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Mistakes to avoid in CPT coding and billing: understanding the Current Procedural Terminology system helps enhance compliance and reduce delays in reimbursement.

Understanding the Current Procedural Terminology system helps enhance compliance and reduce delays in reimbursement.

Health care acronyms are starting to sound like those of politics and government, and the comparison is apt. Among the flurry of abbreviations (Table I) that deserves special attention from laboratories receiving reimbursement from Medicare and Medicaid is CPT, or Current Procedural Terminology.

Now in its fourth edition, the CPT list of over 7,000 five-digit codes--devised by the American Medical Association at the request of the Health Care Financing Administration (HCFA)--provides a useful method for identifying and billing medical services. Laboratory services are identified by the 80000 series.

CPT had its first effects on the clinical laboratory in 1984. As the Federal Prospective Payment System (PPS) was being implemented for inpatient reimbursement, the CPT coding system was being set in motion for outpatient payment.

Under Medicare and Medicaid regulations, the coding system must be used to identify procedures performed for outpatient reimbursement. If not, Medicare is not obligated to pay.

* Hics-Pics. Because some medical procedures had not been given CPT codes, HCFA added additional codes where needed. These Level II codes form HCFA'S Common Procedural Coding System (HCPCS), commonly known as "Hic-Pics." Some states and carriers have created local Level III HCPCS codes to identify services that do not have CPT or HCPCS designations. All such codes consist of five characters and are used by Medicare and/or Medicaid.

[Paragraph]Level I. CPT code. National. Example: CPT 85376, fibrinogen, thrombin with plasma dilution.

[Paragraph]Level II. Alphanumeric code beginning with letters A through V. National. Example: P9012, cryoprecipitate, each unit.

[Paragraph]Level III. Alphanumeric code beginning with letters W through Z. Local. Example: Y8305 (Colorado), platelet neutralization.

HCFA is phrasing out Level III codes as part of its standardization process for reimbursement. To simplify the transition, most carriers and intermediaries that use Level III codes are cross-referencing them to CPT codes.

Prospective payment regulations call for inpatient services to be reimbursed according to allowable fees in diagnosis related groups (DRGs). An anticipated decrease in revenue from Government payers led laboratorians to hope that private payers would fill the void. Some health care professionals worried so much about inpatient reimbursement that they failed to learn enough about CPT coding for outpatient services.

Now we acknowledge the importance of our outpatient market and how CPT coding affects that income. For example, a pro-thrombin time test for an outpatient whose fees are paid through Medicare must be identified as CPT 85610. Regardless of the laboratory's usual fee, reimbursement is a standard amount for all laboratories in a defined geographicl area. In Utah, for example, #85610 brings $5.37.

Laboratory reimbursement for each CPT-coded procedure is listed on a schedule. The amount varies from one Medicare area to another. Payments under Medicaid tend to be slightly lower. In Texas, for example, the Medicaid fee schedule allows 90% of the amounts reimbursed by Medicare.

Regardless of provider status--hospital, independent laboratory, or POL--Medicare and Medicaid reimbursement remain the same. Most laboratories are paid at the 60th percentile of the median of all national fee schedules. An institution will be reimbursed at the 62nd percentile only if it is classified as a rural hospital, has an emergency department, and offers 24-hour laboratory service seven days a week.

In general, all providers are reimbursed identically according to the lowest of the following fees: charge for test, local fee schedule, or national fee schedule. This is true whether or not the provider participates in the Medicare program. The provider must accept assignment for services and cannot bill the patient for any excess.

In 1990, Medicare alalowed a 4.7% increase in scheduled laboratory reimbursements and then capped payment at 93% of the new amounts. For 1991, amounts on the schedule were increased by 2%. The amount allowed, however, will be capped at the 88% level. The 2% increase also applies to 1992 and 1993, for which no cap has yet been announced.

Not all laboratory payments are subject to a fee schedule. Exemptions include:

[Paragraph]Nondiagnostic services, such as blood banking;

[Paragraph]Areas with professional components, such as consultations and anatomic and surgical pathology;

[Paragraph]Certain procedures that use new technology, so that prescribed reimbursement would be premature;

[Paragraph]Services billed with unlisted or miscellaneous codes; and

[Paragraph]Organ- and disease-oriented panels.

Payment of exempted services
 Table III
 Variations in payment
 for multichannel codes
CPT # Oregon Ohio Florida New Mexico
80002 $ 8.08 $ 5.57 $ 8.08 $ 8.08
80003 11.32 5.57 11.32 8.63
80004 10.87 5.57 10.87 8.63
80005 9.14 5.57 12.24 8.63
80006 12.15 6.73 12.15 12.15
80007 12.68 7.78 12.68 12.68
80008 13.11 8.94 13.11 12.83
80009 13.14 10.09 13.41 12.83
80010 13.14 11.15 13.45 13.45
80011 13.14 12.31 13.68 13.68
80012 13.14 13.36 14.00 14.00
80016 13.14 16.49 16.50 16.09
80018 13.14 16.51 16.52 16.52
80019 17.14 17.14 17.14 17.14

usually constitutes 80% of the billed amount, providing that amount is "usual, customary, and reasonable." In other words, the charge must be the provider's usual fee, similar to what other local providers charge, and reasonable for the service in question.

* Other systems. The International Classification of Diseases, 9th Edition, Clinical Modification (ICD-9-CM) codes diagnoses of patients. [1] These numerical codes contain three to five digits plus a decimal. The theory is that by using all five digits, a provider can code to the greatest degree of certainty and the highest level of specificity.

ICD-9 supports reimbursement by indicating that CPT-coded procedures are justified for the diagnosis under consideration. If additional problems or complications develop, supplementary ICD-9 or "V" codes may be listed on the claim form.

"V" codes identify additional factors or complications indicating that further testing is warranted. If a CPT code does not cross over to an ICD-9 code listed on the claim form, the CPT-coded procedure may be deemed medically unjustified. As a result, payment for it may be denied.

Each ICD-9 code identifies a diagnosis appropriate to a particular DRG. In the hospital, the medical records department codes patient records and insurance claims with ICD-9 and DRG codes.

* Updates. CPT codes are revised each year. Changes tend to be published in December, when the AMA releases its annual text. [2] Providers have until April 1 to adopt the changes. Continuing to bill with a deleted CPT code usually leads to denial of payment.

Because no new codes were established this year, the laboratory section of CPT lists relatively few changes for 1991. Code and test description alterations since 1990 are listed in Table II.

* Compliance. Failure to remain in compliance with Federal regulations risks monetary penalties, Medicare sanctions, and even charges of fraud. Refrain from upcoding, the practice of billing for more expensive procedures than were actually performed. For example, a laboratory in Maine that performed a cardiac evaluation panel (80062, reimbursable for $21.46) might bill Medicare for a cardiac injury panel with creatine kinase (CK) isoenzymes (80064, $25.09) even though no isoenzyme studies had been performed.

Similarly, a laboratory in Montana that did an automated hemoglobin analysis (85018, reimbursable for $3.66) might upcode the test to a plasma hemoglobin (83051, $11.32). The labs in Maine and Montana would pocket an additional $3.63 and $7.76, respectively--and be in violation of regulations.

Some laboratories "fragment" or "unbundle" their billing in an attempt to elicit highet reimbursement. In Colorado, a flat fee of $12.13 is allowed for a group of six automated tests for electrolytes, glucose, and BUN. Billing for each item separately would yield $23.04. Even when unintentional, upcoding and fragmentation carry a potential penalty of up to $2,000 per infraction.

From another perspective, failing to code accurately risks being reimbursed for less than the proper amount. No laws are broken, but the laboratory loses valuable revenue. According to a 1989 observation by the author, a laboratory often incorrectly coded an antibody test as a complement fixation (CPT 86171). After the test was correctly recoded as an immunoassay for an infectious agent (CPT 86317), laboratory revenue was increased by $24,151 a year.

* Variance. Reimbursement can vary substantially from one Medicare area to another. An automated CBC with a manual differential performed in San Francisco and billed to Medicare as $32 under CPT 85022 will yield $8.75. The same test done in San Diego and billed to Medicare for the same amount under the same CPT code will yield $8.52. What matters is not the billed amount but the amount allowed in the schedule.

Most laboratories perform a certain number of chemistry procedures that must be billed under automated multichannel codes. The code for one or two automated multichannel procedures is 80002; for three procedures, it is 80003. The pattern continues up to 80019, for 19 procedures or more. Knowing the allowable payment for common procedures often influences related decisions, such as whether to buy a new analyzer. Table III indicates the reimbursement allowed for the automated, multichannel CPT codes in four states.

Laboratorians tend to overutilized unlisted or miscellaneous CPT codes to bill procedures they can't readily identify. Some carriers deny payment for unlisted codes or assign a procedure code that reimburses at a lower level.

Most procedures can be assigned a regular CPT code. When an appropriate code is unavailable, however, codes ending in 99, commonly used for infrequent, specialized, and expensive procedures, provide a mechanism for billing. The use of -99 codes should be restricted since they require a written explanation and are subject to medical review by the carrier. Any such intervention typically delays payment.

Since HCFA is encouraging providers to file claims electronically, paper claims delay payment as well. HCFA announced in January that paper claims would be held even longer than the then-current 17 days (it's now more like 60 days) before payment is made. The extra time is intended to ease Medicare's increased workload and decreased budget.

* Send-outs. Who may bill for clinical lab testing? The Deficit Reduction Act (DEFRA) of 1982 proclaimed that a test may be billed only by the laboratory that performed it. The sole exception was independent laboratories. According to the Omnibus Budget Reconciliation Act (OBRA) of 1989, an independent lab that has sent tests to a referral lab may bill for the tests if they meet one of the following criteria:

[Paragraph]Both laboratories are "subsidiary-related." That is, one is owned by the other or both are wholly owned subsidiaries of another entity.

[Paragraph]Not more than 30% of clinical diagnostic tests billed annually by the referring laboratory are performed by another lab other than one that is subsidiary-related.

According to the Medicare Hospital Manual (MHM), a hospital laboratory sending a test to a referral lab may ask it to bill Medicare for the analysis even if the specimen is from a hospital inpatient. Part B payment to othe referral laboratory is authorized under section 602 of the 1983 amendments to the Consolidated Omnibus Budget Reconciliation Act (COBRA). Labs accepting such assignment are reimbursed 100% of a reasonable charge.

Some states have announced that referral laboratories doing tests for hospital labs may bill only for outpatient testing. Inpatient testing that has been sent out mutt be billed by the hospital laboratory, thus, keeping the reimbursement within the DRG system. In general, hospital labs are exempt from the 1989 OBRA requirement that the lab doing the work must also do the billing.

* Panels. How to bill organ- and disease-oriented panel testing can pose problems for the clinical laboratory. For years, Medicare has exempted these panels from the fee schedule because the procedures and the test content for a particular panel can vary.

HCFA has asked all Medicare carriers to identify the test content and payment allowance for each organ- or disease-oriented panel or profile. These are identified by CPT codes 80050 through 80090. HCFA has further stated that carriers are responsible for knowing what services have been rendered and which tests were performed. Each carrier must establish a uniform definition for such panels. Any laboratory that fails to comply with this definition must identify the content of every panel billed.

In 1990, carriers asked laboratories to bill panels in various ways. Some accepted no codes for panels; other accepted some codes; a few applied no restrictions at all. This lack of consistency is forcing providers to list the contents of panels/profiles with individual CPT codes, to bill the more easily defined panels with the appropriate panel code, or to use panel codes as determined by the area carrier or intermediary. Most payers want providers to supply the content of defined test panels and indicate changes in writing.

Carriers are beginning to deny some of these codes, saying that the panel may be identified with automated multichannel codes that tend to reimburse at a lower level. For example, Indiana's carrier no longer recognizes CPT 80058, a hepatic function panel that was reimbursable for $51.81. Instead, the carrier suggests using 80012, a multichannel code that brings in $11.78. Blue Shield of Western new York lists no organ- or disease-oriented panel codes in its 1991 fee schedule.

Table IV outlines the test content of panels and profiles as defined by several carriers. In almost all cases, the assays listed were included in the more common panels.

* Stay alert. Coding and billing regulations have become part of the daily workings of the clinical laboratory. Using improper designations can cost the clinical laboratory a great deal of money in lost income or stiff fines. A summary of general guidelines can be found in Figure I.

[1] ICD-9-CM. Washington, D.C., Department of Health and Human Services, 1991.

[2] CPT, 4th ed. Chicago, American Medical Association, 1991.

The author is marketing director of hospital services at Med-Index, a coding and reimbursement consulting firm at Salt Lake City, Utah.
COPYRIGHT 1991 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Author:Voorhees, Diana
Publication:Medical Laboratory Observer
Date:Jun 1, 1991
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