5 ways the new Medicare rules will change your job

The new Medicare billing rules will cause many changes in your ED’s operations, say emergency medicine experts. Here are several things to prepare for:

1. Nursing services will need to be documented and billed for.

It is estimated that 50% of payments from Medicare will be linked to nursing procedures, reports Mason Smith, MD, FACEP, president and chief executive officer of Lynx Medical Systems, a Bellevue, WA-based consulting firm specializing in coding and reimbursement for emergency medicine. "What is going to catch everybody by surprise in the ED is that nursing services will become a major source of payment," he predicts.

Nursing documentation will drive payment of these services. "It’s going to be incumbent on the nursing department to work out how they are going to capture these charges," he says. "Nursing services will need to be recorded so it can be identified they were performed."

Nurses will also need to document current procedural terminology visit levels. "They will need to meet the physician documentation guidelines and will have to do evaluation and management coding just like physicians," he says. "So that means a complete revision of their charge master for assigning visit levels."

2. An expanded list of services will be necessary.

"The ED will need to include both services currently charged for by the physician, and an expanded list of services typical for physician offices, such as administration of medication by [intramuscular] injection," he says. "Some of these procedures are going to be bundled, but the majority are not."

Two hundred specific procedure codes will need to be added to cover all of the services that may be performed, he adds. Some of these procedures are performed only by nurses. "Because of that, nurses cannot simply take the physicians charges and use those to determine their charges for services," Smith says. "That will potentially work for visit levels, assuming that the physicians are accurately charging, which may not be the case."

By reviewing the HCFA-proposed regulations published in the Sept. 8, 1998, Federal Register, you can learn whether or not your charge master is complete. "Your charge master will be radically different in the future, because it will need to list between 200 and 300 specific charges," he says.

3. There will be a limitation on the amount of copayments that hospitals can bill for.

This change could have a major impact on a hospital, depending on its pricing strategy, according to Smith. "If a hospital has had very high prices, then they are going to see a very significant cash reduction. There is a limitation on patient copayment, and that is the part hospitals can bill for immediately after providing a service."

Under current law, 20% of a Medicare patient’s bill is charged as a copayment. "Under the new rules, every line item will have a limited copayment. And that co pay ment will not be billable until after Medicare has told the hospital that it is an approved service, just like they do for physicians," Smith explains. As a result, hospitals will not be able to bill immediately for copayments. "They will be dependent on the turnaround of the Medicare explanation of benefits, so that they know what they are legally allowed to bill," he says.

Under the proposed prospective payment system (PPS), beneficiary copayment eventually will be limited to 20% of the maximum allowable payment from the Medicare program. "The copayment policy includes incentives for hospitals to voluntarily reduce beneficiary copayment toward the 20% copayment objective," he explains.

4. The administrative burden will increase.

Hospitals will submit more detailed bills than they have in the past, which will result in a major increase in paperwork, he says. "Maintaining 300 separate charges, as opposed to the usual five or six, is work in itself."

Preparing for the new system will call for the creation of new charge masters for facility services that parallel those for physician services. "This will require redefining and repricing the services provided in the ED," he says.

Hospitals will need to submit the appropriate ambulatory patient classification visit code to describe the services related to the medical visit portion of the ED visit. "Most hospitals have assigned individual patients a single charge for the services provided in the ED," Smith explains.

For example, a hospital may have eight levels of ED care. Level 2 may include a visit and simple suturing of a wound. Level 3 may apply to a sprained ankle requiring an X-ray. "Under the PPS, billing in this fashion will not result in full payment to the hospital. To be paid appropriately under the proposed system, hospitals will have to report ED services following the same coding conventions required for physicians."

Now, the number of ED charges will have to increase to encompass charges that were previously captured by central service and ancillary departments, particularly pharmacy and central supply, Smith explains. The average number of charges per encounter is likely to be about two and one-half, he adds.

EDs must ensure their charge masters identify the items and services that were previously charged by other departments. "For example, a tetanus toxoid immunization injection is often reported as a pharmacy charge," he notes. Under the PPS, the service must be reported by the ED.

5. Miscoding will have a greater impact.

Many hospitals have instituted very conservative compliance programs to avoid fraud and abuse allegations. "Those programs have been targeted at the physician services, not at the hospital services," says Smith. "Often, the compliance staff are not well-informed in assigning ED evaluation and management codes and assign very low levels, which are not appropriate."

Currently, those mistakes affect only the physician payment, but they will affect the hospital’s payment in the future. "If you don’t assign the correct visit level, it will cost the hospital a lot of money," he says. "Since you will be on a fee schedule, you can’t make up for it on the cost report, so that old standard tool is no longer available."