Your Path to Program Success: Expert Advice

Financial Housekeeping in The Cath Lab: Time for Spring Cleaning?

Catherine DiNardo, Lead Business Consultant Corazon, Inc., Pittsburgh, Pennsylvania
Catherine DiNardo, Lead Business Consultant Corazon, Inc., Pittsburgh, Pennsylvania
With focus on new beginnings, spring is the perfect time to make changes to departmental processes, regularly-used documents and, perhaps most importantly, the chargemaster, a list of all billable hospital services. Performing regular chargemaster maintenance will help your hospital avoid potentially costly errors that result from outdated or incorrect information. Indeed, a chargemaster can never remain static. In fact, regularly updating this important list can be the difference between accurate payment for patient services rendered and incomplete or inappropriate reimbursement. The new Medicare outpatient reimbursement rates became effective in January 2009, along with new CPT coding changes — a typical occurrence at the beginning of the calendar year. Often an organization can struggle with charging and coding practices. But an accurate and complete chargemaster is the first step to optimal billing and timely payment — a key strategy in these tough economic times. Inaccuracies in the chargemaster can cause incorrect payments back to the hospital and/or even payment delays or denials. The American Medical Association publishes new CPT manuals annually, and CMS updates the HCPCS codes periodically throughout the year. The cath lab department manager should regularly compare the chargemaster to the list of revised and deleted codes. If the chargemaster contains any of the newly-invalid codes, it’s necessary to consult with coding professionals in the hospital’s HIM department for assistance in assigning new codes to the services listed in the chargemaster. Failure to do so could again result in denials or incorrect payments. Several problem areas can arise during chargemaster maintenance. The below sections detail these areas and explore ways to overcome the associated challenges. Charge Capture Missed charges mean missed revenue for the hospital. The chargemaster plays a central role in charge capture, making accuracy within this important list a financial priority. Reviewing service code line items sorted by volume will focus attention on low-volume and zero-volume service codes. Lower than expected volumes can indicate a problem and the need to conduct an audit of the charging process. Corazon often recommends education to help department staff with understanding their daily role in charge capture and this role’s impact on the ‘big picture’ financials of the hospital as a whole. To accurately assess whether the department’s chargemaster is complete, start by comparing the chargemaster, the current CPT manual, and the Medicare outpatient PPS Addendum B. The department manger should evaluate whether codes that appear in the CPT manual and on the Outpatient PPS payment schedule should be included in the chargemaster. Generally, all services that are currently offered (or those planned for the future) should appear in the chargmaster. Setting a Charge Comparing Addendum B to the chargemaster may reveal some revenue opportunities. Addendum B shows the outpatient payment amount by CPT and the associated APC code. Medicare will reimburse the lower of the payment listed in Addendum B or the billed amount. To receive the Medicare payment amount, the department manager has to set charges at least equal to the Medicare payment amount. The rule holds true for other payor contracts as well. For example, if the insurance company contracts to pay $4000 per outpatient for cardiac cath procedures, but the patient bill is $3800, the insurance company will pay the $3800. Hospital prices can be set in various ways, but the manager’s goal is to assure that reimbursement reflects a match with overall resource utilization, so that the hospital receives correct payment for the care delivered. At minimum, reimbursement should cover the costs of performing the procedure. Correct Coding Understanding what service or supply is provided for each service code is the first step to ensure the correct CPT or HCPCS codes are assigned. After verifying the appropriateness of each service and the associated description in the chargemaster, determine if the correct HCPCS, CPT, and revenue code are present. If the department manager is uncertain about the assignment of the correct HCPCS or CPT code, they should consult with the coding experts in the hospital’s HIM department. In our experience, ancillary departments such as the cardiac cath lab generally hard-code the majority of the CPT and HCPCS codes into the chargemaster. Since these codes eventually appear on the patient bill with minimal review by the HIM coders, it is necessary to hard-code the complete code, including the modifiers, into the chargemaster. For example, the insertion of an intracoronary stent, code 92980, requires a modifier identifying the location of the stent placement. The modifiers that can be used with this code are the right coronary artery (RC), left circumflex artery (LC), and the left anterior descending artery (LD). Hard coding this service into the CDM would require the addition of three service codes with the CPT code and modifiers: 92980RC, 92980LC, and 92980LD. While such an effort could be time-consuming at the outset, this initiative could save valuable time, effort and dollars in the long-term. The department manager should verify that charge sheets contain the same descriptions and CPT/ HCPCS codes as the electronic copy of the chargemaster. It is not uncommon for charge sheets to be updated with new CPT codes while the computer maintenance on the chargemaster and the charge entry system are overlooked. Such oversights can cause payment problems and potentially trigger an audit. Likewise, charge codes should match the clinical documentation on the medical record. We encourage cath labs to utilize their CVIS systems to facilitate a more automated approach to clinical documentation — one that is linked to the coding and billing process. Miscellaneous and Stat-only Charges Miscellaneous codes often create billing problems. Since there are no HCPCS, CPT or revenue codes associated with miscellaneous service codes, these charges inevitably become “non-covered charges” on the patient bill. If the miscellaneous item is not denied outright, payors will request further documentation for the miscellaneous item, which will generally delay payment for the entire patient bill. Excessive use of “miscellaneous” line items indicates that service-specific line items need to be developed. Statistic-only service codes with zero prices can also create billing problems. Our review of one hospital’s chargemaster revealed that the staff was inputting the service codes for all of the statistical counters, but not the service codes to bill the patient. The employees did not realize that the service codes were statistics only, which translates to lost revenue. The problem was two-fold: first, the service code descriptions did not indicate that it was a statistical counter; and, second, there were almost as many statistical codes in the CDM as there were actual service codes. We recommended the use of the actual service code volume for statistical counts and use of zero-price statistical counters only when the volume was not captured elsewhere. Partial or unclear descriptions are not just a problem for the cath lab staff. Using clear, patient-friendly terms instead of clinical abbreviations can reduce the number of questions from those outside the department. Clear descriptions make it easier for the business office staff to answer questions from auditors, insurers and patients as they come up, resulting in efficiencies. Supply Charges The chargemaster should be reviewed to identify any service codes that should be removed. Routine supplies — those supplies that are customarily used during the usual course of treatment — are not billable. Examples of routine (non-billable) supplies are gloves, bandages, tubing and saline solutions. Defined as such, the costs of these supplies are considered to be bundled into the payment for the procedure. On the other hand, non-routine supplies are billable, and include any supplies necessary to treat a specific patient’s illness or injury based on a physician’s order and a documented plan of care. Examples of non-routine (separately billable) supplies would include stents and other implantable devices. Departments can set up service codes for kits or trays that contain both routine and non-routine supply items as long as they document the contents and the charge amount is for the billable supply items only. The majority of supplies used in the hospital do not require a HCPCS code, but Medicare does require HCPCS codes for implanted devices. When CMS developed APC payments for outpatient services, a number of expensive items (i.e., implantable devices) were assigned specific HCPCS codes called “C-codes” and paid separately as a pass-through costs. While the pass-through payment status for device category codes have expired, hospitals are still required to report the device C-codes on claims when such devices are used in conjunction with a procedure billed under the Medicare outpatient prospective payment system. There are a number of procedures commonly performed in the cath lab that would require a charge code for the related device. C-codes for AICDs, leads, pacemakers and stents should be included in the chargemaster in addition to the charge for the related procedure. Even though the payment for the device is now included in the payment for the procedure, it is important that hospitals bill and report the HCPCS codes for the procedure and the related device. CMS uses this claims data to establish future payment rates. Therefore, if the required HCPCS codes are not on the claim, the claim will be returned unprocessed. Ultimately, this practice could affect future payment rates. Equipment usage charges often find their way into the chargemaster, even though they are not billable to Medicare. We recommend that all equipment charges be removed from the CDM. Rather, the cost of using the equipment should be built into the procedure charge. Ongoing chargemaster maintenance is necessary due to continual changes in medical technology, the addition of new services to a hospital’s repertoire, changes in Medicare billing guidelines, and annual updates to the CPT and HCPCS coding systems. As physicians develop new methods for performing procedures, the CPT and HCPCS coding systems are revised, thus requiring that the chargemaster be updated. Department managers need to monitor Medicare transmittals for possible changes to the CDM. These transmittals are published periodically throughout the year and often impact the billing and coding of specific services. The chargemaster should be updated each year when the CPT and HCPCS updates are published. Ultimately, the chargemaster drives the billing and payment process. A complete and accurate chargemaster is essential for optimal payment. Sometimes, even the most clinically-adept organizations fail to give the necessary attention to this seemingly minor services list that has huge strategic and financial import to the overall viability of the hospital. Maintaining the chargemaster is a critical first step in ensuring financial profitability, now and in the future. Cathy is a Lead Business Consultant at Corazon, offering consulting, recruitment and interim management for the heart, vascular and stroke specialties. Visit for more information. To reach Cathy, call (412) 364-8200 or email