Revenue Cycle

CAHs take notice: Certain improper payment edits required by July 1

Medicare Update for CAHs, March 21, 2012

CMS recently released two replacement transmittals that summarize Recovery Auditor-identified issues that have caused significant overpayments. As a result, CMS is requiring facilities to implement edits to either correct or prevent these errors. All of the issues pertain to critical access hospitals (CAHs) and require the development of edits by July 1.

Transmittal R1051OTN lists the following Recovery Auditor-identified issues that have necessitated the implementation of edits to correct improper payments:

  • Physician place of service codes (POS)
  •  Evaluation and management E/M) services during a global period
  • Untimed codes
  • Inpatient psychiatric facility (IPF) admissions from its own emergency department
  • Skilled nursing facility (SNF) consolidated billing

Other than the untimed codes issue, most of these edits appear to be “correction” edits because they depend on the comparison of claims data from other providers or the same provider.

Because the fiscal intermediary (FI)/Medicare administrative contractor (MAC)/carrier will need to compare provider claim to data that is already in the common working file (CWF) or fiscal intermediary shared system (FISS), providers may receive payment for these types of services up front and see a recoupment later on, says Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc.

“The provider would have to work through the denial process to be paid monies owed to them that may have been recouped due to another provider’s incorrect claims data,” she says. “These types of edits can be very costly and time consuming to resolve. Providers who receive these types of denials should take the time to try to resolve any process issues that they have control over before the claim goes out the door.”

Transmittal R1052OTN lists the following Recovery Auditor-identified issues which have necessitated the implementation of edits to prevent improper payments for professional fees:

  • Pulmonary diagnostic procedures billed with E/M services
  • Intravenous hydration services
  • New patient E/M services
  • Modifier -62 (two surgeons)

Other than the modifier -62 issue, most of these appear to be “prevention” edits because they do not depend on the comparison of claims data with other providers. 

These prevention-type edits will cause a rejection of the item billed. The provider will need to clarify the services billed by reporting a modifier, a different CPT®code, or removing the charge altogether, says Mackaman.

“This process will require the provider to review the claim to make sure that what they are billing is supported in the medical record so it will prevent overpayments and potential recoupments,” she says. “If a provider sees a high volume of these types of claim issues, further staff education may be needed to prevent delays in payment for services that are appropriate. “

CAHs should take notice of these edits, as the Medicare contractors will be required to implement them as of July 1. In additions, CAHs should expect to see more of these edits as the Recovery Auditor Program identifies further issues. If a facility’s billing or claims scrubbing software can create prebilling edits, consider implementing these edits to prevent improper claims from being submitted, suggests Mackaman.

“By doing so, this will decrease the likelihood of receiving an overpayment that may be subject to recovery or creating a delay in payment while the claim is being corrected,” she says. “Keep in mind that the same prebilling review could be created manually, but these processes tend to be time-consuming and not as reliable as an automated system.”

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