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Compliance Notes

Last Updated on 10 May 2023

 

Difference between Medicare and Medicaid

 

Medicare is federal health insurance for anyone age 65 and older, and some people under 65 with certain disabilities or conditions.

Medicaid is a joint federal and state program that provides health coverage for some people with limited income and resources.  Medicaid offers benefits, like nursing home care, personal care services, and assistance paying for Medicare premiums and other costs.

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There are four parts of Medicare: Part A, Part B, Part C, and Part D.

• Part A provides inpatient/hospital coverage.

• Part B provides outpatient/medical coverage.

• Part C offers an alternate way to receive your Medicare benefits (see below for more information).

• Part D provides prescription drug coverage.

 

Part A (Hospital Insurance): Helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care.

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Part B (Medical Insurance): Helps cover:

• Services from doctors and other health care providers

• Outpatient care

• Home health care

• Durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment)

• Many preventive services (like screenings, shots or vaccines, and yearly “Wellness” visits)

 

Part D (Drug coverage): Helps cover the cost of prescription drugs (including many recommended shots or vaccines). You join a Medicare drug plan in addition to 

Original Medicare or you get it by joining a Medicare Advantage Plan with drug coverage. Plans that offer Medicare drug coverage are run by private insurance companies that follow rules set by Medicare.

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TRICARE is the health care program for uniformed service members, retirees, and their families around the world. A Tricare patient typically must-see physician at their military treatment facility.

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Medicaid is always the payer of last resort.

This means that if a patient has more than one type of insurance coverage and one of the insurances is Medicaid, then biller must bill the other insurance first and Medicaid second.

Medicaid will never pay, if the patient has more than one type of insurance coverage.

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Workers’ compensation insurance provides medical and wage benefits to people who are injured or become ill at work. Worker compensation will not be applicable if the worker does not follow safety requirement.

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Blue cross will be the primary payer and Medicaid will be the secondary based on the payer of the last resort.

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Medical billing fraud in the United States refers to the deliberate submission of false or misleading information to a healthcare insurance provider or government healthcare program for financial gain.

Examples of medical billing fraud can include:

• Billing for services or treatments that were not actually provided to the patient.

• Billing for a more expensive treatment or service than what was provided.

• Upcoding, which involves billing for a more complex or expensive service than what was performed or documented.

• Double-billing, which involves billing multiple insurance providers or billing for the same service twice.

• Billing for services that are not medically necessary or are not covered by the patient's insurance plan.

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The purpose of an internal audit is to allow the coders and biller in your office to make sure your claims was biller correctly. There are two types of internal audits:

1. prospective, which are completed before claims are sent out.

2. retrospective, which are performed after claims are sent and paid.

Both internal audits are conducted to make sure your office is coding and billing correctly.

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HIPAA, which stands for the Health Insurance Portability and Accountability Act, was created in 1996 to address the growing concerns regarding the confidentiality, security, and privacy of sensitive health information.

There were several reasons why HIPAA was created:

1. To improve the efficiency and effectiveness of the healthcare system: HIPAA was designed to simplify the administrative tasks associated with healthcare by standardizing electronic transactions and requiring healthcare providers, health plans, and healthcare clearinghouses to adopt standardized electronic data interchange.

2. To protect the privacy of patients: HIPAA includes strict rules and regulations regarding the privacy of personal health information (PHI). It requires healthcare providers and organizations to implement safeguards to protect the confidentiality of PHI and to obtain patient consent before using or disclosing PHI for certain purposes.

3. To improve the security of health information: HIPAA requires healthcare organizations to implement physical, technical, and administrative safeguards to protect PHI from unauthorized access, use, or disclosure.

4. To establish standards for electronic health transactions: HIPAA established standards for the electronic transmission of health information, such as electronic claims submissions and eligibility inquiries, to make the process more efficient and reduce the potential for errors. and effectiveness of the healthcare system.

The purpose of the compliance plan is to help your office follow the correct coding and billing protocols.

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Major Laws Related to Compliance

The purpose of healthcare compliance is to assist with the prevention of erroneous healthcare claims submission to healthcare insurance carriers (federal, state, and commercial). The ultimate goal is to prevent fraud, waste, and abuse.

 

Below is a quick summary of a few (but certainly not all) of the acts and statutes related to healthcare compliance.

1. False Claims Act (FCA): The civil FCA imposes civil liability on any person who knowingly submits, or causes the submission of, a false or fraudulent claim to the federal government. “Knowing” and “knowingly” mean a person has actual knowledge of the information or acts in deliberate ignorance or reckless disregard of the truth or falsity of the information. A person can violate the FCA even if they have no specific intent to defraud. Example: A physician knowingly bills for patient services when the patient was not seen.

2. Anti-Kickback Statute (AKS): The AKS makes it a crime to knowingly and willfully offer, pay, solicit, or receive any remuneration directly or indirectly to induce or reward patient referrals for the generation of business involving any item or service reimbursable by a federal healthcare program. Healthcare organizations should be sure to review updates to the AKS (and the Stark law below).

Example: A medical office gives coffee shop gift cards to patients who bring new patients to the office.

1. Physician Self-Referral Law (Stark Law): The Physician Self-Referral Law is often called the Stark Law. This law prohibits a physician from referring patients to receive “designated health services” payable by Medicare or Medicaid from an entity with which the physician or a member of the physician’s immediate family has a financial relationship, unless an exception applies.

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Example: A physician writes prescriptions for Medicare patients requiring prescriptions to be filled at the pharmacy owned by the physician.​

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Resource-Based Relative Value Scales (RBRVS) are used to determine the resource costs of providing service to standardize how health care providers are reimbursed by Medicare. It is reviewed every five years.

RBRVS is the way Medicare determines how much it will pay physicians, based on the resource costs needed to provide a . The RBRVS is calculated using three components: physician work, practice expense and professional insurance.

 

Under the RBRVS, physician payment for services are determined by:

1. Total RVUs

2. Geographic Practice Cost Indices (GPCIs)

3. Conversion Factor (CF)

   GPCI are reviewed every three years.

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Types of RVUs

To accurately capture the consumption of time, effort, and money involved in providing a service to patients, the RBRVS model utilizes three specific components, or types of RVUs, that, when totaled, determine payment.

These RVU types measure the following:

 

• Work RVUs account for the provider’s work when performing a procedure or service. Variables factored into this value include technical skills, physical effort, mental effort and judgement, stress related to patient risk, and the amount of time required to perform the service or procedure.

Work RVUs account for 50.866% of the total RVU for a code.

 

• Practice expense (PE) RVUs reflect the cost of clinical and nonclinical labor and expenses of the practice. These include medical supplies, office supplies, clinical and administrative staff, and pro rata costs of building space, utilities, medical equipment, and office equipment.

 

Practice expense RVUs account for 44.839% of the total RVU for a given service.

 

• Malpractice (MP) RVUs reflect the cost of professional liability insurance based on an estimate of the relative risk associated with each CPT® code. Malpractice RVUs account for 4.295% of a service’s total RVUs.

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These are generally the values and represent payment for the professional liability expenses.

An MUE (Medically Unlikely Edits) for a Healthcare Common Procedure Coding System (HCPCS) / Current Procedural Terminology (CPT) code is the maximum units of service that a provider would report under most circumstances for a single beneficiary on a single date of service. Not all HCPCS/CPT codes have an MUE.  

Although CMS publishes most MUE values on its website

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Place of Service Codes are two-digit codes placed on health care professional claims to indicate the setting in which a service was provided. The Centres for Medicare & Medicaid Services (CMS) maintain POS codes used throughout the health care industry. It refer to the location where the patient is treated.

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What is the difference between Facility (Fac) and Non Facility (NonFac)?
Medicare Part B services that are paid under the Resource Based Relative Value System (RBRVS) fee schedule may have differing payment amounts based on where a service was provided.

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In general, Facility services are provided within a hospital, ambulatory  surgery center, or skilled nursing facility. 

Non Facility services are provided everywhere else and include outpatient clinics, urgent care centers, home services, etc.

Non Facility services generally have a higher reimbursement rate due to a higher relative value unit (RVU) for the Non Facility Practice Expense amount. In a Facility setting, such as a hospital, the costs of supplies and personnel that assist with services - such as surgical procedures - are borne by the hospital whereas those same costs are borne by the provider of services in a Non Facility setting.

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NCCI Edits are updated quarterly and can be found on the CMS website.

Mutually exclusive procedures cannot reasonably be performed at the same anatomic site or same beneficiary encounter. An example of a mutually exclusive situation is the repair of an organ that can be performed by two different methods. Only one method can be chosen to repair the organ.

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Important Abbreviation

LCD: Local coverage determination.

NCD: National Coverage determination

NCCI: National correct coding initiative

ABN- Advanced Beneficiary Notice

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An Advanced Beneficiary Notice (ABN) is a notice that healthcare providers or suppliers give to Medicare beneficiaries (patients) to inform them that Medicare may not pay for certain items or services they have received.

An ABN is a written notice from Medicare (standard government form CMS-R-131), given to you before receiving certain items or services, notifying you:

• Medicare may deny payment for that specific procedure or treatment

• You will be personally responsible for full payment if Medicare denies payment

 

 

The Office of the Inspector General (OIG), a part of the Department of Health and Human Services, was established in 1976 in order to combat waste, fraud, and abuse within Medicare, Medicaid, and other government services. This includes the evaluation of proper physician billing as to avoid overspending.

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The centre for Medicare and Medicaid services (CMS) and National centre for health Statistic (NCHS) , two department of health and human services (DHHS) provide the following guidelines for coding and reporting using the international classification of Disease,10th revision, Clinical Modification (ICD 10 CM).

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The guidelines have been approved by four organisation that make up the cooperating Parties for the ICD-10 CM

1. American Hospital Association (AHA)

2. American Health information Management Association (AHIMA)

3. The centre for Medicare and Medicaid services (CMS)

4. National centre for health Statistic (NCHS)

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“The HIPAA Privacy Rule does not apply to entities that are either workers' compensation insurers, workers' compensation administrative agencies, or employers, except to the extent they may otherwise be covered entities

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General Equivalence Mappings (GEM), which were developed as a tool to assist with the conversion of International Classification of Diseases, 9th Edition, Clinical Modification (ICD-9-CM) codes to International Classification of Diseases, 10th Edition (ICD-10) and the conversion of ICD-10 codes back to ICD-9-CM.

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When a physician’s claim form is submitted to an insurance company, which two main components must the claim link to in order to prove medical necessity? -Diagnosis and procedure code(s)

What is the standard claim form that is used to report professional services and supplies to insurance plans? - CMS 1500

• The hospitals don’t use CMS 1500, as they may not charge for the procedures. But healthcare professionals or physicians use this form to get their payments done on time.

• So, CMS 1500 is used only by the physicians and not hospitals. Whereas UB-04 or CMS 1450 form is used by hospitals with 81 field locators to enter all the required details like HCPCS codes, NPI, Tax ID, etc.

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