Medicare Myths: Common Misperception about Medicare Billing Rules

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Original story posted on: December 17, 2014

 Which of the following are true?  

•  The Medicare Administrative Contractor (MAC) has complete legal authority to determine whether a service is medically necessary.

•  You must bill exactly the same charge to all patients who receive the same service. 

•  It is an overpayment if a note is not signed.  

•  Nurse practitioners and physician assistants can’t bill for high-level visits.

•  If it isn’t written, it wasn’t done.

Surprisingly, none of these statements are accurate. Instead, they reflect conventional wisdom that is so widespread and so frequently repeated that it is often assumed to be law. For example, while it is widely believed that Medicare prohibits you from charging any patient less than the amount paid on the Medicare fee schedule, the actual rule is quite different. Medicare will pay a physician the lower of the physician’s actual charges, the fee schedule amount, or the physician’s usual and customary charge. Medicare defines a physician’s usual and customary charge as the median charge, that is, a sum of which exactly half of the patients pay more, and half pay less. In other words, as long as at least half of your patients pay as much or more than the Medicare fee schedule amount, it is perfectly permissible for you to provide a discount. Of course, even that statement is too simplistic; if the discount can be construed as a kickback, the federal anti-kickback statute may prohibit it. The key point, however, is that simple platitudes often obstruct the complex truth.

Be a cynic

The current emphasis on compliance has created a whole industry of lawyers, consultants, and others who are happy to tell you what you can and can’t do. Given the complexity of the rules and the fact that you must also stay current with clinical developments, it makes sense that you seek guidance from outside experts. However, it is important to understand that any source of information, including trade associations, magazines, and even Medicare carriers, can make mistakes. Therefore, you should always be skeptical. Just because everyone believes that something is a rule does not make it so. Whenever you seek advice about a Medicare billing issue, ask for a citation to the underlying rule. If Medicare actually prohibits a particular practice, the person should be able to provide you with the relevant rule. 

Even if there is a written rule, that does not necessarily mean that the rule is valid. For Medicare, there is a very clear hierarchy of authority. The Medicare statute controls everything in the program. The regulations interpret the statute. Various manuals are published by the Centers for Medicare & Medicaid Services (CMS) to help MACs interpret the law. The manuals do not actually themselves constitute laws, but they can be a useful tool for understanding Medicare policy (and courts often defer to the government’s view of the law.) Finally, publications by individual Medicare carriers contain local policies. When something in a rule or policy contradicts something decreed by a higher legal authority, the rule or policy is invalid. For example, while MACs have authority to create some policies, their authority is quite limited. MACs frequently publish policies that exceed their authority. Therefore, if a MAC takes a position that is unreasonable, you can and should challenge it. The Medicare appeals process is easy to navigate. If you work with experienced legal counsel, the appeal should more than pay for itself.

“If it isn’t written, it wasn’t done” isn’t the law. 

Perhaps the single largest myth in healthcare is that when a chart fails to comply with Medicare’s documentation guidelines, it is fraudulent to bill for the service because “if it isn’t documented, it wasn’t done.” It is certainly true that many if not most observers, including health lawyers and consultants, act as though the evaluation and management documentation guidelines are a law. However, official publications from CMS/HCFA indicate that they are wrong. In 1995, when CMS/HCFA first issued the documentation guidelines, they issued a question-and-answer sheet that asked “are the documentation guidelines required?” The answer: “No.” The memo proceeded to explain that if Medicare conducts a review and determines that documentation is lacking, then the carrier is supposed to request additional information from the physician to determine whether the services were rendered. In short, the memo indicates that you determine the code based on the level of the service provided by the medical professional, not by the amount of documentation.

Most Medicare carriers ignore this memo. Instead, they mistakenly rely on a statute that indicates that “no payment shall be made to any provider of services or other person under this part unless there has been furnished such information as may be necessary in order to determine the amounts due such provider.” MACs typically claim that this requires you to document information in the medical record. But that law does not mention the word “documentation,” nor does it mention a medical record; it only requires that you furnish information necessary to demonstrate what you have done. You can comply with that statute if you can support the code you selected through testimony, a letter, or other information that supplements the information available in the medical record. 

I do not mean to suggest that documentation is unimportant. If the documentation is deficient, it is going to be much more difficult to prove that services were delivered. According to the CMS/HCFA document, if Medicare performs a review and the documentation meets the guidelines, the review is closed. If the documentation is lacking, you have to convince a hearing officer that the services were really provided. That will be a significant, uphill battle, and can cost you both time and money. From a risk management perspective, it is foolish to allow a significant number of claims to be submitted without documentation in the record. However, just because it is prudent to have your documentation satisfy the guidelines does not mean that failing to meet the guidelines constitutes fraud. In short, as the name documentation “guidelines” suggests, they are voluntary; they are not rules. 

Ideally, documentation should reflect all of the work done for a patient. However, legally, if the documentation does not support the code billed but you are comfortable that the service was provided as coded, there is a strong argument that you need not downcode the Medicare claim to match the documentation. But you should know that there is a risk that in the event of an audit, you may be unable to demonstrate the service was provided. Finally, it is important to recognize that other payors may have different rules.

NPs and PAs can bill Level 4 or Level 5 services.

Another common myth is that an NP/PA is not permitted to bill for a high-level service. Perpetrators of the myth usually argue that NPs/PAs are not permitted to perform high-complexity medical decision-making, and therefore billing for a high-level code is impossible. Whether or not NPs/Pas can perform high-complexity decision-making is really a question of state law, but regardless of how your state handles the issue, at least for established patients, an NP/PA can bill for a high-level service if the history and exam are detailed or comprehensive. For established patients, the level of service is determined by the highest two of the three key components. If the history and exam support a high-level code, no medical decision-making is necessary to justify the bill.

In closing, it is important to understand that Medicare reimbursement is controlled by rules, not by logic. The fact that someone makes a very intelligent, logical argument about why a particular practice is forbidden is immaterial unless they can point to a rule that supports the analysis. Whenever you are receiving advice about Medicare, ask for the underlying authority. This is the best way to determine whether the information you are receiving is a true or whether it is merely another Medicare myth.

About the Author

David M. Glaser, Esq.is a shareholder in Fredrikson & Byron’s Health Law Group. David assists clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Monday and is a member of the RACmonitor editorial board.

Contact the Author 

dglaser@fredlaw.com

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editor@racmonitor.com

David M. Glaser, Esq.

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and a member of the RACmonitor editorial board.

 

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