1. Charge Description Master –Enhancing Revenue and Compliance
Prepared for
American Association of Healthcare Administrative Management – WI (AAHAM)
May 10, 2018
Copyright 2018 EBB Coding Solutions, Inc.
Copyright 2014 HBE Advisors LLC dba HC Healthcare Consulting

2. 11/13/2018
Disclaimer
EBB Coding Solutions, Inc has prepared the following information based on current, available information as of the date of this presentation. Attendees should be aware that regulatory, coding, and billing information changes frequently and the information contained in these slides may become outdated quickly. This information is not intended to replace job specific training and should only be used as a reference after confirming the accuracy and applicability of the information based upon current published laws, statutes, regulations, and guidelines.
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3. Agenda Common Problem Areas
PPS and CAH Reimbursement and Impact of CDM
Strategies For Auditing and Maintaining your CDM
Recommendations
Client CDM Report Summary: General & Pharmacy
Open Discussions

4. Objectives
Identify common problem areas within a Charge Description Master (CDM).
Strategies for auditing and Maintaining your CDM.
Recommended steps to mitigate risk and promote compliance.
Remaining compliant while maximizing reimbursement.

5. Common Problem Areas

6. Common Problem Areas
In today’s environment, a significant percentage (approximately 70% - 75%) of outpatient, hospital coding and reimbursement is chargemaster driven.
Having a current and accurate chargemaster, combined with staff education, is critical to ensure compliant reimbursement and optimal charge capture.
Due to the volume of coding performed through the chargemaster, an error in a code or description will result in repetitive improper claims and/or lost revenue.

7. Common Problem Areas Impact on the Revenue Cycle – What Areas?
Charge Capture: Documented services are manually or electronically translated into billable fees.
Coding: The process of transforming descriptions of medical diagnoses and procedures into universal medical code numbers.
Claim Submission: Billable fees are submitted to the insurance company via a universal claim form for payment.
Remittance Processing: Posting or applying payments/adjustments to the appropriate accounts, including rejects.
Third Party Follow-up: Pursue collections from insurers after the initial claim has been filed.
Utilization Review: Evaluation of the necessity, appropriateness, and efficiency of the use of medical services and facilities, which includes regular reviews of admissions, length of stay, services performed, and referrals.

8. Common Problem Areas – Revenue Cycle
The impact of the CDM on portions of the revenue cycle is immeasurable.
An inaccurate/incomplete CDM can cause countless errors on the claim, which impacts those areas of the revenue cycle mentioned.
Every batch of claims sent daily to payors, may have or lead to:
Inaccurate CPT/HCPCS reporting
Incorrect unit reporting
Incomplete claims
Overstating claims
Inaccurate descriptions - services provided - mis-represented on the claim
Incorrect charges – both over and under reporting
Potential compliance issues – submission of false claims
Increased rejections & denials
Possibility of more frequent audits
Increased Additional Development Requests (ADR)
Patient satisfaction?
Increased Write – offs?

9. Common Problem Areas
There are a variety of errors that are commonly seen within a chargemaster. The types of errors most commonly noted include:
Deleted/invalid CPT/HCPCS codes
CPT/HCPCS description errors
Unit errors
Pricing errors
Hard-coded modifiers
Missing common services/procedures
Revenue code errors
Payor specific coding requirements
Other issues

10. Common Problem Areas CPT/HCPCS description errors
Chargemaster description reflects a 1-view x-ray.
CPT code description reflects a 2-view x-ray.
Reporting when a 1-view x-ray was performed would be considered up-coding and could potentially result in overpayments and increased compliance risk.

11. Common Problem Areas Unit errors
Unit reporting errors can be responsible for both lost revenue and increased compliance risk.
CPT/HCPCS descriptions may indicate the service(s) should be reported for each or each additional.
Failure to include these important descriptors within your chargemaster can lead to frequent coding errors.
CPT Closed treatment of metacarpal fracture; without manipulation, each bone
Patient undergoes closed treatment of 3 separate metacarpal fractures.
The service was reported as x 1.
CDM description did not include the term each
The service should have been reported as x 3.
Lost revenue of at least $344 for one encounter.

12. Common Problem Areas Unit errors
High volumes of errors related to reporting of drug units
Multiple published audits by the OIG focused on improper drug unit reporting.
Units in the chargemaster are commonly set based on manufacturer information rather than the HCPCS reporting descriptions. Examples to follow at the end of this presentation.
Units in the chargemaster also assume that waste will be appropriately documented and separately reportable.

13. Common Problem Areas Unit errors Chargemaster description is per 50mg.
HCPCS description is per 30mg.
Patient receives a 150mg dosage.
Based on the current chargemaster format, the item would be billed as J0282 x 3. (50MG X3 = 150MG)
If service was billed according to HCPCS description, the item should be billed as J0282 x 5.
Multipliers/Inaccurate Conversions?
Potential loss of revenue.

14. Common Problem Areas Unit errors Chargemaster description is per 1mg.
HCPCS description is per 250mg.
Patient receives a 500mg dosage.
Based on the current chargemaster format, the item would be billed as J0696 x 500.
If service was billed according to HCPCS description, the item would be billed as J0696 x 2.
Potential overpayment and compliance risk.

15. Common Problem Areas Pricing errors
Careful consideration to pricing should be given when reviewing a chargemaster.
Many factors to consider when assigning charges to services:
Payor mix/contracts
Market conditions
Geographic competitiveness
Costs
Profitability

16. Common Problem Areas Pricing errors
Most payors reimburse providers based on the lesser of the charge or allowed amount.
Most non-government payors’ reimbursement rates are higher than Medicare.
Analysis should be performed to ensure charges are set at least 150% above the current Medicare reimbursement rates.
Attention should also be given to ensure prices are reasonable and not “excessive”.
We recommend charges under 110% and over 400% be reviewed.

17. Common Problem Areas Pricing errors
A standardized, thoughtful approach to evaluating and assigning prices should be utilized.
Prices should be uniform across all payors.
You cannot charge a non-government payor less than what you charge a government payor for the same service.
Prices should be uniform across the same services.
You should not charge more for a 2 view x-ray of the right hip than you charge for a 2 view x-ray of the left hip.

18. Common Problem Areas Pricing errors
Current charge for CPT is $
Current Medicare reimbursement rate is $1,
Lost Medicare revenue of $ per charge.
Loss likely greater for private payors.
Even less if a CAH: calculate your Outpatient Interim Rate (OIR). E.g. 40% (OIR) of charge = $266 (-$1, per service).
Assuming a volume of 20 per month, that is a loss of at least $201,940.80, for one, low volume, CPT code, per year.

19. Common Problem Areas Hard-coded modifiers
With limited exceptions, modifiers should not be hard-coded within a chargemaster.
26 modifier
RT modifier
LT modifier
Any modifier which is considered a “payment” modifier should not be included in the chargemaster.
25 modifier (Separately identifiable E&M by same MD)
59 modifier (Distinct procedural service)

20. Common Problem Areas Hard-coded modifiers
The appropriate use of payment modifiers like modifiers 25 and 59 should only be applied by the coding department, when the use of the modifier is supported by the medical record documentation.
Inappropriate use of modifiers 25 and 59 have been a long-standing focus area of the OIG.
See Update at:
Including hard-coded payment modifiers within the chargemaster leads to significantly increased potential for improper claims, payments and increased compliance risk.

21. Common Problem Areas Missing common services and procedures
The AMA issues new CPT/HCPCS codes effective January 1 of each year.
Last year - effective January 1, 2017 – 420 new codes in total were implemented.
148 CPT codes were added effective January 1, 2017.
272 HCPCS codes were added effective January 1, 2017.
This year - effective January 1, 2018 – 325 new codes in total were implemented
172 CPT codes were added effective January 1, 2018.
153 HCPCS codes were added effective January 1, 2018.

22. Common Problem Areas Deleted/invalid CPT/HCPCS codes
The AMA deletes active CPT/HCPCS codes effective January 1 of each year.
81 CPT codes were deleted effective January 1, 2017.
120 HCPCS codes were deleted effective January 1, 2017.
82 CPT codes were deleted effective January 1, 2018.
122 HCPCS codes were deleted effective January 1, 2018.
CMS issues quarterly updates to HCPCS.
It is critical that code deletions are identified as they are issued, so that the codes can be removed from the chargemaster to prevent unnecessary claims denials.

23. Common Problem Areas
CPT/HCPCS description errors
Included in the CPT and HCPCS updates are revisions to CPT and HCPCS descriptions.
496 CPT codes were revised effective January 1, 2017.
166 HCPCS codes were revised effective January 1, 2017
60 CPT codes were revised effective January 1, 2018.
52 HCPCS codes were revised effective January 1, 2018.
Code revisions include changes to descriptions as well as bundling notes and instructions for reporting. It is critical that code revisions are identified as they are issued so that the codes can be updated within the chargemaster to prevent coding errors and/or unnecessary claims denials.

24. Common Problem Areas Missing common services and procedures
CMS publishes data regarding the top 200 billed CPT and HCPCS codes on a national basis.
The data should be compared to your chargemaster to identify commonly billed services that are currently not included in your chargemaster.
Any identified “missing” services should also be discussed with relevant department personnel to determine the appropriateness for inclusion within the chargemaster to fully realize revenue potential.

25. Common Problem Areas Missing common services and procedures
Regular communications with department personnel is critical for purposes of identifying procedures, services and supplies that are commonly provided but are not included in the chargemaster.
Your clinical department staff is the best source of information you have when it comes to identifying potential lost revenues or revenue opportunities.
While chargemaster software may be useful for certain aspects of maintenance, it cannot provide human feedback or identify services you are performing but not capturing.

26. Common Problem Areas Other issues
Some providers have programmed their chargemaster with “exploding” charges.
There are significant compliance risks associated with exploding charges. The OIG has identified this practice as fraud.
Charging for services not ordered.
Charging for services not performed.
For example:
Pathology selects the chargemaster item for a surgical pathology examination (CPT 88305).
The system automatically adds the following codes:
pathology consult, frozen section during surgery
decalcification procedure
Group 1, special stain
Group 2, special stain

27. PPS and CAH Reimbursement and Impact of CDM
11/13/2018
PPS and CAH Reimbursement and Impact of CDM
PPS Supply Reimbursement
PPS hospitals are currently not reimbursed by Medicare for non-routine supplies when reported on the claim form unless a HCPCS code is available and has a payment rate assigned (e.g. prosthetics/orthotics). Most supplies are bundled into the cost of the service or procedure.
Although Medicare may not pay for most non-routine supplies, it is collecting data on every claim submitted that may impact the PPS hospitals RCC (Ratio to Cost of Charges) and cost report data.
For commercial payors that pay a percent of gross charges, it is critical to continue reporting supplies in order to capture net reimbursement. These must be incorporated into the CDM.
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28. PPS/CAH Reimbursement and Impact of CDM
11/13/2018
PPS/CAH Reimbursement and Impact of CDM
CAH Supply Reimbursement
Inpatient: A set daily payment rate for inpatient services is paid by Medicare to a CAH. Reporting non-routine supplies on the inpatient claim is important and may impact future inpatient rates paid to the hospital. For commercial payors, total gross charges may also impact reimbursement if paid by a percent of charges.
Outpatient Services: An outpatient interim rate (OIR) is calculated several times per year based on claim information received by Medicare from the CAH. For example, if the OIR is 40% for a facility, if the claim total is a charge for $100, the net reimbursement for that claim will be $40.
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29. PPS and CAH Reimbursement and Impact of CDM
11/13/2018
PPS and CAH Reimbursement and Impact of CDM
CAH Supply Reimbursement
It is critical that all hospitals (especially CAH) report all non-routine supplies in the CDM and on the claim form to be certain they are getting these costs reported on the PS&R data to the MAC. This has an enormous impact on future payments by Medicare and may have an immediate impact on commercial payments.
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30. Prosthetic/Orthotic in the CDM
11/13/2018
Prosthetic/Orthotic in the CDM
Prosthetics/Orthotic in the CDM:
There is a common misconception that prosthetics/orthotics are “DME”. Although they are a sub-component of DME they have actual OPPS payment rates assigned within the prosthetic/orthotic fee schedule that is reimbursed.
It may or may not include fitting and adjustment. Services provided will have to either be bundled or unbundled depending on the HCPCS description.
These are typically excluded from the CDM and never captured.
Patients are often billed for these items erroneously – out of pocket.
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31. Prosthetic/Orthotics in the CDM
11/13/2018
Prosthetic/Orthotics in the CDM
Example:
These items are commonly missed and never reported or implemented in the CDM. In addition, many hospitals believe they are “bundled” and should not be reported on the claim which is incorrect.
Per the AMA HCPCS Level II 2018 Professional Edition Manual (page 328): “Knee- ankle-foot orthosis, fracture orthosis, femoral fracture cast orthosis, thermoplastic type casting material, custom fabricated” (KAFO).
The correct HCPCS it must be reported with is“L2126”and revenue code 0274.
Per the Medicare “Durable Medical Equipment Prosthetic Orthotic”(DMEPOS) revised “2018 Fee Schedule” the payment rate for this item is $
Because “fitting and adjustment” is not stated with “L2126”, you may also bill CPT “Orthotic(s) management and training (including assessment and fitting when not otherwise reported), upper extremity(s), lower extremity(s) and/or trunk, each 15 min. Also, see CPT for 2018.
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32. Strategies for Auditing/Maintaining

33. Strategies for Auditing/Maintaining
With almost 1,300 code changes issued in 2017 and 641 already this year, and more on the way, comprehensive and efficient processes for evaluating and updating your chargemaster is crucial for your organization’s success.
Ideally, a review of the entire chargemaster should be performed on a quarterly basis in conjunction with the HCPCS releases.

34. Strategies for Auditing/Maintaining
If your organization does not have the resources to conduct quarterly audits, or to review the entire chargemaster on a quarterly basis, audits should be conducted no less than on an annual basis.
Chargemaster software alone is not enough.
If you don’t have the resources in-house, outsource to an external organization.
Annual reviews by an external source is strongly recommended and is an allowable cost on the Medicare Cost Report.

35. Strategies for Auditing/Maintaining
Prioritize the project, if necessary, to make it more manageable.
Known high risk departments
Pharmacy
Known payment risks
Hard coded modifiers
High volume departments
Supplies – not reported – due to bundling
High volume procedures
High volume denials

36. Strategies for Auditing/Maintaining
Looking at the chargemaster in isolation is also not enough.
Compare to CMS statistics
Compare to CPT and HCPCS updates
Department feedback
Medical record documentation
Claims data
Is the data populating the claim the way you anticipated?
Claims denials
Conduct regular claim and documentations reviews

37. Recommendations
Assign a dedicated team of individuals that are responsible and accountable for the accuracy and completeness of your chargemaster.
The chargemaster team/committee should include:
Certified coders
Billing staff
Clinical personnel representing each department IT
Finance

38. Recommendations
Develop formal policies and procedures that outline the frequency and process for conducting chargemaster reviews.
Chargemaster reviews should be conducted no less than annually, and revisions should be effective January 1 of each year.
Quarterly reviews are preferred.
The policies and procedures should also address the process for validating and implementing recommendations in a timely manner and outline a process for confirming updates are accurately reflected.
QA process
Claims testing
There should also be a formal process for providing education and training to each department affected by the revisions.

39. Recommendations
Restrict chargemaster modification access to a limited number of individuals (2-3) that have undergone appropriate training.
Develop formal policies and procedures for requesting and making interim modifications to the chargemaster.
The policies and procedures should require a two-fold confirmation process before changes are made.
The policies and procedures should also require claims testing to confirm changes are reflected accurately on claims.
Any changes should be communicated with affected staff.

40. Client – CDM Review Report Summary

41. CDM Report Summary – General (Pharmacy Separate Report)

42. CDM Report Summary – General
Reason Code
Reason Description
Total
CD1
Recommended CPT/HCPCS Code Addition- for Medicare Use Only 27
CD2
The item has an invalid CPT/HCPCS code and should be updated 24
CD3
The item requires a valid CPT/HCPCS code for reporting accuracy and/or reimbursement
218
CD5
Hard-coded modifier which should be revised/deleted
167
CD6
Incorrect CPT/HCPCS code based on service description 69
CD7
Recommended Description Change
799 C0
The item was identified as Durable Medical Equipment (DME) and should be billed to the DMERC 4 C1
The item was identified as a "nonsterile/nonroutine" supply and should be billed with UB04 Revenue Code 271 C2
The item was identified as a "sterile supply" and should be billed with UB04 Revenue Code 272 71 C4
The item was identified as an "orthotic/prosthetic" device and should be billed with UB04 Revenue Code 274 w/appropriate HCPCS 44 C5
The item was identified as a permanent pacemaker generator/lead and should be billed with UB04 Revenue Code 275 2 C8
The item was identified as an "implant" and should be billed with UB04 Revenue Code 278 29

43. CDM Report Summary - General
Reason Code
Reason Description
Total
CH1
Recommended Charge Change because Original Charges are Priced Below 110% of the APC Rate or Fee Schedule
188
CH2
Recommended Charge Change because Original Charges are Priced 400% Above APC Rate or Fee Schedule
468 P1
Item identified as a drug requiring detailed coding. Recommend Revenue code 636 and the appropriate Level II HCPCS code for Outpatient - Revenue Code 250 for Inpatient (w/no HCPCS) 4 IP
Inpatient Only Procedure 2 X1
The item is not a medical service or supply or may be permanent medical equipment or a routine/personal care supply and should be not be reported on the claim. Recommend deletion or report with revenue code 099
181 X2
This item is a duplicate charge line and should be removed 18 X3
This item is not reportable to a payor. If used for internal tracking purposes, report with revenue code 0999. 24 NM
No Modifications to Item
3759
Total items
6122
Less No Modifications
-3759

44. CDM Report Summary - Pharmacy

45. CDM Report Summary - Pharmacy

46. Last Slide - to Share and Terrify the Compliance Officer With 
Item Description - Hospital
Hospital Multiplier/Conversion
Units after Conversion and Billed
CPT
Description Per CPT/HCPCS Manual
CYCLOPHOSPHAMIDE 20MG/ML:1000MG(1GM)
100
2,000 MG
J9070
CYCLOPHOSPHAMIDE, 100 MG
DARATUMUMAB 20MG/1ML 20ML:DARZALEX 40
800 MG
J9145
INJECTION, DARATUMUMAB 10 MG
ECULIZUMAB 10MG/ML 30ML:SOLIRIS 30
300 MG
J1300
INJECTION, ECULIZUMAB, 10 MG
FLUOROURACIL 50MG/ML VIAL:20ML 2
100 MG
J9190
INJECTION, FLUOROURACIL, 500 MG
GEMCITABINE 38MG/ML 2GM:*200MG*
200
7,600 MG
J9201
INJECTION, GEMCITABINE HYDROCHLORIDE, 200 MG
BLEOMYCIN 15UNITS/10ML 15
225 MG
J9040
INJECTION, BLEOMYCIN SULFATE, 15 UNITS

47. CDM Review Note
These are the results of a CDM review provided on behalf of a 60 bed PPS hospital in This client had the same review completed in We are currently conducting the 2018 review.
We have provided this to you, to illustrate the extreme importance of having, an external review done at least annually.

48. Open Discussion

49. Thank You!

50. Timothy P. Eaton MBA, Major–US Army (Retired), COC (CPC – H) President EBB Coding Solutions, Inc. S64W37838 Hwy ZZ Eagle, WI (262) EBBCSI.COM
Prepared for
American Association of Healthcare Administrative Management – WI (AAHAM)
May 10, 2018
Copyright 2018 EBB Coding Solutions, Inc.
Copyright 2014 HBE Advisors LLC dba HC Healthcare Consulting