CMS Ignores Uniform Billing Committee, Creating Compliance Risks for Hospital Labs

In spite of concerns expressed by members of the National Uniform Billing Committee (NUBC) in a Jan. 21 letter to the Centers for Medicare and Medicaid Services (CMS), the agency went forward with its plan to use type of bill (TOB) 14X to identify exceptions to new bundled payments for certain hospital laboratory claims. Under new payment policies required by the Hospital Outpatient Prospective Payment System (HOPPS) final rule published in the Federal Register on Dec. 10, 2013, laboratory services will be bundled for payment under HOPPS with only a few exceptions. Hospitals scrambled to modify billing polices and systems to meet the new requirements. However, according to the NUBC letter, the CMS action related to the use of the TOB 14X for this purpose alters the official definition and purpose of an NUBC data element. Further, CMS did so without specifically requesting comments about the proposed change to the definition of TOB 14X, which is used for reporting “non-patient” laboratory services. According to the NUBC, CMS cannot use the rulemaking process to arbitrarily change the definition of an NUBC data element. NUBC has a change request process that CMS did not follow. “CMS’ failure to notify the NUBC of its intention to change our definition is extremely troublesome,” stated the letter. The NUBC had to resort to threatening to file a Health Insurance Portability and Accountability Act complaint to get CMS’s attention and get the issue corrected. MLN Matters SE1412 CMS relented and issued an MLN Matters notice, SE1412, on March 5, changing the requirement to the use of a new Healthcare Common Procedure Coding System modifier to identify claims that should not be bundled under the new rules effective July 1. This MM notice is an important document and should be reviewed by all laboratory compliance officers as a guide for correctly implementing these new requirements and submitting proper claims. Hospitals must now begin working on preparing their billing systems to use the TOB approach and to use the new modifier, further increasing the cost of this change and the compliance risks associated with it. Noncompliance Is Not an Option Regardless of the process used to identify claims that should be bundled, the rule was effective Jan. 1 and CMS has made it clear that hospitals are responsible for billing correctly for outpatient lab services. There are limited exceptions to the bundling requirements for outpatient laboratory services. According to the new policy, outpatient laboratory tests, other than molecular pathology, will be bundled and paid to the hospital under the HOPPS payment system. Separate payment billed directly by the laboratory will be allowed in the following circumstances:

• »Nonpatient specimens that are specimens received by the hospital and the patient is not present and the hospital does not collect the specimen;
• »A hospital collects the specimen and furnishes only the outpatient labs on a given date of service; or
• »A hospital conducts outpatient lab tests that are clinically unrelated to other hospital services furnished on the same day, for a different diagnosis and ordered by a different practitioner than the one who ordered the other hospital services.

In all of the above cases, except the first, the patients will still be outpatients of the hospital so the hospital lab will still have to bill them and cannot defer the billing to a reference laboratory in cases where the Medicare reimbursement is lower than the charge by the reference lab. Under the new requirements, the laboratory would bill the specimens in bullets two and three as outpatients on a TOB 13X but would add the new modifier to indicate the claims should not be bundled. Meantime, claims filed with dates of service between Jan. 1 and July 1 that should be separately payable under the exceptions listed above should be billed with a TOB 14X designation. Lower Reimbursement, Added Cost While the impact of the bundling rule change is yet to be determined, many laboratory experts believe hospitals and laboratories are going to experience lower reimbursements as a result of the rule change. If that is not enough, hospitals now will also bear the cost of dealing with CMS’s interpretation error and the cost and compliance risks associated with having to develop two different processes for claims filed with dates of service between Jan. 1 and July 1 and then change that to use the new modifier for claims with dates of service after July 1. CMS states that hospitals are not required to seek separate payment for laboratory services and may bill all lab services after Jan. 1 using TOB 13X and receive bundled payments for all outpatient laboratory services. Further, hospitals are not required to reprocess any previously submitted claims. Special Provisions for Sole Community Hospitals Sole community hospitals with qualified laboratories are still eligible for the 62 percent payment under the Clinical Laboratory Fee Schedule (CLFS) for outpatient lab tests separately payable under exceptions 2 and 3 described previously in this article. The differential payment does not apply to nonpatient lab services billed with TOB 14X. These hospitals should carefully review the MM section addressing their special needs so they ensure proper claims submittals. Avoid Compliance Problems There is no indication that CMS has put any kind of effective system in place to detect improper claims or overpayments. If a hospital makes an error and designates a claim as separately payable when it is not, it is up to the hospital to detect and correct the claim. CMS goes to a lot of trouble to make it clear when a test is separately payable and when it is not, including using case study-type of examples to illustrate when and when not to bill separately. Further, the MM comments that “CMS will be reviewing claims data for CY 2014 for potential inappropriate unbundling of laboratory services under the new OPPS packaging policy. As stated in the OPPS final rule, CMS does not expect changes in practice patterns under the new policy. Hospitals may not establish new scheduling patterns in order to provide laboratory services on separate dates of service from other hospital services for the purpose of receiving separate payment under the CLFS.” This warning to providers is clear. Compliance officers should create policies and procedures to ensure compliance with the new requirements and communicate these changes throughout their hospitals to any department that has any responsibility for lab services. It would also be a good idea to audit claims to ensure correct claims submittal is occurring rather than wait for a post-payment audit by a government contractor to find them and result in a refund demand or worse. There are always risks associated with government audits where overpayments are detected. It is always a good idea for a laboratory to self-detect and repay any claims paid in error. Takeaway: Regardless of government or contractor mistakes or errors, the laboratory is still responsible to make every effort to submit accurate claims for its services.