Navigating Coding & Billing Compliance in Outpatient Departments

1. WVHFMA Fall Revenue Cycle November 27, 2012 Navigating Coding & Billing Compliance in Outpatient Departments Jill Newberry, CPA, CPC Arnett Foster Toothman, PLLC

2. OPPS Coding and Billing Hot Topics • 2013 Proposed OPPS Rule • October, 2012 APC Charge Edit • Physician Supervision • Coding for Clinic and ED Facility E&M Services • Emergency Department Services • EHR Dangers for E&M Professional Codes • Observation Services • Injections & Infusions • Wound Care

3. What is a HOT Topic and Why is it Hot? • Something that puts the institution at risk • Regulatory risk • Financial risk • Recent audit activity, increased regulatory review • Recovery Audit Contractors (RAC) • Office of Inspector General (OIG)

4. Background • Billing and coding compliance is dynamic with constant changes to regulations and interpretations and/or "clarifications" of long standing rules • Individual organizations will experience different hot topics based on service lines, internal systems and controls and methods of communication involved in generating a “clean claim” • Not intended to be an all inclusive list of hot topics (i.e. high risk) billing and coding issues

5. How Do Billing and Coding Issues Become Hot Topics? • New requirement • New interpretation of long standing practice or policy • Requires coordination -> 1 group involved • Issue under investigation or review by external agencies ex: OIG, RAC etc

6. 2013 OPPS Final Rule • Approximately half the size of the 2012 rule • Proposing two major changes: • CMS proposes to change the way it calculates APC relative weights • Has used median cost data since inception to create APC weights • Suggesting using the geometric mean cost to create APC weights • CMS released a file so hospitals can look at impact • 2013 Geometric Mean Median Change (different view of addendum B

7. 2013 OPPS Final Rule • Proposing two major changes (Cont): • Separately payable drugs • CMS Proposes to reimburse hospitals for separately payable drugs and biologicals without pass-through status at average sales price (ASP) plus 6%, a 2% increase from 2012. • No policy changes • No additional composite APCs • No changes to drug administration Hospitals should take a note of the payment rate shifts due to proposed new process for weighting of APC’s

8. October 1, 2012 APC Edit • Transmittal 2463, May 4, 2012 • SUMMARY OF CHANGES: Effective for claims received on or after October 1, 2012, contractors shall verify claims with OPPS Payments that meet a reimbursement amount greater than submitted charges. • Background: The U.S. Department of Health and Human Services (HHS), Office of Inspector General (OIG), recently issued several final audit reports regarding the “Review of Medicare Payments Exceeding Charges for Outpatient Services Processed” to various A/B Medicare Administrative Contractors (A/B MACs). • Audit findings in these reports include: providers reporting incorrect units of service and/ or incorrect HCPCS codes, or use of HCPCS codes that do not reflect the procedures performed. • Based on findings in these reports, the Center for Medicare & Medicaid Services (CMS) is implementing a verification policy when the Outpatient Prospective Payment System (OPPS) payment is greater than the billed charges.

9. October 1, 2012 APC Edit • Policy: When the OPPS reimbursement is greater than the claim charges, verification will be needed to ensure that a billing error has not caused this situation. • Effective for claims received on or after October 1, 2012, FISS shall install a verification edit for claims with OPPS Payments that meet a reimbursement amount greater than submitted charges. The edit shall be applied to the following providers and bill types: • Provider Type Types of Bills • Hospitals 12X, 13X, 14X • Contractors shall suspend those claims receiving the verification edit for development and contact providers to resolve billing errors. If the contractor determines that the reimbursement is excessive and claim corrections are required, the contractor shall return the claim to the provider. If the contractor determines that the billing is accurate and the reimbursement is not excessive, the contractor shall override the FISS edit and submit the claim to the Common Working File (CWF).

10. Physician Supervision - Review • Many hospital outpatient therapeutic services are covered under the “incident to a physician’s service” provision of the SSA. Physician “incident to” provisions are contained at SSA §1861 (a)(2)(A) • “This provision does not apply to services covered under other benefit categories.” 72 Fed. Reg. 66580, 66818 (November 27, 2007) • Supervision “assumed” for on-campus hospital departments per CMS language in the April 2000 OPPS final rule • CMS issued a “restatement and clarification” in the 2009 OPPS final rule that its always expected “direct supervision” for incident-to outpatient therapeutic services in both on- and off- campus departments • Providers raised concerns regarding the CMS “clarification” during 2009 and 2010 • CMS will not withdraw what it considers longstanding physician supervision policies for hospital outpatient services, but has acknowledged that there has been some confusion prior to January 1, 2009 • CMS finalized physician supervision requirements for 2010 but in March 2010, agreed to non-enforcement for CAHs.

11. 2011 Physician Supervision - Review • CAHs and rural hospitals commented that the direct supervision requirements conflicted with CAHs CoPs • CMS argued there is a difference between CoPs and payment policy • However – CMS then announced that physician supervision requirements would not be enforced for CAHs and also for small rural hospitals with less than 100 beds in CY 2011 & also 2012 • CMS continues to emphasize need for consistent quality and safety for outpatient services provided all facilities • CMS likely to revise supervision rules for all facilities to include CAHs and small rural hospitals

12. 2011 Physician Supervision - Review • CMS designated 16 services as “non-surgical extended duration services” where direct supervision is required for the initiation of the service followed by minimum standard of general supervision for the duration of the service • CMS revised the definition of direct supervision by removing all references to “on the same campus” or “in the off-campus provider-based department of the hospital” or “in the hospital or CAH” • By removing specific boundaries, CMS provided “flexibility” while holding the facility and practitioner accountable for determining how to be physically and immediately available when supervising services provided “incident to” a physician’s service in the outpatient setting • The new definition applies equally in the hospital or in an outpatient department of the hospital both on-and off- campus • The new definition of direct supervision simply requires immediate availability which means physically present, interruptible, and able to furnish assistance and direction throughout the performance of the procedure

13. 2011 Physician Supervision - Review • Supervisory practitioner must be immediately available to furnish assistance and direction throughout the procedure • Temporal requirement, no specific physical boundary requirement • Supervisory practitioner cannot be so physically distant that he/she could not intervene right away • Supervisory practitioner cannot be performing another procedure or service that he/she could not interrupt • Supervisory practitioner must have within his/her State scope of practice and hospital granted privileges the knowledge, skills, ability, and privileges to perform the service • Supervisory practitioner must be clinically able to furnish the service himself/herself • Supervisory responsibility is more than the capacity to respond to an emergency and includes the ability to take over the performance of the procedure or provide additional orders

14. 2011 Physician Supervision - Review • Supervision may be performed by a physician or by a certain non-physician practitioner (clinical psychologist, licensed clinical social worker, physician assistant, nurse practitioner, clinical nurse specialist, or certified nurse midwife) • Hospital should have in place credentialing procedures, bylaws and other policies to ensure that outpatient services furnished to beneficiaries are provided only by qualified practitioners • For therapeutic services furnished under arrangement outside the hospital to patients, CMS expects that the services are being supervised appropriately

15. 2011 Physician Supervision - Review • Direct supervision – immediately available to furnish assistance and direction throughout the procedure. Does not mean in the room; but CMS makes it clear must be physically present. Available thru phone does not meet the requirement. In a clinic within close proximity, is considered to be immediately available. • General supervision – services are furnished under the overall direction and control of the physician but his presence is not required during the procedure. • Personal supervision – physician is present in the room when procedure is performed.

16. 2012 Physician Supervision • During the 2012 OPPS rulemaking cycle, CMS finalized plans to augment the scope and membership of the APC Advisory Panel to include supervision levels and members of rural and CAH providers, respectively • Evaluation Criteria: • Complexity of the service; • Acuity of the patients receiving the service; • Probability of unexpected or adverse patient event; • Expectation of rapid clinical changes during the therapeutic service or procedure; and • Recent changes in technology or practice patterns that affect a procedure’s safety. • CMS will prioritize requests based on: • service volume, • total expenditures for the service, and • frequency of requests. • Priority to services that the public has requested for evaluation in the CY 2010 through CY 2012 OPPS/ASC rules & to services not previously been evaluated by the Panel. • Baseline supervision level is direct & requests require justification for change in supervision level, supported with clinical evidence and at the CPT/HCPCS code level.

17. 2013 Physician Supervision – Proposed Rule • Enforcement Instruction for the Supervision of Outpatient Therapeutic Services in CAHs and Small Rural Hospitals: • In this proposed rule, we are requesting that CAHs and small rural hospitals submit to CMS for potential evaluation by the Panel at the summer meeting any services for which they anticipate difficulty complying with the direct supervision standard in CY 2013. • In developing evaluation requests, hospitals should refer to the evaluation criteria that we finalized in the CY 2012 OPPS/ASC final rule with comment period. • We recognize that hospitals have had little experience in submitting evaluation requests to CMS for consideration by the Panel. • In order to give hospitals additional opportunity this year to become familiar with the submission and review process at the summer Panel meeting, and to allow hospitals time to meet the required supervision levels for services that may be considered for CY 2013, we anticipate extending the non-enforcement instruction one additional year through CY 2013. • We expect that this will be the final year for the instruction, regardless of the services reviewed by the Panel during its summer meeting.

18. 2013 Physician Supervision – Sept 24 Preliminary Decisions on Recommendations • Hospital OP Payment Panel meeting August 27-28, 2012 • Decisions are preliminary and were open to public comment through October 24, 2012 • Final decisions will be posted after considering any comments and those decisions will be effective on January 1, 2013 • Panel recommended change from direct supervision to general supervision for the following services: • G0008 – flu • G0009 – pneumoncoccal vaccine • G0010 – Hepatitis B vaccine • G0127 – Trimming of dystrophic nails • 11719 – Timming of nondystrophic nails • 36000 – Introduction of needle or intracatheter, vein • 36591 – Collection of blood specimen from a completely implantable venous access device • 36592 – Collection of blood specimen using established central or peripheral cathether, venous • 51072 – Insertion of temporary indwelling bladder catheter; simple • 51705 – Change of cystostomy tube; simple • 51798 – Measurement of post-voiding residual urine and/or bladder capacity by ultrasound, non-imaging

19. 2013 Physician Supervision – Sept 24 Preliminary Decisions on Recommendations • Panel recommended change from direct supervision to general supervision for the following services (Cont): • 96360 – IV infusion, hydration; initial • 96361 – IV infusion, hydration; each additional hour • 96561 – Refilling and maintenance of portable pump • 96523 – Irrigation of implanted venous access device for drug delivery systems • G0379 – Direct Admit for hospital observation care • The following codes remain “extended duration” meaning general after the initiation of service under direct supervision: • G0378 Hospital observation services per hour • G9141 – Infuenza A • 29580 – Strapping, unna boot • 29581 – Application of multi-layer compression system, leg (below knee) • 96365 – 96368 – IV infusion, therapy codes • 96372 – 96376 – Therapeutic or diagnostic injections

20. Physician Supervision – CMS - FAQs FAQ #5 – Can an emergency department physician or NPP directly supervise therapeutic outpatient services while in the emergency department? • “In most cases the emergency physician or NPP can directly supervise outpatient services so long as the emergency physician in the ED of the campus is immediately available, meaning that, if needed, he or she could reasonably be interrupted to furnish assistance and direction in the delivery of therapeutic services provided elsewhere in the hospital…We believe that most emergency physicians can appropriately supervise many services within the scope of their knowledge, skills, licensure, and hospital-granted privileges…”

21. Physician Supervision – CMS - FAQs FAQ #6 – Does a physician need to directly supervise therapeutic services delivered to hospital outpatients or can other NPPs directly supervise as well? • “Beginning in CY2010, NPPs, including nurse practitioners, physician assistants, clinical nurse specialists, certified nurse-midwives, and licensed clinical social workers may directly supervise the provision of all hospital therapeutic services that they may perform themselves within their state scope of practice and hospital-granted privileges, provided that they continue to meet all the requirements for directly providing services, including any collaboration or supervision requirements…”

22. Physician Supervision – Enforcement If you are audited by any government agency who is questioning physician supervision at your hospital, the first step is to figure out what period is under review in order to determine what the rule was at the time! Be sure to get policies in place for provider based locations as well as any other departments where you perform these services.

23. Coding for Clinic and ED facility E&M Services • Technical Component Coding – Hospital level of care provided. Hospital must have a policy for determining level of care. • Time • Staff intervention • Point system • Professional Component Coding – Based on E&M rules • History • Exam • Medical Decision Making • Both technical and professional coding should be monitored by reviewing frequency and distribution of codes.

24. Emergency Department Facility E&M Determination • Five levels – CPT 99281 – 99285 • Critical care – CPT 99291 – code also any procedures performed • Third party payers may not pay additional ½ hours of critical care on the facility side • All procedures performed by physicians and ancillary staff must be coded • Review nursing notes for procedures performed

25. Clinic Departments Facility E&M Determination • New Patient CPT 99201 – 99205 • Established Patient – CPT 99211 – 99215 • All procedures performed by physicians and ancillary staff must be coded – ancillary staff services determine facility level E&M • Review nursing notes for procedures and E&M services performed

26. Coding for Clinic and ED facility E&M Services • Evaluation and Management (E&M) services are coded on the technical (hospital) component side based on resources utilized • CMS states in several OPPS rules that they do not intend to tell us how to code these levels, in fact, in the 2009 OPPS final rule, they state that hospitals are doing well by using their own policies • Most hospitals use a “scorecard” approach to determine the correct level • Be careful not to include “separately billable” services on the “scorecard” to prevent duplication

27. Coding for Clinic and ED facility E&M Services Methodologies for Determining E&M Level (Scorecard type) • Staff time – based on the time staff spent with the patient. Higher levels are reported based on increments of time beyond baseline care. • Staff intervention – based on the number or type of staff interventions performed by nursing or ancillary staff. Higher levels are reported based on the number and/or complexity of staff interventions. • Resource intensity point scoring – based on points assigned to each staff intervention based on time, intensity and staff type required. The service level is determined by the sum of the points for all services provided.

28. ED & OP Visit Coding (Facility) CMS E&M Facility Guidelines • Based on hospital facility resources • Clear and usable for compliance purposes and audits • Meet the HIPAA requirements • Require documentation that is clinically necessary for patient care • Should not facilitate upcoding or gaming • Written or recorded, well-documented, and provides the basis for selection of a specific code • Applied consistently across patients in the clinic or ED to which they apply • Should not change with great frequency • Readily available for fiscal intermediary (or, if applicable, Medicare Administrative Contractor) review • Should result in coding decisions that could be verified by other hospital staff members, as well as outside sources.

29. ED & OP Visit Coding (Facility)2013 Proposed Rule • “…we are continuing to instruct hospitals to report facility resources for clinic and emergency department hospital outpatient visits using the CPT E/M codes and to develop internal hospital guidelines for reporting the appropriate visit level. We note that our continued expectation is that hospitals' internal guidelines will comport with the principles listed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66805). We encourage hospitals with specific questions related to the creation of internal guidelines to contact their servicing fiscal intermediary or MAC. We refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74338 through 74346) for a full historical discussion of these longstanding policies.”

30. Emergency Department ED Treatment Rooms • Do not bill E/M with drug administration charge when an infusion is the sole reason for the visit • 2007 OPPS Final Rule – “Providers should bill a low-level visit code in such circumstances only if the hospital provides a significant, separately identifiable low level visit in association with the packaged service.”

31. Medical Necessity • Medically Necessary means that a service, supply or medicine is necessary and appropriate and meets the standards of good medical practice in the medical community for the diagnosis or treatment of a covered illness or injury, as determined by the insurance company • Review National Coverage Decisions (NCD) • Review Local Medical Review Policies (LMRP) • NCDs take precedence over LMRPs

32. Medical Necessity - ED • Code Signs and Symptoms to support test • May code diagnoses from the Radiology Report • “Rule out” or “probable” diagnose not acceptable • May not code results from Lab tests

33. Split/Shared Visit • Qualified Non Physician Providers (NPPs) who are permitted to assist a physician during a shared visit are: • Nurse practitioners • Physician assistants • Clinical nurse specialists • Certified nurse midwife • Medicare reimburses services provided by an NPP alone at 85% of the rate it reimburses physicians. However, CMS reimburses visits shared between the physician and the NPP at 100% of the allowed amount to the physician. • To obtain the full reimbursement allowed, the physician must document his or her participation in the care of the patient along with the NPP’s documentation of his or her portion of the care. If the documentation does not support the physician’s presence and the portion of work the physician performed, the NPP should report the care alone.

34. Reporting Split/Shared Visits to Medicare • The split/shared visit rules state that both the NPP and the physician must have a face-to-face encounter with the patient on the day the facility or practice reports the service. (The Handshake Rule) • Both the physician and the NPP should document their own participation in the medical record. • The physician practice employs the NPP. Warning - do not report a shared visit when a hospital facility or other entity employs the NPP. • The physician cannot simply co-sign the chart and state “reviewed and agree” in the record without seeing the patient personally. The physician must perform and document at least some of the three key components of E/M services (i.e., the history, the exam, and the medical decision-making) https://www.cms.gov/transmittals/downloads/R178CP.pdf

35. OIG Report: Coding Trends of Medicare E&M Services • Similar trends held true across 13 different categories of E/M services. • The jump from 99213 to 99214 yielded a handsome increase in compensation. In 2010, Medicare paid on average $97.35 for a 99214 visit, which is 50% more than the $64.80 for a 99213. • As a result of this study, OIG turned the names of 1,700 physicians over to CMS and suggested review. • The OIG states that it did not determine whether physicians who chose more 99214’s and other higher-level E/M codes in 2010 billed Medicare inappropriately or fraudulently. That line of inquiry, it says, will be the focus of future reports. • The following month (June 2012) the OIG issued a Memorandum Report – Use of Electronic Health Record Systems in 2011: Among Medicare Physicians Providing Evaluation and Management Services. • The survey concluded that physicians do not trust their EHR’s to assign billing codes. Of the 2,000 physicians surveyed, 88% manually assign the codes for E&M services and the remaining 12% use professional billers to do so. • The message is crystal-clear, OIG has specifically targeted billing fraud perpetuated by reliance on EHR coding/documentation.

36. OIG Memorandum Report: Use of EHR Systems in 2011 Among Medicare Physicians Providing Evaluation and Management services • This memorandum report responds to a request from • officials of the Office of the National Coordinator for • Health Information Technology (ONC), who expressed • interest in information about physicians’ reported use of • electronic health record (EHR) systems • ONC officials made this request in connection with an • ongoing evaluation on the extent of documentation • vulnerabilities of evaluation and management services • using EHR systems

37. OIG Memorandum Report: Use of EHR Systems in 2011 Among Medicare Physicians Providing Evaluation and Management services • OIG Findings: • 57% of Medicare Physicians used EHR at primary practice location in 2011 • 95% of physicians who used EHR for E&M began between 2001 and 2011 • Of these physicians, 22% began using EHR in 2011, the year CMS commenced the incentive program • 3 of every 4 Medicare physicians with an EHR system used a certified system to document E&M services • Although many EHR systems can assist physicians in assigning codes for E&M services, we found that most Medicare physicians manually assigned E&M codes

38. NY Times: Medicare Bills Rise as Records Turn Electronic New York Times Article September 21, 2012 • “the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care.” • “one contractor, National Government Services, recently warned doctors that it would refuse to pay them if they submitted “cloned documentation”.” • Trailblazer Health Enterprises in Texas “found that 45 out of 100 claims from Texas and Oklahoma emergency department doctors were paid in error. Patterns of over-coding E.D. services were found in template-generated records”. • One patient came to Virginia hospital ED with kidney stones. When he received the bill from the ED doctor, his medical record, produced electronically, reflected a complete physical exam that never happened. • Record showed his extremities had been examined, however patient’s legs were wrapped in a blanket. • Patient alleges “most logical conclusion was [the doctor] went to a menu and clinked standard exam and the software filled in a examination of all of his system. • After he complained, the physician group reduced his bill.

39. Letter From US AG and US DHHS Secretary • Dated September 24, 2012 to 5 Trade Associations. • “55% of hospitals have already qualified for incentive payments authorized by Congress for adopting and meaningfully using electronic health records.” • “Used appropriately, electronic health records have the potential to save money and save lives.” • “Troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled”. • “These indications include potential “cloning” of medical records in order to inflate what providers get paid.” • “There are some reports that hospitals may be using electronic health records to facilitate “up-coding” of the intensity of care or severity of patient’s condition as a means to profit with no commensurate improvement in the quality of care.” • “A patient’s care information must be verified individually to ensure accuracy: it cannot be cut and pasted from a different record of the patient, which risks medical errors as well as overpayments.” • “CMS is initiating more extensive medical reviews to ensure that providers are coding evaluation and management services accurately.” • “This includes comparative billing reports that identify outlier facilities.

40. The Dangers of Copy and Paste • The practice goes by several names: • Copy and paste • Cloning • Carrying forward • Carrying forward information without careful review can cause contradictions in a patient’s chief compliant documentation or history of present illness. • If a clinician is carrying forward information unless they read the information word for word, line for line and re-evaluate, the information carried forward may be inaccurate. • Documentation may show physicians performing services they only performed once in the past, leading to over reimbursement. • Documentation must be recorded for each specific encounter • Once copy and paste gets in to the record, its credibility may be compromised • Copying forward a previous review of systems without reviewing changes in the patient’s health status is noncompliant. • Many MAC’s are now requesting multiple visits of the same patients E&M record and reviewing for cloning, upon finding it, the entire amount of payment is rescinded.

41. CMS Allows RAC to Add E&M Services to Approved List • In September, 2012, CMS made the decision to allow RACs to begin reviewing the billing codes for office visits for healthcare providers. • Specifically the codes at issue are evaluation and management codes (E&M). • These claims had previously been off-limits to RACs. • Connolly, Inc., the contractor for RAC audit services in 15 states (including WV) will sort through claims filed by doctors and hospitals from as far back as October 1, 2007. • The plan is to conduct limited reviews using statistical sampling to project how many physician claims that used the high level, established patient E&M code 99215 were paid correctly. • Other RACs are expected to follow Connolly’s lead.

42. Steps to Take Now to Lower Your Risk Profile • Be Proactive – Start Now! • Compliance Program – if you don’t have an effective compliance program, get one now. • If you have not already purchased an EHR, shop carefully and be wary of vendors who promise your patient encounters will come out at a higher level after you adopt their system. • Run a baseline CPT frequency report of your E&M services for each provider before you implement EHR. Continue to monitor the frequency of the distribution of E&M code levels after implementation and look for significant changes. • Understand EHR functionality – determine where in workflow “cloning” can occur. • Provider regular consistent training to physicians regarding the appropriate use of EHR.

43. Steps to Take Now to Lower Your Risk Profile • If you have already implemented an EHR, calculate any improved net revenue directly associated with higher E&M coding levels. • Review any variations among providers (i.e., some physicians billing mostly level 4 or 5). • Perform a documentation review to look for evidence of cloning or carrying forward notes on history, exam or medical decision making. • Review current documentation policies and consider turning off ability to cut and paste. • Consider not allowing EHR to select level; either move that practice back to the physician or to certified coders.

44. Method II Billing – CAH’s • DEFINED: An increased payment to a Critical Access Hospital for outpatientphysician services • Attributes of Method II Billing: • Must be elected by a CAH within 30 days of start of fiscal year • Once elected it remains in effect until CAH cancels • Physicians can be employed or contracted by hospital • Any outpatient hospital department qualifies: ED, Radiology, Laboratory, Hospital-based physician clinics, etc. • Method II Clinic = (Hospital-based clinic) + 15% increase for physician services • Increased payment = 15% increase to the physician payment for a hospital-based clinic (see next slide) • Physician Prof. Fees are billed on a UB…NOT on a 1500

45. Method II Payment Formula (Physician Services): CPT 99213 – Medicare Facility Payment (SOS 22) $41.31 Reduce for Patient Coinsurance x 80% Net Medicare Facility Payment $33.05 Increase for Method II x 1.15 Medicare Facility Payment – Method II $38.01 CPT 99213 – Medicare Phys. Office Payment (SOS 11) $57.96 Reduce for Patient Coinsurance x 80% Medicare Phys. Office Payment $46.37 Method II Billing – CAH’s

46. Method II Billing – CAH’s • The Medicare Internet Only Manual (IOM) 100-04, Chapter 4, Section 250 states that a CAH billing for the non-physician practitioner (NPP) services under Option II must report a CPT modifier describing the credentials of the performing practitioner. • This reference further explains that payment for non-physician practitioners will be made at 115 percent of the allowable amount payable under the Medicare physician fee schedule; in other words at a reduced rate of 115% of the 85% (NPP rate). • The non-physician practitioner professional services require one of the following modifiers: • GF – Service rendered in a CAH by a nurse practitioner (NP), clinical nurse specialist (CNS), certified registered nurse (CRN) or physician assistant (PA). • SB - Services rendered in a CAH by a nurse midwife. • AH - Services rendered in a CAH by a clinical psychologist. • AE - Services rendered in a CAH by a nutrition professional/registered dietitian

47. Observation Definition has not changed since Day 1 • “Observation services are those services furnished on a hospital’s premises, including use of a bed and periodic monitoring by nursing or other staff, which are reasonable and necessary to evaluate an outpatient’s condition or determine the need for a possible admission as an inpatient”. • APC regulation (FR 11/30/01, pg 59881) “Observation is an active treatment to determine if a patient’s condition is going to require that he or she be admitted as an inpatient or if it resolves itself so that the patient may be discharged.” • Expanded 2006 Federal Register Information “Observation is a well defined set of specific, clinically appropriate services, which include ongoing short-term treatment, assessment and reassessment, before a decision can be made regarding whether a pt will require further treatment as hospital inpts or if they are able to be discharged from the hospital.” Note: No significant 2007, 08 ,09 , 10, 11, 12 reg changes

48. Observation Other 2006 Federal Register info: • Pt must be under the care of a physician….as documented in the medical record by admission, discharge and other appropriate progress notes that are timed, written and signed by the physician. • The medical record must include documentation that the physician explicitly assessed patient risk to determine that the beneficiary would benefit from observation care. (pg 68694)

49. Transmittal 1745/1760 July 2009 Meant to clarify OBS language on patient status. However, nothing changed regarding “active physician involvement, assessment and reassessment to determine if the patient needs admitted or safely discharged home” = Billable hour.

50. Transmittal 1745/1760 July 2009 • Editorial change to remove references to “admission” and “observation status” in relation to outpt observation services and direct referrals for observation services. These terms may have been confusing to hospitals. The term ‘admission’ is typically used to denote an inpt admission and inpt hospital services. For payment purposes, there is no payment status called “observation” • Observation care is an outpt service, ordered by a physician and billed with a HCPCS code. • Revenue code 762 or 760 is acceptable. • Rounding of hrs. Hospitals should round to the nearest hr. (EX 3:03 to 9:45 = 7 hrs) • Standing orders for obs services following outpt surgery are not recognized. Recovery room services billed separately (4-6 hrs) • References: 290.1; 290.2.1; 290.2.2/ Transmittal 1745 • Medicare Claims Processing Manual Chpt 4, 290; Pub 100-02 Medicare Benefit Policy Manual Chpt 6, 29.6