Click the link below to view the G2 Pathology Institute 2014 slideshow.
Fee for Service vs. Salaried Positions: Calculating the Risks by Mick Raich.
In January 2014, we identified a high number of denials from Florida Medicaid, “provider not credentialed/invalid provider.” Upon review of certain Medicaid claims and calls to Medicaid Florida, the Medicaid Florida system was incorrectly denying claims for CLIA certification errors as far back as December 2013, due to a system error. These claims have since been refiled, and we are now receiving payments.
Medicaid Florida Denial codes on Explanation of Benefits are MA120 Missing/incomplete/invalid CLIA certification, and CO 16 Claim/service lacks information which is needed for adjudication.
Review your biller’s denials reports for these remark codes and be sure to refile your claims for payment.
By Ann Lambrix and Mick Raich
The new Insurance Exchange is up and running and many practices are wondering how this will affect their bottom line. There are several issues to review when thinking about these Exchanges.
In the past, many practices have remained out-of-network with carriers that have lower reimbursement rates due to the ability to obtain higher out-of-network payments. Unfortunately, this will not be the case with the Exchange Plans. Many, if not all, plans within the Insurance Exchange will not offer out-of-network coverage, aside from emergency services. Providers that choose to remain out- of- network may see a decrease in referrals if the contract/patients within these product lines require in-network providers only. The choice may not be entirely up to the provider as well – some carrier’s contracts may have language indicating that your participation is inclusive of all product lines (including the Exchanges).
Some carriers will also have a “narrow network” that limits participating providers. This will also impact physician referrals if the provider is not within this narrow network of approved physicians.
So you simply will have no choice but to be involved with these plans as there is no “out of network” coverage any patient that is out of network will be self-pay.
Rates for the Exchange Products aren’t anything to get excited about either. In an article from Medscape, How insurance Exchanges Will Affect Doctor’s Income (Page, 2013), indicates rates will be 30-40% below what providers are currently receiving from existing non-Exchange plans. Plans will act similarly to Medicaid plans, where the goal is to emphasize efficiencies and cut reimbursement.
The big issue here is the fact that once you accept these Exchange plans and their lower rates how long will it be until this becomes the new industry standard? This means if you accept 40% of Medicare for the Exchange plans why, can’t you accept that from the standard HMO or PPO plan?
In an interview with Michael Ferrie, the founder of Physician Data Management (PDM), national path/lab physician billing firm, he noted that another area of interest is the “most favored nation status” in the contract. He states “This is often a missed or misunderstood section of the contract and the implications are considerable. This allows for payers to grab lower reimbursement that are better for the payer where a practice signs a contract with a subsidiary.”
Jane Pine Wood of McDonald Hopkins also noted that in addition to being wary of the impact of participation in an exchange upon most favored nation clauses in private payer contracts, pathology providers should be mindful that some state Medicaid programs have similar most favored nation clauses, and if the exchange’s rates are less than the state Medicaid program, the pathology provider may need to lower its charges to Medicaid to the exchange’s fee schedule rates.
Providers will also need to be prepared for an increase in patient out of pocket expenses, as well as potential increases in collection activity for patients within the Exchange Networks.
Participating plans will offer a tier-based program to members. Patient out-of-pocket expense will be based on the level (Bronze – lowest premium/highest out-of-pocket – Platinum-highest premium/lowest out-of-pocket). Many patients will choose the lower premium cost/higher out-of-pocket plans which may mean more unpaid patient deductibles outstanding, an increase in patient A/R, and higher volume of collection activity.
With Obama Care, the grace period for non-payment of premiums has increased from a standard 30 days to 90 days. The first 30 days the carrier will continue to pay claims, and the additional 60 days will suspend payment until the premium is paid. After 90 days the patient will be dis-enrolled from the plan for non-payment of premium and plans will deny claims billed after the initial 30 days within the grace period. How does your practice combat this and prepare for individuals that “play the system”, jumping from one plan to the next to basically receive free healthcare?
Your billing system should be effective in separating out these patients/plans to identify if there are potential issues. Due to so many unknowns, it is difficult to estimate or recommend exactly how providers will be proactive in these situations. Increase patient screening on the front end and collection activity on the back end? Ultimately, the impact of your bottom line will be the costs of additional resources needed to collect on payment that is due to you.
Finally, true self-pay patients may be a thing of the past. Since Obama Care requires everyone to have health insurance or face a fine, this population will shift to the lower reimbursement, in-network only Exchange Plans.
Health Exchange products will be reimbursed less than current contracts and will not have out-of-network benefits. Carriers may include current contracted providers in the insurance Exchange plans, making it difficult to terminate the contract for risk of losing higher commercial/Medicare plan reimbursement. Providers also risk losing referral sources if they are out-of-network as referring physicians will be required to refer to in-network providers.
The rates paid for these Health Exchange Plan patients will be very low and will in effect lower the overall acceptable rates for services provided.
These plans may well be tied to other plans and lower rates via a most favored nation clause.
Practices will need to be prepared for higher patient out-of-pocket expenses, with more accounts rolling into collections. Personnel costs may increase as more resources will be needed to identify potential risk and collect on outstanding debts.
True self-pay patient population will decrease significantly, with the shift going to the Health Insurance Exchange Plans.
The MUE denial is effectively in place for G0461 (aka 88342). Yes, they are allowing only one unit per date of service. If there is more than one unit billed because there is more than one specimen reviewed, you will be denied. The additional units must be appended with the appropriate modifier –, 59, 76, or 91 depending on your MAC). Note: the Medicare advantage product lines are quickly jumping on board. Be prepared to make changes to your front end edit process. More to come from the commercial community when we see how they are working the 88342/88343 changes for 2014.
The new CMS fee schedule poses some unique challenges for practices. In anticipation of this new fee schedule we have prepared a sample impact analysis that takes into account both the changes in the 88342 change but the anticipated 88343 pricing and changes as it pertains to these stains.
The real issue here is how to bill multiple 88342’s. It is fairly clear what Medicare will pay and how to bill these to Medicare. Remember this is a “per specimen” application.
The complexity happens when you start looking at how you bill these cases to commercial carriers. There are several schools of thought, the first one is to bill the commercial carriers the old way, 88342 x 6 for example and just wait for denials and then appeal the case as directed by the payer.
The second thought is to bill the cases using Medicare protocol via the G codes.
The final thought is to bill using the 88343, which although it is not on the Medicare fee schedule has actually been approved as an add-on code.
The bottom line may be that many carriers will follow Medicare, some will continue to use the 88343 code and some will even develop their own policy. It is guaranteed this will lead to increased denials and confusion with the payers anticipating that groups will not follow up on denied claims. Remember this, 16% of all claims are denied, and 50% of all denied claims are not recouped.
We decided to build our impact analysis using the G codes for Medicare and then using an 88343 for commercial providers with the payment for the 88343 built to echo the G0462 code as they have similar RVU values. Here is an example from a small AP lab.
As you can see this is about a $159,000 projected loss. This is an estimate and granted it may be on the dour side but it easily explains how this change will affect this practice. This is about a $53,000 loss per physician owner.
Next we looked at a how these changes affected a group that only bills professional only. In this case we can only project on the losses from Medicare. We could not estimate the loss from private payers.
As you can see this hurt this practice also but the loss was significantly less per physician owner, in this case the loss was about $4,379.00 per pathologist. Remember this is only the loss from Medicare.
Either way there are going to be some interesting errors that will happen in the first quarter of 2014.
First, many Medicare intermediaries will not have these codes added to their system this will mean rebilling and refiling these claims when the denials happen.
Second, many commercial carriers will not have the 88343 and the G codes built in their system, what will happen when you bill these carriers?
Finally it should be noted that if your managed care plan does not recognize this code then you may be paid a percentage of charge. Many contracts have clauses that note “when CPT codes are billed that are not on the CMS fee schedule the practice will get paid 60% of their charge.” Since 88343 is not on the Medicare fee schedule nor is 88342 how will these claims be paid under these contracts?
It is my thought that many groups will see a decrease in the payment as the payers and Medicare struggle to figure out how to pay these claims. Groups and labs will suffer from these changes in the fee schedule but they will also suffer from lack of payer coordination as this is implemented.
The best option is to build an impact analysis and monitor your billing closely.
A new proposed Medicare fee schedule has been released and it brings more bad news for pathologists. Medicare is proposing an estimated impact of -5% for the specialty of pathology and a -26% for independent labs. The only other specialty taking a hit this large is radiology. This dire proposal is driven by a decrease on the technical component (TC) for many CPT codes.
What does this mean? First this means more trouble for independent labs. These dermatology labs and small anatomic pathology labs took a significant loss last year with the 88305 TC cut. Many are hanging on hoping for a small increase in the 88305 TC rate. Sadly there is another proposed 7% decrease in the 88305 TC rate. Most of these labs have gone on significant cost cutting sprees. This can only be expected if you lose 33% of your revenue. These labs have lost Medicare money and money from managed care plans as they followed the Medicare cuts. The extra 2% pay cut from the sequester did not help any either. Few businesses can survive a 33% cut in their revenue stream. Often this is their margin and losing this means taking drastic measures to stay in business.
Although these labs seldom do 88307 or 88309 type cases, the 88305 TC, 88342 TC and other codes cut will hurt these labs significantly. (Although it can be argued that 88342 CPT codes is the crux of the volume based billing issue. I personally have seen cases where 88342 x 24 is billed.) We must know that many payers have already limited the volume on this code. Now the volume will be limited and the payment rate cut also.
These changes in the last few years seem to be designed to prevent non-pathology groups from billing for pathology, i.e. urology, gastroenterology, etc. If this is the case then Medicare has thrown out the baby with the bath water as these changes have hurt all pathologists and further forced the practice of pathology to be viewed as a commodity.
It should also be noted that there are 1%-2% proposed cuts for the professional component of many of the CPT codes also. This means a total of 3%-4% decrease in the revenue for these codes if you add in the sequester cut.
Granted the government is losing money and needs to cut costs. The current Accountable Care Organization (ACOs) bundled payment model is the latest effort proposed to accomplish this task. Perhaps the issues with ACO’s (many hospitals are dropping out of their pioneer ACO models) has driven Medicare back to the chopping block and revived the practice of cutting individual CPT codes as a stop-gap measure to prevent rising costs for these services.
If we look at radiology we can see a proposed future and it is not pretty. In radiology, the payment for some CPT codes is actually tiered, for example they get paid 100% on the first view, 75% for the second view and 50% for all other views. Imagine if the government built a tiered payment for pathology cases that have multiples. For example, 88305 x 5 would get paid on a similar tiered system.
Medicare seems to be trying to equalize the cost for global pathology services. By decreasing the technical component they are making the physician fee schedule equal to the Ambulatory Patient Classification (APC) rate. This makes perfect sense to them; why pay more to a hospital for this than to an independent lab. In my opinion these are the questions left unanswered:
When will the hospitals decide to leave the histology business and outsource this work? Who will take up this volume? What happens if Medicare cuts the (APC) rate for an 88305 also? How will the 88342 TC cut affect non-pathology practices such as Urology? Where is the tipping point that forces this work back to community pathologists? Many of these labs are down to paying their pathologists $15.00 per case. Are we poised on the cusp of an $8.00 pathology case? Does this eliminate the non-pathology lab margin? What will the national labs do when their shareholders find that anatomic pathology is no longer profitable? Could the big three be looking to divest themselves of this loss leader? The payers are lowering their rates at a very quick rate, when do pathologists start saying no to this pay cut? When are hospital based groups going to gain leverage to remove themselves from low paying contracts?
As we know this is only the proposed fee schedule. Perhaps there will be major changes by the time the actual fee schedule is produced. From what I can tell these decreases are likely to stick in one form or another as the government struggles to find a way to decrease its costs and reduce the volume of work performed.
Overall, we could see an area where no one wants to do histology work. If the profitability in this area continues to fall who will want to do this work? The groups, labs and hospitals that do survive these cuts are going to be the businesses that are proactive and aggressively approach this change. Those that are passive are going to watch change steamroll them into nonexistence.
Mick Raich owns Vachette Pathology and works with pathologists, laboratories and hospitals nationwide in the area of strategic management, and revenue cycle management.
This is my opinion of some of the current changes. The cost for billing your anatomic pathology work just went up; as payments for services decease the cost for billing has to decrease equally. If billing costs do not decrease at a rate even to the decrease in payments then in fact your billing costs went up. Look at the facts: If your billing cost is 5% on an 88305GB that paid $105.86 then you paid $5.30 to get this claim paid.
FY 2013 MPFS Final Rule, released Nov. 1, 2012, CMS announced a 33% reduction to the global payment of an 88305. Now the same 88305GB now pays at $70.46 in 2013 but it still costs you $5.30 to bill. This is now 7.9% of the total payment. This means you are paying an extra 2.9% for billing. This may not seem much but on a practice that collects $10M a year this costs about $290,000 per year.
How are you going to handle this increased cost? Many independent labs are saying that they are not changing billing and that they are going to see how it plays out. These labs have a strong local presence in their communities and have a given mission statement to support their local economy. This is very admirable. Some labs will choose to out-source billing and use the savings to increase efficiencies in the lab, increase marketing presence, or drive managed care contracting.
My opinion is that no matter what your business is you must choose the path of least resistance to stay competitive. Failure to do this leads to issues that defeat the business. The key in any business is creating a profit margin. Those companies that can do this survive and those that don’t fail.
I can see the writing on the wall for self- billing. The 2013 MPFS Final Rule cut the clinical lab fee schedule 4.5% and slashed the global charge 33% on 88305. These cuts are significant obstacles to overcome. I fear some labs won’t survive this change.
If you consider the current out-sourced billing world you will see that these services are offering quality outcomes at very reasonable prices. These billers have huge economies of scale. They all have large proprietary billing platforms built specifically for pathology and lab billing. Plus they can take advantage of the cost savings that come from off shoring the manual part of billing and data entry for example. These variables allow them to bill more efficiently and at a lower price than most in-sourced services. As a person who has reviewed and audited pathology and laboratory billing processes and results for the last ten years I can comment that there are some very effective in-sourced billing sites. But, if you consider the future of further cuts from Medicare and managed care plans, and the proposed increase in the minimum wage and the burdens that come with the billing process changes, i.e. the point of service changes self-billing is going to become more arduous in the future. Like independent labs, only the most efficient billing operations will maintain profitability.
The bottom line is this: Most labs or groups that do their own billing have costs between 7% and 15%. A realistic outsourced cost is around 5.5% or 6%.
I often hear labs say their billing costs are 3% or 5%, although this number may be true, usually these labs have lab people double shifting as billing people. Furthermore when audited their costs are found to be to be significantly more. It is not unusual to find these labs are actually paying 10%-15%. The highest I have seen is over 22%. (This lab saved about $500,000 when they fixed their billing costs.) Here is a simple overview if you lower your costs down to 6% from 15%. This calculation looks at a lab that collects $4M per year:
Lab gross collections: $4,000,000.00 Billing costs: at 6% $240,000
Billing costs: at 7% $280,000
Billing costs: at 8% $320,000
Billing costs: at 10% $400,000
Billing costs: at 15% $600,000
As you can see the benefits are obvious and please note this is only the cost benefit, it does not include an average of 2%-4% increase in revenue from using a new outsourced provider. A lab that collects $4M a year may find an additional $80,000 to $160,000 a year in revenue, add this to the costs savings and you can clearly cover the entire loss from the payment decreases. We have numerous labs that have moved through this process. It is the only way to stay profitable and make a margin.
Mick Raich is a revenue cycle consultant who owns Vachette Pathology, and Stark Medical Auditing. He can be reached at firstname.lastname@example.org or at 866-407-0763 or 517-403-0763.
In a conversation today I spoke with Steven Weinstein, a partner with the international law firm K&L Gates. We discussed the group of class action lawsuits filed over the last several months against Blue Cross and Blue Shield Association and its 38 licensees. The litigation, now consolidated in federal court in Birmingham, Alabama, will be an antitrust battle against all the licensees for “having allegedly divided and allocated among themselves health insurance markets throughout the nation to eliminate competition.”
You may remember that there were a series of class action lawsuits against the the Blues several years back. The various Blues entities ultimately settled for more than $130 million and were given a very broad release [see Rick Love MD vs. Blue Cross and Blue Shield Association].
It is likely that the Blues will now use their past release from the Love settlement to try and prevent the antitrust lawsuits from going forward. This case has numerous details and could possibly lead to a favorable result for providers. (Isn’t this reminiscent of the large labs cutting prices to gain market share in California?)
It may be in your best interest to contact Mr. Weinstein about the above or any other payor disputes you may have questions about. He is not involved with the antitrust lawsuit but is knowledgeable about it. Mr. Weinstein has 20 years of experience in payer disputes and related litigation and will be willing to assist you further. He can be reached at 305.5393353 or at Steven.Weinstein@klgates.com.
We have found that some independent labs are now seeing commercial payers applying the TC (technical component) Grandfather Clause and the non-payment of the technical component of hospital inpatients and outpatient to these labs. The payers are now using the exact same reasoning as Medicare which presumes the payment for the TC is paid via a DRG, therefore the payer does not need to pay the technical component portion of this global bill. Some payers are actually quoting the Medicare regulations as their reasoning to deny these claims. How do you fix this? First, you need to review your contract; this change may not be covered by the current contract. Second, you need to open up discussions with the payers to educate them on this process and the fact that you are actually performing this work.
The other option is that you could go back to the hospital for pass through compensation for this work; again this will lead to a series of conversations. Be advised that the hospital administrators will be blindsided by this request for more cash.
Medicare is moving to forward with their denials of incomplete claims. In phase one of this current missive they issued a warning stating the claims failed to meet NPI requirements. In phase two these claims will be denied. What this means is simply this: Ordering and referring MDs must have an enrollment record with Medicare and their NPI and legal name must be posted on the claim. You must use the individuals ordering providers NPI not their group NPI. The following messages will be on the claims:
- N264 Missing/incomplete/invalid ordering physician provider name
- N265 Missing/incomplete/invalid ordering physician primary identifier
Again this is another reason to have a solid denial report from your billing agent and it is important for them to actually work this denial report. This is another reason why your practice management firm should review these denial reports each and every month.
California Introduces a Bill to Keep Pathologists Forefront in ACOs
California is proposing a bill that would mandate that each ACO create a Clinical Laboratory Advisory Committee and that this committee include a physician who is the director of the clinical laboratory providing services to the ACO. This keeps pathologists and their efforts directly involved in the ACO process. This is called State Bill 264 in California. What is your state doing?
New HIPPA Rules Affect Patient Billing
A new rule goes into effect this week that can change your self-pay billing in a very unique way. As of March 26th. Consider this a patient who pays out of pocket can now request that their insurance NOT be billed. The biller has to comply with this request. If you do not comply with this request it is not a HIPPA violation.
Independent Labs Fighting Medicare to Get Paid.
If an independent labs bills an encounter on the same dote of services as the patient has an outpatient encounter they are not getting paid. Several labs have contacted Medicaid about this issue and are fighting the battle to get paid for these services. It seems that CMS has erroneously tied this payment to the TC Grandfather Clause as part of their hospital bundling edits. The only real recourse at this time is to appeal each claim on an individual basis.
Sequester Payment Changes
Please note the sequester cuts do not actually affect the CMS fee schedule only the actual amount paid. Therefore the payment amount and the fee schedule amount will differ. Also the decreased amount will be taken after the deductible and co-pay are taken therefore the patient will actually have a larger co-pay and deductible.
Credit Card Numbers in-house
Many physicians are now choosing to gather credit card information upfront and requesting permission to put the patient balance on these cards. This has some compliance and legal issues, for example are your employees bonded? This is an excellent way to get that pesky co-pay or deductible paid in full.
It seems Tricare wants all claims submitted with a Department of Defense identification number yet has not given these numbers to all their members. Therefore your claims may be denied if you submit them with the new Department of Defense number until all cards are distributed. You will still need to request Sponsor’s SSN.
Value Based Payment Modifier (VBPM)
The Patient Protection and Affordable Care Act (ACA) required that Medicare (CMS) have guidelines in place for a value based payment. This new modifier will be based on the quality and the cost of care to patients. It will be rolled out to select physicians and then expanded to all physicians on 2017. Your VBPM will be tied to your PQRS data.
It is imagined that this VBPM will be tied to your payment and can affect your payments in a positive or negative way depending on your performance. A negative performance could affect your payments as much as -1%. Please note a group that has not meet their PQRS requirements can have their payments lowered an additional -1.5%.
New HIPPA Rules Affect Patient Billing
A new rule goes into effect this week that can change your self-pay billing in a very unique way as of March 26th. Consider this, a patient who pays out of pocket can now request that their insurance NOT be billed. The biller has to comply with this request. If you do not comply with this request it is now a HIPPA violation.