Medicare billing rules are available on the Centers for Medicare and Medicaid (CMS) website.
The list below summarizes some of the key billing rules in 2006 but is not a complete listing. For additional Medicare guidance, access the physician page on the Medicare website.
AMA CPT Guidelines
Some private payers have included language in their provider contracts or handbooks stating that they follow the NCCI edit guidelines, others use third-party proprietary claim edit programs. However, most private payers don’t specify the source or logic behind their claims editing program and process.
It is preferable to have your private payer claims adjudicated based on the AMA CPT guidelines and conventions. The AMA develops and maintains the CPT codes, modifiers and the instructions and guidelines for their use with input from physicians of all specialties, third-party payers and government agencies. The CPT codes, guidelines and conventions are readily available at a modest fee.
The use of these guidelines and conventions in claims processing allows physicians to bill and be reimbursed properly for the services provided. Recent class-action lawsuits filed on behalf of physician groups against payers alleging improper bundling, downcoding and the rejection of properly used modifiers have been successful in changing some payers’ improper claims edits.
As private payers continue to expand their claims audits and reviews, a physician’s best defense is to have negotiated in the contract proper claim adjudication based on the AMA CPT guidelines, and adherence to those rules when billing services and procedures.
In 2006 the AMA has adopted most of the language used by Medicare to describe the temporary G-codes used in 2005 as well as many of the billing rules including modifier usage and bundling edits. This is significant due to the fact that the AMA CPT guidelines have generally bundled fewer codes than Medicare’s (NCCI) edits.
Key AMA Guidelines & Conventions for 2006
With the adoption of the new CPT codes for drug administration, the AMA has also published new/updated guidelines for the use of these services. The list below summarizes some of these guidelines. For complete guidelines reference the AMA’s CPT® 2006, CPT Changes: An Insider’s View 2006, and the CPT Assistant November 2005 Volume 15 issue 11.
Medicare Physician Fee Schedule 2006
The 2006 Medicare Physician Fee Schedule Final Rule, “Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2006 and Certain Provisions Related to the Competitive Acquisition Program of Outpatient Drugs and Biologicals Under Part B; Final Rule” was published in the Federal Register November 21, 2005. The final rule becomes effective January 1, 2006.
The 362 page document contains information on the new drug administration codes, the Competitive Acquisition Program, 2006 oncology demonstration project and Medicare Part B payment policy. Some of the key items of concern to oncology practices are summarized below.
Payment for Physician Services
The Medicare Physician Fee Schedule (MPFS) is updated annually. The sustainable growth rate formula (SGR) is specified by statute as the method through which the MPFS is updated. The SGR formula, which is used to calculate the conversion factor (CF), is tied to the national economy. When physician payments exceed the formula’s target a negative update occurs.
It is widely accepted that the SGR does not accurately account for the true cost of providing Medicare services. The Medicare Modernization Act of 2003 (MMA) contained temporary provisions to stop scheduled cuts in physician payments, due to this flawed formula, in 2004 and 2005.
As was expected, due to the update formula, the 2006 Medicare payment rates for physician services will be reduced by 4.4% with the new conversion factor at $36.1770. CMS acknowledges the problems with the current payment system formula, and CMS Administrator Mark B. McClellan, M.D., Ph.D. states that CMS will continue to work with Congress to develop a sustainable payment system.
There are several bills pending that would stop the scheduled cuts and in anticipation of a last-minute fix, CMS decided not to include the physician fee schedule on the 2006 Medicare Physician Disclosure Information CD-ROM.
The three percent transition payment on drug administration services mandated by section 303 of the MMA expires at the end of 2005 further reducing the physician payment amount on drug administration services.
In the MPFS Final Rule CMS denied requests to pay physicians an additional 2% on the ASP (Average Sales Price) for handling and preparation of the drugs (as was proposed for hospitals) stating, “The costs for handling pharmaceuticals are paid through the PE (practice expense) RVUs for the drug administration code.” Editor’s Note: See the article on the recently released Hospital Outpatient Department (HOPD) Final Rule for more on this add-on payment.
2006 Medicare Oncology Demonstration Project
The 2006 project, 2006 Oncology Demonstration Project: Improved Quality Of Care For Cancer Patients Through More Effective Payments And Evidenced-Based Care, is designed to determine whether, and how, oncology practices follow evidence-based practice guidelines as published by the National Comprehensive Cancer Network (NCCN) or the American Society for Clinical Oncology (ASCO).
As in 2005, this is a voluntary project and physicians will participate in the project by billing one G-code for each of three categories:
ASCO has developed an easy-to-read table of the 2006 demo project codes.
The new project has an allowable of $23 and is no longer tied to chemotherapy administration. The 2006 demonstration project will be billable by office based hematologists/oncologists who provide a level 2-5 office visit for an established patient with one of thirteen primary cancer diagnoses. Editor’s note: See inset for a list of the qualifying diagnoses.
On November 2, 2005 CMS published a Fact Sheet on the 2006 project and it is expected that additional details and clarifications will be released prior to the start of the demonstration project.
Additional Payment for IVIG
CMS has created a new temporary G-code, (G0332) Preadministration-related services for intravenous infusion of immunoglobulin, per infusion encounter (to be billed in conjunction with administration of immunoglobulin). CMS states the payment rate for IVIG is accurate and that there is no shortage of the drug. However, they explain that the new temporary additional payment for IVIG services, reimbursed through code G0332 for CY 2006 only, is designed to protect Medicare beneficiaries from the effects of the current unstable IVIG market and to ensure that they receive the necessary treatment.
G0332 is valued at 1.9 RVUs and is billable by both physician offices and hospital outpatient departments. The allowable for G0332 is $75 in the hospital outpatient setting and $69 in the physician office with 80% payable by Medicare and 20% from the patient. It is advisable for physician offices to contact the secondary insurer (where applicable) to determine if they will pick up the 20% coinsurance.
Competitive Acquisition Program
The final rule addressed some comments received on the Competitive Acquisition Program (CAP) interim final rule and announced that issues not addressed in the final rule will be addressed in future rulemaking.
Perhaps the most important change to the CAP is the decision by CMS to exclude CAP prices from ASP calculation. The decision was made to exclude CAP drugs from ASP for the initial three years of the program giving CMS the opportunity to examine the impact of the exclusion.
The final rule revises the bidding process, clarifies the process for vendors to add drugs to their CAP drug list, allows for the inclusion of some newly approved drugs, seeks to provide equitable payment for wasted drug, clarifies how unused CAP drugs may be handled, and discusses voluntary arrangements between CAP physicians and vendors for the collection of coinsurance and related information.
The vendor bidding process for CAP was reopened when the final rule was published in the Federal Register on November 21, 2006. The expected implementation date for this voluntary program is July 1, 2006. Additional details on the CAP Overview.
In the proposed final rule for 2006, CMS detailed their plan for substantial change to the practice expense (PE) payment methodology. In response to comments received CMS has determined that they will delay the proposal for 2006. CMS will continue to work with specialty societies to refine the practice expense payment methodology.
CMS proposed to reduce payments for certain diagnostic imaging procedures performed on the same patient, by the same physician, on the same day. The multiple procedure payment reduction of 50% after the first service was to be applied to the technical component (TC) of certain multiple diagnostic imaging services that involve contiguous body parts viewed in a single session.
In response to comments, CMS has decided to phase in the 50% payment reduction over two years with a 25% reduction in 2006 increasing to 50% in 2007. This reduction will not apply to transvaginal ultrasound and ultrasound of the breasts.
The Medicare Physician Fee Schedule 2006 Final Rule (MPF) Final Rule. Comments on this final rule must be received by 5pm January 20, 2006. Comment electronically.
ASCO’s Quality Oncology Practice Initiative
ASCO’s (The American Society of Clinical Oncology) Quality Oncology Practice Initiative (QOPI) is a quality improvement initiative directed by oncologists and focused on practice based cancer care with the goal of promoting excellence in cancer care through self-examination and improvement.
QOPI is a timely program as interest in “pay for performance” or “pay for quality” programs continues to grow in both the private and government sectors. Health plans, employers and CMS are seeking ways to ensure that cancer patients receive quality cancer care that is measurable.
The ASCO QOPI pilot program initiated by Joseph V. Simone, MD, began in November 2002 and ultimately included 23 practices. These practices helped to refine and improve the program which is now open to interested oncologists nationwide.
QOPI provides the resources for practices to access their performance based on measurable indicators of quality cancer care and supports the practice in the continuing process of evaluating and improving cancer care.
Participating practices conduct retrospective reviews of patient charts and report the de-identified data through ASCO’s secure website. Each participating practice receives a confidential report comparing their practice results to the aggregate.
ASCO has plans to develop a Best Practices Library through which the highest performing practices will share with other QOPI participants clinical tools and strategies used to achieve their results.
For more information about QOPI, or about joining the program, contact:
Medicare Part D
With only days to go before the implementation of Medicare’s Prescription Drug Benefit program, it is reported that vital plan information on the Medicare website is inaccurate or missing altogether and PDP plan sponsors are scrambling to notify Medicare beneficiaries and CMS of the problems.
Additionally there remain many questions and concerns surrounding the Part D program including:
Nevertheless, this massive new program mandated by the Medicare Modernization Act of 2003 (MMA) will clearly benefit those Medicare beneficiaries who previously had no prescription benefits or whose prescription benefit plan was limited.
Part D Resources for Physicians:
On the CMS website:
Part D Resources for Patients:
On the CMS website or call 1-800-MEDICARE
The new 2006 CPT® (Current Procedural Terminology) codes for drug administration will replace the 18 temporary G codes that have been in use for Medicare in 2005. The American Medical Association (AMA) has developed a total of two new codes for hydration infusion, nine new codes for therapeutic, prophylactic and diagnostic injections and infusions and eleven new codes for chemotherapy services including injections and infusions.
The descriptions for the drug administration codes previously reported to Medicare with the temporary G-codes have largely been kept intact allowing for a rather straightforward crosswalk from the temporary G-codes to the new CPT codes.
The CPT code set has been designated as the national coding standard for healthcare professional services and procedures under the Health Insurance Portability and Accountability Act (HIPAA). HIPAA mandates that all electronic transactions include only HIPAA compliant codes. Therefore healthcare providers, health plans and other covered entities conducting financial or administrative health care transactions electronically must use the CPT code set.
Nevertheless, your billing department should be prepared to educate payers on these codes as they are not always familiar with the new codes and this can significantly slow the claims processing system and your revenue stream. It is recommended that you contact your largest private payers and inquire as to whether they have the new CPT codes loaded in their claims processing program.
National Correct Coding Initiative Edits
The National Correct Coding Initiative (NCCI) was developed by the Centers for Medicare and Medicaid Services (CMS) to promote national correct coding rules and to reduce inappropriate payments for Medicare Part B services. NCCI edits are updated quarterly and are available on the CMS website
Column 1/Column 2 Correct Coding Edits and the Mutually Exclusive Edits identify pairs of CPT or HCPCS Level II codes that are not separately payable except under certain circumstances. The edits apply to services billed by the same provider for the same beneficiary on the same date of service.
Column 1/Column 2
Mutually Exclusive Edits
Both Edit tables contain a column that indicates whether a modifier is allowed, if the modifier indicator is 0 a modifier is not allowed, modifier indicator 1 means a modifier is allowed and modifier indicator 9 means that the use of a modifier is not applicable.
NCCI Edit Version 11.3 Effective October 1, 2005 – December 31, 2005
In the October update of the NCCI Column 1/Column 2 Correct Coding Edits G0351 (therapeutic or diagnostic injection; subcutaneous or intramuscular) is bundled into G0345 (intravenous infusion, hydration; initial, up to 1 hr), G0347 (intravenous infusion, for therapeutic/diagnostic; initial, up to 1 hr), G0357 (intravenous; push technique, single or initial substance/drug), G0359 (chemotherapy administration, intravenous infusion technique; up to one hour, single or initial substance/drug), G0361 (Initiation of prolonged chemotherapy infusion – more than 8 hrs – requiring the use of a portable or implantable pump), and G0363 (irrigation of implanted venous access device for drug delivery systems).
When billed with G0345, G0347, G0357, G0359 or G0361, G0351 is the column 2 code and the other code is the column 1 code so G0351 will be denied and the column 1 code will be paid. However, as the modifier indicator for these code sets is 1, appending with a clinically appropriate modifier to G0351 may allow for both codes to be paid.
When billed with G0363, G0351 is the column 1 code and it would therefore be paid, while G0363 as the column 2 code will be denied. The modifier indicator on the code pair G0351 - G0363 is 0 so use of a modifier is not allowed.
It appears that the edit may have been applied to G0351 in part to deny payment for G0351 when inappropriately billed for the administration of a local anesthetic as described by Empire Medicare Services:
“The G0351should not be billed for the infiltration of a local anesthetic at the insertion site of an intravenous needle or catheter for infusion, since it is already included in the work of the infusion code. The code may be billed for injecting a second drug (other than a local anesthetic) subcutaneously or intramuscularly, concurrently or sequentially, with an infusion. In these situations, a –59 modifier should be attached to the G0351.”
The October 1, 2005 NCCI edits also bundle G0351 with the Evaluation and Management office visits 99201-99215. The office visit is the column 2 code and will be denied while the column 1 code G0351 will be paid. The modifier indicator for these code pairs is a 1, so a clinically appropriate modifier appended to the E&M code will allow both the injection and office visit to be paid.
If the purpose of the visit is for a separately identifiable service, other than the injection, the modifier -25 appended to the E&M service will allow separate payment for the visit. Do not use modifier -25 if the purpose of the visit was the injection.
The NCCI is maintained by Reliance Safeguard Solutions, Inc., and its subcontractor, AdminaStar Federal, Inc. Comments regarding the NCCI edits should be addressed to:
National Correct Coding Initiative
Medicare Hospital Outpatient Prospective Payment System
The Medicare Hospital Outpatient Prospective Payment System (HOPPS) final rule The Medicare Hospital Outpatient Prospective Payment System Final Rule Medicare Program; Changes to the Hospital Outpatient Prospective Payment System and Calendar Year 2006 Payment Rates; Final Rule was published in the Federal Register Vol. 70, No. 217 Thursday, November 10, 2005. The final rule becomes effective January 1, 2006.
The formula used to update payments under HOPPS resulted in a conversion factor for CY 2006 of $59.51, a 3.7% increase over the 2005 rate. Sole community hospitals in rural areas will receive an additional 7.1% payment adjustment on all procedures paid under the OPPS, with the exception of drugs and biologicals.
In this final rule CMS continues their move towards equalizing payment rates and co-insurance across sites of service.
Drugs & Biologicals
In 2006 most Part B drugs and biologicals administered in the hospital outpatient setting will be reimbursed at ASP + 6%. In the proposed final rule CMS proposed paying an additional 2% for pharmacy overhead. However, in the final rule CMS states that the proposed 2% add-on payment is unnecessary as 106% of ASP covers both the drug and associated overhead.
CMS dropped the proposal to collect drug overhead cost through the use of temporary C-codes, deferring to objections citing the increased administrative burden and cost associated with the proposal.
The temporary 2006 add-on for IVIG that is described under the Medicare Physician Fee Schedule 2006 article also applies to IVIG administered in the hospital outpatient setting. Hospitals may charge Medicare $75 for each day that a Medicare beneficiary with Part B coverage receives IVIG in an outpatient setting. The new temporary G-code (G0332) for this service has a 20% copayment.
The coinsurance rates for hospital outpatient services continue to decline. In 2006 Medicare beneficiaries will have a maximum coinsurance rate of 40% of the total payment to the hospital as opposed to a 45% maximum coinsurance rate in 2005.
CMS reports that the average beneficiary copayment for all outpatient services is expected to drop from 33% of total payments in 2005 to 29% in 2006. This gradual decrease in coinsurance rates for OPPS (Outpatient Prospective Payment System) services will continue until the beneficiary’s share for any outpatient service is 20% of the hospital’s total payment.
Drug Administration Codes
CMS continues their data collection efforts on drug administration in the outpatient setting. In 2005 hospital outpatient departments began reporting CPT codes for drug administration, in 2006 CMS has adopted 20 of the 33 new/revised CPT codes and created 6 temporary C-codes to report drug administration in the hospital outpatient setting.
The CPT data collected will be used to create a future payment methodology for administration costs in the hospital outpatient setting.
CMS says that it will publish further guidance on billing and coding for drug administration in the hospital outpatient setting.
Under HOPPS, hospitals are paid the full APC (ambulatory payment classification) for each diagnostic imaging procedure. In its March 2005 report, the Medicare Payment Advisory Commission (MedPac) recommended that CMS reduce the technical component for multiple imaging services that are performed on contiguous areas of the body. Pursuant to the MedPac recommendation, CMS proposed to reduce reimbursement for 11 families of imaging procedures whenever two or more procedures from one of these families are performed in the same session. Under the proposal, the first procedure would be paid at the full reimbursement rate and subsequent procedures performed during the same session on contiguous areas of the body would be reimbursed at a 50% discount.
CMS decided to phase in this reduction in the physician office (see the section on imaging under the 2006 MPFS article), but they declined to finalize the payment reduction for multiple imaging in the hospital outpatient final rule. Instead CMS agreed to delay the reduction for 1 year, allowing for additional time to study the proposal.
Consultation Code Changes in 2006
Effective for dates of service on or after January 1, 2006 the follow-up inpatient consultation codes 99261-99263 have been deleted.
Physicians providing a consult in the inpatient setting will bill for one initial inpatient consult (99251-99255), if the physician sees the patient again (during the same hospital stay), use the subsequent hospital care codes (99231-99233), for nursing facility visits use the subsequent nursing facility codes (99307-99310).
The subsequent hospital care codes (99231-99233) are to be used for subsequent visits by the same physician to the same patient during the same inpatient hospital stay. Examples cited by the AMA include:
The AMA also deleted for 2006 the confirmatory consultation codes 99271-99275 after determining that more accurate and specific E&M consultation codes are available; (99241-99245) for office or other outpatient consultations and (99251-99255) for inpatient consultations.
The AMA further clarifies that “Consultations” initiated by a patient or family member (not requested by another physician) are to be reported with the appropriate E&M code not a consultation code. And when billing for a consultation mandated by an entity such as a third-party payer append modifier -32 mandated services, to the consultation code.
Medicare Guidance Consultation vs. Visit
The Medicare Claims Processing Manual (MCPM) Chapter 12 – Physicians/Nonphysician Practitioners Section 30.6.10 outlines the 3 requirements for consultations:
One physician in a group practice may request a consultation from another physician in the same group practice as long as all the requirements for a consult are met.
Click Here to access the MCPM Chapter 12.
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