March 20, 2014

CMS Changes Its Mind on Denial of Related Claims

By

Aside from recoupment of the surgeon’s fee for denied joint replacement admissions by First Coast Service Options in Florida, physicians have in the past been financially held harmless for their decisions to admit a patient to the hospital or perform a procedure on their patient.

But that was about to change when, on February 5, 2014, CMS released Transmittal 505. In this transmittal, CMS updated Chapter 3 of the Medicare Program Integrity Manual, Section 3.2.3 - Requesting Additional Documentation During Prepayment and Postpayment Review, adding the following:

The MAC, Recovery Auditor, and ZPIC have the discretion to deny other related claims submitted before or after the claim in question. If documentation associated with one claim can be used to validate another claim, those claims may be considered “related.” Claims may be “related” in the following EXAMPLE situations:

- An inpatient claim and associated documentation is reviewed and determined to be not reasonable and necessary and therefore the physician claim can be determined to be not reasonable and necessary.

- A diagnostic test claim and associated documentation is reviewed and determined to be not reasonable and necessary and therefore the professional component can be determined to be not reasonable and necessary.

The list of examples is not an exhaustive list and claims may be “related” in other scenarios.

If “related” claims are denied automatically, MACs shall count these denials as automated review. If the “related” claims are denied after human intervention, MACs shall count these denials as routine review.

The MAC, Recovery Auditor, and ZPIC are not required to request additional documentation for the related claims before issuing a denial for the related claims.

This transmittal gave the MACs the ability to deny payment for the history and physical, all consultations, and all hospital visits billed by physicians if they determine that the admission was not medically necessary. But this also allowed the denial of the radiologist claims for interpretation of imaging studies, pathologist claims for interpretation of any specimens, and anesthesiologist claims for administration of anesthesia for any procedures. The case management community welcomed this policy change, as it has been difficult to get physician cooperation with utilization issues until the physicians have some financial risk themselves.

After its release, I spoke with a MAC representative who informed me that they were aware of the change but had no short- or long-term plans to begin denying related claims. The representative, though, reminded me that if and when they did start such denials, the various audit agencies have the ability to go back and audit claims several years old, so providers should not wait until audits start to adjust their practices.

Unfortunately, on March 20, CMS retracted this transmittal, stating, “Effective March 19, 2014, Transmittal 505, dated February 5, 2014, is being rescinded due to the need to clarify CMS’s policy and will not be replaced at this time.” CMS did not specify the needed clarification, but the user groups were flooded with speculation. Amongst the issues discussed included what would happen if the hospital appealed the denial and won—would the denied related claims be automatically reversed and paid? If the hospital accepted the denial, could the physician still appeal their denial? If the physician did appeal and win, would that reverse the denial to the hospital and the other related claims? And most significantly, how can CMS hold a consultant, anesthesiologist, pathologist, or radiologist financially liable when they have absolutely no control over the admission of the patient or the ordering of consultations, tests, or procedures?

It is unlikely that we will ever know the “why” behind the retraction, but if and when CMS releases a new iteration, we hope that the related claims that are subject to automatic denial will be more clearly delineated and that they will provide some more clarity into the justification if they allow automatic denials of related claims submitted by providers with no input into the decision to admit the patient or order the test or procedure. Physicians should have some skin in the game, but it needs to be a targeted approach, as First Coast is doing, for example, recouping the surgeon fees on medically unnecessary joint replacements.

About the Author

Ronald Hirsch, MD, serves as vice president of physician advisory services (AccretivePAS®) in the Regulation and Education Group (“the REG Specialists”). Prior to his employment at Accretive Health, Dr. Hirsch, a board certified internist and HIV specialist, practiced and served as president at a multispecialty practice in Illinois, and medical director of case management at Sherman Hospital in Elgin, Ill.

Contact the Author

RHirsch@accretivehealth.com

To comment on this article go to editor@racmonitor.com

This email address is being protected from spambots. You need JavaScript enabled to view it.