Charges Do Not Magically Appear on Medicare Claims

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Clinical and medical staff who work in hospital outpatient wound management provider-based departments (PBDs) rarely compare the codes, units, and charges on their Medicare claims with the documented services and procedures performed in the PBD. Instead, they tend to believe that the correct diagnosis and procedure codes, along with the appropriate number of units provided and the accurate charges, will magically appear correctly on their Medicare claims. Nothing can be further from the truth. 

The revenue cycle process begins the moment the patient makes an appointment and continues with many steps before a Medicare claim is finally submitted. The PBD staff should take an active role in verifying that each step of the revenue cycle process is working properly for their Medicare claims to truly reflect the work that was performed. Therefore, this author invited Donna Cartwright, MPA, RHIA, CCS, RAC, FAHIMA, to share the revenue cycle management steps where PBD staff should actively participate in order to have a positive influence on submission of accurate claims, which influences the PBD’s bottom line. To assist us with this discussion, Donna prepared a flow chart to show the outpatient PBD revenue cycle steps to a Medicare claim. See Figure 1.  

Kathleen D. Schaum: Welcome, Donna. Will you please tell the readers why the revenue cycle that leads to a Medicare claim begins the moment the patient makes an appointment? 

Donna Cartwright: Step 1: When the patient calls to make an appointment, the pre-registration/registration personnel should gather the patient’s name, date of birth, Medicare ID, supplementary insurance ID, and reason for appointment. If the patient was referred by another physician, personnel should ask the patient to contact the referring physician and request her/him to forward the patient’s pertinent past medical history, services/procedures previously performed, and products previously used. The registration personnel should enter the patient’s demographics and insurance information into the registration system. NOTE: The registration system should be designed to register the patient for each PBD encounter and to submit a separate claim for each encounter. Wound management outpatient PBDs should not submit monthly claims. This can lead to denials because of the potential for mismatch of diagnoses with different services that may not be covered.

KS: PBDs seem to underestimate the importance of the next step: Insurance benefit verification/prior authorization. Will you please discuss the importance of this step?

DC: Step 2: Before the patient arrives for her/his appointment, the PBD should verify both the patient’s primary and secondary insurance. 

If the patient has Medicare Fee-For-Service insurance, the physicians and other qualified healthcare professionals (QHPs) should have read Medicare’s National Coverage Determinations (NCD) and Local Coverage Determinations (LCD) and should know Medicare’s coverage requirements for the work they typically perform in the PBD. 

If the patient has Medicare Advantage, Medicaid, or some other private insurance, the PBD should check if the patient’s payer(s) cover the top 5 or 10 procedures normally performed by the wound management physicians/QHPs. Therefore, the first question that should be asked is, “Does the payer cover [5 to 10 procedure codes] on that patient’s plan and are there any special utilization guidelines and/or medical policies pertaining to those procedures?” That information should be recorded in the patient’s medical record for the physicians/QHPs to know what the patient’s insurance covers.  

If the payer covers a procedure, ask the payer if prior authorization is required. If it is, ask what information is required, if a special form is required, how the information should be sent and to whom, when should the prior authorization decision be made, and how the payer will inform the PBD of the decision. NOTE: Some payers will authorize a course of treatment. For example, by obtaining approval for the anticipated number of applications of a cellular and/or tissue-based product (CTP) for skin wounds, PBDs will not have to obtain approval multiple times. This will prevent treatment delays.

If the payer does not cover a procedure, ask the payer about the pre-determination process in case the physician/QHP wishes to request a coverage exception for that patient.  

The PBD should have Advanced Beneficiary Notices of Non-Coverage (for the Medicare Fee-For-Service patients) and Waivers of Liability (for the patients with other insurance) available for the physicians/QHPs to use when a patient wants to pay out-of-pocket for a procedure that is not covered by their payer. 

When patients arrive for their appointment, be sure to obtain their insurance card(s), to scan the card(s), and to compare the card(s) to the information the patient provided when making the appointment. Depending on your hospital’s collection policy, you may want to discuss and/or collect the patient’s co-payment at that time. NOTE: Please keep in mind that the patient’s co-payment is usually 20% of the payer’s allowable charge. If you fail to collect the co-payment, you will only receive 80% of the allowable rate for each service, procedure, and product you provide. Therefore, you should always audit the amount collected from the payer and from the patient. 

KS: Outpatient wound management PBDs often report that their electronic health record (EHR) does not always include all the procedures and products that they use. In fact, some report that the EHR only includes products that manufacturers pay to include in the formulary. In addition, many PBDs report that they do not know how charges for their services are determined and how the unit and charges are calculated in their Charge Description Master (CDM). Will you please educate the readers about these important revenue cycle steps?

DC: Step 3: PBDs pay a lot of money for their EHRs and should demand that all the procedures they perform and the specific products they use be included in their EHRs. If all those items are not included, claim mistakes can happen and correct outcome data will not be captured. Physicians/QHPs should determine what procedures and products their patients need and should not be limited to only those that are subsidized by manufacturers. 

Because the CDM is the “aorta” of the outpatient wound management PBD’s revenue cycle, the PBD program director and medical director should ensure that every service, procedure, and product (with the status indicator of “H” or “N”) is listed on the CDM with the correct CPT^®/HCPCS code, descriptor, units, and marked-up charge (determined by collaboration between the PBD and the Chief Financial Officer).¹ For example: If the marked-up charge on the CDM is for one unit (e.g., 1 sq. cm of a CTP), verify that the CDM calculates the correct charge when multiple units are reported in the PBD charging system. This can be accomplished by auditing processed claims to be sure the expected codes, units, and charges are captured on the claims. 

Add new services, procedures and products to the CDM before the physician/QHP starts performing/using them, and remove services, procedures and products, that are no longer performed/used, from the CDM. Do not program modifiers into the CDM: that can lead to claim errors. Modifiers should only be added when the documentation in the medical record supports their use. The PBD should also have a process for billing applicable late charges and charge capture should be audited periodically to ensure all charges were billed for a date of service.

Finally, PBDs should engage an outside reimbursement consultant, who has expertise in outpatient wound management coding, payment, and coverage, to review their CDMs once a year.   

KS: Audits of wound management services, procedures, and products provided continue to find inadequate documentation to support medical necessity and/or to clearly describe the work performed. Will you please explain why quality documentation is so important? Also, will you describe the elements that should be included in wound management documentation?

DC: Step 4: Many PBDs have received denials because their medical record documentation failed to meet the medical necessity requirements and guidelines (specified in Medicare NCDs/LCDs/articles/manuals/guidance documents, and in private payer medical policies). When payers review documentation, they use their published documents as checklists: if any item is missing from the documentation they are reviewing, the claim is denied and/or a repayment is required. Therefore, physicians and QHPs should meticulously include all the required elements in their documentation, which affects both the PBD and the physician/QHP payment for the services performed.  

The following elements should be included in wound management documentation: 

• A detailed description of the wound should include response to previous treatment, wound location, wound size (length x width x depth), description of wound margins, wound stage/grade as appropriate, and a detailed description of the wound appearance including signs/symptoms of infection, exudate with amount and type, color, texture, and temperature.
• A detailed history of how the wound has been treated prior to the encounter; list specific products or procedures already used, if applicable. This could potentially serve as documentation of conservative therapy if the treatments listed are specifically addressed in the physician/QHP notes.
• Documentation of smoking status and counseling for smoking cessation.
• A well-documented plan of care. If products are to be used, document the frequency and number of anticipated applications. For example: Most Medicare Administrative Contractors only allow 10 applications of a CTP in a 12-week period. Physicians/QHPs should document and keep track of the number of applications provided. 
• If products are needed, verify that they are approved for use on the type of wound and/or diagnosis treated. Many policies have very specific exclusionary terms that can lead to denials. For example, some payers do not allow CTPs to be used on exposed bone and tendon unless specifically indicated on the product’s instructions for use.
• Documentation of all chronic conditions that are either observed or monitored during the encounter, or that would affect the healing process. Status conditions such as wheelchair or bed bound patients, hemiplegia, etc., should also be documented as these conditions may require additional effort during a visit. NOTE: be careful of EHR systems that pull through all previous diagnoses and medications as these could artificially increase the severity of the encounter. Conditions that are resolved and medications that are discontinued should not be documented in the current record as they cause confusion to a payer.
• A specific order, for all services, procedures, tests, and products, should be written and signed by the physician/QHP. NOTE: Work performed in a PBD without a physician/QHP order will not “stand up” under an audit.    
• A detailed description of procedures should include a pre-op and post-op diagnosis and any anesthesia used.
  • Documentation for debridement should include measurements prior to and after debridement, instrument used, type of tissue removed, and depth of debridement. Specify if the debridement is surgical or non-surgical. For example, scraping the edges of a wound with a scalpel is most likely not a surgical debridement. In addition, some debridements are often included in other procedures, such as the application of CTPs. 
  • Documentation for the application of CTPs should include measurement of the wound, square centimeters of CTP applied, and square centimeters of CTP discarded. 
  • Documentation for repeated procedures should reflect improvement in the patient’s wound, which may justify the medical necessity for further procedures. 

The days of documenting a two-line operative note are over.

KS: How does a coder utilize the documentation to apply ICD-10-CM diagnosis codes, CPT procedure codes, and HCPCS codes to the claim? Why is documentation so important for coders who code for the PBD?

DC: Step 5: Coders are totally dependent on the medical record documentation to select the most specific and appropriate codes for the care rendered for each encounter. Coders should code only if they have a medical record to read. The reported codes should reflect the medical necessity for work that is documented in the medical record. The coder should also verify that all codes automatically assigned via an EHR system are correct and well-documented. The coder must also make sure that each provider has their own supporting documentation in the medical record.  

When coders are reporting the ICD-10-CM diagnosis code(s) for the PBD, they must place the code that represents the reason for the encounter in the first position on the claim. Be careful on the selection of first listed diagnosis. Imagine if you have 26 weekly claims with the same wound code as the first listed diagnosis. Not that this situation is not possible, but it would tend to intimate that the wound has never healed. Therefore, remember that the diagnosis may be a diagnosis other than the wound. For example, if the patient is being seen because the CTP sheared off the wound, that should be the first listed diagnosis, or if the wound is infected, that should be the first listed diagnosis for that encounter. Coders should also report the conditions treated and/or observed during the encounter. The coders should not include conditions that have been resolved or medications that have been discontinued because that could artificially inflate severity. In addition, the coders should ensure that the primary and secondary diagnosis codes, that support coverage for the service, procedure, and/or product provided and that were confirmed during benefit verification/prior authorization are reported on the claim. The coders will then assign the appropriate CPT codes for any procedures performed and the HCPCS codes for the procedures used based on the documentation in the record. 

KS: The next step on the flow chart says pre-billing review. What exactly does that mean?

DC: Steps 6 and 7: Outpatient PBD billing systems usually have internal check systems which 1) review the claims for Medicare’s National Correct Coding Initiative (NCCI) edits, 2) looks for omissions and missing information, and 3) scans for invalid codes. The goal, of course, is to send a clean claim to the payer on the first submission. These systems help the PBD to check for completeness, compliance issues and required coding edits. The claim is then sent to the patient’s primary insurance for processing.

KS: When the claim reaches the payer, what happens?

DC: Step 8: The claims are subjected to whatever claim scrubbing system that a payer has in place. The claim scrubber is an automated system that runs checks similar to the pre-billing review performed by the PBD, such as NCCI edits, missing information, etc. Sometimes the payers have medical policy enforcement of coverage programmed into their claim scrubbers. For example, if a product is only indicated for a specific diagnosis, the payers could have the diagnosis programmed into their claim scrubbers. The payers may also have their claim scrubbers programmed to flag cases for pre-payment or post-payment reviews. 

KS: What happens next?

DC: Step 9: After a claim is scrubbed, the claim is processed. If the claim is approved, an Electronic Data Interchange (EDI) posts payment to the PBD. Some payer policies require review of the medical record before they can process a claim. Therefore, a claim might be held until the PBD provides the documentation that is required/requested.    

KS:  PBDs often report that their Chief Financial Officer is contemplating closing their department because they are losing money. The PBDs also state that they reported all the services, procedures, and billable products. No one ever told the PBDs that their claims were underpaid or denied. When asked if they reviewed the remittance advices received from the payer, and if they compared their actual payment received with their department’s Medicare allowable rate and with their private payer contracted rates, the answer was typically “we are not given access to that information.” Donna, will you please explain why these steps are essential in the revenue management cycle?

DC: Step 10: Every outpatient wound management PBD should know their department’s Medicare allowable rates. The PBD should periodically compare their hospital’s unique Outpatient Prospective Payment System (OPPS) Medicare allowable rates with the remittance advice payment rates. If discrepancies are identified, determine if it was due to a revenue cycle processing error or to an error by the Medicare Administrative Contractor (MAC) that processed the claims. 

In addition, PBDs should know exactly what their private payer contracts say about payment guidelines and allowable rates. The PBD does not need to see the entire contract—just the part that pertains to the PBD. Ask the hospital contracting manager for copies of the PBD’s portion of the payer contracts and for the contracted fee schedule rates for the work performed in the department. 

Then periodically compare the PBD’s remittance advices with the contracts and fee schedules. If discrepancies are found, investigate to see if errors in the revenue cycle process caused the incorrect payment; if so, correct the errors so they do not keep reoccurring. If the payer paid a rate different than the contracted rate, the billing department should contact the payer about the discrepancy. NOTE: When reviewing payer contracts, the PBD may find some surprises. For example, the PBD may find that the hospital negotiated a flat rate, e.g., $50.00 per encounter, no matter what service or procedure is performed and what products are used. If the PBD finds contracting mistakes such as these, bring them to the attention of the contract manager and the chief financial officer. 

KS: What happens if the claim is rejected/denied by the payer? What action should the PBD take?

DC: Steps 11 and 12: If a claim is rejected/denied, the Explanation of Benefits includes a claim rejected reason code. The coders should review the rejection/denial reason to identify coding errors or missing information. The coders (not the patient accounts office) should be the ones to correct the information on the rejected/denied claim. To make corrections, the coders should have the medical record in front of them to ensure the accuracy of the corrected information.  

If the denial is due to a medical necessity issue, 100% of these cases should be reviewed by the physician/QHP who performed the work. It is the physician’s/QHP’s responsibility to ensure that the treatments rendered were medically necessary and documented in the record. If the coder investigates and the physician/QHP corrects the error, the coder can resubmit the claim back to the payer for reprocessing. If the denial is reviewed and the physician/QHP disagrees with the determination, the facility can appeal the claim. NOTE: The PBD, physicians, and QHPs should learn from rejected/denied claims. If there is a pattern to the coding and coverage errors, the wound management team should do everything possible to prevent those same errors from reoccurring on future claims. 

Summary

After reviewing the revenue cycle steps to a Medicare claim, PBDs should have a clear understanding that charges do not magically appear on claims. Therefore, PBD stakeholders should participate in every step of the claim submission, claim review, and claim rejection/denial process. That participation should lead to clean claims, to fewer rejected/denied claims, and to less loss of revenue. 

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

1. CPT is a registered trademark of the American Medical Association.