Does Your Wound Care PBD Correctly Charge for Inpatient Services?

Editor’s Note: Kathleen D. Schaum, MS, author of Business Briefs, will be on extended vacation through early 2018. While she’s away, we will feature guest authors in this column space. Ms. Schaum will return to her column beginning with the February 2018 edition.

Information regarding coding, coverage, and payment is provided as a service to our readers. Every effort has been made to ensure information accuracy. However, HMP and the author do not represent, guarantee, or warranty that coding, coverage, and payment information is error-free and/or that payment will be received. The ultimate responsibility for verifying information accuracy lies with the reader.

Having worked closely with certified wound ostomy care nurses, physicians, and other qualified healthcare professionals (QHPs) who lead outpatient wound care provider-based departments (PBDs), this author has a keen interest in (and much admiration for) the “miracle work” that these folks do for their patients. Today, many hospitals report that they offer wound care PBD services. In fact, the 2018 Outpatient Prospective Payment System (OPPS) proposed rule cost files reveal that wound care management codes 97597-97602 reported on Medicare claims (651,303 services performed in 2016) rank among the most frequent OPPS services performed.  

Therefore, this author is often inclined to ask those working in hospitals throughout the country the following questions about their wound management services: 

1. When ordered by physicians, do your wound care PBD nurses also provide wound care management services for inpatients? (The answer is frequently “yes.”)
2. Does your hospital charge for the wound care PBD wound management services on the inpatient accounts? (Unfortunately, this question most often leads to blank stares or, sometimes, a verbal exclamation of “We can’t do that!”) 

Wound care PBDs can post charges to inpatient accounts when the wound care management is ordered by physicians or other QHPs, is medically necessary, and is appropriately documented. This article will discuss this topic further. After reading this article, wound care program directors should evaluate what is needed by the PBD and hospital to begin charging wound care PBD services furnished to inpatients on their inpatient accounts, if this is not already occurring. If inpatients are already being charged for these services, this article should be used to determine if requirements are being met appropriately.

DEFINITIONS PERTINENT TO WOUND CARE PBDs

Hospital Cost Centers (or Departments)

This definition comes from Part 1 of the Medicare Provider Reimbursement Manual (PRM) that governs how a hospital completes Medicare’s hospital cost report. (All hospitals are required to follow these rules and file an annual cost report.) The definition of a “cost center” from PRM 15-1, Section 2302.8 is an organizational unit, generally a department or its subunit, having a common functional purpose for which direct and indirect costs are accumulated, allocated, and apportioned. Direct expenses include the salaries and benefits of the staff assigned to work in that department. Indirect expenses may be overhead and/or equipment costs apportioned to the department. Therefore, wound care PBDs are often considered to be cost centers or departments.  

Ancillary Revenue Departments

Section 2202.8 of the PRM defines ancillary revenue departments as those including laboratory, radiology, drugs, delivery room (including maternity labor room), operating room (OR; including post-anesthesia and postoperative recovery rooms), therapy services (physical, speech, occupational), and other special items and services for which charges are customarily made in addition to a routine service charge. The wound care PBD, like the emergency and radiology departments, is considered an ancillary revenue department because it delivers unique patient care services and has both direct and indirect expenses, as well as patient care revenues, attributed to it on the hospital’s general ledger.  

Outpatients 

Section 2202.2 of the PRM defines an outpatient as a person who has not been admitted by the provider as an inpatient and who is not lodged in the provider facility while receiving its services. Where a provider uses the category “day patient” (ie, an individual who receives the facility’s services during the day and is not expected to be lodged in the facility at midnight), the individual is classified as an outpatient. Section 2202.14 says that outpatient services include services that are diagnostic in nature, as well as those services and supplies incident to the services of physicians in the treatment of patients. Wound care services are considered “therapeutic” in that they are provided incident to the services of physicians in their treatment of their patients. The order for wound care services and the approval of the wound care treatment plan with type, frequency, and duration of service is a critical documentation element to prove coverage and to prove that the wound care services are incident to a physician’s service.

Inpatients

Inpatients, in contrast to outpatients, are defined in section 2202.1 of the PRM as persons who have been admitted to a hospital for bed occupancy to receive inpatient hospital services. It may seem logical that an outpatient ancillary revenue department would only render services to outpatients and never to inpatients. This is true of some wound care PBDs, but the staff of many other wound care PBDs render services to both outpatients and inpatients. Ancillary revenue departments can perform and charge for services provided to both outpatients and inpatients. Therefore, the charge numbers in the wound care PBD’s charge description master (CDM) can be posted on both inpatient and outpatient accounts in the patient accounting system. If the wound care PBD staff responds to the physician (or other QHP orders) and provides wound care management services to inpatients on the nursing unit, those services should be charged. In fact, if the hospital does not post charges for the inpatient care, it is in violation of a Medicare charging requirement: charges are required to be applied consistently to inpatients and outpatients.  

REQUIREMENTS FOR PATIENT CHARGES 

PRM Section 2202.4 defines the requirements for patient charges: “Charges refer to the regular rates established by the provider for services rendered to both beneficiaries and to other paying patients. Charges should be related consistently to the cost of the services and uniformly applied to all patients, whether inpatient or outpatient. All patients’ charges used in the development of apportionment ratios should be recorded at the gross value (ie, charges before the application of allowances and discounts deductions).” Don’t let the term “apportionment” cause confusion: this is just a cost-reporting term that means “allocation of indirect and other expenses to departments.”  This is a very important definition when determining the appropriateness of charging patients. First, the definition requires charges to be related consistently to the cost of the services. This means that when a wound nurse from the wound care PBD provides wound management services to an inpatient upon order of a physician or other QHP, and expends the same amount of time or effort with the inpatient that is expended for an outpatient, then both these patient accounts should incur the same dollar charge to consistently reflect the cost of the wound care management they received from the wound care PBD nurse. Another definition in Section 2203 states: “So that its charges may be allowable for use in apportioning costs under the program, each facility should have an established charge structure [that] is applied uniformly to each patient as services are furnished to the patient and [that] is reasonably and consistently related to the cost of providing the services.” Another way to think about this requirement is that when patients receive the same wound care management service, regardless of insurance coverage or inpatient or outpatient status, they should be charged the same dollar amount for that service. Hospitals have colloquially referred to this as “billing all patients the same.”

PROCESS FOR WOUND CARE PBDs TO CHARGE INPATIENT ACCOUNTS

If physicians or other QHPs write orders for wound care PBD nurses to assess an inpatient’s wounds and to provide management services, those services should be charged to the inpatient’s account. Usually, the hospital can post the exact same charge numbers to the inpatient account that are in the wound care PBD’s CDM for wound care management services, such as selective debridement; nonselective debridement; negative pressure wound therapy (eg, both durable medical equipment and disposable); and low-frequency, noncontact, nonthermal ultrasound. The wound care PBD nurse should have a method of identifying the appropriate charge(s) with the inpatient account number, and someone, perhaps that nurse, should post the charge(s) on the inpatient’s account. Because wound care PBD nurses complete a charge screen (or charge ticket) for the outpatients seen in the PBD, this process should not be foreign to them. In addition, if the wound care PBD nurse provides wound care PBD supplies to the inpatient, those wound care supplies should also be charged to the inpatient account.

This author is often asked, “Which revenue code should the wound care PBD nurse use for posting charges to inpatient accounts?” Because the wound care nurse provides wound management at the inpatient’s bedside, the hospital cannot use the revenue codes (0510 for “clinic” or 0761 for “treatment room”) that are typically used in the wound care PBD. Therefore, the patient accounting system usually changes the revenue code to 0940 “other therapeutic services.” Note that the actual Current Procedural Terminology/Healthcare Common Procedure Coding System codes for wound management services and products will not appear on the hospital claims. (Those charges will be included in the revenue codes.) The claim will list appropriate diagnosis codes, which will be identified from the medical record by the hospital coding department. Remember that documentation must support the wound management services provided by the wound care PBD nurse. As already mentioned, the order for inpatient care by the PBD nurse is critical. It can be a specific order made by the patient’s attending/consulting physician/other QHP, or it may be a “protocol order” based on a floor nurse assessment, such as the Braden Scale. If it is a protocol order, the protocol should be approved no less than annually by the medical staff, and the PBD nurse should pull the actual written protocol into the patient’s documentation when he/she performs the wound management. If it is the PBD nurse’s first visit to the inpatient, he/she should document the salient points of the wound assessment and the recommended wound care management plan for the physician or other QHP to review. If the wound care management plan includes follow-up wound care services, the physician or other QHP must approve and authenticate the plan before the PBD nurse provides further service. NOTE: If an inpatient floor nurse requests the PBD nurse to “come and look at a patient,” this is not a chargeable service because the treating physician or other QHP did not write an order for the service. Of course, if the PBD nurse visits the patient briefly and concurs that his/her expertise is needed, the best practice is for the PBD nurse to discuss this need with the patient’s physician or other QHP. In most cases, that discussion will precipitate an order from the physician or other QHP for the PBD nurse’s services. 

Remember, electronic health record systems provide date and time stamps for all entries in the medical record. Therefore, it is not appropriate for the PBD nurse to perform a complete wound assessment upon request of the inpatient floor nurse (this assumes the absence of a medical staff-approved protocol) and to obtain the physician or other QHP order after the work has been performed. Performing work without an order is easily detected and evident in the medical record, and is not appropriate.

WHY CHARGE IF ACUTE CARE HOSPITALS ARE PAID “CASE RATES” FOR INPATIENTS?

As outlined in the aforementioned definitions, the hospital is required to post charges for wound management services provided to inpatients by the PBD nurse. It is improper for a hospital to render services to inpatients and to not charge when the hospital charges outpatients for those same services. This could cause the hospital’s entire charging practices to be questioned and could result in corrective action from the Medicare Administrative Contractor. The following are additional reasons charges are important to hospitals:

• If the charge is not posted to the inpatient account, the hospital is not reporting the resources expended on inpatients. (This would be akin to performing a surgical procedure and failing to charge for the OR’s time and supplies.) The hospital would be taking the position that, as long as the coders put the correct ICD-10-CM procedure code on the account and the Medicare severity diagnosis-related group (MS-DRG) is correct — so that the “case rate” payment is correct — then the missing charges do not matter. 
• However, charges do matter on individual cases for possible outlier payment and for future rate setting. If all hospitals took the position that charges do not matter, hospital payment rates would continue to fall. For inpatients receiving wound care services from the PBD nurse, the MS-DRGs do not reflect the resources used to properly manage the wounds unless both the charges for the wound management services and products, along with the ICD-10 codes, appear on the claim.  
• Furthermore, not all payers pay hospitals “case rates” for inpatients. Some payers pay a percentage of charges, so the wound care PBD charges on those inpatient accounts will immediately translate into net revenue for the hospital. For commercial payers who do pay case rates, if the incidence of wounds is increasing, and if that is due to the incidence of diabetes increasing, then the payer will see the costs for the inpatients who are living with wounds begin to rise — a very appropriate reason to correctly charge inpatient accounts for wound care PBD services provided to inpatients.

Accurately Charging All Services Improves PBD Finances 

Finance and nursing management are focused on staff productivity and the contribution margins of the wound care PBD to the hospital’s bottom line. When wound care PBD nurses respond to a physician’s or other QHP’s orders to assess and provide wound management to inpatients, their time is not spent seeing PBD outpatients. This can look like a productivity problem for the wound care PBD. (It is a financial problem if the PBD nurse does not charge for services provided to inpatient accounts.) Accurately charging all services improves the financial reporting of the PBD.

Valerie A. Rinkle is president of Valorize Consulting LLC, Medford, OR. She may be reached via email at valerie.rinkle@valorizeconsulting.com.