Long-Term Care

Avoid the common pitfalls of consolidated billing

LTC Educator's Corner, January 4, 2010

The intricacies of consolidated billing continue to challenge even the most experienced billers. Often, the issues that cause the greatest uncertainty are shared across the industry.
For that reason, Elizabeth Malzahn, health and wellness finance manager at Covenant Retirement Communities in Skokie, IL, compiled a list of some of the most common pitfalls associated with SNF consolidated billing:
  • Distinguishing Major Category I items
  • Failing to establish a contract or agreement with outside vendors
  • Failing to create a process for paying outside invoices
Ron Orth, RN, NHA, CPC, RAC-MT, president of Clinical Reimbursement Solutions in Milwaukee, agrees that these three issues continually trouble many billers and offers an additional common pitfall:
Remembering the leave of absence rule and the midnight rule
All four issues are addressed by Malzahn and Orth in the hope of not only summarizing the relevance of each, but more importantly, offering valuable tips and solutions to help billers handle these common pitfalls of consolidated billing.
Major Category I items
Major Category I services that are not performed at a hospital will not be excluded from consolidated billing, requiring a SNF to cover the cost.
One of the reasons CMS encourages treatment at hospitals is because it feels that hospitals are the most appropriate setting for providing extensive services to geriatric residents, says Malzahn. If anything were to go wrong or if an emergency arose, the resident would already be in a hospital setting where equipment, staff members, and greater resources are typically available to handle any occurrences, she says.
The arrangement is win-win given that residents can receive the best care and SNFs can avoid additional expenses, Malzahn adds.
“I think that’s what CMS’ motivation was behind that, because that’s really where they wanted the services provided, and what better incentive?” she says.
However, some treatments can also be delivered outside of a hospital. When a resident is sent to one of those locations, a facility becomes liable for the costs.
Orth says three of the most common services performed outside of a hospital are CT scans, MRI, and radiation treatment.
“I think the best thing that a facility can do is when these tests are ordered—somebody orders a CT scan, somebody orders an MRI—they need to be asking the appropriate questions before the resident is sent,” he says. “And the No. 1 question you want to ask is: Where are they having this done?’
The problem occurs when this question is not addressed or when facility staff members do not communicate information regarding a resident’s service needs.
“A lot of times what happens is the individuals who are actually scheduling the appointments may be ward clerks or medical secretaries, who are actually working on the floor,” Malzahn says. “So there’s a disconnect between who’s scheduling it and who’s receiving the bill and possibly an assumption that the staff scheduling the appointments are aware of these place of service criteria.”
To address this issue, Malzahn recommends creating a resource guide for staff members who schedule resident appointments. The guide should list locations where services should be provided and indicate what the priority should be in selecting a location, making it clear that Major Category I items should be executed at a hospital whenever possible.
“Just have something quick at the nurses’ station or at the ward clerk desk so they understand to make every effort to schedule these specific services in a hospital,” Malzahn says.
Contracts with outside vendors
To avoid discrepancies later on, Malzahn and Orth recommend establishing contracts with outside vendors from the very beginning, thus forging a payment agreement regarding the service before it is actually provided.
“If you don’t do that and you send [the resident], they have every right to basically bill you whatever their usual and customary charge is,” Orth says. “And now you might have this dispute about what they’re billing you and what you want to pay, and it’s best to have that beforehand.”
This may seem like an easy issue to avoid. Still, most facilities do not establish agreements from the get-go, says Malzahn, who attributes this to a lack of communication. “Again, I think it’s that disconnect,” she says. “Who do we have contracts with? Who do we not have contracts with? I think there are a lot of assumptions made.”
Orth says it is especially important to enter into contractual agreements with outside vendors that are routinely used.
“I also understand that there are times when a doctor may order something and there is only one place that does it, and maybe you don’t have a standing contract with that particular provider,” Orth says. If that’s the case, the facility should make every effort to come to a financial agreement before the service is provided, he says.
Malzahn points to the best practices insight offered by CMS, which details why an early agreement is so important.
“At this point, CMS hasn’t made it mandatory, but they’ve made as many suggestions and put as much emphasis on it that they can,” she says.
Although print documentation is always best, the contract doesn’t necessarily have to be written, Malzahn says. “It can be verbal and it also can just be something that we’re sending with the resident out to their appointment that says, ‘This person is Medicare Part A. We expect you to bill us for any included services and we’ll pay you at the fee schedule.’ Because if we don’t have an agreement, then that vendor is not required to accept the Medicare fee schedule as payment,” she says.
Still, it is best to draft a contract with an outside vendor as early as possible to avoid any last-minute agreement concerns and potentially ensuing discrepancies.
A simple way to manage this issue is to compile an easily accessible binder that contains all information regarding outside vendors, explains Malzahn. It should include the contracts that have been established and ones that need to be drafted. Anyone who needs to identify this information should have access to the binder, which could prove to be a resource capable of saving a facility many unnecessary costs and headaches. Paying outside invoices
With the high numbers and varieties of outside invoices received, it is critical that SNFs stay on top of finances and keep organized. Creating an invoice payment process will do just that, Malzahn says.
Facilities need to scrutinize each invoice and ask themselves three questions:
  • Was the billed resident on Part A?
  • Are we sure we have to pay for this item or service?
  • Do we have an already established agreement with this vendor and, if so, are we paying the correct fee schedule amount?
Going through such a step-by-step process will help eliminate potential payment mistakes, Malzahn says.
“For a bill to come into the business office for $1,500 for an MRI, a lot of places aren’t even sending that to the director of nursing for approval,” she says. “They’re coding it and paying it.”
Facilities also need to make sure they are only paying for the technical component of services, says Orth. The technical component is the actual test performed, such as an MRI, and the professional component is the physician’s time and interpretation.
“There are certain tests and procedures that are performed that have both a professional component and a technical component, so there’s really two fees associated with that particular test or procedure,” Orth says. “The SNF is only responsible for the technical component.”
Orth adds that it is important to remember the leave of absence rule and the midnight rule when addressing outside invoices.
“If a resident departs your facility and does not return before midnight, then any charges that are assumed while that resident is gone from your facility are not part of consolidated billing and are not the SNFs responsibility,” he says.
A sleep study is a prime example, Orth says. If a facility pays for a resident taking part in a sleep study off-site, the SNF should not be billing for that day under Medicare because of the midnight rule—if a resident is not in the facility at midnight, that day is nonbillable.
“For consolidated billing purposes, the resident ceases to be a resident of the facility if they’re not in your building at midnight,”Orth adds.
Malzahn and Orth agree that efficient communication is critical in dealing with each of these consolidated billing common pitfalls. Staff members need to share pertinent information. Doing so not only helps ensure that everyone is on the same page, it also serves as a reminder that resources are readily available to answer any questions or uncertainties involving consolidated billing.
“It comes down to a basic principle: Know what services your residents are getting, where they are getting them, and how much you’re going to pay for them,” Orth says.
“It’s so simple, but it’s so overlooked,” Malzahn says.

 Source: Billing Alert for Long-Term Care, November 1, 2009

For more information on consolidated billing visit HCPro's Medicare Boot Camp® - Long-Term Care Version.

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