CMS As Umpire?

Connie Leonard, Director of CMS Recovery Audit Operations, recently encouraged providers to contact CMS if they see this kind of denial. She also claims that RACs don’t intentionally deny procedures on the CMS Inpatient-only list. One wonders, though, did anyone really ask that question? And does it really matter, since both RACs and providers involved wind up spending money on chasing “phantom” errors?

Regardless, providers continue to be frustrated with the whole process, especially since CMS never seems to accept any judgments overturning denials as precedent for other cases, which has been painfully evident ever since the Feb. 1, 2010 Medicare Appeals Council decision against CMS, supporting O’Connor Hospital, reversing a denial by one of the Demonstration Project RACs. While that case was a completely different subject, on allowing a provider to bill for “observation and underlying care” when the claim was denied as an inpatient claim, it nevertheless shows the CMS proclivity to consider every such case as an island, untethered to any other cases, regardless of similar or even duplicated circumstances.

Turmoil in the RAC world… and this is new? Not hardly. But recently, many providers have been loudly complaining that RACs are inappropriately issuing medical necessity denials for claims with procedures that exist on the CMS inpatient-only list. Some cases have borne out this assertion by providers. However, there are other cases where the denials are not inappropriate, despite the seeming incongruity of the situation.

How can that be true? Several factors are involved, not the least of which concerns (a) the physician’s documentation to support the procedure in the first place, and (b) the CMS Inpatient-only list itself, for the year in question. There is also an inherent, what shall we call it… lunacy… involved in the whole payment system, which we shall mention last, below.

And, we should mention here, you should try to forget about the idea that RACs are purposely pursuing such denials. This is a nightmare for them, as well. They would just as soon avoid these reviews and denials, because they wind up just costing them money, for which they are not reimbursed by CMS.

Let’s first look at the two factors already mentioned.

Documentation

The majority of complex denials issued by the RAC to date are for short-stay medical necessity, typically where the care was, in the opinion of the RAC, provided int the wrong setting. Many times, this type of denial can be attributed to a lack of documentation in support of an inpatient admission. While providers have been very successful at appealing these type of denials at the Administrative Law Judge (ALJ) level, the third stage of the appeal process, there are recent reports that this may become increasingly more difficult for providers to win, as ALJs have recently been taking a “more stringent” view of these type of cases. [see Health Business Daily http://aishealth.com/archive/rmc043012-01 story, May 14, 2012].

As we all know, “Not Documented = Not Done” is now and forever shall be the mantra of coders, billers and auditors. If the documentation does not support the codes, then it doesn’t matter whether the code was on the CMS inpatient-only list.

The CMS Inpatient-Only List

For whatever reasons, the list on Inpatient-only Procedures changes, year to year, as per the list makers at CMS. The key point here is that just because a code is on the list one year, does NOT mean it will be on the list THIS year. That is, you have to match the year of the claim with the year of the list. We are aware of cases where the codes involved in a denial were on the list the year before the claim was filed, but were not on the list for the year the claim was filed.

Simple, right? Yes.

And No.

CPT + ICD + DRG = Nightmares

This is where we get to the Lunacy part. The CMS Inpatient-only List is a list of procedure codes. Specifically, here is the file title, which appears inside the Excel file, which is available from CMS: Addendum E.-Final HCPCS Codes That Are Paid Only as Inpatient Procedures for CY 2012.

Wait… aren’t we talking about Inpatient billing? Yes, hospitals are billing for Inpatient procedures, which would normally suggest that they would be billing with ICD-9 procedure codes, but NOT HCPCS Codes.

And there’s the rub… The HCPCS Codes do not appear on the inpatient claims. Oops!

Oops is right. Those codes don’t appear on the claim, and there does not appear to be any current way to identify the claim as including a procedure that appears on the CMS Inpatient-only list.

Whence, the problem. And to make matters worse, there are no readily available crosswalks for these HCPCS codes to ICD-9 codes.

Until CMS determines some way to identify such situations on an inpatient claim, there will continue to be confusion, turmoil and consternation. And denials.

What Providers Should Do

We would recommend that these claims be flagged by providers somehow, before the denials occur. The RACs have already shown that they are quite happy to rescind denials for claims where the procedure was appropriately billed. But you need to make sure you have your ducks in a row… for now, you will have to manually check the Inpatient-only Lists for whatever year is in question, AND you have to make sure the documentation is supporting and appropriately descriptive and specific. If you have that, you will get it overturned, or rescinded or you can win on appeal.

Unfortunately, that’s likely the best you can do, for now.

Four Years of Inpatient-Only Lists

By the way, we thought people might want these, so here they are for download…

CMS Inpatient Only List CY2009

CMS Inpatient Only List CY2010

CMS Inpatient Only List CY2011

CMS Inpatient Only List CY2012