Welcome to AR System’s
Training Library
“Surgery/Invasive Procedure, Recovery and
Supplies – Opportunity w/Challenges”
Presented by:
Day Egusquiza
President
“Finding HealthCare Solutions…
together”
P.O. Box 2521
Twin Falls, ID 83303
(208) 423-9036
daylee1@mindspring.com
1
Special Olympic’s Oath
Help me Win
 But if I Can Not Win
 Help me be BRAVE in the
Attempt…

2
What is the current
charging structure?



Main OR & Day
Surgery
Time with levels
GI/Endo
Time with levels
Procedure based
Levels with procedures
Cath Lab
Procedure based


Interventional
Radiology
Procedure based
Recovery
Set charge
Time based
Time based with phases
PACU vs outside PACU
3
Why Make a Change?



New World of
Consumerism
Can the patient
understand their
charges?
Is the current
charge structure
understood by the
care team?

Conduct a benchmark
audit.
Are all supplies Nonroutine?
Are all costs being
addressed thru the
charge structure?
Has nursing charted
and is charging cut to
close with other costs
captured?
4
It is all about Transparency..






Pts want understandable, comparable quality
information.
Pricing is a mystery, unfortunately.
Meaning pts want the Business Office to be more
open, i.e. glass walls concept
Health care model different state to state
Pts really want to know what they will owe
(Richard Clarke, Pres/CEO HFMA, article: What is Price Transparency, Feb
17, 2006. hfma.typepad.com/views/2006/02/what_is_price_t.html
5
Procedure vs Timed






Win: Actual time is billed; not averages
Win: Can ‘see’ real cost of procedures
Win: Cost to charge alignment
Con: Slow physician = higher charge
Con: Estimates rather than procedure
charges
Con: Each pt’s charges could be different
6
And then there were multiple
procedures…


Procedure based billing for multiple
procedures should reflect a reduced pricing
as the room was only set up once, cleaned
up once, one set of staff, one scheduling
cost, one billing cost, one instrument
cleaning cost, etc.
Difficult to automate but needs done.
7
.
1.
2.
3.
4.
5.
Things to remember
Billable time
Non-routine supplies are separately
billable
Nursing must chart & physician must
order all non-routine supplies
Create ‘rules’ to accompany leveling
system
Use existing sample for comparison and
historical process.
8
Think Outside the Box




Move to time based charging in OR,
Day Surgery, endo, and recovery
Create a service line with individual
leveling system
FOCUS: Align costs to charges
Ensure 3 areas are addressed: put me
to sleep/anesthesia; do the procedure;
wake me up/recovery. All present?
9
New Charge Structure
OR, Day Surgery, Endo, etc.
Focus: per minute only or
front load 1st 15
minutes and each min
thereafter.
1.
Time based for all
surgeries
2.
Identify potential service
lines:
Ortho, Neuro, Vascular, Plastics,
Podiatry, Gyn, Endo, Cataract,
ENT, Transplant, Urology,
Cardic, General
3.
4.
Begin to complete all
direct costs and indirect
costs for each service
line –per service line
Based on significantly
different costs, create
levels within the service
lines including inpt vs
outpt.
Ortho level 1-2 outpt
Ortho level 3-4 inpt (as
preop costs for inpt
significantly higher)
10
OR, Day Surgery, Endo and more





Move to a cost based, timed system –includes pre-op costs
Identify direct costs = staff in the room
Identify indirect costs –both in the care area and outside
the area.
Identify routine supplies/not separately billable with the
cost rolled into the per minute charge (costs, not chgs)
Identify billable time




Cut to close (However, time in/out is used for productivity)
Scope in/scope out
Identify current billing in all invasive procedure areas
Create a work team to accomplish the transformation
11
Focus on Aligning Cost to Charge


Determine direct and indirect costs –both
within and outside the care area. (See work
papers)
Determine scheduled costs separate from
unscheduled costs and create charging
accordingly. (Ensure the unscheduled
criteria is well understood and not assigned
as after hrs, call back, etc.)
12
And then you sample……….


Once the service line levels are completed, ensure
sampling/testing occurs prior to implementation
to ensure at least budget neutrality.
Don’t forget the finance-driven expenses
Overhead allocation to the OR areas
Depreciation on non-movable equipment and other cost report items
Management costs
IT costs (dedicated OR computer plus % of mainframe)

Last step – add the mark up %.
13
More billable services

Discontinued procedures




If the discontinue procedure was due to the
pt’s condition – create a flat rate
Prior to Anesthesia with 73 modifier
After Anesthesia with 74 modifier
Rate should only cover costs as the full
procedure charge will be created when the pt
has the procedure
14
Recovery Guidance

Services that are covered under Part A, such as a
medically appropriate inpt admission or as part of another
Part B service, such as postoperative monitoring during a
standard recovery period (4-6 hrs) which should be billed
as recovery room services. Similarly, in the case of pts
who under diagnostic testing in a hospital outpt dept,
routine preparation services furnished prior to the testing
and recovery afterwards are included in the payment for
those dx services. Obs should not be billed concurrently
with therapeutic services such as chemotherapy. (Pub 10002, Ch 6, Sec 70.4
15
Recovery Charging
Define Phase 1 and Phase 2




Keep it very simple
Phase 1 = immediate post
procedure
Phase 2 = outside PACU; or
once moved past Phase 1
Extended recovery -=
beyond 6 hrs routine
recovery
Look for all areas where
‘recovery’ is being done.
Billable with non-dx
procedures in all areas.
Floors, PACU, front of day
surgery.
16
Recovery vs Observation Options
17
Starred* Procedure = Exception




Appendix G/CPT = list of included CPTs
Conscious sedation is used 99.9% of the
time; therefore, inherent to the procedure
and not separately billable.
Since C/S was used, see 99148-50 for
guidelines for billing recovery. Inherent to
the procedure and not billed separately.
Ensure procedure pricing includes all.
18
ROUTINE VS NON-ROUTINE SUPPLIES—HELP!
The Medicare Reimbursement Manual defines Routine Services in 2202.6 on
page 22-7:
“Inpatient routine services in a hospital or skilled nursing facility generally
are those services included by the provider in a daily service charge—sometimes
referred to as the “room and board” charge. Routine services are composed of two
broad components: (1) general routine services, and (2) special care units (SCU’s),
including coronary care units (CCU’s) and intensive care units (ICU’s). Included in
routine services are the regular room, dietary and nursing services, minor medical and
surgical supplies, medical social services, psychiatric social services, and the use of
certain equipment and facilities for which a separate charge is not customarily made.
“In recognition of the extraordinary care furnished to intensive care, coronary care,
and other special care hospital inpatients, the costs of routine services furnished in
these units are separately determined. If the unit does not meet the definition of a
special care unit (see § 2202.7), then the cost of such service cannot be included in a
separate cost center, but must be included in the general routine service cost center.
(See § 2203.1 for further discussion of routine services in an SNF.)
19
Routine Supplies –always a challenge
Medical supplies are those items that, due to their therapeutic
or diagnostic characteristics, are essential to the care ordered
by the physician to treat or diagnose the patient’s illness or
injury. These supply items fit into two categories:
•
Routine (not separately billable) supplies are
customarily used during the usual course of treatment, are
included in the unit supplies and are not designated for
specific patient.
•
Non-routine (separately billable) supplies are
necessary to treat a specific patient’s illness or injury based
on a physician’s order and a documented plan of care.
20
Capturing Non-Routine Supplies While Not
Losing Revenue
For Routine Supplies – the how tos
Guidelines:
•
•
•
The Medicare regulation excludes a separate payment for ‘minor medical and surgical
supplies.” (HFCA Pub 15, Section 2102.2) The costs are considered to be covered in
the inpatient room and board, OR time, observation time, & ER levels.
Unfortunately, there is little further clarity – other than individual Medicare Fiscal
Intermediaries (FIs) ‘interpretations’ – which vary greatly.
Therefore, it is important for each facility to use the best information available to:
•
Create a policy defining ‘routine’ and ‘non-routine’
•
Outline the internal process for reviewing the charge master to determine those
items that can be billed separately and those that can not.
•
Include how new supply items will be reviewed prior to being added to the
charge master.
•
Include any ‘questionable’ items, such as portable xray add on charge where
Medicare may have given a negative opinion, but the site is going to challenge
it and continue to bill to Medicare and/or other payers.
21
OPERATING ROOM IDEAS
How do you pass all three elements?
1) Specific to one patient’s Injury and
Illness Usually items associated with a
specific surgery should pass. However,
all ‘items available for all patient use”
such as syringes, pads, gloves – would be
considered routine and not separately
billable. Items that are specific to the
procedure should pass the non-routine
test.
22




2) Physician’s Order. It is important that the
physician has ordered the non-routine items.
Idea: Have the physician sign/date the preference cards
with an internal policy as to periodic review.
Additional items beyond the preference card would still
need ordered.
Idea: Nursing must also chart the non-routine supplies.
Supply charge card, date/sign by nursing and physician.
Orders and documentation.
23



3) Part of the documented care plan.
Idea: Conduct a review of existing Op Report
documentation. Common sense should be used
in determining ‘documentation of supplies.’
The focus is to ensure the physician is directing
the supplies used and that the facility is not
arbitrarily adding items that the physician did not
order.
24
Equipment
The following is an excerpt from Medicare newsletter #488:
To:
Administrator of all Medicare Certified Facilities
From: Bonnie Irwin, Acting Director of Federal Programs
Date:
June 22, 1995
Subject: Billing Ancillary versus Routine Services and Equipment
This bulletin reemphasizes Medicare policy with regard to billing ancillary versus routine services and billing for
equipment.
It is not allowable to bill for either the replacement cost of equipment or operating equipment. Equipment is considered
by the Health Care Financing Administration (HCFA) to be capital equipment under the heading of “major medical,
surgical or rehabilitation equipment.” As such, the replacement cost is reimbursed as a capital pass thru on the Medicare
cost report. To bill for this equipment would result in a minimum of double reimbursement and even more, depending on
the total amount billed over the life of the equipment. This would be considered, at a minimum, abuse of the Medicare
program and potentially fraudulent.
The operating of equipment by hospital staff is considered routine as defined above. These services are assumed to be
included in the accommodation charge for inpatients and the emergency room fee / facility charge for outpatient.
Medicare considered reimbursement of these services to be included in the DRG for inpatients and in the prevailing
charges / fee schedules used to reimburse outpatient services. Again, billing for this type of service would, at a minimum
be considered abuse and potentially fraudulent.
If your facility is currently billing for equipment, please cease immediately.
(Also reference: Section 441, Hospital Manual, HCFA Publication 10)
25
SUMMARY
is important that the facility develop it’s own
It
definition for routine and non-routine that supports
the Medicare regulation. Once developed, a policy
should outline the steps for adding new items to the
charge master (going through a charge master integrity
team) and any exceptions. The ‘due diligence’ should
include all references used (preferably the FI’s input too)
that support the billing of supplies.
DON’T FORGET OTHER PAYERS. Many times
items are lost to audit from 3rd party payers (WC,
Commericals) because the facility can not ‘defend’ their
practices. The policy along with the Medicare-supported
definitions can help in this environment as well.
Have fun!
26
AR Systems’ Contact Info
Day Egusquiza, President
AR Systems, Inc
Box 2521
Twin Falls, Id 83303
208 423 9036
daylee1@mindspring.com
www.arsystemsdayegusquiza.com
Thanks for joining us!
RAC2008
27
NOT SEPARATELY BILLABLE ITEMS
(Kansas FI 10/00)

The purpose of this bulletin is to provide cost report
reimbursement instructions for supplies/items pertaining
to hospital patients. A list such as this cannot be all
inclusive nor can it be current with all technology
advances. The final determination of an item or service as
routine or non-routine is that of the fiscal intermediary.
Generally, the definitions listed below and section 2202.6
of HCFA Pub 15-1, should be used to determine if an
item/service is routine or ancillary. Your facility should
coordinate these cost report reimbursement instructions
with its UB-92 billing procedures.
28
Routine or Ancillary Supplies / Equipment (Examples)
The following is a reference tool (not all inclusive) to be used to determine
whether a supply item should be considered routine (and therefore not separately
billable to Medicare) or ancillary (separately billable to Medicare) [Source:
Medicare Part A Bulletin, no. 95-10-12- by AdminaStar Federal, Oct 17, 1995]:
Preparation Kits
Any linen
Gowns
Gloves
Oxygen masks
Syringes and needles
Saline solutions
Sponges
Reusable items
Cardiac monitors
Oximeters
Oxygen supplies
IV pumps
Blood pressure monitors
Thermometers
Ice bags or packs
Heat light or heating pad
Wall suction
Specimen collection containers
Alcohol or peroxide
29
Routine or Ancillary Supplies / Equipment (Examples)
Continued…
Betadine / phisohex solution
Slippers
Iodine swabs / wipes
Powders
Lotions
Blood pressure cuffs
Pads
Drapes
Cotton balls
Urinals / bedpans
Irrigation solutions
Pillows
Towels
Diapers
Soap
Tourniquets
Gauze
Supplies (self-admin inj)
IV tubing
30