“Allowed” and “Allowable” Do Not Mean Payment is Always Allowed

Information regarding coding, coverage, and payment is provided as a service to our readers. Every effort has been made to ensure accuracy. However, HMP and the author do not represent, guarantee, or warranty that coding, coverage, and payment information is error-free and/or that payment will be received.

While attending the opening sessions of both the 2023 SAWC Spring and Fall, I was surprised to see the vast number of first-time attendees—it appeared to be more than 50%. Therefore, I made a special effort to welcome the new attendees throughout both symposiums. After speaking with them, I jotted down the reimbursement questions that they asked. I plan to address those topics in my 2024 monthly Business Briefs and quarterly Consultation Corner columns.

I was surprised that the two most frequently asked questions pertained to the word “Allowed” in the National Correct Coding Initiative (NCCI) Procedure-to-Procedure (PTP) edits and the word “Allowable” in the various Medicare fee schedules. Then during the first three weeks of 2024, I witnessed real-life consequences of misunderstanding these two terms.

For the first time in my decades of consulting, I received multiple consulting requests from wound/ulcer management professionals whose 2023 year-end financial results were well below their projections. Yet their volume of business aligned with their projections. After carefully reviewing the causes of their financial shortfalls and realizing that they 1) made their projections based on Medicare’s national average allowable rates, and 2) failed to consider the impact of the NCCI PTP edits, I wished that I had addressed the “allowed” and “allowable” issues in my 2023 columns. To prevent others from making the same mistakes in 2024, this Consultation Corner will address why “allowed” and “allowable” do not mean that Medicare payment will always be “allowed.”

National Average “Allowable” Medicare Payment Rates

The annual Medicare fee schedules, published on the Centers for Medicare & Medicaid Services (CMS) website, for physicians and other qualified healthcare professionals (QHPs) and hospital owned outpatient wound/ulcer management provider-based departments (PBDs) list the national average “allowable” payment rates for the services, procedures, and products pertinent to those stakeholders. When reimbursement strategy and education consultants, including this author/consultant, discuss Medicare payment rates, we typically refer to the national average “allowable” payment rates, and remind stakeholders to research the actual Medicare payment rates that apply to them: 

• The Medicare Physician Fee Schedule (MPFS) national average “allowable” payment rates for physicians and other QHPs are adjusted based on the practice cost variations for every Medicare locality. The specific “allowed” rates for each Medicare locality can be found on the website of the Medicare Administrative Contractor (MAC) that processes the claims for that locality.
• The Medicare Outpatient Prospective Payment System (OPPS) national average “allowable” payment rates for PBDs are adjusted based on the wage index for every hospital. Therefore, two PBDs in the same city could have different OPPS “allowable” rates for the same procedure.

Knowing that the Medicare national average “allowable” published rates are not usually the exact payment rates that specific physicians, QHPs, and PBDs receive, wound/ulcer management stakeholders should not base their financial projections on national average allowable rates. Instead, the stakeholders should list the codes for the payable services, procedures, and products in their businesses. Physicians and QHPs should visit their MAC’s website to view the specific “allowable” rates that pertain to the locality in which their business is located. PBDs should ask their finance department for the Medicare “allowable” rates for their facility.
 
Once the correct allowable rates are obtained for each payable service, procedure, and product, the person preparing their 2024 financial predictions should adjust them for other factors that may reduce the final allowable rates—eg, 2% sequestration, NCCI edits, status indicators, etc. Then, and only then, should wound/ulcer management stakeholders make their financial projections for the upcoming fiscal year.

NCCI “Allowed” Correct Coding Modifier Indicator (CCMI) for PTP Edits

This author/consultant often educates wound/ulcer management stakeholders about the NCCI Policy Manual for Medicare Services which is updated every January 1 and posted on Medicare’s website. NOTE: In this year’s updates, the name of the manual was changed to Medicare NCCI Policy Manual. All wound/ulcer management stakeholders should read the introduction to the manual and chapters 1, 3, 4, 11, 12, and 13, which pertain to common wound/ulcer management-related procedures and services. These short, concise chapters provide guidelines about which procedures/services are considered components of other procedures/services.

The CMS website also posts the NCCI PTP edit files. These edits prevent inappropriate payment of services/procedures that should not be reported together. Each edit has a Column One and Column Two HCPCS/CPT^® code.¹ If a wound/ulcer management stakeholder reports the two codes of an edit pair for the same beneficiary on the same date of service, the Column One code is eligible for payment, but the Column Two code is denied unless a clinically appropriate NCCI PTP-associated modifier is allowed and reported.

The table below depicts the layout of the NCCI PTP edit files and a PTP edit example that shows surgical debridement of subcutaneous tissue (11042) will not be paid at the same encounter as the application of a cellular and/or tissue-based product (CTP) for skin wounds (15271).

When wound/ulcer management stakeholders review the NCCI PTP edits which are displayed as Excel spreadsheets, they are often confused when they read the column F header. This column lists the Correct Coding Modifier Indicator (CCMI) that is assigned to each NCCI PTP edit.

• A CCMI of “0” indicates that NCCI PTP-associated modifiers cannot be used to bypass the edit. NOTE: The table reads 0 = not allowed
• A CCMI of “1” indicates that NCCI PTP-associated modifiers may be used to bypass an NCCI PTP edit under appropriate circumstances—eg, separate patient encounters, separate anatomic sites, the table reads 1 = allowed
• A CCMI of “9” indicates that the use of NCCI PTP-associated modifiers is no longer applicable. This indicator is used for all code pairs that used to have an NCCI PTP edit, but the edit has been deleted. The table reads 9 = not applicable.

The CCMI 1 = allowed is the culprit that confuses both new and experienced wound/ulcer management stakeholders. They incorrectly believe that 1 = allowed means that the codes in Column 1 and Column 2 are always allowed to be paid when performed at the same encounter. As stated above, that belief is incorrect. “Allowed” means that payment is only allowed if the two procedures were performed at different encounters or on different anatomic sites. In most instances the wound/ulcer management services/procedures, which are assigned NCCI PTP edits, are performed at the same encounter and on the same anatomic location. Therefore, NCCI PTP-associated modifiers, such as -25, -59, -XE, -XP. -XS, and -XU are not appropriate in these instances, even though the CCMI says that payment for both codes may be allowed.

Therefore, the wound/ulcer management stakeholders, who incorrectly included the payment for both Column 1 and Column 2 codes in their 2023 revenue projections, would have had to increase the patient encounters significantly to make up for the large over-projections.

This author/consultant hopes that this information will prevent you from believing that you will be paid 1) the exact “allowable” rates on the MPFS and OPPS Fee schedules and 2) for both Column 1 and Column 2 codes in the NCCI PTP edit files when both procedures are performed on the same anatomic site and at the same encounter.
 
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@gmail.com.

Reference
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