Physician Coding I

Billing Basics and Procedure Codes

E. Douglas Norcross, MD FACS

Professor of SurgeryMedical University of South

Carolina

How does the

payor know how

much to pay me?

I set a fee for the

service I am going to provide

and the patient or payor pays

me that charge.

Charge ≠ Payment(Except in a few circumstances)

How much do you get paid for doing

something? Practices set a charge up for each service they provide.

However, payors establish fee schedules to determine what they will actually pay for a service.

Charges, therefore, apply only to services provided to patients not covered either by an insurer with whom the practice has a contract, or by federal medical insurance plans (Medicare, Medicaid and a few others)

How much do you get paid for doing

something? Practices negotiate and contract

with private insurance companies to establish a fee schedule so that the same service is paid the same amount every time they are billed for that service by that payor

Medicare and some state Medicaid programs, including South Carolina’s, have fixed fee schedules based on a “Resource Based Relative Value Scale”

Resource Based Relative Value Scale

(RBRVS) The system used by the Centers for

Medicare and Medicaid Services (CMS), a Division of the federal Department of Health and Human Services, to determine reimbursement.

Every procedure and service is assigned a specific number of “Relative Value Units” (RVU’s)

Resource Based Relative Value Scale

(RBRVS) RVU’s based on three separate factors Physician work RVU’s (W RVU’s) account for

the time, technical skill and effort, mental effort and judgment, and stress to provide a service (Approximately 52% of average total RVU’s for procedure or services)

Practice expense RVU’s (PE RVU’s) account for the nonphysician clinical and nonclinical labor of the practice, as well as expenses for building space, equipment, and office supplies(Approximately 44% of average total RVU’s for procedure or services)

Professional liability insurance RVU’s (PLI RVU’s)account for the cost of malpractice insurance premiums(Approximately 4% of average total RVU’s for procedure or services

Practice Expense RVU’sAn additional factor

For some services and procedures there is a difference in the number of PE RVU’s assigned based on whether the procedure or service was done in the hospital (Facility RVU’s) or in an office (Non facility RVU’s).

This accounts for the additional expenses incurred when the physician, through their office expenses, must pay the costs of supplies, labor, etc.

Facility RVU’s are typically lower then Non facility RVU’s

CMS determines which to use based on a location code submitted to CMS with the charge

Politics There is currently a recommendation that

CMS eliminate the distinction between facility and non facility RVU’s and just use the facility RVU values

This would make the calculation easier, but will decrease physician reimbursement for minor office based procedures

Given that this will decrease Medicare expenses, this recommendation is likely to pass!

How do you convert RVU’s into payment?

Each of the three RVU components is adjusted for region (ie a procedure in New York would receive more reimbursement than the same procedure in Atlanta). Referred to as the Geographic Practice Costs Index. (GPCI)

The adjusted total RVU’s are then multiplied by a “conversion factor” determined by congress annually (Dollars per total adjusted RVU) to arrive at reimbursement level.

The formula!{(W RVU x W GPCI) + (PE RVU x PE

GPCI) + (PLI RVU x PLI GPCI)} x Conversion factor = Payment

An exampleYou do a laparoscopic

Cholecystectomy at MUSC in 2011 on a patient with Medicare

2011 Conversion factor = $33.9764 For South Carolina

W GPCI 0.976 PE GPCI 0.937 PLI GPCI 0.482

For Laparoscopic Cholecystectomy W RVU’s 11.76 Non facility PE RVU’s 8.05 PLI RVU’s 2.48

An exampleW RVU’s x W GPCI 11.76 x

0.97612.04

PE RVU’s x PE GPCI 8.05 x 0.937

7.54

PLI RVU’s x PLI GPCI 2.48 x 0.482

1.20

Total Adjusted RVU’s 20.78

Total Adjusted RVU’s x Conversion Factor

X 33.9764

Payment $706.03

The Medicare Fee Schedule

The formula just discussed is then used to develop a “fee schedule” which represents the maximum Medicare reimbursement for each CPT code

Each geographic region has its own “fee schedule” based on the Geographic Practice Costs Index for that particular region.

So, basically, you are paid what the Medicare Fee Schedule says you are to be paid.

The Medicare Fee Schedule

The “conversion factor” is adjusted annually as part of federal budget negotiations in order to balance predicted Medicare charge submissions for the year with the funding appropriated to meet those costs.

For example, if Medicare charges are expected to remain stable for the budget cycle, but spending limits are lowered, the conversion factor is lowered so that the predicted total Medicare payout stays within the budgeted amount.

This formula, and its annual adjustment, explains the annual battle between congress and medical organizations over the “conversion factor”

Remember, this applies to Medicare. The situation differs

with other payors Medicaid

Each state has its own methodology South Carolina uses a percentage of the

Medicare Fee Schedule to determine Medicaid reimbursement each CPT code

Private Insurers Each practice within an insurers network of

providers negotiates with the insurer to determine payment for each CPT code

Some use a multiple of the Medicare Fee Schedule

Some use a percentage of their charges Some might negotiate a fee for each specific

code

How do we standardize terminology so that

payors know how much to pay us?

CPT Codes

What are CPT codes?

Essentially all physician billing is based on numeric codes contained in the document “Current Procedural Terminology” published by the American Medical Association

(Thus the term “CPT” Codes)

What are CPT Codes?

A listing of 5 digit numeric codes with descriptive terms for each code.

Codes are used for reporting medical services performed by physicians.

Intended to provide a uniform language to describe physician services

Types of CPT Codes

Procedure codes Evaluation and Management Codes

(E & M codes)

CPT Codes

Evaluation and Management Codes (E & M codes) are those used to describe patent encounters

Procedure codes are descriptors of specific procedures and activities Surgical Procedures/Bedside Procedures Management of specific medical conditions

(Ex. Dialysis) Various medical diagnostic and therapeutic

procedures Radiology procedure supervision and

interpretation Services involving administration of

anesthesia Laboratory services provided by a physician

(Including physician supervision of services performed by technologists)

CPT Codes

CPT codes Category

Evaluation and Management 99201-99499

Anesthesiology 00100-01999,99100-99140

Surgery 10021-69990

Radiology 70010-79999

Pathology and Laboratory Services

80048-89356

Medicine 90281-99199, 99500-99602

Procedure Codes

Fairly straightforward to use

Simply select the code for the procedure performed.

Global Fee Period

Many procedural codes, including nearly all significant surgical procedures, are associated with a “global fee period” (usually 90 days for major operative procedures).

For procedures with a “global fee period”, the fee paid for the procedure includes the routine pre and post-operative care associated with that procedure

Global fee period

During the global period E and M codes will not be paid if the service provided was: Part of the routine post operative care

of the patient A preoperative visit within 24 hours of

surgery UNLESS the decision to perform surgery was made during that visit.

For most surgeons, procedure

codes provide the

bulk of physician

reimbursement.

Rules for procedure codes

Can not bill for routine post operative care. It is included in the “global fee period”

Preoperative care within the 24 hours of surgery can not be billed. It is included in the “global fee period”. (Exception is if the decision to go to surgery occurs during that 24 hour period…. More on that in the next presentation, Physician Coding II)

Code assumes a single billing physician for each procedure

Code assumes typical difficulty for that procedure

Rules for procedure codes

Code assumes a single procedure is performed per billing episode

The code assumes the physician provided the routine pre and post op care.

The code assumes a unilateral procedure

The code assumes that a procedure was not done during the global fee period for another procedure

So what do I do if I

perform two procedures during one trip to the operating

room?

Modifiers!

What are modifiers?

Payment systems know the rules for payment and will not allow a payment to be made if one of those rules is violated

There are times, however, when exceptions to the usual rules can be applied

Computers look for “modifiers” to identify when one of those exceptions applies.

Failure to use the appropriate modifier will cause a failure to receive payment

Commonly used modifiers applied to procedure codes

by surgeons 22 Modifier: Increased Procedural Services 50 Modifier: Bilateral procedure 51 Modifier: Multiple procedures 52 Modifier: Reduced services 53 Modifier: Discontinued procedure 54 Modifier: Surgical Care only 58 Modifier: Staged or related procedure or

service by the same physician during the postoperative period

Commonly used modifiers applied to procedure codes

by surgeons 59 Modifier: Distinct procedural service 62 Modifier: Two surgeons 66 Modifier: Surgical Team 76 Modifier: Repeat procedure or service by the

same physician 77 Modifier: Repeat procedure by another

physician 78 Modifier: Unplanned return to the

operating/procedure room by the same physician following initial procedure for a related procedure during the postoperative period

79 Modifier: Unrelated procedure or service by the same physician during the postoperative period

Let’s do a few

procedural coding

examples

You do a routine laparoscopic

cholecystectomy on a 25 year old female. There are no intraoperative

complications

Look up the procedure in the CPT manual

Reading the CPT manual

CPT Code

Total Facility RVU’s

Total Non FacilityRVU’s

Global Fee Period

Icons for other stuff spelled out in CPT manual introduction

So we code this as 47562

But what if the patient develops an arrhythmia during the procedure

and we abandon the case before completing

it?

We need to use a modifier! 22 Modifier: Increased Procedural Services

50 Modifier: Bilateral procedure 51 Modifier: Multiple procedures 52 Modifier: Reduced services 53 Modifier: Discontinued procedure 54 Modifier: Surgical Care only 58 Modifier: Staged or related procedure or service by the same

physician during the postoperative period 59 Modifier: Distinct procedural service 62 Modifier: Two surgeons 66 Modifier: Surgical Team 76 Modifier: Repeat procedure or service by the same physician 77 Modifier: Repeat procedure by another physician 78 Modifier: Unplanned return to the operating/procedure room by

the same physician following initial procedure for a related procedure during the postoperative period

79 Modifier: Unrelated procedure or service by the same physician during the postoperative period

So we code this as 47562-53

You perform a left hemicolectomy and open cholecystectomy during

the same procedure. How do you code this?

Colectomy CPT CodeOpen Cholecystectomy CPT Code

Colectomy Facility RVU’s Open Cholecystectomy Facility RVU’s

So we have two codes

Code Description Facility RVU’s

44140 Colectomy, partial; with anastamosis

39.18

44600 Cholecystectomy 31.54

How do we tell the payor what to pay us?

FACT to know!In general, payors will not pay for two

procedures performed at the same time through the same incision. They reason

that the amount of work required for the additional procedure(s) is less because

there is no need for additional incisions, additonal post op care, etc.

FACT to know!However, payors recognize that additional procedures are often indicated and need to be compensated. So they will pay for

additional procedures, but at a discounted rate for those procedures

Fact to knowSo we need to add a modifier to one of the

procedures explaining that it is an additional procedure performed along with the other

procedure so that we will be paid for it, albeit, at a lower rate than for that procedure

performed alone (generally 50% discount).

There is a modifier for that! 22 Modifier: Increased Procedural Services

50 Modifier: Bilateral procedure 51 Modifier: Multiple procedures 52 Modifier: Reduced services 53 Modifier: Discontinued procedure 54 Modifier: Surgical Care only 58 Modifier: Staged or related procedure or service by the same

physician during the postoperative period 59 Modifier: Distinct procedural service 62 Modifier: Two surgeons 66 Modifier: Surgical Team 76 Modifier: Repeat procedure or service by the same physician 77 Modifier: Repeat procedure by another physician 78 Modifier: Unplanned return to the operating/procedure room by

the same physician following initial procedure for a related procedure during the postoperative period

79 Modifier: Unrelated procedure or service by the same physician during the postoperative period

But which code gets the modifier applied to it?

The primary procedure does not get a modifier

All secondary procedures get a 51 modifier applied.

In general, but not always, the procedure with the highest number of RVU’s is the “primary procedure”.

So for our example

Code Description Facility RVU’s

44140 Colectomy, partial; with anastamosis

39.18

44600 Cholecystectomy 31.54

The right hemicolectomy is the primary procedure (the thing we went to the OR to do)

and the cholecystectomy is the additional procedure.

So the billing codes look like this

4414044600-51

The codes apply to “typical” procedures including the

routine pre and post op care. What if the case is not

“typical”? What if the case is more complicated or took significantly more time than usual. For example, a patient with dense adhesions that took hours to take down? Modifier 22

You do the case, but don’t provide the pre or post op care. Modifier 54

The case does not require all of the usual steps because part of it was previously performed. Modifier 53

There are modifiers to cover just about every unusual situation one

might encounter.

Are there special rules for teaching hospitals?

Of course there are! This is the government after all!

Rules for Teaching Physicians

General ConceptsServices furnished in teaching settings are paid under the Medicare Physician Fee Schedule (MPFS) if the services are:

Personally furnished by a physician who is not a resident or

Furnished by a resident when a teaching physician is physically present during the critical or key portions of the service

Rules for Teaching Physicians

Documentation RequirementsDocumentation may be dictated,

handwritten, or computer-generated, and must be dated and include a legible signature. In addition, the documentation must identify, at a minimum:

The service furnished The participation of the teaching

physician in providing the service Whether the teaching physician was

physically present

Rules for Teaching Physicians

Surgical ProceduresIn order to bill for surgical, high-risk, or other complex procedures, the

teaching physician must be present during all critical

and key portions of the procedure and

be immediately available to furnish services during the entire procedure.

Rules for Teaching Physicians

Surgical Procedures The teaching physician may determine

what constitute the “critical or key portions of a procedure”

The teaching physician’s presence is not required during the opening and closing of the surgical field unless these activities are considered to be critical or key portions of the procedure.

If the teaching physician is not present for the entire procedure, the teaching physician should document what they consider the key portions of the procedure and their presence during those portions of the procedure.

Rules for Teaching Physicians

Surgical Procedures During non-critical or non-key portions of

the surgery, if the teaching surgeon is not physically present, he or she must be immediately available to return to the procedure, i.e., he or she cannot be performing another procedure.

If circumstances prevent a teaching physician from being immediately available, then he/she must arrange for another qualified surgeon to be immediately available to assist with the procedure, if needed.

Rules for Teaching PhysiciansEndoscopy

To bill Medicare for endoscopic procedures (excluding endoscopic

surgery that follows the surgery policy in subsection a), the

teaching physician must be present during the entire viewing. The

entire viewing starts at the time of insertion of the endoscope and ends at the time of removal

of the endoscope.

Rules for Teaching Physicians

Minor ProceduresFor procedures that

take only a few minutes (5 minutes or less) to complete and involve

relatively little decision making once the need for the procedure is

determined, the teaching surgeon must

be present for the entire procedure in order to bill for the procedure.

Medicare and Medicaid Comparison

Minor Procedures Medicare defines “presence” as

being in the same room, or partitioned portion of a room, as the patient on whom the minor procedure is being performed.

South Carolina Medicaid defines “presence” as being on the same premises as the patient upon whom the procedure is being performed and being immediately available to assist with that procedure.

Medicaid Minor Procedure Billing

MUSC policy MUSC has defined the premises as any building physically connected to the building in which the procedure is performed. For MUH this includes the hospital,

Library building, Rutledge Tower, Hollings Cancer Center, and the Basic Science Building

For ART, the billing physician must be within the ART building

This applies only to Medicaid patients. For Medicare patients the requirement for presence in the room remains.

What about private insurers?

Variable rules with each provider Safest approach is to use

Medicare/Medicaid guidelines.

Summary Physicians are paid for their services

using different methods depending upon the payor

Medicare and Medicaid use the RBRVS methodology to determine payment for services rendered by physicians

CPT codes are used to describe services provided by physicians to patients

Modifiers are used to describe atypical situations where the usual billing rules do not apply

There are specific supervision requirements for teaching physicians for services that will be billed to Medicare or Medicaid.