ED Coding and Reimbursement Alert

by Caral Edelberg, CPC
Consulting Editor

In many of todays EDs, hospital medical records departments, and group practice business offices, staffing for coding and billing functions is limited. In many cases, coders have been designated the coordinators of the entire reimbursement process. As a result, many emergency medicine coders have been forced to expand their roles and must now familiarize themselves with payment principles that in the past were the domain of practice managers.

Coders have been forced to become increasingly aware of principles outside the normal boundaries of coding, particularly in terms of recognizing the elements of code assignment that have the potential for impact on emergency medicine revenue. This months column will discuss one such element: Medicares 1999 Resource-Based Relative Value Scale (RBRVS), which introduces new complex practice-expense calculations based on the site of service.

The new method Medicare is instituting to calculate the practice-expense component will have a significant impact on emergency medicine reimbursement, and emergency coders, in particular, must take the initiative to keep their physician group or groups aware of the potential loss in revenue over the four-year phase-in period.

What is RBRVS?

For those new to professional coding, RBRVS forms the basis of payment to physicians for services provided to Medicare beneficiaries. Because it is considered the most sophisticated payment system available, many private payers have also adopted the RBRVS methodology to determine their payments to providers. Thus, RBRVS methodology is fast becoming the means by which many providers services are paid. Using this system, the various HCPCS codes (which include CPT-4 and ICD-9 codes) are assigned relative value units (RVUs). The number of units is multiplied by a dollar-value conversion factor to determine the amount of payment for the service.

In order to calculate the number of RVUs assigned for a particular service, Medicare RBRVS uses a complex formula to consider and assign values to the various components of physician resources that are used to provide medical care. These components are: location of the practice, expenses of the physician to maintain the practice, and the overall complexity of the care that is rendered.

BBA Changes Emergency Physician
Practice-Expense RVUs

The Balanced Budget Act of 1997 (BBA) required a four-year transition from a charge-based practice-expense methodology to a resource-based methodology. The first phase of this transition became effective in January 1999. As part of this transition, Medicare began revising the practice-expense RVU component to focus resources more heavily on office-based practices and less on surgical-intensive specialty practices and facility-based practices. The result is a reduction in the practice-expense component for the specialty of emergency medicine. Although significant controversies exist over how this resource-based practice expense was determined, the transition nevertheless became effective this year.

One means of estimating the effect on your individual emergency physician group is to calculate the E/M code distribution reported for the practices Medicare beneficiaries (the number of times each particular code is used) and apply the loss to each E/M level. (See chart on page 36 for a comparison of the 1998 total RVUs for emergency service E/M codes and the RVUs for 1999.)

The chart at the bottom of this page is a sample of the CPT E/M code distribution for emergency medicine nationwide that has been published on the website of the Health Care Financing Administration (http://www.hcfa.gov). We have applied the 1998 and 1999 conversion factors and RVUs to this distribution to illustrate the potential national impact of the RBRVS transition. By substituting your own practice Medicare E/M code distribution, you can estimate the total annual impact on your own practice. Final RVU calculation is determined by applying your geographic practice cost index (GPCI) to the work, practice cost, and malpractice components of the RVU. This composite GPCI is referred to as the geographic adjustment factor (GAF) and is set by HCFA. Thus, the actual payment will vary from one HCFA region to another.

The significance of this transition is a projected loss of 10 percent of Medicare revenue to the specialty of emergency medicine over the four-year transition period. Coders, who must constantly keep a watchful eye on the revenue generated from the codes they assign, will be required to understand the whys of the revenue decrease and assist their physicians in preparing for any revenue reductions based on your groups Medicare volume. At the same time, it is essential that coding be perfected to assure that no allowable revenue is left on the table.

Communication, Accuracy Are Essential

Hospitals that provide coding services to their emergency physicians will be forced to tighten up where, in the past, many viewed physician coding as a necessary evil. Generally, hospitals focus their major coding expertise and effort on the inpatient coding process. Their expertise in the physician coding arena is limited and often results in significant losses in revenue due to limited understanding of the physician coding rules.

In order to minimize losses from the reduction in Medicare reimbursement, it is essential that coders of ED professional services (whether it be the hospital information department, outside billing company or group practice-based department) appropriately bill E/M levels with procedures, identify unique payer-specific coding rules that will maximize allowable reimbursement, provide educational assistance to the emergency physicians about required documentation to facilitate improved coding, and receive and provide feedback to the physicians on payment denials due to documentation and/or coding problems. Unfortunately, the medical records department that actually has the benefit of reviewing physician-component payer guidelines and payment remittances is an exception rather than the rule.

In last months issue, we discussed the impact of the APC payment system on ED facility revenue. The impact of APC payment on hospitals combined with the RBRVS practice-expense transitions for emergency physicians leave little doubt that if private payers follow the Medicare trends, there will be no room for error in our coding systems as we attempt to capture all allowable charges.

Additional revenue may be earned without emergency physicians seeing more patients or increasing their fees but by simply coding visits correctly. With the promise of future payment reductions, it is essential that we begin now, more than ever before, to learn the steps necessary to protect our emergency medicine revenues and develop systems that assure compliance in the process.