Appropriate Use of Observation Services
Hospitals large and small, rural and urban face a common struggle to assure that their patients are admitted to the most appropriate level of care.
While the care provided to outpatients receiving observation services and inpatients may be the same, the payments are very different. The determination of an inpatient (Medicare Part A) or outpatient with observation services (Medicare Part B) for any given patient is specifically reserved to the attending physician, although the physician has Medicare or other payer guidelines he or she is expected to follow.
To be in compliance, hospitals must educate physicians and gain their cooperation even though the care provided and professional fees received may be essentially the same for either level of care.
But what have physician’s been told about observation services? Has their education been based on the facts as published in the Federal regulations or is it based on confusion between different payer requirements, rumor or over-reaction? Have healthcare professionals gone from the extreme use of observation to minimal or no use of observation, and back again?
Our Auditing & Education Assistance
Administrative Consultant Service, LLC auditing and educational assistance is designed to help providers distinguish between fact and fiction. We can then help hospitals develop the appropriate strategies for managing short stay patients whether they are inpatient or outpatient receiving observation services.
Consultation services include:
- Data analysis to identify level of care risk areas
- Medical record review of short stay discharges (observation, inpatient and outpatient surgery) to determine appropriate level of care and accuracy of billing for both inpatient and outpatient services.
- Evaluation of hospital Utilization Review policies and procedures including:
- Denial Management
- Condition Code 44
- Provider Liable Claims
- Observation of the Utilization Review process
- Interview key personnel responsible for the Utilization Review process
- Present educational programs for hospital and members of the medical staff including physician to physician education.
- Provide recommendations for improvement in hospital Utilization Review program.
- Preparation of appeals for medical necessity denial by MAC, RAC, CERT or other payors.
Surgical Classification Charge Development
This complex review is performed to create the hospital’s outpatient and inpatient Surgical Classification charge system to help ensure that the surgical services are effectively and efficiently capturing the service costs provided and receiving proper reimbursement.
The surgical charges are created based on Levels of cost, such as Level 1 time charge for the lowest cost surgical procedures to Level 6 time charge being the highest cost surgical procedures. Each surgical procedure performed by the facility is then mapped to each Level charged based on cost.
The charges are created for each level for the first 15 minutes and each additional minute so that there is no overcharging or undercharging based on time. We also create Level classification charges for facility Anesthesia costs and Recovery Room costs.
Hospitals struggle daily with Medicare denied and non-covered charges due to the correct coding initiative and lack of medial necessity based on National Coverage Determinations and Local Coverage Determinations. Many times it takes a team to determine the problem and solution.
ACS will review denied and non-covered claims over the past 6 to 12 months for the hospital and determine the problems and errors that caused the non-coverage.
We will then provide education to staff members and give solutions to these problems and errors including recommendations for improvement and best practices to keep these problems and errors from happening again.
Medical Necessity and ABN Education
Medical necessity for all hospital outpatient testing is a hot topic these days. Many hospitals have problems getting claims paid for certain tests and procedures due to the implementation of the Laboratory National Coverage Determinations (NCDs) and many Local Coverage Determinations created by the Medicare Administrative Contractors (MACs) formerly Fiscal Intermediaries (FIs).
Traditionally, hospitals have written off these charges because they represent very little reimbursement for each claim. However, the number of local coverage determinations (LCD) have significantly increased to include everything from Magnetic Resonance Images (MRIs) to Radiation Oncology and Pharmaceuticals. As a result, denials now represent a significant financial loss. Hospitals continue to write off a larger percentage of their business. When they determine there is no medical necessity for a test, all they can do is write it off if they don’t have an ABN signed. In addition, hospitals often have to sacrifice payments when specimens arrive without patients because, obviously, there is no one to sign an ABN if the test order lacks a medically necessary diagnosis.
The training provided during the Medial Necessity and ABN education includes the following:
- Education to Registration, Admitting, and Scheduling on how to determine medical necessity when the patient presents for test and procedures
- How to determine when there is inadequate Physician orders
- What to do when no medical necessity is provided for a test or procedure
- How to use the LCDs and NCDs created by CMS and MACs
- How to code diagnoses for medical necessity purposes
- What the billing department and coding department should do when a test or procedure hits a medial necessity edit in the Medicare system
- Know the new CMS ABN guidelines and how to adequately fill out the ABN
- Appropriate assignment of medial necessity modifiers, ABN modifiers, and occurrence codes for Medicare billing
- Appropriate billing of non-covered charges to the Medicare Administrative Contractor