Don't Be Penny Wise And Pound Foolish
Coding appropriately can be just as important as buying smart. Watch out for these pitfalls.

Cost containment is a high priority in ambulatory surgical centers (ASCs), prompted in large part by the rigidity of Medicare's ASC payment system. But while many ASCs are busy trying to save a few dollars here and there, they may be losing substantial revenue because of poor coding practices.

In this article, I'll point out some common coding errors and how to avoid them.

Coding for Multiple Services

Simple errors, such as reporting numbers or units incorrectly on surgery and anesthesia bills may cost an ASC thousands of dollars of reimbursement annually, especially when an ASC provides multiple services but erroneously bills for single services. This may be caused by lack of experience and training for ASC coding and billing staff. A facility may be using a software package that always defaults to a single unit on the claim form; the default is easily overlooked by a coder/biller who is new to facility billing.

Another area of potential loss in ASC billing is failure to identify and code secondary surgical procedures, such as vitrectomy (67005 or 67010) with a modifier 59 when done with cataract surgery. This error of omission can happen either because physicians aren't aware that the add-on procedures may be billed separately or because coders/billers are not reviewing operative reports for added procedures. Be aware that inexperienced coders/billers may not be familiar enough with some surgical procedures to identify portions of the surgery that may be coded separately.

Again, this means the ASC provides services that are never charged out. Although Medicare won't pay an ASC for performing procedures that aren't on the CMS approved list, operative reports should be reviewed to make sure no additional billable services were provided. And of course, non-Medicare payers are more flexible on procedures that are payable in the ASC setting.

Finding Missing Modifiers

Outright coding errors are another source of potential payment loss. Surgical procedures may be incorrectly identified and coded as less extensive than the procedure that's actually performed.

Missing or inappropriate modifiers on surgical codes also can be a costly error. Modifiers are two-digit add-ons attached to CPC codes to communicate additional information to the payer's computer. Appropriate use of modifiers allows a facility to describe circumstances that change the payment decision on claims. Modifier 50, for example, tells the payer that a procedure was done bilaterally. Without modifier 50, the payer's software will recognize only one procedure as provided and payable.

Appropriate use of modifier 59 allows the facility to override the National Correct Coding Initiative edits used by most payers to bundle surgical services, resulting in payment for procedures that would otherwise be denied. Of course, inappropriate assignment of CPT modifiers may also result in improper payments to an ASC, a clear audit risk.

Diagnostic Details

Errors in diagnosis coding frequently result in payment delays (while payers obtain medical chart copies to review claims) and outright denials of procedures as not medically necessary. ASC coders often receive more extensive training in the CPT coding system than in the ICD-9-CM systems, but both must be equally accurate and specific to ensure rapid and optimum reimbursement.

A common diagnosis coding error is assignment of "unspecified" code categories (i.e. 365.9 Unspecified glaucoma). An unspecified code communicates that a physician has not provided enough information to provide a more definitive diagnosis, which is seldom the case.

The ICD-9-CM system is very complex, and includes requirements for fourth and fifth digits on some (but not all) codes. An untrained coder can easily overlook the detailed coding rules incorporated into the system.

For example, two diagnosis codes are required to correctly identify diabetic retinopathy. Both codes require careful assignment of fifth digits, and the code that identifies the diabetes with ophthalmic manifestation is sequenced in front of the retinopathy code to conform to the diagnosis coding system requirements. Codes 250.5 with the appropriate fifth digit to identify the type of diabetes, followed by 362.0 with the appropriate fifth digit which identifies the specific type of retinopathy are the correct codes and sequencing for this condition.

Payer coding software generally conforms to formal coding system requirements; failure to assign both codes often results in a payer's request for records. Then the medical review staff reviews the codes submitted and reassigns diagnosis codes to conform to their edit system requirements. Some coders use additional digits, usually zeroes, to make all diagnosis codes five-digit codes, which also results in edit errors and payment delays.

Medicare claims are subject to local medical review policy (LMRP) for payable diagnosis codes for many, but not all, CPT procedure codes. Any diagnosis coding variation from LMRP requirements also results in denials of Medicare claims. Coders must be familiar with LMRP coding policies and validate that their ASC records include the information necessary to assign LMRP diagnosis codes.

Ensure Clean Claims

'Clean claim' issues are another potential source of payment delay and denial for ASCs. Patient demographic information that doesn't match a payer's records most often results in initial denials and subsequent appeals on facility claims. Errors in names, addresses, birth dates, identification information and the like will cause payer edit systems to deny claims.

The coding and billing staff members that I've worked with in ASCs generally are evaluating the records available and making coding decisions and assignments to the best of their ability. They're usually careful and conscientious employees, but they're often coming to the ASC billing department from other medical practices. Often, they learned their coding and billing skills in areas where the regulations are quite different from those for ASCs.

ASC coders and billers often submit the physicians' claims for professional services as well as the facility bills. Each of these claim types is subject to different billing rules. In addition, only ASCs are required to bill some payers on the CMS 1500 claim form and others on the UB-92 claim forms, which require a considerably different set of skills, including revenue codes on the UB claim form.

ASC coders and billers clearly need excellent baseline training in ASC coding and reporting, as well as updated and excellent reference resources and ongoing training. These can include current CPT and ICD-9-CM coding materials, newsletters such as Decision Health's "Ophthalmology Coder's Pink Sheet," and seminars with specific instruction tracks geared to ophthalmology coding. In addition, even the most experienced coder or biller will benefit from access to outside expertise and periodic outside evaluation to ensure that nothing is being overlooked.

Have a Compliance Plan

A last area of coding and reimbursement concern in some ASCs is the lack of a formal working compliance plan that spells out the requirements and policies for correct coding and documentation for both physicians and staff. Any of the errors described in this article may result in serious audit risks for the ASC.

ASC compliance plans should include a requirement that physicians provide copies of office documentation validating the medical necessity for procedures done in the facility. Medicare's LMRPs, for example, define the need for a Medicare patient to qualify for cataract surgery. If the physician's records don't prove that the patient qualifies for a procedure, both the physician and the facility are at risk of an audit of their charges and medical charts.

The compliance plan also will provide important guidance for employees who may have concerns about their internal billing and reporting process.

A working compliance plan, which includes a baseline coding and audit review and a minimum of annual reevaluations helps protect the ASC from the potential for errors that result in audit risk. A plan also will help identify areas of missed billing opportunities or errors that result in payment delays to help cut the overall costs of filing and collecting insurance claims.

Attention to Details Pays Off

Attention to these areas will ensure that your billing, reporting and coding practices are complete and accurate. This will shorten payment time and prevent denials on claims for services. These practices may very well prove to be considerably more financially beneficial to the ASC than many "penny wise, pound foolish" cost-cutting measures.

Ms. Steigerwald is a senior consultant for The Wellington Group, providing consulting and programs covering coding, reimbursement, documentation, compliance, HIPAA and practice management.