Maximizing lab reimbursement through CPT codes.
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 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 a statewide or nationally capped fee schedule with no supplemental billing to the patient's insurance company allowed.
If you are billing the Government for laboratory services, you must provide either a Current Procedural Terminology (CPT) code' or a HCFA Common Procedural Coding System (HCPCS) code, the latter compiled by the Health Care Financing Administration on a regional basis throughout the United States.
Some states also require a diagnosis code, usually an ICD-9-CM (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, 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.
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, even though laboratories have been performing the test for 15 years. You must use a generic "therapeutic drug monitoring" 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. 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 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.
After reviewing the RAs and EOBs to get a handle on the lab's coding shortcomings, 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?
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 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.
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|Title Annotation:||Current Procedural Terminology|
|Author:||Dettwyler, William K.; Wolfgang, Kenneth E.|
|Publication:||Medical Laboratory Observer|
|Date:||May 1, 1988|
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