Stay Ahead of an Impending Coding Issue

As the health care industry prepares to leap toward the use of the new ICD-10 code set, physicians who see Medicare patients need to be aware of another important coding issue that can significantly affect their cash flow going forward.

With the Centers for Medicare and Medicaid (CMS) shifting how it sets the rate for reimbursement to Medicare Advantage Plans, physicians who see patients of these plans as well as patients on traditional Medicare will have to insure the integrity of the data, both diagnostic and procedural, that they capture for coding and reimbursement regardless of the patient’s type of coverage. Why the emphasis on both procedures and diagnosis?

CMS uses the Hierarchical Condition Category (HCC) coding model to calculate payments to Medicare Advantage Plans. HCCs quantify the “disease burden” of patients by correlating diagnosis codes to 70 chronic clinical categories, such as diabetes, congestive heart failure and pulmonary disease. CMS factors in the age of members, the geographic service area and risk factors that historically affected the “medical spend” necessary for a given population.

Currently, the rate setting for Medicare Advantage plans is based on the cost of covered Medicare services using data collected from fee-for-service (FFS) providers. CMS is changing that methodology and will begin calibrating payment on the FFS equivalent pricing using “encounter data” submitted by Medicare Advantage Plans.

That single change is highly significant and will require a more comprehensive approach to data capture (and submission to CMS) for Medicare Advantage Plans. Traditional FFS medical billers will continue to focus on procedure coding for original Medicare as this drives their payments. But for Medicare Advantage plan members, capturing both procedure and diagnostic codes within the full encounter data format — including precise coding that reflects the conditions with which each patient has been diagnosed — will be critical.

Complicating matters is the fact that the HCC model is cumulative, meaning that patients may have more than one HCC category factored into their risk profile depending on their number of chronic diseases. The bottom line of all this is that reimbursement for providers will be based on how accurately they enter the complete data into the correct payment format. In addition, both services provided as well as diagnosis assigned will need to be correctly documented in the medical record.

Since this change is intended to more fully align physician and health plan incentives, the stakes are high for Medicare Advantage Plans as well. CMS recalculates its fee schedule on a regular basis and the 2013 payments to Medicare Advantage Plans will be based on 2008/2009 FFS claims data.

However, the next recalibration is scheduled to be based on the new methodology of using encounter data from Medicare Advantage plans … and that is provided to them by physicians. The sooner physician offices apply the FFS “rules” for collecting and submitting procedures as well as risk adjustment “rules” for diagnosis, the less likely they are to suffer glitches in their cash flow.

In particular, physician groups serving primarily Medicare Advantage populations risk losing billions of dollars in revenue if they do not work with health plans to arrive at accurate risk scores and pricing (calibration) data.

There are five things that physician offices can do to stay ahead of the curve:

1. Clinicians providing patient care must ensure that all services provided are not only documented and coded appropriately, but diagnoses and linked conditions are being fully noted and submitted in the patient encounter record.

Physicians closely aligned with Medicare Advantage Plans may find that resources are available from the plans to assist in refining the process for data capture.

2. It is important to ensure that your practice has the technological infrastructure to capture and submit complete claims data to payers. Most practices are now submitting claims data electronically. It will be important to ensure that the number of procedure and diagnosis codes your claims system is capable of storing is adequate.

3. Make sure you have a system in place that allows you to receive regular reports on rejected items on a timely basis so you can respond appropriately. Keep a record of rejections to see if there are patterns in the reason codes, meaning there may be an ongoing problem with the data you are submitting.

By correcting the codes and resubmitting them quickly, practices can capture dollars they may have otherwise left on the table.

4. Equip your billing operation with the latest code books each year, so medical billers are using the most up-to-date codes. For instance, there are 186 new, 263 revised and 119 deleted CPT codes in 2013.

5. Conduct periodic chart audits to ensure that patient data capture is complete and fulfills the differing requirements mandated by the type of Medicare coverage the patient has. Identifying problems now and correcting them early can save practices thousands of dollars in rejected claims.

Physicians with significant numbers of Medicare patients will need to be especially diligent going forward regarding the data they collect and the information they submit. Maintaining a healthy cash flow will, quite literally, depend on it.

Pam Klugman has more than two decades of health care experience, specifically in the area of Medicare in both the health plan and provider arenas. She is currently vice president and chief operating officer of Clear Vision Information Systems.