The shift in volume to ambulatory surgery centers will put pressure on outpatient hospital revenue, but the type of patients moving to ASCs is likely to be the bigger issue.
CMS is proposing to eliminate the inpatient-only (IPO) procedure list in the outpatient prospective payment system update for FY2021. CMS' rationale for this proposal is to give patients and physicians more control over the setting and costs of procedures, but in fact, this sets the stage for more procedures to be moved to ambulatory surgery centers (ASC).
The proposal is likely to move volume from the inpatient setting to the outpatient setting, potentially cutting revenue, and shift lower-cost patients to ASCs, further eroding outpatient hospital department margins.
The IPO list is a list of procedures Medicare considers appropriate for inpatient admission regardless of length of stay.
CMS is proposing to eliminate this list over the course of three years, starting with 266 musculoskeletal procedures in 2021. This will not require the procedures to be performed on an outpatient basis, but allows them to be provided in the outpatient setting for clinically appropriate patients.
CMS has previously stated they do not expect large volume shifts when procedures are removed from the IPO list, but past experience with total knee and hip arthroplasty has shown big swings in volume for some facilities as well as confusion regarding the correct status for patients.
This shift from inpatient to outpatient can erode revenue for these procedures, sometimes leaving them significantly underpaid.
Elimination of the IPO list is part of CMS' site neutrality initiative that has already cut into outpatient hospital revenues with policies that encourage volume to move to freestanding settings.
Procedures removed from the IPO list may be added to the ASC covered procedure list. In a separate section of the rule, CMS proposes adding 11 procedures to the ASC approved list for 2021, including total hip arthroplasty. This follows the addition of total knee arthroplasty and several cardiovascular procedures this year.
The shift in volume to ASCs will put pressure on outpatient hospital revenue, but the type of patients moving to ASCs is likely to be the bigger issue.
CMS acknowledges only the least complex patients will be appropriate for the ASC environment, leaving the more complex and sicker patients for the hospital outpatient departments.
As ASCs siphon off the less acute patients and the acuity of patients in hospital outpatient departments rises, costs will also be driven up. But the payment system will lag behind because rates are based on cost data from two years prior. Not only will hospitals potentially lose volume to the ASCs over time, but the volume they retain will be more costly while payments will not keep up.
If they haven’t done so already, now is the time for hospital executives to explore service delivery in freestanding settings.
These settings, such as ASCs and freestanding clinics, are generally less regulated, less expensive to operate, and are able to provide more and more profitable procedures. Instead of fighting site neutrality, it may be time to start finding the advantages in it.
In response to the COVID-19 pandemic, Congress and CMS have made it easier to provide a variety of services to patients remotely or through technology (i.e., virtual services) for the duration of the public health emergency (PHE) declaration.
CMS recognizes three types of billable virtual services: telehealth, virtual check-ins, and e-visits. For the duration of the PHE, two additional categories may be covered under specified circumstances: telephone evaluation and management (E/M) services; and hospital outpatient therapy, education, and training services.
Telehealth is provided through audiovisual technology and billed with regular codes for face-to-face services, when provided by eligible providers under approved circumstances. Virtual check-ins and e-visits have defined codes that specify they are not face-to-face services.
Telehealth is normally limited to rural or health professional shortage area (HPSA) facility originating sites (the site where the patient is located). During the PHE, the originating site can be anywhere, including the patient's home. CMS has provided flexibility to temporarily "relocate" a portion of a hospital's current provider-based department (PBD) to a patient's home. This allows the hospital to bill an originating site fee when providing support for telehealth services to the patient.
The physician (the distant site provider) bills a telehealth-approved face-to-face code. CMS has added 85 codes for use during the PHE, including emergency department and initial inpatient and observation services.
Virtual check-ins are brief communications through synchronous or asynchronous technology, which do not result from or result in a visit with the provider.
E-visits are patient-initiated evaluation and management services through a patient portal. Unlike telehealth, e-visits may be provided by a wider range of practitioners, including physical and occupational therapists.
During the PHE only, CMS has established coverage and payment under the Physician Fee Schedule for telephone E/M services.
Also during the PHE, CMS is allowing hospitals to bill a specified list of behavioral health, physical and occupational therapy, education, and training services delivered by telecommunication technology. Hospitals may bill and be paid for these services when provided by hospital staff to a patient registered as a hospital outpatient and located in a PBD, including the patient's home if it has been designated a relocated PBD by the hospital.
When considering providing virtual services during the PHE, hospitals should carefully consider new reimbursement mechanisms to ensure compliance. CMS is allowing payment of some virtual services to hospitals if they relocate their PBDs to expansion locations, including patients' homes. However, there are steps hospitals must take to be compliant, including notifying CMS of the relocated addresses, and ensuring the locations meet Conditions of Participation not waived through CMS' Hospitals Without Walls initiative. Nevertheless, these new mechanisms for reimbursement represent much-needed economic relief for hospital outpatient departments.
This rule places decisions about supervision in the control of hospitals and physicians involved in patient care and will make the delivery of hospital outpatient services more efficient.
The level of supervision required in hospital outpatient departments has long been a vexing compliance issue for hospitals, with recent hospital settlements in the millions of dollars for violating CMS' direct supervision rule. But beginning January 1, 2020, CMS is eliminating the direct supervision requirement.
For the last 10 years, CMS has required direct supervision of hospital outpatient therapeutic services such as chemotherapy, radiation therapy, and wound care. Direct supervision requires a physician to be "immediately available" when these services are being provided to Medicare beneficiaries.
These rules have had a large impact on the development and planning of hospital outpatient services. Hospitals have had to consider how services would be supervised, impacting the budget and location of some departments. If the supervision issue could not be addressed, hospitals have been forced to either provide the service only to non-Medicare beneficiaries or eliminate the service altogether, affecting access to care for Medicare beneficiaries.
Eliminating access-to-care issues
CMS recognized these requirements might be most difficult for critical access hospitals (CAH) and small (100 beds or less) rural hospitals and might create access-to-care issues for rural beneficiaries. Because of this, CMS issued a "non-enforcement" direction regarding direct supervision at CAHs and small rural hospitals that has been in place since 2010 and is set to expire at the end of this year.
Rather than continue that non-enforcement, CMS is eliminating the direct supervision requirement altogether, for all hospitals, beginning January 1. They cited the lack of supervision-related complaints from beneficiaries and the fact there has been no data showing quality was adversely affected at CAHs and small rural hospitals that have only been required to maintain general supervision.
The CY 2020 OPPS final rule amends regulations at 42 CFR 410.27 to lower the required level of supervision for all hospital outpatient therapeutic services to general supervision. General supervision requires the service be provided under the overall direction and control of the physician, but his or her presence isn't required, allowing for telephone or telehealth direction of services.
CMS maintained the advisory capacity of the Hospital Outpatient Payment panel for future supervision recommendations, leaving the door open to higher levels of supervision for some services in the future.
They also reiterated several times applicable Conditions of Participation requirements, including that patients be under the care of a physician. They noted that failure to adhere to these requirements could trigger a corrective action plan, although it would not cause denial of payment for the individual service.
CMS repeatedly stated that hospitals may choose to adopt higher levels of supervision for more complex services at their discretion. This places decisions about supervision in the hands of the hospitals and physicians involved in the care and will undoubtedly make the delivery of hospital outpatient services easier and more efficient, while maintaining quality of care and access for patients.
The 2020 annual rule cycle has been active for CMS. Several proposals in the outpatient prospective payment system (OPPS) proposed rule are controversial, although there is at least one provider-friendly change. Here's a roundup of five regulatory rules hospital and health system executives need to know.
1. Disclosure of standard charges and payer-specific negotiated rates for all items and services
The OPPS proposed rule for CY2020 has a controversial proposal implementing an executive order by President Trump to increase the availability of meaningful price and quality information for patients. The proposal would expand requirements for posting of charges by requiring disclosure of standard charges and payer-specific negotiated rates for all items and services. Hospitals would also have to post the payer-specific negotiated rate for at least 300 "shoppable" services, including 70 selected by CMS, in a consumer-friendly searchable format. Proposed penalties would be over $100,000 a year for noncompliant hospitals. The proposal is likely to generate significant negative commentary from hospitals due to its administrative burden and impact on contract negotiation and competition.
2. Ambulatory surgery center (ASC)-approved procedure and inpatient-only procedure lists
In their continued push toward site neutrality, CMS is proposing to add several procedures, including total knee arthroplasty (TKA), to the ASC-approved procedure list after removing TKA from the inpatient-only list in 2018. CMS is also proposing to remove total hip arthroplasty from the inpatient-only list for 2020, allowing the procedure to be performed on an outpatient basis.
3. Supervision level reduced for hospital outpatient departments
On a provider-friendly note, CMS is proposing to reduce the level of supervision from direct to general for hospital outpatient departments. The current requirement for direct supervision has prevented many community hospitals from providing chemotherapy and other specialty services because they do not have the needed specialists on-site at all times. Several hospitals have paid multimillion-dollar settlements for failure to maintain direct supervision over outpatient services. This regulatory relief will allow community hospitals to expand their specialty service offerings and make outpatient services more economical for all hospitals.
4. Prior authorizations
In another significant proposal, CMS plans to implement requirements for prior authorization for blepharoplasty, Botox injections, panniculectomy, rhinoplasty, and vein ablation.
5. 340B drug payment reduction
CMS is proposing to continue their payment reduction for 340B purchased drugs but acknowledges the pending litigation to set aside CMS' payment reduction on 340B drugs and has requested comments on possible remedies in the event the discount is set aside.
Hospitals and health system executives should monitor these annual rules carefully for provisions that will affect their organizations' operations.
Editor's note: This excerpt from a February 2019 "Note from the instructor" from Revenue Cycle Advisor has been edited for brevity.
CMS recently published several Benefit Policy Manual and Claims Processing Manual transmittals updating various therapy-related issues. The updates primarily relate to statutory and regulatory changes to billing and payment for therapy, including the expansion of coverage for intensive cardiac rehabilitation programs (ICR).
Instructions related to supervised exercise therapy for symptomatic peripheral artery disease were also published.
Functional reporting
In the CY 2019 Medicare Physician Fee Schedule (MPFS) final rule, CMS eliminated reporting of functional status codes, effective January 1, 2019, due to stakeholder concerns about the burden of reporting the codes. The functional status codes consisted of sets of HCPCS Level II G-codes that were reported indicating the beneficiary's functional limitation addressed by the therapy.
The codes were reported in pairs indicating the current status, goal, or discharge status, depending on the reporting situation. Each code was reported with a severity modifier to indicate the beneficiary's level of functioning in order to collect data on the types and duration of therapy for various conditions.
CMS issued Benefit Policy Manual Transmittal 255 and Claims Processing Manual Transmittal 4214 to revise manual language to note that the functional status codes were eliminated in 2019. They did not remove the codes from the manual, but rather clarified that these codes were only required for therapy provided from January 1, 2013, through December 31, 2018. They also published associated MLN Matters 11120.
ICR programs
The Bipartisan Budget Act of 2018 expanded coverage of ICR, effective February 9, 2018, to the following two conditions:
Stable, chronic heart failure, defined as a patient with left ventricular ejection fraction of 35% or less and New York Heart Association class II to IV symptoms despite being on optimal heart failure therapy for at least 6 weeks; and
Any additional condition for which the Secretary has determined that a cardiac rehabilitation program shall be covered, unless the Secretary determines, using the same process used to determine that the condition is covered for a cardiac rehabilitation program, that such coverage is not supported by the clinical evidence.
CMS published Benefit Policy Manual Transmittal 256 and Claims Processing Manual Transmittal 4222 to implement the expanded coverage, which was effective nearly a year ago. CMS indicated they will further address the expansion of coverage and its implementation in the CY2020 MPFS proposed rule.
Although the effective date of the expanded coverage is February 9, 2018, the transmittal indicates the implementation date will not be until March 19, 2019. This means that while patients with these conditions are covered for the service of ICR from dates of service February 9, 2018 and forward, the claims will not process correctly for payment until March 19, 2019.
CMS has directed contractors to adjust claims brought to their attention by providers with dates of service after February 9, 2018 but received before the implementation date of March 19, 2019, because they will presumably be denied incorrectly for lack of coverage if submitted before this date.
Rehabilitation claims are generally submitted on monthly claims. Claims for dates of services from February 9, 2018, through March or April of 2018 should be submitted for the incorrect denial, then the provider should request reprocessing due to the one-year timely filing deadline.
For claims with later dates of service, the provider can either submit the claims and ask for reprocessing or hold the claims and submit them after the March 19, 2019 implementation date.
Misunderstandings created by years of variable-quality audits have caused hospitals to be so cautious they are misapplying CMS guidance and forgoing revenue.
For too long, discussions of patient status have focused only on denials. Misunderstandings created by years of variable-quality audits have caused hospitals to be so cautious they are misapplying CMS guidance, forgoing otherwise appropriate revenue, and negatively affecting Medicare beneficiaries.
In my 15 years of experience writing, teaching, and speaking on Medicare, there is no area more misunderstood than the Medicare rules for inpatient admission and related billing and payment mechanisms. I frequently find that even if one hospital department understands the guidance, they may face challenges from other departments that do not.
To ensure accurate payment, here are three patient status rules your staff members should understand and implement correctly.
1. Observation care as the basis for inpatient Part A payment
The most significant misunderstanding I encounter is the idea that the patient must always meet inpatient requirements under InterQual or MCG to be covered.
This is directly contrary to written CMS guidance and FAQs published by KEPRO, who has been tasked by CMS with patient status audits. All medically necessary outpatient care should be counted toward CMS’ metric for admission: two midnights.
If the documentation demonstrates the patient is in medically necessary observation (e.g., the patient meets InterQual or MCG requirements for hospital-level observation) for two midnights, the case would be considered appropriate for Part A inpatient payment under CMS’ current Program Integrity Manual guidance. Providers should never have cases of medically necessary observation lasting more than 48 hours.
2. Self-denials and inpatient Part B payment
CMS adopted a self-denial process allowing full inpatient Part B (APC) payment for cases that don’t meet inpatient requirements.
Post-discharge self-denials are far more efficient than the labor-intensive and time-sensitive condition code 44 (CC44) process providers have been using for years, and if billed correctly, self-denials provide exactly the same payment, in most cases.
The time UR staff and physician advisors save on the CC44 process can be used to focus on third-party insurance authorizations, peer-to-peer appeals, and denials, which have the potential to have a much greater impact on overall revenue.
However, providers must be careful they are following CMS billing instructions to ensure they are getting the full payment they are entitled to for these cases.
3. Inpatient-only procedures
The recent removal of total knee arthroplasty (TKA) from the inpatient-only list highlighted the significant misunderstandings about this rule.
Procedures not on the inpatient-only list, such as TKA, may still be provided on an inpatient basis if the patient’s condition warrants. Procedures also get added to the list every year, such as stenting with myocardial infarction in 2018.
These procedures require an inpatient order to receive any payment; if the inpatient order is missing, there is no way to recoup payment. Training and concurrent review are vital to ensure that inpatient orders are not missed and that patients who qualify for admission get admitted.
