Lack of Correct Charges & Claim Submission Impacting HOPDs

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When the 2017 Outpatient Prospective Payment System (OPPS) Final Rule was released, this author’s past education, warnings, and predictions about inadequate charges and claim submissions negatively impacting Medicare payments for wound care hospital-based outpatient departments (HOPDs) became  reality. Before reading on, add a “high priority” item on your February to-do list: Have your HOPD charge description master (CDM) reviewed by a professional who understands wound care and verify that your actual claims reflect the correct codes, units, and charges for your services, procedures, packaged procedures, and products. 

How HOPD Charges & Claim Submission Impacts 2017 APC Allowable Rates

Let’s review what happened Jan. 1, 2017, so that you can 1) fix your systems; 2) provide payers with accurate information regarding costs for products, procedures, and services; and 3) prevent drastic payment reductions from happening again. As we have discussed previously in Business Briefs, claims submitted by HOPDs in 2015 to Medicare dictated the Ambulatory Payment Classification (APC) group to which each service and procedure was assigned in 2017. In turn, APC group assignments dictate the 2017 national average Medicare allowable rates that HOPDs will receive this year. First, let’s review what your HOPD’s 2015 claims told Medicare about your use of cellular and/or tissue-based products (CTPs) for wounds:​

• In many instances, HOPD claims reported that you performed the application of a CTP, but that you didn’t use a CTP. You reported procedure code (15272-15278 or C5271-C5278), but did not report the Healthcare Common Procedure Coding System (HCPCS) code for the CTP applied. In effect, your claims said your HOPD did not incur costs to purchase a CTP. This either caused the packaged procedure to be placed into a lower-paying APC group or kept it from moving to a higher-paying group — where it belongs.
• In many HOPD claims, the HCPCS code for the CTP was reported with a unit of “1,” rather than the total number of square centimeters that were purchased for that patient. In effect, your claims said the HOPD only incurred costs for 1 sq cm. This either caused the packaged procedure to be placed in a lower-paying APC group or kept it from moving to a higher-paying group — where it belongs.
• In another large number of claims, the charge for the CTP was either for only 1 sq cm, was less than the product cost, or was only for the portion of the CTP that was applied (rather than for the number of sq cm purchased for the specific patient). Therefore, Medicare was given the false impression that the actual costs of the CTPs were lower than the HOPD actually paid. That either caused the packaged procedure to be placed into a lower-paying APC group or kept it from moving to a higher-paying APC group — where it belongs. 
• Another large number of claims didn’t report the add-on codes for application procedures. This also gave Medicare a false impression that HOPDs did not need paid for wounds > 25 sq cm or > 100 sq cm.
• The most startling HOPD claims gave Medicare the false impression that CTPs applied to the smaller anatomic locations (eg, feet) cost the HOPD less than the same size CTPs applied to larger anatomic locations (eg, legs). Let’s look at an example to depict just how nonsensical that is. 

Example: The physician ordered the same brand CTP for two patients (one living with a 120-sq cm wound on the leg; the other a 120-sq cm wound on the foot). The CTP is available in 140 sq cm sheets. Therefore, the HOPD incurred the same cost for each 140-sq cm sheet regardless of the wound’s anatomic location.

Logic tells us that the HOPD should have submitted the same charge for each 140-sq cm sheet and that the HOPD should have submitted the same charge for the application procedure to both anatomic locations because the wounds were the same size. Unfortunately, an astoundingly high number of HOPDs reported a much smaller charge for CTPs purchased for wounds on smaller anatomic locations than they charged for the same size CTPs purchased for wounds on larger anatomic locations. That just does not make sense! HOPDs paid the manufacturer the same amount for the same size CTP regardless of the anatomic location where it is applied. 

If this author were setting HOPD charges for the application of CTPs, the same charges for 15271/15272, C5271/C5272, 15275/15276, and C5275/5276 would be set. In addition, the same charges would be set for 15273/15274, C5273/C5274, 15277/15278, and C5277/C5278. Unfortunately, most 2015 HOPD claims charged more for the same size wounds on the legs than for those on the feet. Worse yet, most HOPD claims for the work to apply “high-cost” packaged products included higher charges than the same work to apply “low-cost” products. That also doesn’t make sense. The physician or other qualified healthcare professional generally does the same amount of work regardless of the cost of the packaged CTP. Now, let’s look at what theses incorrect units and charges did to the 2017 HOPD national average Medicare APC allowable rates for both “high-cost” and “low-cost” packaged CTPs. Because many HOPDs are using the low-cost packaged CTPs to minimize their costs and the patients’ coinsurance, as well as to help physicians meet their Merit-Based Incentive Payment System goals, let’s look at Table 1 and study the OPPS payment history of “low-cost” packaged CTPs. First, consider the Medicare allowable rates in 2015, then study how the claims data caused changes to the 2016 allowable rates, and, finally, digest how the claims data worsened and caused some shocking reductions in 2017. 

• In 2015, the packaged allowable rate for application of “low-cost” CTPs to wounds ≥ 100 sq cm was significantly lower for wounds on the feet ($430.12) than for the same size wounds on the leg ($1,407.42). It’s incomprehensible that HOPDs in 2013 (claims data that established 2015 rates) did not pay the same amount for 100+ sq cm of the CTP regardless of anatomic location to which it was applied. And, more importantly, how could the cost for the application of the “low-cost” CTPs to smaller-size wounds (C5271/C5275) be the same as the cost for application of the “low-cost” CTPs to larger-size wounds on the feet (C5277)?
• Claims data in 2014 seemed to paint the picture of the cost for application of “low-cost” CTPs to larger-size wounds. The 2016 allowable rate for application to the leg (C5273) increased from $1,407.42 to $2,137.49. That payment rate allowed HOPDs to afford to purchase “low-cost” packaged CTPs for larger-sized wounds on the legs. The 2016 allowable rate also increased for the application to the feet (C5277), from $430.12 to $1,411.21. Even though that’s a sizeable increase, it’s highly unlikely it reflected HOPDs’ true cost to purchase and apply large sizes of “low-cost” packaged CTPs to large wounds. Once again, it’s hard to believe the HOPD needed $2,137.49 to purchase and apply 100+ sq cm of a “low-cost” packaged product to the leg, but could purchase and apply the same size product to the leg for $1,411.21. 
• Something terrible must have happened to HOPDs’ CDMs and claims-processing systems in 2015, because 2017 allowable rates for application of the “low-cost” packaged CTPs to the 100+ sq cm wounds took a shocking nosedive. This author finds it hard to believe HOPDs’ costs to purchase and apply “low-cost” packaged CTPs dropped from $2,137.49 to $1,427.16 (C5273) or, worse yet, from $1,411.21 (which was already too low) to $452.91 (C5277). 

If you’re reading this in amazement, don’t assume this was caused by a “few errant claims,” or that your claims “weren’t part of the problem.” It took many errant claims to cause these allowable rates for 100+ sq cm wounds in 2017! Therefore, don’t assume that the charges and units submitted in your HOPD were appropriately processed by your CDM or by the several software programs involved in producing the claims, or that the coders and billers did not manually make some unexpected changes to the “low-cost” packaged CTP claims before they were actually submitted. The only way to be certain is to audit your department’s units and charges, your CDM, and your submitted claims. 

Because “high-cost” packaged CTPs cost more for the HOPD and the patient, the HOPD must be equally careful about processing these claims, because they need much higher allowable rates to purchase and apply “high-cost” CTPs. Let’s look at Table 2 and study the OPPS payment history of “high-cost” packaged CTPs starting in 2015, then move to 2016, and, finally, 2017. As with the review for “low-cost” packaged CTPs, continually ask yourself, “With the allowable rates that were driven by the claims data, can I afford to purchase the product to cover the entire wound bed, to cover the wound edges, and to extend into the wound margin so that the CTP can be fixated?” 

• 2015 rates paid less for the application of “high-cost” packaged CTPs to the same size wounds ≥ 100 sq cm on the feet ($1,407.42) than on the leg ($2,301.54). Also in 2015, it does not appear that the rates for 15271 and 15275 ($1,407.42) are adequate to purchase some “high-cost” CTPs and to pay for the work to apply them to wounds up to 99 sq cm. Finally, rates for the wounds ≥ 100 sq cm are simply inadequate to purchase 100+ sq cm of most “high-cost” CTPs, let alone to pay for HOPDs’ costs to apply, offload, and dress the wounds. 
• The 2014 claims caused the 2016 rates to finally pay the same for the application of packaged “high-cost” CTPs to all anatomic locations of wounds ≥ 100 sq cm. But look what happened in 2017: HOPD 2015 claims caused 2017 payment for the application of CTPs to large wounds on the feet to drop significantly (from $2,137.49 to $1,427.16). Ask yourself, “What happened to HOPD CDMs and/or to HOPD claim preparation that caused this to happen?” This is more confusing since the 2017 payment for large-size wounds on the legs increased significantly (from $2,137.49 to $2,503.63.) This increase should have also been for 15277. 
• One last thing about payment rates for all procedure codes for the application of “high-cost” packaged products: These rates may still be too low to account for the actual cost of appropriately applying some “high-cost” CTPs to larger wounds. This is caused by all the issues described about coding and charging purchasing, and for the products.  

How can HOPDs Rectify Seesawing Allowable Rates?

It’s too late to do anything about 2018 rates because those rates will be set by claims submitted in 2016. However, work can be done on rectifying this situation in 2019 if HOPDs submit more accurate units and charges throughout 2017. Now is the time to look at charging systems and CDMs, and to audit a sizeable number of claims to determine if your HOPD claims are contributing to the problem. If they are, you must fix them early in 2017 in order to have a full year of claims to improve 2019 Medicare allowable rates for packaged CTPs. 

Should HOPDs Audit Other Procedures For Similar Charging & Claim-Submission Errors?

Yes, with the increasing utilization of disposable negative pressure wound therapy (NPWT), HOPDs must verify that their claims for application of disposable NPWT devices (97607/97608) include adequate charges for both the acquisition of new disposable NPWT devices and the work to assess the wound, apply the new disposable device, and provide instructions for ongoing care. That charge for 97607/97608 should be significantly larger than the charge for 97605/97606 (application of NPWT durable medical equipment [DME] and supplies the patient acquires from the DME supplier and carries into the HOPD). The reason is simple: HOPDs do not incur any costs for NPWT DME. Therefore, the charge for 97605/97606 is only for wound assessment, product application, and instructions for ongoing care; it does not include a charge for equipment because the HOPD does not purchase the NPWT DME and supplies. Now, you’re probably saying to yourself, “That makes total sense. I just know our charging system, our CDM, and our claims for disposable NPWT (97607/97608) have a significantly higher charge than our claims for NPWT DME (97605/97606).”  Remember that you cannot assume the charges on claims for disposable NPWT are as high as they should be. You must review the CDM and the actual claims submitted. This author has talked with many CDM managers who thoroughly believe HOPDs should not charge any more for disposable NPWT than they charge for NPWT DME. It usually takes an hour or more to help these managers understand that just because codes 97605/97606 and 97607/97608 are next to each other in the Current Procedural Terminology (CPT^®) Manual, and just because both of their code descriptions include the words “negative pressure wound therapy,” does not mean the codes are describing application of the same type of product with the same type of cost to the HOPD. Table 3 shows how HOPD claims have caused the APC national average allowable rates to rise and fall when the actual costs of disposable NPWT have not been rising and falling. As you should know, more physicians and patients are interested in using disposable NPWT. It appears that HOPDs are initially adding 97607/97608 to their CDMs with the same charge as the application of NPWT DME. Unfortunately, those claims are causing rates for 97607/97608 to drop. By the time HOPDs rectify the problem, they have already negatively impacted APC rates for the calendar year two years from that calendar year. As you can see in Table 3, the original 2014 Medicare allowable rate was $274.81. Then, HOPD claims caused the rate to drop to $146.14 in 2015. Some HOPDs rectified their claim charges, which caused the allowable rate to increase slightly (to $225.55 in 2016). Note that this still doesn’t reflect its 2014 allowable rate. Some HOPDs rectified their claim charges, which caused the allowable rate to increase to $292.62 in 2017. However, there are still many HOPDs that haven’t rectified their charges for disposable NPWT. These HOPDs are putting the 2019 APC allowable rates for 97607/97608 at risk of decreasing. Now is the time for HOPDs that have been using disposable NPWT to review their 2017 CDMs to ensure charges for 97607/97608 reflect costs for the labor to assess the wound, purchase the disposable NPWT, apply the disposable NPWT, and provide instructions for ongoing care.  In addition, as more HOPDs begin to use disposable NPWT, they must be sure they do not make the same mistakes that other HOPDs have made; they should add 97607/97608 to their CDMs at a different charge than is currently in their CDMs for 97605/97606. The reason? HOPDs don’t want to cause rates for 97607/97608 to drop like they did in 2015. The good news: This is not an impossible mission because HOPDs are totally responsible for their CDMs and for their claims. This is your mission, should you choose to accept it! 

Kathleen D. Schaum, MS, is president and founder of Kathleen D. Schaum & Associates Inc., Lake Worth, FL; and director, medical products, reimbursement, at Smith & Nephew, Fort Worth, TX.