Category: Physician Groups

As the use of telehealth skyrockets due to the COVID-19 pandemic, financially hard-hit providers must consider new revenue cycle management protocols to ensure the best chance for full reimbursement.

In March 2020, telehealth utilization exploded 4,300% from a year earlier as patients and providers sought alternatives to office visits for routine care. Yet long-term uncertainty about Medicare reimbursement and wide disparities in the way commercial payers and Medicaid programs reimburse for telehealth mean providers must be extra-vigilant to limit denials and underpayments.[1]

Key steps like ensuring complete documentation of services, including the audio and/or visual functionality used to deliver the care, as well as close scrutiny of telehealth claims, are essential to maximize reimbursement, revenue cycle experts with Healthcare Financial Resources (HFRI) say.

“With telehealth services accounting for an ever-larger percentage of care, making sure you’re collecting every telehealth dollar you’re entitled to will be critical to sustaining cash flow in the months and years to come, particularly amid the lingering downturn triggered by COVID-19,” said Dan Low, HFRI’s director of operations.

As defined by the American Medical Association, telehealth services generally fall into one of four modalities:

• Real-time, audio-visual communications that link physicians and patients
• Store-and-forward technologies that collect images and data to be transmitted and interpreted later
• Remote patient-monitoring tools such as wearable devices, blood pressure monitors and other devices that record and communicate biometric data
• Verbal and text virtual check-ins made through patient portals and messaging apps.[2]

Telehealth can be administered by a range of clinicians, including physicians, nurse practitioners, physician assistants, clinical nurse specialists and psychologists.

Economic pressure mounting

Physician offices and hospitals have been slammed economically by sharp drops in office visits and elective procedures as a result of the pandemic. Although volume has begun to recover, the American Hospital Association is predicting hospitals and health systems could still lose $120.5 billion between July 2020 and the end of the year, or about $20 billion a month.[3] Primary care doctors, meanwhile, may lose approximately $15 billion in 2020.[4]

Permanent changes sought

At the outset of the pandemic, statutes preventing expanded access to telehealth for Medicare beneficiaries were waived by Congress as part of the declaration of a public health emergency. The temporary move allowed a wider range of providers to deliver more telehealth services with a greater variety of technology and without geographic or originating site limitations. This flexibility helped accelerate the expansion of telehealth across the care continuum, with over nine million Medicare beneficiaries participating from mid-March through mid-June, according to internal Centers for Medicare and Medicaid Services (CMS) analysis.[5]

Although the initial telehealth waivers were initially set to expire on July 25, 2020, the U.S. Department of Health and Human Services (HHS) extended the federal public health emergency on July 24 through October 23, 2020, thus ensuring continued telehealth coverage through the ongoing public emergency. This waiver must be renewed every 90 days.[6]

Separately, the CMS 2021 Physician Fee Schedule Draft has proposed nine new telehealth CPT codes. The agency also has developed a new Category 3 for codes that will be covered during the COVID-19 emergency only. This category contains approximately 50 codes created during the COVID-19 pandemic, as well as 13 new codes and other changes.[7] Several telehealth bills likewise have been introduced to help expand the service and ensure telehealth regulations remain intact beyond the pandemic.[8]

Commercial, Medicaid payer confusion

The increased statutory flexibility has made it easier to be reimbursed for Medicare telehealth services. But at least for now, inconsistent and conflicting policies across the commercial landscape have created major payment hurtles for some providers. Although many insurance companies have asserted that, like Medicare, they will reimbursement at 100% of the in-person rate for a range of virtual visits, the reality is far less straightforward.

Clinicians say some insurance companies are unable to provide updated information about telehealth payment policies and much uncertainty exists about what companies will pay for and what they won’t. Medicaid reimbursement, meanwhile, varies from state to state, with telehealth payment policies clearly defined in some states but not in others.

Revenue Cycle safeguards

Regardless of the payer, providers should make a point to include all pertinent information on telehealth claims to limit the risk of denials. Specifically, claims should incorporate:

• Date, time and location of service
• Appropriate use of GT (telehealth) modifiers
• Emergency room or outpatient consultation
• Recommendations and scheduled follow-ups
• Type of technology used
• Proof of patient consent with systems that are not privacy protected (e.g. Skype)

Providers also should conduct ongoing audits to be sure telehealth claims are being coded, documented and filed accurately. Close monitoring of, and communications with, payers of all types likewise are important to maintain an up-to-date understanding of telehealth policies.

“Consistent monitoring of telehealth CARC AND RARC reason codes from the insurance carrier will help you to identify what rejections the payers are applying to your telehealth services,” Low said.

The new normal

Most observers expect the waivers granted for Medicare telehealth will be made permanent and that commercial payment policies eventually will become more coherent and consistent. Assuming providers remain vigilant about reimbursement policies, the telehealth wave unleashed by COVID-19 ultimately could support a new paradigm for providing health-quality, cost-efficient care, not only for outpatient services but inpatient and remote patient monitoring as well.

ParaRev can help

Staying abreast of the latest coding directives regarding telehealth reimbursement and denials can be a challenge. This is especially true when coverage varies between government and commercial payers and from state to state. ParaRev has a large footprint across the U.S. Our experts have a thorough knowledge of each state’s requirements and can help you with comprehensive revenue cycle services to support accurate coding, clean claims and timely and appropriate reimbursement. Contact us today to learn more about the many ways we can help your organization.

1. Heather Landi, “More than 300 organization, physician groups push Congress to take action on telehealth policies,” Fierce Healthcare, June, 30, 2020.
2. “AMA Telehealth quick guide,” American Medical Association, updated July 6, 2020.
3. Robert King, “AHA: Hospitals could lose $20B a month for the rest of 2020 due to COVID-19 impact,” Fierce Healthcare, June 30, 2020.
4. Robert King, “Study: Primary care practices could lose $15B in 2020 due to COVID-19,” Fierce Healthcare, June 26, 2020.
5. Seema Verma, “Early Impact of CMS Expansion of Medicare Telehealth During COVID-19,” Health Affairs, July 15, 2020.
6. “Renewal of Determination that a Public Health Emergency Exists,” Kaiser Family Foundation, July 1, 2017.
7. Eric Wicklund, “How CMS Changes, Trump’s Executive Order Affect Telehealth Coverage,” mHEALTH INTELLIGENCE, August 6, 2020.
8. Eric Wicklund, “The COVID-19 Telehealth Expansion Bills Are Starting to Pile Up,,” mHEALTH INTELLIGENCE, July 31, 2020.

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Hospitals can quickly and dramatically improve collections by reducing Claim Adjustment Reason Code (CARC) 24 denials, or claims rejected due to incorrect Medicare and Medicaid submissions.

CARCs are used by payers on electronic and paper remittance advice and coordination of benefit (COB) claim transactions to categorize payment adjustments and denials.

CARC 24 denials are defined as “Charges covered under a capitation agreement or managed care plan.” These denials represent claims mistakenly billed to original Medicare or Medicaid in cases wherein the beneficiary is actually enrolled in a Medicare Advantage (MA), Medicaid Advantage or a similar managed care replacement policy. The denials most frequently originate in the emergency department or with outpatient surgical procedures.

Medicare Advantage and Medicaid managed care growth

Nationwide, the volume of CARC 24 denials has increased as government-payer managed care enrollment has continued to grow. Total MA enrollment of 22 million in 2019 represented an 8 percent increase, or about 1.6 million people, over 2018 levels, and was more than twice as high as MA enrollment 10 years ago (about 10.5 million).[1] MA enrollment is expected to continue expanding, with managed care plans projected to cover 60-to-70 percent of all Medicare beneficiaries within the next two decades.[2]

Medicaid managed care coverage has also risen. From 2003 to 2017, Medicaid managed care enrollment increased by approximately 229 percent nationwide to over 54 million,[3] with “more than two-thirds of all Medicaid beneficiaries nationally receive most or all of their care from risk-based managed care organizations (MCOs) that contract with state Medicaid programs to deliver comprehensive Medicaid services to enrollees.”[4]

In total, over 76 million individuals are currently covered by Medicare Advantage or Medicaid managed care organizations. That means incorrect Medicare or Medicaid managed care submissions can be an issue for any hospital or health system.

From our experience with clients nationwide, Healthcare Financial Resources’ (HFRI) has found that CARC 24 denials generally account for about 5% of all hospital denials. The good news is that unlike CARC 22 order-of-insurance denials, eliminating CARC 24s can be relatively simple.

And because replacement plans typically pay more than original Medicare or Medicaid, projected reimbursements, or expected cash, can be improved along with outright collections. ParaRev has seen 100% increase in expected reimbursements after correcting CARC 24 denials.

Accessing common working files

To cut CARC 24 denials, hospitals should implement more rigorous registration policies to help ensure that staff verifies the beneficiary’s type of coverage when the patient presents for care. This can be as simple as developing a list of increasingly specific questions for patients who state they are covered by Medicare or Medicaid.

Equally important is providing staff with access to common working files that contain details of beneficiaries’ Medicare or Medicaid coverage. The files are generally available through state or regional Medicare and Medicaid websites. Because access is restricted to approved applicants, providers should engage with their local Medicare and Medicaid authorities to submit appropriate applications for relevant staff members and to ensure website availability is maintained.

Partnering with a vendor

ParaRev is able to identify both CARC 24 denials and underlying root causes with our advanced technology, which relies on robotic process automation, or bots, to identify potential claim rejections and flag them in the workflow. By helping ensure that any denial issues will to be worked quickly, hospitals can receive faster reimbursement and, when necessary, generate the patient bill sooner. That means improved cash collections.

HFRI has focused exclusively on the challenges associated with hospital payment delay and denials for nearly 20 years. From this effort, we’ve perfected a system that relies on advanced technology and staff specialization to identify denial root causes while streamlining and accelerating the resolution process. Contact us today to learn more.

1. Gretchen Jacobson, et al., “A Dozen Facts About Medicare Advantage in 2019,” Kaiser Family Foundation, June 6, 2019.
2. “A Simple Guide to Medicare Advantage and Why It’s Taking Off Now,” CB Insights, Jan. 3, 2019.
3. “Total Medicaid MCO Enrollment – 2003-2017,” Kaiser Family Foundation, July 1, 2017.
4. “Medicaid Managed Care Market Tracker,” Kaiser Family Foundation, 2020.

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When it comes to payment denials, some of the most common and potentially damaging involve Claim Adjustment Reason Code (CARC) 22, or order-of-insurance coverage problems.

Not only do CARC 22 denials reduce cash flow, they can also trigger unnecessary patient invoicing. This, in turn, may undermine customer goodwill and harm the hospital’s overall patient experience and brand.

To maximize collections and avoid antagonizing patients, organizations should develop procedures for addressing the root causes that lead to CARC 22s. The good news is that once the core issues are identified, avoiding the denials isn’t difficult.

Increasing cash flow

Claim Adjustment Reason Codes are used by all payers on electronic and paper remittance advice and coordination of benefit (COB) claim transactions to categorize payment adjustments and denials.

CARC-22 states: “This care may be covered by another payer per coordination of benefits.” In essence, a CARC-22 is generated when a COB-related problem occurs. A common example involves instances in which the patient’s secondary insurance coverage is being billed as the primary coverage. This can occur with Medicare, Medicare Advantage, Medicaid or a commercial payer as the primary insurer. Typically, the patient is automatically balance-billed following a CARC-22 denial.

From our experience with clients nationwide, Healthcare Financial Resources’ (HFRI) has found that CARC 22 order-of-insurance denials typically account for about 7-8% of all hospital denials. With average balances generally of between $500 and $1,500 per claim, preventing CARC-22s could mean an additional $100,000 to $1 million in monthly collections, depending on the hospital’s size

Denial triggers

While CARC-22s occur in both inpatient and outpatient settings, the denials are most frequently associated with emergency department services. This is largely due to the fact that staff may not have the time or the systems in place to positively identify the patient’s primary insurance, or the patient may not be in a condition to provide the required information.

Specific CARC-22 triggers can include:

• Incorrect plan codes loaded for primary insurance
• Failed transfer in the attachment of the primary EOB to the bill

Medicare CARC-22s may also result from situations in which the beneficiary’s spouse has an employer-based health plan. For example, if the spouse’s employer has 20 or more employees, the group health plan pays first. However, if the employer has less than 20 employees, Medicare is the primary coverage. Rules regarding other primary payer scenarios involving Medicare and Medicaid, Tricare and workers compensation claims vary. Detailed information about Medicare and coordination of benefits can be found here.

Reducing denials

Registration staff represents the first line of defense when it comes to reducing and eliminating CARC-22s, particularly in the emergency department. Organizations should ensure that systems are in place to verify the correct order of insurance and plan code prior to billing. Staff should also have direct access to state-based websites in order to effectively validate Medicare and Medicaid order of coverage.

Creating an aftercare department to double-check the billing information provides an important second line of defense. Additionally, third-party robotic process automation systems can be deployed to identify registration issues that could trigger a CARC-22.

Partnering with a vendor

Because CARC 22 denials typically involve low-value, high-volume claims, many hospitals ignore them to focus limited resources on other, higher-value denial areas. However, ParaRev is equipped to handle these kinds of claims using our advanced technology, which relies on robotic process automation or bots and intelligent automation to identify potential CARC denials and flag them in the workflow.

This helps ensure that any denial issues will to be worked quickly. That means hospitals can receive faster reimbursement and, when necessary, generate the patient bill sooner. Our approach not only improves hospital margins, it helps ensure patient satisfaction doesn’t suffer due to unnecessary, surprise bills.

ParaRev has focused exclusively on the challenges associated with hospital payment delay and denials for nearly 20 years. From this effort, we’ve perfected a system that relies on advanced technology and staff specialization to identify denial root causes while streamlining and accelerating the resolution process. Contact us today to learn more.

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Medicare recently finalized a plan that will require hospitals to obtain prior authorization before performing certain outpatient procedures. Understanding these changes will be critical to avoid unnecessary denials beginning on July 1, 2020.

The new prior authorization rules, which were outlined in the 2020 Medicare Hospital Outpatient Prospective Payment System (OOPS), are primarily for services that are sometimes performed for cosmetic purposes and have been identified by the Centers for Medicare and Medicaid Services (CMS) as being at-risk for incorrect payment due to medical necessity concerns.

The prior authorization final rule was published in the Federal Register on Nov. 12, 2019, in Section XIX under “Prior Authorization Process and Requirements for Certain Hospital Outpatient Department (OPD) Services.”

Masking cosmetic procedures

According to the rule, CMS conducted an analysis of over 1 billion claims relating to outpatient department services (OPD) dating from 2007 to 2017. The agency determined that utilization volume increased significantly during that period, from approximately 90 million to 118 million. In addition, the Medicare allowed amount for OPD more than doubled, from $31 billion in 2007 to $65 billion in 2017.

To reduce improper outpatient claims, CMS specifically targeted Medicare cosmetic surgical procedures that may be combined with, or masquerade as, therapeutic services. CMS’ analysis indicated the following outpatient procedure categories had higher-than-expected volume:

1. Blepharoplasty
2. Botulinum toxin injections
3. Panniculectomy
4. Rhinoplasty

July 2020 deadline

Prior authorization for the specified list of procedures found under these categories (see below) must be obtained for services performed on or after July 1, 2020. In theory, the authorization process should take no more than 10 days. Either the physician or the hospital may submit the request for prior authorization, but the hospital will remain ultimately responsible for ensuring that authorization is obtained prior to the surgical procedure.

To help prevent unnecessary denials, be sure your staff is fully aware of the specific procedures that now require prior authorization. Be sure to watch for news from your local Medicare Administrative Contractor (MAC) as the July 1 implementation date approaches because the MACs will be responsible for organizing the authorization request process.

Table 65: Proposed List of Outpatient Services That Would Require Prior Authorization [1]

Code	(i) Blepharoplasty, Eyelid Surgery, Brow Lift, and Related Services
15820	Removal of excessive skin of lower eyelid
15821	Removal of excessive skin of lower eyelid and fat around eye
15822	Removal of excessive skin of upper eyelid
15823	Removal of excessive skin and fat of upper eyelid
67900	Repair of brow paralysis
67901	Repair of upper eyelid muscle to correct drooping or paralysis
67902	Repair of upper eyelid muscle to correct drooping or paralysis
67903	Shortening or advancement of upper eyelid muscle to correct drooping or paralysis
67904	Repair of tendon of upper eyelid
67906	Suspension of upper eyelid muscle to correct dropping or paralysis
67908	Removal of tissue, muscle, and membrane to correct eyelid dropping or paralysis
67911	Correction of widely opened upper eyelid

Code	(ii) Botulinum Toxin Injection
64612	Injection of chemical for destruction of nerve muscles on one side of face
64615	Injection of chemical for destruction of facial and neck nerve muscles on both sides of face
J0585	Injection, onabotulinumtoxina, 1 unit
J0587	Injection, rimabotulinumtoxinb, 100 units

Code	(iii) Panniculectomy, Excision of Excess Skin and Subcutaneous Tissue (Including Lipectomy), and Related Services
15830	Excision, excessive skin and subcutaneous tissue (includes lipectomy); abdomen, infraumbilical panniculectomy
15847	Excision, excessive skin and subcutaneous tissue (includes lipectomy), abdomen (e.g. Abdominoplasty) (includes umbilical transposition and fascial plication) (list separately in addition to code for primary procedure)
15877	Suction assisted removal of fat from trunk

Code	(iv) Rhinoplasty, and Related Services
20912	Nasal cartilage graft
21210	Repair of nasal or cheek bone with bone graft
21235	Obtaining ear cartilage for grafting
30400	Reshaping of tip of nose
30410	Reshaping of bone, cartilage, or tip of nose
30420	Reshaping of bony cartilage dividing nasal passages
30430	Revision to reshape nose or tip of nose after previous repair
30435	Revision to reshape nasal bones after previous repair
30450	Revision to reshape nasal bones and tip of nose after previous repair
30460	Repair of congenital nasal defect to lengthen tip of nose
30462	Repair of congenital nasal defect with lengthening of tip of nose
30465	Widening of nasal passage
30520	Reshaping of nasal cartilage

Code	(v) Vein Ablation and Related Services
36473	Mechanochemical destruction of insufficient vein of arm or leg, accessed through the skin using imaging guidance
36474	Mechanochemical destruction of insufficient vein or arm or leg, accessed through the skin using imaging guidance
36475	Destruction of insufficient vein of arm or leg, accessed through the skin
36476	Radiofrequency desctruction of insufficient vein of arm or leg, accessed through the skin using imaging guidence
36478	Laser desctruction of incompetent vein of arm or leg, accessed through the skin
36479	Laser desctrustion of insufficient vein of arm or leg, accessed through the skin using imaging guidance
36482	Chemical destruction of incompetent vein of arm or leg, accessed through the skin using imaging guidance
36483	Chemical destruction of incompetent vein of arm or leg, accessed through the skin using imaging guidance

Your AR specialists

ParaRev specializes in accounts receivable recovery and resolution and serves as a virtual extension of your hospital central billing office to help you quickly resolve and collect more of your insurance accounts receivable.

We utilize proprietary intelligent automation and staff specialization to efficiently process all claims regardless of size or age. In addition to our resolution capabilities, ParaRev also can provide denial management assistance by conducting root cause analysis and recommend process improvements to help decrease aged and denied claims going forward.

Contact ParaRev today to learn more about how we can help you with your hospital’s accounts receivable management.

1. Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Rules and Regulations. Pages 61450-61451.

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Long a thorn in the side of hospitals nationwide, the Centers for Medicare and Medicaid Services’ (CMS) Recovery Audit Contractor (RAC) program recently underwent substantial changes which CMS say will make the audit process significantly less burdensome for providers.

The RAC program — one of several Medicare payment oversight initiatives — was launched in 2009 and relies on third-party contractors to uncover and correct improper Medicare fee-for-service payments through post-payment claims reviews.

RACs identified approximately $89 million in overpayments and recovered $73 million in FY 2018.[1] Since its inception, the RAC program has returned more than $10 billion in improper payments to the Medicare trust fund and more than $800 million in underpayments to providers.[2]

RAC audits typically involve automated claim reviews utilizing computers to detect improper payments, as well as complex reviews that incorporate human analysis of medical records and other documentation. The process has long been a target of ire for the American Hospital Association (AHA) and others in the industry due to the disruption, cost and uncertainty that can accompany a RAC audit for a target hospital.

Fewer audits, more transparency

In announcing changes to the RAC process earlier this year, CMS Administrator Seema Verma acknowledged the agency had received numerous complaints about the program in the past.[3]

“Providers found the audits time-consuming, necessitating high administrative expenses, and often requiring lengthy appeals,” Verma said. “Thanks to recent efforts by this Administration, complaints about RACs have decreased significantly. CMS listened to what providers were telling us and we made meaningful changes.”[4]

Modifications aimed at making the RAC process easier for providers include:[5]

• RACs could previously select a certain type of claim to audit. They must now audit proportionately to the types of claims a provider submits.
• Instead of treating all providers the same, RACs are conducting fewer audits of providers with low claims denial rates.
• Providers have more time to submit additional documentation before being required to repay a claim. A 30-day discussion period, after an improper payment is identified, means that providers do not have to choose between initiating a discussion and filing an appeal.
• CMS is now seeking public comment on newly proposed RAC areas for review before the reviews begin. According to the agency, this allows providers to voice concerns regarding potentially unclear policies that will be part of the review.

Among the CMS program changes designed to hold RACs more accountable:[6]

• RAC provider portals are being enhanced to make it easier for providers to understand the status of claims.
• RACs that fail to maintain a 95% accuracy score will receive a progressive reduction in the number of claims they’re allowed to review.
• RACs that fail to maintain an overturn rate of less than 10% will also see a reduction in the number of claims they can review.
• RACs will not receive a contingency fee until after the second level of appeals is exhausted. Previously, RACs were paid immediately upon denial and recoupment of the claim. This delay in payment helps assure providers that the RAC’s decision was correct before they’re paid, according to CMS.

Tracking RACs

The AHA closely monitored the RAC program between 2014 and 2016. According to the AHA’s final RAC report, 60% of claims reviewed by RACs in the third quarter of 2016 were found not to have an overpayment.[7] Hospitals appealed 45% of all denials, with 27% of hospitals reporting having a denial reversed in the discussion period.[8]

AHA also disclosed that 43% of hospitals spent over $10,000 to manage the RAC process during Q3 2016, while 24% spent more than $25,000 and 4% spent over $100,000.[9]

Driving down the denial backlog

In recent years, denials initiated due to RAC audits have contributed to a massive backlog of Medicare appeals, the number of which totaled 426,594 in November 2018.[10] In response to a lawsuit brought by AHA and others, the Department of Health and Human Services (HHS) was ordered last year to eliminate the backlog by the end of the 2022 fiscal year.[11]

As a result of the order, the backlog had been reduced by 25%, or 108,340 appeals, by the end of Q3 2019, according to AHA, bringing the total down to 318,254.[12] AHA and others sued HHS in 2012 for noncompliance with a statutory requirement that decisions on appeals at the administrative law judge level be made within 90 days.[13] According to CMS, the average processing time for appeals was 1,361 days in FY 2019, up from 1,193 days in 2018 and 94 days in 2009, the year the RACs program was launched.[14]

RAC tactics

In anticipation of an increase in RAC activity — and because CMS Administrator Verma noted that RACs will henceforth be guided by the volume of claims a provider submits — some experts are zeroing in on claims that may represent large-volume risk areas for hospitals.

Among these, according to the John Hall, MD, writing in RACmonitor publication, are observation claims. “There are two types of potential observation denials,” Hall wrote.[15] “The first is denials based on the failure to document the essential elements of observation services. The second is based on observation claims that should have been inpatient.”

Hall suggested asking a series of questions about each observation claim in preparation for a possible review:[16]

• Does the documentation indicate what is being treated, assessed and reassessed?
• Is there documentation of ongoing treatment, assessment and reassessment, or is the patient being seen once a day?
• Does the documentation indicate what parameters might trigger admission “for further treatment,” or if the patient might be discharged from the hospital?

“Implicit in observation services, for the purposes of reimbursement, is a decision related to admission or discharge,” Hall wrote. “If the record does not delineate CMS’ criteria, then observation reimbursement might be jeopardized.”[17]

According to Hall, other potential risk areas, based on the new RAC guidance, include:[18]

• Diagnostic or therapeutic services with documentation requirements
• One-midnight inpatient surgical procedures
• Observation services in the perioperative period
• Inpatient care for traditionally outpatient services
• NCD and LCD compliance

A comprehensive coding, claims and revenue cycle solution

Meeting the challenges of Medicare claims compliance and overall revenue cycle management requires systematic approaches grounded in empirical evidence and a capable staff delivering proven solutions.

ParaRev can help you significantly refine your coding, AR recovery and resolution, and denial management processes. We can also help you minimize the risk of a RAC audit, while ensuring you’re in a position to respond promptly and effectively if one occurs. Contact us today to learn more about how we can help your organization secure its financial foundation.

1. Seema Verma, “Recovery Audits: Improvements to Protect Taxpayer Dollars and put Patients over Paperwork,” CMS.gov, May 2, 2019.
2. “A History of the RAC Program,” MedicareIntegrity.org.
3. Seema Verma, “Recovery Audits: Improvements to Protect Taxpayer Dollars and put Patients over Paperwork,” CMS.gov, May 2, 2019.
4. Ibid
5. Ibid
6. Ibid
7. “Exploring the Impact of the RAC Program on Hospitals Nationwide,” American Hospital Association, Dec. 5, 2016.
8. Ibid
9. Ibid
10. Jacqueline LaPointe, “Court Orders HHS to Eliminate Medicare Appeals Backlog by 2022,” RevCycle Intelligence, Nov. 13, 2018.
11. Ibid
12. “As a result of AHA lawsuit, HHS continues to reduce appeals backlog,” press release, American Hospital Association, Sept. 30, 2019.
13. Jacqueline LaPointe, “Court Orders HHS to Eliminate Medicare Appeals Backlog by 2022,” RevCycle Intelligence, April 4, 2018.
14. “Average Processing Time By Fiscal Year,” Office of Medicare Hearings and Appeals, HHS.
15. John K. Hall, “Level of Concern Rises as RACs are Back,” RACmonitor, July 24, 2019.
16. Ibid
17. Ibid
18. John K. Hall, “Level of Concern Rises as RACs are Back: Part II,” RACmonitor, July 31, 2019.

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Hospitals on the front lines of the opioid epidemic have new tools to address the scourge of opioid misuse and addiction, including bundled Medicare reimbursements for holistic treatment services.

The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act—signed into law by President Trump in October 2018—represents the federal government’s most ambitious effort yet to combat the opioid crisis. The legislation provides solutions across multiple areas, including prevention, treatment, recovery and enforcement.

On Jan. 1, 2020, a bundled Medicare payment became available to hospitals to support comprehensive treatment of opioid disorders. The new reimbursement opportunity is one of several provisions in the act aimed at mitigating opioid misuse risk among Medicare beneficiaries.

A wave of addiction and overdoses

Addiction rates and overdose deaths attributed to opioids have soared since physicians began prescribing the drugs for pain relief in the 1990s. Currently, an average of 130 Americans die every day from overdoses of all types of opioids, including prescription pain relievers, heroin, and synthetic opioids such as fentanyl.[1] From 1999 to 2017, almost 400,000 people died from opioid overdoses;[2] with the annual death toll during that period rising 8,048 in 1999 to 47,600 in 2017.[3]

According to the National Institute on Drug Abuse, between 20-30% of patients who are prescribed opioids for chronic pain misuse them, and between 8-12% develop an opioid use disorder.[4] In 2017, an estimated 1.7 million Americans suffered from substance use disorders (SUDs) related to prescription opioid pain relievers. Significantly, about 80% of those who use heroin first misused prescription opioids.[5]

Opioid overutilization is a significant issue for Medicare. In 2017, nearly one in three beneficiaries received at least one prescription opioid through Medicare Part D. That equates to about 14.4 million of the total 45.2 million seniors enrolled in Part D.[6] And about 1 in 10 Part D beneficiaries, or 4.9 million people, received opioids for a total of three or more months in 2017.

“Opioids may have been necessary for many of these beneficiaries, but these high numbers raise questions as to whether opioids are being appropriately prescribed and used,” the Department of Health and Human Services’ Office of Inspector General wrote in 2018. “Research shows that the risk of opioid dependence increases substantially for patients receiving opioids continually for 3 months.”[7]

Support Act provisions

The Support Act stipulates that beginning on or after Jan. 1, 2020, Medicare will pay 100% (less any beneficiary co-payments) of a bundled payment for opioid use disorder (OUD) treatment provided to Medicare beneficiaries during an episode of care.

Medicare has not previously offered an explicit OUD benefit, although many services necessary for OUD treatment have been covered under broad Medicare benefit categories.[8] Additionally, the act requires opioid treatment plans to include the administration of medication-assisted treatment (MAT) drugs, individual and group therapy, toxicology testing and other items and services as deemed appropriate by the HHS.[9]

In addition to the new bundled payment, the Support Act includes several other provisions to address opioid risk and abuse within the Medicare population. These include:[10]

1. Expanding the use of telehealth services beyond rural, underserved areas for the treatment of substance use disorders (SUDs), effective in July 2019. Also allows Medicare Advantage plans to provide additional telehealth benefits.
2. Screening for potential SUDs during a beneficiary’s Initial Preventative Physical Examination (IPPE), effective Jan. 1, 2020. This provision also includes review of the beneficiary’s current opioid prescriptions during their annual wellness visit.
3. Starting Jan. 1, 2021, all prescriptions for Part D covered Schedule II, III, IV, or V controlled substances mush be transmitted electronically. Some exceptions apply, however.
4. Part D plans are required by Jan. 1, 2022 to implement lock-in programs for beneficiaries at risk for opioid misuse or abuse. The plans will limit the number of pharmacies and prescribers an at-risk beneficiary can use for their opioid medications.
5. CMS also is directed, no later than Jan. 2, 2021, to conduct a four-year demonstration project on increasing access to OUD treatment, improving beneficiary outcomes and reducing Medicare expenditures.

It is recommended all providers review the tables that contain all provisions and scheduled implementation dates of the Act, as its provisions will impact all providers, including Federally Qualified Health Centers and Rural Health Clinics.

Coding and Claims

Special enrollment for opioid disorder treatment (ODT) programs is required to be eligible for reimbursement. Reimbursement for the program is per week of treatment. Additional professional and facility fee reimbursement is limited only to G2086, G2087 and G2088.

The chart below contains HCPCS and payment rates for weekly ODP Program services. The information is available through CMS.[11]

CY2020 Final Payment Rates for Opioid Treatment Program (OTP) CMS-1715F

HCPCS	Descriptor	Drug Cost	Non-Drug Cost	Total Cost
G2067	Medication assisted treatment, methadone; weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing, if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program)	$35.28	$172.21	$207.49
G2068	Medication assisted treatment, buprenorphine (oral); weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare enrolled Opioid Treatment Program)	$172.21	$86.26	$258.47
G2069	Medication assisted treatment, buprenorphine (injectable); weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program) (+This code should be billed only during the week that the drug is administered. HCPCS code G2074, which describes a bundle not including the drug, would be billed during any subsequent weeks that at least one non-drug service is furnished until the injection is administered again, at which time HCPCS code G2069 would be billed again for that week.)	$1,578.64	$178.65	$1,757.29
G2070	Medication assisted treatment, buprenorphine (implant insertion); weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program)	$4,918.98	$407.86	$5,326.84
G2071	Medication assisted treatment, buprenorphine (implant removal); weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program)	$0	$427.32	$427.32
G2072	Medication assisted treatment, buprenorphine (implant insertion and removal); weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program)	$4,918.98	$626.97	$5,545.95
G2073	Medication assisted treatment, naltrexone; weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program	$1,164.02	$178.65	$1,342.67
G2074	Medication assisted treatment, weekly bundle not including the drug, including substance use counseling, individual and group therapy, and toxicology testing if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program)	$0	$161.71	$161.71
G2075	Medication assisted treatment, medication not otherwise specified; weekly bundle including dispensing and/or administration, substance use counseling, individual and group therapy, and toxicology testing, if performed (provision of the services by a Medicare-enrolled Opioid Treatment Program).	–	–	–

Intensity Add-on Codes (+ The medical services described by these add-on codes could be furnished by a program physician, a primary care physician or an authorized healthcare professional under the supervision of program, physician, or qualified personnel such as nurse practitioners and physician assistants. The other assessments, including psychosocial assessments could be furnished by practitioners who are eligible to do so under their state law and scope of licensure.)[12]

Intensity Add-On Codes

HCPCS	Descriptor	Drug Cost	Non-Drug Cost	Total Cost
G2076	Intake activities, including initial medical examination that is a complete, fully documented physical evaluation and initial assessment conducted by a program physician or a primary care physician, or an authorized healthcare professional under the supervision of a program physician or qualified personnel that includes preparation of a treatment plan that includes the patient’s short-term goals and the tasks the patient must perform to complete the short-term goals; the patient’s requirements for education, vocational rehabilitation, and employment; and the medical, psycho- social, economic, legal, or other supportive services that a patient needs, conducted by qualified personnel (provision of the services by a Medicare-enrolled Opioid Treatment Program); List separately in addition to code for primary procedure.	$0	$179.46	$179.46
G2077	Periodic assessment; assessing periodically by qualified personnel to determine the most appropriate combination of services and treatment (provision of the services by a Medicare-enrolled Opioid Treatment Program); List separately in addition to code for primary procedure.	$0	$110.28	$110.28
G2078	Take-home supply of methadone; up to 7 additional day supply (provision of the services by a Medicare enrolled Opioid Treatment Program); List separately in addition to code for primary procedure. (+ SAMHSA allows a maximum take-home supply of one month of medication; therefore, CMS does not expect the add-on codes describing take-home doses of methadone and oral buprenorphine to be billed more than 3 times in one month (in addition to the weekly bundled payment))	$35.28	$0	$35.28
G2079	Take-home supply of buprenorphine (oral); up to 7 additional day supply (provision of the services by a Medicare-enrolled Opioid Treatment Program); List separately in addition to code for primary procedure. (+ SAMHSA allows a maximum take-home supply of one month of medication; therefore, CMS does not expect the add-on codes describing take-home doses of methadone and oral buprenorphine to be billed more than 3 times in one month (in addition to the weekly bundled payment))	$86.26	$0	$86.26
G2080	Each additional 30 minutes of counseling or group or individual therapy in a week of medication assisted treatment, (provision of the services by a Medicare enrolled Opioid Treatment Program); List separately in addition to code for primary procedure.	$0	$30.94	$30.94

Table notes: Methadone drug costs are calculated using ASP data, oral buprenorphine drug costs are calculated using NADAC data, and the other drug costs are calculated using data from the quarterly ASP Drug Pricing Files. The payment amounts in this table are based on data files posted by CMS. The non-drug component for the non-drug bundle is based on the sum of the rates under Medicare for the following codes: CPT codes 90832, 90853, 80305, and HCPCS codes G0396 and G0480. For the codes that include oral medications (HCPCS codes G2067 and G2068), CMS added to that amount the rate for dispensing oral drugs using an approximation of the average dispensing fees under state Medicaid programs, which is $10.50. For the codes that include injectable drugs (HCPCS codes G2069 and G2073), CMS added to the non-drug bundle amount the fee that Medicare pays for the administration of an injection (which is currently $16.94 under the CY 2019 non-facility Medicare payment rate for CPT code 96372). For the codes that include implantable buprenorphine (HCPCS codes G2070, G2071, and G2072), CMS added the rates under Medicare for the insertion, removal, and insertion/removal of buprenorphine implants (which is $$246.15, $265.61, and $465.26, respectively, based on the CY 2019 non-facility Medicare payment rates for HCPCS codes G0516, G0517 and G0518). The payment rate for HCPCS code G2076 is based on the CY 2019 non-facility Medicare payment rate for CPT code 99204 plus one presumptive toxicology test (CPT code 80305). The non-drug component for HCPCS code G2077 is based on the CY 2019 non-facility Medicare payment rate for CPT code 99214. The payment rate for HCPCS code G2080 is based on the CY 2019 non-facility Medicare payment rate for HCPCS code G2080 when furnished by an NPP. The non-drug component of the bundled payment amounts, and add-on payments will be geographically adjusted based on the PFS GAF.[13]

Level II Codes

Three new HCPCS Level II G codes are added to the Medicare Telehealth Services list for Calendar Year (CY) 2020.[14] These codes describe new bundled services for the treatment of opioid use disorders (OUD).

The new HCPCS Level II codes for reporting the treatment of OUDs, on or after Jan. 1, 2020, are:[15]

HCPCS	Descriptor	MPFS		OPPS
		Non Fae	Fae	APC Status: s
G2086	Office-based treabnent for opioid use disorder, including development of the treatment plan, care coordination, individual therapy and group therapy and counseling; at least 70 minutes in the first calendar month	$413.23	$301.35	$131.35
G2087	Office-based treabnent for opioid use disorder, including care coordination, individual therapy and group therapy and counseling; at least 60 minutes in a subsequent calendar month	$368.48	$293.77	$131.35
G2088	Office-based treabnent for opioid use disorder, including care coordination, individual therapy and group therapy and counseling; each additional 30 minutes beyond the first 120 minutes (list separately in addition to code for primary procedure)	$70.01	$35.01	(payment packaged)

In November, the American Association of Professional Coders published the following detailed summary of what the new opioid codes cover and what they do not:

What is Covered Under the New G Codes?

HCPCS Level II code G2086 describes the initial month of treatment, including intake activities and development of a treatment plan, assessments to aid in development of the treatment plan to care coordination, individual therapy, group therapy, and counseling.

HCPCS Level II code G2087 describes subsequent months of treatment, including care coordination, individual therapy, group therapy, and counseling.

HCPCS Level II code G2088 is an add-on code that describes additional resources for a patient beyond what is provided in the base codes. “In other words,” CMS states in the PFS final rule, “the add-on code would address extraordinary circumstances that are not contemplated by the bundled code.” The total time spent by the billing professional and the clinical staff furnishing the OUD treatment services must exceed double the minimum amount of service time required to bill the base code for the month.

CMS assumes patients with OUD — described by ICD-10-CM code F11.x Opioid related disorders — will require two individual psychotherapy sessions per month and four group psychotherapy sessions per month; however, CMS states in the PFS final rule, “We understand that based on variability in patient needs, some patients will require more resources, and some fewer.” At least one psychotherapy service must be furnished to bill for G2086 or G2087. Practitioners can bill for additional psychotherapy furnished for the treatment of OUD using add-on code G0288.

Practitioners reporting the OUD bundle must also furnish a separately reportable initiating visit in association with the onset of OUD treatment. The initiating visit should establish the patient/doctor relationship, allow the practitioner to assess the patient to determine clinical appropriateness of medication-assisted treatment (MAT), if applicable, and provide an opportunity to obtain the required patient consent to receive care management services.

The same services that serve as the initiating visit for chronic care management (CCM) and behavioral health integration (BHI) can serve as the initiating visit for the services described by G2086-G2088. The face-to-face visit included in transitional care management services also qualifies as a comprehensive visit.

For new patients, or patients who have not been seen by the practitioner within a year prior to the start of CCM and BHI services, the practitioner must initiate the OUD service during a comprehensive evaluation and management (E/M) visit, annual wellness visit, or initial preventive physical exam. Most of the E/M visit codes are on the Medicare telehealth list and can be furnished in addition to G2086-G2088.

What’s Not Covered Under the New OUD Codes?

The new G codes should not be billed for patients who are receiving treatment at an opioid treatment program (OTP).

If a patient’s treatment involves MAT, this bundled payment does not include payment for the medication itself – billing and payment for medications fall under Medicare Part B or Part D. Payment for medically necessary toxicology testing is billed separately under the Clinical Lab Fee Schedule.

When furnished to treat OUD, CPT® psychotherapy codes 90832, 90834, 90837, and 90853 may not be reported by the same practitioner for the same patient in the same month as G2086, G2087, G2088. Practitioners can bill for additional psychotherapy furnished for the treatment of OUD using +G2088, when medically necessary.

The CPT® psychotherapy codes may be billed concurrently to the G codes for other diagnoses, however. CMS states in the 2020 PFS final rule that practitioners should determine which of the patient’s diagnoses they are treating is primary for the session to determine whether it is appropriate to bill separately for psychotherapy services furnished for co-occurring diagnoses. Hopefully, they will elaborate on the meaning of this statement in future physician education.

Billing the Originating Site Facility Fee

The originating site facility fee may be reported for the face-to-face portions of the services contained in G2086-G2088; however, the geographic limitations for telehealth services furnished on or after July 1, 2019, are statutorily removed for individuals diagnosed with a substance use disorder (SUD) for the purpose of treating the SUD or a co-occurring mental health disorder at any telehealth originating site (other than a renal dialysis facility), including in a patient’s home. Medicare will not pay an originating site facility fee when the individual’s home is the originating site.

The originating site facility fee for telehealth services furnished in CY 2019 was $26.15 and the Medicare Economic Index increase for 2020 is 1.9 percent. Therefore, the CY 2020 payment amount for Q3014 Telehealth originating site facility fee is 80 percent of the lesser of the actual charge, or $26.55.

ParaRev

To learn more about appropriate coding and claims for the new bundled opioid services, contact the coding experts at ParaRev. In addition to providing coding expertise, ParaRev also offers a range of accounts receivable recovery and resolution services and denial management solutions. ParaRev delivers comprehensive revenue cycle services to support accurate coding, clean claims and timely and appropriate reimbursement.

1. “Opioid Overdose Crisis,” National Institute on Drug Abuse, January, 2019.
2. “Opioid Overdose: Understanding the Epidemic,” Centers for Disease Control and Prevention, Dec. 19, 2018.
3. “Opioid Death Rates,” National Institute on Drug Abuse, January, 2019.
4. “Opioid Overdose Crisis,” National Institute on Drug Abuse, January, 2019.
5. Ibid
6. “Opioid Use in Medicare Part D Remains Concerning,” U.S. Department of Health and Human Services Office of the Inspector General, June, 2018.
7. Ibid
8. “The SUPPORT for Patients and Communities Act (P.L.115-271): Medicare Provisions,” Congressional Research Service, Jan 2, 2019.
9. “CRS Releases Summary Report on the SUPPORT Act Provisions Affecting Medicare,” Strategic Management Services, February, 2019.
10. “The SUPPORT for Patients and Communities Act (P.L.115-271): Medicare Provisions,” Congressional Research Service, Jan 2, 2019.
11. “CY2020 Final Payment Rates for Opioid Treatment Program (OTP) CMS-1715F,” Centers for Medicare and Medicaid Services.
12. Ibid
13. Ibid
14. “List of Telehealth Services,” Covered Telehealth Services CY2019 and CY2020 (Updated 11/1/19), CMS.gov, Nov 20, 2019.
15. Renee Dustman, “New G Codes Bundle Opioid Use Disorder Treatment,” American Academy of Professional Coders, Nov 25, 2019.

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IMPORTANT UPDATE:

On January 2, 2020, the Centers for Medicare and Medicaid Services (CMS) announced that it has extended by one full year the reporting deadline for private payor rate data. The announcement was posted on the CMS PAMA Regulations website. For more information on the reporting requirement, which applies to many hospitals and physician clinics which operate a CLIA-certified lab, read our article below. To review the revised dates, click here.

With the clock ticking, hospitals nationwide are scrambling to comply with a new reporting mandate announced by Medicare in early 2019 within a densely written and widely misunderstood transmittal.

The reporting, which is mandated by the Protecting Access to Medicare Act of 2014 (PAMA), requires physician clinics and hospital outreach laboratories that perform specimen-only lab testing on the 14x Type of Bill (TOP) to report their commercial payor payment rates for lab services by the end of March 2020 or potentially face fines of more than $10,000 per day.

Many hospitals view the requirement as onerous, since most don’t retain detailed payment rate data at the line-item level. Instead, hospitals generally post total payment, total adjustments, and total patient liability only, without specific rates for each line on a claim. As a result, the information is not available within the hospital accounting system and other methods must be found to meet the reporting requirement.

The new mandate marks the second time Medicare has collected private payor lab rate payment data, but it’s the first time the requirement has been extended to include hospitals that bill Medicare and other payors on the 14x TOB. The Centers for Medicare and Medicaid Services (CMS) must collect private payor data every three years for use in setting rates under the Clinical Lab Fee Schedule (CLFS). Their initial effort in 2016 required that only large national and regional lab testing firms, such as LabCorp and Quest, report.

The 2019 Outpatient Prospective Payment System (OPPS) Final Rule expanded the reporting obligation to include hospital outreach laboratories that submit Medicare claims for non-patient services if the hospital meets the threshold of $12,500 in revenues paid by Medicare for services on the 014x TOB during the first six months of 2019. The rate reporting is due to CMS by the end of the first quarter of 2020.

Applicable laboratories

According to CMS, “applicable laboratories” that are required to collect and report their private-payor, non-patient service lab rates paid for dates of service from January 1 through June 30, 2019, are organizations that can answer affirmatively to the following questions:[1]

1. Is the laboratory certified under CLIA?
2. Does the CLIA-certified laboratory bill Medicare Part B for specimen-only/non-patient laboratory services on the 14x Type of Bill?
3. Were the majority of payments received from Medicare on TOB 14x claims paid under the Clinical Lab Fee Schedule or the Medicare Physician Fee Schedule? (Majority of Medicare Revenues test)
4. Did Medicare reimburse the laboratory more than $12,500 for lab services billed on the 014x type of bill between January 1 and June 30, 2019? (Minimum revenue threshold test.)

Since tests 1 through 3 are typically met by hospitals that perform non-patient lab testing, the main determinant of the obligation to report is the $12,500 threshold.

It’s important to note that Medicare Advantage plan payments made under Medicare Part C are not to be included in the total Medicare revenues component of the majority of Medicare revenue threshold calculation.

Medicare acknowledges that most hospital labs will meet this Majority of Medicare revenues test on page 8 of Medicare Learning Network Matters Number: SE19006:

“Hospital outreach laboratories that bill Medicare Part B under the hospital’s NPI, and therefore determine applicable laboratory status based on its Medicare revenues from the 14x TOB, will most likely meet the majority of Medicare revenues threshold. They will most likely meet the majority of Medicare revenues threshold because their Medicare revenues are primarily, if not entirely, derived from the CLFS and or PFS. In other words, the revenues from the CLFS and or PFS services included in the numerator are essentially the same as the total Medicare revenues included in the denominator.”

Note that while the UB manual specifies that 14x TOB is for non-patient lab tests, California Medicaid requires emergency department charges (ED) to be reported on the 14x type of bill. Hospitals in California, therefore, will need to report specimen-only testing claims and exclude claims for in-person medical services, such as ED charges, to ensure they’re only reporting non-patient lab charges.

Some physician offices that provide laboratory services will need to report if they have $12,500 or more in Medicare revenue for all clinical services, even though they bill on a CMS1500/837i claim form. Reporting for physician offices should nonetheless be relatively straightforward, since, unlike hospitals, they post by line item in the patient accounting system.

Reporting requirements and timetable

Applicable laboratories are responsible for collecting three primary types of information, according to CMS:[2]

1. The specific HCPCS code associated with the test
2. The private payor rate for each test for which final payment has been made during the data collection period
3. The associated volume for each test

For additional details on reporting requirements, visit CMS Medicare Learning Network Matters SE19006.

The period for which data is to be collected includes dates of service from January 1 through June 30, 2019, as well as claims from earlier dates of service that were not paid until the 1/1/19-6/30/19 timeframe.

The six-month period from July 1 through the end of calendar 2019 was designated by CMS as a review and validation period. The rate information can be reported to CMS starting Jan. 1, 2020, with a deadline of March 31, 2020. This collection, validation and reporting cycle will repeat every three years to form the basis for an updated CLFS.

The reporting is designed to ensure that the rates paid under Medicare’s Clinical Lab Fee Schedule fairly represent hospital rates, as well to those paid to commercial, low-charge/high-volume labs. It is therefore important for all outreach labs to provide data which can help support more equitable and appropriate Medicare reimbursement rates in the future.

Penalties

Applicable organizations may face civil penalties of up to $10,017 per violation per day if reporting is not complete, accurate and timely, according to CMS. There is no exception for Critical Access Hospitals. In its final rule, CMS noted that in situations where its review revealed that the data submitted was incomplete or incorrect, the agency would work with the Office of Inspector General (OIG) to assess whether a civil monetary penalty should be applied, and if so, what the appropriate amount should be based on the specific circumstances.[3] CMS also stated that it does not intend to assess monetary penalties for minor errors.[4]

Achieving compliance

Even if your organization hasn’t started test rate collection and validation, it’s not too late to achieve compliance with the March 31 reporting deadline. Hospitals can immediately task clerks with the task of pulling both paper and electronic 835s claims to begin assessing the total dollar amount and volume of the tests in question.

Alternatively, ParaRev provides compliance assistance through our comprehensive Lab Payment Reporting Analytical Services. Using Medicare outpatient claims data, we’ll help new and existing clients determine the type and volume of payments made through the Medicare 14x TOB. This will help determine whether the hospital has exceeded either the $12,500 Medicare threshold for the January-June 2019 reporting period, and therefore needs to report.

The PARA Data Editor additionally offers the ability to analyze electronic remittance files to quickly generate a spreadsheet of the allowable rates paid by CPT® codes on the 14x TOB. PARA can configure this electronic data into the required format for Medicare reporting. However, some clients will likely have received payments that will require manual research if they were not paid on a submitted 835 file, since ParaRev is unable to research payments submitted on paper remittances.

It’s critical that hospital outreach labs push to meet the PAMA reporting requirements, not only to eliminate the risk of onerous monetary penalties, but to help ensure the highest possible lab reimbursements in the future. Contact HFRI to learn more about how our Lab Payment Reporting Analytical Services can help you.

1. “Medicare Part B Clinical Laboratory Fee Schedule: Revised Information for Laboratories on Collecting and Reporting Data for the Private Payor Rate-Based Payment System,” MLM Matters, Centers for Medicare and Medicaid Services, Sept. 5, 2019.
2. Ibid
3. “Medicare Program; Medicare Clinical Diagnostic Laboratory Tests Payment System, Final rule,” Federal Register, June 23, 2016.
4. Ibid

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Waste in the U.S. healthcare system has decreased slightly over the past eight years, but it still remains an enormous problem that consumes 25% of all healthcare dollars, a new study has found.[1]

Published in the Journal of the American Medical Association (JAMA) in October, the study estimated the full amount of healthcare waste at between $760 billion and $935 billion annually, or roughly one-quarter of all healthcare expenditures.[2] The JAMA report was produced from analysis of peer-reviewed publications, government reports and unpublished or non-commercial reports.

Six domains

While the annual percentage of waste has fallen from an estimated 30% in 2011, unnecessary spending continues to occur in a wide variety of areas. The JAMA study estimated the range of wasted expenditures across six domains:[3]

Domain	Wasted Expenditures
Pricing failure	$230.7 – $240.5 billion
Fraud and abuse	$58.5 – $83.9 billion
Administrative complexity	$265.6 billion
Failure of care delivery	$102.4 – $165.7 billion
Failure of care coordination	$27.2 – $78.2 billion
Overtreatment or low-value care	$75.7 – $101.2 billion

Zeroing in on non-clinical waste

Within each domain, waste can manifest in a variety of ways, according to the JAMA article. Among the three non-clinical areas identified in the study:

• Pricing failure can result when prices substantially deviate from ranges expected in a well-function marketplace wherein prices reflect the costs of production plus a fair profit. As an example, the study noted U.S. prices for diagnostic procedures such as MRI and CT scans are several times more than identical procedures in other countries due to a lack of transparency and the absence of competitive markets. The study incorporated research that focused on four areas of pricing: medication pricing, payer-based health services pricing, laboratory-based pricing and ambulatory pricing. The estimated total savings from interventions that address pricing failure range from $81.4 billion to $91.2 billion.[4]
• Fraud and abuse determinations were focused primarily on Medicare services. Despite the scope of the problem, the Medicare Fee-for-Service Recovery Audit Program has made significant progress in reducing fraud, waste and abuse since the initiative was launched in 2009. According to the Centers for Medicare and Medicaid Services (CMS), more than $10 billion has been recouped for Medicare over the life of the program.[5] The study estimated that $22.8 billion – $30.8 billion could be saved in this category.[6]
• Administrative complexity waste stems in part from the fragmented nature of healthcare and result from inefficient or misguided rules established by government agencies, accreditation organizations, payers and others. These requirements can include payer rules that consume limited physician time in needlessly complex billing procedures. In addition, responding to lengthy Medicare Recovery Audit Contractor (RAC) audits can require significant provider resources.

Third-party partnerships

Healthcare organizations can enlist external expertise to help reduce waste associated with pricing, fraud and abuse monitoring, and administrative complexity. ParaRev understands the convergence of forces at work in today’s market and the tools providers need to respond effectively. That’s why we’ve assembled a sophisticated array of services and technologies that collectively deliver the capabilities your organization needs to cut waste and flourish in the current marketplace.

• Rational pricing

For hospitals and health systems, a solid financial footing requires the development of a comprehensive, market-based pricing strategy built around cost, reimbursement and peer pricing data. To help you create a new pricing model, ParaRev will review your current transaction data across all revenue streams to develop a complete market position summary.

Next, we’ll assess rates charged for equivalent services by each member of your designated provider peer group. From these comparisons, you’ll be able to see exactly how your pricing lines up with specific competitors to quickly identify opportunities for increasing prices while remaining within group norms. You’ll also be able to flag any instances in which your organization is the high-priced outlier.

The net result of this effort is improved profitability through the creation of a detailed and empirically based pricing model. The model ensures you’re aligned with peer group averages while positioning you to capitalize on opportunities for optimized returns on below-market-priced items and services.

• Strengthening revenue integrity to reduce waste

Although rational pricing is essential for competitive positioning and waste reduction, a similarly refined approach to revenue cycle management is necessary to ensure an organization’s financial foundation is sound.

HFRI’s revenue integrity program is a comprehensive service that complements our pricing suite by helping ensure critical elements of the revenue cycle – coding, charge capture and claims management – are executed correctly and consistently. The objective is to reduce the administrative complexity of coding and billing, along with attendant waste, while ensuring optimal collections.

The process involves a detailed chargemaster review, onsite audits, retrospective claims analysis and automated claim audit tools to identify compliance and charge capture problems. We can also help you effectively manage RAC audits and other regulatory actions to help ensure you aren’t compelled to commit inordinate amounts of resources to the task.

• Decreasing administrative complexity through AR recovery and resolution

Although 90%[7] of denials are preventable, 65%[8] of are never corrected or resubmitted for payment. This is largely due to the labor-intensive complexity associated with working denials. ParaRev can help you reduce this burden and collect more revenue with scalable, client-specific accounts receivable (AR) resolution and recovery solutions. These services allow hospitals to systematically address problem claims across the full AR spectrum to cut compliance risk and optimize collections. Through our proprietary, intelligent automation and powerful process engineering, we’re also able to resolve all claims, regardless of size or age. Denial management is handled through the identification and categorization of toot causes, with causes ranging from contractual, registration and clinical issues to coding, coverage and utilization denial triggers. Working from category-specific, prioritized work queues, our remediation specialists expedite rework and secure resolution for both low- and high-value claims much more quickly. Our process also helps identify reoccurring problem areas to prevent denials from occurring in the first place.

A comprehensive solution

Cutting systematic waste in the areas of pricing and administrative complexity while reducing the risk of costly fraud, waste and abuse audits requires an approach grounded in empirical evidence and supported by a capable staff and advanced technologies.

ParaRev’s suite of services can help you significantly refine your pricing, coding, AR recovery and resolution, and denial management processes. The result is improved revenue capture, less waste, reduced compliance risk and better margins. Contact us today to learn more about how we can help your organization cut waste across a range of areas.

1. “Waste in the US Health Care System Estimated Costs and Potential for Savings,” William H., MD Shrank, MD, MSHS; Teresa L. Rogstad, MPH; Natasha Parekh, MD, MS. JAMA. Oct. 2019.
2. Ibid
3. Ibid
4. Ibid
5. “Recovery Audits: Improvements to Protect Taxpayer Dollars and put Patients over Paperwork,” Seema Verma, Administrator, Centers for Medicare & Medicaid Services. May 2, 2019.
6. Ibid
7. Morgan Haines, “An ounce of prevention pays off: 90% of denials are preventable,” Advisory Board. Dec. 11, 2014.
8. “Optimizing the Revenue Cycle Requires a Financially Integrated Network,” HFMA. July 7, 2015.

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With the majority of hospitals and health systems struggling to achieve the full potential of their electronic health systems (EHR), many organizations are turning to outsource companies and other vendors to improve revenue cycle performance, a new survey shows.

More than 60% of healthcare executives believe the challenges associated with EHR revenue cycle management (RCM) outweighed the benefits,[1] according to analysis conducted by Navigant based on a survey done by the Healthcare Financial Management Association (HFMA). A total of 108 hospital and health system chief financial officers and revenue cycle executives responded to the survey.[2]

Unmet expectations

The survey underscores providers’ ongoing disappointment with EHR performance and the actions they’re taking to overcome those shortcomings. Historically, EHR solutions have frequently failed to deliver key RCM capabilities.

For example, most systems typically do not integrate with practice management systems to facilitate effective charge capture.[3] Ineffective charge capture can result in a significant amount of money being left on the table due to under-coding, or an increased compliance risk because of over-coding.

“It was anticipated that EHRs would be the main driver of broad performance improvement, but that has not occurred in many cases,” said Timothy Kinney, managing director of Navigant.[4]

“Instead, providers are now taking other steps, including looking outside their organizations to collaborate with external entities and leveraging advanced technology solutions, and they’re seeing successes.”

According to the survey, 46% of respondents said they were collaborating with external organizations, including outsourcing and vendor partnerships, to decrease revenue cycle costs and increase economies of scale.[5] At the same time, the survey also found that spending for staff training, business intelligence/analytics and coding all declined in 2019.

So, what does this mean for providers?

With less money being spent for training and analytics, providers must look to establish new alliances with partners that can deliver the cost-effective expertise needed to supplement a health system’s revenue cycle management resources.

Areas where outside partners can provide additional value include:

• Creation of a market-based pricing strategy
  For hospitals and health systems, a solid financial footing begins with the development of a comprehensive, market-based pricing strategy built around cost, reimbursement and peer pricing data. Most hospitals don’t have the resources to conduct in-depth competitive pricing analysis. ParaRev has the expertise to create a detailed and empirically based pricing model to ensure you’re aligned with peer group averages and simultaneously positioned to capitalize on opportunities for maximizing returns on below-market-priced items and services.
• Implementation of a revenue integrity program
  It’s vital that hospitals and healthcare systems ensure critical elements of the revenue cycle – coding, charge capture and claims management – are executed correctly and consistently. Charge master reviews can uncover where you may be either losing reimbursement or be at risk for compliance issues. On-site audits by an external partner can help spot opportunities for increased reimbursement, improved charge accuracy, more effective compliance and denial reductions. A retrospective claims analysis will compare the claim against the supporting documentation and target inconsistencies that can lead to reduced reimbursement.
• Accounts Receivable (AR) recovery and resolution
  Hospitals often don’t have the resources to work aged and/or small balance claims to recover everything they are owed from insurance claims that otherwise would have been written off. While the administrative costs of reworking denials approach $9 billion annually,[6] only about 35% of payer rejections are ever reworked and resubmitted.[7] Partnering with a qualified third-party vendor that possesses the technology and expertise required to help hospitals isolate, identify and remediate issues that result in unresolved claims can drastically improve margins and increase cash.
• Robotic Process automation (RPA)
  Significantly, the HFMA survey found that 15% of health system executives said their organizations are now targeting RPA to improve revenue cycle management. That’s up from zero in 2018.[8] “New technologies leveraging RPA, artificial intelligence, and machine learning have unlocked significant opportunities to reach previously unattainable levels of revenue cycle performance,” said Kent Ritter, director with Navigant.[9]Vendors that have already implemented RPA as well as intelligent automation can provide a more robust and powerful process for quickly and more effectively handing outstanding AR.

ParaRev can help

Armed with this data, ParaRev pricing experts work alongside the hospital’s financial management team to establish specific pricing targets and timelines based on the opportunities presented. These calculations will also take into account contractual reimbursement rates to ensure the new prices are consistent with payer policies.

Likewise, ParaRev can help develop effective strategies for areas or services that require pricing sensitivity. For example, an organization may want to keep prices at, near or even below cost for some services to remain competitive with independent, free-standing facilities.

Importantly, the pricing developed through ParaRev’s rational pricing model is competitive with peer pricing and therefore both defensible and supportive of an effective consumer-facing transparency strategy.

A comprehensive solution

ParaRev understands the pressures hospitals face today and the tools providers need to respond effectively. That’s why we’ve assembled a sophisticated array of services and technologies, including robotic process automation (RPA), that collectively deliver the capabilities your revenue cycle needs to flourish in the current marketplace.

From optimized pricing through peer analysis to comprehensive revenue cycle performance audits and technology-driven denial management and recovery, ParaRev’s services – whether accessed ala carte or as a single solution – give you the ability to perfect pricing strategies while ensuring the highest level of revenue cycle performance.

For example, ParaRev’s scalable, client-specific accounts receivable resolution and recovery solutions allow hospitals to systematically address problem claims across the full AR spectrum. Through our proprietary, intelligent automation and powerful process engineering, we’re able to resolve all claims, regardless of size or age.

Utilization of our software, the PARA Data Editor (PDE) will also provide an automated claim audit tool to identify charge capture problems, such as observation cases billed without evaluation and management (E&M) codes or chemotherapy administration charges that don’t include chemotherapy drugs on the same claim.

Meeting the challenges of hospital pricing and revenue cycle management requires systematic approaches grounded in empirical evidence and a capable staff implementing proven solutions.

ParaRev’s suite of services can help you significantly refine your pricing, coding, AR recovery and resolution, and denial management processes. The result is improved revenue capture and better margins. Contact us today to learn more about how we can help your organization accelerate its financial transformation.

1. “EHRs, Consumer Self-Pay Remain Providers’ Top Revenue Cycle Challenges,” 2019 Navigant/HFMA Revenue Cycle Trends Survey, Sept. 25, 2019.
2. Ibid
3. Jacqueline LaPointe, “Hospitals Looking Beyond EHR to Improve Revenue Cycle Performance,” RevCycle Intelligence, Sept. 25, 2019.
4. “Revenue Cycle Technology Trends,” Navigant/HFMA, September 2019.
5. Ibid.
6. Philip Betbeze, “Claims Appeals Cost Hospitals Up to $8.6B Annually,” HealthLeaders, June 26, 2017.
7. Chris Wyatt, “Optimizing the Revenue Cycle Requires a Financially Integrated Network,” HFMA, July 7, 2015.
8. “EHRs, Consumer Self-Pay Remain Providers’ Top Revenue Cycle Challenges,” 019 Navigant/HFMA Revenue Cycle Trends Survey, Sept. 25, 2019.
9. “Revenue Cycle Technology Trends,” Navigant/HFMA, September 2019.

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Like it or not, pricing transparency has moved to the forefront of healthcare reform efforts. That means hospitals must be ready to make detailed price information available for consumers interested in shopping procedures and services.

Yet it’s no secret transparency is a double-edged sword. Publicizing pricing information before an organization has made sure its prices are rational, competitive and defensible can damage a hospital’s brand and undermine the bottom line.

The good news is that capabilities now exist to help hospitals develop comprehensive, market-based pricing strategies that allow them to optimize margins while remaining competitive with local and regional peer organizations. This pricing data can then be shared publicly in easy-to-use formats and harnessed to accurately convey patient payment responsibilities.

Government pressure

Price transparency has been one of the most talked-about healthcare reform objectives for a decade or more. Much of this emphasis has been fueled by the continued growth of high deductible insurance plans. Proponents say consumers need, and expect, detailed price information to be sure they’re getting the most for their hard-earned healthcare dollars. Policymakers also believe transparency will spur provider competition and help drive down costs.

But with much of the industry’s attention focused elsewhere in recent years – notably on the implementation of value-based reimbursement models – transparency has taken a back seat. In fact, the percentage of hospitals unable to provide price information increased between 2012 and 2016, from 14 percent to 44 percent.[1]

That’s likely to change, however, now that the government has signaled it’s serious about making hospital pricing information more accessible to all. In January 2019, the Centers for Medicare and Medicaid Services (CMS) announced a rule mandating that hospitals post their standard charges, or chargemaster, online.

CMS then upped the ante in July of this year with a proposed rule that would require hospitals to post not just the often-inflated numbers of the chargemaster but also typically confidential information showing actual negotiated rates by payer and plan for specific procedures and services.

Failure to comply with the rule, which is scheduled to take effect on Jan. 1, 2020, could result in civil monetary penalties of up to $300 per day. Hospitals could also be subject to audits and corrective action plans if they fail to disclose negotiated rates.[2]

Both hospital and insurance groups are vehemently opposed to the requirement that negotiated rates be made public. They argue that publicizing the information could inhibit competition, increase the administrative burden for hospitals, increase costs and reduce access to care.[3]

As a result, the rule is expected to trigger a number of legal challenges, and whether it will take effect in January remains to be seen. But if the past is any prologue, government healthcare reform efforts — regardless of their popularity — eventually find their way into the market, in one fashion or another.

Peer analysis

That’s why forward-thinking hospitals would do well to begin developing their own transparency strategies. Before this can happen, though, it’s essential that organizations are fully confident the numbers they’re prepared to share publicly make economic sense and are justifiable when it comes to peer pricing.

ParaRev has developed a comprehensive process to help hospitals create rational pricing models built around cost, reimbursement and peer pricing data. The effort begins with a review of existing pricing information across all hospital revenue streams, including room rates, emergency visits, diagnostic and therapeutic procedures, operating room, anesthesia, PACU, pharmacy and medical supplies.

Once this baseline information is established, ParaRev will compare service line and procedure prices against equivalent pricing from a designated group of peer institutions. The latter information is acquired through review of the most recent quarterly Inpatient and Outpatient Standard Analytic File (SAF) data generated by the Centers for Medicare and Medicaid Services (CMS).

Using these comparisons, hospitals can to see exactly how their pricing stacks up against specific facilities and also against averages for the entire group. Quantifying in percentage terms the extent to which the price for a particular service or product deviates from the group average enables hospitals to quickly spot opportunities for increasing prices while still remaining competitive. Conversely, ParaRev can also flag any instances in which an organization’s high prices represent over-market outliers.

The right prices

Armed with this data, ParaRev pricing experts work alongside the hospital’s financial management team to establish specific pricing targets and timelines based on the opportunities presented. These calculations will also take into account contractual reimbursement rates to ensure the new prices are consistent with payer policies.

Likewise, ParaRev can help develop effective strategies for areas or services that require pricing sensitivity. For example, an organization may want to keep prices at, near or even below cost for some services to remain competitive with independent, free-standing facilities.

Importantly, the pricing developed through ParaRev’s rational pricing model is competitive with peer pricing and therefore both defensible and supportive of an effective consumer-facing transparency strategy.

A comprehensive solution

Meeting the challenges of pricing transparency demands a systematic approach grounded in empirical evidence and a capable staff implementing proven solutions. ParaRev can help you refine your pricing to improve revenue capture and strengthen margins while remaining competitive in your market. Contact us today to learn more about how we can help your organization prepare for the transparency transformation ahead.

1. Tony Abraham, “No way to enforce hospital price transparency rule, CMS says,” Healthcare Dive, Jan. 11, 2019.
2. Jacqueline LaPointe, “Proposed Hospital Price Transparency Rule Faces Industry Criticism,” RevCycle Intelligence, Aug. 5, 2019.
3. Ibid.

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