Reimbursement
Clinical Coding and Coding Compliance
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Clinical Coding--Reimbursement Connection
Structure: Tabular List, Alpha List, Procedures
Claims submitted must comply with the guidelines and
conventions published for the various clinical coding sets:
Dx: 3-5 digits Proc: 2-4 digits
HIPAA designated code sets
Inpatient
Proced
Outpatient
Provider
Dx
Dx
Proced
Physician
ICD-9-CM
CPT
ICD-9-CM
CPT
Facility
ICD-9-CM
ICD-9-CM
ICD-9-CM
HCPCS
Maintenance: Coordination and Maintenance Cmte (NCHS-Dx
& CMS-Proc ) advisory in nature. Final determinations are
made by the director of NCHS and administrator of CMS.
Public meetings (March & Sept.) for changes, determined
after the December meeting, become effective October 1
of the following year.
ICD-9-CM Coding Guidelines
ICD used world-wide for mortality reporting. Maintained by
WHO. Updated approx. every 10 yrs.
Codes serve as communication vehicle between providers
and insurers. Vital to follow guidelines. Accurate
reimbursement, dependent upon timely, accurate, and
complete coding of services and procedures provided.
ICD-10: 10th revision. US will use Clinically Modified (CM).
This will provide greater detail and granularity to allow
more accurate code submission.
Cooperating parties -- NCHS, CMS, AHA, AHIMA = editorial
advisory board resp. For publishing coding guidelines for
ICD-9-CM. AHA publ. guidelines in Coding Clinic (official).
ICD-10-PCS allows US to realize benefits of interoperability
stds specified by HC IT Stds Panel (HITSP). Limits use of
"Not elsewhere classified".
 Official coding advice and official coding guideline
 correct code assignments for new technologies and newly
identified diseases
 articles and topics that offer practical information and improve
data quality
 coding changes and/or corrections
 FAQs with practical examples
ICD-9-CM: Developed by Nat'l Ctr for Health Statistics
(NCHS). US version expanded to include morbidity or
chronic conditions and procedure reporting.
Coding clinic should be a compliment of all coding education
and compliance programs for HC provider and facility
coding units.
Uses:
Healthcare Common Procedure Coding System (HCPCS) -Two-tiered syst. Of procedural code, used primarily for
ambulatory care and physician services. HCPCS codes are
frequently attached to Inpt and Outpt charge description
masters (CDMs) to facilitate commun. btwn providers and
payers about services and supplies included in the CPT or
HCPCS Level II syst.
This allows payers to better measure quality outcomes and
expand pay-for-reporting and pay-for-performance
programs.
 classifying morbidity and mortality information for statistical
purposes.
 Classifying diagnoses and procedures information or
epidemiological and clinical research.
 Indexing hospital records by disease and surgical procedure.
 Reporting information to various Healthcare reimbursement
systems
 analyze resource consumption patterns.
 Analyzing adequacy of reimbursement or health services
Providers use ICD-9-CM to determine payment categories for
various PPSs:
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Hosp. Inpt: MS-DRGs
Hospital rehab: case-mix groups (CMGs)
long-term care: LTC MS-DRGs
home health resource groups (HHRGs)
Current Procedural Terminology CPT (HCPCS Level I) -Reports diagnostic and surgical services and procedures.
Created and first published by AMA in 1966. Used by
physicians to report services and procedures performed in
the hospital inpatient and outpatient setting. And by
facilities for outpatient services and procedures.
ICD-9-CM Dev’p by Nat’l Ctr for Health Stats (NCHS) 1979.
 Communication vehicle for public and private reimbursement
systems
 Development of guidelines for medical care review
 Basis for local, regional, and national utilization comparisons
 Medical education and research
Int’l version focuses on acute illnesses and mortality
code set adopted into HCPCS in 1985.
CM expanded: incl. morbidity or chronic conditions and
procedure reporting
Structure: Category I (6 Sections), Category II (optional
tracking for performance measurement), Category III
(Temp, New Technol.), Modifiers.
Reimbursement
Clinical Coding and Coding Compliance
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Category I: describe a procedure or service that is consistent
with contemporary medical practice and is performed by
many physicians and clinical practice in multiple locations.
FDA has approved devices & drugs in this category. 5-digit
numeric.
HCPCS Level II Permanent Codes (National) -- May be used by
all public and private health insurers. Letter + 4 numbers.
Letter designates the category the codes is classified in.
Miscellaneous codes are manually reviewed and require
pricing and documentation of medical necessity.
Category II: facilitate data collection for certain services
and/or test results that contribute to positive health
outcomes and quality patient care. 5-digit ends in F.
Current dental terminology (CDT4) dental codes are a
separate category of national permanent codes. First letter
D.
Category III: Represent emerging technologies. Must have
relevance for research, either ongoing or planned. 5-digit,
ends in T.
HCPCS Level II Temporary Codes -- used to meet the
immediate and short-term operational needs of individual
insurers, public and private. Letter + 4 letters. Temporary
codes may remain as such by an indefinite period of time. If
necessary a permanent code will be created to replace the
temporary code in the temporary codes will be deleted.
Modifiers: Two-digit numeric or alphanumeric character,
designed to give Medicare and other third-party payers.
Additional information needed to process claim. Flags a
service altered by some special circumstance(s) but for
which the basic code description itself has not changed.
Modifier 91 is used to indicate a clinical lab test was
repeated. The modifier indicates the duplicate code
reported was not accidental or fraudulent, but based on
medically necessary foundation. Supporting documentation
is required and establishes the medical necessity criteria.
Maintenance of CPT -- 16-member CPT Editorial Panel (meets
4 x's/yr). Editorial Panel supported by CPT Advisory Cmte.
Revised annually Jan. 1.
Requesting Code Modifications: Use coding change request
form on AMA website. Categ. I and III Submissions are
passed on to CPT Advisory Cmte Categ. II passed on the
Performance Measurement Advisory Grp for review. 2/3
majority must vote for adding the code before it is passed
on to CPT Advisory Cmte. Only those warranting final
review are passed on to CPT Editory Panel for final
decisions on all coding modifications.
CPT Coding Guidelines: -- Official publication of CPT Assistant
(AMA) contains
 coding communication that provides up-to-date information on
codes and trends
 critical opinion that offer insight into confusing coding and
modifier usage scenarios
 coding consultation that covers the most frequently asked
questions
All coding education and compliance programs should include
the use of CPT Assistant.
HCPCS Level II -- Developed by CMS in 1980s to report
services, supplies, and procedures not represented in CPT
but submitted for reimbursement. System is managed by
both private and public health insurers. Existence of a
particular code does not guarantee or indicate
coverage/reimbursement by Medicare, Medicaid, or other
third-party payers. 2 types of codes in HCPCS Level II syst:
permanent and temporary.
HCPCS Level II Modifiers 2-digit alpha or alphanumeric codes.
Indicate body areas that allow for specific information
provided
Maintenance of MCPCS Level II Coding System -Permanent codes maintained jointly by an American health
insurance plans (AHIP), Blue Cross and Blue Shield
Association (BCBSA), and CMS = national panel.
Permanent national coats updated January.
Temporary codes, maintained by individual's of national
panel.
Requesting Code Modification for HCPCS Level II -- Can
submit any time of the year. Three types: addition,
language used to describe an existing code may be
changed, existing code may be deleted. Continuous process
April 2 through following April 1. Request form on the CMS
website. Submit it to your cell phone-numeric HCPCS
coordinator at CMS. Reviewed by CMS HCPCS Workgroup
at monthly meetings. National panel is responsible for
approving of code modifications. All three members must
agree.
HCPCS Level II Coding Guidelines -- AHA Coding Clinic for
HCPCS not official, but expert. Published by Central Office
of ICD-9-CM. No official coding resource other than
coverage determinations issued by CMS and its Medicare
administrative contractors (MACs).
Coding is not dictate coverage of medical services for
reimbursement policies.
Coding Compliance, And Reimbursement -- For coding,
billing, and reimbursement professionals, being compliant
means performing job functions according to the logs,
regulations, and guidelines set forth by Medicare and other
third-party payers. It is their responsibility to perform their
jobs with integrity at all times. AHIMA standards of ethical
coding , sets forth guidelines professionals should
understand.
Reimbursement
Clinical Coding and Coding Compliance
Fraud (Worse) -- An intentional representation data in
individual notes defaults, or does not believe to be true and
makes, knowing that the representation could result in
some other authorized benefit himself/herself or some
other person.
Abuse -- When a healthcare provider unknowingly or
unintentionally submit an inaccurate claim for payment.
Generally results from unsound medical, business, or fiscal
practices that directly or indirectly result in unnecessary
costs to the Medicare program.
Examples:
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billing for services not furnished (F)
misrepresenting the diagnosis to justify payment (F)
soliciting, offering, or receiving a kickback (F)
unbundling or "exploding" charges (A)
falsifying certificates of medical necessity, plans of
treatment, and medical records to justify payment (F)
billing for services not furnished us billed (known as
upcoding) (A/F)
Congress has several targeting fraud and abuse
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Protects the Medicare trust fund
Gave CMS resources and penalties to settle fraud and
abuse
False Claims Act -- Passed during the Civil War to prohibit
contractors of any kind from knowingly filing a false or
fraudulent claim, using a false record or statement, or
conspiring to defraud the US government. Continues to
serve to rebuke abusers of the Medicare and Medicaid
system. Allows for fines up to $10,000 violation and
exclusions from Medicare participation.
Office of Inspector General Compliance Program Guidance -1991: OIG released seven elements of effective corporate
compliance plan (revised 2005):
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Designation of the compliance officer and complaints
committee
Development of compliance policies and procedures,
including standard of conduct
Development of open lines of communication
Appropriate training and education
Internal monitoring and auditing
Response to detected deficiencies
Enforcement of disciplinary standards
Compliance Program Guidance For Clinical Laboratories 1997
Supplemental Compliance Program Guidance For Hospitals
2005
Operation Restore Trust (Clinton)
Joint effort of DHHS, OIG, CMS, and Admin on Aging (AOA).
Released in 1995, the Turkish fraud and abuse among
healthcare providers. Spent $7.9 million / recovered $188
million. Established
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National toll-free fraud and abuse hotline
Voluntary disclosure program
Special fraud alert documents
Health Insurance Portability And Accountability Act Of 1996
(HIPAA) -- The key fraud and abuse areas targeted are:
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medical necessity
Upcoding
Unbundling
Billing for services provided
Established Medicare integrity program. Reviewing past
claims for fraud and abuse, focused expanded to cost
reports, payment determinations, and the need for
ongoing complaint education.
Balanced Budget Act of 1997 (BBA) -- Began educating
beneficiaries unbearable in preventing fraudulent and.
Beneficiaries rise to review Medicare summary notices
(MSNs/EOBs) for errors and report errors to the secretary
of DHHS.
Beneficiaries notified of right to request copies of detailed bill
for services and informed about the toll-free fraud and
abuse hotline.
Expansion: DOJ & FBI in order to keep up with
warranted reviews. Pepper program (Program for
Evaluating Payment Patterns Electronic Report)
Improper Payment Information Act of 2002 (IPIA) and
Improper Payments Elimination Recovery Act of 2010
(IPERA) (Bush)
IPIA requires all federal agencies provide an estimate of
improper payments in what actions are being taken to
reduce improper payments.
IPERA amended IPIA.
CHIP is a program that has significant potential for improper
payments.
 CMS created Payment Error Rate Measurement (PERM)
program. Complies with IPIA. It collects error rates and
measures errors. Educational materials, statistics, and
reports can be found on the CMS website.
CERT (Medicare Comprehensive Error Rate Testing)
Complies with IPERA.
CMS is required by the act to protect the Medicare trust. CMS
has established the Medicare Review and Education
Program, based on Progressive Corrective Action (PCA).
CMS utilizesA/B MACs and DME MACs to complete medical
reviews (improper payment reviews). These entities are
referred to as Medicare contractors.
Reimbursement
Clinical Coding and Coding Compliance
PCA (progressive corrective action) includes the following
steps:
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Data analysis
Error detection
Validation errors
Provider education
Determination of review type
Sampling of claims
Payment recovery
Medicare contractors focused reviews of the identified areas
determined by contractor data analysis, search
finding,OIG/GAO reports, and Recovery Audit Contractor
(RAC) vulnerabilities work.
Major causes the improper payments include:
 Physician orders missing
 Signatures being eligible for missing
 National Coverage Determinations (NCDs) / Local Coverage
Determinations (LCDs) . Requirements not being met
 Medical record documentation not supporting medical necessity
It answered the question of whether RACs were a costeffective method of ensuring correct payment under
Medicare. $1.03 billion in overpayments recouped. Each
Implementation was based on CERT report. 4.4% of
Medicare dollars paid did not comply with Medicare
coverage, coding, billing, or payment rules. $10.8 billion
RACs , identify under- and overpayments (M'care A & B)
primary and secondary payer.
RACs recoup overpayments from providers. CMS added
resources to the compliance section without additional
costs.
Lessons Learned From The RAC, which Demonstration
Project
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Provider education is the key component of this program.
Medicare contractors are expected to publish LCDs to
provide guidance to the medical community regarding
coverage, coding, and medical necessity requirements.
Medicare Learning Network (MLN) articles should be created
in an effort to improve transparency of the medical review
process.
Comprehensive Error Rate Testing Program (CERT)
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Transition to Medicare beginning in 2001.
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Purpose of CERT is to measure improper payments, not to
measure fraud. Examples
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payment that should not have been made.
Payment made in an incorrect amount.
Payment to an end eligible to be.
Duplicate payment.
Payment for service that was not received.
OIG Reports -- significant, oh I see reports are
communicated via Medicare transmittal to Medicare
contractors for use in medical review activities (RAC).
National Recovery Audit Program (RAC) (Pilot) -- Began as a
demonstration project (MMA 2003) such and was so
successful (2005-2008) it is now fully implemented CMS
program. Encompasses all areas of Medicare fee-for-service
and Medicaid. It is sponsored by the Medicare Integrity
Program designed to prevent improper payments and
ultimately to protect the Medicare trust fund.
RACs are able to find a large volume of improper payments
providers do not appeal every overpaid the determination
overpayments collected were significantly greater than the
program costs
RACs are willing to spend time on provider outreach
activities, developing strong relationships with provider
organizations
it is administratively possible to have a RAC . Work closely
with the Medicare claims processing contractor
RAC efforts did not disrupt Medicare for law enforcement
and type fraud activities
it is possible to find companies willing to work on a
contingency fee basis
Feedback from providers yielded a number of modifications
to improve RAC program
At first, run by OIG 1996 to 2002
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Having all new push issues a RAC wishes to pursue for
overpayments validated by CMS are an independent RAC
Validation Contractor and sharing the upcoming new
issues with provider organizations
Requiring each new RAC to hire a physician medical
director as well as certified coders
Requiring the RACs to pay that contingency fees would
improper payment determination is overturned at any
level of appeal
Changing from a four-year look-back period to a threeyear look-back period
Adding a maximum look-back date of each October 1,
2007
Adding a web-based applications that will allow providers
to look at the status of medical record reviews
Tax Relief and Healthcare Act (TRHCA) of 2006 made the RAC
program permanent. 4 RAC jurisdictions. Each RAC must
have review issues, vulnerabilities, approved by the
Recovery Audit Validation Contractor prior to performing
audits. Vulnerabilities must be published on the website
prior to audit.
Reimbursement
Clinical Coding and Coding Compliance
Only 5% of total claims ID'd by RACs were challenged by
providers In 2010. Only 2.4% of those were challenged and
overturned on appeal. Facilities must incorporate issues
identified by RACs and other Medicare contractors into
their coding compliance plans.
Other Third-Party Payer Reviews -- Actual payers tend to
follow Medicare's lead and apply it to their own review
portfolio. These review topics and findings should be
incorporated into the coding compliance plans.
Coding Compliance Plan
Each coding unit focuses in regulations and guidelines with
which coding professionals must comply. Compliance
Program Guidance (DHHS/OIG guidance)
Core Areas:
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Policies and procedures.
Education and training,
Auditing and monitoring
Policies and Procedures
Well-designed complete policies provide employees with
consistent guidance to perform assigned tasks.
Managers perform job analysis ensures that every task has
been established policy or procedure to govern it.
Finally, is a listed species that should be included in a coding
compliance plan. At least...
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efficient query process
coding diagnoses not supported by medical
documentation
upcoding
unbundling
coding medical records without complete documentation
assignment discharge destination codes
correct use of encoding software
complete process for using the scrubber software
Education and Training (CE hours) -- To be complainant,
coding, billing, and reimbursement professionals must
continually participate in their education. Sample issues
that should be placed on the continuous education
schedule includes
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Public and private payer guidelines
LCDs (LCDs replaced local medical review policies [LMRPs])
NCDs
Official coding guidelines for ICD-nine-and, CPT, and
HCPCS Leve II codes
Quarterly and yearly code changes
Quarterly and yearly prospective payment system changes
OIG workplan issues
National correct coding initiative (NCCI)
Education must be provided to bring deficient workers up to
speed with expected guidelines. Completion of required
educational sessions should be built into annual
Ch-2: Page | 5
evaluations/reviews for all coding, billing, and
reimbursement employees.
Auditing and Monitoring
Best strategy: incorporate internal and external auditing into
coding compliance plan.
Internal auditing enables managers to see firsthand where
their units' strengths and weaknesses lie.
External auditing provides an unbiased view of the
department's performance.
Benchmarking: 2 kinds -- internal and external
Internal (Trending) Allows the manager to examine reporting
rates over a period of time. Enables pinpointing specific
time period within which compliance issue arose.
External (Peer Comparison) Helps the manager to know how
his/her team has performed compared with peers. Issues
revealed include whether its case-mix index (CMI) level
puts the facility at risk.
Target areas for internal and external benchmarking should
correlate with those highlighted in the policies and
procedures and education and training sections of the
coding compliance plan along with problem areas identified
during routine internal and external audit.
Focus Areas -- Managers must stay up to date on compliance
issues, published and discussed in various government and
other third-party payer documents. For example,
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OIG workplan should be reviewed each year
CERT and National Recovery Audit programs issue
summaries of improper Medicare Fee-for-service
payments throughout the year
Case-Mix Index Analysis (Benchmarking Tool) -- Analyzing
the growth or decline the facilities see and I is the
beginning phase for assessing the quality of its coding and
billing practices. Managers begin by comparing this year by
the facility to that of its peers in the state or nation at the
past three years.
Major Diagnostic Category (MDC)
Used to pinpoint the noteworthy changes (highs or lows) at
the service area level. Several areas to consider include
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Coding and billing errors
Changes in MS-DRG assignments (FY Oct. 1 changes)
Equipment purchases
New or expanded service areas
Acquisition of new facilities
Changes in deficient personnel
Reimbursement
Clinical Coding and Coding Compliance
Regardless week cause of the data deviations, compliance
with established rules and regulations must be verified.
Ch-2: Page | 6
A code of ethics is important
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1) If coding practices are questionable, or medical record
review should be completed to identify whether
compliance infection has occurred.
2) managers should follow established procedures for
correcting and reporting of compliance lapse. Each
in helping to guide the decision-making process, and
can be referenced by individuals, agencies,
organizations, and bodies (such as licensing and
regulatory boards, insurance providers, courts of
law, government agencies, and other professional
groups)
Site of Service: Inpatient Versus Outpatient
The AHIMA standards of ethical coding are intended to
 assist coding processes and actions
 outline expectations for making ethical decisions in
the workplace
 demonstrate coding professionals' commitment to
integrity during the coding process, regardless of the
purpose for which the codes are being reported.
See Examples beginning on pg. 47
Standards Ethical Coding
E/M Facility Coding in the Emergency Dept.
Coding professionals should:
Implementation of OPPS (Hosp. Outpt Prospective Payment
System) brings compliance challenges:
1.
MS-DRG Relationships Reporting
Assigning complications or comorbidities incorrectly creates
noncompliance. Hospital reporting of MCCs and CCs should
be closely monitored to insure all coding rules and
regulations have been followed.
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E/M Coding (bcs CPT code reported on M'care outpt
claim drives ambulatory payment classification
(APC) assignment,
 level of reimbursement. This must be closely monitored.
Currently each facility determines its hospital-specific criteria
for level of service determination. Therefore, our bidding is
necessary to validate that the levels are correctly assigned
based on the established criteria and that the criteria are
reflective of resource consumption. Experienced at that
facility for the services rendered.
See example on page 48.
AHIMA Standards Of Ethical Coding
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Based on AHIMA's Code of Ethics
Both reflect expectations of professional conduct for
coding professionals (involved in diagnostic and/or
procedural coding or other health record data
abstraction).
Sets forth professional values and ethical principles
Offers ethical guidelines to which professionals
aspire and by which their actions can be judged.
HIM , professionals are expected to demonstrate professional
values by their actions to patients, employers, members of
the healthcare team, the public, and the many stakeholders
they serve.
apply accurate, complete, inconsistent coding practices, but
protection of high-quality healthcare data.
2. Report all healthcare data elements required for external
reporting purposes completely and accurately, in accordance
with regulatory and documentation standards and
requirements of applicable official coding conventions, rules,
and guidelines.
3. Aside report only codes and data that are clearly and
consistently supported by health record documentation in
accordance with applicable codes and abstraction conventions,
rules and guidelines.
4. Query provider for clarification and additional documentation
prior to code assignment. When there is conflicting, incomplete
or ambiguous information in the health record regarding
significant reportable condition or procedure or other
reportable data elements dependent on health record
documentation.
5. Refused to change reported coats or the narratives of codes so
that meetings are misrepresented.
6. Refused to participate in or support coding and documentation
practices intended to it appropriately increased payment,
qualify for insurance policy coverage, or skew data binding it
did not comply with federal and state statutes, regulations and
official rules and guidelines.
7. Facilitate interdisciplinary collaboration situations supporting
proper coding practices.
8. Advance coding knowledge and practice through continuing
education.
9. Refuse to participate in or conceal an ethical coding or
abstraction practices or procedures.
10. Protect confidentiality of the health record at all times been
refused access protected health information not required for
coding-related activities.
11. Demonstrate behavior that reflects integrity, shows a
commitment to ethical and legal coding practices, and fosters
trust in professional activities.