March 9 , 2006

In This Issue . . .

Condemning CMS Code Limits Initiative:
Lab and Pathology Groups Speak Out against ‘Medically Unbelievable Edits’

Julie L McDowell

A proposal by the Centers for Medicare and Medicaid Services (CMS) to curb coding errors—also known as “medically unbelievable edits” or MUEs—has drawn fire from health care providers, with many complaining that the effort is an example of federal legislators putting Medicare savings before patient care. As the 60-day comment period comes to a close on March 20 th , this issue of Strategies explores the controversy surrounding MUEs and how it could impact future clinical laboratory reimbursement levels.

Facing a projected $400 billion budget deficit, the Bush Administration's fiscal belt tightening includes plans to cut Medicare spending by $36 million over the next five years. An important element of Medicare savings efforts are programs such as the CMS's National Correct Coding Initiative (NCCI), which was implemented in the mid-1990s to decrease inappropriate reimbursement payments due to coding errors. The agency appears to have taken this program one step further with its proposed “medically unbelievable” edits (MUEs) program, which would establish payment limits on medical services, including diagnostic tests, billed for a particular code by a health care provider for the same Medicare patient performed on the same date. If a provider reports a claim that exceeds these limits, the claim will automatically be denied. CMS has made the proposed MUE codes public and is requesting feedback by March 20 th . Implementation of the coding edits was originally scheduled for this July, but earlier this week CMS postponed that date, according to an agency spokesman, who added that a revised proposal—reflecting the comments received during the current comment period—will be published in the future, for another round of public comment.

Coding Controversy

Soon after learning of the MUE program, many medical associations—including AACC, the College of American Pathologists, the American Medical Association, and the American Clinical Laboratory Association—wasted no time in writing CMS Administrator Mark McClelland, MD, PhD, detailing their criticisms of the program. One point of contention is that the agency did not go through appropriate administrative procedures, according to a letter to McClelland from AACC President John E. Sherwin, PhD. “In February 2005, CMS issued and later rescinded Change Request Number 2987, which had been promulgated to ‘establish unit of service edits intended to catch typographical errors and unbelievable cases' submitted to Medicare for reimbursement,” reads the letter. “Later in 2005, one of the Agency's contractors, Reliance Safeguard Solutions, released new MUEs without advance notice or an opportunity to comment. This created much consternation and confusion within the medical and laboratory communities.” Reliance Safeguard Solutions ( Syracuse , NY ) is no longer the NCCI contractor and therefore is no longer working on the MUE program. The current contractor, Correct Coding Solutions (CCS, Carmel , Ind. ), is charged with refining the MUE proposal once the March comment period is closed.

However, according to Sherwin's letter, there is cause to be concerned that the data and codes currently under review have not been verified, in an effort to avoid delaying the original July implementation date. “From our perspective, the development and implementation of these edits is too important to be done haphazardly,” wrote Sherwin. “We are concerned that patients may forego critical physician ordered services that are standard of care, because Medicare will not cover them. This is particularly a problem, since providers will not be able to use modifiers to bypass the edits. Therefore, AACC recommends that CMS withdraw this initiative and develop a new process that meets the needs of CMS, patients, and providers.”

But CMS and CCS dispute that there have been any irregularities involved in sending the MUEs out for comment. The edits have been distributed for comment and review using the same process that the NCCI has used over the past 10 years, according to a CMS spokesperson. “ Correct Coding Solutions LLC acquired the MUE file from Reliance around January 3, 2006,” the spokesperson explained in a statement. “Because of the planned implementation date of July 1, 2006 and the desire to provide a sixty day comment period, the MUE file was sent out for comment on January 18, 2006, without confirming that all listed HCPCS/CPT codes were still active for 2006. No other validation was necessary. The MUE edits in the file did not require an accuracy check which had been done previously by Reliance.” This statement was echoed by CCS Medical Director Niles R. Rosen, MD, who said that the company did indicate that it had not validated that all HCPCS/CPT codes in the file were active for 2006 since the file had been prepared in 2005.

There are also positive aspects of the MUE program that have gone ignored, according to Rosen. Because the Medicare program does not have a fixed pot of money, excessive spending in one year has a strong influence on legislative and regulatory decisions about benefits in following years. “Eliminating inappropriate payment when too many units of service are billed for a CPT code reduces overall expenditures, thereby reducing budgetary pressures on policy makers,” he explained. “As a former carrier medical director I encountered an ophthalmologist who routinely billed 10 or 20 cataract extractions per patient. Actually he meant to bill one or two but a consistent error in his billing program caused the inappropriate units of service to be reported. Who would not want edits to prevent such overpayments?”

MUEs Will Impact Pathology

From the clinical laboratory perspective, the pathologists' professional claims will likely be more adversely affected than the clinical labs' technical claims, predicts Robert Murray, JD, PhD, Chair , Pathology Department, Advocate Lutheran General Hospital ( Park Ridge , Ill. ). “From the people who work in the clinical laboratory, the impact is not nearly as great as it is for pathologists,” he explained. “It will affect the clinical laboratory in some of the genetic testing codes. For example, there's a CPT code for a DNA probe. Virtually any genetic analysis is going to use multiple probes, yet under the proposed MUE, reimbursement will be limited to two of them. So if this goes into effect exactly as proposed, there would be huge numbers of denials.”

In the case of pathologists, they will be impacted because many of their procedures fall under a generic code, explained Murray . While the clinical laboratory has separate codes for most diagnostic procedures, such as calcium, phosphorus, and uric acid, a majority of pathology services fall under about five CPT codes; for example, gross microscopic examination levels 2–6. “In surgical pathology, claims are submitted based on complexity, not on the specific tissue examined. In many cases multiple tissue samples are submitted from the same patient, for the pathologist's examination—all with the same CPT code,” he said. “This is why they are concerned that there will be many denials.”

Fortunately for the clinical labs, a majority of Medicare testing is done on hospital inpatients, which are reimbursed under DRGs. Therefore, regardless of coding limits, the laboratory portion of the DRG reimbursement will not change. One potential problem, however, could crop up when multiple tests are done on outpatients, points out Murray . “The only place where MUEs will have an impact is on the outpatients who come in for a test, but it's quite rare for an outpatient to have multiple tests on the same date,” he explained. “One example, however, is an outpatient who has a blood transfusion and who will probably have a CBC before he is transfused. He will then get his transfusion and then he'll have another CBC. But the MUEs allow for that, with a limit of two per day. So even in those rare cases, it's not likely to have a major impact on reimbursement.” Another problem could occur when labs order immunoglobulin tests, as each subclass— IgG1, 2, 3, or 4— is coded separately, and MUEs would limit the number that could be performed.

Another potential issue will be if a lab procedure is performed on a 23-hour admit patient, one who is technically an outpatient, but still occupying a hospital bed, following a procedure such as a cardiac catheterization. If a nurse or physician observes the patient is dehydrated or experiencing pulmonary problems, repeat tests such as electrolytes and blood gas might be ordered.

Lab Directors: Stay Tuned

Even though pathologists—rather than clinical laboratorians—may feel the brunt of the impact if CMS's MUE program becomes a reality, laboratorians are still advised to follow the issue, and send feedback to the agency, according to Charles Root, PhD, President of CodeMap LLC (Barrington, Ill.), a Medicare reimbursement consulting firm. Root predicts that if CMS eventually implements MUEs, then one of the medical associations may file a lawsuit to delay implementation. This may be successful, he added, because CMS's process of making the MUEs public and open for review is problematic.

Nevertheless, CMS is encouraging laboratory and p athology groups to identify incorrect edits, in addition to recommending alternative MUE levels and providing the rationale for the alternative levels, according to the CMS spokesperson. “The accuracy of the final MUE levels will be very much dependent upon the degree of participation by various pathology and laboratory groups that have been asked to participate,” said the spokesperson.

But Root points out that this review process is a monumental undertaking, even given the 60-day time table. “CMS is essentially asking providers, ‘if you don't like these MUEs, give us specific reasons why, for each one,'” he said. “Well, for the lab alone, there are about a thousand codes, and another 7–8,000 for physicians. That's a totally unrealistic request.”

CCS's Rosen acknowledges the complaints about the number of MUE edits to review, but responds that the number of edits in this file is less than the number of edits in many of the files that the NCCI sends out for review and comment, and most national societies only have to review a smaller subset of the MUEs. He also emphasizes that the final edits that are implemented will reflect the comments received as well as any applicable national data. “After the edits are implemented all MUE edits will be subject to further review and revision based on additional comments received,” added Rosen. “The same process will be utilized that is currently utilized for other NCCI edits.”

For more information: Various physician, pathology, and clinical laboratory groups have submitted letters to CMS Administrator McClellan calling for the MUE proposal to be rescinded. These letters can be found online at the associations' Web sites:

Julie McDowell is the Editor of Strategies. She can be reached by email.

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