Annual Charge Master Update

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1 Annual Charge Master Update Best Practices to Start Off the New Year Right Jon Menard, CPC, COC, CRCR Consulting Manager The ROI Companies

2 Agenda Charge Description Master (CDM) Management structure & responsibilities Keys to success Handling annual code updates CDM Risks Charge Capture Identifying charge capture opportunities Ensuring accurate charges Charge capture risks Connecting CDM and charge capture 2

3 Charge Description Master (CDM) What is it? Essentially, a comprehensive list of procedures, supplies, devices, drugs, and other items for which a distinct patient charge exists. May also include statistical tracking line items, payment and adjustment codes, other data Master file is maintained within the hospital information system(s) and is interfaced with other applications to support the charging of items and services 3

4 Charge Description Master (CDM) Some describe the CDM as the life blood of the revenue cycle, or the backbone or central revenue cycle mechanism Whatever the term used to describe it, the CDM is fundamental to revenue generation and the charge capture process Maintenance of the CDM is critical to the financial success of any institution 4

5 Management Structure Who is responsible for the CDM? CDM management varies greatly depending on the size of the facility and organizational structure Examples: Large health system CDM Manager, team of CDM analysts Mid-sized hospital CDM Coordinator Small facilities Responsibility of PFS director, along with EVERYTHING ELSE? 5

6 Keys to CDM Success Regardless of where the responsibility ultimately lies, the first key to CDM success is OWNERSHIP Do the person/people responsible for the CDM own the file? Or is CDM management a secondary task/responsibility that is done on the side or when there is time? Change is constant. Attention is required for annual & semiannual CPT changes, quarterly HCPCS changes, new services, obsolete services, regulatory & third party payer requirements. Not keeping up with changes for even a short period of time can lead to compounding issues within the CDM file. 6

7 Keys to CDM Success The second key to CDM success is COLLABORATION The CDM contains elements that are both financial and clinical in nature. Finance cannot maintain the file without the assistance of clinical departments, and vice versa. Example: Complicated changes to lab drug screen codes for 2015 and Are clinical department heads aware of what is in their CDM file? Do they continuously work with finance to manage it? Are departments held accountable for their charges? 7

8 Other Parties Involved Many other areas outside of clinical departments are greatly impacted by the CDM, including: Business office/pfs HIM IT Compliance Finance Do all of these areas have a direct line of communication with the owner of the CDM? Do they understand their relationship with the CDM? 8

9 Annual Coding Updates Every year the American Medical Association (AMA) and Centers for Medicare and Medicaid Services (CMS) delete, revise and introduce new CPT and HCPCS codes. Number of changes varies from year to year, but often close to 1,000 total changes annually (1,269 for 2017!) What is the process for handling annual changes? Is there a well-defined process, or do you just cross your fingers and hope for the best? 9

10 Annual Coding Updates Are changes being implemented on time? Changes that are not ready by the first of the year can lead to major problems with denials and claims being held in scrubbers 10

11 Who is Responsible for Annual CDM Updates? Finance HIM PFS Clinical Depts. IT 11

12 Keys to Handling Annual Updates Be proactive! Do not wait until the last minute Preparation can start MONTHS before the year ends Use available resources Seek out as much data as possible regarding the changes Provide as many educational resources as you can Work as a team, and hold people accountable Work closely and communicate well between all parties involved Set expectations and monitor progress 12

13 Be Proactive! Preparation for annual coding changes can begin as soon as data becomes available CPT codes are released by the AMA the first week of September HCPCS codes are released by CMS within the first two weeks of November CPT Editorial Panel has meetings throughout the year where future updates are decided upon Specialty groups begin planning for possible changes as soon as they are proposed 13

14 Use Available Resources CPT data file can be purchased from the AMA as soon as it is released CPT manuals are available each October HCPCS data file may be accessed for FREE from the CMS website HCPCS manuals are available each December Specialty groups share proposed and final coding updates and have very early access to information Clinical departments should sign up for updates from their respective organizations (ACR, ASTRO, APTA, etc.) 14

15 Use Available Resources Other organizations also provide educational resources Coding organizations (AAPC, AHIMA) Consultants Software vendors Webinars Seminars 15

16 Teamwork and Accountability Finance does not understand the complex clinical nature of every service being rendered Clinical departments do not understand all of the nuances of coding, billing, reimbursement, etc. Both areas need to work together, in conjunction with IT, in order to ensure that changes are properly implemented 16

17 Teamwork and Accountability Establish plans, goals and timelines Check for progress along the way Hold parties accountable for results Examine final results, and tweak where necessary to make improvements to the process Document the process in CDM Management Policy 17

18 It s Not All About January What about the constant barrage of changes that are needed in the CDM throughout the rest of the year, outside of the annual code changes? New services Obsolete services Changing regulatory and payer requirements System changes Is there a policy for charge master additions, deletions, revisions? Is it followed? 18

19 CDM Revision Policy There should be a standardized form for additions, revisions, deletions Paper? Electronic? Created by IT - requestor notified Requested by dept Completed by individual requesting the charge Reviewed by Compliance, if necessary Reviewed by CDM coordinator Has fields for dept, charge description, CPT/HCPCS code, price, etc. Approved by Finance Fields are completed and reviewed by appropriate parties (CDM coordinator, finance, compliance, IT) What is the approval process/turnaround time? Does someone follow the new charge through to third party remittance when first established? 19

20 CDM Risks Charging for wrong items/services Not charging for items/services Reporting incorrect number of units Denials or claims rejections many reasons Fines or penalties Automation a single error may be duplicated hundreds or thousands of times before being identified 20

21 Basic Risk Areas and How to Avoid Them Simple, everyday charge master maintenance tasks, if done incorrectly, can lead to major risks On the following slides, we will discuss some common risk areas and how to avoid them 21

22 Charge Descriptions Accurate charge descriptions are important Often limited by space constraints Descriptions should match the definition of the corresponding CPT/HCPCS code assigned in the CDM Slight inaccuracies or vagueness can lead to incorrect charges being reported, which may lead to dramatic differences in reimbursement 22

23 Charge Descriptions Example: Charge in CDM is described as Closed tx humeral shaft fx Sounds fine, right? 23

24 Charge Descriptions Two CPT codes exist for reporting closed treatment of humeral shaft fractures Closed treatment of humeral shaft fracture; without manipulation Current Medicare APC reimbursement = $ Closed treatment of humeral shaft fracture; with manipulation, with or without skeletal traction Current Medicare OPPS reimbursement = $1, Which procedure was performed? 24

25 Charge Descriptions A better charge description would be: Closed tx humeral shaft fx w/manip Or Closed tx humeral shaft fx w/o manip Are both charges needed? This is just one of thousands of different examples of the importance of accurate charge descriptions 25

26 Other Description Considerations Standardized descriptions Verbiage that appropriately describes items/services and is understood by all that use the charge (e.g., specimen source, number of views, unit of measure, etc.) Abbreviations make sure they are clear Example: Diphenhydramine 1 ml SYR Does this mean syrup? Syringe? Each would be billed very differently (injectable drug versus self-administered drug) Timed codes Biller per hour? Per 15 minutes? Does description specify? 26

27 Revenue Codes Four digit numeric codes established by the National Uniform Billing Committee (NUBC) that categorize/classify line items in the CDM Example: 0420 Physical Therapy, 0301 Lab Chemistry, 0250 Pharmacy How do you choose revenue code assignments? 27

28 Revenue Codes From CMS (Medicare Claims Processing Manual, Chapter 4, Section 20.5): Where explicit instructions are not provided, providers 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 the cost report. 28

29 Why are Revenue Codes Important? Cost reporting Revenue codes are cross walked to certain cost centers on the cost report Claim edits Some HCPCS codes must be reported with specific revenue codes in order to get paid by certain payers (e.g., Medicare requires revenue code 0770 for some preventive services) Reimbursement Some commercial payers base payment on revenue code assignment rather than CPT/HCPCS codes (fee schedule, case rate, per diem?) 29

30 Modifiers Two digit alpha or numeric character that can be appended to a particular CPT or HCPCS code to provide additional information about that code Modifiers may be hard coded in the CDM or can be soft coded by HIM or other staff Who should assign modifiers? HIM? Departmental staff? Billers? Some modifiers can safely be coded in the CDM. Examples: Laterality (LT, RT, 50) Informational (GP, GO, GN) Payer required (GY) 30

31 Modifiers Other modifiers can be very risky to have hard-coded in the CDM and are not recommended. Examples: Separate and distinct services (25, 59, or L1 for labs) Repeat lab tests (91) Discontinued procedures (73, 74) These modifiers describe clinical situations and require a certain expertise when determining when it is appropriate to assign These modifiers may circumvent NCCI edits, or impact reimbursement amounts 31

32 Modifiers Have a set policy in place documenting which modifiers are included in the CDM and which are not Ensure that staff adding modifiers understand the significance of the modifiers and requirements for their use Only hard-code modifiers when the situation they are describing is true 100% of the time 32

33 Pharmacy Major risk area in CDM due to constant changes HCPCS codes: Who assigns? Many times Pharmacy manages their own CDM. When new drugs are added to formulary, are HCPCS codes always looked up? Many drugs have specific HCPCS codes, many of which are separately reimbursed by Medicare or other payers No HCPCS code = no reimbursement Drug may not have HCPCS code when first introduced who monitors updates? 33

34 Pharmacy Drug Units Drugs are billed in units defined by HCPCS descriptions Example: J1741 injection, ibuprofen, 100 mg 500 mg vial would be billed as 5 units of J1741 Traditionally, administered drugs have been converted to billable units via drug unit multipliers, either housed in the CDM or in the formulary. This has always been a major risk area if incorrect multipliers are assigned, or if multipliers are not updated with code changes. 34

35 JW Modifier Reporting of drug units is being dramatically changed with CMS now mandating that drug waste be reported on a separate line with JW modifier appended (effective 1/1/17) For single dose vials, units representing the amount of drug actually administered to the patient are reported on one line Units representing any amount of drug discarded/wasted are reported on a separate line with modifier JW appended 35

36 JW Modifier Considerations Multipliers must be addressed current setup will no longer work and represents a compliance risk Documentation it is critical that documentation supports what is being reported, including documentation of the amount of drug being wasted Vial sizes CMS expects that drugs are to be administered in the most efficient manner possible Ensure that the most appropriate vial sizes are being used to minimize wastage Significant audit risk 36

37 Pharmacy Self-Administered Drugs Self administered drugs not covered by Medicare Part B How are these identified in the CDM? If assigned to revenue code 250, may be getting billed to Medicare masked as a covered drug compliance issue Should be assigned to revenue code 637 (some hospitals use 259) Mechanism should be in place to either bill to Medicare Part B as non-covered, or to not bill to Medicare at all 37

38 Supplies Does person creating charges for supplies understand the definition of billable patient supplies? 1. Medically necessary and furnished at the direction of a physician or other practitioner Does not include personal convenience items such as slippers, personal care items, or routine items such as drapes, pads, cotton balls, urinals, bed pans, gauze, etc. 2. Single use/disposable Cannot charge for reusable supplies 3. Patient identifiable Medical record must support and document the use of the item Is there a policy for charging for supplies? 38

39 Pricing Is there a standard methodology that is used consistently? Do prices for the same services vary from department to department? Differences in prices would need to be justified Are prices reviewed against payer fee schedules? Charges priced too low can result in less than optimal reimbursement Charges priced too high may be challenged by some payers Annual price increases? Be mindful of current trends in hospital pricing. Price transparency, defensible pricing, etc. 39

40 Obsolete Items Departments should regularly review their charges and should inactivate charges that are no longer needed Keeping obsolete items in the CDM: 1. Leaves the possibility open for incorrect charges to be selected 2. Makes the CDM larger, more cluttered, and more difficult to analyze Review all items with no volume for at least months and consider for inactivation 40

41 Charge Master Reviews Best practice complete review every 1-2 years Involve clinical departments! Share findings Review processes and procedures It is more than just confirming valid CPT/HCPCS codes Volume analysis, identification of missing charges, pricing, etc. Don t forget to implement changes! A comprehensive CDM review sitting on the shelf collecting dust helps nothing! 41

42 Does a Clean CDM Guarantee Revenue Maximization and Risk Reduction? NO! 42

43 CDM is One Major Piece of the Puzzle The CDM is a major component of the middle revenue cycle and its importance cannot be understated However, the positives of a clean CDM can be negated due to poor charge capture A charge may be perfectly represented in the CDM file, but. If it isn t captured, it isn t paid! 43

44 What is Charge Capture Ensuring that each patient encounter is charged completely and compliantly for all services, supplies, and pharmaceuticals used Very complex process Multiple types of patient encounters Many different departments and locations Unique coverage and billing requirements Variety of information systems 44

45 Who Captures Charges During a single patient encounter, many different hospital departments and associated personnel contribute to providing and charging for services and supplies Do all parties understand the complexities of charge capture? Nurses? Ancillary staff? Coders? Billers? One major reason for charge capture failures is that many personnel are not properly trained or provided with the necessary resources 45

46 Charge Capture Risks Missing charges Not charging for all items/services being delivered Incorrect charges Charging for items/services that were not the actual items/service being delivered Late charges Delays in posting charges leading to held claims, rebills, writeoffs Reduced productivity Spending far too much time fixing charging issues on the back end (when these issues do occur, be sure to go back to the source of the error!) 46

47 Methods of Charge Capture Order entry (ordered/resulted) Upon EHR documentation Manual entry by specified staff (and backup person if staff is out?) HIM/coding (are there backlogs/delays?) Patient accounts? (hopefully not!) 47

48 What Methods are Used at Your Facility? Does each clinical department head have a complete understanding of how they are charging for what is being done in their areas? What is the worst response that we often here when we ask a clinical department head how do you charge for? I DON T KNOW How can you be sure that you are getting paid for everything that you are doing if you don t even know how you are charging for it? 48

49 Are You Charging for Everything You Can? Interview departmental staff to determine all services that are being performed Confirm that all chargeable items/services are identified in the CDM Review code ranges in CPT book Review new CPT codes Chart reviews/audits may identify services being performed that aren t being captured 49

50 Identifying Charge Capture Errors Daily charge reconciliation Confirm that appropriate charges are being posted to every account Revenue and usage reports Look for trends that might identify issues Late charge reports Excessive late charges due to charge capture breakdowns Chart reviews Identify deficiencies that might otherwise go unnoticed 50

51 Connecting the CDM to Charge Capture Regardless of how charges are being captured - where are the charges coming from? How are charge capture methods in clinical areas linked to the CDM? Electronic procedure menus interfaced with CDM? Charge sheets? 51

52 Connecting the CDM to Charge Capture Do items/services being described in various charge capture methods link to matching items in the CDM? Verify that a 1:1 relationship exists between items on charge sheets and the CDM Charge sheets get outdated! Is there a process for regular review? Revision date should be included on document. Review of mapping is just as important as review of the CDM or charge capture processes 52

53 Ensuring Accurate Charge Capture Provide departments with the education and tools that they need to manage their charges Written policies and procedures Training regarding billing rules and guidelines Paper or electronic resources (e.g., CPT books, online reference sites, CDM management tools) CDM resource information coordinator Require daily charge reconciliation Perform regular audits Compare physician orders, to chart documentation, to itemized charges, to claim form identify deficiencies or missing charges 53

54 Conclusion Clean and complete CDM and accurate charge capture are critical to the financial success of any hospital Cannot be a secondary responsibility, but rather must be an area of focused effort and attention Requires the right people with the right knowledge and the necessary resources needed to get the job done right There is more than one piece to the Middle-Revenue Integrity puzzle. Breakdowns in any area can lead to risks. One size does not fit all every facility is different. Each hospital needs to develop processes that work depending on the size, the resources, and the people at your facility. 54

55 Questions Jon Menard Consulting Manager The ROI Companies 55

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