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For other articles and previous issues click here. November 1, 2004 Desperately
Seeking Validation We all need to be validated, right? Well, codes are no different. However, a number of variables make it difficult to get a handle on the buggers. Perhaps a dose of Web-based technology will get them under control. Most coding, billing, and compliance professionals reach for the jumbo-sized bottle of aspirin when considering the number of variables that come into play for coding and billing claims for services provided in a hospital. The regulations affecting how they assign codes, how they submit each claim, and, ultimately, how much their facility is paid are staggeringly complex. The rules invariably lead these professionals on a paper chase through policy manuals, coding guides, and briefing bulletins—a time-consuming task requiring the investment of significant amounts of a hospital’s human and financial resources. The bad news is that the claims management and validation process isn’t going to get any easier in the foreseeable future. The rules are becoming even more stringent and the rate at which they change is accelerating. The good news is that new technologies are being developed that will help coding, billing, and compliance professionals circumvent the paper chase while improving coding and billing accuracy—which, in turn, will result in minimized claim delays, reduced denials, and increased reimbursement. The most advanced of this new generation of claims validation systems are Web-based and provide real-time editing capabilities. These systems enable members of a hospital’s billing staff to upload claims—in many cases, either individually or in batches—and compare them with up-to-date databases containing relevant payor policies and edits. Some systems can even transmit an alert to the hospital’s staff that identifies potential coding and compliance problems within specific claims and provide links directly to payor guidelines affecting the codes in question. The staff member can then gather more information, correct the claim when appropriate, and alert colleagues to the issue so it can be avoided in the future. The need for superior code validation has never been more critical than it is heading into 2005. Why? Several months ago, the Centers for Medicare & Medicaid Services (CMS) announced that it was doing away with the three-month “grace period” providers had been given in the past to implement new codes. This means that when new Current Procedural Terminology (CPT) and Level II Healthcare Common Procedure Coding System (HCPCS) codes take effect January 1, 2005, hospitals, physicians, and other providers must begin using them immediately. According to the CMS, claims with any “old” codes will be returned as unprocessable. Many coding and compliance experts see this policy change as beneficial. In the past, adopting new codes was often confusing because not all providers and insurers began using the new codes at the same time. This particular problem will be eliminated but, on the other hand, everyone will be under greater pressure to get their systems updated sooner. That is, once new codes have been introduced this fall, facilities have until January—not March, as would have been the case in the past—to integrate the changes into all their coding and billing processes. Hospitals that partner with software vendors providing advanced compliance tools will have far fewer headaches than those scrambling at the last minute to implement new codes on an enterprisewide basis. Why Has Coding and Billing Compliance Developed
Into Such a Daunting Task? First, they must figure out the procedure and service codes—ie, CPT, HCPCS—that accurately reflect the care provided to the patient. Second, they must look at the diagnostic groups and specific codes that might—or might not—justify the medical necessity for the documented level of care. Then, they have to factor in ancillary services, supplies, equipment, and technology and determine whether these items are separately billable or whether they are inherent in the primary service. After all this, the real fun begins. Medical records professionals have to consider bundling edits that might affect whether or not two codes can be billed together, frequency edits that might flag a service for denial, place-of-service requirements that might limit reimbursement for a delivered service, medical necessity guidelines that might raise questions about the viability of the claim, and/or absence of modifiers that might allow the claim to bypass medical necessity barriers. Top these off with yet another level of variables. Coders, billers, and medical record professionals must research whether or not Medicare has provided guidance on a national level regarding the services in question—which may have been communicated via bulky manuals, national coverage determinations, memoranda and transmittal updates, or notices in the Federal Register. Of course, in some instances, local Medicare carriers have discretion over the level of payment through local medical review policies and local coverage determinations, which may supersede national policy. And, in virtually all cases, these policies change frequently—quarterly, in the case of the National Correct Coding Initiative edits, and possibly more regularly at the local level. Finally, to further complicate matters, commercial insurers may implement their own sets of rules, regulations, and guidelines. Likewise, managed care contracts are negotiated and renegotiated, so coverage differs from payor to payor—and possibly even from patient to patient. What Problems Arise From These Complicated Rules? More and more, hospitals are looking to solve these problems by avoiding them in the first place. They are turning to front-end coding and claims validation processes that allow them to check which claims are at greatest risk for rejection before they are submitted the first time. This means retiring the old method of checking claims, which usually consists of coding and billing professionals spending hours flipping through coding guidebooks and three-ring binders stuffed with updates and policy changes. Not only is this process time- and resource-consuming, but it also doesn’t guarantee accuracy. Paper files can be out-of-date, recent bulletins can be overlooked, and important documents can be misfiled or misplaced. Instead, forward-thinking coders, billers, and medical record professionals are turning to advanced information and research tools, such as Payerpath’s CodeCheck, that provide real-time claim checking and editing capabilities before initial claim submission. Web-based transaction systems are now available, allowing claims data to be validated against the most current coding databases, directories, and medical necessity billing news. Solutions such as these feature up-to-date local and national code sets, which eliminate the need for each individual coder or biller to make sure they are on top of the constantly changing requirements governing bundling errors, proper modifier usage, and medical necessity. What Features Characterize Effective Claims Validation
Systems? • Web-based solutions to produce timely and accurate claim validation. These applications allow hospitals easy access to the most current compliance edits because they develop and maintain databases reflecting local and national codes. This eliminates the need for users to stay up-to-date with constantly changing billing requirements. Not only do they provide greater accuracy, but these Web-based technologies also remove the responsibility and cost of staying current from individual hospitals and place it with the vendor providing the database. • Front-end compliance validation that allows hospitals to correct problems before they even become problems. Because these solutions compare claims with editing databases before the claim is submitted to Medicare or other payors, hospitals eliminate the problems associated with denials. Prescreening claims for bundling and medical necessity requirements results in minimized claim delays, reduced numbers of denials, shortened revenue cycles, and increased reimbursement. • Direct, immediate access to payor-specific guidelines. The best systems on the market today not only alert hospitals when claims are in danger of failing but also help the health information staff uncover where the problem lies. The most recent generation of Web-based products links coders and billers directly to the applicable payor policy so they can investigate why the claim might be rejected. In addition, these links offer valuable information about what actions can be taken that would render the service payable—for example, diagnosis categories that support medical necessity for a specific procedure. This level of detailed information allows staff to review the patient’s medical record, speak with physicians and other caregivers, and determine whether or not additional information would allow the claim to be amended—and eventually paid. • Detailed, user-defined flags that identify the severity of an editing issue. Some Web-based solutions provide only one level of warning—notifying hospitals about the presence of a potential error or denial. But without further detail delineating whether or not the claim may pass even if it’s not “perfect,” these warnings don’t allow staff to evaluate the severity of the problem. Greater categorization of potential claim failures helps billers and coders detect whether the claim needs to be reviewed and modified or whether it can be sent as is. Some technology vendors have developed graduated warning systems that let HIM staff know whether the software has simply picked up an inconsistency or whether a significant error is present. The increased level of information helps staff determine how best to proceed and assess the amount of time and effort that might be required to rectify the problem. • Customized reports that support enterprisewide process improvement. Catching errors is only half the battle. Certainly front-end validation decreases errors, reduces denials, and enhances revenue. But many technology solutions provide customized reporting options so hospitals can keep abreast of payor edits and track coding error trends. The reports can then be used to provide feedback to health information staff, physicians, and other departments about where errors typically occur so they can be avoided in the future. In addition, the reports can become a vital part of the hospital’s continuing education program to update caregivers and support staff about current coding conventions and compliance policies. Real Results However, her department functions in a radically different way now. “It is so helpful to get notification before we submit a claim that something is wrong,” Khodush notes. “The links pop right up on the screen, so we can double-check the codes against the payor’s edits.” The outcomes, she says, have been dramatic. “This technology has had far-reaching effects. We are getting much higher levels of payment, and we’ve seen a substantial improvement in the number of claims that get paid the first time we submit them. Front-end claims validation has produced amazing results.” — Troy Burns serves as chief information officer for Payerpath, a provider of Internet-based financial transaction solutions for healthcare providers, hospitals, and payors. |
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