ICD-10 postponed until 2014, giving facilities another year to prepare

ICD-10 postponed until 2014, giving facilities another year to prepare

In April, the U.S. Department of Health and Human

Services (HHS) proposed an extension of the ICD-10

deadline for one year, from October 1, 2013, to October 1,

2014. On August 24, HHS issued the final ruling, confirm-

ing the one-year extension, which was instituted to allow

more time for healthcare facilities—particularly smaller

facilities—to adopt the new coding system.

“We believe the change in the compliance date for

ICD-10 gives covered health care providers and other cov-

ered entities more time to prepare and fully test their sys-

tems to ensure a smooth and coordinated transition by all

covered entities,” HHS said in the final published ruling.

Many facilities expressed concern with the 2013

deadline, pointing to the difficulty a variety of organiza-

tions had in meeting the compliance deadline for the

Associated Standard Committee’s X12 Version 5010

standards, which updated billing software and laid the

groundwork to accommodate the longer and more

detailed ICD-10 coding system.

In December 2011, CMS conducted a survey among

404 healthcare providers, 101 payers, and 90 vendors

to determine how well prepared the industry was for

these changes.

CMS found that

83% of provid-

ers were aware

of the upgrade to

Version 5010, but

only 64% indi-

cated they would

be compliant by

the January 2012

deadline. Addi-

tionally, nearly a

quarter of providers in the survey indicated they would

not be ready for the ICD-10 October 1, 2013, deadline.

Another survey conducted by the American Health

Information Management Association in September

2011 had mixed results from 639 providers concern-

ing compliance efforts with Version 5010 and ICD-10.

Although 85% of inpatient facilities had begun prepar-

ing for the implementation of ICD-10, 39.3% of all other

providers had not started planning at all. Furthermore,

of the “other” providers that hadn’t started implementa-

tion planning, 50.5% indicated they weren’t sure when

this planning would begin.

Lastly, according to a survey by the Workgroup for

Electronic Data Interchange conducted in February,

50% of respondents indicated they didn’t know when

they would complete their impact assessment of the

ICD-10 transition.

Even after the January deadline for Version 5010,

“ The longer you

procrastinate, the less

time you have to get

ready. There are so many

things that a facility or

practice can do today that

can help them with the

processes right now and

help them to understand

the impacts of ICD-10.”

—Dawn Duchek

November 2012 Vol. 14, No. 11

IN THIS ISSUE

p. 4 Hospital readmissions penalties: An opportunity for SNFs?Last month, more than 2,000 hospitals became subject to financial penalties for preventable readmissions under Medicare. Find out how this shift may impact your facility.

p. 7 Data analysis sees cuts pushing SNF sector ‘into the red’A recent study suggests that SNFs face a staggering $65 billion cumulative reduction in Medicare funding over the next 10 years. How will your facility face these reductions?

p. 9 Making your collections process airtightSubmitting accurate claims is only one piece of the reimbursement puzzle. Ensure that your facility has an effective collections process and don’t let payments slip through the cracks.

p. 11 BALTC Q&AWe review the Medicare Part B wound care billing process.

Billing Alert for Long-Term Care November 2012

© 2012 HCPro, Inc. For permission to reproduce part or all of this newsletter for external distribution or use in educational packets, contact the Copyright Clearance Center at www.copyright.com or 978-750-8400.

From a financial perspective, a regulatory impact

analysis conducted by HHS showed a cost avoidance of

$3.6–$8 billion that would incur if healthcare providers

and plans had to process claims manually, and smaller

healthcare providers would have to take out loans as a

result of delayed payments.

A new date with the same changes

Aside from the date, nothing has changed in terms of

the impact the transition from ICD-9-CM to ICD-10-CM

will have. These new diagnosis codes are still much more

specific than the ICD-9 version. ICD-9 codes are three to

five characters, whereas ICD-10 codes are three to seven

characters and alphanumeric, offering more detail and

specificity for certain conditions. For example, under ICD-

9, pressure ulcers were coded as 707.0x and 702.2x in

order to define the scope and stage. ICD-10 gets far more

specific with more than 100 codes for pressure ulcers that

define the location, laterality, and stage of the wound.

Once implemented, the specificity of ICD-10-CM

coding will paint a fuller and more detailed picture of

the resident in the UB-04 form, which should ultimately

reduce the number of denials to SNFs. The system will

also be able to better handle the transition to electronic

medical records (EMR) by providing more current in-

formation on a resident’s condition, and staying current

with terminology and clinical concepts.

Although the transition to ICD-10 is on the horizon,

facilities still need help fully understanding the current

ICD-9 system, says Marilyn Mines, senior manager of

clinical services for FR&R Healthcare Consulting, Inc., in

Deerfield, Ill. These misconceptions will only make the

transition more difficult.

“There’s a lot involved in ICD-10 that is not under-

stood,” she says. “I’m not sure how SNFs are going to be

able to move to the specificity of this coding when the

current coding is not always being done correctly.”

Approaching the change

The following are suggested steps facilities can take to

facilitate a smooth transition to ICD-10:

healthcare organizations—particularly smaller organiza-

tions—continued to struggle. In February, the Medical

Group Management Association sent a letter to HHS

indicating that if the government didn’t step in to help

solve the problems with transitioning to 5010, physi-

cian practices would face operational difficulties and

could even be forced to close their practices. Given the

struggles the healthcare industry had with Version 5010,

there were plenty of concerns among long-term care

providers that implementing an even more complicated

system in ICD-10 would be extremely difficult by the

October 2013 deadline, says Dawn Duchek, industry

initiatives coordinator for Gateway EDI in St. Louis.

“5010 had a much bigger impact to the industry than

was expected,” Duchek says. “The goal with ICD-10 is to

have a much smoother transition and to better prepare

for the potential bumps in the road.”

Kate Brewer, PT, MBA, GCS, RAC-CTVice PresidentGreenfield Rehabilitation Agency Greenfield, Wis.

Diane Brown, BA, CPRARegulatory Specialist & Boot Camp InstructorHCPro, Inc., Danvers, Mass.

Karen Connor, MHAPresident and CEOConnor LTC Consulting Haverhill, Mass.

Joseph Gruber, RPh, CGP, FASCP Vice President & Clinical Products Specialist Mirixa, headquartered in Reston, Va.

Lee A. HeinbaughPresidentThe Heinbaugh Group Cleveland, Ohio

Elizabeth MalzahnNational Director of HealthcareCovenant Retirement CommunitiesSkokie, Ill.

Editorial Advisory Board Billing Alert for Long-Term Care

Assoc. Editorial Director: Elizabeth Petersen

Associate Editor: Melissa D’Amico

Contributing Editor: Matt Wickenheiser

Billing Alert for Long-Term Care (ISSN: 1527-0246 [print]; 1937-7452 [online]) is published monthly by HCPro, Inc., 75 Sylvan St., Suite A-101, Danvers, MA 01923. Subscription rate: $259/year. • Billing Alert for Long-Term Care, P.O. Box 3049, Peabody, MA 01961-3049. • Copyright © 2012 HCPro, Inc. All rights reserved. Printed in the USA. Except where specifically encouraged, no part of this publication may be reproduced, in any form or by any means, without prior writ-ten consent of HCPro, Inc., or the Copyright Clearance Center at 978-750-8400. Please notify us immediately if you have received an unauthorized copy. • For editorial comments or questions, call 781-639-1872 or fax 781-639-7857. For renewal or subscription information, call customer service at 800-650-6787, fax 800-639-8511, or email [email protected]. • Visit our website at www.hcpro.com. • Occasionally, we make our subscriber list available to selected companies/vendors. If you do not wish to be included on this mailing list, please write to the marketing department at the address above. • Opinions expressed are not necessarily those of BALTC. Mention of products and services does not constitute endorsement. Advice given is general, and readers should consult professional counsel for specific legal, ethical, or clinical questions.

Mary H. Marshall, PhDPresidentManagement and Planning Services, Inc. Fernandina Beach, Fla.

Janet Potter, CPA, MASManager of Healthcare ResearchFrost, Ruttenberg & Rothblatt, PC Deerfield, Ill.

Frosini Rubertino, RN, CPRA, CDONA/LTC Executive DirectorTraining in Motion, LLC Bella Vista, Ariz.

Elise Smith, JDFinance Policy CounselFinance and Managed Care American Health Care Association Washington, D.C.

Bill UlrichPresident Consolidated Billing Services, Inc. Spokane, Wash.

November 2012 Billing Alert for Long-Term Care


been resolved, their diagnosis still reads, “fractured

hip.” A similar situation arises with pressure ulcers

as they progress or regress to higher or lower stages.

Facilities need to develop written policies that dictate

an effective flow of information to input diagnostic

changes as they arise. “This includes new diagnoses

as they come up,” Mines says. “The billers need to

have a point person who is knowledgeable, that they

can consult with in updating, changing, and elimi-

nating diagnoses and conditions. The same diagno-

ses from the hospital stay should not continue from

10 years earlier if they are resolved.”

Start sooner rather than later

“Pushing the ICD-10 back to 2014 shouldn’t trans-

late to an extra year of procrastination,” Duchek says.

Facilities should be using this additional time to begin

the process of evaluating how they will make the

transition.

“We had the interim final rule in February and now

six months have gone by, so if you haven’t done any-

thing, what have you gained? You’ve only gained six

months,” Duchek says. “The longer you procrastinate,

the less time you have to get ready. There are so many

things that a facility or practice can do today that can

help them with the processes right now and help them

to understand the impacts of ICD-10.”

Mines recommends initiating a task force at the

beginning of 2013 to get the process started by identi-

fying a few key leaders to look at how new codes will

be implemented and how they will affect the facility’s

current billing system. This committee should also look

at their percentage of rejections and appeals with ICD-9,

whether those will increase or decrease with ICD-10,

and how they can maximize reimbursement by accu-

rately applying the new system.

“I would say right after the beginning of the year is

when people should sit down with their teams and figure

out what they’re going to do and set up a schedule of

events, so when the date actually comes they won’t be

out of their minds to figure out what to do,” Mines says. n

➤ Assemble a steering committee. The first step in

making the transition to ICD-10-CM is to assemble a

steering committee made up of representatives from

coding, billing, and IT, as well as doctors and nurs-

es who can help with the specific clinical translations,

Duchek says. This committee should look at ways the

new system will affect software, hardware storage, and

paper processes, how patients will be impacted, and

where their facility is in terms of making this switch.

➤ Identify software needs. Software upgrades may be

necessary to house the additional 140,000 codes in-

cluded in ICD-10, as well as the existing ICD-9 codes

which will continue to be used for inpatients with a

discharge date prior to October 1, 2014, or if there is

an issue with rebilling. “Now is the time to look at the

reports you’re getting from your practice management

system or EMR to identify the ICD-9 codes you use

most often,” Duchek says. “Identifying your top rev-

enue codes is a good place to start with mapping ICD-

9 to ICD-10. You will also want to confirm that your

ICD-9 reports will be converted to ICD-10.”

➤ Establish a lead contact within the facility.

Facilities should also appoint a designated point per-

son who is going to be the resident expert in the new

system and lead the transition. MDS coordinators are

typically the ones who handle the current ICD-9 sys-

tem, so the responsibility will most likely fall to them,

although a team approach may be necessary, Mines

says. “With the new system, there might be the need

to have an actual coder who is more educated in the

system, one who can be more accurate,” she says.

“But I’m fearful that it is all going to fall to the MDS

coordinators.”

➤ Examine internal processes. Long-term care facili-

ties in particular should also focus on their process

for changing a resident’s diagnosis, Mines says. The

specificity of ICD-10 coding will allow for more time-

ly adjustments as new issues arise or an existing diag-

nosis is resolved. For example, residents often come

into a long-term care facility after having surgery for

a fractured hip in the hospital. Even though it has



“You’ll see, as it unfolds, creative ways of grouping

these providers together. I don’t think ACOs are fully

defined—you hear about new ones being announced all

the time,” says Anthony Cirillo, FACHE, a healthcare

marketing and experience management expert and the

About.com expert guide for assisted living.

“What I tell SNFs is at the end of the day there’s al-

most 6,000 hospitals and three times that many nursing

homes. Not everybody’s going to qualify for whatever

criteria hospitals pick for organizations of choice. The

SNFs that are fortunate enough to become partners have

a great opportunity.”

How to become an ACO partner

For facilities to take advantage of these potential op-

portunities, understanding how to get involved with an

ACO is essential.

➤ Build the right relationships. “They need to be

cultivating relationships with hospitals if they have

not already,” advises Cirillo. “They probably need to

work up the C-suite and have conversations with

those folks, make them understand who they are,

what they do, how they measure quality.”

➤ Identify a value proposition. In order to under-

stand where your facility can add value as an ACO

partner, you must understand the needs of the hos-

pitals and other providers within the organization.

You will add the greatest value when your strengths

fill the gaps created by their weaknesses. “It’s real-

ly about establishing relationships and showing the

metrics around that,” says Cirillo. “If you haven’t got-

ten that far, start identifying the metrics that will be

important to hospitals.”

➤ Recognize the right cultural fit. In the ACO arena,

hospitals will be choosing partners that have the right

cultural fit, along with quality metrics that show

that patients who have received rehabilitation ser-

vices within a SNF eventually go home rather than

either being readmitted to a hospital or transferred

A seismic shift in American healthcare occurred in

August, as more than 2,000 hospitals became subject to

financial penalties for preventable readmissions under

Medicare.

As part of the Affordable Care Act of 2010 (ACA), the

penalties represent an attempt to encourage partnerships

among healthcare providers by driving efficiency and

efficacy into the system with both a carrot and a stick.

According to recent reports by Kaiser Health News

(KHN), 278 hospitals nationwide will be hit with the

maximum penalty—1% of their base Medicare pay-

ments, or about $280 million in penalties. That max

penalty will increase to 2% in October 2013, and then

to 3% in October 2014.

Nearly 2 million Medicare beneficiaries are readmit-

ted to the hospital within 30 days of discharge each year,

costing Medicare an estimated $17.5 billion in additional

hospital bills, KHN reports, while the national aver-

age readmission rate has hovered at just above 19% for

several years.

An opportunity for SNFs

The reduction of hospital readmissions is an area that

offers some significant opportunities for SNFs, according

to experts.

This focus feeds into a concurrent trend toward ac-

countable care organizations (ACO). An ACO is a group

of physicians, hospitals, SNFs, and other providers that

work together to promote accountability for a patient

population and coordinate items and services under

Medicare Part A and Part B.

As hospitals seek to decrease readmissions, it seems

that an obvious answer would be to work closely with

SNFs to provide skilled nursing and rehabilitation ser-

vices—potentially in ACOs. By partnering with hospi-

tals through an ACO, facilities will not only benefit by

improving the quality of care provided to residents, but

also through cost savings that may result through better

care coordination.

Hospital readmissions penalties: An opportunity for SNFs?



to a nursing facility, says Cirillo. “Obviously they’re

looking for providers on the SNF side that are going

to help rehab [patients] and not send them back to

the hospital, but send them home.” Culture is a neb-

ulous thing, Cirillo acknowledges. But SNFs can start

meeting with hospitals, looking at their facilities, and

getting a gut feeling for how the two can operate in

an ACO, he adds. “When the rubber hits the road is

when you’re looking at transitions of care and care

coordination, that’s where it will matter most in terms

of fitting together. You really want it to be seamless,”

says Cirillo. Part of this, he says, can be smoothed

over, coordinating the care by using effective dis-

charge planning, health coaches, care managers, and

other professionals. Jackie Birmingham, RN, MS,

vice president emeritus of clinical leadership at Cu-

raspan Health Group strongly advises that all parties

look at discharge planning software solutions that fa-

cilitate the discharge process for patients between

hospitals and nursing homes.

Those SNFs that aren’t picked to be in an ACO will

need to think of other methods to attract volume, says

Cirillo. “If you’re not going to get the rehab from hospitals,

are you going to go deeper in services you offer?” he says.

SNFs may want to look at extending their brand, look-

ing at home healthcare, hospice care, and other areas.

The entire area of partnering up and squeezing efficien-

cies is one that still hasn’t had full buy-in, Cirillo says.

“People are talking a lot about these issues, about how

the continuum of care is blurring, and we need to part-

ner and work together,” he says. “But what I see in prac-

tice is a lot of organizations are becoming the absolute

best at what they do and are only paying lip service to

the concept of working together, playing in the sandbox.

They really need to take this seriously.”

Concerns to keep an eye on

Although the pressure on hospitals to reduce read-

missions may open up some areas of opportunity for

SNFs, there are also concerns facilities should be aware

of. The following are some key components SNFs should

understand:

➤ SNFs must focus on rehospitalizations too.

Birmingham notes that SNFs are under their own

gun for rehospitalizations—in the form of value-

based purchasing (VBP). (For more details on how

VBP may impact SNFs, see “Is VBP finally on its way

for SNFs?” in the July issue of BALTC.) The concept

of VBP is woven throughout the ACA and boils down

to some basic tenets to provide better care. In VBP,

CMS will reward providers for improved outcomes.

Broadly speaking, reduced rehospitalizations is only

one factor of the program, which also includes:

– Patient outcomes

– Reduced costs

– Staffing

– Overall efficiency

➤ SNFs need to know what care they can provide

in their own facility. “What will the hospital read-

mission penalty do to SNFs? SNFs must look at internal

options instead of sending patients to the emergency

department [ED]. Where in the past the patient might

have been readmitted, the admission decision will be

made with stronger collaboration with the hospital and

the attending physician. This is true particularly if it’s

a condition a SNF should be able to medically man-

age,” says Birmingham. “And if the patient does get the

treatment and diagnosis needed during that ED visit,

the SNF will be expected to be ready to take the patient

back regardless of the time of day or day of week.”

➤ Facilities and hospitals may need to review

and update transfer agreements. Birmingham

adds that the new rehospitalization penalties may

necessitate the review and updating of transfer agree-

ments required by a SNF and hospital. She notes that

SNFs need to follow specific utilization review rules

according to the Social Security Act § 1861(I), Agree-

ments for Transfer Between Skilled Nursing Facilities

and Hospitals. The rule states:

Ahospitalandaskillednursingfacilityshallbecon-

sideredtohaveatransferagreementineffectif,byreason



“This could result in a greatly improved working

relationship—hospitals may want to work with clinical

staff at SNFs to identify some clinical care issues that the

SNF hasn’t tackled.”

For example, some questions hospitals and SNFs may

want to address include:

➤ Do SNFs have the capability of doing some diagnostic

tests that could be done without going to the ED?

➤ Can the ED staff triage residents’ conditions and

symptoms by phone with a nurse or physician at the

SNF, sort of like a call center?

Overall, it is essential for facilities to recognize that a

changing focus on quality of care, including the reduc-

tion of rehospitalization rates, will change the way care

providers interact. SNFs should take this shift as an

opportunity to build new relationships with hospitals.

By asking the right questions and building partnerships,

facilities will be able to not only provide higher quality

care, but also reduce expenses overall. n

ofawrittenagreementbetweenthemor(incasethetwo

institutionsareundercommoncontrol)byreasonofawrit-

tenundertakingbythepersonorbodywhichcontrolsthem,

thereisreasonableassurancethat:

– (1)transferofpatientswillbeaffectedbetweenthehospi-

talandtheskillednursingfacilitywheneversuchtransfer

ismedicallyappropriateasdeterminedbytheattending

physician;and

– (2)therewillbeinterchangeofmedicalandother

informationnecessaryorusefulinthecareandtreat-

mentofindividualstransferredbetweentheinstitu-

tions,orindeterminingwhethersuchindividualscan

beadequatelycaredforotherwisethanineitherofsuch

institutions.

A changing relationship with hospitals

This shift to focus on rehospitalizations may lead to

an overall evolution in the relationship between hos-

pitals and SNFs, beyond the technical, according to

Birmingham.

The demands on long-term care providers have never been greater. HCPro’s Advisory Services are outcome-driven,

individualized solutions to meet your most complex regulatory, financial, and operational challenges.

Our value lies in the unique partnership we build with providers and the results we help them achieve. There is nothing

standardized about our approach—we will evaluate your current processes and outcomes, create action plans to improve

them, build tools to use in practice, and implement a system for sustainable results.

Our team of advisors offers a full range of services to long-term care providers, including:

• Documentation Improvement Review • MDS 3.0 & RUG-IV Review

• Survey Preparation and Response • Compliance Program Development

• Case Mix Analysis • Medicare Coding and Billing Audits

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To discuss your needs with lead advisor Diane Brown, please call 877-233-8828 for a free, no-obligation conversation

about how HCPro Advisory Services can benefit you today. www.hcpro.com/LTCadvisory

Customized guidance from a trusted source.

Advisory Services



larger deficit and debt reduction debate anticipated next

year, would compel “more draconian action” by many

facilities, he says.

“Since roughly 70% of SNF costs are labor-related—

salaries and benefits—and since providers already have

cut everything else, our deepest concern is that nothing

is left but to direct the impact of most of any additional

cuts to the caregiving staff,” says Rosenbloom. “These are

the people who can least afford such changes, and whose

presence—or absence—contributes the most to the qual-

ity of care and services, and quality of life, for patients

and their families.”

The cuts, says Bill Ulrich, president of Consolidated

Billing Services, Inc., of Spokane, Wash., “obviously

push providers toward a tipping point.”

“Nursing homes are being squeezed between ever-

rising costs due to increased staffing and higher acuity,

increased regulatory scrutiny, and reduced reimburse-

ment from Medicare and Medicaid programs,” says

Ulrich.

The government cuts and policy shifts since 2009 lead-

ing to the potential $65 billion problem for SNFs include:

➤ Affordable Care Act productivity adjustment ($34 bil-

lion cut over 10 years; $1.3 billion cut in 2013)

➤ Case-Mix Adjustment in FY 2010 CMS Rule

($16 billion regulatory funding reduction over

10 years; $1.3 billion reduction in 2013)

➤ Forecast Error Adjustment in FY 2011 CMS Rule

($3 billion regulatory funding reduction over

10 years; $240 million reduction in 2013)

➤ Sequestration Provision of Budget Control Act ($9 bil-

lion cut over 10 years; $782 million cut in 2013)

➤ Bad Debt Provision in March 2012 Middle Class

Tax Relief and Job Creation Act ($3 billion cut over

10 years; $355 million cut in 2013–14)

“Perhaps the most indefensible of these cuts is reduc-

ing reimbursement for Medicare dual-eligible bad debt,”

contends Ulrich.

A new 50-state data analysis released by The Alliance

for Quality Nursing Home Care (AQNHC) suggests that

a combination of regulatory changes and budget cuts at

the federal level will essentially push the skilled nursing

sector to the brink.

The analysis, conducted by healthcare policy research

group Avalere, suggests that SNFs face a staggering

$65 billion cumulative reduction in Medicare funding

over the next 10 years, including reductions of nearly

$4 billion in 2013–2014.

For 2013–2014, the study estimates the states facing

the most impact from SNF Medicare funding cuts and

regulatory changes include:

➤ Florida ($370 million)

➤ California ($350 million)

➤ Texas ($240 million)

➤ Illinois ($240 million)

➤ New York ($220 million)

➤ Pennsylvania ($200 million)

➤ Ohio ($200 million)

➤ New Jersey ($190 million)

➤ Michigan ($140 million)

➤ Indiana ($140 million)

The complete list of estimated cuts for all 50 states can

be found at http://tinyurl.com/9jwx6k3.

Providers already have had to adjust to the cascade of

Medicare and Medicaid cuts they’ve faced over the last few

years as detailed by the Avalere data. “The steps individual

facilities and companies have had to take include: wage

freezes; benefit reductions; reduced hours; layoffs; delay

in or elimination of capital repair and improvement of

facilities; and, in some cases, facility closures,” says AQNHC

President Alan G. Rosenbloom. “The cuts already en-

acted have taken a sector with overall operating margins

of 3% or lower and put it on a path projected to take the

entire sector into the red over the next few years.”

Additional cuts, which Rosenbloom calls “a real risk”

given a potential lame-duck session this year and the

Data analysis sees cuts pushing SNF sector ‘into the red’



there is room for improvement. Nursing homes

have many expenses, ranging from facility utilities

to pharmaceuticals and medical supplies to food for

the residents. While eliminating these expenses is

not an option, facilities can explore ways to reduce

their impact on the budget. Facilities should look at

the different cost areas, determine what their needs

are, and see whether there is any room to cut costs

by reducing the amount of items or services they use.

However, it is extremely important to make sure you

are doing so without affecting the quality of resident

care provided.

➤ Find the best bargain. Understanding your facility’s

expenses is the easy part. Determining the best way

to reduce those expenses can be a bit more challeng-

ing. When assessing pricing for services, consider the

following:

– Don’t rely solely on experience within your facil-

ity. If you are only comparing pricing for services

based on past experience within your own facil-

ity, you are limiting knowledge and not ensuring

that you are getting the best deal. Facilities need

to broaden their research beyond historical data.

Examine pricing around the country and measure

the price your facility is currently receiving against

that broad national data.

– A good relationship with a supplier does not nec-

essarily mean the supplier is giving you the best

price. Maintaining a good relationship with your

suppliers is key, but it does not guarantee the

best price. Facilities may not want to jeopardize a

long-standing relationship by challenging pricing

or other terms of an agreement, but if done profes-

sionally and respectfully, it can be well worth the

effort.

– Renegotiate contracts. Nursing homes should also

not assume that they cannot change the pricing or

terms of an agreement just because a contract with

a supplier has already been signed. Contracts can

usually be negotiated and, if needed, SNFs can put

items out for bid. n

He notes that for days 21–100, beneficiaries in a

Medicare Part A stay are responsible to pay a portion of

the cost. In 2012, that amount is $147.50 per day. If that

person is dually eligible for Medicaid as well as Medicare,

he says, the state Medicaid program is on the hook.

“The catch is that many states implemented laws

avoiding paying their share in most instances. Cuts

pending to nursing homes were made on the basis of

nursing homes needing to work harder to collect that

unpaid coinsurance, though it is impossible in many

instances to collect,” Ulrich says. “Nursing homes were

used as a ‘pay for’ for the doctor fix last spring. This

particular cut is completely indefensible and leaves

providers in many states well short of the cost to care for

Medicare beneficiaries.”

Rosenbloom says AQNHC hosted a variety of SNF

tours across the nation with U.S. Senate and House can-

didates to help stress how these cuts negatively impact

facility care and threaten patients.

“Yet, beyond warning about the local impact of still

more SNF Medicare cuts, it is our job and our mission to

explain how SNFs are a key part of the solution to both

reining in healthcare costs and improving coordination

of care along the entire postacute continuum,” he says.

“A zero sum game of just more SNF Medicare cuts is

not just a bad policy approach; it’s completely wrong for

taxpayers and the entire U.S. healthcare system.”

Face payment cuts and protect your bottom line

Facilities that have faced the payment cuts of recent

years are not strangers to monitoring budgets and may

have released a sigh of relief with the modest increase in

Medicare payments for fiscal year 2013. But it is impor-

tant to take the opportunity while you can to reevaluate

your facility’s expenses and make sure you are getting

the most bang for your buck.

When examining expenses, facilities should:

➤ Understand what their expenses are. Ultimately,

the first step in getting control of your facility’s

expenses is to understand where the money is going,

how much is going there, and then seeing whether



➤ Payments must be marked accordingly, meaning they

must bear the correct date and be filed timely in the

system as soon as the deposit is made

➤ The patient census should be verified for accuracy of

correct revenue

➤ Cash postings must be accurate, to the correct patient

and dates of service

Connor adds that every month, there should be

follow-up for those accounts that have not yet been paid

on the regular cycle, and notes should be taken as to

why the claim was denied (if it was) and what was done

to correct the original billing.

A range of SNF professionals need to be involved in

the collections process. Staff members facilities may con-

sider involving include:

➤ Accounts receivable (A/R) manager

➤ A/R billers

➤ Controller

➤ Chief financial officer

Additionally, the collection policy should be ap-

proved by the board of directors or owners, according

to Potter.

Look out for common pitfalls

According to Connor and Potter, the following are

some common pitfalls to avoid when preparing and

implementing a successful collections program:

➤ Overlapping or gaps in responsibilities. “Facilities

often have overlapping duties, which adds work for

the business office. If one person has done a step, the

results should be communicated to others rather than

redone by someone else—for example, running the

CWF or rekeying the same information more than

once,” says Potter. “On the other hand, we also see

facilities with gaps, with no one taking on the re-

sponsibility of following up with certain steps in the

collection process.”

Submitting accurate claims—correctly coded, which

clears the claims edits—goes a long way toward getting

timely and continued payments from commercial and

government payers, and those in private-pay situations

as well.

But that’s only the first part of the story. After those

accurate claims are filed, it is up to the billing office

to track payments and make sure the SNF is actually

getting paid for services rendered with a specific and ef-

ficient collections process.

It’s never too early to begin the collections process,

says Janet Potter, CPA, MAS, manager of healthcare

research with Frost, Ruttenberg & Rothblatt Healthcare

Consulting, Inc., in Deerfield, Ill.

“A successful collections process should begin at

or before admissions. Determining payer sources and

discussing covered and noncovered items and services

with the resident and family up front can help avoid

misunderstandings and collection issues later on,”

advises Potter. “Every admission should begin with a re-

view of the Common Working File [CWF] to determine

Medicare coverage [Part A, Part B, Medicare Advan-

tage, hospice elections, etc.] and potential Medicare as a

Secondary Payer issues.”

And, says Potter, every organization should consis-

tently follow a thorough written collection policy that

covers all payer types.

“Medicare only allows bad debts to be written off if

a consistent collection policy is followed,” she notes.

“Small claims courts will also look for consistency in fol-

lowing the collection policy.”

A successful collections process

Karen Connor, MHA, senior consultant and owner

of Connor LTC Consulting in Haverhill, Mass., noted some

other hallmarks of a successful collections process:

➤ It should be disciplined

➤ Bills should be done on the same schedule

every month

Making your collections process airtight



➤ For insurance companies, send certified receipt so

you do not miss timely filing of claims.

➤ Have A/R meetings to determine whether network-

ing in-house can help you with claim denials.

➤ Contact the insurance company to determine

what the denial is and resubmit claims as soon as

possible.

➤ For private pay, communication is key. Call the

family and send letters immediately.

On unpaid claims, says Potter, “the business office

needs to follow the steps outlined in the collections

policy.”

“For example, the policy may be mailing two state-

ments, making a phone call to the responsible party,

sending a final notice, then transferring to a collections

agency,” she says.

There are ways to encourage timely payments, says

Connor. “When the census is good, your revenue is

good,” she says.

Know the contracts, what is covered, when to submit

claims, and verify coverage before the bill is submitted,

Connor says. On the private-pay end, establish a rela-

tionship immediately with the family and let them know

their responsibility.

“If they do not have funds, apply for state assistance

as soon as possible,” she suggests.

And remember, potential issues don’t disappear just

because a payment has been collected. The payment may

have been incorrect.

“Keep track that the balances are correct for that

time period and billing cycle. Monitor the claims to see

if deductibles and/or copayments were deducted from

the amount due,” says Connor. “Contact the family and

or insurance company [secondary] for the remaining

balance.”

Adds Potter, “It is important that all payments be

correctly posted in the accounts receivable. During a

Medicare, Medicaid, or financial audit, unposted or

misposted amounts can lead to questions and concerns

of auditors.” n

➤ Sequential billing is a difficulty with Medicare col-

lections and some other payers as well, Potter says.

“The first claim must be paid before the second and

subsequent claims may be submitted. If the first claim

is subject to medical review, collections is greatly

slowed down, not just for that claim but potentially

for many more claims,” she explains.

➤ Timely filed claims. Timely payments will never

be received if the claims were not billed timely in the

first place. Medicare billing is typically done by the

third to fifth business day of the month, says Potter.

Many organizations have similar internal deadlines

for other payers as well.

➤ Lack of follow through when problems are

identified. It is important to have good follow-

through on problem claims (i.e., those which do not

get paid right away), Potter says. Sometimes it is a

simple fix and the payment is made, she adds. Per-

haps an identifier was mistyped or an additional

document needed. Prior authorization codes and pro-

cedures can also slow the process for collection with

Medicare Advantage and primary insurance claims.

If payment has not been made, says Connor, contact

the insurance company or resident, and make phone calls

or look online for denials immediately. She adds:

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BALTC Q&AEditor’snote:Thismonth’s“Q&A”wasmodifiedfromthe

HCProbookMedicare Part B Billing Manual for Long-

Term Care,writtenbyFrosini Rubertino, RN, CPRA,

CDONA/LTC.Formoreinformationortoorder,callcustomer

serviceat800-650-6787orvisitwww.hcmarketplace.com/

prod-7856.Tosubmitaquestionforupcomingissues,email

AssociateEditorMelissaD’[email protected].

Q Can you review how to bill wound care supplies

for Medicare Part B? Do facilities need to be ac-

credited suppliers? How can I ensure accurate billing?

A SNFs that are not accredited suppliers of Durable

Medical Equipment, Prosthetics, Orthotics, and

Supplies ( DMEPOS) lost the opportunity to bill their

DME MAC for Part B supplies after September 30, 2009.

But what does this mean for SNFs that bill their fiscal

intermediary (FI) or MAC for Part B– covered wound

care supplies? The DMEPOS accreditation requirement

has to do with the supplier number, for which SNFs do

not need to bill their FI/MAC. Therefore, SNFs billing

their FI/MAC for certain Part B supplies, such as wound

care, ostomy, and urological items, do not have to be ac-

credited. Accreditation does not apply to the Medicare

provider number.

Maintaining the ability to bill for wound care supplies

is excellent news for SNFs, because many facilities use

more wound care supplies than other Part B items, such

as ostomy or urological supplies; this type of Part B bill-

ing may provide more revenue.

Before billing for wound care supplies, SNFs must

know what types of supplies they can actually bill to

Medicare Part B.

Not all wound care supplies are covered by Part B.

When it comes to wound care supplies, SNFs can only

bill Part B for dressings used in debridement and surgical

dressings, which are needed to treat wounds resulting

from surgical procedures.

Debridement refers to the process of removing dead

tissue or foreign material from and around a wound.

Routine dressings, such as supplies used for cleaning

purposes, are not billable under Part B.

Dressings are broken down into two categories:

primary and secondary. Primary dressings are applied

directly to the wound, and secondary dressings, such

as tape and gauze, protect the primary dressings. Medi-

care will cover both the primary and secondary dress-

ings if the wound being treated is caused by a surgical

procedure, has been or is being debrided, and is under a

physician’s order.

Collaboration between the clinical and billing staff

is essential to a successful wound care billing process.

The clinical team must provide the biller with specific

information before wound care supplies can be properly

billed. For example, clinical documentation must include

information about swelling, pain, size and/or dimen-

sions of the wound, as well as when the dressings were

changed.

The documentation must also include detailed in-

formation about any changes or improvement in the

wound. If there is no indication of healing, there should

be some documentation of dialogue with the physician

about changing treatment to facilitate improvement.

SNF billers rely on the clinical staff to provide infor-

mation about the type and quantity of supplies used by

each resident. Unless wound care supplies are ordered

specifically for a resident, tracking and determining the

cost per patient for certain supplies, such as a bag of

gauze or roll of tape, can become quite cumbersome.

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When it comes to billing Part B supplies, wound care

is a great place to start. Wound care supplies are excel-

lent revenue sources, and billing your FI or MAC for

these Part B items tends to be easier than billing other

supplies. For most facilities, everything for wound care is

done in-house; a treatment nurse does the wound care,

you know how the wound originated, and you know

what is being provided.

To be successful with wound care billing, it is critical to

establish procedures for tracking the supplies used by each

resident. Although establishing these tracking measures,

as well as the billing procedures, may be time-consuming,

these systems can often be applied to other Part B–billable

supplies, making Part B billing a more manageable process.

Facilities submitting Part B claims for wound care

supplies will bill for a variety of items. The following is a

list of some of the more common types of items used for

wound care:

➤ Wound pouches

➤ Alginate dressings

➤ Composite dressings

➤ Contact layer

➤ Foam dressings

➤ Gauze

➤ Hydrocolloid dressings

➤ Hydrogel dressings

➤ Special absorptive dressings

➤ Transparent film n

However, the clinical staff can make this task easier by

documenting the supplies and quantities used and record-

ing this information on the resident’s treatment sheet.

SNFs must understand the policies and local coverage

determinations (LCD) of their FI/MAC before billing for

wound care supplies. Every FI/MAC has its own set of

LCDs, which can be interpretations or further explana-

tions of the national coverage determinations (NCD)

established by CMS. FIs and MACs also develop their

own unique LCDs that are separate from the NCDs.

SNFs must carefully adhere to the LCDs of their

FI/MAC, which can be found on the contractor’s web-

site, because the LCDs outline specific criteria that must

be met for services to be covered. For example, LCDs can

indicate frequency requirements for dressing changes

or the type of documentation needed to support the

medical necessity of wound care supplies. LCDs will also

indicate appropriate modifiers to include on the UB-04.

If the FI/MAC does not have an LCD, the NCDs on

the CMS website apply.

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ICD-10 postponed until 2014, giving facilities another year to prepare

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