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Maximizing lab reimbursement through CPT codes.

Using reimbursement Reimbursement

Payment made to someone for out-of-pocket expenses has incurred.
 codes properly can protect laboratories

against the loss of thousands of dollars in revenue.

Have you ever wondered how the laboratory gets paid for the outpatient work you do? Until recently, most lab managers didn't give it much thought. They were occasionally asked to clarify a point, but it was the billing department's job to make sure the amounts reimbursed were correct.

Today this responsibility rests with the lab. If that news comes as a surprise, chances are your institution's third-party reimbursement paperwork is either incorrect or incomplete. And if such is the case, the lab is probably losing many thousands of dollars in uncollected but reimbursable outpatient revenue.

Under the Consolidated Omnibus Budget Reconciliation Act Consolidated Omnibus Budget Reconciliation Act, law that allows individuals to carry over health coverage from a previous job for a limited time at their own expense.
 implemented in 1987, outpatient laboratories were required to accept Medicare assignment, and billings to Medicare had to be coded to qualify for reimbursement. The Tax Equity and Fiscal Responsiblity Act paved the way in 1983 for use of a fee schedule by Federal agencies. As a result of these Congressional actions, about half of the outpatient test volume at many labs is now paid according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 a statewide or nationally capped fee schedule with no supplemental billing SUPPLEMENTAL BILL, equity plead. A bill already filed to supply some defect in the original bill. See Bill supplemental.  to the patient's insurance company allowed.

If you are billing the Government for laboratory services, you must provide either a Current Procedural Terminology Current Procedural Terminology See CPT.  (CPT CPT

See: Carriage Paid To
) code' or a HCFA HCFA
Health Care Financing Administration

HCFA, See Health Care Financing Administration.
 Common Procedural Coding System Noun 1. coding system - a system of signals used to represent letters or numbers in transmitting messages
code - a coding system used for transmitting messages requiring brevity or secrecy
 (HCPCS HCPCS Healthcare Common Procedure Coding System ) code, the latter compiled by the Health Care Financing Administration Health Care Financing Administration, department in the U.S. agency of Health and Human Services responsible for the oversight of the Medicaid and Medicare benefit programs, including guidelines, payment, and coverage policies.
 on a regional basis throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. .

Some states also require a diagnosis code, usually an ICD-9-CM ICD-9-CM International Classification of Disease, 9th edition, Clinical Modification
A standardized classification of disease, injuries, and causes of death, by etiology and anatomic localization and codified into a 6-digit number, which allows
 (International Classification of Diseases, 9th Edition with Clinical Modifications). The states that require the ICD-9-CM system codes use those three- to five-digit codes as an additional reimbursement criterion-they do not replace the CPT codes.

Developed by the American Medical Association American Medical Association (AMA), professional physicians' organization (founded 1847). Its goals are to protect the interests of American physicians, advance public health, and support the growth of medical science. , five-digit CPT codes constitute descriptions of services or tests. HCFA's five-digit HCPCS codes encompass the CPT entries and add Federally mandated and state-approved codes. For example, HCFA has an HCPCS code for sodium plus potassium and another for a complete blood count plus a sedimentation rate sedimentation rate
The degree of rapidity with which red blood cells sink in a specimen of drawn blood, which when elevated may indicate anemia or inflammation. Also called erythrocyte sedimentation rate, sed rate.

So this is the system that determines how much or if a laboratory will be reimbursed. Laboratories lose money when they submit and incorrect procedure or diagnosis code. If a laboratory-provided code is no longer in the fee schedule, for example, the computer rejects the claim, and payment is denied.

Omissions flaw the CPT system. For example, there is no code at all for valproic acid valproic acid /val·pro·ic ac·id/ (-ik) an anticonvulsant used particularly for the control of absence seizures.

val·pro·ic acid
An anticonvulsive drug used to treat seizure disorders.
, even though laboratories have been performing the test for 15 years. You must use a generic "therapeutic drug monitoring therapeutic drug monitoring Clinical pharmacology The regular measurement of serum levels of drugs requiring close 'titration' of doses in order to ensure that there are sufficient levels in the blood to be therapeutically effective, while avoiding potentially " code instead; if a second unlisted drug is tested, there's a separate code covering two drugs assayed, rather than specific codes for each.

Whatever the faults, the Federal government is pleased with the apparent success of its fee schedule concept, and laboratories have no choice but to comply. Many other third-party payers-particularly Blue Cross/Blue Shield and a few large PCOs (physician care organizations)-are considering adopting the Medicare fee schedule as their own. Some have already done so, pegging payment rates at a set percentage of the Medicare fee allowance, Given the great number of patients covered by such fee schedules, smaller insurers can be expected to follow suit.

What's more, Congress has reduced fee allowances on selected tests in addition to the across-the-board reduction that took effect in April. It's easy to see why third-party payers find this system so attractive. And it is equally clear that laboratories must adapt if they are to survive.

The trouble is that many haven't done so. Over the last two years, our CPT coding consultations in more than 23 hospitals and 40 independent laboratories and clinics have indicated that:

* Many laboratories have no idea how much revenue is lost to improper code assignment-10 per cent is probably a conservative estimate of the loss. For example, a large laboratory performs 20 MIC antibiotic susceptibilities each day and mistakenly uses the old Kirby-Bauer code. This single error is likely to cost the lab $25,000 a year.

Another frequent and costly mistake is the grouping of procedures that should be coded separately-an iron and iron-binding capacity, for example. There is one code for the iron and another one for the iron-binding capacity. Two codes would need to be used, not one, if correct payment is expected.

* The average estimated increase in the annual rate of reimbursement for our clients runs about $2,000 per employee-$60,000 for a laboratory with 30 full-time equivalents Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or a student's enrollment at an educational institution. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. . This does not mean that each employee makes $2,000 worth of coding mistakes. It is the laboratory manager who commonly assigns the codes. The figure of $2,000 per employee, based on our observations in several labs, is a function of annual test volume and demonstrates how the cost of perpetuating coding errors adds up month after month. If your laboratory isn't using the codes properly, this equation can shed light on how much it stands to gain by correcting the oversight.

* Even with some training, laboratory CPT code analysts may find their effectiveness hampered because of such factors as the cost or revenue center codes assigned to other areas of the hospital, which may complicate the payment process. Certain revenue center codes are paid by Medicare at a percentage rate and are not based on the CPT code. Some blood banking codes fall into this category because many are services rather than diagnostic tests.

A busy laboratory manager may feel unable to devote the amount of time needed to properly coordinate coding. Most find the time after we show them how correcting what is merely an oversight can bring in several thousand extra reimbursement dollars. And the larger the lab, the bigger the return.

We emphasize to clients that winning the reimbursement game depends on a joint effort between the laboratory and billing departments. A harmonious working relationship is essential. The billing department cannot process the paperwork properly and profitably unless the lab provides the correct numeric codes.

Our first step is to conduct a systematic coding survey to make sure that all pertinent areas are covered. The survey is not cut-and-dried; it is adapted to each laboratory's needs.

We examine the remittance Money sent from one individual to another in the form of cash, check, or some other manner.

Financial statements sent by a creditor to a debtor frequently refer to the process of submitting a monthly remittance.

REMITTANCE, comm. law.
 advices (RAs) and explanations of benefits (EOBs) from payers. They provide a wealth of clues that won't be found anywhere else. If you know how to read them, you can usually learn why a claim was partially or completely denied. Yet these crucial comments often go unread, bundled away in the billing files.

Needless to say, a critical look at such information is every bit as important as cashing the check that accompanies it. We show the laboratory manager how to assess payment denials, identify problem areas, and formulate appropriate corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or .

After reviewing the RAs and EOBs to get a handle on the lab's coding shortcomings A shortcoming is a character flaw.

Shortcomings may also be:
  • Shortcomings (SATC episode), an episode of the television series Sex and the City
, the next step is to go over the procedure guide and discuss the codes assigned to each test. We also ask about any procedures that are consistently denied and those for which the laboratory no longer bothers submitting a reimbursement request. We find out why reimbursement has been denied and encourage the lab manager to catch up on the paperwork for tests that haven't been submitted.

We also look at how the procedures are performed to make sure the codes are appropriate: Is the technologist performing a Kirby-Bauer, or is it really a minimum inhibitory concentration minimum inhibitory concentration Lab medicine The minimum antibiotic concentration needed to inhibit bacterial growth from a clinical isolate–eg, a bloodborne infection, which is a form of antimicrobial susceptibility testing. Cf Minimum bactericidal concentration. ?

A comprehensive code survey usually takes a full day in a small hospital or reference laboratory. Larger facilities-labs in hospitals with more than 100 beds or reference labs with more than 20 FTEs-require two full days. The survey seldom takes longer. Although 400- and 500-bed hospitals generate proportionately more laboratory work, it is the number of different procedures and not the total test volume that determines the complexity of the evaluation.

How long does it take before the reimbursement flow increases? It usually starts in just a few weeks if the lab manager follows our guidelines promptly.

CPT coding also represents a career opportunity for enterprising technologists. It is an area in which their bench background is an asset and also one in which very few consultants specialize.

Some colleges with medical technology programs are starting to offer courses in diagnosis and CPT coding, and last year a joint meeting of the Oregon chapters of American Medical Technologists This article or section may deal primarily with the U.S. and may not present a worldwide view.  and the American Society for Medical Technology included a seminar on CPT coding.

Producing precise lab results is important, of course, but so is getting paid for the work. As laboratorians, we must keep on top of constant regulatory changes.

In many institutions today, nonlaboratory health professionals are responsible for determining appropriate codes and assigning a dollar value to the laboratory's work. We feel strongly that laboratorians must learn new skills such as CPT coding and take a more assertive role in guiding the direction of their profession.
COPYRIGHT 1988 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1988 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Current Procedural Terminology
Author:Dettwyler, William K.; Wolfgang, Kenneth E.
Publication:Medical Laboratory Observer
Date:May 1, 1988
Previous Article:Training technologists for the late shifts.
Next Article:Creating a microbiology technologist.

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