Payment Policy and Coding

CHAPTER 15


Payment Policy and Coding


Helene M. Fearon, Stephen M. Levine and Lori Quinn



LEARNING OBJECTIVES


After reading this chapter and completing the exercises, the reader will be able to:


1. Define third-party payers.


2. Describe Medicare policies and the key elements of documentation for Medicare and other third-party payers.


3. Outline Medicare guidelines for documenting skilled therapy services.


4. List the components of documenting initial evaluations, progress notes, treatment notes, reevaluations, and discharge summaries for Medicare.


5. Understand use of ICD-9 (diagnosis) coding and CPT (procedure) coding for billing and payment purposes.


6. Summarize guidelines for CPT coding that may enhance payment for services and minimize denials.


The topic of health care reform in the United States includes a change in the way health care services are financed. Current reform initiatives include legislative provisions that may have a significant impact on how health care insurance is structured and therefore have an inevitable effect on what is required for medical record documentation. The purpose of this chapter is to provide an overview of current payment policy in the United States and understand its effect on documentation by therapists. Of note, the information presented here is likely to change, so readers are encouraged to use this chapter as an overview of payment policy but to consult current health care policy manuals, Web sites, and other related resources for the most up-to-date information.



Third-Party Payers


A third-party payer is an organization or entity that finances health care services for a patient or client. The patient is considered the first party and the health care provider is considered the second party. In the United States third-party payers are typically either insurance companies or third-party administrators, which are private entities, or Medicare or Medicaid, which are government-run agencies.


For all third-party payers, it is necessary from the outset for therapists to justify the necessity of the services they are providing. The principal way this is achieved is through appropriate documentation of therapy services because this is the key method for payers to obtain information about the legitimacy of the services for which they are providing payment. One of the primary roles of third-party payers is cost containment. The United States currently has the highest per-capita health care expenditure in the world (Kaiser Family Foundation, 2007). This is due in part to the rising and unsustainable costs of health care. Reviews and audits of rehab services commonly demonstrate that services are provided without the evidence to support their effectiveness or relation to positive health and functional outcomes. Documentation often does not justify the necessity of services based on the patient’s clinical presentation. Both government agencies and insurance companies are under pressure to find methods to reduce health care costs, especially for services that may not be necessary. Therefore the medical necessity for services, as defined by the third party responsible for payment of health care claims, is more likely to be scrutinized.


Third-party payers set standards or policies regarding the method and amount of payment for health care services they cover. These policies affect physical therapy and other providers of rehabilitation services, and moreover are often developed specifically for rehab services because of concerns of overutilization and unwarranted variation in treatment provided. For example, an insurance company may set a limit on the number of physical therapy visits in a calendar year or may determine that only certain types of interventions will be covered for a particular diagnosis. Each third-party payer typically also has its own requirements for billing and documentation. As discussed in Chapter 2, physical therapy documentation has many different purposes—one of which is to provide justification for payment by third-party payers. Although therapists must become familiar with the policies and requirements of each of their patient’s third-party payers, many—if not most—payers look to Medicare to set the standard for payment policy, including documentation requirements. Therefore the focus of much of this chapter is on current Medicare requirements because therapists who are familiar with and incorporate these guidelines for documentation and coding will, in most instances, meet the requirements of most other third-party payers.




MEDICARE


Because Medicare is the largest source of funding for medical and health services for people in the United States without private health insurance, its guidelines and regulatory features are of particular concern to PTs and rehabilitation professionals. Furthermore, Medicare is often looked to as a standard from which other companies design their own coverage and payment decisions. Many policies adopted by Medicare have been incorporated by other private third-party payers.


Medicare is the federal health insurance plan for individuals aged 65 years and older. Individuals with a permanent disability are also eligible to receive Medicare benefits. Medicare Part A is hospital insurance provided by Medicare; it applies to payment for services rendered in a hospital setting, skilled nursing facility, inpatient rehab, or home health agency after discharge from the hospital. Medicare Part B is medical insurance to pay for medically necessary services and supplies provided in an outpatient setting. Individuals pay a premium to receive this coverage. Part B covers outpatient care, including physician’s services, physical, occupational, or speech therapy, and services provided in the home when the patient is no longer considered homebound. The discussion in this text focuses on Medicare Part B requirements for documentation because outpatient practice comprises the majority of physical therapy practice. Although some components and requirements for documentation of Medicare Part A and B differ, the general principles are the same. Efforts continue to eliminate discrepancies in documentation requirements between inpatient and outpatient settings. Medicare requirements related to documentation in the inpatient setting should be reviewed as you proceed with the process of improving documentation skills because this area is currently under review.


For Medicare services, the CMS contracts with different insurance companies (previously called Medicare carriers or intermediaries and now called Medicare Administrative Contractors [MACs]) to manage and implement Medicare benefits. Medicare Contracting Reform (section 911 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003) mandated that the Secretary for Health & Human Services replace intermediators and carriers to administer the Medicare Part A and Part B fee for service (FFS) programs, contained under Sections 1816 and 1842 of the Social Security Act, with the new MAC authority. There are 15 new MACs processing Part A and Part B claims. These MACs require specific documentation to justify payment under the Medicare benefit. Title XVIII of the Social Security Act, section 1833(e), prohibits Medicare payment for any claim that lacks the necessary information to process the claim. Section 1862(a)(1)(A) of the Act allows payment to be made only for those services considered medically reasonable and necessary.


The Program Integrity Manual (CMS), Chapter 3, Section 3.11.1, states:




KEY FEATURES OF MEDICARE DOCUMENTATION


Failure to submit requested documentation will result in complete or partial denial of payment for services. For a service to be covered under the Medicare program, all the following must be true:



In addition to the coverage requirements listed above, the following additional Conditions of Payment must exist for therapy services to be paid under Medicare:



Medicare provides guidance to its requirements in its Benefit Policy Manual (BPM), 100–02, Chapter 15, Section 220. Following are the key elements of Medicare documentation excerpted from the BPM, that must exist to support payment for therapy services under Medicare and that must be evident in the documentation throughout the therapy episode of care:



1. Medical necessity. Medicare refers to the concept of medical necessity using the terms “reasonable and necessary” in its benefit policy language. Many physical therapists wrongly believe the physician’s order or referral establishes medical necessity for physical therapy services. Although a physician’s order or referral (which some refer to as a prescription, although this is not the professionally accepted or appropriate term) is not required by Medicare, the Medicare benefit for therapy services does require that the patient be under the care of a physician for some diagnosis (which may or may not be related to the diagnosis for which the therapist is treating the patient) for therapy services to meet coverage guidelines. However, simply because the patient is under a physician’s care and a referral to physical therapy has been made does not automatically justify the medical necessity of therapy services. Medical necessity for therapy services is determined by the evaluating physical therapist, and there must be clear evidence of this medical necessity demonstrated in the physical therapist’s documentation. It is critical for therapists to understand that documentation of the initial evaluation is the baseline from which medical necessity for therapy services is established, progress toward identified functional goals will be measured, and payment for services can be justified.


2. Reasonable and necessary. The BPM clarifies that to be considered reasonable and necessary, the following conditions must each be met:



• The services shall be considered under accepted standards of medical practice to be a specific and effective treatment for the patient’s condition. Acceptable practices for therapy services are found in:



• The services shall be of such a level of complexity and sophistication or the condition of the patient shall be such that the services required can be safely and effectively performed only by a therapist or under the supervision of a therapist.


• There must be an expectation that the patient’s condition will improve significantly in a reasonable (and generally predictable) period, or the services must be necessary for the establishment of a safe and effective maintenance program required in connection with a specific disease state.


• The amount, frequency, and duration of the services must be reasonable under accepted standards of practice. The contractor shall consult local professionals or the state or national therapy associations in the development of any utilization guidelines.


Although the BPM provides a broad identification of the requirements for coverage under Medicare, CMS provides significant discretion in determining the specific services to be considered “reasonable and necessary” to its MACs. The MACs do this through establishment of LCDs, which are published decisions by an MAC indicating whether particular services are covered on a MAC-wide basis, in accordance with Section 1862(a)(1)(A) of the Social Security Act (i.e., a determination as to whether the service is reasonable and necessary)” (CMS, Program Integrity Manual).


3. Skilled services. For therapy services to be considered medically necessary or “reasonable and necessary” under the Medicare benefit (as well as most other third-party payers), they must also be of a skilled nature. The BPM identifies that services are considered to be skilled when the knowledge, abilities, and clinical judgment of a therapist are necessary to safely and effectively furnish a recognized therapy service whose goal is improvement of an impairment or functional limitation. Services must not only be provided by the “qualified professional” (the therapist) or “qualified personnel” (the therapy assistant), they must also “require the expertise, knowledge, clinical judgment, decision making and abilities of a therapist that assistants, qualified personnel, caretakers, or the patient cannot provide independently.” Also, a therapist may not merely supervise any care being provided by a therapy assistant, but must also apply his or her skills regularly during the episode of care by actively participating in the treatment of the patient. This involvement must be evident in the documentation.


A therapist’s skill may also be required for safety reasons if a particular condition or status of the patient requires the skill of a therapist to perform an activity that might otherwise be done independently by the patient at home. Once the patient is judged safe for independent performance of the activity, the skill of a therapist is not required and reasonable and necessary requirements are not met under Medicare.


Services provided by professionals or personnel who do not meet CMS qualification standards, and services provided by qualified people that are not appropriate to the setting or conditions, are not considered skilled services. In addition, services that are repetitive or reinforce previously learned skills or maintain function after a maintenance program has been developed, are considered unskilled services and do not meet the requirements for covered therapy services in Medicare manuals. They are therefore not payable using codes and descriptions for therapy services.


In the BPM, CMS provides examples of how a therapist’s skills may be documented in the medical record, such as the following:



In summary, the deciding factors regarding whether services are considered skilled and “medically necessary” are always whether the services are considered reasonable, effective treatments for the patient’s condition and require the skills of a therapist, or whether they can be safely and effectively carried out by nonskilled personnel without the supervision of qualified professionals. If at any point in the therapy treatment it is determined by the treating therapist, or through review of the documentation by an MAC (or other third party) that the treatment does not legitimately require the services of a qualified professional, the services will no longer be considered reasonable and necessary and therefore are not considered for payment under the Medicare benefit.



INITIAL EVALUATION


Medicare identifies specific documentation components necessary to meet minimal documentation requirements, which include the initial evaluation and plan of care, certification (and recertification) of the plan of care, treatment notes, progress notes, and a discharge report. The initial evaluation is the most critical component of documentation because it establishes the medical necessity for therapy interventions, identifying the necessity for a course of therapy through documented objective findings and subjective patient self-reporting. In addition to clearly identifying these findings, documentation of the evaluation should list any complexities that are present and, where not obvious, describe the impact of these complexities on the prognosis and/or the plan for treatment such that it is clear on reviewing the documentation that the services planned are appropriate for the individual.


Medicare provides guidance for including areas that should be evident in the documentation of the initial evaluation, including but not limited to the following:



• A diagnosis (where allowed by state and local law) and description of the specific problem(s) to be evaluated and/or treated


• Documentation supporting illness severity or complexity


• Documentation identifying any medical care before the current episode, if any


• Documentation indicating the patient’s social support, including where the patient lives (e.g., private home, private apartment, rented room, group home, board and care apartment, assisted living, skilled nursing facility), who they live with (e.g., lives alone, spouse or significant other, child or children, other relative, unrelated person(s), personal care attendant)


• Documentation indicating objective, measurable, beneficiary physical function, including the following:



As indicated in the beginning of this chapter, many, if not most, third-party payers look to Medicare to set the standard for documentation of therapy services. Therefore therapists are strongly encouraged to develop consistent documentation standards based on an understanding of these Medicare requirements. In addition to the above concepts, Medicare identifies the following elements as key factors that should be documented by the PT for the initial evaluation. Each of the following elements has been explained in detail in other chapters:


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Jun 22, 2016 | Posted by in PHYSICAL MEDICINE & REHABILITATION | Comments Off on Payment Policy and Coding

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