Determining What’s Broken With Your Wound Clinic Reimbursement & Implementing Required Fixes

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Often in a panic, wound care stakeholders from hospital-based outpatient provider-based departments (PBDs) frequently contact this author because their PBDs are having reimbursement and/or financial problems. Regardless of their stated problems and regardless of their respective positions (eg, program directors, medical directors, office managers, billers, coders, compliance officers, finance officers), this author first encourages a calm approach to determining the underlying causes of their problems. These stakeholders are usually surprised when they learn that the underlying causes tend to revolve around a lack of knowledge about pertinent regulations, medical policies, and/or correct revenue-cycle processes. Fixing these types of problems usually requires educating stakeholders throughout the revenue cycle (from physicians to coders and billers to compliance officers) and changing processes that have been in place for years. When these stakeholders learn that the solution to these problems are not “easy fixes,” their responses typically have common themes, such as: 

• “The wound care department has been doing it this way for many years, so it will be very hard to change their process.”
• “Our physicians and clinicians do not have time to read national coverage determinations (NCDs), local coverage determinations (LCDs), and medical policies – that is the coder’s job.”
• “Administration will not let us see our revenue reports.” 

In fact, some stakeholders are afraid to “rock the boat” and don’t take the steps necessary to turn around their departments. Until wound care stakeholders determine what is really broken when it comes to their businesses and accept the changes that are required to fix the problems, some PBDs will continue to face reimbursement issues. In this edition of Business Briefs, we will discuss the 10 most common reimbursement problems (divided into two major categories: regulations/medical policies and revenue-cycle processes) that wound care stakeholders must be willing to fix to prevent their PBDs from failing to the point that they’re no longer in business. 

REGULATIONS & MEDICAL POLICIES

1. Conduct insurance benefit verification for all new patients (and before all procedures).

Outpatient wound care PBDs should conduct insurance benefit verifications for all new patients before patients arrive for their first appointment. This verification (for all payers except traditional Medicare) should also include inquiring if the top 5-10 procedures typically performed in the PBD are covered on that patient’s plan. If the physician or other qualified healthcare professional (QHP) needs to perform a procedure that was not verified for coverage, the PBD should contact the payer before the procedure is performed. Unfortunately, many PBDs only verify if the patient has insurance – not whether the service/procedure/product is covered on the patient’s plan. This results in many denials and a significant loss of revenue.

For traditional Medicare patients, the PBDs should refer to NCDs and to their Medicare Administrative Contractor’s (MAC’s) LCDs to determine if the patient’s condition meets the medical necessity requirements for the service/procedure/product – before they proceed with the work. They should have advance beneficiary notices (ABNs) of non-coverage available when they discuss services/procedures/products that may not be covered for that patient.

For traditional Medicare patients, the insurance verification process should also include investigating whether the patients are also receiving Part A services, such as home health agency (HHA) or skilled nursing facility (SNF) care. If so, some services/procedures should be billed to the HHA/SNF due to consolidated billing regulations. Therefore, PBDs should set up a thorough insurance benefit verification process that includes reviewing medical policies, using ABNs, and verifying if patients are receiving Part A services from HHAs or SNFs. 

2. Maintain direct physician supervision.

Medicare regulations for departments paid by the Outpatient Prospective Payment System (OPPS) are very clear that direct physician supervision is required in hospital-based outpatient PBDs for all services/procedures/products, except for the application of an Unna’s boot and the application of multilayer compression bandages. Yet, many wound care PBDs continue to function every day (or on some days) only with wound care nurses. Those who have been audited have found the penalties to be sizeable. Therefore, wound care PBDs should have appropriate policies and procedures about physicians being “immediately available,” should have schedules for the physicians/QHPs who provide the direct supervision, and should not schedule patients in PBDs unless the direct supervisor is “immediately available” for the entire encounter. The physicians/QHPs who are scheduled to provide direct supervision should take this responsibility seriously and should be immediately available during the hours they are scheduled for this work. NOTE: Critical access hospitals are exempt from the outpatient PBD direct-physician-supervision requirement for 2018 and 2019. 

3. Read pertinent Medicare NCDs, LCDs, and private-payer medical policies; monitor for new/revised/retired policies.

The Medicare NCDs and LCDs and the private-payer medical policies should be the “playbook” for wound care PBDs, physicians, and QHPs. Even though we would never expect our favorite football team to play the game without a “playbook,” wound care professionals do not think they should take the time to read their “playbooks.” In fact, many wound care PBDs, physicians, and QHPs tell this author that “it is not their job” to read the pertinent NCDs, LCDs, and medical policies. Nothing could be further from the truth. These documents provide excellent guidelines for documenting the medical necessity of specific services/procedures/products, for coding correctly, for ordering correctly, etc. Because these guidelines are updated frequently, someone should be assigned to monitor the pertinent NCDs, LCDs, and medical policies each month. This person should look for revisions, new draft policies, future effective policies, and retired policies. All new documents should be shared and reviewed by all the wound care stakeholders, including the physicians and QHPs. When a new draft LCD is released, wound care stakeholders should carefully review it and provide comments to the Medicare Administrative Contractor (MAC). If an active LCD contains guidelines that do not align with published clinical evidence, wound care stakeholders should provide the published evidence and request a revision to the LCD through the LCD reconsideration process.

4. Review National Correct Coding Initiative (NCCI) Coding Policy Manual for Medicare Services and quarterly updates. 

Before a hospital administrator approves the development of an outpatient wound care PBD, he/she always identifies the expected services and the expected volume to determine the expected costs and the expected revenue. Unfortunately, the expected revenue is often overstated because nobody educated the administrator about the NCCI edits, which prevent Medicare payment for certain procedures performed together on the same day on the same anatomic location. Then, once the PBD opens and begins receiving Medicare payment, the reimbursement for each encounter is often less than the administrator expected. 

In addition, many wound care stakeholders use modifiers to inappropriately bypass NCCI edits. The modifiers allow the claims to be paid – until an audit occurs and large repayments are required. 

This author is always surprised at the number of wound care stakeholders who do not know that: 1) an NCCI manual exists and that it is updated every year; and 2) how to locate the NCCI procedure-to-procedure edits and NCCI medically unlikely edits that are updated on a quarterly basis and that are easily accessible on the Internet. Therefore, hospital administrators should be informed about the NCCI edits when they are preparing proformas before deciding to open outpatient wound care PBDs and existing PBDs should: 1) read the pertinent chapters of the NCCI edits manual every fall when it is released; 2) use the NCCI edit manual guidelines to improve documentation and to use modifiers correctly; and 3) review the updated NCCI edits at the beginning of each quarter. 

5. Submit per-encounter claims rather than monthly/series claims. 

The Centers for Medicare & Medicaid Services identified certain revenue codes that must be submitted on a monthly/series claim. The revenue codes for the emergency department (ED) and the outpatient wound care PBD are not on that list. Although there may be some EDs in the country that bill on a monthly/series claim, this author is overwhelmingly told that facilities submit per-encounter claims for their EDs. Yet, these same hospitals think it is justified to bill for the outpatient wound care PBDs on monthly/series claims. Nothing good comes from billing wound care services on monthly/series claims. The payers are very strict about the primary diagnosis that supports medical necessity for wound care services/procedures/products. Because wounds change from week to week, the same service/procedure/product is not always used. Therefore, the claim must show the unique diagnosis code to support each encounter, which is impossible on a monthly/series claim that only accepts one primary diagnosis code. 

Every year this author receives hundreds of calls from wound care professionals who emphatically state that they are never again providing a specific service/procedure or using a specific product because it “always gets denied.” After a few consulting hours, this author usually identifies that the reason a claim is denied hinges on the lack of a primary diagnosis code that proves medical necessity for that specific service/procedure/product. In nearly every case, the PBD submitted monthly/series claims. When asked why they submit claims monthly, the stakeholders usually say, “that’s how we have always done it,” or “we don’t want to spend the extra money to register the patient for every visit,” or “we do not want to inconvenience the patient.”  These reasons are rather shallow when considering how much money the PBD loses due to lack of medical necessity for the encounter. Therefore, outpatient wound care PBDs should take advantage of the fact that they are not required to do monthly/series billing (which would be a detrimental requirement) and should rush to do per-encounter billing. This will be a great help for one’s revenue now and for proving quality of care, total cost of care, and patient satisfaction in the future.

REVENUE-CYCLE PROCESSES

6. Continually update the charge description master (CDM).

The CDM is the “heartbeat” of the PBD. Therefore, it should be customized to include: 1) the work that the physicians and other QHPs perform; and 2) the exact products used in the PBD. Program directors should update the CDM every December to prepare for coding, contract, and payment changes and on a monthly basis to address changes in products, procedures, and acquisition prices that occurred that month.

Outpatient wound care PBDs should keep in mind that this year’s charges are used to set OPPS allowable rates two years from now. Let’s reflect on a real-life example of how incorrect charges affect future OPPS payment: Most wound care physicians/QHPs would agree that the work to prepare a chronic wound for a cellular and/or tissue-based product (CTP) for a skin wound and to apply the CTP on wounds < 25 sq cm takes fewer resources than on wounds > 100 sq cm. However, PBDs charged the same amount for both procedures, which caused the allowable rate for wounds > 100 sq cm to be the same as the allowable rate for wounds measuring 25 sq cm. In addition, most wound care physicians/QHPs would agree that the work to prepare a leg wound measuring 100 sq cm for a CTP and to apply 100 sq cm of a CTP to the wound takes the same resources as it takes to prepare a foot wound measuring 100 sq cm and to apply 100 sq cm of a CTP to the wound. However, PBDs charged less for the work on the feet, which caused the allowable rate for wounds on the feet to be less than the allowable rates for the same size wounds on the legs. When this author discusses this situation with PBD staff members, they often say, “that is not happening in my CDM.” Then, when this author audits the CDM, it’s often revealed that it is happening in the CDM. In fact, it is happening in so many CDMs across the country that the OPPS rates continue to be out of line with real-life costs for applying CTPs. Therefore, PBDs should have their CDMs audited during the first quarter of each year by an outside reimbursement strategy consultant who understands the nuances of outpatient wound care coding, coverage, and payment. Many failing PBDs report that their CDM audits were performed by auditors who specialize in inpatient reimbursement because the hospital contracted with one company to audit the entire CDM. Unfortunately, the unique outpatient wound care issues are frequently missed by inpatient CDM auditors. 

Wound care stakeholders are always amazed at the number of problems a CDM audit uncovers. For example, at the end of the last CDM audit that this author conducted for a typical outpatient wound care PBD, five pages (single-spaced) of issues that needed to be fixed were uncovered and six hours of pertinent education to all the wound care stakeholders involved were provided.  At the end of the consultation, the wound care stakeholders reported that they had “no idea a CDM could tell such a story about their work and their processes.” 

7. Audit codes and modifiers submitted on claims. 

Wound care stakeholders should know the exact descriptions of the codes and modifiers they use. Then, they should select the correct codes/modifiers based on the documentation that appears in the medical record. NOTE: Wound care stakeholders who have been working with physicians/QHPs for a long time often code what they know the physician/QHP “meant to say” rather than what the medical record says. That raises the percentages of a repayment upon a payer audit. 

Wound care stakeholders often tell this author that: 1) they do not use a correct code because they do not like its payment rate; or 2) they always use modifiers to receive payment for multiple services/procedures – they disregard the NCCI edit guidelines. In addition, this author finds that coders correctly or incorrectly change codes/add modifiers without telling the PBD before they submit the wound care claims. Wound care stakeholders should remember that “if a code exists, it must be used” and “providers/coders should not select a code/modifier based upon the payment rate that they like.” Therefore, the wound care PBD must conduct routine claim audits to verify that the codes and modifiers on submitted claims matched the medical record documentation. 

8. Audit charges submitted on claims.

Wound care PBDs tend to trust that the charges in their CDMs are the charges that appear on their claims. Unfortunately, many unexpected things can occur as the codes/charges for an encounter pass through the various claims-processing systems. For example, the billing for CTPs seems to create several major charging errors: 

1) When the PBD correctly reports 1 unit for the application code 15271/C5271 and correctly reports the appropriate “Q” code with the number of square centimeters (eg, 10, 30, 40) opened for the patient, some coders incorrectly change to “1” the number of “Q” code units. That causes the charge for the CTP to be less than the PBD paid.

2) When the physician applies a portion of the CTP and discards the remaining portion, some PBD coders incorrectly only charge for the portion of the CTP applied. 

Therefore, the wound care PBD should conduct routine claim audits to verify that the charges on claims correctly represent the services/procedures/products delivered to the patient.

 9. Audit remittance advice information for denied claims.

Wound care stakeholders often report that they are not told about denied claims and that they often have not heard of the term “remittance advice.” Therefore, they cannot learn from their mistakes and they miss the opportunity to correct errors that caused claims to deny. After MACs process each claim, they generate a remittance advice as a companion to the payment or as an explanation of no payment. Remittance advice explains and provides guidance as to whether a payment was or was not made, or if the payment differs from what the provider submitted. The remittance advice also conveys itemized information for each claim and/or claim line and reports the reason for each adjustment (and the value of each adjustment). Therefore, the wound care PBD should ask to audit remittance advice for denied claims because it provides a wealth of information. The PBD should share the denials that could have been prevented by better documentation, coding, modifiers, etc. with its wound care stakeholders. 

 10. Audit revenue-and-usage reports.

Outpatient wound care PBD stakeholders rarely request to see their revenue-and-usage reports. In fact, when this author works with PBDs and requests these reports, the PBD often sends the report that shows their expenses compared to their budgets, or the PBD staff member says he/she is not allowed to see the reports. This author then calls a finance department representative, who usually provides the reports. In addition to showing the revenue generated by the wound care PBD, these reports show unusual coding and billing practices, for example:

• Coding all first-time patient encounters as “new” clinic visits.
• Coding all clinic visits as Level III or IV.
• Coding all debridements as surgical debridements.
• Coding application of CTP codes without “Q” codes.
• Reporting 5 units for every hyperbaric oxygen therapy service.
• Reporting only the number of square centimeters of CTP applied.

These reports are typically prepared each month. The PBD program director should receive and review these reports, just like the finance department reviews the same reports. 

SUMMARY 

Every outpatient wound care PBD needs success with financial margins to continue providing quality patient wound care. Therefore, it is essential to capture and report accurate, complete, and compliant charges. In this way, PBDs will know the true cost of their services and will be able to use those costs to analyze the value they provide. If your wound care PBD is having reimbursement and/or financial problems, take the time to determine what is broken and take the time to fix the problem, even if that means change is needed. 

Kathleen D. Schaum oversees her own consulting business and is a founding member of the Today’s Wound Clinic editorial advisory board. She can be reached for consultation and questions at kathleendschaum@bellsouth.net