Work That Happens Before The Patient Is Seen: The Chargemaster and the Billing Cycle

  In 2007, TWC published an issue on Before the patient can be seen, the clinic has to determine how it will prepare a bill (charges) for the services rendered to the patient. This means that every hospital clinic needs to develop a chargemaster that is specific to their department in order to capture charges and ensure consistent billing. The layout of individual facility chargemasters varies from hospital to hospital; however, it includes a core group of data elements that correspond to all of the services, procedures and supplies that may be used in that facility.

  The key corresponding data items are described below.
     1) Department Cost Center: This is the number assigned to the specific ancillary department, and provides a mechanism to attribute the charges generated with this entry as originating in the Wound Care department.
     2) The CPT® Code: An abbreviation for “Common Procedural Terminology” published annually by the American Medical Association. These standardized codes represent diagnostic and treatment procedures and evaluation and management services provided by physicians, podiatrists, osteopaths, and other health care practitioners.
     3) The HCPCS Code: An abbreviation for “Healthcare Procedure Coding System” these are “level 2” procedure codes developed by the Centers for Medicare and Medicaid Services (CMS), which provide “descriptive terminology” used for reporting the provision of supplies, materials, injections and certain services and procedures which are not defined in CPT®.
     4) Description: The name of the procedure or service, which is hospital-specific but should be listed in a way that is recognizable to others who do not work in the clinical department.
     5) Revenue Code: See below.
     6) Price: The markup above the “Medicare allowable” that the hospital is going to charge.
     7) CDM Number: The CDM (charge description master) number is the hospital’s unique identifier for that procedure or service. Every hospital will have their own unique CDM number for every procedure and supply. Some hospitals use the CPT code as part of their CDM but it is different at every facility.

  Some chargemasters may include supply charges or pharmaceuticals. The chargemaster structure facilitates the submission of patient claims in a consistent manner. A poorly constructed chargemaster can cause inaccurate claims to be submitted, which may result in denials and delays in payment.

Hospital Revenue Codes

  What is a revenue code? Revenue codes are 4-digit numbers that are used on hospital bills to tell CMS and other insurance companies either where the patient was when they received treatment, or what type of item a patient might have received during treatment. For example, revenue code 0420 represents services done in a Physical Therapy department by a therapist.

  There is no revenue code to identify care done specifically in a “wound clinic.” Most of the services, which occur in a hospital-based outpatient wound center occur in a clinic or a treatment room. Thus, wound center services are assigned the revenue codes 0761 or 0510 that define these places of service. Other examples of revenue codes (representing areas of service in the hospital) are pharmacy, surgery (more on this later) and respiratory therapy services.

  On the claim submitted to the insurance company, commonly known as the UB-04, every CPT code must be linked to a revenue code that explains where in the hospital that service was provided. Unless the CPT code is linked to a revenue code, the claim will not be paid. Where explicit instructions are not provided by CMS through a National or Local Coverage Decision (NCD or LCD, respectively) policy, hospitals should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in their cost report.

What is a Cost Report?

  At the end of the year, the hospital will send a “cost report” to CMS to calculate and determine the final Medicare and Medicaid reimbursement due to the facility. In other words, depending on this report, at the end of the year the hospital could get a higher reimbursement or a lower reimbursement than they were getting the prior year. Accuracy in this report is critical to the hospital’s bottom line in the long term. This data is also used by Congress to control the rate of increase in Medicare spending and by the Prospective Payment Assessment Commission to make recommendations for changes to the prospective payment system. In other words, the revenue codes in the chargemaster matter a lot.

  The local contractors must apply Cost-to-Charge Ratios (CCRs) prospectively to calculate outlier payments (for hospitals paid under OPPS and CMHCs), Transitional Outpatient Payment System (TOPS) payments (for hospitals paid under OPPS), device pass-through payments (for hospitals paid under OPPS), and items and services paid at charges adjusted to cost (for hospitals paid under OPPS). In the future, if Medicare ever decides to convert outpatient care to a DRG like payment system as they did the inpatient setting, this data will play an important role in determining the reimbursement.

  Medicare publishes a Revenue Code to Cost Center crosswalk to assist hospitals in accurately mapping their services to locations where these services are taking place (https://www.cms.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage). This mapping indicates if and how charges on a claim are mapped to a cost center for the purpose of converting charges to cost. If the revenue code is used in HOPPS (Hospital Outpatient Prospective Payment System) sometimes also referred to as “outpatient payment prospective payment system or OPPS,” median calculation, "Y" appears in Column C. One or more cost centers are listed for every revenue code that is used in OPPS median calculations, starting with most specific, and ending with most general. CMS maps the revenue code to the most specific cost center with a provider-specific Cost Center Revenue. Above is an example of several listed on the crosswalk.

  Many CPT codes we use in the wound center are “surgical services” such as the debridement codes. Thus, it may seem logical to link these CPT codes to the revenue code for “surgery.” However, this is inaccurate because the activity is not happening in the operating room, it is happening in an outpatient clinic. It is imperative that the individual who creates the wound center “chargemaster” understand that even if some of the CPT codes used in the HOPPS are “surgical services” they need to be linked to a revenue code such as 0761 or 0510 to accurately reflect that the place of service was in a clinic setting where wound care services are done.

Creating and Using the “Chargemaster” to Bill a Wound Center Patient

  After a procedure or service is performed, the charge has to be entered manually by a person or electronically through an EHR. Some EHRs have direct interfaces so that charge entry can be automatically dropped as soon as the visit is completed and the clinician signs off the chart. This is a large part of the reason for the drive to “point of care charting” to ensure that the time from patient visit to billing is as short as possible in hopes that billing accuracy will be optimized. EHRs, which directly interface with the hospital billing system do not require a “superbill” because the charges go directly from the electronic chart into the billing software. There are electronic documentation systems, which do not interface with the hospital billing systems. These have no advantage over paper from the standpoint of billing. Billing charges must still be entered manually some time after the visit into the hospital charge entry system. This means that some sort of “Superbill” must exist (or charge summary) on which the clinicians mark what services they provided.

  Once this charge is entered into the hospital billing system, from there it makes its way to a “scrubber” system run by the hospital. This system may be computerized or “manual” (in other words, a human may review each charge). This system may add modifiers for claim submission. It is then sent electronically to the local Fiscal Intermediary (FI) or Medicare Administrative Carrier (MAC) for payment. Assuming that the claim has been filled out appropriately, and passes the carrier’s “edits,” they are required to pay within 30-days. As you see, there are many potential failure points, which could result in the denial of a charge, but the first (and most critical) step is having an accurate and up-to-date chargemaster in place.

  One of the concerns with manual charge entry is that the “descriptor line” in the manual software has limited space for detail in explaining the procedure or service. Many CPT codes have long explanations of services, but the last one or two words can radically affect payment by defining the true service. For example, there are 4 CPT codes for the Dermagraft application. Two of these are “add-on” codes when you go beyond the use of 100 cm2. The only difference in the other two primary codes is the area of the body upon which it is applied. In the short descriptor, both of these codes have the exact beginning phrase: “tissue culture, allogenic dermal substitute.” The rest of the descriptor tells you the body part for which the code is used. An individual manually selecting the correct code may only have the beginning of the phrase available as the definition, and not the detailed location information. CPT code 15360 lists body parts as trunk, arms and legs. However, Dermagraft is only covered for use on the foot. CPT code 15365 lists many body parts including the face and genitals, but the final body part listed is feet. Many charge masters for wound centers have been built using the CPT code for “legs” and omitting the CPT code for “feet.” Thus, these charge masters have been designed for nonpayment in the application of bioengineered skin. Even if these claims were paid, upon review by an auditor they would be subject to payback because the documentation would not correlate to what was submitted on the claim. When done routinely, this can be viewed as poor billing practice.

  Interfacing directly to the hospital billing system is an important feature to consider in the purchase of a Wound Clinic EHR. As of January 1, 2011, some CPT codes were deleted by CMS but many chargemasters have not been brought up-to-date or the descriptions that have been revised by the AMA have not been revised by chargemasters. Some CPT codes have become “add-on” codes (the codes now mean something different than they did in 2010). If your clinic uses manual entry of charges, it is very important for the individual responsible for that task to undergo annual education regarding any changes to the items listed.

The Link Between the Chargemaster and the Patient Claim

  The result of the registration activities, which occur prior to the clinical visit is that the patient is assigned an account number. That account number is used to bill for all the services and procedures provided while that account is active. The hospital outpatient clinic must decide whether that account will be active for one day or 30-days based on the way the billing cycle is set up. This issue of “billing cycles” is one of the least understood and yet most important issues for the hospital based outpatient wound center. However, setting up the “billing cycle” is more of the work that happens before the patient is seen. In this case, it can be a critical step in determining whether the clinic succeeds or fails. To make sense of this topic, we need to revisit the issue of those pesky revenue codes we once used to think were quite benign.

Billing Cycles

  Perhaps one of the most important issues about revenue codes is something that is easily overlooked and may make the difference in whether a wound center survives or fails financially even when the chargemaster is structured correctly. That issue has to do with what is known as “repetitive billing.”

  Hospitals are required to follow the repetitive billing requirements when billing repetitive Part B outpatient services on a UB-04 monthly or at the conclusion of treatment with the appropriate revenue code. Services repeated over a span of time and billed with the following revenue codes are defined as repetitive services.

  You may remember that in most cases the hospital is allowed to assign the place of service for procedures. However, in the case of hyperbaric oxygen therapy (HBOT), Medicare requires the hospital use the revenue code 0413 for the provision of hyperbaric services. Note that this revenue code is NOT on the list of services, which can be billed as repetitive. (There are only 3 respiratory codes on this elite list and they are: 0410, 0412 and 0419.) Also missing from the elite repetitive list are the codes 0761 or 0510, the two codes which indicate that the place of service is in the outpatient clinic or treatment room.

  However, Medicare does recognize that there are other reoccurring services, which are repetitive in nature but do not fall on the elite “list” of revenue codes. So, hospitals can elect to report charges for recurring “non-repetitive” services (eg, chemotherapy or radiation therapy) on a single monthly claim. However, if a hospital elects to do this, they must report all charges associated with that reoccurring service (revenue code) within that 30-day period on the same claim In other words, a wound center could chose to bill a non repetitive service in a 30 day cycle all on one claim, but the catch is that you would not be allowed to carve out additional non repetitive services and put them on a separate claim. If you chose to bill 0413 (hyperbaric) charges on a monthly claim, that means that you would also have to include any other services provided in the wound center on the same claim.

  So far that doesn’t seem problematic until you begin to include the ICD-9 codes necessary on the Medicare UB-04 claim form hospitals are required to submit. This form does allow you to include multiple diagnosis codes. However, it has a single box to fill in the primary diagnosis code. National Coverage Determination (NCD) and Local Coverage Determination (LCD) policies clarify which CPT's or HCPCS are recognized by Medicare and which diagnosis codes (ICD-9) are approved to be used in conjunction with them. These policies may specify the need for certain ICD-9 codes to be designated as Primary when submitted for payment.

  If there are multiple procedures, which require different primary diagnoses codes to be listed on the claim during the month (ie, hyperbarics and Apligraf), these claims will be returned with an edit stating “invalid diagnosis code.” You may have all the right CPT codes, modifiers and ICD-9 codes on the claim but the inability to identify more than one diagnosis as primary, will leave you not only with a denial, but a mystery in trying to find out why. Inpatient coders typically do not reference LCD’s, as they have been conditioned to utilize their own software tools geared for inpatient diagnosis related group (DRG) coding. So, these claims will be denied in spite of the fact that the chargemaster was correct! Even if all charges were correctly entered at the time the patient was seen, the “billing cycle” selected by the hospital and the incompatibility of this to the HOPPS setting will cause these charges to be denied. You will be left wondering how the denials could have happened despite your careful and correct chargemaster development and thorough documentation!

  Remember, wound clinics are “step-children” when it comes to hospital outpatient services. We operate more like a physician’s office in the unique and diverse Part B services we provide, yet we bill under the hospital Part A umbrella. physician’s drop claims daily for services. A patient can return tomorrow with a new diagnosis so dropping claims daily helps insure that clean claims are going out. If claims are sent in monthly and one is denied, it will be like searching for a needle in a haystack to determine what the problem was with the claim.

  The problem with dropping daily claims in the outpatient wound center is that the patient will need a new account number every day. This effectively means that patients could have to be reregistered every day. However, hospitals, which understand this issue have automated this process so that they do not have to fully re-register the patient every day. Instead, the hospital computer system automatically discharges the patient each night and is able to roll forward most patient information. The next time the patient is seen they will be assigned a new account number for that day of service.

The Bottom Line

  The sad fact is that you could get the patient registered properly, create the perfect chargemaster, make the right diagnosis, provide the right treatments, link the CPT codes for these services to the right revenue codes, create the perfect claim and still have your claim denied. Coding and billing rules are not the same thing. The reason for the denial will be that the hospital decided to bill hyperbaric and/or wound care services in 30-day episodes, thus negating a huge portion of the bill, or making it impossible to link the treatments to the right diagnosis code. So, the most important work that happens before the patient is seen is that the development of a complete, accurate chargemaster and establishment of the wound center billing cycle, even if this means assigning a new account number to each patient every day.

  Toni Turner, RCP is owner of Protia Health Initiatives, LLC consulting and Director of Operations at Intellicure, Inc. She can be reached at toni.turner@intellicure.com.

  CPT® code is a registered trademark of the American Medical Association (AMA).