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The Importance of Proper Coding at Your CHC

October 21, 2013

You hear it so often you start to believe it is true….coding at a CHC…it just doesn’t matter. In other words, regardless of what is coded, we always get the encounter rate so really, who cares about coding?!?!

OK, maybe this seemed true back in the day when nearly ALL encounter rate payment came directly from Medicare or Medicaid vs. “managed care” payers. AND, maybe your CHC still sees most encounter rate payments coming directly from Medi-Medi but do you really believe these elevated encounter rate payments will sustain forever? Even if you are rock-solid certain (and this would seem careless based on market trends), consider the following to see if it pertains to your CHC.

  • Managed Medicaid/Medicare…. This simply means the state and/or federal government pay a commercial payer (think BCBS, Aetna, etc.) or a unique payer is created (think SecureHorizons, AmeriGroup) to manage the care of Medicare and.or Medicaid beneficiaries (i.e., patients). Many of these payers compensate a CHC in a “fee-for-service” model (FFS) or via Per Member Per Month (PMPM) capitation vs. the encounter rate payments. Certainly there are many variations BUT these payers not only care about coding…they use it to determine a variety of things about a CHC…including but not limited to:
  1. Is the patient population as “intensive” as CHCs persistently claim (“Our patients are more complicated!”)??
  2. Is the CHC under or over compensated compared to peer groups (So…does the PMPM or “bonus” go up or down based on trending)??
  3. Can the payer continue to profit within this risk group of patients (Meaning…after paying the CHCs and other providers does there exist enough margin to remain in the business OR must they seek increases in premium from Medicare or Medicaid)??
         Make no mistake, payers use HCPCS (e.g., CPT) and ICD coding to make business                decisions. Always have. Always will.
  • Cash Position…. This ties to the immediately above Manged ‘Caid/’Care and may be perhaps my favorite topic for a CHC… i.e., the ability to “improve a CHC’s cash position” through optimal coding. Many providers (and frighteningly CFO and CEO types too) believe just waiting for the “wrap around payment” from Medicaid will make them “encounter rate” whole. Sooo, again, who cares about coding? Quick scenario… A CHC has a Medicaid encounter rate of $165 and (shockingly) a provider who under-codes most patient encounters. In example “A,” he captures a 99212 and a urine dip (e.g., 81002) resulting in a FFS payment of $45. In reality (and what we will label as example “B”) let;s assume for a moment that what should/could have been coded based on actually rendered and documented service was a 99214, a urine with micro (81000), ECG (93000), and a venipuncture (36415) all of which result in an aggregate FFS payment of $125. In both cases, the wrap around payment will arrive BUT in example A…you wait for $120 while in example B you wait for $45. So who makes money on the interest while waiting for that quarterly, semi-annual, or even annual “wrap” payment?? Answer: NOT the CHC.
  • Commercial Payers… The ONLY way to increase compensation from these payers is to code optimally. Too many CHCs still undervalue the financial opportunity available from commercial payers because commercial insurance is perceived to be too small a percentage of a CHC’s overall business. Translation…it does not seem worth a CHC’s time or attention. However, from work around the nation, PMG consistently finds Commercial Payers, as a percentage of aggregate charges, often account for less than 10% of CHCs’ output. However, as a percentage of payments (which is what we really care about), AND assuming coding is accurate…not unethically or inappropriately elevated but accurate…the Commercial Payer payments as a percentage of all payments is typically double the percent of Commercial Payer charges. Stated otherwise, Commercial Payers, when optimized, are significant sources of increased payments but ONLY if coding is done accurately and well.
  • Compliance… You hear people say “under-coding is just as bad as over-coding” and this never seems sensible. What happens if you are “caught” under-coding…does someone cut you a check as a penaltyOver-coding…er get that but again, if we get paid encounter rate, can a payer really take back money for coding errors. In short, yes. While never able to find a statute to substantiate this, PMG has spoken with CHC CFOs around the country who have had their full encounter rate recovered by Medicaid programsbecause an audit of the documented record demonstrated incongruence between what was coded and billed vs. what was documented. Seems ludicrous to me that this could even happen if the “trigger” for payment is “face to face contact with a core provider for a medically necessary service.” This “trigger” event occurred. No doubt. But hey, explain that the RAC, OIG, BEAF, and/or other acronym-based investigative team attempting to recover money during what has been one of the most dire economic periods ever experienced by our nation and the larger world economy.
  • Medicare Change Request (CR) 7038…. OK, this now seems like ancient history as it was January 2011 BUT this was a significant departure for Medicare “encounter rate” payments which had always been primarily paid after submitting an ANSI 837-I (a.k.a., paper version of UB-04) with one of the two revenue codes (521 for medical and 900 for behavioral health) with corresponding “HCPCS” (e.g., CPT) being 99212 with Rev 521 and 9080X with Rev 900. Easy peasy. No fuss, no muss. Then comes CR7038 requiring all CHCs to include HCPCS code detail with corresponding Revenue code because, well…because…uhhh….no real answer given. They were curious? Suddenly studious?? After nearly two decades of perceived coding complacency, now someone at Medicare cares??> As we say often at PMG, it is never the money…but it is always the money. The feds are broke and so are most states. This is just conjecture mind you but it would make sense as CHC Medicare payment transitions from encounter rate (derived via “cost based” analysis) to “prospective payment system” (PPS) that they want to analyze what a CHC would be paid in a FFS world vs. encounter rate compensation land. Is it outlandish that they might take interest in a “cost based” line item and take action in terms of cutting future expense?? Ask the home-health care industry what the 1990s did to their “cost based” reimbursement bubble…Answer? Anyone?? Bueller??? Pop…deflated. Just an opinion but PMG recommends you code correctly or have difficulty justifying your future encounter rate existence,,,and we don’t think this is just Medicare. In fact, why is encounter rate even necessary if all of a sudden in less than two years everyone has coverage?? Was not the encounter rate at least partially (if not largely) intended to afford CHCs elevated compensation so they could afford to see the under- or un-insured??? No guaranteed answers here. Just some plausible questions.
  • PCMH/ACO… These payment systems are grounded around one key term: “payment justification.” Demonstrate elevated/improved outcomes…make more money. Demonstrate elevated acuity or more complicated patient mix…make more money. Demonstrate true need necessary to manage a complex, diverse, and transient patient base….make more money. How do you do this??? Obviously CHCs require tremendous data-diving skills but the reports are based on enhanced and optimal coding capture. There is simply no other way.

In the end, correct coding is just the right thing to do to clearly demonstrate the true breadth and scope of what a CHC does to manage the care of a diverse and needy patient population. For too long CHCs have received around “correct coding expectations” what to some has felt like a press pass. Even if that was not really true, the climate of fiscal fastidiousness, elevated investigative scrutiny, and scarcity of historically abundant government funded programming mandates accelerated attention to an area of a CHC’s work that may have in years past been easy to overlook. Coding accurately, consistently, and thoroughly should be the standard not the exception. Make certain your CHC is training, auditing, and training some more to assure positive outcomes for any future initiatives driven by HCPCS (e.g., CPT) and ICD coding. Prove your worth through correct coding or ponder your CHC’s longevity.

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