Business Briefs: Wound Clinic Reimbursement: “The Devil is in the Details”

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  Ever since the new CPT®¹ codes for the application of skin substitute grafts were released in November 2011, I have had the honor to publish articles on the topic (one was in the December 2011 issue of Today’s Wound Clinic), present 2 nationwide webinars with a live question and answer session (attended by nearly 2000 wound care professionals), and to answer over 500 one-on-one telephone questions. With that many educational encounters in such a short period of time, I learned a lot from the wound care professionals who work in wound clinics.

  I also heard and felt the wound care professionals’ frustrations over the numerous coding, payment, and coverage changes that they must somehow learn about and implement in-between taking care of patients with chronic wounds. Most wound care professionals do not have business and reimbursement training. Therefore, the minutia that is required to 1) submit clean claims to the payers supported by thorough patient-specific documentation of medical necessity, and 2) to maintain compliance, often seems like a lot of busy work to these excellent wound care clinicians.

  As the New Year began, I realized that the idiom “the devil is in the details” should be my training motto for 2012. The idiom refers to a catch or mysterious element hidden in the details. Therefore, my New Year’s Resolution is to not only teach you “what” you need to do, but “ why” or “how” to accomplish the task more efficiently and the possible ramifications of not taking care of the details. To help you start the New Year off right, this article will review several reimbursement details that appear to be overlooked or misunderstood by wound care professionals throughout the United States. Although these overlooked/misunderstood details were brought to my attention when discussing the new skin substitute graft CPT® codes and the new biomaterial HCPCS codes, these details are pertinent for all CPT® and HCPCS codes.

  In all of the skin substitute graft educational articles, webinars, and telephone conversations, I reminded the wound care professionals to update their Charge Description Master (CDM) data base. The CDM database is the “orchestra leader” of your revenue cycle because it lists the codes and charges for all wound clinic services, procedures, and products. Therefore, the CDM database should contain everything that you do and that you provide to patients. You must discipline yourself to meticulously maintain that electronic database every time you add, delete, or change a service, procedure, or product. Each item in the CDM database must have the correct HCPCS or CPT® code, correct description, correct billing unit, correct price, and correct revenue code.

  Following are some CDM database “details” that I learned were not handled correctly and that negatively affected the reimbursement of many wound clinics throughout the country:

HCPCS Codes That Were Deleted by CMS Were Still in the CDM Database

  On January 1, 2006 the Centers for Medicare & Medicaid Services (CMS) assigned HCPCS codes that began with the letter “J” to various categories of skin and dermal substitutes. Wound care professionals quickly learned which “J” codes were relevant to the brands of products that they used and they added those codes to their CDM databases.

  On January 1, 2009 CMS deleted those “J” codes and replaced them with brand-specific “Q” codes. CMS also periodically issued new pass-through codes with brand-specific “C” codes for new products. After a period of time, those pass-through codes were deleted and replaced with brand-specific “Q” codes. Wound care professionals should have updated their CDM databases with the new “Q” codes in 2009, with new “C” pass-through codes as they were released, and then with new “Q” codes for products whose pass-through “C” codes were deleted.

  Effective January 1, 2012 several new products received “Q” codes, one new product was awarded a pass-through “C” code, and one product’s pass-through “C” code was converted to a new “Q” code.

  You are probably saying, “Of course, everyone understands that those codes were changed – what’s the big deal?” I have to admit that I was surprised to learn that many wound care professionals changed the HCPCS codes on their charge sheets and in their data entry systems, and sometimes added the new HCPCS codes to their CDM databases, but they failed to disable the old “J” codes in their CDM databases. Therefore, their actual bills have been going out the door for the past two years with the wrong HCPCS codes and those wound care practices have not been paid for those products since 2008. Worse yet, they had not conducted internal audits that could have uncovered these expensive mistakes.

  Yes, the “devil is in the details”: When HCPCS codes are new, deleted, or changed, wound care professionals must take the time to meticulously update their charge sheets, their data entry systems, and their CDM databases. Then they must test the entire process to be sure that the actual claims contain the correct HCPCS codes. Finally, they should conduct internal audits to test correct claim submission periodically throughout each year. NOTE: Although the new biomaterial codes brought this issue to my attention, this update process is important for all products with HCPCS codes.

Billing Units for Drugs and Biologics Were Not Correctly Reported on Claim Forms

  Many wound care professionals told me that they were reimbursed a very small fraction of the cost of the product. Depending on your distributor and purchasing contracts, your reimbursement may fall a little short of the cost of the product, but you should not be receiving reimbursement that is only a very small fraction of the cost of the product.

  Because this problem seemed odd to me, I helped each of the callers to investigate the reason for their miniscule reimbursements. In every case, the charge sheets stated that the physician applied one (1) piece, the unit of one (1) was entered into the data entry system, and the CDM database listed the unit as one (1). Therefore, the number of units reported on the claim form was one (1). Because nearly all of the “Q” code descriptors for these products are “per square centimeter”, the payer paid for one (1) square centimeter, rather than the total number of square centimeters that were applied i.e. 44 sq cm, 37.5 sq cm, 10.5 sq cm, 21 sq cm, 70 sq cm, 140 sq cm.

  Once again, “the devil is in the details”: The CDM database should list the unit as “1” square centimeter for all products with “per square centimeter” descriptors. The charge sheets and data entry system should then have a place to enter the total number or square centimeters applied and the total number of square centimeters wasted (if your Medicare contractor requires the wasted portion to be reported on a separate claim line item). Then the physician should document the number of square centimeters of the product opened for the patient, the number of square centimeters applied, and the number of square centimeters wasted. When those numbers of square centimeters are captured on the charge sheets and in the data entry system, they will be multiplied by the hospital’s charge per square centimeter in the CDM database. The code, number of units, and correctly calculated charge will then be reported on the claim. When Medicare and the patient pay their portion of the Medicare allowable, the wound clinic should be reimbursed at a rate that is close to the acquisition cost of the product. NOTE: Do not be surprised if the product actually costs a little more than the total reimbursement. A variety of circumstances can cause this small discrepancy.

Price Changes, Particularly Price Increases, Were Not Entered Into the CDM Database

  Numerous wound care professionals reported that they were being reimbursed less than the Medicare allowable even when the patients paid their coinsurance. At first that was a mystery to me. Then it dawned on me that price increases might not have been consistently loaded into the CDM database. I contacted the wound care professionals who reported those issues and asked them to verify their actual cost for each product for the past 2 years. Surprise! Surprise! All of the wound care professionals reported price increases that had not been loaded into the CDM database. Therefore, the claims that were submitted to Medicare requested a smaller payment than the Medicare allowable. When charges are lower than the allowable, Medicare will pay based on the lower charges.

  Yes, you guessed it, “the devil is in the details”: Wound care professionals must coordinate with the materials management department to stay informed about price changes. When prices change, your charges in the CDM database should be adjusted to reflect the new acquisition cost. Then when you bill for the number of square centimeters applied/wasted, that number of units will be correctly multiplied by the correct charge per square centimeter. Because most hospital charges are usually greater than the Medicare allowable, your wound clinic should then be reimbursed the full Medicare allowable, as long as you collect the patient’s coinsurance. If you do not collect the patient’s coinsurance, your reimbursement may not be close to the cost of the product: the variance will depend on the cost of the product.

Charges Were Not Increased When Payment for Codes Were Combined

  Many wound clinics showed concern that debridement (except for gross contamination) and application of multi-layer compression bandage systems (which is required for all venous stasis ulcers) were not separately payable from the new application of skin substitute codes. When I asked the callers if their hospital had increased their charges for these new codes to include the cost of the debridement and the cost of the application of multi-layer compression bandage systems, everyone answered “no”. I then asked every caller if they increased their charges for other services that were combined in previous years such as: debridement and application of multi-layer compression bandages, application of previous years’ skin substitute codes and application of multi-layer compression bandages, and application of previous years’ skin substitute codes and application of total contact casting. Once again, the unanimous answer was “no”. Therefore, CMS was not given any indication that the wound clinics resource cost was higher when payment for one procedure was combined into the payment for another procedure.

  For the final time, “the devil is in the details”: The charges that all hospital based outpatient departments submit for each code in 2012 will be used by CMS to determine the APC group and payment rate for each code in 2014. CMS always reminds hospitals to accurately and appropriately report the costs of their services, as represented by the billed charges on their claims. CMS expects hospital charges to reflect the resources that are required to furnish a particular service. Therefore, as new codes and/or new coding rules are released that include more resources, the wound clinic director should collaborate with the CDM database director and the hospital’s finance department to establish new charges that reflect the resources that are required to furnish the full array of resources represented by the new code and/or coding rules.

  Because CMS uses all hospitals’ claims data to set future outpatient departments payment rates, it is incumbent on every hospital based outpatient department in the country to adjust their charges when new codes and/or new coding rules combine more work and more products into the payment for a single code. If every hospital based outpatient department in the country does not adjust their charges for these combination services, your future rates for these services will be inappropriately low in the future. The time to worry about your 2014 Medicare reimbursement is when you set your 2012 charges.

Summary

  I know that many of you are thinking that these situations happened to other wound clinics, but are not happening in your wound clinic. Actually, I hope that is the case. However, the number of times these 4 scenarios were reported in the last 90 days gives me reason to believe that these situations are wide-spread throughout the country. Remember, none of the wound care professionals knew they had these problems until they went to update their CDM database with the new skin substitute graft codes. No one had reported the claim denials or the low reimbursement rates to them. Furthermore, they had not conducted internal audits which might have identified the issues.

  Before you say that these cases are only happening to other wound clinics, you should double check that your CDM database contains all of your services, procedures, and products. Be sure that the most current HCPCS and CPT® codes are in the CDM database and that outdated codes are deleted, or at least disabled. Check that drug and biomaterial units are reported correctly on the claim. Maintain a close working relationship with your materials management department: ask them to inform you when wound care product prices change, particularly when they increase. Finally, all hospital outpatient wound care departments throughout the country should adjust their charges for each code to reflect all the resources that are combined into one billing code.

  If you maintain your CDM database throughout the year as you add new services, perform new procedures, purchase new technology, and/or incur price increases, you should never be working with an outdated CDM database. Remember that “the devil is in the details” of reporting all chronic wound-related services, procedures, and products.

Kathleen D. Schaum, MS, is President and Founder of Kathleen D. Schaum & Associates, Inc., Lake Worth, FL. Ms. Schaum can be reached for questions and consultations by calling (561)964-2470 or through her email address: kathleendschaum@bellsouth.net.

Reference

1. CPT is a registered trademark of the American Medical Association.