With only minutes to spare, the United States Senate joined the House of Representatives in passing legislation, the Preventing Access to Medicare Act of 2014, to prevent a 24% reduction in physician fee schedule payments slated to occur on April 1, 2014.  In lieu of this draconian cut, the Congress approved a one-year extension of the current Medicare Conversion Factor (CF) through March 31, 2015.  This means that Medicare will continue to pay for physician services through the remainder of 2014 what it has been paying for services for the first three months of 2014.

Up until the very end, many held out hope that the Congress would approve a permanent fix to the SGR problem but coming to an agreement on how to pay for the SGR fix remained elusive.  Earlier in March, the House and Senate leadership had reached agreement on new policies for replacing the SGR but they were unable to reach agreement on how to save the $130 – $180 Billion necessary to fix the SGR and other Medicare policies in need of correction.

For this reason, the Congress was forced to approve an SGR patch for the 17th time in the last 12 years in order to prevent steep cuts in Medicare physician fee schedule payments.  The total cost of patching the SGR for one year and extending the various programs is approximately $21 Billion.

The Protecting Access to Medicare Act of 2014 would:

(1)        Extend the .5% update to the Conversion Factor that has been in place since January, 2014, through the remainder of calendar year of 2014, and

(2)        Freeze the update to the single conversion factor at 0.00% for January 1, 2015, through March 31, 2015.

In addition to the temporary SGR fix, Congress also approved an extension of various Medicare programs scheduled to expire at Midnight, March 31.  Included among these so-called extenders were:

  • Extends Medicare work Geographic Practice Cost Index (GPCI) floor for 1 year
  • Extends Medicare therapy cap exception process for 1 year
  • Extends Medicare ambulance add-on payments for 1 year
  • Extends Medicare adjustment for Low-Volume hospitals for 1 year
  • Extends Medicare-dependent Hospital (MDH) program for 1 year
  • Extends Medicare Advantage Special Needs Plan for 1 year
  • Extends Medicare Reasonable Cost Contracts for 1 year

In order to “pay for” this legislation, Congress approved a series of changes in the Medicare program intended to save approximately $21 Billion over the next 10 years.  These included:

  • Establish a value-based purchasing program for Skilled Nursing Facilities (-$2 Billion)
  • Reform Medicare Payment policy for Clinical Diagnostic Laboratory tests (-$2.5 Billion)
  • Quality Incentives for developing Appropriate Use and Clinical Decision Making tools for Advanced Medical Imaging (- $200 Million)
  • Medicare misvalued code revaluation (-$4 Billion)
  • Changing the Medicaid Disproportionate Share program (-$4.4 Billion)
  • Revise and Realign Medicare Sequester (-$7.2 Billion)
  • Revise Medicare ESRD Prospective Payment Program (-$1.8 Billion)

The legislation also directs the Secretary of Health and Human Services (HHS) to continue through June 2015, and with a specified limitation, certain medical review activities related to the so-called two-midnight rule.  The two-midnight rule allows Medicare inpatient coverage of hospital stays for which a physician admits a beneficiary to a hospital and where the beneficiary is expected to require care that crosses two midnights.  If the care does NOT cross two midnights, Medicare will generally deny inpatient coverage of the care and instead, pay for the care on an outpatient basis.

The failure to complete action on permanent SGR repeal/replace legislation by the April 1 deadline does not necessarily mean all action on reaching a compromise on a permanent fix will end immediately.  Congress is further along in their efforts to reach a bi-partisan/bicameral solution than at any time in the history of the SGR.




2014 PQRS

CMSThroughout 2013 medical providers were encouraged by the Center for Medicare and Medicaid Services (CMS) to report back what they determined to be “quality measures” to ensure eligible medical providers were providing “quality care” to their patients. Through 2013, providers were required to report back at least 3 measures derived from the PQRS manual provided by CMS, on at least 50 percent of their Medicare Part B and Railroad Medicare patients to avoid a 1.5 – 2 percent reduction to their Medicare Physician payments.

Starting in 2014, CMS released that they will now require eligible health professionals to report back 9 measures, across 3 National Quality Strategy Domains in order to qualify for the .05 percent increase. The Domains are what the National Quality Strategy research division of the Health & Human Services (HHS) identified as areas of healthcare that require “improvement”. Reporting options for PQRS measures have also changed. In 2013 providers were able to choose from four options to report back PQRS measures.

  1. At the Claim level on Part B Claims
  2. Any qualified PQRS registry
  3. Through EMR/EHR product
  4. valid PQRS data submission vendor

In 2014, reporting methods for PQRS measures depend upon which measure is being reported. As you can see in the example below, Heart Failure can not be reported on the claim level or through a Web Interface.


Measure                                                                               Reporting Option

Diabetes: Hemoglobin A1c Poor Control                        Claims, Registry, EHR, Web Interface

Heart Failure                                                                        Registry, EHR, Measures group


The same incentives and penalties from 2013 still apply in 2014, providers are just required to report more to qualify for the incentive increase. If you report 9 measures, across 3 domains on 50% or more, you receive a .05 percent increase in payments. If less than 50 percent is reported on at least 3 measures then a 1.5 to 2 percent reduction in payments will be applied to the individual provider. All requirements are based at the individual provider level not at the group/entity.

For more information on the 2014 PQRS requirements, and for a copy of the 2014 PQRS manual, visit

2014 Medicare Physician Fee Schedule Final Rule

CMSLast week, the Centers for Medicare and Medicaid Services (CMS) released the 2014 Physician Fee Schedule Final Rule which finalizes the physician and non-physician rates for 2014. A press release that accompanied the final rule said “CMS projects that total payments under the fee schedule in 2014 will be approximately $87 billion.”

Along with this announcement was the anticipated revealing of the the Medicare Conversion Factor (MCF) for the subsequent year. Typically under the Sustainable Growth Rate or SGR formula, physicians have seen reductions in the MCF. Due to Congressional intervention, most of these cuts have been avoided for 2014.

With the Final Rule, CMS calculates the CY 2014 Fee Schedule Conversion Factor will be $27.2006. This will represent a reduction of 20.1 percent from the current CF of $34.0230. While still a reduction, it is not as a dramatically reduced as earlier estimates, but still represents a significant cut in physician fee schedule payments if Congress fails to intervene. Without Congressional intervention, physicians will experience a 20.1% reduction in their fee schedule payments that is exclusively due to the SGR. The reduction could possibly be mitigated for certain specialties due to higher Relative Value Unit (RVU) scores for certain services. Meaning the actual reduction amount could be even higher for specialties where the final rule reduces the RVU for certain services.

According to CMS, certain specialties will see payment rate increases based on the new rates for 2014, with the greatest increases going to mental health providers. CMS also plans to reduce the value of certain codes based on what they consider “mis-valued”.

The final rule includes several provisions with regards to physician quality programs and the Physician Value-Based Payment Modifier. CMS is finalizing proposals to apply the Physician Value-Based Payment Modifier to physician groups with 10 or more professionals for 2016. Physicians in groups of 100 or more professionals, will also be subject to upward and downward payment adjustments based on their performance beginning 2016. However only upward adjustments will be applied based on performance for groups with professionals between 10 and 99 physicians. CMS says, at this time, physicians in “small” groups will NOT be subject to downward payment adjustments.

Physicians will be able to report quality measures through qualified clinical data registries starting January 1, 2014. Previously this option was reserved for physicians working in groups.

CMS is also planning to align quality measures across quality reporting programs so physicians and other professionals may report a measure once in order to receive credit in all quality reporting programs in which that measure is used. Data collected in 2012 for physicians reporting PQRS measures under the Group Practice Reporting Option (GPRO) will be publicly report on the CMS Physician Compare website in 2014.





Basic Health Program

government_400Part of the Affordable Care Act and Patient Protection plan provides states with a new coverage option called the “Basic Health Program”. This program is for the purpose of providing a health insurance program for citizens or lawfully present non citizens, who won’t qualify for Medicaid, the Children’s Health Insurance Program (CHIP) or other minimum essential coverage and also have an income between 133 percent and 200 percent the federal poverty level (FPL).

The Basic Health Program (BHP) was to be up and running by January 1st, 2014. CMS has issued a proposed rule for establishing the standards for BHP. Through this process, administration and the HHS have determined that it will not meet the January 1st, 2014 deadline and hope to have the program up and running by January 1st, 2015.

The purpose of BHP is to provide states with an option to establish health benefit programs for low-income individuals who would otherwise be eligible to purchase health insurance coverage through the Health Insurance Marketplace. The proposed rule establishes the framework for eligibility and enrollment, benefits, delivery of health care services, transfer of funds to participating states, administration and federal oversight.

The BHP benefits will include the ten essential benefits specified in the Affordable Care Act. Individuals eligible for the BHP will not be required to pay premium costs that will exceed what an eligible individual would be required to pay when receiving benefits through a Qualified Health Plan (QHP) through the Market Place. States that offer BHPs will qualify for federal funding equal to 95 percent of the amount of the premium tax credits and cost sharing reductions that would be provided to a eligible individual enrolled in a QHP through the Marketplace.

The rule proposes:

(1)        The procedures for certification of a state-submitted Basic Health Program blueprint, and standards for state administration of the Basic Health Program consistent with that blueprint;

(2)        Eligibility and enrollment requirements for standard health plan coverage offered                          through the Basic Health Program;

(3)        The benefits covered by such standard health plans as well as requirements of the              plans;

(4)        Federal funding of certified state Basic Health Programs;

(5)        The purposes for which states can use such federal funding;

(6)        The parameters for enrollee financial participation; and

(7)        Federal oversight of Basic Health Program funds.

The Rule establishes that eligibility determinations must be performed by government agencies. It uses the same criteria using most standards to those of the Internal Revenue Service when determining advance premium tax credits and cost sharing reductions. The rule also proposes the minimum benefit standard and makes provisions for additional benefits. It also establishes cost-sharing standards consistent with the Marketplace including the prohibition of cost sharing for preventive health services.


HBMA Testifies on ICD-10

Shaking handsDue to the large role the Healthcare Billing and Management Association (HBMA) plays in revenue cycle management, the HBMA was invited to participate in discussions with the National Committee on Vital and Health Statistics (NCVHS) subcommittee standards on the process of transitioning from ICD-9 to ICD-10 on October 1, 2014.

Holly Louie, CHBME, Chair of HBMA’s ICD-10/5010 Committee presented HBMA’s views on what they considered “lessons learned” from the 5010 conversion that took place in January 2011, and how those lessons could apply to the upcoming ICD-10 conversion.

Louie was one of many experts invited to address the NCVHS. In her address she said, “HBMA believes that we MUST learn from the mistakes that were made in transitioning from 4010 to 5010, and undertake the transition from ICD-9 CM to ICD-10 CM in a way that demonstrates we learned those lessons.” She shared the HBMA’s concerns with the committee and of how those “lessons learned” from 4010 to 5010 should “materially inform the implementation of ICD-10”. She further explained to the committee, “the economic stability of America’s healthcare reimbursement system will be at risk and could be severely compromised, affecting provider financial viability and patients’ access to care.”

The Centers for Medicare and Medicaid Services (CMS) have already delayed the implementation date of ICD-10 to October 1 2014. With this delay Louie said, “it is imperative that the time gained by the delay be used wisely in order to ensure that the transition is successful. If we fail to learn the lessons we will merely be delaying the likelihood for payment disruptions and patient access to care problems from 2013 to 2014.”

HBMA strongly recommends the following:

1. While CMS has adopted a definition of “ready” and developed the tools and checklists to assist every provider, organization, payor and vendor to validate they are ready on October 1, 2014, a subsequent announcement by CMS that they will not perform any external testing is extremely problematic for the industry. End-to-end testing by all payors, to meet the definition of “ready” must occur to ensure a smooth ICD-10 CM implementation. Failure to engage in meaningful end-to-end testing is a recipe for disaster.

2 CMS must establish period benchmarks that cannot be ignored to assess the “readiness” status for all facts of the healthcare industry.

3. There must be clear pronouncement that there is no vendor, EHR, coding assist tool, map, crosswalk or other product that will solve the problem of excellent medical record documentation and accurate coding. Physicians and staff must be fully prepared with adequate training to operate compliantly and not rely on false proclamations of marketed solutions.

4. Payor policies will be critical to the appropriate adjudication of claims. Currently, there is a wide variance among payors in stated policies. It is imperative that policies are published by October 1, 2013 in order to allow adequate time for education and training, data analysis and other preparations for ICD-10 CM.

5. Any payor that is currently only accepting claims by 4010 format must be fully 5010 compliant by January 1, 2014 in order to be ICD-10CM ready.

HBMA’s expert remarks were made on behalf of the membership with the goal of making this transition as smooth as possible for the entire medical community.


SOURCE: Healthcare Billing and Management Association



government_400The SGR problem that has been an issue for over a decade, remains a high priority for senate leaders. The original SGR formula was developed during the Clinton administration and has had serious flaws. Since, a fix to the SGR problem as continued to be elusive.

A fix to the SGR is not imminent due to many factors but the House and Senate feel that a permanent fix appears achievable in 2013. Congressional Committees that have jurisdiction over Medicare Physician Payment reforms have held Hearings and gotten feedback on possible permanent solutions. Both Democratic and Republican leaders remain committed to finding a permanent solution whereas in past years, the commitment level was much much less.

Proposals have been circulated amongst various physician offices, as well as some other healthcare organizations for the purpose of feedback and reaction to proposed fixes. The Healthcare Billing and Management Association (HBMA) will meet with the Senate Finance Committee and other White House staffs to assist in finding permanent fix to the SGR problem.

If Congress fails to find a permanent solution prior to the end of 2013, the current estimate of a 24% reduction in provider payments will be necessary to comply with SGR law.

The following are concepts from discussions for the SGR fix:

  1. Repeal SGR and replace it with statutory increases (possibly 1 – 2% per year) for a period of time (3 – 5 years). Thus eliminating the 24% cut come January 1, 2014.
  2. Implement Specialty Specific Quality Measures as part of the payment formula.
  3. Payments would be a combination of “base rate” plus a variable rate that would be tied to quality/performance.
  4. A score on quality would be based upon a comparison of peers AND compared to the individual providers prior year scores AND provider participation in specialty specific clinical improvement initiatives.
  5. Providers of the same specialty would “self-identify” with a peer cohort and provide information on:
  • Identifies the peer group the provider wants to be compared to; and
  • Provides information on quality measures applicable peer group that the provider is assigned

The Health & Human Services (HHS) Secretary will be responsible for the development and methodology for assessing the performance of providers with respect to the measures and for methods of collecting data for the assessments. The Secretary is directed to develop the processes in a way that will minimize the administrative burden to ensure reliable results.

The HBMA and other healthcare organizations, continually encourge Congress to find a permanent solution to the SGR problem before January 2014.


Improving Documentation

1314902_medical_doctorThe purpose of ICD-10 is to provide more detailed information on the care being provided. There are many steps that need to be taken in order for a practice to prepare for the ICD-10 conversion that is coming October 1, 2014. One of the key changes that will need to be made by some, if not most, physicians is what type of information is being documented in a patient’s medical records and determining whether that information is enough.

Looking at how diagnosis information is being documented will help physicians and coding staff be better prepared for the ICD-10 switch.

Here is a suggested process on how you can better prepare your documentation for ICD-10.

Pull a handful of medical records on some of your more commonly used diagnoses. Review those records with your coding staff, and have them determine if your current documentation provides enough information to associate the appropriate ICD-10 code. If it doesn’t, then you’ll know improving documentation is a necessary change for your practice.

But what kind of information are you supposed to include in your documentation to be able to code for ICD-10???

The best way to think of what the differences are between ICD-10 and ICD-9 is to think of ICD-10 as “expanded”. Most diagnoses in ICD-10 are expanded to include things like body locations, types, causes etc. Laterality is an example of what is expanded in ICD-10. So, documentation for diagnoses needs to include information on which side of the body is affected (right, left, or bilateral). Below are a few other examples of how ICD-10 is expanding on a particular diagnosis and the documentation that will need to be in the medical records.

Fractures –

  • Site
  • Laterality
  • Type
  • Location

Injuries –

  • External Cause – You will need to provide “how” the injury occurred.
  • Place of occurrence – Where did the injury take place?
  • Activity code – What was the patient doing that caused the injury?
  • External cause status – Indicate if the injury was related to another source (military, work, etc.)

Diabetes Mellitus –

  • Type of Diabetes
  • Complication or manifestation
  • Body system affected
  • If type 2 diabetes, long-term insulin use

Making your documentation as detailed as possible will help your coding staff assign the appropriate codes and help reduce the potential for rejected claims. ICD-10 shouldn’t affect patient care. All it is doing is requiring more detailed information. Most of the information is likely already being provided to you during the patient’s visit. It is just making sure you’re recording everything your coding staff will need to chose the correct code.

Improving documentation will improve coding staff turnaround time on billings and in turn reduce the amount of rejected claims for coding issues and so will help you to maintain a consistent revenue stream.




What is that 141,000 number mean? That is just the total number of ever more specific diagnosis codes that comes along with the Tenth Edition of the International Classification of Disease (ICD-10). A little bit of an increase from the Ninth Edition (ICD-9) which totaled 17,000 codes. The department of Health and Human Services (HHS) extended the compliance date from what would have been October 1 of this year, to October 1, 2014. Although the date has been pushed back once again, HHS urges all covered entities under the Health Information Portability and Accountability Act (HIPAA) to continue, or start, preparations for the transition to ICD-10.

A transition of this magnitude requires extensive planning and preparation in all aspects of a medical practice and throughout the industry. It is recommended that timelines be established as soon as possible to help manage tasks and keep the transition from becoming too overwhelming.

The Centers for Medicare & Medicaid Services (CMS) have created an example timeline to help illustrate the process. Click the link below to view the timeline.

What does this mean for a physician?

Most changes will be on coding and coding staff becoming familiar with the new format of codes and the multiple options for a specific diagnosis. It will also take some coordination from physicians in being more specific with their diagnosis when charting. In ICD-9 there would typically be one option for a particular condition, where as in ICD-10 there may be multiple. Below is an example of of the differences of what is reported using ICD-9 and what will be required with ICD-10.

Example: 1                                      


784.0 – Headache


G441 – Vascular Headache Not elsewhere classified

R51 – Headache

Example: 2


784.59 – Speech Disturbances


R4702 – Dysphasia

R4781 – Slurred Speech

R4789 – Other Speech Disturbances

Note: ICD-10 will not affect CPT codes.

Although diligent efforts are being made industry wide for a smooth efficient transition, a change of this scale is not without it’s bumps and hiccups, foreseen and unseen alike. Payment, and claims processing delays are a major concern. With the 5010 transition last year which was the electronic claim file format upgrade from 4010, payment and claims processing delays did cause cash flow problems nationally. Cash flow is a major concern to any organization, group, private practice or covered entity under HIPAA. To help organizations prepare as best they can and avoid cash flow issues, it is being recommended that organizations begin preparations now! Some consultants have also suggested providers and organizations build a line of credit that can sustain them anywhere from two to six months after the compliance date to manage delays in payments.

Training of coding and other staff is also a vital component for preparations for the ICD-10 transition. Studies showed that after the ICD-10 transition in Canada, staff productivity dropped by 50 percent in the first six months. A drop in productivity means that fewer patient claims will be submitted timely and more money paid to staff for increased time thus affecting cash flow and the bottom line. It is imperative that physicians and organizations help staff to understand the importance of preparing for the transition to avoid productivity drops.

Contacting vendors is also another key cog in the wheel of preparation. Contact and follow up with, EHR/EMR vendors, billing software vendors, outsourced billing providers, electronic clearinghouses, and payers. Software testing with clearinghouses and payers will typically be handled through the software vendors, or outsourced service providers but none the less, providers and organizations should follow up to ensure preparation and timelines have been established.

Some helpful hints to plan for the ICD-10 transition:

  • Start a plan
  • Establish a timeline
  • Contact vendors
  • Staff Training
  • Build a line of credit

If you’re asking yourself, “when do i start planing for ICD-10?”. THE TIME IS NOW!


Medicare Claim Hold

CMSTechnical issues with certain parts of the quarterly system release have been identified by The Centers for Medicare & Medicaid Services (CMS). Claims that were affected were, Home Health final claims, outpatient Critical Access Hospital (CAH) and Rural Health Clinic (RHC) where money was applied to beneficiary deductible, and the remittance advice summary payment amount for Medicare Advantage inpatient prospective payment system (IPPS) with indirect medical education. However, actual payments and the claim level payment amounts on remittance advices were correct, Claim dates that were affected were dates of service or “Through Dates” on or after April 1, 2013. Final Home Health, CAH, RHC and IPPS claims with dates of service “Through Dates” prior to April 1, 2013 were unaffected.

CMS has instructed all Medicare claims administrators to hold these specific claim types until April 14, 2013. CMS expects to have the fixes for these claims issues implemented by that day. The affected claims will then be released for processing on April 15, 2013. The claim hold is expected to have minimal impact on provider cash flow. web change alert Due to current law, clean electronic claims are not paid sooner than 14 calendar days after the date of receiving the claim. Paper claims are held 29 days after the date of receiving the claim.

Physician Quality Reporting System (PQRS)

stethoscope notepadThe Physician Quality Reporting System (PQRS), formerly the Physician Quality Reporting Initiative (PQRI), is designed to create incentives and also adjustments for eligible professionals to report quality information back to the Centers for Medicare & Medicaid Services (CMS).

For what purpose???

CMS intends PQRS to create a “quality standard” of satisfactory reporting. In doing so the hope is to lower the possibility of fraudulent claims and maximize the level of payment to providers.

Eligible professionals who successfully report the quality measures required to CMS on at least 50 percent of Medicare Part B and Railroad Medicare covered services, are eligible to receive a 0.5 percent payment incentive on their total estimated allowed charges to the Medicare Part B Physician Fee Schedule (PFS) during the reporting period (calendar year). The estimated Allowed charges of course are based on covered professional services under the PFS. Eligible professionals who do not meet the required 50 percent of the Physician Quality Reporting System during the specified reporting period, will be subject to a 2 percent adjustment of their total allowed covered charges to the PFS, meaning a 2 percent reduction in Medicare Part B and Railroad Medicare eligible payments.

To begin reporting quality measures for the Physician Quality Reporting System requires no registration or forms. Quality measures are reported to CMS on Medicare Part B and Railroad Medicare covered services one of four ways. The first (1) being on Medicare Part B and Railroad Medicare claims. The second (2) being, a qualified physician quality reporting registry. The third (3), transmission to CMS through a qualified electronic health records (EHR/EMR) software or product. Fourth (4), transmission through a qualified Physician Quality Reporting System vendor.

The Physician Quality Reporting System is in effect for 2013 for eligible professionals to receive incentive payments of 0.5 percent for successfully reporting quality measures on 50 percent of their Medicare Part B and Railroad Medicare patients in 2014. The adjustment or payment reduction of 2 percent is also in effect for eligible professionals who do not report quality measures on at least 50 percent of Medicare Part B and Railroad Medicare patients.

Physician Quality Reporting System eligible professionals include:


Doctor of Medicine

Doctor of Osteopathy

Doctor of Podiatric Medicine

Doctor of Optometry

Doctor of Oral Surgery

Doctor of Dental Medicine

Doctor of Chiropractic


Physician Assistant

Nurse Practitioner

Advanced Practice Registered Nurse

Clinical Nurse Specialist

Certified Registered Nurse Anesthetist

Certified Nurse Midwife

Clinical Social Worker

Clinical Psychologist

Registered Dietitian

Nutrition Professional



Physical Therapist

Occupational Therapist

Qualified Speech – Language Therapist