this request element include providing copies of payment documentation from other payers, including the patient? Does your system retain copies of remittances from other payers and checks from patients? If so, are they retained electronically or must they be pulled from storage?


  • Volume of records: If you manage a small critical-access hospital with maybe six people in HIM, will you be able to handle a monthly request of 30 or more records from a MIC?


o   Often these facilities do not have the manpower to keep up with day-to-day activities, let alone the resources to hire additional staff or consultants to argue the validity of coding or medical necessity and incur the additional expenses of preparing the materials for these requests. One might ask if CAHs are being targeted simply because of this – their weakness is their vulnerability.


Recovery Audit Contractors


Physicians beware! Yes, the RACs are starting to penetrate the professional side for takebacks. Here are some examples of the findings:


  • Services billed as office service while a patient was an inpatient. This issue surfaced for both hospitalists and specialty services (oncology). Discussion: when billing databases were managed by separate entities (carriers and fiscal intermediaries), the ability to catch this was hampered. With the RAC warehouse in place and the establishment of Medicare Administrative Contractors using a centralized database, more of these errors will be identified. Attention needs to be given to selecting the proper E&M code that corresponds to the place of service.



  • E&M services not billed with the modifier on the same day as a global procedure. Discussion: physician practices, especially practices that perform invasive procedures, need to ensure their billing/coding personnel are current in terms of coding education.


Facilities and Physicians, watch your remits for denial code N469. Many providers are finding takebacks occurring before they receive letters from a RAC. Common automated takebacks include:


  • Units greater than allowed
  • Preadmission testing not bundled with admission


Any External Auditor


Ask about the decision maker’s credentials. When a “results” letter is received, ask the commercial payer or government agency: (1) who made the determination, (2) what are the individual’s credentials, and (3) how long the person has been doing this type of work? Some providers have indicated that individuals making determinations have limited experience or lack credentials. One auditor who made determinations under the PERM program for one of the RACs had no credentials, but had attended a boot camp.


About the Author


Rose T. Dunn, MBA, RHIA, FACHE, is chief operating officer of First Class Solutions, Inc., a healthcare consulting firm based in St. Louis, Mo. First Class Solutions assists clients with their internal workflow and processes to address the multitude of external audits occurring in healthcare today, and provides HIM operational and coding compliance review services. Rose also is a past AHIMA president.


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