In this episode, we are joined by Rob Senska, General Counsel and Director with LW Consulting, to discuss proper billing for level four new patients.Learn how to listen to The Hospital Finance Podcast on your mobile device.
Highlights from this episode include:
- The four key elements needed in order to appropriately bill a level 4 new patient.
- Steps that medical practices can take to ensure proper coding and billing.
- Implications and impact of improper coding and billing errors.
- Ways that practices can implement controls to prevent billing mistakes.
Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast
Rob has nearly 20 years of legal compliance and regulatory experience in the healthcare field, focusing on both the payer and provider side. Rob has held senior level hospital legal and compliance leadership roles at both community hospitals and major national health systems. He’s also worked at top New Jersey and New York law firms in their health and hospital practice groups.
Rob holds a JD from Brooklyn Law School, an MBA from Union University, a Bachelor of Science from Union College and a Lean Six Sigma Blackbelt Certification from Villanova University.
Rob, welcome to the podcast.
Rob Senska: Good morning, Mike. Thanks for having me.
Mike: So today, Rob, we’re going to talk about proper billing for a level 4 new patient. Why don’t you tell us what a level 4 new patient office visit is?
Rob: Sure, Mike. So, in responding to this question, I think it’s best to sort of break down such a visit into its component elements.
So first, let’s start with the office visit. This is really the meeting between the patient and provider. And by way of brief background, billing criteria for an office visit falls under the evaluation and management or E&M section of the current procedural terminology, a.k.a. CPT Manual, which is put out by the American Medical Association and adapted by CMS.
Really, what this is is a sequence of five numbers that hold the monetary value associated with or describing the medical and surgical procedures, the office visit, the hospital encounters, the lab tests, the imaging procedures, et cetera. It is essentially the way that providers get paid for the services performed.
So that’s sort of the office visit component of this.
Now, with respect to the new patient component, this is defined by CMS as a patient who has not had a face-to-face professional service with a provider or a patient who has not been seen within the last three years by the provider. If they don’t meet one of these elements of this definition, then the patient falls into the category of what’s considered “established patient.”
Now, the final piece of your question, Mike, is really regarding the leveling which is probably the most tricky piece of this. So in general, on very simple terms, there are certain “levels” for an evaluation and management or E&M visit. And those levels are 1 through 5. And these levels that sort of the abbreviation which corresponds to CPT codes 99211, 99212, 99213, 99214 and 99215, each of these comes with an increasing level of complexity of care and services, thus warranting a higher level of reimbursement.
Now, in most cases, Mike, the levels generally fall within the middle of the bell curve, if you will, being levels 2, 3 and 4. In fact, the recent 2017 MGMA Medicare data indicates that for both internal medicine and family medicine physicians, they build approximately 90% of all E&M billings at a level 3 or 4. So there’s clearly a really spiked bell curve in terms of the billing for these services with respect to the E&M levels.
So, that’s sort of a summary of what a new patient office visit level 4 would be in general terms, Mike.
Mike: And Rob, what are the components required to meet this level of care?
Rob: That’s a great question. And since a level 4 new patient visit, as I indicated, has a higher level of reimbursement associated with it, meaning there’s more services being provided than at the lower levels, therefore there are certain standards that must be met in terms of the services documented and the billing.
For a level 4, Mike, it requires three out of three very specified components in order to bill it appropriately. So what are these components? What must be done is a comprehensive history of the patient, a comprehensive exam, and moderate level medical decision-making.
Now, each one of these components is a loaded term. So for new patients, really, depending on the reason for the visit, it is often feasible to appropriately bill for a level 4 based on these elements because, in general, for a new patient, there’s also a new problem. So it tends to be a little more complex and a little more work for the attending physician, thus making it reasonable and substantiating the need for a level 4 or the billing of a level 4.
So, let’s get into a little bit about these three components. And I’ll give some summary information for our audience.
So, with respect to the comprehensive history, the following elements are needed in order to appropriately bill a level 4: 1) a chief complaint, 2) four history of present history elements (or what are called HPI elements), and then 3) a complete past family social history and a complete 10-point review of systems or ROS.
So, those are the elements that are needed for a comprehensive history.
Now, let’s get into the comprehensive exam for a moment. In order to meet this standard, eight organs systems must be examined. And this is based on the 1997 examination guidelines which was promulgated and set forth by CMS.
Now, auditors and coders should be careful not to get confused by counting both organ systems and body areas. Other levels, such as the 2 or 3, allow you to mix and count organ systems and body areas. A comprehensive exam, however, is only met by reviewing a minimum again of eight organ systems.
Now, the last part of this—which I think is the most tricky—that is with respect to the medical decision-making which tends to be a bit more subjective and a bit more gray and often an area of debate with billing this level service.
So, medical decision-making in general is where the physician comes to a decision and shows his/her thought process behind the level of care. And there are three elements that make up MDM or medical decision-making—the nature and number of the clinical problems is one, the amount in complexity of the data reviewed by the physician, and 3) the risk of morbidity and mortality to the patient.
So, those are the elements that are part of the medical decision-making and whether it’s going to be moderate or not.
Now, there is more to this, Mike, which is probably a little more advanced for the purposes of this discussion. But in general, there is a summary that are accepted points system whereby coders and auditors can ascribe a score to these three MDM elements. You need a certain number of total tally points to meet the threshold for moderate medical decision-making, and thus satisfying the level 4 visit billing. This is where you get the higher reimbursement. And these are sort of the steps you need to take in terms of being pragmatic about documenting the coding and the billing for this level service.
There are tools, Mike, that help auditors and coders tally these numbers to ensure that they have the right elements to meet this level. And our company does a lot of educating in this space, especially on the MDM piece. And provider education is key, making sure that they know what components are necessary to bill this level of visit—or any level of visit for that matter. It’s important for the auditors and the coders to follow the guidelines and to use some common sense as to what is being performed and documented.
Mike: What steps should medical practices take to ensure they are properly coding and billing for the correct services?
Rob: Now, great question. I think one thing that comes to mind immediately is having experienced coders who know the guidelines and do the work for you.
And really keeping the knowledge current. Things change constantly. We know this as an audit company. We do a lot of overseeing and auditing across the provider spectrum. And we keep our auditors up-to-date on LCD’s and NCD’s constantly and any other regulatory changes that impact billing and coding.
And it’s really important for medical practices/hospitals, irrespective of the provider type, really to make sure that the people who are doing their coding and billing are up to speed on all these LCD’s and NCD’s that apply to them. This is key.
Other keys are kind of commonsense in this industry, but seem to get lost in translation sometimes—documenting accurately and legibly. There a saying in the industry that if it isn’t documented, it wasn’t performed or wasn’t done. If you can’t read it, then it wasn’t documented.
So if I had one take-home message, make sure you can read it, make sure it’s documented. Then you have the right to get paid for it.
And auditor or insurance company or CMS does not know how sick a patient is unless it’s documented. So if you don’t have it in the record, it wasn’t performed.
And then, I think another good tidbit here is to have a really good quality assurance program which should really be part of a robust compliance program. And having the ongoing audit and education process in place really makes—you put a lot of onus on the process rather than the people. Having that kind of culture will keep you out of trouble.
Mike: Talk to me about the implications of improper coding and billing errors?
Rob: Right! Speak of trouble. There’s many impacts of improper coding and billing errors. This can impact a provider on so many levels. I’ll give you some of my thoughts as to what comes to mind immediately:
Rejected claims from third-party payers. This is going to slow down your incoming cash and really impact your revenue and revenue cycle for the provider. So the entire revenue cycle can be slowed by having multiple errors in your billing and coding.
Even if you supplement the records subsequent to a question by a third-party payer, or even if you overturn or appeal the challenges to the third-party payer, it still slows down your cash, meaning you’re not getting paid as quickly for the work you actually did simply because you did not have the billing and the coding done accurately in the first instance. If you get that out the door accurately, you’re going to get paid faster.
In addition to that, insurance audits and slowing down the cash flow with investigations and inquiries also is time-consuming to respond to and expensive. There’s a huge administrative burden that goes along with that.
Now, let’s up the ante for a second. And if it’s not just sort of a normal course, we’ll call it, investigation or questioning by a third-party payer, it could be that your billing and coding errors are leading to a fraud investigation. And this is the level that could really sink the provider.
If the OIG or DOJ, Department of Justice, are investigating you, you have a huge administrative burden, you have reputational risk that goes along with that in the media, and potentially, not just recoupment , but potentially, at that level, you’re talking about possibly being kicked out of the Medicaid and Medicare reimbursement system and even having criminal or civil sanctions or penalties set against your company—and individually now.
With the recent happenings like Yates Memo at the DOJ level, individual executives can be and will be found and held liable and guilty for potential fraud errors stemming again from improper coding and billing.
I personally have been internal as both chief compliance officer and general counsel of an acute care facility that had a HIPAA subpoena for civil and criminal allegations. And ultimately, we were found exonerated. But it cost us millions of dollars to defend and to prove essentially our innocence. And a lot of that stemmed initially from improper billing and coding or really billing and coding errors as I would couch it.
So, the legal action I think is the biggest scare. But again, all of this is a distraction. It’s bad press. It’s slowed cash flow. And it has potentially huge impacts on your business. So if you’re not doing your billing and coding properly and accurately and making sure your documentation is really pristine, it becomes a very scary world for a provider.
Mike: Rob, are there differences between Medicare and non-Medicare patients when it comes to billing for level 4 new patients?
Rob: Not really, Mike. I mean, for the E&M guidelines, they’re essentially used with every third-party payer. They’re put out by CMS. However, it’s still very important to check each Medicare contractor or MAC based on the jurisdiction. There are, sometimes, nuanced local coverage determinations, and sometimes national coverage determinations, that you need to check each time you’re doing a project.
Again, for our auditors, we’re always double checking the LCD’s and the NCD’s and any other regulatory updates before we engage on a project. So that’s key. In general, they’re the same though, Mike.
Also, it’s important to note that private insurers may have their own nuances in their contracts or policies that you need to check on quite frequently to make sure there’s nothing you’re missing with respect to these third-party payers.
Mike: And what other controls can practices implement to prevent billing mistakes?
Rob: Yeah, I think some of the things that should be done as a matter of practice aren’t new concepts in the compliance world nowadays. But you have to have internal and external audits of risk areas. Basically, any place where you’ve seen reimbursement issues or other operational or potential fraud issues, basically, signs of smoke, always follow the smoke.
Now, the OIG has really separated out monitoring and auditing. And monitoring, as the OIG states, is really the day-to-day oversight of your compliance program and overseeing the day-to-day operations, making sure if there’s any red flags they’re investigating, and carrying out any remedial action.
And then, there’s the auditing component which really is internal and external. Now, the OIG really recommends that providers, healthcare providers, irrespective of the type of provider, have external third-parties come in, and from time to time, do objective, independent audits and assessments. So that’s really per the regulatory guidance. And I think you need to have both components, the day-to-day monitoring, and also the ongoing auditing. So those are two pieces that are really part of an effective compliance program as set forth by the OIG.
And then, another key component, Mike, is the constant education of providers; and not just providers, but the constant education and training of billing staff, revenue cycle staff, and other operational units. At the end of the day, you need to make sure all the people have the right knowledge to get the documentation done right and the bills out the door correctly.
And again, our company does a ton of educating in this space because things do change. It’s not a static area. So again, being wise, you need to keep people educated. You need to keep on top of all the changes.
And then, I think overarching all of this and sort of starting at the top is having an effective compliance program that is really part of the culture. And that compliance program needs to be constantly attended to by the compliance department, the compliance offer, and really the other company leaders.
Mike: What impact, if any, does this have on a practice’s revenue cycle?
Rob: So, once again, I think if you’re not billing appropriately, it can affect your practice in many ways. If you’re over-coding, this can result in being flagged by the government or a third-party payer for audit or inquiry or investigation based on the results. You might have to pay money back or you could have a bigger issue like we talked about a little while ago with fraud or a DOJ or OIG investigation.
And then, also I think with respect to under-coding, what you see are practices or hospitals or providers not billing for everything that they do. Now, sometimes, there’s a fear of the things I’ve talked about—the fraud or the over-billing—but it’s really important that every patient encounter be coded accurately for the work that was done.
Now, I know for a fact in talking with my colleagues across the nation that compliance officers often cringe at consulting words like “revenue optimization” or “revenue enhancement,” but that really shouldn’t be the case because all we’re really talking about is getting paid for bona fide, legitimate medically necessary services that were actually performed. And to get paid for what you did is not illegal in any way. It’s just making sure you have the documentation done properly.
So, again, a lot starts with making sure you have a good compliance plan in place, making sure that you have the right people with the right knowledge doing the work, and continuous educating your staff on these things.
Mike: We hear a lot about “medical necessity.” Where does this fit in when billing for level 4 new patient visits?
Rob: I think the medical necessity piece fits in not only for level 4 new patients but pretty much across the board for any levels. Medical necessity is a key element for any service billed. And it really is a legal doctrine that relates to the activities which are justified as “reasonable, necessary and/or appropriate care based on evidence-based clinical standards of care.”
So, the base question really is: “Does your documentation support the medical need for the services or procedures that you are rendering?” That’s the key question here.
So, the documentation may include the clinical evaluations, physician evaluations, consultations, progress notes, physician office records, hospital records, nursing home records, home help agency records, records from other healthcare professionals and any test reports just to name a few.
It’s really important again for companies and providers across the spectrum to ensure they have quality assurance and audit compliance programs that strive and really double check to ensure all services rendered and billed are actually medically necessary.
It can be elusive and it’s often litigated and discussed in literature. But very basically, it means that services were warranted and needed by the patient.
Mike: Rob, thanks for helping us understand more about level 4 new patients. If someone would like to learn more about LW Consulting and what you do, where can they go?
Rob: They can reach us at LW-Consult.com, Mike. Thank you.
Mike: Great, Rob. Thanks again.