Revisiting Healthcare Merchant StatusBy Jack Duffy

Executive Vice President

Some time ago I wrote an article question-ing why healthcare was the only consumer activity that routinely extended credit to its patients (customers) without a specific agreement for repayment. Each year billions of dollars are lost to patients who often, for their own reasons, fail to pay their portion of the healthcare bill. Additional billions are spent to engage collec-tion agencies to send letters and make calls to attempt to recover these lost revenues.

As a person who travels frequently, it is second nature to approach hotel front desks and rental care

Industry Trends &Updates 2CMS Implements CARC and RARC Updates 2Rules, Rules, Rules 2Cloud-Based Managed Care Analytics 6CentraMed’s Newest RID Reaches Million Dollar Milestone 7What is the Million Dollar Club? 7$1,243,548,013 and Growing... 8

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Net Revenue MattersOctober 2013

counters with my credit card of choice already out of my pocket. I use the same response when approach the coffee counter or sandwich shop. Contrast this with my quarterly visits to my physician. I have never been asked or paid the visit co-payment at the time of service. That is 0 for 20 in the past five years. I do pay when the bill is received a few weeks later but the time value of money has been lost and a cost for the bill has been incurred. Of greater importance is the fact that for everyone who does pay there are at least as many patients who do not.

Might there be a simple solution to reducing both the expense and losses associated with failure to collect? All elective services will require the imprinting of a valid bank credit card. The card will be charged for visit co-payment at the time of service and co-insur-ance balances, if any, at the time the insurance carrier remit their portion of the service. A hold on the line of credit will be placed on the credit card for the estimated patient balance. Disputed balances due to insurance denials will be pended until the patient and/or healthcare provider appeals the decision.

The vast majority of patient balances can be resolved using this method. For the 3% to 5% of American households who go not have a credit card, another financial instrument may be available. If suc-cessful, this merchant approach to the community would save billions of dollars and create a level playing field with other service providers in the community.

With the advent of the Health Care Exchange many uninsured or underinsured people will have the opportunity to have coverage. The merchant process above is not designed to manage cata-strophic healthcare expenses. It will not resolve the debate about the disparity between charges and average payments from insurance companies. It will go a long way to eliminate the delays and costs associated with the current failed process. I would predict that after the first round of patient questions about why they never had to pay before, the use of a credit card at the point of service would become no more of an issue when compared with hotels, car rental companies and virtually every other merchant who shares main street America with health-care providers.

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Industry Trends &Updates

CMS Implements CARC and RARC UpdatesThe Centers for Medicare and Medicaid Services (CMS) implemented updates to Claim Adjustment Reason Code (CARC) and Remittance Advice Remark Code (RARC) lists on October 7, 2013. Per Medicare policy, CARCs and RARCs that provide either supple-mental explanation for a payment adjustment or policy information that generally applies to the payment adjustment are required in the remittance advice (835 or paper remittance) and coordination of benefits transactions (837). CARC and RARC code sets are updated three times a year.

CARC updates include nine new codes (e.g., 253 – Sequestration – reduction in federal spending), modified narrative on twenty-four codes, and one deactivated code (125 – Submission/billing error) effective 11/1/2013. RARC updates include 103 new codes (e.g., N642 – Adjusted when billed as individual tests instead of as a panel) and modified narrative on four codes. There were no deactivated RARC codes.

Additional information regarding CARC and RARC updates is available in MLN Matters article #8422 http://www.cms.gov/outreach-and-Education/medicare-Learning-Network-MLN/mlnmattersAr-ticles/Downloads/MM8422.pdf.

A complete list of CARC and RARC code sets is available on the Washington Publishing Company (WPC) website at http://wpc-edi.com/Reference.

Rules, Rules, RulesHow is your facility going to get this right? Today as healthcare providers, clinical staff and coders we are up against many challenges. With ICD-10-CM/PCS implementation just less than a year away there is urgency to get ready now to avoid lost reimburse-ment later. 5010 Testing is still continuing for many facilities and payers. Statistics show some are still operating on the 4010. The vendors on 4010 can’t accommodate an ICD-10 data field, which equates to “no payer can accept it.” Time is ticking, how is your facility doing in the timeline of readiness?

If that isn’t enough then we have the final rule release for IPPS. Two-midnights to be specific. This final rule emphasizes the need for a formal order of inpatient admission to begin inpatient status, but permits the ordering practitioner to consider all time a patient has already spent in the hospital as an outpatient receiving observation services, or care in the emergency department, operating room, or other treatment area in guiding their two-midnight expectations. Getting documentation that will support the coding of such services has already been a challenge with implementation of Electronic Health Records not to mention omission of nursing documentation for infusion start and stop times for patient treatments. This continues to be a huge revenue leak for many hospitals as CentraMed has mentioned in previous articles. For 2014 Injection and Infusion services will likely see a decline in reim-bursement due to CMS packaging more services in the future.

Now back to the Hospital Inpatient Admission Order and Certification regulation. On September 5, 2013 the following information was released by CMS for clarification of requirements. The following is verbatim from CMS and can be located at:

http://cms.gov/Medicare/Medicare-Fee-for-Ser-vice-Payment/AcuteInpatientPPS/Downloads/IP-Certification-and-Order-09-05-13.pdf

For More Industry Trends & UpdatesFollow CentraMed,Inc Online!

Net Revenue Matters - October 2013 - 3 -

As a condition of payment for hospital inpatient services under Medicare Part A, section 1814(a) of the Social Security Act requires physician certifica‐tion of the medical necessity that such services be provided on an inpatient basis. The order to admit as an inpatient (“practitioner order”) is a critical element of the physician certification, and is therefore also required for hospital inpatient coverage and payment under Part A. The physician certification, which includes the practitioner order, is considered along with other documentation in the medical record as evidence that hospital inpatient service(s) were reasonable and necessary. The following guidance applies to all inpatient hospital and critical access hospital (CAH) services unless otherwise specified. The complete requirements for the physician certification are found in 42 CFR Part 424 subpart B and 42 CFR 412.3.

Physician Certification of inpatient services of hospitals other than inpatient psychiatric facilities:

1. Content: The physician certification includes the following information:

a. Authentication of the practitioner order: The physician certifies that the inpatient services were ordered in accordance with the Medicare regula‐tions governing the order. This includes certification that hospital inpatient services are reasonable and necessary and in the case of services not specified as inpatient‐only under 42 CFR 419.22(n), that they are appropriately provided as inpatient services in accordance with the 2‐midnight benchmark under 42 CFR 412.3(e).

b. Reason for inpatient services: The reasons for either— (i) Hospitalization of the patient for inpatient medical treatment or medically required inpatient diagnostic study; or (ii) Special or unusual services for cost outlier cases under the inpatient prospective payment system (IPPS);

c. The estimated time the beneficiary requires or required in the hospital.

d. The plans for posthospital care, if appropriate, and as provided in 42 CFR 424.13.

e. CAHs: For inpatient CAH services, the physician must certify that the beneficiary may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the CAH.

2. Timing: Certification begins with the order for inpatient admission. The certification must be completed, signed, dated and documented in the medical record prior to discharge, except for outlier cases which must be certified and recertified as provided in 42 CFR 424.13, and certification of CAH inpatient services which is required no later than 1 day prior to the date on which the claim for payment for the inpatient CAH services is submitted (§ 424.15).

3. Authorization to sign the certification: The certification or recertification may be signed only by one of the following:

(1) A physician who is a doctor of medicine or osteopathy.

(2) A dentist in the circumstances specified in 42 CFR 424.13(d).

(3) A doctor of podiatric medicine if his or her certification is consistent with the functions he or she is authorized to perform under State law.

Certifications and recertification’s must be signed by the physician responsible for the case, or by another physician who has knowledge of the case and who is authorized to do so by the responsible physician or by the hospital’s medical staff (or by the dentist as provided in 42 CFR 424.11). Medicare considers only the following physicians, podiatrists or dentists to have sufficient knowledge of the case to serve as the certifying physician: the admitting physician of record (“attending”) or a physician on call for him or her; a surgeon responsible for a major surgical procedure on the beneficiary or a surgeon on call for him or her; a dentist functioning as the admitting physician of record or as the surgeon responsible for a major dental procedure; and, in the specific case of a non‐physician non‐dentist admitting practitioner who is licensed by the State and has been granted privileges by the facility, a physician member of the hospital staff (such as a physician member of the utilization review committee) who has reviewed the

Net Revenue Matters - October 2013 - 4 -

case and who also enters into the record a complete certification statement that specifically contains all of the content elements discussed above.

4. Format: As specified in 42 CFR 424.11, no specific procedures or forms are required for certification and recertification statements. The provider may adopt any method that permits verification. The certification and recertification statements may be entered on forms, notes, or records that the appropriate individual signs, or on a special separate form. Except as provided for delayed certifications, there must be a separate signed statement for each certification or recertification.

5. Default Methodology for Initial Certification: In the absence of specific certification forms or certification statements, CMS and its contractors will look for the following medical record elements in order to meet the initial inpatient certification requirements.

a. The authentication requirement for the practitioner order will be met by the signature or countersignature of the inpatient admission order by the certifying physician.

b. The requirement to certify the reasons that hospital inpatient services are or were medically required will be met either by the diagnosis and plan documented in the inpatient admission assessment or by the inpatient admitting diagnosis and orders.

c. The estimated time requirement will be met by the inpatient admission order written in accordance with the 2‐midnight benchmark, supplemented by the physician notes and discharge planning instructions.

d. The post hospital care plan requirement will be met either by physician notes or by discharge planning instructions.

e. The CAH 96 hour expectation requirement will be met either by physician notes or by actual discharge within 96 hours.

Practitioner Order: A Medicare beneficiary is considered an inpatient of a hospital, including a CAH, if formally admitted as an inpatient pursuant to an order for inpatient admission by a physician or

other qualified practitioner

1. Content: The practitioner order contains the instruction that the beneficiary should be formally admitted for hospital inpatient care. The order must specify admission for inpatient services. Inpatient rehabilitation facilities (IRFs) also must adhere to the admission requirements specified in 42 CFR 412.622, and the 2‐midnight benchmark does not apply in IRFs.

2. Qualifications of the ordering/admitting practitioner: The order must be furnished by a physician or other practitioner (“ordering practitioner”) who is: (a) licensed by the State to admit inpatients to hospitals, (b) granted privileges by the hospital to admit inpatients to that specific facility, and (c) knowledgeable about the patient’s hospital course, medical plan of care, and current condition at the time of admission. The ordering practitioner makes the determination of medical necessity for inpatient care and renders the admission decision. The ordering practitioner may be, but is not required to be, the physician who signs the certification.

At some hospitals, practitioners who lack the authority to admit inpatients under either State laws or hospital by‐laws may nonetheless frequently write the sets of admitting orders that define the initial inpatient care of the patient. In these cases, the ordering practitioner need not separately record the order to admit. Following discussion with and at the direction of the ordering practitioner, the order (including a verbal order) may be documented by an individual who does not possess these qualifications (such as a physician assistant, resident, or registered nurse), as long as that documentation (transcription) of the order is in accordance with State law including scope‐of‐practice laws, hospital policies, and medical staff bylaws, rules, and regulations. In this case, the order must identify the qualified “ordering practitioner”, and must be authenticated by the ordering practitioner (or by another practitioner with the required admitting qualifications) prior to discharge. A transcribed and authenticated order also satisfies the order part of the physician certification as long as the ordering practitioner also meets the requirements for a certifying

Net Revenue Matters - October 2013 - 5 -

article continued on page 8

point of inpatient admission, and other practitioners qualified to admit inpatients and actively treating the beneficiary at the point of the inpatient admission decision. Although a utilization review committee physician may sign the certification on behalf of a non‐physician admitting practitioner, a practitioner functioning in that role does not have direct responsibility for the care of the patient and is therefore not considered to be sufficiently knowledgeable to order the inpatient admission. The order must be written by one of the above practitioners directly involved with the care of the beneficiary, and a utilization committee physician may only write the order to admit if he or she also fulfills one of the direct patient care roles, such as the admitting physician of record.

4. Timing: The order must be furnished at or before the time of the inpatient admission. The order can be written in advance of the formal admission (e.g., for a pre‐scheduled surgery), but the inpatient admission does not occur until formal admission by the hospital. Conversely, in the unusual case in which a patient is formally admitted as an inpatient prior to an order to admit, the inpatient stay should not be considered to commence until the inpatient admission order is documented. Medicare does not permit retroactive orders or the inference of orders. Authentication of the order is required prior to discharge and may be performed and documented as part of the physician certification.

5. Specificity of the Order: The regulations at 42 CFR 412.3 require that, as a condition of payment, an order for inpatient admission must be present in the medical record. The preamble of the FY 2014 IPPS Final Rule at 78 FR 50942 specifies that, “the order must specify the admitting practitioner’s recom‐mendation to admit ‘to inpatient,’ ‘as an inpatient,’ ‘for inpatient services,’ or similar language specify‐ing his or her recommendation for inpatient care.” The purposes of this requirement are to reinforce the policy that the physician should be involved in the determination of patient status and to improve clarity among hospitals, beneficiaries, and ordering practitioners regarding whether the beneficiary is being treated as a hospital inpatient or hospital outpatient.

physician.

Example: “Admit to inpatient v.o. (or t.o.) Dr. Smith” and “Admit to inpatient per Dr. Smith” would be considered acceptable methods of identifying the ordering practitioner and would meet the order requirement if they are appropriately authenticated by Dr. Smith. This method is also acceptable for residents and students who are not licensed or do not have privileges to admit inpatients, and may be used by all residents and fellows working within their GME program. If Dr. Smith meets the qualifications for a certifying physician, then the authentication of this order by Dr. Smith also meets the requirement for the order component of the certification.

Verbal orders: In accordance with 42 CFR 482.24(c), the inpatient order to admit may also be directly communicated to staff as a verbal (not standing) order. A verbal inpatient admission order may be initially documented in the medical record by the staff receiving the order as provided above, including identification of the ordering practitioner. A verbal or telephone inpatient admission order must be authenticated (signed, dated and timed) by the ordering practitioner (or by another practitioner with the required admitting qualifications in his or her own right) in the medical record prior to discharge, unless the hospital or the State requires an earlier timeframe. An authenticated verbal order also satisfies the order part of the physician certification as long as the ordering practitioner also meets the requirements for a certifying physician.

3. Knowledge of the patient: Medicare considers only the following practitioners to have sufficient knowledge about the beneficiary’s hospital course, medical plan of care, and current condition to serve as the ordering practitioner: the admitting physician of record (“attending”) or a physician on call for him or her, primary or covering hospitalists caring for the patient in the hospital, the beneficiary’s primary care practitioner or a physician on call for the primary care practitioner, a surgeon responsible for a major surgical procedure on the beneficiary or a surgeon on call for him or her, emergency or clinic practitioners caring for the beneficiary at the

Your managed care analysis and management team will have the ability to:

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• Implement and monitor productivity standards for both auditors and collection team members;

• Prioritize work queues based on volume; and

• Run focused and summary reports from our robust library with customization capacity.

Net Revenue Matters - October 2013 - 6 -

Solution Highlight

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Client Corner

- 7 - Net Revenue Matters - October 2013

CentraMed’s Newest Revenue Integrity Department Reaches Million Dollar MilestoneCongratulations to Marietta Memorial Hospital for achieving one million dollars in cash and net revenue within their second month!

To celebrate Marietta Memorial Hospital becoming a member of CentraMed’s Million Dollar Club, the RID team’s picture will be placed on CentraMed’s Million Dollar Wall in Carlsbad next to all the other

Revenue Management/Integrity Departments who have achieved this milestone.

Pictured above: (left to right) Tabitha Kinight, Managed Care; Katie Yglesias, Pricer; Diana Chapman, Director; Angie Mendenhall, Charge Capture; Jennifer Dulaney, CDM; Tammy Adams, CCDR. Not Pictured: Karen Oliver, CCDR; Tim Stanley, Pricer; Jackie Lauer, Compliance/RAC Auditor.

This team, which is still filling positions, achieved this goal during their second month. The implemen-tation of the team took place in Marietta Ohio in July 2013.

“Debbie and Patty from CentraMed are more like co-workers and friends than consultants. They have been very flexible with us and visited our site for training because it was a hardship for my brand new staff to travel across the country. That meant so much to us. We look forward to a long and pro-ductive relationship with them. They have been there for us every step of the way. I can’t thank them enough,” said Diana Chapman, RID Director at Marietta Memorial Hospital.

We look forward to continued success for this team under the leadership of Diana Chapman.

We look forward to a long and productive relationship

with [CentraMed]. They have been there for us every step

of the way. I can’t thank them enough.”

Diana Chapman, RID DirectorMarietta Memorial Hospital

What is the Million Dollar Club?This is the program that you’ve been hearing and reading about – the $ Million Dollar (Net Revenue) Club.

Club members are facilities that have achieved a net increase of a million dollars in additional sustain-able net patient revenue – using the CentraMed playbook to develop and grow their internal Revenue (cycle) Management Department (RMD) or Revenue Integrity Department (RID).

Typical returns range from 2% in very high perform-ing facilities to 6% in those facilities that have more untapped opportunities.

Net Revenue Matters - October 2013 - 8 -

Have You Visited the CentraMed Client Portal Lately?There are a variety of resources available to you within the “Clients Only” section of the CentraMed website including Online Education, Help Desk, Database Tutorials, Downloads, Pre-recorded Webinars, Templates and more! To log in, visit: http://www.centramed.co/client-portal/

We hope that you enjoy this added benefit from your partnership with CentraMed. Please contact info@centramed.co if you need assistance or have questions.

continued from page 5 “Rules, Rules, Rules”

The specificity requirements outlined in the FY 2014 IPPS Final Rule are most clearly met by the inclusion of the term “inpatient” in the admission order, as illustrated above. However, in the event that explicit identification of the admission as “inpatient” is not specified, the admission order may still be consis‐tent with 42 CFR 412.3 provided that the intent to admit as an inpatient is clear. Orders that specify admission to an inpatient unit (e.g., “Admit to 7W”, “Admit to ICU”), admission for a service that is typically provided on an inpatient basis (“Admit to Medicine”), or admission under the care of an admitting practitioner (“Admit to Dr. Smith”), and orders that do not specify beyond the word “Admit,” will be considered to specify admission to an inpatient status provided that this interpreta‐tion is consistent with the remainder of the medical record.

Treatment of such admission orders as properly inpatient is consistent with CMS’ historical interpre‐tation of inpatient admission orders and hospitals’ historical standards of practice. However, if the usage of the order to specify inpatient or outpa‐tient status is ambiguous, the hospital is encour‐aged to obtain and document clarification from the physician before initial Medicare billing (ideally before the beneficiary is discharged). Under this policy, CMS will continue to treat orders that specify a typically outpatient or other limited service (e.g., admit “to ER,” “to Observation,” “to Recovery,” “to Outpatient Surgery,” “to Day Surgery,” or “to Short Stay Surgery”) as defining a non‐inpatient service, and such orders will not be treated as meeting the inpatient admission requirements.

Annual HCPCS updates reminder effective January 2014 can be found at: Medicare contractors shall download the 2014 annual HCPCS update from the CMS mainframe. The update will be available after 8:00 p.m. Eastern time, on October 30, 2013. The filename is as follows: P@HCP.@AAA2360.HCPC2014.CONTR

NOTE: The new HCPCS update is effective for dates of service on or after January 1, 2014. For more information visit:

http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R2791CP.pdf

Net Revenue Matters is a monthly publication of CentraMed and is offered as an informational service. Due to the nature of this publication, examples cited and advice given must often be general in nature and may not apply to a particular facility or situation. Thus, CentraMed does not warrant or guarantee that the information contained witihin will be applicable or appropriate in all situations. Each facility will need to evaluate its specific opportunities and take such action as to best meet its business needs. To find out more about a given subject or for information tailored to your specific circumstances, contact a CentraMed professional.

If you have questions or would like to submit information for a future newsletter, please contact:Nicole Koenig • 760‐448‐1033 • nkoenig@centramed.co

$1,243,548,013 and Growing...CentraMed continues to increase retained earnings for client hospitals and have passed one billion dollars in retained earnings associated with account audits and process improvement initiatives.

While cash contribution is very important, the understanding that revenue integrity is everyone’s responsibility is even more critical for long-term gains. The dialogue between administrative and clinical departments has forever modified the tradi-tional silo approach to work. Replacing that legacy thinking is an open exchange of ideas that almost always leads to improved financial performance.