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IME and Issues Related to Shadow Billing [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Olga Barone-Allan and Michele Keller-Eiler of BESLER’s Revenue Cycle team to talk about IME and issues related to shadow billing.

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Highlights of this episode include:

  • What is an IME shadow bill
  • Why it’s important to submit shadow bills to Medicare
  • Medicare Advantage growth
  • Incorrect condition code issues
  • How registration can affect shadow bills

Mike Passanante: Hi, this is Mike Passanante, and welcome back to the award-winning Hospital Finance Podcast. Independent Medical Education, or IME, is a key reimbursement area for hospitals. However, there are things that can happen which could reduce a hospital’s Medicare compensation related to IME. I’m joined today by Olga Barone-Allan and Michele Keller-Eiler of BESLER’s Revenue Cycle team to talk about IME and issues related to shadow billing. Olga and Michelle, welcome back to the show.

Olga Barone-Allan: Thank you, Mike, for inviting us.

Mike: So Olga, why don’t you tell us briefly what an IME shadow bill is and why it’s important to submit them to Medicare?

Olga: A shadow bill is a separate bill submitted to Medicare for informational purposes while the original claim is sent to the primary payer for payment. A shadow bill is also known as no pay or information only claim. The importance of reporting shadow bill is so that Medicare can reimburse facility two additional payments: one for the Direct Graduate Medical Education, also known as DGME, and one for the Indirect Medical Education, also known as IME. DGME covers the direct fixed cost of training physicians, but the payments are received via cost report settlement to each hospital based on the number and specialties of the residents it trains. IME, on the other hand, covers indirect costs that teaching hospitals incur given their broader range of services. With the Balanced Budget Act of 1997, Medicare has included these additional payments to Medicare Advantage patients who have opted out of traditional Medicare. Importantly, this additional payment and process applies also to not only the IPPS teaching hospital, but also to non-IPPS hospitals such as long-term care, rehab, and psych, to name a few, and non-teaching hospitals.

Mike: Michelle, capturing IME shadow bills is a pretty well-established process. But we know that many still get missed, and that will only become a bigger problem as Medicare Advantage grows, isn’t that right?

Michelle Keller-Eiler: It sure is, Mike. As we had actually discussed in one of our prior episodes on Medicare Advantage, not only are the number of available plans for beneficiaries to choose from increasing, but also the number of eligible beneficiaries is increasing. With the recent change, the ESRD, or end-stage renal disease patients, can now elect a Part C Medicare Advantage plan. But before, there were very few special-needs plans that they could choose from or they stayed with traditional Medicare. In the past decade, Medicare Advantage enrollment has actually doubled. In 2021, there are more than 26 million people enrolled in a Medicare Advantage plan, which accounts for about 42% of all Medicare beneficiaries. And it looks like that trend is going to continue right into 2022. We estimate on average about 5% of shadow bills are missed. With the growing number of patients enrolling in MA plans, this could result in a significant amount of missed IME revenue as well as affecting the DGME reimbursement and cost report calculations that Olga had just mentioned. As more and more patients are opting in to these Medicare Advantage plans and more and more patients are starting to come back to the hospital, the potential for this missed revenue continues to grow as well.

Mike: Right. And even if you do drop a shadow bill, there are still requirements for specific condition codes to be on them, which could cause issues if they’re missed, correct?

Michelle: Yes. So each MAC actually does provide guidance on the appropriate submission of the Shadow bill claims processing for teaching, non-teaching, and your distinct units. We notice many are missing or have an incorrect condition code which causes the claim to either process incorrectly or fall into an RTP category which may get overlooked on the IME side. We see this a lot when we’re doing our review on the distinct unit psych and rehab claims, which they are required to be submitted even though they are a zero pay claim. But due to the zero pay, it’s not necessarily noticed that a condition code was missed when the claim was submitted and therefore it’s not always picked up which results in those days not being captured for cost report calculations.

Mike: Many hospitals assume that because they have Epic, their shadow billing process is handled, it’s done. But other errors can still cause problems, for instance, issues at registration. Why don’t you tell us about that?

Michelle: Sure. So we have noticed a trend with newer billing software implementations, specifically with a lot of Epic clients, that shadow bills are automatically dropped for Medicare Advantage claims once the primary payer pays the claims. So once the Aetna or Humana Medicare pays the primary portion, the system will automatically drop and submit the shadow bill claim. We do recommend submitting these claims simultaneously. You don’t have to wait for that primary payer to pay. But it is a policy that we see pretty frequently. And of course, this is a great feature to have if it’s your policy to wait. When the shadow bill drops automatically, it hands off, unless, of course, the patient were to provide the wrong insurance at the time of service. Perhaps they have a new MA plan, and it’s not provided or not updated when they come in for their visit, or maybe the patient comes in and says, “Hey, I have Aetna now,” and an Aetna commercial plan is selected at registration time instead of an Aetna Medicare Advantage plan or plan code. Or maybe the patient’s last visit was as a result of a motor vehicle accident or an injury, and the auto insurance or worker’s comp is listed as primary for that visit. But now, on this new visit, the patient comes in for an unrelated visit, and the primary plan is not updated or changed back to the Medicare Advantage plans, so it’s incorrectly coded, still is a commercial primary when it’s not related to that last visit. 

All of these scenarios, if not corrected, could result in the shadow bill not being automatically dropped because the primary payer code is not one that would drop a shadow bill. And if it’s not caught in time and corrected, and now we have to make that correction, wait for the primary payer to pay, and then submit the shadow bill claim, which for all of the Medicare IME claims, is only one year from the date of service. So there’s really a strict timeline that we have to follow, which just causes issues and potential for lost revenue. Another common problem that we see is that MBI numbers, or your Medicare Beneficiary Identification numbers are not being captured at the time of registration. The patient’s Medicare Advantage plan ID number is not their MBI number. With the transition from the HICN to MBI, we can no longer just hope that adding in A to the end of the patient’s social will work for claims submission. It doesn’t work anymore. We have to have an MBI now. We actually spend a significant amount of time on our client files determining the patient’s correct MBI and then verifying their eligibility in the Part C plan and ensuring that the correct MBI is dropped on the shadow bill so that payment isn’t delayed.

Mike: Thanks, Michelle. Olga, BESLER offers a contingency-based independent shadow billing review service. Can you tell us what the benefits of an independent shadow billing review are?

Olga: Absolutely. And if you take into consideration some of the scenarios that Michelle mentioned, you could see that there’s a lot of moving targets that– we know that hospitals are stretched thin, and to capture all of these scenarios is difficult. So missing shadow bills can cost hospitals hundreds of millions every year. In addition, properly submitting shadow bills as a compliance mandate for all teaching and non-teaching facilities. An independent review of a hospital’s shadow billing process will identify opportunities for improvement, potentially provide an immediate revenue infusion, and most importantly, ensure that a hospital is well-positioned as Medicare Advantage enrollment continues to expand.

Mike: Excellent summary, Olga. Olga and Michelle, thank you so much for coming by the podcast again today and talking with us about some of the pitfalls associated with IME shadow bills.

The Hospital Finance Podcast

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