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Outpatient Prospective Payment System

Published December 2011

Part A

IMPORTANT

The information provided in this manual was current as of November 2011. Any changes or new information superseding the information in this manual, provided in MLN Matters® articles, eBulletins, listserv notices, Local Coverage Determinations (LCDs) or CMS Internet-Only Manuals with publication dates after November 2011, are available at: http://www.trailblazerhealth.com/Medicare.aspx

© CPT codes, descriptions, and other data only are copyright 2011 American Medical Association. All rights reserved. Applicable FARS/DFARS clauses apply. © CDT codes and descriptions are copyright 2011 American Dental Association. All rights reserved. Applicable FARS/DFARS clauses apply.

Provider Outreach and Education AS

IMPORTANT

MEDICARE PART A

Outpatient Prospective Payment System Manual

Table of Contents

OUTPATIENT HOSPITAL SERVICES ........................................................................... 1 Definition of Outpatient ................................................................................................ 1 Types of Services ........................................................................................................ 1 Coverage Policy .......................................................................................................... 8 Non-Covered Services................................................................................................. 9 OUTPATIENT PROSPECTIVE PAYMENT SYSTEM................................................... 13 Ambulatory Payment Classification ........................................................................... 13 Addendum B.............................................................................................................. 13 Status Indicators........................................................................................................ 13 Packaging.................................................................................................................. 13 Unconditional Packaging ........................................................................................... 14 Discounting................................................................................................................ 14 APC Payment Rate Calculation................................................................................. 15 Deductible.................................................................................................................. 15 Coinsurance .............................................................................................................. 15 Integrated Outpatient Code Editor ............................................................................. 16 National Correct Coding Initiative .............................................................................. 16 Modifiers .................................................................................................................... 18 OUTPATIENT MEDICAL ITEMS AND SERVICES ...................................................... 19 Laboratory Services................................................................................................... 19 Dialysis Services ....................................................................................................... 22 Emergency Services.................................................................................................. 23 Medical Devices ........................................................................................................ 26 Nuclear Medicine Procedures.................................................................................... 27 Drugs and Biologicals ................................................................................................ 28 Blood and Blood Products ......................................................................................... 36 Psychiatric Services .................................................................................................. 39 Partial Hospitalization ................................................................................................ 40 Repetitive Services .................................................................................................... 46 Therapy Services....................................................................................................... 46 Billing Requirements.................................................................................................. 67 Skilled Nursing Facility/Swing Bed Consolidated Billing ............................................ 69 Inpatient-Only Procedures ......................................................................................... 72 Observation Services ................................................................................................ 72 Outpatient Services Treated as Inpatient................................................................... 75

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Inpatient Admission Changed to Outpatient .............................................................. 77 Ancillary Services ...................................................................................................... 79 Preventive Services ................................................................................................... 80 REVISION HISTORY .................................................................................................... 82

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Contents

MEDICARE PART A

Outpatient Prospective Payment System Manual OUTPATIENT HOSPITAL SERVICES Definition of Outpatient

A "hospital outpatient" is a person who has not been admitted by the hospital as an inpatient but is registered on the hospital records as an outpatient and receives services (rather than supplies alone) from the hospital. The inpatient of a Skilled Nursing Facility (SNF) may be considered an outpatient of a hospital. However, the inpatient of a hospital cannot be considered an outpatient of that or any other hospital. When a hospital uses the term "day patient," it is referring to an individual who receives hospital services during the day and is not expected to be a patient in the hospital at midnight. A day patient is classified as an outpatient.

Types of Services

Hospitals provide two distinct types of services to outpatients. Both types of services are covered under the Part B benefit: Diagnostic services are services used to determine a diagnosis for the patient (i.e., diagnostic X-rays or diagnostic laboratory services).

Therapeutic services are services that aid the physician in treatment of the patient (i.e., services incident to the physician's services).

Payment may not be made for an outpatient hospital service unless the same service would be covered by Medicare as an inpatient hospital service. DIAGNOSTIC SERVICES A service may be regarded as "diagnostic" if it is an examination or procedure to which the patient is subjected or which is performed on materials derived from the patient to obtain information to aid in the assessment of a medical condition or the identification of a disease. These examinations and tests include: Diagnostic laboratory services (such as hematology and chemistry).

Diagnostic X-rays. Isotope studies. EKGs. Pulmonary function studies. Thyroid function tests. Psychological tests. Other tests given to determine the nature and severity of an ailment or injury.

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Diagnostic services are defined by the presence of the following revenue and/or HCPCS codes on the bill: 0254 ­ Drugs "incident to" other diagnostic services.

0255 ­ Drugs "incident to" radiology. 030X ­ Laboratory. 031X ­ Laboratory pathological. 032X ­ Radiology diagnostic. 0341 ­ Nuclear medicine, diagnostic. 0343 ­ Diagnostic radiopharmaceuticals. 035X ­ CT scan. 0371 ­ Anesthesia "incident to" radiology. 0372 ­ Anesthesia "incident to" other diagnostic services. 040X ­ Other imaging services. 046X ­ Pulmonary function. 0471 ­ Audiology diagnostic. 0481, 0489 ­ Cardiology, cardiac catheter lab/other cardiology with CPT codes 93501, 93503, 93505, 93508, 93510, 93526, 93541, 93542, 93543, 93544, 93556, 93561 or 93562. 0482 ­ Cardiology, stress test. 0483 ­ Cardiology, echocardiology. 053X ­ Osteopathic services. 061X ­ MRI. 062X ­ Medical/surgical supplies "incident to" radiology or other diagnostic services. 073X ­ ECG/EKG. 074X ­ EEG. 0918 ­ Behavioral health testing. 092X ­ Other diagnostic services.

Covered diagnostic services to outpatients include the services of: Nurses.

Psychologists.

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Technicians. Drugs and biologicals necessary for diagnostic study. The use of supplies and equipment.

When a hospital sends hospital personnel and hospital equipment to a patient's home to furnish a diagnostic service, the service is covered as if the patient had received the service in the hospital outpatient department. Diagnostic services furnished on or after January 1, 2010, are covered when the following conditions are met: The services are furnished by the hospital or under arrangements made by the hospital with another entity.

The services are ordinarily furnished by, or under arrangements made by, the hospital to its outpatients for the purpose of diagnostic study. The services would be covered as inpatient hospital services if furnished to an inpatient.

Payment is allowed under the hospital Outpatient Prospective Payment System (OPPS) for diagnostic services only when those services are furnished under the appropriate level of physician supervision. Under general supervision, the training of the nonphysician personnel who actually perform the diagnostic procedure and the maintenance of the necessary equipment and supplies are the continuing responsibility of the facility. Although Physician Assistants (PAs), Nurse Practitioners (NPs), Clinical Nurse Specialists (CNSs) and certified nurse midwives who operate within the scope of practice under state law may order and perform diagnostic tests, these tests must be furnished under the appropriate level of supervision by a physician. Some NonPhysician Practitioners (NPPs) may perform diagnostic tests without supervision. Therefore, NPPs who only require physician supervision included in collaboration or supervision requirements particular to a type of practitioner when they personally perform a diagnostic test are not permitted to function as supervisory "physicians" for other hospital staff performing diagnostic tests. Physician Supervision Guidelines For hospital outpatient diagnostic services, the supervision levels assigned to each CPT or Level II HCPCS code in the MPFS Relative Value File that is updated quarterly apply as described below.

General Supervision The procedure is furnished under the physician's overall direction and control, but the physician's presence is not required during the performance of the

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procedure. Under general supervision, the training of the non-physician personnel who actually performs the diagnostic procedure and the maintenance of the necessary equipment and supplies are the continuing responsibility of the physician.

Direct Supervision For services furnished directly or under arrangement in the hospital or in an oncampus outpatient department of the hospital, direct supervision means that the physician must be present on the same campus and immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician must be present in the room when the procedure is performed. For services furnished directly or under arrangement in an off-campus outpatient department of the hospital, direct supervision means the physician must be present in the off-campus provider-based department of the hospital and immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician must be present in the room when the procedure is performed. Immediate availability requires the immediate physical presence of the physician. CMS has not specifically defined the word "immediate" in terms of time or distance; however, an example of a lack of immediate availability would include situations when the supervisory physician is performing another procedure or service that he could not interrupt. Also, for services furnished on campus, the supervisory physician may not be so physically far away on campus that he could not intervene right away. The supervisory physician must have, within his state scope of practice and hospital-granted privileges, the knowledge, skills and ability to perform the service or procedure. CMS is aware that specially trained ancillary staff and technicians are the primary operators of some specialized diagnostic testing equipment and does not expect the supervisory physician to operate this equipment instead of a technician in those cases. However, the physician who supervises the provision of the diagnostic service must be knowledgeable about the test and clinically appropriate to furnish the test. The supervisory responsibility is more than the capacity to respond to an emergency; it includes the ability to take over performance of a procedure and, as appropriate to the supervisory physician and the patient, to change a procedure or the course of care for a particular patient. CMS would not expect that the supervisory physician would make all decisions unilaterally without informing or consulting the patient's treating physician or NPP. The supervisory physician must be clinically appropriate to supervise the service or procedure.

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Personal Supervision A physician must be in attendance in the room during the performance of the procedure.

One of the following numerical levels is assigned to CPT or HCPCS code in the Medicare Physician Fee Schedule (MPFS) database: 0 ­ Procedure is not a diagnostic test or procedure is a diagnostic test which is not subject to the physician supervision policy.

1 ­ Procedure must be performed under the general supervision of a physician. 2 ­ Procedure must be performed under the direct supervision of a physician. 3 ­ Procedure must be performed under the personal supervision of a physician. 4 ­ Physician supervision policy does not apply when procedure is furnished by a qualified, independent psychologist or a clinical psychologist or furnished under the general supervision of a clinical psychologist; otherwise must be performed under the general supervision of a physician. 5 ­ Physician supervision policy does not apply when procedure is furnished by a qualified audiologist; otherwise must be performed under the general supervision of a physician. 6 ­ Procedure must be performed by a physician or by a physical therapist who is certified by the American Board of Physical Therapy Specialties (ABPTS) as a qualified electrophysiologic clinical specialist and is permitted to provide the procedure under state law. 6a ­ Supervision standards for level 66 apply; in addition, the physical therapist with ABPTS certification may supervise another physical therapist but only the physical therapist with ABPTS certification may bill. 7a ­ Supervision standards for level 77 apply; in addition, the physical therapist with ABPTS certification may supervise another physical therapist but only the physical therapist with ABPTS certification may bill. 9 ­ Concept does not apply. 21 ­ Procedure must be performed by a technician with certification under general supervision of a physician; otherwise must be performed under the direct supervision of a physician. 22 ­ Procedure may be performed by a technician with online real-time contact with physician. 66 ­ Procedure must be performed by a physician or by a physical therapist with ABPTS certification and certification in this specific procedure. 77 ­ Procedure must be performed by a physical therapist with ABPTS certification or by a physical therapist without certification under direct

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supervision of a physician, or by a technician with certification under general supervision of a physician. Nurse practitioners, clinical nurse specialists and physician assistants may not function as supervisory physicians under the diagnostic tests benefit. However, these practitioners may personally perform diagnostic tests pursuant to state scope of practice laws and under applicable state requirements for physician supervision or collaboration. THERAPEUTIC SERVICES Therapeutic services, which hospitals provide on an outpatient basis, are those services and supplies (including the use of hospital facilities) that are incident to the services of physicians and practitioners in the treatment of patients. All hospital outpatient services that are not diagnostic are services that aid the physician or practitioner in the treatment of the patient. Such services include clinic services, emergency room services and observation services. Therapeutic services furnished on or after January 1, 2010, are covered as incident to a physician's services, when the services and supplies are furnished: By the hospital or under arrangement made by the hospital.

As an integral, although incidental, part of the physician's or NPP's professional service in the course of diagnosis or treatment of an illness or injury. In the hospital or at a department of the hospital that has provider-based status in relation to the hospital (i.e., in areas in the main building(s) of the hospital that are under the ownership, financial and administrative control of the hospital, operated as part of the hospital, and for which the hospital bills the services furnished under the hospital's CMS Certification Number (CCN)). Under the order of a physician or other practitioner practicing within the extent of the Social Security Act, the Code of Federal Regulations and state law. By hospital personnel and under the direct supervision of a physician or NPP.

Direct Physician Supervision Guidelines A service by a non-physician does not also require the actual rendition of a personal professional service by the physician responsible for care of the patient. However, during any course of treatment rendered by auxiliary personnel, the physician must personally see the patient periodically and sufficiently often to assess the course of treatment and the patient's progress and, where necessary, to change the treatment regimen. A hospital service or supply would not be considered incident to a physician's service if the attending physician merely wrote an order for the services or supplies and referred the patient to the hospital without being involved in the management of that course of treatment.

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The physician or NPP that supervises the services is not required to be in the same department as the ordering physician. In addition to physicians and clinical psychologists, licensed clinical social workers, physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives may directly supervise services that they may personally furnish in accordance with state law and all additional requirements. For services furnished in the hospital or an on-campus outpatient department of the hospital, direct supervision means the physician or NPP must be present on the same campus and immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician or NPP must be present in the room when the procedure is performed. For services furnished in an off-campus outpatient department of the hospital, direct supervision means the physician or NPP must be present in the off-campus providerbased department of the hospital and immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician or NPP must be present in the room when the procedure is performed. Immediate availability requires the immediate physical presence of the physician or NPP. CMS has not specifically defined the word "immediate" in terms of time or distance; however, an example of a lack of immediate availability would include situations when the supervisory physician or NPP is performing another procedure or service that he could not interrupt. Also, for services furnished on campus, the supervisory physician or NPP may not be so physically far away on campus that he could not intervene right away. The supervisory physician or NPP must have, within his state scope of practice and hospital-granted privileges, the knowledge, skills and ability to perform the service or procedure. CMS is aware that specially trained ancillary staff and technicians are the primary operators of some specialized therapeutic equipment and does not expect the supervisory physician or NPP to operate this equipment instead of a technician in those cases. However, the physician or NPP must be knowledgeable about the therapeutic service and clinically appropriate to furnish the service. The supervisory responsibility is more than the capacity to respond to an emergency; it includes the ability to take over performance of a procedure and, as appropriate to the supervisory physician or NPP and the patient, to change a procedure or the course of care for a particular patient. CMS would not expect that the supervisory physician or NPP would make all decisions unilaterally without informing or consulting the patient's treating physician or NPP. The supervisory physician or NPP must be clinically appropriate to supervise the service or procedure.

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Direct supervision is the minimum standard for supervision of all Medicare hospital outpatient therapeutic services. Considering that hospitals furnish a wide array of very complex outpatient services and procedures, including surgical procedures, CMS would expect that hospitals already have the credentialing procedures, bylaws and other policies in place to ensure that hospital outpatient services furnished to Medicare beneficiaries are being provided only by qualified practitioners in accordance with all applicable laws and regulations. For services not furnished directly by a physician or NPP, CMS would expect that these hospital bylaws and policies would ensure that the therapeutic services are being supervised in a manner commensurate with their complexity, including personal supervision where appropriate. If a hospital therapist, other than a physical therapist, occupational therapist or speechlanguage pathologist, goes to a patient's home to give treatment unaccompanied by a physician, the therapist's services would not be covered.

Coverage Policy

The fact that a drug, device, procedure or service is assigned a HCPCS code and a payment rate under the OPPS does not imply coverage by the Medicare program, but indicates only how the product, procedure or service may be paid if covered by the program. Medicare contractors determine whether a drug, device, procedure or service meets all program requirements for coverage. Since Medicare is a fee-for-service payment system and does not perform predeterminations or precertifications, it is sometimes necessary to provide interpretation of the phrase "reasonable and necessary" for beneficiaries, physicians and other providers. Various coverage policies, both local and national, are developed to assist in this interpretation. NATIONAL COVERAGE DETERMINATIONS The vast majority of Medicare coverage is provided on a local level and developed by clinicians and the contractors that pay Medicare claims. However, in certain cases, Medicare deems it appropriate to develop a National Coverage Determination (NCD) for an item or service to be applied on a national basis for all Medicare beneficiaries meeting the criteria for coverage. NCDs and Lab NCDs may be found on the CMS Web site at: http://www.cms.gov/medicare-coverage-database/. LOCAL COVERAGE DETERMINATIONS A Local Coverage Determination (LCD) is a decision made by a Medicare contractor on whether to cover a particular service based on the jurisdiction it serves (e.g., a determination as to whether the service or item is reasonable and necessary). Medicare contractors develop LCDs when there is no NCD or when there is a need to further define an NCD.

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LCDs consist of two separate, though usually closely related, documents ­ the LCD and the policy article. The LCD contains only the reasonable and necessary language. Any non-reasonable and necessary language a Medicare contractor wishes to communicate to providers is done through the policy article. TrailBlazer's LCDs are available on the TrailBlazer Health Enterprises® Web site at: http://www.trailblazerhealth.com/Tools/LCDs.aspx.

Non-Covered Services

The Advance Beneficiary Notice of Noncoverage (ABN) is a written notice that a provider gives to Medicare patients prior to rendering services that are not expected to be covered by Medicare. The purpose of the ABN is to document that the patient had knowledge prior to receiving the service that Medicare may not pay and allows the patient to make an informed decision about whether to receive services that he may be financially responsible for paying. Notice and billing requirements are described below. Additional information about the completion of the ABN can be found in the Advance Beneficiary Notice of Noncoverage manual on the TrailBlazer® Web site at: http://www.trailblazerhealth.com/Publications/Training Manual/abn.pdf. VOLUNTARY ABNS The ABN may be issued on a voluntary basis but is not required for services that do not meet the definition of any Medicare benefit or that are statutorily excluded from Medicare coverage. Services that are statutorily excluded from the Medicare program include: Personal comfort items.

Self-administered drugs and biologicals (i.e., pills and other medications not administered by injections). Cosmetic surgery (unless required for prompt repair of accidental injury or for improvement of a malformed body member). Eye exams for the purpose of prescribing, fitting or changing eyeglasses or contact lenses in the absence of disease or injury to the eye. Routine immunizations (except influenza vaccine, pneumococcal vaccine and hepatitis B vaccine; these services have specific regulations regarding patient responsibility). Physicals, laboratory tests and X-rays performed for screening purposes (except screening mammograms, screening Pap smears and various other mandated screening services; these services have specific guidelines regarding patient responsibility and when an ABN should be obtained).

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X-rays and physical therapy provided by chiropractors. Hearing aids and hearing examinations. Routine dental services (i.e., care, treatment, filling, removal or replacement of teeth). Supportive devices for the feet. Routine foot care (i.e., cutting or trimming corns or calluses, unless inflamed or infected; routine hygiene or palliative care or trimming of nails). Custodial care. Services furnished or paid by government institutions. Services resulting from acts of war.

A claim for these services must only be submitted to Medicare if the patient receives both covered and non-covered services on the same day or if the beneficiary requests that the claim be submitted to Medicare. The claim should be billed as follows: Condition code 21 (only if all services on the claim are non-covered and the patient requests that the services be billed to Medicare in order to receive a denial notice for secondary payers).

Occurrence code 32 and the date the ABN was given. Report modifier GX (notice of liability issued, voluntary under payer policy) with services for which a voluntary ABN was issued to the patient. Modifier GY (item or service statutorily excluded or does not meet the definition of any Medicare benefit) may also be reported. Non-covered charges.

These services will deny as beneficiary liability and the provider may request payment from the patient.

MANDATORY ABNS

Providers are required to issue the ABN in advance of initiating, reducing or terminating services that the provider believes to be not reasonable and necessary or constituted as custodial care (i.e., not reasonable and necessary per national or local coverage determinations or other Medicare benefit policies, or due to a reduction or termination in previously covered care). If the ABN is not given, the provider may not shift financial liability for such items and services to patients. Services denied by the Medicare program as not medically necessary can only be billed to the patient when a valid ABN is signed by the patient and is on file in the patient's medical record.

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Services for which an ABN was issued are billed as follows: Occurrence code 32 and the date the ABN was given.

Report modifier GA (waiver of liability statement issued, as required by payer policy) with services for which the ABN was issued. Covered charges.

These services are not automatically denied; however, if a service does deny based on other edits in the Medicare system, it is denied as beneficiary liability and the provider may request payment from the patient. Services for which an ABN was not issued are billed as follows: Report modifier GZ (item or service expected to be denied as not reasonable or necessary) with services for which the ABN should have been issued.

Non-covered charges.

These services will automatically deny as provider liability, will not be subject to complex medical review, and the provider may not request payment from the patient. CONDITION CODE 20 (DEMAND BILLS) The purpose of a demand bill is to assure that beneficiaries have the right to demand that Medicare be billed for services provided to them even if that billing does not provide Medicare payment. By assuring that claims are sent to and processed by Medicare, permitting official payment decisions to be made, beneficiaries retain the right to appeal payment decisions made on those claims when they believe need to use that right exists. Demand billing is resource-intensive for the Medicare program and affects the timeliness of payment determinations, which should prevent conscientious providers from abusing the mechanism when there is no true doubt as to coverage/payment. Routine billing of covered services and billing of non-covered charges should both be used as appropriate when coverage/payment is not believed to be in doubt. Providers are required to submit demand bills when: An ABN was not given/not appropriate for billing because the provider was not certain that the service would not be covered by Medicare.

The provider advised the patient that Medicare is not likely to cover the service. The beneficiary requests a medical determination from Medicare.

The billing requirements for demand bills are as follows: Type of bill 130 (if all services on the claim are non-covered).

Condition code 20.

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All charges associated with condition code 20 must be submitted as noncovered. All non-covered services on the demand bill must be in dispute. At least one non-covered line must appear on the claim related to the services in dispute. Unrelated covered charges are allowed on the same claim. Unrelated non-covered charges not in dispute, if any, should be billed on a nopayment claim using condition code 21 (see below). Occurrence code 32 is never submitted on a claim with condition code 20.

Medicare will perform a review of demand bills with condition code 20 to assure compliance with Medicare medical necessity, coverage and payment liability policies is met. CONDITION CODE 21 (BILLING FOR DENIAL) Condition code 21 is used when all charges on the claim are non-covered and the beneficiary or other insurer has requested a denial notice to facilitate payment by subsequent insurers. The billing requirements for a denial notice are as follows: Type of bill 130.

Condition code 21. Non-covered charges.

Non-covered charges billed on these claims, when not rejected, will be denied as beneficiary liability.

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Outpatient Prospective Payment System Manual OUTPATIENT PROSPECTIVE PAYMENT SYSTEM

The Outpatient Prospective Payment System (OPPS) applies to hospital outpatient departments (except hospitals that provide Part B only services to their inpatients, Critical Access Hospitals (CAHs), Indian Health Service (IHS) hospitals, hospitals located in American Samoa, Guam, Saipan and the Virgin Islands) and to partial hospitalization services provided by Community Mental Health Centers (CMHCs).

Ambulatory Payment Classification

Payment for service under the OPPS is calculated based on grouping outpatient services into Ambulatory Payment Classification (APC) groups. Services within an APC are similar clinically and require similar resource use. The payment rate and coinsurance amount calculated for an APC apply to all of the services within the APC. Each payable service is assigned an APC based on the HCPCS/CPT code billed; however, not every HCPCS/CPT is assigned an APC.

Addendum B

Addendum B is a list of HCPCS/CPT codes and the APC, status indicator, national payment amount and coinsurance amounts assigned to the code. This list is updated quarterly (in January, April, June and October) and can be accessed on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/AU/list.asp. The OPPS Addendum B search tool is also available on the TrailBlazer Web site at: http://www.trailblazerhealth.com/Tools/OPPSAddendumB.aspx.

Status Indicators

An OPPS payment status indicator is assigned to every HCPCS code and defines how a service is processed. The "OPPS Status Indicators" job aid includes a current list of status indicators and their definitions and is available on the OPPS Web page under "Publications." http://www.trailblazerhealth.com/Facility Types/OPPS/

Packaging

Under OPPS, packaged services are items and services that are considered to be an integral part of another service that is paid under the OPPS. No separate payment is made for packaged services because the cost of these items is included in the APC payment for the service of which they are an integral part. For example, routine supplies, anesthesia, recovery room and most drugs are considered to be an integral part of a surgical procedure, so payment for these items is packaged into the APC payment for the surgical procedure.

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Outpatient Prospective Payment System Manual Unconditional Packaging

Services identified with status indicator N are never separately paid because payment for the service is always packaged into payment for other services. CONDITIONAL PACKAGING Services identified with status indicators Q1, Q2 or Q3 are packaged when reported with separately payable services on the same date of service but change to a payable status indicator when no separately payable services are reported on the same date of service. STVX-PACKAGED SERVICES Services identified with status indicator Q1 are packaged into the APC payment for a service with status indicator S, T, V or X when one is reported on the same date of service. If there is no payable service with status indicator S, T, V or X reported on the same date of service, the status indicator of the STVX-packaged service (Q1) changes to a payable status indicator and is separately paid. T-PACKAGED SERVICES Services identified with status indicator Q2 are packaged into the APC payment for a service with status indicator T when one is reported on the same date of service. If there is no payable service with status indicator T reported on the same date of service, the status indicator of the T-packaged service (Q2) changes to a payable status indicator and is separately paid. COMPOSITE APCS Services identified with status indicator Q3 are mapped to composite APCs. Composite APCs provide a single payment for a comprehensive diagnostic and/or treatment service that is defined, for the purposes of the APC, as a service that is typically reported with multiple HCPCS codes. When HCPCS codes that meet the criteria for payment of the composite APC are billed on the same date of service, a single payment is made for all of the codes as a whole, rather than paying each code individually. The "Composite APCs 20XX" job aids include a list of services subject to the composite APC payment and are available on the OPPS Web page under "Publications." http://www.trailblazerhealth.com/Facility Types/OPPS.

Discounting

Discounting occurs when: Multiple surgical procedures furnished during the same operative session are discounted.

The full amount is paid for the surgical procedure with the highest weight.

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Fifty percent is paid for any other surgical procedure(s) performed at the same time. Surgical procedures terminated after a patient is prepared for surgery but before induction of anesthesia are paid at 50 percent of the APC payment. When multiple surgical procedures are performed during the same operative session, beneficiary coinsurance is discounted in proportion to the APC payment.

APC Payment Rate Calculation

The OPPS national unadjusted payment rates for APCs other than drugs and biologicals are calculated as the products of the scaled relative weight for the APC and the OPPS conversion factor. Hospital- specific payments for these APCs are derived after application of applicable adjustment factors (e.g., multiple surgery reduction, rural sole community adjustment, etc.) and the post-reclassification wage index that applies to the hospital to which payment is being made. Payment rates for separately paid drugs and biologicals are generally established based on a percentage of the average sales price of the drug or biological. An OPPS APC Calculator tool is available on the Self-Service Tools page of the TrailBlazer Web site at: http://www.trailblazerhealth.com/Tools/APCCalculator.aspx.

Deductible

The Outpatient Pricer determines the deductible for OPPS services on a claim and the Medicare contractor determines the deductible for other services on the same claim. The Pricer automatically applies the deductible to the APC line item with the largest national unadjusted coinsurance as a percent of the APC payment. The Pricer then goes to the next largest coinsurance as a percent of the APC payment until the deductible is met or no other payments can be used to satisfy the deductible. This method of applying the deductible is the most advantageous for the beneficiary. If less than $100 or less than the beneficiary's remaining deductible amount is applied, an additional deductible amount from other services, if applicable, is applied to the claim for other types of payments on the same claim before submitting to the Common Working File (CWF).

Coinsurance

The wage-adjusted coinsurance for a service under OPPS cannot exceed the inpatient deductible amount. The law offers hospitals the option of electing to reduce coinsurance amounts and advertise their reduced rates for all OPPS services. In other words, they may elect to receive a coinsurance payment from Medicare beneficiaries that is less than the wage-adjusted coinsurance amount per APC. That amount will apply to all services within that APC. This coinsurance reduction must be offered to all Medicare beneficiaries.

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Outpatient Prospective Payment System Manual Integrated Outpatient Code Editor

The Integrated Outpatient Code Editor (I/OCE) is a software package supplied to Medicare contractors by CMS to edit outpatient claims for errors and assign an APC for each service covered under OPPS. The I/OCE specifications are published quarterly through a CMS Change Request (CR) and are effective for January, April, July and October of each year. A list of I/OCE edit descriptions and dispositions is available on the TrailBlazer Web site at: http://www.trailblazerhealth.com/Publications/Job Aid/oce.pdf.

National Correct Coding Initiative

CMS developed the National Correct Coding Initiative (NCCI) to promote national correct coding methodologies and to control improper coding leading to inappropriate payment in Part B claims. A subset of NCCI edits is incorporated into the I/OCE for OPPS and therapy providers. The purpose of the NCCI edits is to prevent improper payment when incorrect code combinations are reported for the same patient on the same date of service. The NCCI contains two tables of edits: Column One/Column Two or Comprehensive/Component Edits and Mutually Exclusive Edits. The NCCI edit tables and contact information to address concerns about specific NCCI edits are available on the CMS Web site at: http://www.cms.gov/NationalCorrectCodInitEd/NCCIEHOPPS/list.asp. COMPREHENSIVE/COMPONENT EDITS Comprehensive/component edits are applied to HCPCS code combinations in which one of the codes (the column two code) is a component of the more comprehensive code (the column one code). The Column One/Column Two Edit table indicates whether the component code is never separately paid from the comprehensive code or if separate payment may be made if a modifier is applied to indicate that the service was distinct and independent. MUTUALLY EXCLUSIVE EDITS Mutually exclusive edits are applied to HCPCS code combinations in which one of the codes is considered to be either impossible or improbable to be performed with the other code on the same patient on the same date of service. The Mutually Exclusive Edit table indicates whether the column two code is never separately paid or if separate payment may be made if a modifier is applied to indicate that the service was distinct and independent.

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MODIFIER 59 When the NCCI Edit tables indicate that a modifier may be applied to allow separate payment for a code, modifier 59 may be used (when other modifiers do not apply) to indicate that a procedure or service was distinct or independent from other services performed on the same day. Documentation must support one of the following situations: Different session or patient encounter.

Different procedure or surgery. Different site or organ system. Separate incision or excision. Separate lesion. Separate injury (or area of injury in extensive injuries).

MEDICALLY UNLIKELY EDITS A Medically Unlikely Edit (MUE) for a HCPCS/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. CMS publishes most MUE values on its Web site at: http://www.cms.gov/NationalCorrectCodInitEd/08_MUE.asp. Note: OPPS providers use the "Facility Outpatient Services MUE Table." The following CPT modifiers may be used when appropriate to report the same code on separate lines of a claim for medically reasonable and necessary units of service in excess of an MUE: Anatomic modifiers (e.g., RT, LT, F1, F2).

Modifier 76: Repeat procedure by same physician. Modifier 77: Repeat procedure by another physician. Modifier 59: Distinct procedural service. Modifier 91: Repeat clinical diagnostic laboratory test.

Note: Modifier 59 should be used only if no other modifier describes the service. The MUE edit is applied by line item; therefore, any line item reported with units of service in excess of the MUE will line item deny with reason code 51MUE. Use the following example to report medically necessary units of service in excess of an MUE.

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Example: The MUE for a particular service is two and the medical documentation supports that it was medically necessary for the patient to receive five units. Report one line item with two units of service, a second line item with two units of service, and the appropriate modifier and a third line item with one unit and the appropriate modifier. Since claim lines are denied, excess units of service may be appealed. However, a denial of services due to an MUE is a coding denial, not a medical necessity denial; therefore, a provider shall not issue an ABN in connection with services denied due to an MUE and cannot bill the beneficiary for units of service denied based on an MUE.

Modifiers

Level I (CPT) and Level II (HCPCS) modifiers may be reported with services when appropriate to provide additional information about the service and/or to allow appropriate processing of the service. A modifier code search tool that provides descriptions and guidelines for modifiers commonly used in Medicare claims filing is available on the TrailBlazer Web site at: http://www.trailblazerhealth.com/Tools/ModifierCodeSearch.aspx.

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Diagnostic X-ray, laboratory and other diagnostic tests, including materials and the services of technicians, are covered under the Medicare program when the services are related to a patient's illness or injury (or symptom or complaint) and ordered by a physician. Clinical laboratory services include the examination of materials derived from the human body for the diagnosis, prevention or treatment of a disease or assessment of a medical condition. Some clinical laboratory procedures or tests require Food and Drug Administration (FDA) approval before coverage is provided. CLINICAL LABORATORY IMPROVEMENTS AMENDMENT The Clinical Laboratory Improvements Amendment of 1988 (CLIA) extends jurisdiction of the Department of Health and Human Services (HHS) to regulate all laboratories that examine human specimens to provide information to assess, diagnose, prevent or treat any disease or impairment. The purpose of the CLIA program is to assure that laboratories testing specimens consistently provide accurate procedures and services. As a result of CLIA, any laboratory soliciting or accepting specimens for laboratory testing is required to hold a valid license or letter of exemption from licensure issued by the Secretary of HHS. The CLIA mandates that laboratories meet applicable federal requirements and have a CLIA certificate in order to receive reimbursement from federal programs. OUTPATIENT AND NON-PATIENT SERVICES A non-patient is defined as a patient who is neither an inpatient nor an outpatient of a hospital but has a specimen that is submitted for analysis to a hospital and the patient is not physically present. If a hospital provides hospital outpatient and non-patient laboratory tests on different dates of service, two claims should be submitted: one for the outpatient laboratory test (13X type of bill) and one for the non-patient laboratory specimen test (14X type of bill). If a patient receives hospital outpatient services on the same day as a specimen collection and laboratory test, the patient is considered to be a registered hospital outpatient and all services should be billed on one claim (13X type of bill). If the hospital collects or draws a specimen from the patient and the patient does not also receive other hospital outpatient services on the same day, the hospital may either bill for the services as a non-patient (14X type of bill) or the hospital may choose to register the patient as an outpatient and bill for the services (13X type of bill).

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DATE OF SERVICE POLICY The Date of Service (DOS) policy for either a clinical laboratory test or the technical component of a physician pathology service is as follows: General rule: The DOS of the test/service must be the date the specimen was collected. Variation: If a specimen is collected over a period that spans two calendar days, the DOS must be the date the collection ended. Exception 1 ­ DOS for tests/services performed on stored specimens: If a specimen was stored for less than or equal to 30 calendar days from the date it was collected, the DOS of the test/service is the date the test was performed only if: The test/service is ordered by the patient's physician at least 14 days following the date of the patient's discharge from the hospital.

The specimen was collected while the patient was undergoing a hospital surgical procedure. It would be medically inappropriate to have collected the sample other than during the hospital procedure for which the patient was admitted. The results of the test/service do not guide treatment provided during the hospital stay. And, The test/service was reasonable and medically necessary for treatment of an illness.

If the specimen was stored more than 30 calendar days before testing, the specimen is considered to have been archived and the DOS of the test/service is the date the specimen was obtained from storage. Exception 2 ­ DOS for chemotherapy sensitivity tests/services performed on live tissue: A chemotherapy sensitivity test is defined as a test that requires a fresh tissue sample to test the sensitivity of tumor cells to various chemotherapeutic agents. The DOS of the test/service must be the date the test/service was performed only if: The decision regarding the specific chemotherapeutic agents to test is made at least 14 days after discharge.

The specimen was collected while the patient was undergoing a hospital surgical procedure. It would be medically inappropriate to have collected the sample other than during the hospital procedure for which the patient was admitted.

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The results of the test/service do not guide treatment provided during the hospital stay. And, The test/service was reasonable and medically necessary for treatment of an illness.

SPECIMEN COLLECTION FEE A nominal fee is provided to cover the appropriate costs of collecting the sample on which a clinical laboratory test was performed and for which payment is made with respect to samples collected in the same encounter. A specimen collection fee is allowed in circumstances such as drawing a blood sample through venipuncture (i.e., inserting a needle with a syringe or vacutainer into a vein to draw the specimen) or collecting a urine sample by catheterization. A specimen collection fee is not allowed for blood samples where the cost of collecting the specimen is minimal (such as a throat culture or a routine capillary puncture for clotting or bleeding time). This fee will not be paid to anyone who has not extracted the specimen. Only one collection fee is allowed for each type of specimen for each patient encounter, regardless of the number of specimens drawn. When a series of specimens is required to complete a single test (e.g., glucose tolerance test), the series is treated as a single encounter. The specimen collection fee is not separately payable for dialysis patients dialyzed in a dialysis facility or for patients dialyzed at home under reimbursement Method I. Payment for this service is included under the End Stage Renal Disease (ESRD) composite rate, regardless of whether the laboratory test itself is included in the composite rate or separately billable. Fees for taking specimens from home dialysis patients who have elected reimbursement Method II may be paid separately when all other payment criteria are met. Also, fees for taking specimens in the hospital setting, but outside of a dialysis unit, for use in performing laboratory tests not included in the ESRD composite rate may be paid separately. The following HCPCS codes and terminology must be used: G0001 ­ Routine venipuncture for collection of specimen(s).

P9615 ­ Catheterization for collection of specimen(s).

PAYMENT

CMS distributes an annual list of codes that indicates the payment method applied to each service. The majority of outpatient laboratory services are paid under the laboratory fee schedule or the OPPS.

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The Clinical Laboratory Fee Schedule can be found on the TrailBlazer Web site at: http://www.trailblazerhealth.com/Tools/Fee Schedule/ClinicalLabFeeSchedule.aspx. For services paid under the laboratory fee schedule, Medicare pays 60 percent of the allowed amount (62 percent for sole community hospitals). The allowed amount is the lesser of: Actual charges.

The fee schedule amount for the state or local geographic area. Or, A national limitation amount for the HCPCS code.

The annual Part B deductible and coinsurance do not apply to HCPCS codes paid under the laboratory fee schedule.

Dialysis Services

Medicare will cover non-routine dialysis treatments furnished to ESRD patients in the outpatient department of a hospital that does not have a certified dialysis facility. Payment is limited to unscheduled dialysis for ESRD patients in any of the following circumstances: Dialysis performed following or in connection with a dialysis-related procedure such as vascular access procedure or blood transfusions.

Dialysis performed following treatment for an unrelated medical emergency, e.g., if a patient goes to the emergency room for chest pains and misses a regularly scheduled dialysis treatment that cannot be rescheduled, hospitals may provide and bill Medicare for the dialysis treatment. Emergency dialysis for ESRD patients who would otherwise have to be admitted as inpatients in order for the hospital to receive payment.

These services are billed as follows: There is no assigned revenue code. Providers should report the revenue code that identifies where the services were rendered. This excludes revenue codes 082X­084X.

HCPCS code G0257 ­ Unscheduled or emergency treatment for dialysis for ESRD patient in the outpatient department of a hospital that does not have a certified ESRD facility. Note: Do not use HCPCS code G0257 for patients with acute renal failure.

Dialysis following or in connection with a vascular access procedure will not be separately payable when furnished by a hospital to beneficiaries who are covered in a Part A stay in a SNF.

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ESRD PPS CONSOLIDATED BILLING

Effective January 1, 2011, all ESRD-related lab tests and drugs/biologicals must be billed by the renal dialysis facility whether provided directly or under arrangements. A list of items and services subject to ESRD consolidated billing is available on the CMS Web site at: http://www.cms.gov/ESRDPayment/50_Consolidated_Billing.asp. Lab tests and drugs/biologicals that are included in the ESRD PPS will reject when billed by providers other than the ESRD facility. However, if the lab test and/or drug/biological is furnished to an ESRD patient for reasons other than for the treatment of ESRD, modifier AY should be reported to allow separate payment. Note: Modifier AY does not apply to HCPCS code G0257. For claims with dates of service on or after January 1, 2012, the consolidated billing edit for laboratory services will be bypassed when billed in conjunction with an emergency room service on a hospital outpatient claim and the AY modifier will not be necessary. This does not mean that ESRD facilities should send patients to the emergency room or department for routine laboratory testing or for the provision of renal dialysis services that should be provided by ESRD facilities. The intent is to acknowledge that there are emergency circumstances where the reason for the patient's illness is unknown and the determination of a laboratory test as being ESRD-related is not known. For hospital claims with dates of service on or after April 1, 2012, that include an emergency room service with revenue code 045X on a line item date that differs from the line item date of service for the related laboratory test(s), the hospital must include modifier ET to attest that the laboratory test(s) were ordered in conjunction with the emergency services.

Emergency Services

EMERGENCY ROOM SERVICES

Emergency care is defined as a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in placing the health of the individual in serious jeopardy, serious impairment to bodily functions or serious dysfunction of any bodily organ or part. Urgent care services are defined as services provided within 12 hours to avoid the likely onset of an emergency medical condition. Payment may be made for covered outpatient hospital services provided at a participating hospital. Payment may also be made for emergency/urgent care outpatient hospital services furnished by or under arrangements with a non-participating hospital.

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Hospital Emergency Room (ER) services should be billed as follows: The ER is identified with revenue code 045X.

The service date for the ER encounter is the date the service was initiated in the ER. If the patient was in the ER after midnight, only one service date should be entered ­ the date the patient entered the ER. For all other services related to the ER encounter (e.g., lab, radiology), the line item date of service reported is the date the service was actually rendered/initiated. ER services performed in hospitals and services related to the ER encounter are excluded from Skilled Nursing Facility (SNF) Consolidated Billing (CB) for beneficiaries that are in a skilled Part A SNF stay (i.e., billed by and reimbursed to the hospital). Report modifier ET with services not rendered on the date of the ER service. If, during the ER encounter, the patient's condition requires a separate Evaluation/Management (E/M) service (i.e., a separate history, separate physical or separate medical decision is documented in the patient's medical record), report modifier 25 with the E/M service that was provided on the same day as an "S" or "T" status procedure. For multiple outpatient hospital E/M visits on the same day in the same revenue center, report: o Condition code G0. o The first visit with no modifier. o The additional visit with modifier 27.

ER DEPARTMENT TYPE A A Type A emergency department must meet the following criteria: Available 24 hours, seven days a week.

Licensed by the state as an ER, or held to the public as a place that provides emergency care without a scheduled appointment.

The following CPT codes are used for billing: CPT codes 99281­99285. ER DEPARTMENT TYPE B A Type B emergency department must meet at least one of the following criteria: Licensed by the state.

Held out to the public as a place that provides emergency care without a scheduled appointment.

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During the last calendar year, provided at least one-third of outpatient visits for emergency conditions without a scheduled appointment.

The following HCPCS codes are used for billing: G0380 ­ Level 1 hospital type B ED visit.

G0381 ­ Level 2 hospital type B ED visit. G0382 ­ Level 3 hospital type B ED visit. G0383 ­ Level 4 hospital type B ED visit. G0384 ­ Level 5 hospital type B ED visit.

CRITICAL CARE

Medicare will pay for critical care at two levels, depending on the presence or absence of trauma activation. Providers will receive one payment rate for critical care without trauma activation and additional payment when critical care is associated with trauma activation. Under the OPPS, the time that can be reported as critical care is the time spent by a physician and/or hospital staff engaged in active face-to-face critical care of a critically ill or critically injured patient. If the physician and hospital staff or multiple hospital staff members are simultaneously engaged in this active face-to-face care, the time involved can only be counted once. When at least 30 minutes of critical care is provided without trauma activation, the hospital will bill: CPT code 99291© ­ Critical care, first 30­74 min.

CPT code 99292© ­ Critical care, add'l 30 min.

Payment will be made under APC 0617. Prior to January 1, 2011, any services included in the description of CPT code 99291 should not be billed separately. Instead, hospitals should report charges for any services provided as part of critical care services. Beginning January 1, 2011, all ancillary services and their associated charges should be billed separately. Payment for these services will continue to be packaged when provided in conjunction with critical care services. Modifier 59 may be reported to indicate that an ancillary service is distinct or independent from critical care when performed on the same day but in a different encounter. TRAUMA ACTIVATION Only trauma centers or hospitals licensed or designated by the state or local government authority or verified by the American College of Surgeons may bill revenue code series 068X. Different subcategory revenue codes are reported by designated Levels 1­4 hospital trauma centers. Only patients for whom there has been pre-hospital

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notification based on triage information from pre-hospital caregivers, who meet either local, state or American College of Surgeons field triage criteria or are delivered by inter-hospital transfers, and are given the appropriate team response, can be billed a trauma activation charge. Billing should include the following: Revenue code 068X.

HCPCS code G0390. Same date of service as CPT code 99291. Additional payment. APC 0618.

Medical Devices

PROCEDURE-TO-DEVICE EDITS Hospitals paid under the OPPS that report procedure codes that require the use of devices must also report the applicable HCPCS codes and charges for all devices that are used to perform the procedures. The Integrated Outpatient Code Editor (I/OCE) returns to the provider any claim that reports a HCPCS code for a procedure listed in the Procedure to Device Code List when one of the possible device codes is not included on the claim. Device edits do not apply to the specified procedure code if one of the following modifiers applies: Modifier 52 ­ Reduced services.

Modifier 73 ­ Discontinued outpatient procedure prior to anesthesia administration. Modifier 74 ­ Discontinued outpatient procedure after anesthesia administration.

Effective for services furnished on or after January 1, 2007, I/OCE returns to the provider any claim that reports a HCPCS for a device listed in the Device to Procedure Code List when the procedure is not included on the claim. The Procedure to Device and Device to Procedure Code Lists are updated quarterly and can be found on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/02_device_procedure.asp.

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CREDITED DEVICES Without Cost or Full Credit When a hospital replaces a device and receives the device without cost or with full credit from a manufacturer, the hospital must report modifier FB with the procedure code that reports the services provided to replace the device. The hospital must report a token charge for the device (less than $1.01) in the covered charges field. More Expensive Replacement Device When a hospital replaces a device with a more expensive device and receives a credit in the amount that the device being replaced would otherwise cost, the hospital must report modifier FB with the procedure code that reports the services provided to replace the device. The hospital must charge the difference between its usual charge for the device being implanted and its usual charge for the device for which it received credit in the covered charges field. Partial Credit When a hospital receives a partial credit of 50 percent or more of the cost of a new replacement device due to warranty, recall or field action, the hospital must report modifier FC with the procedure code that reports the services provided to replace the device. Payment Adjustment for Replaced Devices Effective January 1, 2007, Medicare payment is reduced by the full offset amount for specified procedure codes reported with modifier FB. Effective January 1, 2008, Medicare payment is reduced by the partial offset amount for specified procedure codes reported with modifier FC. Effective January 1, 2009, payment is only reduced for procedure codes that map to the APC groups on the list of APCs subject to the adjustment that are reported with modifier FB or FC and that are present on claims with specified device HCPCS codes. The lists of APCs and devices to which the offset reductions apply and the full and partial offset amounts are updated quarterly and are available on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/02_device_procedure.asp.

Nuclear Medicine Procedures

The I/OCE edits for the presence of a radiolabeled product when a separately payable nuclear medicine procedure is present on a claim. The services on the claim must reflect the date the particular service was provided. Therefore, if the nuclear procedure is provided on a different date of service from the radiolabeled product, the claim will contain more than one date of service.

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When reporting a nuclear medicine procedure for which a radiolabeled product was provided during a previous hospital inpatient stay, report: The nuclear medicine procedure HCPCS code.

HCPCS code C9898 with a token charge of less than $1.01 and the same date of service as the nuclear medicine procedure.

There are certain rare instances when a diagnostic radiolabeled product may be administered to a beneficiary in a given calendar year prior to a hospital furnishing an associated nuclear medicine procedure in the subsequent calendar year. Since Medicare does not allow multiple calendar year services to be reported on a single claim, in this limited circumstance hospitals are instructed to report the date the radiolabeled product is furnished to the beneficiary as the same date that the nuclear medicine procedure is performed. When a radiolabeled product is administered in one hospital and the nuclear medicine scan is subsequently performed at another hospital, the hospital that bills for the nuclear medicine procedure must also bill for the radiolabeled product. The hospital that administers the radiolabeled product may enter into an arrangement with the hospital that administers the nuclear medicine scan to receive payment for the radiolabeled product. Beginning January 1, 2011, hospitals should report radiolabeled products received free of charge or with full credit by including modifier FB with the nuclear medicine procedure code and a token charge of less than $1.01 for the radiolabeled product. The payment amount for the procedure will be reduced by the full offset amount appropriate for radiolabeled products. The radiolabeled product edit list is updated quarterly and available on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/02_device_procedure.asp.

Drugs and Biologicals

The Medicare program provides limited benefits for outpatient drugs. The program covers drugs and biologicals that are furnished incident to a physician's service, provided that the drugs are not usually self-administered by the patients who take them. Separate payment is made for certain drugs and biologicals while others are packaged into the procedure with which they are billed. Generally, drugs and biologicals are covered only if all of the following requirements are met: They meet the definition of drugs or biologicals.

They are of the types that are not usually self-administered.

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They meet all the general requirements for coverage of items as incident to a physician's services. They are reasonable and necessary for the diagnosis or treatment of the illness or injury for which they are administered according to accepted standards of medical practice. They are not excluded as non-covered immunizations. They have not been determined by the FDA to be less than effective.

SELF-ADMINISTERED DRUGS AND BIOLOGICALS The definitions below provide interpretation of the phrase "not usually self-administered by the patient" and outline the policy that Medicare contractors follow when determining exclusions to the self-administered drug policy. Definition of Administered The term "administered" refers only to the physical process by which the drug enters the patient's body. It does not refer to whether the process is supervised by a medical professional (for example, to observe proper technique or side effects of the drug). Injectable drugs, including intravenously administered drugs, are typically eligible for inclusion under the "incident to" benefit. With limited exceptions, other routes of administration, including but not limited to oral drugs, suppositories and topical medications, are considered to be usually self-administered by the patient. Definition of Usually For the purposes of applying this exclusion, the term "usually" means more than 50 percent of the time for all Medicare beneficiaries who use the drug. Therefore, if a drug is self-administered by more than 50 percent of Medicare beneficiaries, the drug is excluded from coverage and the contractor may not make any Medicare payment for it. In arriving at a single determination on whether a drug is usually self-administered, contractors should make a separate determination for each indication for a drug as to whether that drug is usually self-administered. After determining whether a drug is usually self-administered for each indication, contractors should determine the relative contribution of each indication to total use of the drug (i.e., weighted average) to make an overall determination as to whether the drug is usually self-administered. For example, if a drug has three indications and is not self-administered for the first indication but is self-administered for the second and third indications, and the first indication makes up 40 percent of total usage, the second indication makes up 30 percent of total usage, and the third indication makes up 30 percent of total usage, then the drug would be considered usually self-administered. Reliable statistical information on the extent of self-administration by the patient may not always be available. Consequently, CMS offers the following guidance for each contractor's consideration in making this determination in the absence of such data:

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Absent evidence to the contrary, presume that drugs delivered intravenously are not usually self-administered by the patient. Absent evidence to the contrary, presume that drugs delivered by intramuscular injection are not usually self-administered by the patient. (Avonex®, for example, is delivered by intramuscular injection, not usually self-administered by the patient.) The contractor may consider the depth and nature of the particular intramuscular injection in applying this presumption. Absent evidence to the contrary, presume that drugs delivered by subcutaneous injection are self-administered by the patient. However, contractors should examine the use of the particular drug and consider the following factors: o Acute condition ­ Is the condition for which the drug is used an acute condition? If so, it is less likely that a patient would self-administer the drug. If the condition were longer term, it would be more likely that the patient would self-administer the drug. o Frequency of administration ­ How often is the injection given? For example, if the drug is administered once per month, it is less likely to be selfadministered by the patient. However, if it is administered once or more per week, it is likely that the drug is self-administered by the patient.

In some instances, Medicare contractors may have provided payment for one or perhaps several doses of a drug that would otherwise not be paid because the drug is usually self-administered. Medicare contractors may have exercised this discretion for limited coverage, for example, during a brief time when the patient is being trained under the supervision of a physician in the proper technique for self-administration. Medicare will no longer pay for such doses. In addition, contractors may no longer pay for any drug when it is administered on an outpatient emergency basis if the drug is excluded because it is usually self-administered by the patient. Definition of Acute Condition For the purposes of determining whether a drug is usually self-administered, an acute condition means a condition that begins over a short time period, is likely to be of short duration and/or the expected course of treatment is for a short, finite interval. A course of treatment consisting of scheduled injections lasting less than two weeks, regardless of frequency or route of administration, is considered acute. Evidence to support this may include FDA approval language, package inserts drug compendia and other information. By the Patient The term "by the patient" means Medicare beneficiaries as a collective whole. The contractor includes only the patients themselves and not other individuals (that is, spouses, friends or other caregivers are not considered the patient). The determination is based on whether the drug is self-administered by the patient a majority of the time the drug is used on an outpatient basis by Medicare beneficiaries for medically

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necessary indications. The contractor ignores all instances when the drug is administered on an inpatient basis. The contactor makes this determination on a drug-by-drug basis, not on a beneficiaryby-beneficiary basis. In evaluating whether beneficiaries as a collective whole selfadminister, individual beneficiaries who do not have the capacity to self-administer any drug due to a condition other than the condition for which they are taking the drug in question are not considered. For example, an individual afflicted with paraplegia or advanced dementia would not have the capacity to self-administer any injectable drug, so such individuals would not be included in the population upon which the determination for self-administration by the patient was based. Note that some individuals afflicted with a less severe stage of an otherwise debilitating condition would be included in the population upon which the determination for "self-administered by the patient" was based, for example, an early onset of dementia. Evidentiary Criteria Contractors are only required to consider the following types of evidence: peer-reviewed medical literature, standards of medical practice, evidence-based practice guidelines, FDA-approved labels and package inserts. Contractors may also consider other evidence submitted by interested individuals or groups subject to their judgment. Contractors should also use these evidentiary criteria when reviewing requests for making a determination as to whether a drug is usually self-administered and requests for consideration of a pending or published determination. Note: The fact that the FDA label includes instructions for self-administration is not, by itself, a determining factor that a drug is subject to this exclusion. Conferences Between Contractors Contractors' medical directors may meet and discuss whether a drug is usually selfadministered without reaching a formal consensus. Each contractor uses its discretion as to whether it will participate in such discussions and makes its own determinations with respect to the self-administered exclusion. Beneficiary Appeals If a beneficiary's claim for a particular drug is denied because the drug is subject to the self-administered drug exclusion, the beneficiary may appeal the denial. Because it is a benefit category denial based on medical necessity, an ABN is not required. A benefit category denial (i.e., a denial based on the fact that there is no benefit category under which the drug may be covered) does not trigger the financial liability protection provisions of limitation on liability (under Section 1879 of the Social Security Act). Therefore, providers may charge the beneficiary for an excluded drug.

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Provider Appeals Providers may appeal a denial under the provisions found in Internet-Only Manual (IOM) Pub. 100-04, Chapter 29. REASONABLE AND NECESSARY Contractors will make the determination of reasonable and necessary with respect to the medical appropriateness of a drug to treat the patient's condition. Contractors will continue to make the determination on whether the intravenous or injection form of a drug is appropriate as opposed to the oral form. Contractors will also continue to make the determination as to whether a physician's office visit was reasonable and necessary. However, contractors should not make a determination on whether it was reasonable and necessary for the patient to choose to have the drug administered in the physician's office or outpatient hospital setting. That is, while a physician's office visit may not be reasonable and necessary in a specific situation, in such a case an injection service would be payable. SELF-ADMINISTERED DRUG EXCLUSIONS Each Medicare contractor must determine the drugs it considers to be excluded from the "usually self-administered by the patient" policy. TrailBlazer's list of selfadministered drug exclusions is available at: http://www.trailblazerhealth.com/Specialty Services/Drugs and Biologicals/SADExclusionJ4.aspx. IMMUNOSUPPRESSIVE DRUGS Medicare will no longer make payments to hospital outpatient departments subject to the OPPS for immunosuppressive drugs furnished to beneficiaries for use after discharge (e.g., 30-day supplies). Payment may be allowed under the hospital OPPS for one administration of an immunosuppressive drug when furnished to a beneficiary who is registered as an outpatient. Immunosuppressive drugs and many other drugs are packaged into the services the beneficiary receives on a given day (i.e., the cost billed for the drug in the base year is part of the cost of the service with which it was billed). Consequently, hospitals that have been providing beneficiaries with immunosuppressive drugs must bill the Durable Medical Equipment Medicare Administrative Contractor (DME MAC) to receive payment for these supplies of immunosuppressive drugs. TAKE-HOME DRUGS Hospitals bill the appropriate DME MAC for take-home supplies of oral anti-cancer drugs, oral anti-emetic drugs and multi-day supplies of immunosuppressive drugs, as well as the associated supplying fees. All inhalation drugs and the associated dispensing fees are also billed to the DME MAC. When beneficiaries come to a hospital outpatient department and have an encounter with a physician or mid-level professional (e.g., a physician assistant or nurse practitioner), during which one or more specimens are collected for laboratory work,

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treatment is monitored (including anti-cancer drugs, either oral or infused) and a drug is administered, this is considered an outpatient visit. Only when more than a single-day supply of a drug is dispensed to the beneficiary for take-home use should the drugs be billed to the appropriate DME MAC. When only one day of drugs is dispensed and other services are rendered in conjunction with the treatment, the entire visit is billed to Medicare Part A. REPORTING DRUGS Hospitals are strongly encouraged to report charges for all drugs and biologicals, regardless of whether the items are paid separately or packaged, using the correct HCPCS codes for the items used and units of service that are consistent with the quantity of the drug or biological that was used in the care of the patient. Revenue Codes Drugs assigned status indicator K (non-pass-through drugs and biologicals) must be billed with revenue code 0636 (drugs requiring detail coding) and the appropriate HCPCS code for the drug in order to receive separate payment. Drugs assigned status indicator N (packaged services) are billed with the appropriate packaged revenue codes 0250­0259. HCPCS CODES Prior to January 1, 2008, the OPPS generally only recognized the lowest available administrative dose of a drug if multiple HCPCS codes existed for the drug, and higher doses were assigned status indicator B, indicating that another code existed for OPPS purposes. However, beginning January 1, 2008, the OPPS recognizes each HCPCS code for a drug, regardless of the units identified in the drug descriptor. Hospitals may choose to report multiple HCPCS codes for a single drug or continue to report the HCPCS code with the lowest dosage descriptor available. Units of Service Units of drugs administered to patients should be reported in terms of the dosage specified in the full HCPCS code descriptor. If the full HCPCS code descriptor of a drug code is 50 mg and 200 mg of the drug was administered to the patient, bill four units. Hospitals should not bill the units based on the way the drug is packaged, stored or stocked. If the HCPCS descriptor for the drug code specifies 1 mg and a 10-mg vial of the drug was administered to the patient, bill 10 units even though only one vial was administered.

National Drug Code

Hospitals may report a National Drug Code (NDC) for any drug or biological for the purpose of crossover to third-party payers that require the NDC. The following information must be included on the claim:

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The NDC. The quantity of the drug that was administered, expressed in the unit of measure applicable to the drug or biological. One of the following quantity qualifiers: o F2 ­ international unit. o GR ­ gram. o ML ­ milliliter. o UN ­ units.

Hospitals under the OPPS that bill for drugs and biologicals that have received FDA approval but have not yet received product-specific drug/biological HCPCS codes are required to report the NDC. The following information must be included on the claim: The appropriate drug revenue code.

HCPCS code C9399. Units and date of service. The NDC. The quantity of the drug that was administered, expressed in the unit of measure applicable to the drug or biological. One of the quantity qualifiers noted above. The name of the drug in the Remarks field.

COMPOUNDED DRUGS If two or more drugs or biologicals are mixed together to facilitate administration, the correct HCPCS codes should be reported separately for each product used in the care of the patient. The mixing of two or more products does not constitute a new drug as regulated by the FDA under the New Drug Application (NDA) process. Therefore, it is not appropriate to bill HCPCS code C9399 (unclassified drug or biological), which is used to report new drugs and biologicals that are approved by the FDA but have not been assigned a HCPCS code. Unless otherwise specified in the long description, HCPCS code descriptors refer to the non-compounded, FDA-approved final product. If a product is compounded and a specific HCPCS code does not exist for the compounded product, the hospital should report an appropriate unlisted code such as J9999 or J3490. DISCARDED DRUGS Providers are encouraged to schedule patients in such a way that they can use drugs or biologicals most efficiently in a clinically appropriate manner. However, if a provider

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must discard the remainder of a single-use vial or other single-use package after administering a dose/quantity to a Medicare patient, TrailBlazer requires the provider to bill for the amount discarded as well as the dose administered, up to the amount of the drug or biological as indicated on the vial or package label. Additional information and instructions on the use of the JW modifier to report appropriately discarded drugs is included in the "Drug Wastage" job aid on the TrailBlazer Web site at: http://www.trailblazerhealth.com/Publications/Job Aid/Drug Wastage.pdf. DRUGS AND BIOLOGICALS USED AS IMPLANTABLE DEVICES Biologicals that are solely surgically implanted or inserted should always be reported separately. If the implanted biological has pass-through status, a separate payment is made; otherwise, payment for the biological is packaged into the payment for the associated procedure. Biologicals that may either be surgically implanted/inserted or otherwise applied in the care of a patient should only be separately reported if they have pass-through status. Under the OPPS, hospitals are provided a packaged APC payment for surgical procedures that includes the cost of supportive items, including implantable devices without pass-through status. When using biologicals during surgical procedures as implantable devices, hospitals may include the charges for these items in their charge for the procedure, report the charge on an uncoded revenue center line or report the charge under a device HCPCS code (if one exists) so these costs would appropriately contribute to the future median setting for the associated surgical procedure. Infusions and Injections The following guidelines should be followed when billing for drug administration services provided in the hospital outpatient department: Use the full set of drug administration CPT codes.

Report all drug administration CPT codes in a manner consistent with their descriptors, CPT instructions and correct coding principles. Report all HCPCS codes that describe the drug administration services provided, regardless of whether or not those services are separately paid or their payment is packaged. This includes reporting an initial hour of infusion even if the hospital did not initiate the infusion and additional HCPCS codes for additional or sequential infusion services if needed. Use a line item date of service that corresponds with the day the drug administration service was provided. Only one initial drug administration service is to be reported per vascular access site per encounter, including during an encounter where observation services span more than one calendar day.

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BLOOD DEDUCTIBLE Medicare does not pay for the first three pints of whole blood or equivalent units of packed red cells received under Part A and Part B combined in a calendar year. However, blood processing (e.g., administration, storage) is not subject to the deductible. The term "whole blood" means human blood from which none of the liquid or cellular components have been removed. A unit of packed red cells is considered equivalent to a pint of whole blood. Other components of blood such as platelets, fibrinogen, plasma, gamma globulin and serum albumin are not subject to the blood deductible. However, these components of blood are covered as biologicals. The blood deductibles are in addition to any other applicable deductible and coinsurance amounts for which the patient is responsible. A provider may charge the beneficiary or a third party its customary charge for whole blood or units of packed red cells, which are subject to either the Part A or Part B blood deductible, unless the individual, another person or a blood bank replaces the blood or arranges to have it replaced. A deductible pint of whole blood or unit of packed red cells is considered replaced when a medically acceptable pint or unit is given or offered to the provider or, at the provider's request, to its blood supplier. Accordingly, where an individual or a blood bank offers blood as a replacement for a deductible pint or unit furnished a Medicare beneficiary, the provider may not charge the beneficiary for the blood, whether or not the provider or its blood supplier accepts the replacement offer. When a provider accepts blood donated in advance, in anticipation of need by a specific beneficiary, whether the beneficiary's own blood (i.e., an autologous donation) or blood furnished by another individual or blood assurance group, such donations are considered replacement for pints or units subsequently furnished to the beneficiary. PURCHASED BLOOD AND BLOOD PRODUCTS Hospitals that purchase blood from a blood bank or collect blood in their own blood bank and assess a charge should bill as follows: Value code 37 and the number of pints the patient received (only when billing revenue code 0381 (packed red cells) or 0382 (whole blood)).

Revenue code 038X (except revenue code 0380) with the appropriate blood product HCPCS code ("P" code), BL modifier, number of units transfused and date of service.

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Revenue code 0390, 0392 or 0399 (processing and storage) with the same "P" code, BL modifier, number of units and date of service as reported for revenue code 038X. Revenue code 0391 (transfusion) with the appropriate CPT code, one unit and date of service.

NON-PURCHASED BLOOD AND BLOOD PRODUCTS Hospitals that do not purchase blood or blood products from a blood bank (i.e., donated) or do not assess a charge for blood from their own blood bank should bill as follows: Revenue code 0390, 0392 or 0399 (processing and storage) with the appropriate blood product HCPCS code ("P" code), number of units transfused and date of service.

Revenue code 0391 with the appropriate CPT code, one unit and date of service.

Revenue Codes for Blood Products Revenue Code 0381 0382 0383 0384 0385 0386 0387 0389 Definition Packed red blood cells Whole blood Plasma Platelets Leukocytes Other components Other derivatives Other blood

Note: The blood product revenue code and HCPCS code ("P" code) reported on the claim must match. Example: Revenue code 0382 (whole blood) and HCPCS code P9010 (Blood (whole), for transfusion, per unit). Revenue Codes for Blood Storage and Processing Revenue Code 0390 0391 0392 0399 Definition General Blood administration ­ transfusion Processing and storage Other blood storage and processing

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Value Codes for Blood Deductible Value Code 06 Description Dollar amount for blood deductible Definition Amount shown is the product of the number of unreplaced deductible pints of blood supplied times the charge per pint. If all deductible pints have been replaced, this code is not used. When the provider gives a discount for unreplaced deductible blood, charges after the discount is applied are shown. Example: No. of unreplaced deductible pints x $ per pint = $XX.XX. 37 Number of pints of blood patient received Number of pints of blood applied to deductible Total number of pints of whole blood or units of packed red cells furnished, whether or not they were replaced. Number of unreplaced deductible pints of blood supplied. If all deductible pints furnished have been replaced, no entry is made. Number of pints of blood that were donated on the patient's behalf. If all blood has been replaced, all blood charges are shown under the 039X revenue code series (blood administration) or under the 030X revenue code series (laboratory).

38

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Note: Providers should not report value codes 06 or 38. If necessary, these will be applied by the Medicare Administrative Contractor (MAC). Frozen and Thawed Blood and Blood Products When a beneficiary receives a transfusion of frozen blood or a blood product that has been frozen and thawed for the patient prior to the transfusion, bill the specific HCPCS code that describes the frozen and thawed product, if a specific code exists, in addition to the CPT code for the transfusion. If a specific HCPCS code for the frozen and thawed blood or blood product does not exist, bill the appropriate HCPCS code for the blood product, along with CPT codes for freezing and/or thawing services that are not reflected in the blood product HCPCS code. Example: If HCPCS code P9057 (red blood cells, frozen/deglycerolized/washed, leukocytes reduced, irradiated, each unit) is billed, it would not be appropriate to bill

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additional CPT codes for freezing and/or thawing since charges for freezing and thawing should be included in the charge for HCPCS code P9057. If a blood product has been frozen and/or thawed in preparation for a transfusion but the patient does not receive the transfusion of the blood product, bill the patient for the CPT code that describes the freezing and/or thawing services specifically provided for the patient. Use the date the blood product would have been transfused (e.g., date of a procedure or date of outpatient discharge) rather than the date of the freezing and/or thawing services. Unused Blood When purchased blood or blood products are not used, processing and storage costs cannot be charged to the beneficiary. However, certain patient-specific blood preparation costs (e.g., blood typing and cross-matching) can be charged to the beneficiary under revenue code series 030X or 031X. Patient-specific preparation charges should be billed on the dates the services were provided. Processing and storage costs for unused blood products that are not considered patient-specific blood preparation services and costs for unused blood products that have been purchased should be reported as costs under cost centers for blood on the provider's Medicare cost report. When blood or a blood product is split or irradiated with the specific intent of transfusion to a beneficiary but is not used, the hospital may bill for the services of splitting or irradiating the unit of blood, but may not bill for the HCPCS code for the blood product that was not transfused. The date of service must be the date on which the decision not to use the blood was made and indicated in the patient's medical record. When a unit of blood is split or irradiated and stored without specific intent to administer it to a beneficiary at the time of splitting or irradiation and it is not transfused, there is no service to report.

Psychiatric Services

Hospitals may provide a wide range of services and programs to their outpatients who need psychiatric care, ranging from a few individual services to comprehensive, full-day programs; from intensive treatment programs to those that provide primarily supportive, protective or social activities. In general, outpatient hospital psychiatric services must be: Incident to a physician's service.

Reasonable and necessary for the diagnosis or treatment of the patient's condition (i.e., services must be for the purpose of diagnostic study or the services must reasonably be expected to improve the patient's condition).

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COVERAGE CRITERIA The services must meet the following criteria. Individualized Treatment Plan Services must be prescribed by a physician and provided under an individualized written plan of treatment established by a physician after any needed consultation with appropriate staff members. The plan must state the type, amount, frequency and duration of the services to be furnished and indicate the diagnoses and anticipated goals. Physician Supervision and Evaluation Services must be supervised and periodically evaluated by a physician to determine the extent to which treatment goals are being realized. The evaluation must be based on periodic consultation and conference with therapists and staff, review of medical records and patient interviews. Physician entries in medical records must support this involvement. The physician must also provide supervision and direction to any therapist involved in the patient's treatment and see the patient periodically to evaluate the course of treatment and to determine the extent to which treatment goals are being realized and whether changes in direction or emphasis are needed. Reasonable Expectation of Improvement Services must be for the purpose of diagnostic study or reasonably be expected to improve the patient's condition. The treatment must, at a minimum, be designed to reduce or control the patient's psychiatric symptoms so as to prevent relapse or hospitalization and improve or maintain the patient's level of functioning.

PAYMENT LIMITATION

Reimbursement for a day of outpatient mental health services is capped at the amount of the maximum partial hospitalization per-diem payment (APC 0176). The I/OCE will total the payments for all mental health services rendered on the same date of service and if the sum of the payments for the individual services exceeds the maximum partial hospitalization per-diem payment (APC 0176), the I/OCE assigns the mental health services composite payment (APC 0034) to one of the line items, and payment for the other mental health services rendered on that day is considered packaged.

Partial Hospitalization

A Partial Hospitalization Program (PHP) is a distinct and organized outpatient psychiatric treatment program that may be provided by a hospital outpatient department or a Community Mental Health Center (CMHC) for patients who would otherwise require inpatient care. A PHP is active treatment that incorporates an individualized treatment plan, which describes a coordination of services that addresses the particular needs of the patient and includes a multidisciplinary team approach to patient care under the direction of a

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physician. Treatment goals should be measurable, functional, time-framed, medically necessary and directly related to the reason for admission. A program composed primarily of diversionary activity, social or recreational therapy, vocational rehabilitation, or management of medication for patients whose psychiatric condition is otherwise stable does not constitute a PHP. PATIENT ELIGIBILITY Patients admitted to a PHP must: Be under the care of a physician who certifies the need for partial hospitalization.

Require a minimum of 20 hours per week of therapeutic services. Require comprehensive, structured, multimodal treatment requiring medical supervision and coordination because of a mental disorder that severely interferes with multiple areas of daily life, including social, vocational and/or educational functioning. Be able to cognitively and emotionally participate in the active treatment process and be capable of tolerating the intensity of a PHP program.

There are two groups of patients who meet the benefit category requirements for Medicare coverage of PHP: Patients who are discharged from an inpatient hospital treatment program and require the PHP in lieu of continued inpatient treatment.

Patients who, in the absence of partial hospitalization, would be at a reasonable risk of requiring inpatient hospitalization.

COVERED SERVICES A PHP program may include the following services: Individual or group psychotherapy.

Occupational therapy. Services of staff trained to work with psychiatric patients (i.e., social workers, psychiatric nurses, etc.). Drugs and biologicals that cannot be self-administered. Individualized activity therapies that are not primarily recreational or diversionary. Family counseling services. Patient training and education. Medically necessary diagnostic services related to mental health treatment.

Additional coverage guidelines can be found in the "Partial Hospitalization Programs (PHPs) ­ Psychiatric" Local Coverage Determination (LCD) on the LCD Web page at: http://www.trailblazerhealth.com/Tools/LCDs.aspx.

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REASONABLE AND NECESSARY SERVICES This program of services provides for the diagnosis and active, intensive treatment of the individual's serious psychiatric condition and, in combination, is reasonably expected to improve or maintain the individual's condition and functional level and prevent relapse or hospitalization. A particular individual covered service as intervention, expected to maintain or improve the individual's condition and prevent relapse, may also be included within the plan of care, but the overall intent of the partial program admission is to treat the serious presenting psychiatric symptoms. Continued treatment to maintain a stable psychiatric condition or functional level requires evidence that less-intensive treatment options (e.g., intensive outpatient, psychosocial, day treatment and/or other community supports) cannot provide the level of support necessary to maintain the patient and to prevent hospitalization. Patients admitted to a PHP do not require 24-hour per day supervision as provided in an inpatient setting, must have an adequate support system to sustain/maintain them outside the PHP and must not be an imminent danger to themselves or others. Patients admitted to a PHP generally have an acute onset or decompensation of a covered Axis I mental disorder, as defined by the current edition of the Diagnostic and Statistical Manual published by the American Psychiatric Association, that severely interferes with multiple areas of daily life. The degree of impairment will be severe enough to require a multidisciplinary intensive, structured program, but not so limiting that patients cannot benefit from participating in an active treatment program. The need, as certified by the treating physician, for the intensive, structured combination of services provided by the program constitutes active treatment that is necessary to appropriately treat the patient's presenting psychiatric condition. For patients who do not meet this degree of severity of illness and for whom partial hospitalization services are not necessary for the treatment of a psychiatric condition, professional services billed to Medicare Part B (e.g., services of psychiatrists and psychologists) may be medically necessary, even though partial hospitalization services are not. Patients in a PHP may be discharged by either stepping up to an inpatient level of care, which would be required for patients needing 24-hour supervision, or stepping down to a less-intensive level of outpatient care when the patient's clinical condition improves or stabilizes and he no longer requires structured, intensive, multimodal treatment. REASONS FOR DENIAL Benefit category denials are not subject to an ABN, cannot be billed to the beneficiary, and cannot be appealed. Examples of benefit category denials include: Day care programs, which provide primarily social, recreational, or diversionary activities, custodial or respite care.

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Programs attempting to maintain psychiatric wellness, where there is no risk of relapse or hospitalization (e.g., day care programs for the chronically mentally ill). Patients who are otherwise psychiatrically stable or require medication management only.

Coverage denials are not subject to an ABN, cannot be billed to the beneficiary and cannot be appealed. The following services are excluded from the scope of partial hospitalization services: Services to hospital inpatients.

Meals. Self-administered medications. Transportation. Vocational training.

Reasonable and necessary denials are subject to an ABN and can be appealed. Examples of reasonable and necessary denials for partial hospitalization services include: Patients who cannot, or refuse, to participate (due to their behavioral or cognitive status) with active treatment of their mental disorder (except for a brief admission necessary for diagnostic purposes), or who cannot tolerate the intensity of a PHP.

Treatment of chronic conditions without acute exacerbation of symptoms that place the individual at risk of relapse or hospitalization.

Documentation Requirements and Physician Supervision The following components will be used to determine whether the services provided were accurate and appropriate: Initial psychiatric evaluation/certification ­ Upon admission, a certification by the physician must be made that the patient admitted to the PHP would require inpatient psychiatric hospitalization if the partial hospitalization services were not provided. The certification should identify the diagnosis and psychiatric need for the partial hospitalization. Partial hospitalization services must be furnished under an individualized written plan of care, established by the physician, which includes the active treatment provided through the combination of structured, intensive services that are reasonable and necessary to treat the presentation of serious psychiatric symptoms and to prevent relapse or hospitalization.

Physician recertification: o Signature ­ The physician recertification must be signed by a physician who is treating the patient and has knowledge of the patient's response to treatment.

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Timing ­ The first recertification is required as of the 18th calendar day following admission to the PHP. Subsequent recertification is required at intervals established by the provider, but no less frequently than every 30 days. o Content ­ The recertification must specify that the patient would otherwise require inpatient psychiatric care in the absence of continued stay in the PHP and describe the following: The patient's response to the therapeutic interventions provided by the PHP. The patient's psychiatric symptoms that continue to place the patient at risk of hospitalization. Treatment goals for coordination of services to facilitate discharge from the PHP.

o

Treatment plan ­ Partial hospitalization is active treatment pursuant to an individualized treatment plan, prescribed and signed by a physician, which identifies treatment goals, describes a coordination of services, is structured to meet the particular needs of the patient, and includes a multidisciplinary team approach to patient care. The treatment goals described in the treatment plan should directly address the presenting symptoms and are the basis for evaluating the patient's response to active treatment. The plan should document ongoing efforts to restore the individual patient to a higher level of functioning that would permit discharge from the program, or reflect the continued need for the intensity of the active therapy to maintain the individuals' condition and functional level and to prevent relapse or hospitalization. Activities that are primarily recreational and diversionary, or provide only a level of functional support that does not treat the serious presenting psychiatric symptoms placing the patient at risk, do not qualify as partial hospitalization services. Progress notes ­ Medicare may not pay for services unless necessary and sufficient information is submitted that shows that services were provided and to determine the amounts due. A provider may submit progress notes to document the services that have been provided. The progress notes should include a description of the nature of the treatment service, the patient's response to the therapeutic intervention and its relation to the goals indicated in the treatment plan.

BILLING REQUIREMENTS

Type of bill: o Hospitals ­ 13X with condition code 41. o CMHCs ­ 76X. Revenue and HCPCS codes:

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Revenue Code 0250 043X 0900 0904 0914 Description Drugs and biologicals Occupational therapy Behavioral health treatment/services Activity therapy Individual psychotherapy G0129 90801 or 90802 G0176 90816, 90817, 90818, 90819, 90821, 90822, 90823, 90824, 90826, 90827, 90828, 90829, 90845, 90865 or 90880 G0410 or G0411 90846 or 90847 96101, 96102, 96103, 96116, 96118, 96119 or 96120 G0177 HCPCS Not required

0915 0916 0918

Group psychotherapy Family psychotherapy Psychiatric testing

0942

Education training

If mental health services that are not approved for Partial Hospitalization (PH) are submitted, the claim will Return to Provider (RTP) with reason code W7080.

PAYMENT

Hospitals and CMHCs are paid on a per-diem basis under the hospital OPPS. Effective January 1, 2011, there are two separate APC payment rates for CMHCs and two separate APC payment rates for hospital-based PHPs: 0172 ­ Level I Partial Hospitalization (three services) for CMHCs.

0173 ­ Level II Partial Hospitalization (four or more services) for CMHCs. 0175 ­ Level I Partial Hospitalization (three services) for hospital-based PHPs. 0176 ­ Level II Partial Hospitalization (four or more services) for hospital-based PHPs.

The first listed PH line item on a PH claim is assigned the appropriate payment APC and status indicator P (per diem APC payment). For all other line items with a PH service, the status indicator is changed to N (packaged).

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Repetitive services are defined as services that are repeated over a span of time and billed with the revenue codes listed in the chart below. Institutional providers that bill these services must submit one claim per month (or at the conclusion of treatment). Revenue Code 0290­0299 0410, 0412 and 0419 0420­0429 0430­0439 0440­0449 0550­0559 0820­0859 0482 and 0943 0948 DME rental Respiratory therapy Physical therapy Occupational therapy Speech-language pathology Skilled nursing Kidney dialysis treatments Cardiac rehabilitation services Pulmonary rehabilitation services Type of Service

Occurrence span code 74 (leave of absence) is used on the repetitive bill to report any of the following services provided during the period of repetitive outpatient services: Inpatient stay.

Day of outpatient surgery. Outpatient hospital services subject to the OPPS.

Any items/services provided in support of the repetitive service are also reported on the claim even if the revenue code(s) reported with those supported services are not on the repetitive revenue code list. Supporting items/services are those needed in the performance of the repetitive service (i.e., disposable supplies, drugs or equipment). Monthly repetitive bill examples are available on the "Repetitive Services" job aid on the TrailBlazer Web site at: http://www.trailblazerhealth.com/Publications/Job Aid/RepetitiveCodes.pdf.

Therapy Services

Physical Therapy (PT), Occupational Therapy (OT) and Speech-Language Pathology (SLP) services must be medically reasonable and necessary, provided "incident to" the services of a physician and furnished by or under arrangements made by a participating provider of services (i.e., approved clinics, rehabilitation agencies, public health agencies, hospitals, skilled nursing facilities and home health agencies).

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Since the outpatient therapy benefit under Part B provides coverage only for therapy services, payment can be made only for those services that constitute therapy. In cases where there is doubt about whether a service is therapy, the LCD will prevail. TrailBlazer's "Therapy Services" LCD policy is available at: http://www.trailblazerhealth.com/Tools/LCDs.aspx. Outpatient therapy services furnished to a beneficiary are payable only when furnished in accordance with the following conditions:

The services are or were required because the individual needed therapy services. A plan for furnishing the services has been established by a physician/NPP or by the therapist providing the services and is periodically reviewed by a physician/NPP. The services are or were furnished while the individual is or was under the care of a physician. The services must be furnished on an outpatient basis. All of the conditions are met when a physician/NPP certifies an outpatient plan of care for therapy. Certification is required for coverage and payment of a therapy claim.

REASONABLE AND NECESSARY To be considered reasonable and necessary, each of the following conditions must be met: The services shall be considered under accepted standards of medical practice to be a specific and effective treatment for the patient's condition. Acceptable practices for therapy services are found in: o Medicare manuals. o National and local coverage determinations. o Guidelines and literature of the professions of PT, OT and SLP. The services shall be of such a level of complexity and sophistication or the condition of the patient shall be such that the services required can be safely and effectively performed only by a therapist, or in the case of PT and OT, by or under the supervision of a therapist. Services that do not require the performance or supervision of a therapist are not skilled and are not considered reasonable and necessary therapy services, even if they are performed or supervised by a qualified professional.

If the contractor determines the services furnished were of a type that could have been safely and effectively performed only by or under the supervision of such a qualified professional, it shall presume that such services were properly supervised when required. However, this presumption is rebuttable, and, if in the course of processing claims it finds that services are not being furnished under

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proper supervision, it shall deny the claim and bring this matter to the attention of the Division of Survey and Certification of the Regional Office.

While a beneficiary's particular medical condition is a valid factor in deciding if skilled therapy services are needed, a beneficiary's diagnosis or prognosis should never be the sole factor in deciding that a service is or is not skilled. The key issue is whether the skills of a therapist are needed to treat the illness or injury, or whether the services can be carried out by non-skilled personnel. There must be an expectation that the patient's condition will improve significantly in a reasonable (and generally predictable) period of time, or the services must be necessary for the establishment of a safe and effective maintenance program required in connection with a specific disease state. In the case of a progressive degenerative disease, service may be intermittently necessary to determine the need for assistive equipment and/or establish a program to maximize function. The amount, frequency, and duration of the services must be reasonable under accepted standards of practice. The contractor shall consult local professionals or the state or national therapy associations in the development of any utilization guidelines.

REHABILITATIVE THERAPY The concept of rehabilitative therapy includes recovery or improvement in function and, when possible, restoration to a previous level of health and well-being. Therefore, evaluation, re-evaluation and assessment documented in the progress report should describe objective measurements which, when compared, show improvements in function, or decrease in severity, or rationalization for an optimistic outlook to justify continued treatment. Covered therapy services shall be rehabilitative therapy services unless they meet the criteria for maintenance therapy requiring the skills of a therapist described below. Rehabilitative therapy services are skilled procedures that may include but are not limited to: Evaluations/re-evaluations.

Establishment of treatment goals specific to the patient's disability or dysfunction and designed to specifically address each problem identified in the evaluation. Design of a plan of care addressing the patient's disorder, including establishment of procedures to obtain goals, determining the frequency and intensity of treatment. Continued assessment and analysis during implementation of the services at regular intervals. Instruction leading to establishment of compensatory skills.

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Selection of devices to replace or augment a function (e.g., for use as an alternative communication system and short-term training on use of the device or system). Patient and family training to augment rehabilitative treatment or establish a maintenance program. Education of staff and family should be ongoing through treatment and instructions may have to be modified intermittently if the patient's status changes.

Maintenance Programs During the last visits for rehabilitative treatment, the clinician may develop a maintenance program. The goals of a maintenance program would be, for example, to maintain functional status or to prevent decline in function. The specialized skill, knowledge and judgment of a therapist would be required, and services are covered, to design or establish the plan, assure patient safety, train the patient, family members and/or unskilled personnel, and make infrequent but periodic re-evaluations of the plan. The services of a qualified professional are not necessary to carry out a maintenance program and are not covered under ordinary circumstances. The patient may perform such a program independently or with the assistance of unskilled personnel or family members. Where a maintenance program is not established until after the rehabilitative therapy program has been completed (and the skills of a therapist are not necessary), development of a maintenance program would not be considered reasonable and necessary for treatment of the patient's condition, and would be excluded from coverage unless the patient's safety was at risk. Example: A Parkinson patient who has been under a rehabilitative physical therapy program may require the services of a therapist during the last week or two of treatment to determine what type of exercises will contribute the most to maintain the patient's present functional level following cessation of treatment. In such situations, the design of a maintenance program appropriate to the capacity and tolerance of the patient by the qualified therapist, the instruction of the patient or family members in carrying out the program, and such infrequent re-evaluations as may be required would constitute covered therapy because of the need for the skills of a qualified professional. Evaluation and Maintenance Plan Without Rehabilitative Treatment After the initial evaluation of the extent of the disorder, illness or injury, if the treating qualified professional determines the potential for rehabilitation is insignificant, an appropriate maintenance program may be established prior to discharge. Since the skills of a therapist are required for the development of the maintenance program and training for the patient or caregivers, this service is covered.

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Example: The skills of a qualified speech-language pathologist may be covered to develop a maintenance program for a patient with multiple sclerosis, for services intended to prevent or minimize deterioration in communication ability caused by the medical condition when the patient's current medical condition does not yet justify the need for the skilled services of a speech-language pathologist. Evaluation, development of the program and training the family or support personnel would require the skills of a therapist and would be covered. The skills of a therapist are not required and services are not covered to carry out the program. SKILLED MAINTENANCE THERAPY FOR SAFETY If the services required to maintain function involve the use of complex and sophisticated therapy procedures, the judgment and skill of a therapist may be necessary for the safe and effective delivery of such services. When the patient's safety is at risk, those reasonable and necessary services shall be covered, even if the skills of a therapist are not ordinarily needed to carry out the activities performed as part of the maintenance program. Example: Where there is an unhealed, unstable fracture that requires regular exercise to maintain function until the fracture heals, the skills of a therapist would be needed to ensure that the fractured extremity is maintained in the proper position and alignment during maintenance range of motion exercises. DOCUMENTATION REQUIREMENTS Therapy services shall be payable when the medical record and the information on the claim form consistently and accurately report covered therapy services. Documentation must be legible, relevant and sufficient to justify the services billed. In general, services must be covered therapy services provided according to the requirements in Medicare manuals. Medicare requires that the services billed be supported by documentation that justifies payment. Documentation must comply with all legal/regulatory requirements applicable to Medicare claims. ORDERS/REFERRALS An order (sometimes called a referral) for therapy service, if it is documented in the medical record, provides evidence of both the need for care and that the patient is under the care of a physician. However, the certification requirements are met when the physician certifies the plan of care. If the signed order includes a plan of care, no further certification of the plan is required. Payment is dependent on the certification of the plan of care rather than the order, but the use of an order is prudent to determine that a physician is involved in care and available to certify the plan. EVALUATION The initial evaluation, or the plan of care including an evaluation, should document the necessity for a course of therapy through objective findings and subjective patient selfreporting. Use the guidelines of the American Physical Therapy Association, the

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American Occupational Therapy Association, or the American Speech-Language and Hearing Association as guidelines, and not as policy. Only a clinician may perform an initial examination, evaluation, re-evaluation and assessment or establish a diagnosis or a plan of care. A clinician may include, as part of the evaluation or re-evaluation, objective measurements or observations made by a physical or occupational therapy assistant within their scope of practice, but the clinician must actively and personally participate in the evaluation or re-evaluation. The clinician may not merely summarize the objective findings of others or make judgments drawn from the measurements and/or observations of others. Documentation of the evaluation should list the conditions and complexities and, where it is not obvious, describe the impact of the conditions and complexities on the prognosis and/or the plan for treatment such that it is clear to the contractor who may review the record that the services planned are appropriate for the individual. Evaluations must include the following: A diagnosis and description of the specific problem(s) to be evaluated and/or treated. The diagnosis should be specific and as relevant to the problem to be treated as possible. In many cases, both a medical diagnosis (obtained from a physician/NPP) and an impairment based treatment diagnosis related to the treatment are relevant. The treatment diagnosis may or may not be identified by the therapist, depending on their scope of practice. For PT and OT, include the body part evaluated. Include all conditions and complexities that may impact the treatment. A description might include, for example, the premorbid function, date of onset and current function.

Results of one of the following four measurement instruments are recommended, but not required: o National Outcomes Measurement System (NOMS) by the American SpeechLanguage Hearing Association. o Patient Inquiry by Focus on Therapeutic Outcomes, Inc. (FOTO). o Activity Measure ­ Post Acute Care (AM-PAC). o OPTIMAL by Cedaron through the American Physical Therapy Association. Documentation supporting illness severity or complexity: o Identification of other health services concurrently being provided for this condition. o Identification of durable medical equipment needed for this condition. o Identification of the number of medications the beneficiary is taking (and type if known). o If complicating factors (complexities) affect treatment, describe why or how. Documentation should indicate how the progress was affected by the complexity. Or, the severity of the patient's condition as reported on a functional measurement tool may be so great as to suggest extended treatment is anticipated.

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Generalized or multiple conditions. The beneficiary has, in addition to the primary condition being treated, another disease or condition being treated, generalized musculoskeletal conditions or conditions affecting multiple sites, and these conditions will directly and significantly impact the rate of recovery. o Mental or cognitive disorder. The beneficiary has a mental or cognitive disorder in addition to the condition being treated that will directly and significantly impact the rate of recovery. o Identification of factors that impact severity including age, time since onset, cause of the condition, stability of symptoms, how typical/atypical are the symptoms of the diagnosed condition, availability of an intervention/treatment known to be effective and predictability of progress. Documentation supporting medical care prior to the current episode: o Record of discharge from a Part A qualifying inpatient, SNF or home health episode within 30 days of the onset of this outpatient therapy episode. o Identification of whether the beneficiary was treated for this same condition previously by the same therapy discipline (regardless of where prior services were furnished). o Record of a previous episode of therapy treatment from the same or different therapy discipline in the past year. Documentation required to indicate the beneficiary's health related to quality of life: o The beneficiary's response to the following question of self-related health: "At the present time, would you say that your health is excellent, very good, fair or poor?" If the beneficiary is unable to respond, indicate why. Documentation required to indicate the beneficiary's social support: o Where does the beneficiary live (or intend to live) at the conclusion of this outpatient therapy episode? o Who does the beneficiary live with (or intend to live with) at the conclusion of this outpatient therapy episode? o Does the beneficiary require this outpatient therapy plan of care to return to a premorbid (or reside in a new) living environment? o Does the beneficiary require this outpatient therapy plan of care to reduce Activities of Daily Living (ADLs) or Instrumental Activities of Daily Living (IADLs) assistance to a premorbid level or to reside in a new level of living environment? Documentation required to indicate objective, measurable beneficiary physical function: o Functional assessment individual item and summary scores (and comparisons to prior assessment scores) from commercially available therapy outcomes instruments other than those listed above. o Functional assessment scores (and comparisons to prior assessment scores) from tests and measurements validated in the professional literature that are appropriate for the condition/function being measured.

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Other measurable progress toward identified goals for functioning in the home environment at the conclusion of this therapy episode of care. Clinician's clinical judgments or subjective impressions that describe the current functional status of the condition being evaluated, when they provide further information to supplement measurement tools.

o

A determination that treatment is not needed or, if treatment is needed, a prognosis for return to premorbid condition or maximum expected condition with expected time frame and a plan of care.

When the Evaluation Serves as the Plan of Care When an evaluation is the only service provided by a provider in an episode of treatment, the evaluation serves as the plan of care if it contains a diagnosis, or in states where a therapist may not diagnose, a description of the condition from which a diagnosis may be determined by the referring physician/NPP. The goal, frequency and duration of treatment are implied in the diagnosis and one-time service. The referral/order of a physician/NPP is the certification that the evaluation is needed and the patient is under the care of a physician. Therefore, when evaluation is the only service, a referral/order and evaluation are the only required documentation. If the patient presented for evaluation without a referral/order and does not require treatment, a physician referral/order or certification of the evaluation is required for payment of the evaluation. A referral/order dated after the evaluation will be interpreted as certification of the plan to evaluate the patient. The time spent in evaluation shall not also be billed as treatment time. Evaluation minutes are untimed and are part of the total treatment minutes, but minutes of evaluation shall not be included in the minutes for timed codes reported in the treatment notes. Re-evaluations Re-evaluations are usually focused on the current treatment and might not be as extensive as initial evaluations. Continuous assessment of the patient's progress is a component of ongoing therapy services and is not payable as re-evaluation. A reevaluation is not a routine, recurring service but is focused on evaluation of progress toward current goals, making a professional judgment about continued care, modifying goals and/or treatment or terminating services. A formal re-evaluation is covered only if the documentation supports the need for further tests and measurements after the initial evaluation. Indications for a re-evaluation include new clinical findings, a significant change in the patient's condition or failure to respond to the therapeutic interventions outlined in the plan of care. A re-evaluation may be appropriate prior to planned discharge for the purposes of determining whether goals have been met, or for the use of the physician or the treatment setting at which treatment will be continued.

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PLAN OF CARE Therapy services must relate directly and specifically to a written treatment plan, which must be established before treatment is begun. The plan is established when it is developed (e.g., written or dictated). The signature and professional identity (e.g., MD, OTR/L) of the person who established the plan and the date it was established must be recorded with the plan. The evaluation and plan may be reported in two separate documents or a single combined document. Establishing the Plan The plan must be established by one of the following: A physician/NPP (consultation with the treating physical therapist, occupational therapist or speech-language pathologist is recommended).

The physical therapist that will provide the physical therapy services. The occupational therapist that will provide the occupational therapy services. The speech-language pathologist that will provide the speech-language pathology services.

The plan may be entered into the patient's therapy record either by the person who established the plan or by the provider's staff when they make a written record of that person's oral orders before treatment is begun. Treatment Under a Plan The evaluation and treatment may occur and are both billable either on the same day or at subsequent visits. It is appropriate that treatment begins when a plan is established. Therapy may be initiated by qualified professionals or qualified personnel based on a dictated plan. Treatment may begin before the plan is committed to writing only if the treatment is performed or supervised by the same qualified professional who establishes the plan. Payment for services provided before a plan is established may be denied. It is acceptable to treat under two separate plans of care when different physicians/NPPs refer a patient for different conditions. It is also acceptable to combine the plans of care into one plan covering both conditions if one or the other physician/NPP is willing to certify the plan for both conditions. Plan Contents The plan of care shall be consistent with the related evaluation, which may be attached and is considered incorporated into the plan. The plan should strive to provide treatment in the most efficient and effective manner, balancing the best achievable outcome with the appropriate resources.

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The plan of care must contain the following elements, at minimum: Diagnoses.

Long-term treatment goals. o Long-term treatment goals should be developed for the entire episode of care in the current setting. When the episode is anticipated to be long enough to require more than one certification, the long-term goals may be specific to the part of the episode that is being certified. Goals should be measurable and pertain to identified functional impairments. When episodes in the setting are short, measurable goals may not be achievable; documentation should state the clinical reasons progress cannot be shown. Type, amount, duration and frequency of therapy services. o The type of treatment may be PT, OT, SLP, or where appropriate, the type may be a description of a specific treatment or intervention. (For example, when there is a single evaluation service but the type is not specified, the type is assumed to be consistent with the therapy discipline (PT, OT, SLP) ordered or of the therapist who provided the evaluation.) When a physician/NPP establishes a plan, the plan must specify the type (PT, OT, SLP) of therapy planned. o There shall be different plans of care for each type of therapy discipline. When more than one discipline is treating a patient, each must establish a diagnosis, goals, etc., independently. However, the form of the plan and the number of plans incorporated into one document are not limited as long as the required information is present and related to each discipline separately. For example, a physical therapist may not provide services under an occupational therapist plan of care. However, both may be treating the patient for the same condition at different times in the same day for goals consistent with their own scope of practice. o The amount of treatment refers to the number of times in a day the type of treatment will be provided. When an amount is not specified, one treatment session a day is assumed. o The frequency refers to the number of times in a week the type of treatment is provided. When a frequency is not specified, one treatment is assumed. If a scheduled holiday occurs on a treatment day that is part of the plan, it is appropriate to omit that treatment day unless the clinician who is responsible for writing progress reports determines that a brief, temporary pause in the delivery of therapy services would adversely affect the patient's condition. o The duration is the number of weeks, or the number of treatment sessions, for this plan of care. If the episode of care is anticipated to extend beyond the 90 calendar day limit for certification of a plan, it is desirable, although not required, that the clinician also estimate the duration of the entire episode of care in this setting.

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The frequency or duration of the treatment may not be used alone to determine medical necessity, but they should be considered with other factors such as condition, progress, and treatment type to provide the most effective and efficient means to achieve the patient's goals. For example, it may be clinically appropriate, medically necessary, most efficient and effective to provide short-term intensive treatment or longer term and less frequent treatment depending on the individual's needs. It may be appropriate for therapists to taper the frequency of visits as the patient progresses toward an independent or caregiver-assisted self-management program with the intent of improving outcomes and limiting treatment time. When tapered frequency is planned, the exact number of treatments per frequency level is not required to be projected in the plan because the changes should be made based on assessment of daily progress. Instead, the beginning and ending frequencies shall be planned. Changes to the frequency may be made based on the clinician's clinical judgment and do not require recertification of the plan unless requested by the physician/NPP. The clinician should consider any comorbidities, tissue healing, the ability of the patient and/or caregiver to do more independent self-management as treatment progresses, and any other factors related to frequency and duration of treatment. Optional elements to include in the plan are: Short-term goals.

Goals and duration for the current episode of care. Specific treatment interventions, procedures, modalities or techniques, and the amount of each. Notations in the medical record of the beginning date for the plan are recommended, but not required, to assist Medicare contractors in determining the dates of services for which the plan was effective.

Changes to the Plan Changes are made in writing in the patient's record and signed by one of the following professionals responsible for the patient's care: The physician/NPP.

The qualified physical therapist (for PT services). The qualified occupational therapist (for OT services). The qualified speech-language pathologist (for SLP services). The registered professional nurse or physician/NPP on staff at the facility pursuant to the oral orders of the physician/NPP or therapist.

While the physician/NPP may change a plan of treatment established by the therapist providing the services, the therapist may not significantly alter a plan of treatment established or certified by a physician/NPP without their documented written or verbal

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approval. A change in long-term goals (e.g., a new condition) would be a significant change. Physician/NPP certification of the significantly modified plan of care shall be obtained within 30 days of the initial therapy treatment under the revised plan. An insignificant alteration in the plan would be a change in the frequency or duration due to the patient's illness, or a modification of short-term goals to adjust for improvements made toward the same long-term goals. If a patient has achieved a goal and/or has had no response to a treatment that is part of the plan, the therapist may delete a specific intervention from the plan of care prior to physician/NPP approval. This shall be reported to the physician/NPP responsible for the patient's treatment prior to the next certification. Procedures and modalities are not goals, but are the means by which long- and shortterm goals are obtained. Changes to procedures and modalities do not require a physician signature when they represent adjustments to the plan that result from a normal progression in the patient's disease or condition, or adjustments to the plan due to lack of expected response to the planned intervention, when the goals remain unchanged. CERTIFICATION Certification requires a dated signature on the plan of care or some other document that indicates approval of the plan of care. It is not appropriate for a physician/NPP to certify a plan of care if the patient was not under the care of some physician/NPP at the time of the treatment or if the patient did not need the treatment. Since delayed certification is allowed, the date the certification is signed is important only to determine if it is timely or delayed. The certification must relate to treatment during the interval on the claim. Unless there is reason to believe the plan was not signed appropriately or it is not timely, no further evidence that the patient was under the care of a physician/NPP and that the patient needed the care is required. The format of all certifications and recertifications and the method by which they are obtained is determined by the individual facility. Acceptable documentation of certification may be, for example, a physician's progress note, a physician/NPP order, or a plan of care that is signed and dated during the interval of treatment by a physician/NPP and indicates the physician/NPP is aware that therapy service is or was in progress and the physician/NPP makes no record of disagreement with the plan when there is evidence the plan was sent (e.g., to the office) or is available in the record (e.g., of the institution that employs the physician/NPP) for the physician/NPP to review. The certification should be retained in the clinical record and available if requested by Medicare. Initial Certification The physician's/NPP's certification of the plan (with or without an order) satisfies all of the certification requirements noted above for the duration of the plan of care, or 90

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calendar days from the date of the initial treatment, whichever is less. The initial treatment includes the evaluation that resulted in the plan. Timing of Initial Certification The provider (e.g., facility, physician/NPP or therapist) should obtain certification as soon as possible after the plan of care is established, unless the requirements of delayed certification are met. "As soon as possible" means that the physician/NPP will certify the plan as soon as it is obtained or within 30 days of the initial therapy treatment. Since payment may be denied if a physician does not certify the plan, the therapist should forward the plan to the physician as soon as it is established. Evidence of diligence in providing the plan to the physician may be considered by the Medicare contractor during review in the event of a delayed certification. Timely certification of the initial plan is met when physician/NPP certification of the plan is documented, by signature or verbal order, and dated in the 30 days following the first day of treatment (including evaluation). If the order to certify is verbal, it must be followed within 14 days by a signature to be timely. A dated notation of the order to certify the plan should be made in the patient's medical record. Recertification is not required if the duration of the initially certified plan of care is more than the duration (length) of the entire episode of treatment. Review of Plan and Recertification Payment and coverage conditions require that the plan must be reviewed, as often as necessary but at least whenever it is certified or recertified to complete the certification requirements. It is not required that the same physician/NPP who participated initially in recommending or planning the patient's care certify and/or recertify the plans. Recertifications that document the need for continued or modified therapy should be signed whenever the need for a significant modification of the plan becomes evident, or at least every 90 days after initiation of treatment under the plan, unless they are delayed. Physician/NPP Options for Certification A physician/NPP may certify or recertify a plan for whatever duration of treatment the physician/NPP determines is appropriate, up to a maximum of 90 calendar days. Many episodes of therapy treatment last less than 30 calendar days. Therefore, it is expected that the physician/NPP should certify a plan that appropriately estimates the duration of care for the individual, even if it is less than 90 days. If the therapist writes a plan of care for a duration that is more or less than the duration approved by the physician/NPP, then the physician/NPP would document a change to the duration of the plan and certify it for the duration the physician/NPP finds appropriate (up to 90 days). Treatment beyond the duration certified by the physician/NPP requires that a plan be recertified for the extended duration of treatment. It is possible that patients will be discharged by the

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therapist before the end of the estimated treatment duration because some will improve faster than estimated and/or some were successfully progressed to an independent home program. Physicians/NPPs may require that the patient make a physician/NPP visit for an examination if, in the professional's judgment, the visit is needed prior to certifying the plan or during the planned treatment. Physicians/NPPs should indicate their requirement for visits, preferably on an order preceding the treatment or on the plan of care that is certified. If the physician wishes to restrict the patient's treatment beyond a certain date when a visit is required, the physician should certify a plan only until the date of the visit. After that date, services will not be considered reasonable and necessary due to lack of a certified plan. Physicians/NPPs should not sign a certification if they require a visit and a visit was not made. Restrictions on Certification Certifications and recertifications by doctors of podiatric medicine must be consistent with the scope of the professional services provided by a doctor of podiatric medicine as authorized by applicable state law. Optometrists may order and certify only low-vision services. Chiropractors may not certify or recertify plans of care for therapy services. Delayed Certification Certifications are required for each interval of treatment based on the patient's needs, not to exceed 90 calendar days from the initial therapy treatment. Certifications are timely when the initial certification (or certification of a significantly modified plan of care) is dated within 30 calendar days of the initial treatment under that plan. Recertification is timely when dated during the duration of the initial plan of care or within 90 calendar days of the initial treatment under that plan, whichever is less. Delayed certification and recertification requirements shall be deemed satisfied where, at any later date, a physician/NPP makes a certification accompanied by a reason for the delay. Certifications are acceptable without justification for 30 days after they are due. Delayed certification should include one or more certifications or recertifications on a single signed and dated document. Delayed certifications should include any evidence the provider considers necessary to justify the delay. In the case of a long-delayed certification (over six months), the provider may choose to submit with the delayed certification some other documentation (e.g., an order, progress notes, telephone contact, requests for certification or signed statement of a physician/NPP) indicating need for care and that the patient was under the care of a physician at the time of the treatment. Such documentation may be requested by the contractor for delayed certifications if it is required for review. It is not intended that needed therapy be stopped or denied when certification is delayed. The delayed certification of otherwise covered services should be accepted

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unless the contractor has reason to believe that there was no physician involved in the patient's care or treatment did not meet the patient's need (and, therefore, the certification was signed inappropriately). Denials Due to Certification Denial for payment that is based on absence of certification is a technical denial, which means a statutory requirement has not been met. For example, if a patient is treated and the provider cannot produce (on Medicare's request) a plan of care (timely or delayed) for the billed treatment dates certified by a physician/NPP, then that service might be denied for lack of the required certification. If an appropriate certification is later produced, the denial will be overturned. In the case of a service furnished under a provider agreement, the provider is precluded from charging the beneficiary for services denied as a result of missing certification. A technical denial decision may be reopened by Medicare or reversed on appeal as appropriate, if delayed certification is later produced. PROGRESS REPORTS The progress report provides justification for the medical necessity of treatment. Information required in progress reports shall be written by a clinician that is either the physician/NPP who provides or supervises the services or by the therapist who provides the services and supervises an assistant. It is not required that the referring or supervising physician/NPP sign the progress reports written by a therapist. Timing The minimum progress report period shall be at least once every 10 treatment days or at least once during each 30 calendar days, whichever is less. The day beginning the first reporting period is the first day of the episode of treatment regardless of whether the service provided on that day is an evaluation, re-evaluation or treatment. Regardless of the date on which the report is actually written (and dated), the end of the progress report period is either a date chosen by the clinician, the tenth treatment day or the 30th calendar day of the episode of treatment, whichever is shorter. The next treatment day begins the next reporting period. The progress report period requirements are complete when both the elements of the progress report of the clinician's active participation in treatment have been documented. The dates for recertification of plans of care do not affect the dates for required progress reports. (Consideration of the case in preparation for a report may lead the therapist to request early recertification. However, each report does not require recertification of the plan, and there may be several reports between recertifications.) In many settings, weekly progress reports are voluntarily prepared to review progress, describe the skilled treatment, update goals and inform physician/NPPs or other staff. The clinical judgment demonstrated in frequent reports may help justify that the skills of a therapist are being applied and that services are medically necessary. Particularly where the patient's medical status or appropriate tapering of frequency due to expected progress toward

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goals results in limited frequency (e.g., two to four times a month), more frequent progress reports can differentiate rehabilitative from maintenance treatment, document progress and justify the continued necessity for skilled care. The dates for recertification of plans of care do not affect the dates for required progress reports. Absences Holidays, sick days or other patient absences may fall within the progress report period. Days on which a patient does not encounter qualified professional or qualified personnel for treatment, evaluation or re-evaluation do not count as treatment days. However, absences do not affect the requirement for a progress report at least once during each progress report period. If the patient is absent unexpectedly at the end of the reporting period when the clinician has not yet provided the required active participation during that reporting period, a progress report is still required; however, without the clinician's active participation in treatment, the requirements of the progress report period are incomplete. Delayed Reports If the clinician has not written a progress report before the end of the progress reporting period, it must be written within seven calendar days after the end of the reporting period. If the clinician did not participate actively in treatment during the progress report period, documentation of the delayed active participation shall be entered in the treatment note as soon as possible. The treatment note must explain the reason for the clinician's missed active participation. Also, the treatment note shall document the clinician's guidance to the assistant or qualified personnel to justify that the skills of a therapist were required during the reporting period. It is not necessary to include in this treatment note any information already recorded in prior treatment notes or progress reports. The contractor shall make a clinical judgment whether continued treatment by assistants or qualified personnel is reasonable and necessary when the clinician has not actively participated in treatment for longer than one reporting period. Judgment shall be based on the individual case and documentation of the application of the clinician's skills to guide the assistant or qualified personnel during and after the reporting period. Early Reports Often, progress reports are written weekly, or even daily, at the discretion of the clinician. Clinicians are encouraged but not required to write progress reports more frequently than the minimum required to allow anyone who reviews the records to easily determine that the services provided are appropriate, covered and payable. Elements of progress reports may be written in the treatment notes if the provider/supplier or clinician prefers. If each element required in a progress report is included in the treatment notes at least once during the progress report period, then a

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separate progress report is not required. Also, elements of the progress report may be incorporated into a revised plan of care when one is indicated. Although the progress report written by a therapist does not require a physician/NPP signature when written as a stand-alone document, the revised plan of care accompanied by the progress report must be recertified by a physician/NPP. Services Incident to a Physician's Service The policy for "incident to" services requires, for example, the physician's initial service, direct supervision of therapy services, and subsequent services of a frequency that reflects his active participation in and management of the course of treatment. Therefore, supervision and reporting requirements for supervising physician's/NPP's supervising staff are the same as those for PTs and OTs supervising Physical Therapist Assistants (PTAs) and Occupational Therapist Assistants (OTAs) with certain exceptions noted below. When a therapy service is provided by a therapist, supervised by a physician/NPP and billed incident to the services of the physician/NPP, the progress report shall be written and signed by the therapist who provides the services. When the services incident to a physician are provided by qualified personnel who are not therapists, the ordering or supervising physician/NPP must personally provide at least one treatment session during each progress report period and sign the progress report. Clinician Participation in Treatment Verification of the clinician's required participation in treatment during the progress report period shall be documented by the clinician's signature on the treatment note and/or on the progress report. When unexpected discontinuation of treatment occurs, contractors shall not require a clinician's participation in treatment for the incomplete reporting period. Discharge Note The discharge note is required for each episode of outpatient treatment. In provider settings where the physician/NPP writes a discharge summary and the discharge documentation meets the requirements of the provider setting, a separate discharge note written by a therapist is not required. The discharge note shall be a progress report written by a clinician, and shall cover the reporting period from the last progress report to the date of discharge. In the case of a discharge unanticipated in the plan or previous progress report, the clinician may base any judgments required to write the report on the treatment notes and verbal reports of the assistant or qualified personnel. In the case of a discharge anticipated within three treatment days of the progress report, the clinician may provide objective goals that, when met, will authorize the assistant or qualified personnel to discharge the patient. In that case, the clinician should verify that

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the services provided prior to discharge continued to require the skills of a therapist, and services were provided or supervised by a clinician. The discharge note shall include all treatment provided since the last progress report and indicate that the therapist reviewed the notes and agrees to the discharge. At the discretion of the clinician, the discharge note may include additional information; for example, it may summarize the entire episode of treatment or justify services that may have extended beyond those usually expected for the patient's condition. Clinicians should consider the discharge note the last opportunity to justify the medical necessity of the entire treatment episode in case the record is reviewed. The record should be reviewed and organized so that the required documentation is ready for presentation to the contractor if requested. Assistant's Participation PTAs or OTAs may write elements of the progress report dated between clinician reports. Reports written by assistants are not complete progress reports. The clinician must write a progress report during each progress report period regardless of whether the assistant writes other reports. However, reports written by assistants are part of the record and need not be copied into the clinician's report. Progress reports written by assistants supplement the reports of clinicians and shall include: Date of the beginning and end of the reporting period to which this report refers.

Date that the report was written (not required to be within the reporting period). Signature, and professional identification, or for dictated documentation, the identification of the qualified professional who wrote the report and the date on which it was dictated. Objective reports of the patient's subjective statements, if they are relevant. For example, "Patient reports pain after 20 repetitions". Or, "The patient was not feeling well on 11/05/06 and refused to complete the treatment session." Objective measurements (preferred) or description of changes in status relative to each goal currently being addressed in treatment, if they occur. Note that assistants may not make clinical judgments about why progress was or was not made, but may report the progress objectively. For example: "increasing strength" is not an objective measurement, but "patient ambulates 15 feet with maximum assistance" is objective.

Descriptions must make identifiable reference to the goals in the current plan of care. Since only long-term goals are required in the plan of care, the progress report may be used to add, change or delete short-term goals. Assistants may change goals only under the direction of a clinician. When short-term goal changes are dictated to an assistant or qualified personnel, report the change, clinician's name and date. Clinicians verify these changes by cosignatures on the report or in the clinician's progress report.

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The evaluation and plan of care are considered incorporated into the progress report, and information in them is not required to be repeated in the report. For example, if a time interval for the treatment is not specifically stated, it is assumed that the goals refer to the plan of care active for the current progress report period. If a body part is not specifically noted, it is assumed the treatment is consistent with the evaluation and plan of care. Any consistent method of identifying the goals may be used. Preferably, the long-term goals may be numbered (1, 2, 3) and the short-term goals that relate to the long-term goals may be numbered and lettered 1.A, 1.B, etc. The identifier of a goal on the plan of care may not be changed during the episode of care to which the plan refers. A clinician, an assistant on the order of a therapist, or qualified personnel on the order of a physician/NPP shall add new goals with new identifiers or letters. Omit reference to a goal after a clinician has reported it to be met and that clinician's signature verifies the change. Content of Clinician Progress Reports In addition to the requirements above for notes written by assistants, the progress report of a clinician (therapist, physician/NPP) shall also include the following: Assessment of improvement, extent of progress (or lack thereof) toward each goal.

Plans for continuing treatment, reference to additional evaluation results, and/or treatment plan revisions should be documented in the clinician's progress report. Changes to long- or short-term goals, discharge or an updated plan of care that is sent to the physician/NPP for certification of the next interval of treatment.

A re-evaluation should not be required before every progress report routinely, but may be appropriate when assessment suggests changes not anticipated in the original plan of care. Care must be taken to assure that documentation justifies the necessity of the services provided during the reporting period, particularly when reports are written at the minimum frequency. Justification for treatment must include, for example, objective evidence or a clinically supportable statement of expectation that: The patient's condition has the potential to improve or is improving in response to therapy.

Maximum improvement is yet to be attained. There is an expectation that the anticipated improvement is attainable in a reasonable and generally predictable period of time.

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Objective Evidence Objective evidence consists of standardized patient assessment instruments, outcome measurement tools or measurable assessments of functional outcome. Use of objective measures at the beginning of treatment, during and/or after treatment is recommended to quantify progress and support justifications for continued treatment. Such tools are not required, but their use will enhance the justification for needed therapy. Treatment Notes The purpose of these notes is simply to create a record of all treatments and skilled interventions that are provided and to record the time of the services in order to justify the use of billing codes on the claim. Documentation is required for every treatment day and every therapy service. The format shall not be dictated by contractors and may vary depending on the practice of the responsible clinician and/or the clinical setting. The treatment note is not required to document the medical necessity or appropriateness of the ongoing therapy services. Descriptions of skilled interventions should be included in the plan or the progress reports and are allowed but not required daily. Non-skilled interventions need not be recorded in the treatment notes as they are not billable. However, notation of non-skilled treatment or report of activities performed by the patient or non-skilled staff may be reported voluntarily as additional information if they are relevant and not billed. Specifics such as number of repetitions of an exercise and other details included in the plan of care need not be repeated in the treatment notes unless they are changed from the plan. Documentation of each treatment shall include the following required elements: Date of treatment.

Identification of each specific intervention/modality provided and billed, for both timed and untimed codes, in language that can be compared with the billing on the claim to verify correct coding. Record each service provided that is represented by a timed code, regardless of whether or not it is billed, because the unbilled timed services may impact the billing. Total timed code treatment minutes and total treatment time in minutes. Total treatment time includes the minutes for timed code treatment and untimed code treatment. Total treatment time does not include time for services that are not billable (e.g., rest periods). For Medicare purposes, it is not required that unbilled services that are not part of the total treatment minutes be recorded, although they may be included voluntarily to provide an accurate description of the treatment, show consistency with the plan, or comply with state or local policies. The amount of time for each specific intervention/modality provided to the patient may also be recorded voluntarily, but contractors shall not require it, as it is indicated in the billing. The billing and the total timed code treatment minutes must be consistent.

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Signature and professional identification of the qualified professional who furnished or supervised the services and a list of each person who contributed to that treatment (i.e., the signature of Kathleen Smith, PTA, with notation of phone consultation with Judy Jones, PT, supervisor, when permitted by state and local law). The signature and identification of the supervisor need not be on each treatment note, unless the supervisor actively participated in the treatment. Since a clinician must be identified on the plan of care and the progress report, the name and professional identification of the supervisor responsible for the treatment is assumed to be the clinician who wrote the plan or report. When the treatment is supervised without active participation by the supervisor, the supervisor is not required to cosign the treatment note written by a qualified professional. When the responsible supervisor is absent, the presence of a similarly qualified supervisor on the clinic roster for that day is sufficient documentation and it is not required that the substitute supervisor sign or be identified in the documentation. If a treatment is added or changed under the direction of a clinician during the treatment days between the progress reports, the change must be recorded and justified on the medical record, either in the treatment note or the progress report, as determined by the policies of the provider. New exercises added or changes made to the exercise program help justify that the services are skilled.

Documentation of each treatment may also include the following optional elements, to be mentioned only if the qualified professional recording the note determines they are appropriate and relevant. If these are not recorded daily, any relevant information should be included in the progress report. Patient self-report.

Adverse reaction to intervention. Communication/consultation with other providers (e.g., supervising clinician, attending physician, nurse, another therapist, etc.). Significant, unusual or unexpected changes in clinical status. Equipment provided. Any additional relevant information the qualified professional finds appropriate.

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Therapy services are billed as follows: Physical Therapy (PT)

Occupational Therapy (OT) Occurrence Codes/Dates

Speech-Language Pathology (SLP)

11 ­ Onset symptom/illness. 29 ­ Date PT plan of care was established or last reviewed. 35 ­ Date PT began.

11 ­ Onset symptom/illness. 17 ­ Date OT plan of care was established or last reviewed. 44 ­ Date OT began. Revenue Codes

11 ­ Onset symptom/illness. 30 ­ Date SLP plan of care was established or last reviewed. 45 ­ Date SLP began.

042X Required GP ­ PT plan of treatment. Required

043X HCPCS Required Modifiers GO ­ OT plan of treatment.

044X Required GN ­ SLP plan of treatment.

Units/Line Item Date of Service Required Required

Applicable HCPCS Codes A list of codes applicable to the billing of outpatient rehabilitation therapy services is available on the CMS Web site at: http://www.cms.gov/TherapyServices/05_Annual_Therapy_Update.asp. This list indicates if a service is always or sometimes a therapy service. Codes identified as "always therapy" services are always billed with therapy revenue codes and modifiers regardless of who performs them. Codes identified as "sometimes therapy" are billed with therapy revenue codes/modifiers and paid based on the MPFS when performed by a qualified therapist under a therapy plan of care, but are not billed with therapy revenue codes/modifiers and paid based on the APC when performed by practitioners who are not therapists. Service Units Providers are required to report the number of units for outpatient rehabilitation services based on the procedure or service (e.g., based on the HCPCS codes reported instead

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of the revenue code). For untimed codes, units are reported based on the number of times the procedure is performed, as described in the HCPCS code definition (often once per day). When only one service is provided in a day, providers should not bill for services performed for less than eight minutes. For any single timed CPT code in the same day measured in 15-minute units, providers bill a single 15-minute unit for treatment greater than or equal to eight minutes, through and including 22 minutes. If the duration of a single modality or procedure in a day is greater than or equal to 23 minutes, through and including 37 minutes, then two units should be billed. Time intervals for one through eight units are as follows: Units 1 2 3 4 5 6 7 8 Number of Minutes 8 minutes through 22 minutes 23 minutes through 37 minutes 38 minutes through 52 minutes 53 minutes through 67 minutes 68 minutes through 82 minutes 83 minutes through 97 minutes 98 minutes through 112 minutes 113 minutes through 127 minutes

The pattern remains the same for treatment times in excess of two hours. For example, if a service represented by a 15-minute timed code is performed in a single day for at least 15 minutes, that service should be billed for at least one unit; if the service is performed for at least 30 minutes, that service should be billed for at least two units, etc. It is not appropriate to count all minutes of treatment in a day toward the units for one code if other services were performed for more than 15 minutes. When more than one service represented by 15-minute timed codes is performed in a single day, the total number of minutes of service (as noted on the chart above) determines the number of units billed. If any 15-minute timed service is performed for seven minutes or less on the same day as another 15-minute timed service that was also performed for seven minutes or less and the total time of the two is eight minutes or greater, then bill one unit for the service performed for the most minutes. This is correct because the total time is greater than the minimum time for one unit. The same logic is applied when three or more different services are provided for seven minutes or less.

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The expectation (based on the work values for these codes) is that a provider's direct patient contact time for each unit will average 15 minutes in length. If a provider has a consistent practice of billing less than 15 minutes for a unit, these situations should be highlighted for review. If more than one 15-minute timed CPT code is billed during a single calendar day, then the total number of timed units that can be billed is constrained by the total treatment minutes for that day. The amount of time for each specific intervention/modality provided to the patient is not required to be documented in the treatment notes. However, the total number of timed minutes must be documented.

PAYMENT

Payment for therapy services is: Based on the MPFS at: http://www.trailblazerhealth.com/Tools/Fee Schedule/MedicareFeeSchedule.aspx.

The allowed charge is the lower of the MPFS amount or the actual charge. The Medicare payment is 80 percent of the allowed charge (after the Part B deductible is met). The patient's coinsurance due is 20 percent of the allowed charge.

Effective January 1, 2011, a Multiple Procedure Payment Reduction (MPPR) is applied to the HCPCS codes contained on the list of "always therapy" codes when more than one unit or procedure is provided to the same patient on the same day. Full payment is made for the unit/procedure with the highest practice expense payment and payment for subsequent units/procedures is reduced by 75 percent. The MPPR Rate File on the CMS Web site includes a list of applicable codes that can be sorted by carrier and locality to obtain the MPFS amount, the 25 percent reduced amount and the practice expense for each code: http://www.cms.gov/TherapyServices/.

Skilled Nursing Facility/Swing Bed Consolidated Billing

GENERAL INFORMATION Under the consolidated billing requirement, the SNF must submit all Medicare claims for all the services that its residents receive under Part A, except for certain excluded services, and for all PT, OT and SLP services received by residents under Part B. When a beneficiary leaves the facility (or the Distinct Part Unit (DPU)), the beneficiary's status as a SNF resident for consolidated billing purposes (along with the SNF's responsibility to furnish or make arrangements for needed services) ends. It may be triggered by either of the following events:

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The beneficiary is admitted as an inpatient to another facility. The beneficiary is moved from the DPU to a non-certified area within the same institution.

The CWF has installed edits to prevent duplicate payment of services governed by consolidated billing for both SNF Part A and Part B beneficiaries. CONSOLIDATED BILLING REQUIREMENTS UNDER PART A Consolidated billing applies to services and supplies that a SNF resident receives while in a SNF Prospective Payment System (PPS) Part A inpatient stay. Consolidated billing requires that charges for outside services must be charged back to the SNF if the beneficiary is covered under Medicare Part A and the SNF is receiving SNF PPS payment for that day. Services provided outside the SNF on the day of discharge or on Leave of Absence (LOA) days do not have to be charged back to the SNF since the SNF is not receiving Part A reimbursement. SERVICES AND TREATMENTS PROVIDED `UNDER ARRANGEMENT' For any Part A or Part B service that is subject to SNF consolidated billing, the SNF must either furnish the service directly with its own resources, or obtain the service from an outside entity (such as a supplier) under an "arrangement." Medicare does not prescribe the actual terms of the SNF's relationship with its suppliers (such as the specific amount or timing of payment by the SNF), which are to be arrived at through direct negotiation between the parties to the agreement. However, in order for a valid arrangement to exist, the SNF must reach a mutual understanding with its supplier as to how the supplier is to be paid for its services. Documenting the terms of the arrangement confers the added benefit of providing both parties with a ready means of resolution in the event that a dispute arises over a particular service. This type of arrangement has proven to be effective in situations where suppliers regularly provide services to facility residents on an ongoing basis (e.g., laboratory, X-ray or DME suppliers). If a SNF elects to use an outside supplier to furnish medically appropriate services that are subject to consolidated billing, but then refuses to reimburse that supplier for the services, there is no valid arrangement as contemplated under Section 1862(a)(18) of the Social Security Act. Not only would this potentially result in Medicare's noncoverage of the particular services at issue, but a SNF demonstrating a pattern of nonpayment would also risk being found in violation of the terms of its provider agreement. Consolidated billing requires that services provided by individuals or companies other than the employees of the SNF must be billed to the MAC on the UB-04 for Medicare beneficiaries covered under Part A (and Part B beneficiaries receiving covered therapy

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services). The SNF must do the billing. Under such an arrangement, the SNF must reimburse the outside entity for those Medicare-covered services that are subject to consolidated billing. SERVICES EXCLUDED FROM CONSOLIDATED BILLING CMS has provided a list of those exceptionally intensive and costly services that lie well beyond the scope of the care plans and services that SNFs would ordinarily furnish and, therefore are not bound by consolidated billing rules. This exclusion is not invoked merely because a particular outpatient hospital service does not appear in the individual SNF care plan of the person receiving the service. Physicians (professional component of physician services).

Physician assistants working under a physician's supervision. Nurse practitioners and clinical nurse specialists working in collaboration with a physician. Certified nurse-midwives. Qualified psychologists. Certified registered nurse anesthetists. Home dialysis supplies and equipment, self-care home dialysis support services and institutional dialysis services and supplies. Erythropoietin (EPO) for certain dialysis patients. Hospice care related to a beneficiary's terminal condition. An ambulance trip that transports a beneficiary to the SNF for the initial admissin or from the SNF following a final discharge. Cardiac catheterization (provided by a hospital or CAH). Computerized Axial Tomography (CT) scans (provided by a hospital or CAH). Magnetic Resonance Imaging (MRI) (provided by a hospital or CAH). Ambulatory surgery involving the use of an operating room. Emergency room services billed to the Part A contractor under revenue code 045X. Radiation therapy. Angiography codes. Lymphatic procedures and venous procedures. Chemotherapy items (some chemotherapy is included in SNF PPS). Chemotherapy administration services. Radioisotope services.

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Customized prosthetic devices. Ambulance transport for renal dialysis services.

A list of specific services excluded from consolidated billing is maintained by CMS. This list, the annual updates to the list and a Help File associated with consolidated billing can be located at: http://www.cms.gov/SNFConsolidatedBilling/01_Overview.asp.

Inpatient-Only Procedures

Inpatient-only procedures (procedures assigned status indicator C) are generally, but not always, surgical services that require inpatient care because of the nature of the procedure, the typical underlying physical condition of patients who require the service, or the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged. Inpatient-only procedures and other services provided on the same day are not paid when performed on an outpatient basis. Payment may only be made in the following situations: If the inpatient-only procedure is defined in CPT to be a separate procedure and the other services billed with the inpatient-only procedure include a procedure assigned status indicator "T," the inpatient-only procedure is denied, but payment is made for the separate procedure and other payable services.

If the inpatient-only procedure is performed emergently on an outpatient basis and the patient expires prior to being admitted as an inpatient, modifier CA is reported with the inpatient-only procedure code. The procedure is assigned APC 0375 and any additional services furnished on the same date are bundled into that APC payment.

Inpatient-only procedures provided to a patient in the outpatient setting within the threeday/one-day payment window that would otherwise be deemed related to the admission are not paid by CMS. Providers should bill for these services on a no-pay claim. If there are covered services/procedures provided during the same outpatient encounter as the non-covered inpatient-only procedure, providers are then required to submit two claims: One claim with covered services/procedures on a Type of Bill (TOB) 11X (with the exception of 110).

The other claim with the non-covered services/procedures on a TOB 110 (no-pay claim).

Observation Services

Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital. Observation services are commonly ordered for patients who present to the emergency department and who

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then require a significant period of treatment or monitoring in order to make a decision concerning their admission or discharge. All hospital observation services, regardless of the duration of the observation care, that are medically reasonable and necessary are covered by Medicare. Observation services must be ordered by a physician or another individual authorized by state licensure law and hospital staff by-laws to admit patients to the hospital or to order outpatient tests. Observation is usually less than 24 hours. Only in rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours. For reporting observation hours: Time begins at the time documented in the patient's medical record that coincides with the time that observation care is initiated in accordance with a physician's order.

Time is rounded to the nearest hour. General standing orders for observation services following all outpatient surgery are not recognized. Services that are part of another Part B service, such as postoperative monitoring during a standard recovery period (e.g., 4 to 6 hours), should be billed as recovery room services, not observation services. Routine preparation for diagnostic services furnished prior to testing and recovery afterwards are included in the payments for those diagnostic services and should not be billed as observation services. Observation services should not be billed concurrently with diagnostic or therapeutic services for which active monitoring is a part of the procedure. When such a procedure interrupts observation services, hospitals may determine the most appropriate way to account for this time: o The hospital may record the beginning and ending times for each period of observation services and add the lengths of time to reach the total number of units reported on the claim. Or, o The hospital may deduct the average length of time of the interrupting procedure from the total duration of observation services. Time ends when all medically necessary services related to observation care are completed, including follow-up care furnished by hospital staff and physicians that may take place after a physician has ordered the patient be released or admitted as an inpatient. If a period of observation spans more than one calendar day, all of the hours for the entire period of observation must be included on a single line and the date of service is the date that observation care began.

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Observation services are billed as follows: Revenue code 0762 ­ Observation room.

HCPCS code G0378 ­ Hospital observation services, per hour. HCPCS code G0379 ­ Direct admission of patient for hospital observation care. G0379 should be reported when observation services are the result of a direct referral for observation care without an associated emergency room visit, hospital outpatient clinic visit or critical care service on the day of initiation of observation services. G0379 should only be reported when the patient is referred directly for observation after being seen by a physician in the community. Or, One of the following services: o Emergency room. o Clinic visit. o Critical care.

GENERAL OBSERVATION HCPCS code G0378 for hourly observation services is assigned status indicator N; therefore, observation services billed with HCPCS code G0378 are always packaged and never paid separately. However, in most circumstances, observation services are supportive and ancillary to other services provided to the patient and payment may be made for the entire extended care encounter through one of two composite APCs when certain criteria are met: Composite APC 8002 is paid when eight or more units of HCPCS code G0378 are billed: On the same day as HCPCS code G0379. Or,

On the same day or the day after CPT codes 99205 or 99215. And, There is no T status service the same day or the day before the date of G0378.

Composite APC 8003 is paid when eight or more units of HCPCS code G0378 are billed: On the same day or the day after CPT codes 99284, 99285 or 99291. And,

There is no T status service the same day or the day before the date of G0378.

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DIRECT REFERRAL FOR OBSERVATION CARE Payment for direct referral for observation care is made either as a low-level hospital clinic visit under APC 0604 or packaged into payment for composite APC 8002. The criteria for payment of HCPCS code G0379 under either APC 8002 or APC 0604 include: Both HCPCS codes G0378 and G0379 are reported with the same date of service.

No service with status indicator T, V or critical care is provided on the same date of service as HCPCS code G0379.

If either of the above criteria is not met, HCPCS code G0379 will be assigned status indicator N and will be packaged into payment for other separately payable services provided in the same encounter. NON-COVERED SERVICES The following services are not covered as observation services: Services not reasonable or necessary for the diagnosis or treatment of the patient.

Services provided for the convenience of the patient, the patient's family or a physician. Services covered under Part A, such as a medically appropriate inpatient admission. Services that are part of another Part B service, such as postoperative monitoring during a standard recovery period (e.g., four to six hours), which should be billed as recovery room services. Similarly, in the case of patients who undergo diagnostic testing in a hospital outpatient department, routine preparation services furnished before the testing and during recovery are included in the payment for those diagnostic services. Observation should not be billed concurrently with therapeutic services such as chemotherapy. Standing orders for observation following outpatient surgery.

Outpatient Services Treated as Inpatient

Medicare patients often receive outpatient services prior to being admitted as an inpatient. These outpatient services can be either diagnostic or non-diagnostic (therapeutic) in nature and must be reported according to the three-day or one-day payment window as described below.

THREE-DAY PAYMENT WINDOW

The three-day payment window applies to inpatient acute facilities (or an entity that is wholly owned or operated by an acute facility).

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Diagnostic services (as defined in the "Types of Services" section of this manual) provided to a patient within three days prior to and including the date of the inpatient admission are deemed to be inpatient services and included in the inpatient payment, unless there is no Part A coverage. Therapeutic (non-diagnostic) services (other than ambulance or maintenance renal dialysis services) that are related to the inpatient admission and provided to a patient within three days prior to and including the date of the inpatient admission are also deemed to be inpatient services and included in the inpatient payment, unless there is no Part A coverage. Example: If a patient is admitted on Wednesday, all diagnostic services and therapeutic services related to the inpatient admission (other than ambulance or maintenance renal dialysis services) provided on Sunday, Monday, Tuesday or Wednesday are included in the inpatient Part A payment and should be reported on the inpatient claim. Only therapeutic services that are clinically distinct or independent from the reason for the patient's inpatient admission may be separately billed on an outpatient claim. Such separately billed services may be subject to subsequent review; therefore, medical record documentation should support that the service is unrelated to the admission. Beginning April 4, 2011, providers may submit outpatient claims with condition code 51 (attestation of unrelated outpatient non-diagnostic services) for dates of service on or after June 25, 2010. Outpatient claims received prior to April 4, 2011, that do not contain condition code 51 will need to be adjusted by the provider if they were rejected. Inpatient-only procedures provided to a patient in the outpatient setting within the payment window that would otherwise be deemed related to the admission are not paid by CMS. Providers should bill for these services on a no-pay claim. If there are covered services/procedures provided during the same outpatient encounter as the non-covered inpatient-only procedure, providers are then required to submit two claims: One claim with covered services/procedures on an 11X (with the exception of 110) type of bill.

The other claim with the non-covered services/procedures on a 110 type of bill (no-pay claim).

ONE-DAY PAYMENT WINDOW

The one-day payment window applies to facilities excluded from the Inpatient Prospective Payment System (IPPS) (i.e., cancer hospitals, children's hospitals, distinct units of hospitals, Inpatient Psychiatric Facilities (IPFs), Inpatient Rehabilitation Facilities (IRFs) and Long-Term Care Hospitals (LTCHs)) (or an entity that is wholly owned or operated by one of these facilities).

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Diagnostic services (as defined in the "Types of Services" section of this manual) provided to a patient within one day prior to and including the date of the inpatient admission are deemed to be inpatient services and included in the inpatient payment, unless there is no Part A coverage. Therapeutic (non-diagnostic) services (other than ambulance or maintenance renal dialysis services) that are related to the inpatient admission and provided to a patient within one day prior to and including the date of the inpatient admission are also deemed to be inpatient services and included in the inpatient payment, unless there is no Part A coverage. Example: If a patient is admitted on Wednesday, all diagnostic services and therapeutic services related to the inpatient admission (other than ambulance or maintenance renal dialysis services) provided on Tuesday or Wednesday are included in the inpatient Part A payment and should be reported on the inpatient claim. Only therapeutic services that are clinically distinct or independent from the reason for the patient's inpatient admission may be separately billed on an outpatient claim. Such separately billed services may be subject to subsequent review; therefore, medical record documentation should support that the service is unrelated to the admission. Beginning April 4, 2011, providers may submit outpatient claims with condition code 51 (attestation of unrelated outpatient non-diagnostic services) for dates of service on or after June 25, 2010. Outpatient claims received prior to April 4, 2011, that did not contain condition code 51 will need to be adjusted by the provider if they were rejected. Inpatient-only procedures provided to a patient in the outpatient setting within the payment window that would otherwise be deemed related to the admission are not paid by CMS. Providers should bill for these services on a no-pay claim. If there are covered services/procedures provided during the same outpatient encounter as the non-covered inpatient-only procedure, providers are then required to submit two claims: One claim with covered services/procedures on an 11X (with the exception of 110) type of bill.

The other claim with the non-covered services/procedures on a 110 type of bill (no-pay claim).

Inpatient Admission Changed to Outpatient

When a patient is admitted as an inpatient, but during the course of the stay it is determined that the inpatient level of care does not meet admission criteria, the hospital may change the beneficiary's status from inpatient to outpatient and submit an outpatient claim (Type of Bill (TOB) 13X) with condition code 44 to report medically

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necessary Medicare Part B services that were furnished to the beneficiary only if all of the following conditions are met: The change in patient status from inpatient to outpatient is made prior to discharge or release, while the beneficiary is still a patient of the hospital.

The hospital has not submitted a claim to Medicare for the inpatient admission. The practitioner responsible for the patient's care and the Utilization Review (UR) committee concur with the decision. The concurrence of the practitioner responsible for the patient's care and the UR committee is documented in the patient's medical record.

While typically the full UR committee makes the decision that a change in patient status under condition code 44 is warranted, one physician member of the UR committee may make the decision for the committee as long as he is not the practitioner responsible for the patient's care. When the hospital has determined that it may submit an outpatient claim according to the conditions described above, the entire episode of care should be treated as though the inpatient admission never occurred and should be billed as an outpatient episode of care. Orders and entries in the medical record, including those related to the inpatient admission, cannot be expunged or deleted and must be retained in their original form. Any change in patient status must be fully documented in the medical record, complete with orders and notes that indicate why the change was made, the care that was furnished to the beneficiary, and the participants in making the decision to change the patient's status. When condition code 44 is appropriately used, the hospital reports the services that were ordered and provided to the patient for the entire patient encounter. Hospitals may not, however, report observation services (HCPCS code G0378) for services furnished prior to receiving a physician's order. Medicare does not permit retroactive orders or the inference of physician orders. All hospital outpatient services, including observation services, must be ordered by a physician. The clock time begins at the time observation services are initiated in accordance with a physician's order. Hospitals may include charges for the costs of all hospital resources utilized in the care of the patient during the entire encounter. Example: A beneficiary is admitted as an inpatient and receives 12 hours of monitoring and nursing care. The hospital then changes the status of the patient from inpatient to outpatient, all criteria for billing condition code 44 are met, and the physician writes an order for observation services.

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Outpatient Prospective Payment System Manual

The hospital should only bill for observation services with revenue code 0762 and HCPCS code G0378 from the time the physician's order was written and report the 12 hours of monitoring and nursing care provided prior to the written physician's order on a separate line with revenue code 0762 and no HCPCS/CPT code.

Ancillary Services

Payment may be made under Part B for some medical and health services when furnished by a participating hospital (either directly or under arrangement) to an inpatient of the hospital, but only if payment for these services cannot be made under Part A. Part B payment could be made for these services if: The patient is not entitled to Medicare Part A.

The admission was not disapproved as not reasonable and necessary (and waiver of liability payment was not made). The day(s) of the otherwise covered stay during which the services were provided was not reasonable and necessary (and no payment was made under waiver of liability). No Part A payment is made at all for the inpatient stay because the patient's benefits were exhausted before admission.

The following services can be submitted for payment: Diagnostic X-ray tests, diagnostic laboratory and other diagnostic tests.

X-ray, radium and radioactive isotope therapy, including materials and services of technicians. Surgical dressings, splints, casts and other devices used for the reduction of fractures and dislocations. Prosthetic devices (other than dental) that replace all or part of an internal body organ (including contiguous tissue) or replace all or part of the functions of a permanently inoperative or malfunctioning internal body organ, including replacement or repair of such devices. Leg, arm, back and neck braces, trusses, and artificial legs, arms and eyes, including adjustments, repairs and replacements required because of breakage, wear, loss or change in the patient's physical condition. Outpatient physical therapy, occupational therapy, and speech-language pathology services. Screening mammography services. Screening Pap smear. Influenza, pneumococcal pneumonia and hepatitis B vaccines. Colorectal screening.

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Outpatient Prospective Payment System Manual

Bone mass measurements. Diabetes self-management. Prostate screening. Hemophilia clotting factors (for hemophilia patients competent to use these factors without supervision). Immunosuppressive drugs. Oral anti-cancer drugs. Oral drugs prescribed for use as an acute anti-emetic as part of an anti-cancer chemotherapeutic regimen. Epoetin Alfa (EPO).

Hospitals bill these services on a 12X type of bill. The following revenue codes are not billable on a 12X type of bill: 010X 018X 0252 0270 0374 052X 0548 0631 068X 0943 0961 310X 011X 019X 0253 0273 041X 053X 0549 0632 072X 0944 0962 038X 012X 020X 0256 0277 045X 0541 055X 0633 0762 0945 0969 039X 013X 021X 0257 0279 0472 0542 057X 0637 078X 0946 097X 014X 022X 0258 029X 0479 0543 058X 064X 079X 0947 098X 015X 023X 0259 0339 049X 0544 059X 065X 093X 0949 099X 016X 0250 0261 036X 050X 0546 060X 066X 0940 095X 100X 017X 0251 0269 0370 051X 0547 0630 067X 0941 0960 210X

Preventive Services

The following preventive and screening services are covered under Part B. Initial Preventive Physical Exam (IPPE).

Ultrasound screening for Abdominal Aortic Aneurysm (AAA). Annual Wellness Visit (AWV). Cardiovascular disease screenings. Diabetes screening tests. Diabetes Self-Management Training (DSMT).

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Medical Nutrition Therapy (MNT). Screening Pap tests. Screening pelvic exam. Screening mammography. Bone mass measurements. Colorectal cancer screening. Prostate cancer screening. Glaucoma screening. Seasonal influenza virus vaccine. Pneumococcal vaccine. Hepatitis B vaccine. Smoking and tobacco use cessation counseling. HIV screening. Intensive behavioral therapy for cardiovascular disease. Screening and behavioral counseling interventions in primary care to reduce alcohol misuse. Screening for depression in adults. Intensive behavioral therapy for obesity.

The CMS Medicare Learning Network® (MLN) Products Preventive Services page includes educational products with information on coverage, coding, billing, reimbursement and claim filing procedures: http://www.cms.gov/MLNProducts/35_PreventiveServices.asp.

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Outpatient Prospective Payment System Manual REVISION HISTORY

Note: A revision history has been added to this manual. Current revisions will continue to be indicated throughout the manual in blue, italicized font. Date October 2010 Section Diagnostic Services Therapeutic Services Mandatory ABNs Medically Unlikely Edits Revision Updated definition and direct supervision guidelines per CR 6996. Updated definition and direct supervision guidelines per CR 6996. Added language pertaining to modifier GA per CR 7106. Added note to reference and clarified instructions for reporting multiple lines.

Emergency Room Services Added clarification for reporting condition code G0. Nuclear Medicine Procedures Self-Administered Drugs and Biologicals Discarded Drugs Therapy Billing Requirements Inpatient-Only Surgical Procedures Outpatient Services Treated as Inpatient Inpatient Admission Changed to Outpatient Mandatory ABNs Laboratory Services Dialysis Services Critical Care Nuclear Medicine Added language per CR 7117. Added language per CR 6950. Added language per CR 6711 and reference to job aid. Removed value code information per CR 6899. Corrected the APC assignment. Added clarification per CR 7142. Added clarification for the use of condition code 44 per CR 7117. Added language pertaining to the GZ modifier per CR 7228. Added reference to the Clinical Laboratory Fee Schedule. Added ESRD PPS Consolidated Billing guidelines per CRs 7471 and 7593. Added 2011 billing guidelines per CR 7271. Added FB modifier guidelines per CR

December 2011

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Date Section Procedures Psychiatric Services Partial Hospitalization Repetitive Services Therapy Services Inpatient-Only Procedures Observation Services Outpatient Services Treated as Inpatient Inpatient Admission Changed to Outpatient Preventive Services Revision 7271. Corrected APC code. Added composite APC information per CR 7271. Added revenue code per CR 7163. Added payment and MPPR information per CR 7050. Added guidelines per CRs 7271 and 7443. Added guidelines per CR 7443. Added guidelines per CR 7443. Added language per CR 7545. Added services per various CRs.

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Outpatient Prospective Payment System Manual

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