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Visit Charges and Compliant Billing

Consequences for incorrect billing compliance

1. Denied claims
2. Delays in processing claims & receiving payments
3. Reduced payments
4. Fines & other sanctions
5. Loss of hospital privileges
6. Exclusion from payers' programs
7. prison sentence
8. Loss of physician's license

Code Linkage

connection between a billed service and a diagnosis or patient's condition or illness

Billing Rules

stated in patients' medical insurance policies and in participation contracts.

Centers for Medicare and Medicad Services (CMS)

make the rules about billing

Federal Register and Medicare Carriers Manual and Coverage Issues Manual

publications that contain rules about Medicare and Medicaid Billing

Correct Coding Inniative (CCI)

computerized medicare system that prevents overpayment; controls improper coding that would lead to inappropriate payment for Medicare claims

CCI is based on

- Coding conventions in CPT
- Medicare's national and local coverage & payment policies
- National medical societies' coding guidelines
- Medicare's analysis of standard medical & surgical practice

CCI is upated when

every quarter

CCI contains

many thousands of CPT code combinations

CCI edits

computerized system that identifies improper or incorrect CPT code combinations; available on a CMS website.

CCI edits

apply to MEDICARE claims that bill for more than one procedure performed on the same patient; on the same date of service; by the same performing provider.

CCI edits (correct coding innitiative edits)

- test for unbundling
- prevents billing 2 procedures that could not have been performed together
- requires physicians to report only the more extensive of the procedure performed & disallows reporting of both extensive & limited procedures.

Types of CCI Edits (checks)

- Column 1 / Column 2 code pair edits
- Mutually exclusive code edits
- Modifier indicators

CCI Column 1 / column 2 code pair edit

Medicare code edit where CPT codes in column 2 will not be paid if reported in the same way as the column 1 code

CCI mutually exclusive code (MEC) edit

both services represented by MEC codes that could not have been done during one encounter; Medicare only pays lower-paid code.

CCI Modifier Indicators

Number showing if the use of a modifier can bypass a CCI edit

CCI Modifier indicators

control modifier use to "brea" or avoid CCI edits
- appear next to 1/column 2 code pair list and mutually exclusive code list

CCI Modifier Indicator of 1

means that a CPT modifier MAY be used to bypass an edit

CCI Modifier Indicator of 0

means that use of a CPT modifier will not change the edit.

Medically Unlikely Edits (MUE's)

units of service edits used to lower the Medicare fee-for-service paid claims error rate; They also correct coding mistakes.....


Unit of Service edits CMS uses; also called MUE's Medically Unlikely Edits


related to a specific CPT or HCPCS code and applies to the services that a single provider provides for a single patient on the same date of service.

MUE's correct coding mistakes based on

anatomic consideration
CPT/HCPCS code descriptors
CPT coding instructions
Medicare policies, or unlikely services

OIG Work Plan

OIG's annual list of planned projects

Advisory Opinion

Opinion issued by CMS or OIG that becomes legal advice
(issued when regulations seem contradictory or unclear)

Excluded Parties

Individuals or companies not permitted to participate in federal health care programs


Office of Inspector General... issues other government billing regulations... publishes annually

OIG Website has

Legal advice regarding regulations
Audit reports
List of Excluded Individuals/Entities (lists providers found guilty of fraud or abuse)

Claims are rejected or downcoded because of:

- Medical Necessity errors
- Coding error
- Errors related to billing

Truncated Coding

diagnoses not coded at the highest level of specificity

Assumption Coding

Reporting undocumented services the coder assumes have been provided due to the nature of the case or condition


use of a procedure code that provides a higher payment


payer's review and reduction of a procedure code

Major strategies to ensure compliant billing:

* Carefully define bundled codes & know global periods
* Benchmark the practice's E/M codes with national avg's
*Keep up to date thru ongoing coding/billing education
* Be clear on professional courtesy & discounts to uninsured/ low-income patients
* Maintain compliant job reference aids and documentation templates
* Audit the billing process

Professional Courtesy

providing free services to other physicians

Job reference aid

list of a practice's frequently reported procedures and diagnoses

Computer-assisted coding (CAC)

allows a software program to assist in assigning codes

Documentation template

form used to prompt a physician to document a complete review of systems (ROS) and a treatment's medical necessity

Monitoring the coding and billing process is done to:

ensure adherence to established policies and procedures

An important compliance activity involves audits

- An audit is a formal examination or review
- REcovery Audit Contractor (RAC) - program designed to audit Medicare claims

Audit -External Audit

audit conducted by an outside organization

Audit -Internal Audit

self-audit conducted by a staff member or consultant

Audit -Prospective audit

internal audit of claims conducted before transmission

Audit - Retrospective audit

internal audit conducted after claims are processed and RA's have been received

Physician Fees

Physicians set their fee schedules in relation to the fees that other providers charge for similar services

Charge / Fee -Usual Fee

normal fee charged by a provider

Charge / Fee - Payers Fee Schedules

methods used to establish the rates paid to providers (two main methods)

Charge / Fee - Charge based fee structure

fees based on typically charged amounts

Charge / Fee -Resource based fee structure

fee structures built by comparing three factors:
1. how difficult it is for the provider to do the procedure
2. How much office overhead is involved in procedure
3. The relative risk that the procedure presents to the patient and to the doctor

Payers using charge-based fee structure analyze charges using one of 2 national databases:

(USR) or (RVS)

Charges CBFSDB
USR = Usual, Customary, Reasonable database.

Nat'l database used to set fees by comparing usual, customary & reasonable fees

Charges CBFSDB
RVS = Relative Value Scale database

Nat'l database used to determine fees by assigning unit values to medical services based on their required skill and time

Charges CBFSD
Releative Vaue Unit (RVU)

a factor assigned to a medical service based on the relative skill and required time for a service or procedure

Charges CBFSD
Conversion Factor

Amount used to multiply a relative value unit to arrive at a charge

Charges -Resource-based relative value scale (RBRVS)

relative value scale for establishing Medicare charges

Charges -Geographic practice cost index (GPCI)

Medicare factor used to adjust providers' fees in a particular geographic area

Charges -Parts of the RBRVS

1. RVU's - based on physician's work, overhead cost & cost of malpractice insurance
2. GPCI - raises or lowers cost based on city's cost of living
3. Uniform Conversion Factor

All Parts of RBRVS are updated

annually by CMS

Steps used to calculate the RBRVS payments under the MPFS:

1. Determine procedure code for service
2. Use MPFS to find three RVU's- work, practice expense, and malpractice - for the procedure
3. Use the Medicare GPCI list to find the 3 geographic practice cost indices
4. Multiply each RVU by its GPCI to calculate the adjusted value
5. Add the 3 adjusted totals, and multiply the sum by the annual conversion factor to determine the payment

Fee Based payment Methods by Payers

1. Allowed Charges
2. Contracted Fee schedule
3. Capitation

Allowed Charge

maximum charge a plan pays for a service or procedure

Capitation Rate (or cap Rate)

the periodic prepayment to a provider for specified services to each plan member
- Health plan sets a capitation rate that pays for all contracted services to enrolled members for a given period

Provider Withhold

Amount withheld from a provider's payment by an MCO

Balance Billing

Collecting the difference between a provider's usual fee and a payer's lower allowed charge

Write off

to deduct an amount from a patient's account

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