Janury 22, 2007

Apples and Oranges
By Ruthann Russo, JD, MPH, RHIT
For The Record
Vol. 19 No. 1 P. 26

A different set of circumstances than those found in an inpatient setting makes coding outpatient encounters quite the challenge.

The healthcare industry accounts for more than 30% of the United States’ gross domestic product and affects more than 191 billion Americans.1 Most of the care delivered occurs in the outpatient setting.2

In 2003—when the most recently available comprehensive data on healthcare visits was collected—there were 906 million physician office visits, 94.6 million visits to hospital outpatient departments, and 113.9 million emergency department visits.3,4 That same year, there were 34.9 million inpatient hospital discharges (excluding normal newborns).5

Therefore, in 2003, there were approximately 1.1 billion outpatient visits compared with approximately 35 million inpatient visits to acute care hospitals.

It is clear from this data that healthcare providers must manage massive amounts of outpatient encounters. Numbers and frequency alone create significant challenges for coding, reimbursement, and management of the data to support every bill that is generated for an outpatient visit. This article explores the specific challenges of outpatient compliance and makes suggestions on how to better manage these activities.

Outpatient Coding Management and Data Quality Challenges

The HCFA 1500 Claim Form
Physician visits are responsible for 80% of all outpatient visits. The vehicle used by physicians for transporting coded data to the payer for payment is the HCFA 1500 form, a standardized set of data elements that must be submitted to the payer for the provider to be paid for a patient encounter.

The form contains 33 different fields or sections where specific data elements are required. Field 24 contains data elements for as many as six Current Procedural Terminology (CPT) codes, six International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) diagnostic codes (one ICD-9-CM diagnostic code must be submitted to match each CPT code that is submitted), six modifiers, six place-of-service codes, and six type-of-service codes.

A high degree of precision is required for the data included on this form. In addition, the National Correct Coding Initiative (NCCI) edits incorporate the use of many of the data elements included on the HCFA 1500 forms as the basis for editing invalid claims information.

For an HCFA 1500 claim to be considered “clean,” all data elements must be completed, and they must pass the edits designed by the Centers for Medicare & Medicaid Services (CMS) or the private payer. Even when a claim has passed all computerized edits and is determined to be clean, it does not necessarily mean it represents a valid request for payment of services. A high percentage of claims contain codes that, when the actual patient record is reviewed, are not supported by the documentation in the record.

Bundling and Unbundling
Another example of the complexity inherent in the outpatient arena is the concept of bundling and unbundling coding and claims information for outpatient visits. Bundling edits are considered to be legitimate reporting for healthcare services by Medicare, the American Medical Association (AMA), and the American Hospital Association (AHA). A provider’s failure to appropriately bundle certain codes is considered to be unethical and/or illegal by Medicare.6

According to the NCCI, there are generally two types of bundling edits. The first, known as comprehensive/component edits, prevents payment for services which are components of a more comprehensive procedure. When comprehensive and component codes are billed together, the payer pays for the comprehensive codes but not the component codes.
The second type of bundling is known as mutually exclusive codes. When they are billed together, the payer generally pays for the least costly code. The CMS comprehensive/component code pairs contain approximately 190,000 bundling code edits while the mutually exclusive codes contain approximately 14,000 bundling edits.7

A second definition for bundling, provided by the AMA, is “a payment method that combines minor medical services or surgeries and principal procedures when performed together or within a specific period of time.” This definition notes that it is “acceptable” that “some insurance plans bundle the payment of the lesser service into the payment for the principal procedure.”8

An AHA publication defines bundling as follows: “Some codes, by nature, are included in other codes that describe a more comprehensive service, which encompasses the lesser procedure. In reimbursement systems, the more comprehensive code is valued at a rate that includes the lesser procedure, so it becomes inappropriate to report both codes for payment.”9

In this same publication, the AHA also lists “Examples of Unethical or Illegal Coding.” Unbundling into separate codes when a combination or comprehensive code is available for reporting is included in the list of unethical or illegal coding.

An example of bundling of certain procedures into an evaluation and management (E&M) visit code, taken from the NCCI edits, is the following: For the level 1 CPT code for a new patient office visit (99201), Medicare/CMS bundling edits bundle a total of 55 other services into code 99201 when these services are performed at the same time as the E&M visit.

Examples of the types of services bundled into code 99201 include: urinalysis (CPT code 81002, 81025), H. pylori analysis (CPT code 83013), hemodialysis measurement and disconnection (CPT code 90940), measurement of cardiac output after indicator dilution study (CPT code 93562), and nutritional therapy (CPT codes 97802 through 97804). This means none of these services may be permissibly billed when a code 99201 visit is billed.

Characteristics of Outpatient Encounters That Create Billing Challenges
The following characteristics of outpatient encounters drive the documentation, coding, and billing practices of these visits and should be considered by every healthcare provider when designing a practice improvement system.

1. Different Coding Guidelines and Systems
The “official” coding guidelines applied in the outpatient setting are different from those applied in the inpatient setting. This is relevant because the type of documentation and use of documentation from different providers varies as a result of differences in coding guidelines; it is important for providers to recognize that these differences exist.
In addition, it is also important for providers to recognize that, because of the nature of outpatient visits (quick and numerous), the level of uncertainty and lack of clarity from the coder’s perspective is increased in this setting. This fact alone requires the provider to be proactive to ensure accurate, timely outpatient documentation.

Besides differences in coding guidelines, coders in the outpatient setting are also faced with the task of applying as many as three different coding systems to assign the necessary codes for billing purposes. Every outpatient case must contain at least one ICD-9-CM diagnostic code. In addition, depending on the type of visit, the coder may need to assign CPT procedure codes as well as E&M codes to obtain the appropriate reimbursement.

2. Different Billing Needs
In addition to differences in coding guidelines, there are differences in billing processes as well. First, the hospital should be concerned with whether the service is billed using Ambulatory Payment Classifications (APCs) or fee schedules. This will dictate the edits that may need to be applied on the back end in patient accounting. In every case, it is important for the hospital to make certain that processes are put into place on the front end to ensure each case meets outpatient edits and is not held up in the billing process.

Second, medical necessity plays an important role in determining whether a claim for outpatient care is paid at all. This is particularly true with Medicare cases, but the trend for private payers to utilize the Medicare medical necessity criteria is growing. Medical necessity is built on the relationship between the patient’s ICD-9-CM diagnostic code and the CPT/HCPCS procedure/test code. Education of physicians on the appropriate way to report a patient’s diagnosis can have a significant impact on the hospital’s ability to bill for outpatient visits with no rejections.

3. Coders Needed
There has been a limited supply of coders since the inception of the Inpatient Prospective Payment System in 1982 when, suddenly, payment for healthcare services was driven by the codes assigned to the care provided to the patient.

In most hospitals, the focus on ensuring that inpatient cases are coded timely and correctly has been the top priority, sometimes at the expense of outpatient encounters. This mindset has carried over into staffing of the coding function as well. For example, many hospitals assign less experienced coders to outpatient cases. The logic of this strategy is questionable since, as outlined above, the numbers and complexities of guidelines, rules, and other regulatory requirements for the documentation, coding, and billing of outpatient care is much more intricate than the inpatient component.

4. Brief Encounters
The average length of stay for inpatient cases is five days and the amount of time spent with an outpatient case can vary from a few minutes (ie, a lab test) to 23 hours (ie, observation cases).10 Therefore, the amount of time spent, per patient, on average with outpatient cases as opposed to inpatient cases can range from 4.5 times as much (in the case of observation patients) to 432 times as much (in the case of a patient receiving a simple lab test).

The nature of the outpatient setting means the provider must make every minute count when it comes to recording the activity involved in the patient’s care. Also, in most instances, the provider needs to make sure that documentation provided before the encounter is accurate and complete. This is especially true in the case of lab tests and other diagnostic tests.

Finally, because the outpatient record is so brief, there is a tendency for physicians, more than usual, to rush through the documentation in such a way that the record is illegible. The implications for illegibility extend to medicolegal and patient care issues, as well as documentation for coding and billing.

5. Multiple Outpatient Visits in One Day
Many outpatients may have more than one visit in one day. For example, a patient may be sent from their physician’s office with orders for a lab test, an x-ray, and a cardiac stress test. This simple set of tests is actually translated in the provider setting as multiple encounters.

With the APC system in place since 2000, most outpatient visits are analyzed together, but they can still be assigned different APCs. However, in the case of the patient previously described, the healthcare facility will actually be paid according to two different reimbursement methodologies.

First, the x-ray and the stress test will be assigned into one or more APCs, and the hospital will be paid under the Outpatient Prospective Payment System. Then the lab test will be billed using the facility’s fee schedule for the test or tests ordered.

6. Limited Documentation/Content of the Medical Records
Because of the high numbers and quick timing of outpatient visits, the amount of documentation appearing in the patient’s medical record, especially from physicians, is limited. And chances are great that the healthcare organization will not be able to influence physicians to increase the amount of documentation they are providing in the patient’s record.

It is important to create the most efficient collection systems for outpatient documentation. The most popular strategy is to implement an electronic medical record (EMR), most of which allow physicians to point-and-click their way through a patient encounter, potentially creating additional compliance risk for the organization. The ease and efficiency of the EMR may result in scenarios where, for example, all boxes are automatically checked (or not checked) in a patient’s history and physical. The healthcare organization must therefore implement processes, including training and auditing, to counter these possible risks.

7. Fragmented Documentation Among Different Specialties
Outpatient care can be provided by many different clinical departments and even different physicians in the same department. This can result in an incomplete medical record at the time information is being brought together and processed for coding and billing.

Because it is unlikely that clinicians will come together on their own, it is important for the hospital or healthcare organization to implement a process that will ensure all information about a particular encounter is maintained in the same location and/or can be brought together electronically.

8. Documentation of Other Physicians and Clinicians
In the outpatient setting, documentation of other physicians, besides the admitting or attending physician, takes on increased importance. While the patient’s physician may be responsible for generating the orders for care, the patient’s visits to multiple providers to have testing completed becomes a string of related, but different encounters. In the outpatient setting, the physician who has provided interpretation for testing is responsible for that particular encounter. As a result, it makes perfect sense to allow coders to rely on physician interpretations.

In addition, in limited instances—such as wound debridements—it may be appropriate to rely on documentation from other clinicians (or nonphysicians) for coding and billing purposes. Every provider must be familiar with these practices—which are different from those in inpatient settings—to ensure that their Outpatient Clinical Documentation Improvement program is obtaining the maximum possible benefit.

Conclusion
Given the nature of outpatient encounters, it is important for healthcare providers to design processes that meet the needs of clinicians, physicians, coders, and billers. The following is a summary of the steps healthcare organizations can take to ensure a more proactive and less risky approach to the outpatient reimbursement process:

1. Begin creating the patient’s health record as soon as possible by obtaining accurate documentation about the patient’s diagnosis, care, and insurance prior to the day of the encounter.

2. Hire and train coders to be experts in the outpatient coding and billing area.

3. The implementation of computerized outpatient information systems should require clinician training and concurrent implementation of an auditing process to ensure accurate information collection by the clinicians.

4. Coordinate the collection and storage of encounter data among different departments and specialties for the same patient to ensure all documentation for the same outpatient encounter is stored in the same location or can be retrieved simultaneously.

5. Create a process for communicating any regulatory issues about outpatient documentation, training, and billing to all relevant individuals within the organization. Assign someone to implement procedure changes as a result of new regulations.

— Ruthann Russo, JD, MPH, RHIT, is managing director at Navigant Consulting.

References
1. Hemmasi M, Graf AG, Williams MR. Strategic planning in health care: Merging two methodologies. Competitiveness Review, 1997.

2. Wikipedia, 2006.

3. National Ambulatory Medical Care Survey, 2005.

4. National Hospital Ambulatory Medical Care Survey, Emergency Department Summary.

5. National Hospital Discharge Data Survey, 2005.

6. 42 U.S.C. Sec. 1320a-7a.

7. Medicare’s National Correct Coding Initiative, DHHS, OIG. September 2003. OEI-03-02-00770, page 1.

8. Blount L, Waters J. Mastering the Reimbursement Process. American Medical Association, 2001.

9. Scichilone R. CPT Coding Handbook. American Hospital Association: 1999.

10. Washington State Department of Health, Office of Hospital and Patient Data Systems.