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Medical Coding Notes

Tips for Coding

Medicare

The AAMC's recently updated report on tuition and projected debt service shows the average tuition in 2006 was $39,413 for private schools and $20,978 for public schools, with annual increases of 4.7% and 11.1% respectively. These increases are far greater than inflation, which is approximately 3% annually. 2006 private school graduates with federal student loans on a 25-year repayment plan are projected to spend 14% of their after-tax income on debt service.

The October 2007 discontinuation of the "20/220 rule" means that many residents no longer qualify for an economic hardship deferment and must begin repayment immediately.

In a 2001 study of 600 family practice physicians, only 52% agreed with coding experts, with undercoding being the most common error. For new patient notes, only 17% agreed with coding experts, with overcoding being the most common error.

In a 2005 prospective randomized trial of a template documentation system in a family practice residency program, the mean billing amount (after coding by a blinded expert) was $150 for written documentation and $163 for template documentation, a statistically significant difference.

An analysis of South Carolina Medicaid and State Employees Health Plan data found that "code creep" led to a 2.2% annual increase in expenditures on physician office visits in both programs. This analysis also found that Medicaid claims averaged 1.3% less per visit than the state plan claims, perhaps because physicians are more fearful of the consequences of overcoding for Medicaid than the state plan.

The CPT was first developed by the American Medical Association in 1966 in order to facilitate common terminology for procedures, and to ease the computerization of claims processing. The initial edition focused on surgery, radiology, and laboratory procedures. The second edition in 1970 added internal medicine procedures. In 1983, the federal government adopted CPT as the first level of the Healthcare Common Procedure Coding System (HCPCS), which was required for Medicare claims. Later on, HCPCS was required for Medicaid claims. Insurance companies began using the system as well.

By the 1990s, the complexity of coding led to the passage of the HIPAA act in 1996 to clarify which coding sets to use for which procedures. The HIPAA Final Rule in 2000 made CPT/HCPCS the code set for physician services, lab tests, radiology, and transportation. This rule also specified the use of ICD-9-CM for diagnosis and inpatient hospital services, CDT for dental services, and NDC for medications.

The list of CPT codes is maintained by the CPT Editorial Board, which consists of 17 members. Eleven of these members are nominated by the National Medical Specialty Societies. This panel is supported by a CPT Advisory Committee, which evaluates submitted requests to add, remove, or change the description of CPT codes.

The CPT code is only the first part of the translation of physician work into revenue. The determination of payment comes from the Relative Value Unit, or RVU. While the RVU is a Medicare concept, it is used by private insurance plans as a benchmark for determining their own reimbursement schedules.

MA /Specialty RVS Update Committee (RUC)

A dissection of the revenue/costs of a surgery practice in Hackensack.

The RVU/CPT business is critical to understanding how medicine billing works. The Resource-Based Relative Value Scale was designed in 1992 by a team led by Harvard economist William Hsiao. The RBRVS goal was to create a system for compensating physicians which took into account the physician's work, the opportunity cost of any specialized training, and the cost of running the practice. The original study found that invasive procedures were reimbursed at higher rates than E&M services, despite equal resource costs. Thus, the prediction was that an RBRVS system would raise reimbursement for primarily E&M providers (e.g. family practitioners) while decreasing reimbursement for procedure-heavy specialists.

The RBRVS system was adopted by Medicare as part of the Omnibus Reconcilation Act of 1989. The Medicare RBRVS system became active in January 1992.

Each CPT code has a resource cost expressed in "relative value units" or RVUs. The "AMA/Specialty Society Relative Value Scale Update Committee" (known as the RUC) determines how many RVUs each CPT code is worth. As indicated by the unwieldy name, the committee is formed of two representatives from the AMA, one from the American Osteopathic Association, 23 representatives from specialty societies, and three other seats representing associated committees. This committee assigns RVUs to all new codes, and reviews all codes at least every five years, most recently in 1997 and 2002.

The RBRVS has had some changes from the original goal. Resource costs are now divided into physician work, practice expense, and liability insurance. The physician work is determined by the time required, the mental effort and judgement, and the stress due to risk to the patient. On average, 52% of the total RVU for a service comes from physician work. Practice expense and liability insurance values are resource-based as of 2002, and make up 44% and 4% of the total RVU on average.

The overall formula for calculating the reimbursement for a procedure is a sum of the three RVU contributors, modified for location with a "geographic practice cost index" (GPCI). This total RVU is multiplied by a "conversion factor" (CF) to reach a dollar value. The conversion factor was originally $31.001, and may be changed annually through legislation. For 2007 and 2008, the conversion factor is $37.8975, same as it was in 2006. The CF may change each calendar year and is hotly debated as it, of all the parts of the RVU equation, has the greatest universal effect on physician compensation.

Private insurance companies use the Medicare system as a base and multiply it by a percentage modifier. In the Explanation of Benefits (EOB) sheet that is sent to patients, all of the above is hidden. All you see is the CPT code (a five-digit code) and the "negotiated amount" which includes no explanation. This amount may be referred to as the "Usual, Customary & Reasonable" (UCR) amount, which is the predecessor to the RVU system.

The EOB sheets are funny because while the difference between the billed & negotiated amount is marked as "Total Patient Responsibility", some group plans have negotiated "hold harmless" clauses where it is the insurer's responsibility to pay the doctor, not the patient's. Of course the insurer usually tells the doctor to shove it and dares them to sue the insurer for the extra amount billed.

This paper is a useful counterpoint, where a family practice guy lambasts the surgeons for getting **too much** money from the CPT/RVU system, because they include RVUs for post-op visits which if they occur are about 2 minutes long.

An effort to educate faculty at one academic family medicine practice resulted in significant gains, with the total error rate dropping from 50.2% to 31.1% (significant).

Student notes are to be ignored to meet Medicare compliance.

drexel closure

physicians don't know cost data -- Physicians' estimates of the cost of a month's supply of 33 commonly used medications were accurate in 45% of cases, too low for 40%, and too high for 15%. The costs of brand-name and expensive drugs were most likely to be underestimated.

nobody knows about the MMA

Even academics need to care about billing; Rush had to settle with the federal government over billing irregularities connected to clinical trials.

On the RVU committee.