Corporate Compliance

Note from the Instructor: Ambulance Services and Procedures Performed 'Under Arrangement'

Medicare Insider, August 25, 2015

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This week’s note from the instructor is written by Debbie Mackaman, RHIA, CPCO, CCDS, regulatory specialist for HCPro.

Last week was a quiet week for CMS other than the release of the FY 2016 IPPS final rule on August 17 in the Federal Register. I thought I would take this opportunity to look at a billing issue about which I have recently been asked several questions. The questions generally revolve around how a hospital can bill for ambulance services when an inpatient leaves the facility for a procedure at another facility with the intention to return the same day. Unfortunately, since a hospital will trigger an edit that prevents the ambulance revenue code from being reported on the inpatient claim, it is assumed that the hospital must write off the transportation service. In fact, just the opposite is true based on CMS guidance.

First, let’s take a look at the definition of services provided “under arrangement.” If the admitting hospital cannot provide the needed therapeutic or diagnostic services, excluding “routine services,” it must arrange to have the services provided by another provider either in the hospital or at a location outside the hospital. Effective January 1, 2015, the admitting hospital must provide the “routine services” (e.g., bed, board, nursing services, use of hospital facilities, and medical social services). Services are considered to be provided by the admitting hospital if they are provided in the hospital and the hospital exercises professional responsibility over the services, including quality control.

Second, the payment for most inpatient services consists of all covered services furnished in connection with the admission for either a hospital paid under the prospective payment system (PPS) or a hospital paid under cost, such as a critical access hospital. In general, outpatient services are billed to Medicare Part B and inpatient services are billed to Medicare Part A. An edit is activated in the Medicare claims processing system that prevents payment for both during an inpatient stay because essentially the patient cannot be an inpatient and an outpatient at the same time. Only the hospital where the patient is an inpatient is entitled to receive payment for the services in connection with the admission.

Problems may arise for both the provider who is performing the service under arrangement as well as the provider who transports the patient to and from another hospital to receive specialized diagnostic or therapeutic services not available at the admitting hospital. Both must look to the hospital where the patient is an inpatient for payment and may not separately bill Medicare for the services.

Consequently, these services are covered under Part A and paid by the PPS rate or reimbursed as reasonable costs for hospitals excluded from PPS. The admitting hospital must include the cost of the ambulance services with the appropriate ancillary service cost center indicating where the procedure was performed. Revenue code 0540 (ambulance) cannot be separately billed on a covered inpatient claim.

For example, a patient is admitted to Hospital A for digestive complications, and an endoscopic retrograde cholangiopancreatography (ERCP) is needed. Hospital A does not provide this specialized outpatient service; however, Hospital B, located in the same city, does. The procedure is scheduled at Hospital B and an independent ambulance provider transports the patient to and from that hospital for the procedure. Hospital A must include the charges for the ERCP procedure and the ambulance transport on their claim for the inpatient stay. If the transport charge is $500 and the ERCP procedure is $2,000, Hospital A will combine the charges and bill under the appropriate revenue code (i.e., revenue code 0360 for a total charge of $2,500).

Lastly, the admitting hospital may want to consider other operational issues including supporting documentation and complete charge reporting. Using the example above, Hospital A should maintain a copy of the procedure report in their record to support their charges billed and for the appropriate procedure code assignment. When the inpatient discharge is paid under IPPS, coding of the procedure performed under arrangement may change the MS-DRG assignment. The inpatient claim should not be released for electronic billing until all charges are included on the claim for reimbursement under PPS or cost.

Note that there are several exceptions to the above billing rule, including:
• When a patient has been formally admitted as an inpatient to a hospital and is in the process of being transferred from one hospital to another. If the patient is transferred from one hospital to another and is admitted as an inpatient to the second hospital, the ambulance service is separately billable under Part B by the entity transporting the patient.
• When the intent was to transport the patient back to the admitting hospital and a complication arises following the procedure and the patient must be admitted to the second hospital. In this case, the original admitting hospital discharges the patient from their hospital using the date and time of the transport out and the receiving hospital uses the date and time that coincides with the inpatient order at the performing hospital. The entity transporting the patient may separately bill Medicare for services in this circumstance.
• When a patient is transported by ambulance with a date of service that is the same as the admission or discharge date on an inpatient claim. The entity transporting the patient may separately bill Medicare, as these services are not subject to the bundling rules as demonstrated above.

More information on billing for ambulance services during an inpatient admission can be found in the Medicare Claims Processing Manual, Chapter 3, §§ 10.4 and 10.5 and Chapter 15.

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