Outpatient Rehab Reimbursement & Regulations

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1 Vol. 6 No. 3 March 2001 Briefings on Outpatient Rehab Reimbursement & Regulations Collections INSIDE If you re losing patience with your slow-paying patients, turn to p. 3. Therapeutic spas Looking for a fun new market to tap into? Read about how one woman turned her OT practice into a therapeutic spa on p. 6. BRRR Q & A Find answers to some difficult rehab questions on p. 8. Coding Corner Our columnist investigates the new rules on Medicare coverage of augmentative communication devices and services on p. 10. News in a flash Read news bulletins of interest to the rehab industry on p. 12. Receive BRRR online! For more information, go to or call our Customer Service Center at 800/ Sign up for your FREE newsletter at and visit our online store, for daily discounts and specials! Get familiar with HIPAA now Protecting the privacy of your patients medical records may seem fairly simple. Not so under the government s new information privacy standards for all health care providers, including therapists. Although the complicated rules won t be mandatory until 2003, you ll want to become familiar with them now. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) covers all health information, including electronic records, oral communication, and paper records. The final rule was released in December. Some of the details, which apply An ounce of prevention is often worth more than a pound of the cure. These are the sentiments of David W. Perry, PT, MS, owner of Perry Therapeutics in Grosse Pointe Woods, MI, about fighting Medicare claim denials. First off, the most important thing is to keep yourself out of a situation of denials, he says. However, this is easier said than done. Denials often occur when a therapist hasn t met the criteria for skilled therapy services. This could happen if Medicare deems the treatment to all providers including therapists are as follows: 1. Providers must rewrite contracts with business partners. The contracts will ensure that attorneys, auditors, and consultants adhere to HIPAA rules. However, providers will only be responsible for violations committed by their partners if they knew about them. Now is a good time to collect all your written contracts and determine whether you have any informal handshake contracts that should be formalized. This will make it much easier to include the > p. 2 How to guard against denials took too long or the treatment was not necessary for that particular injury. Perry says the longer the patient is treated, the greater the chances are that a bill may be challenged. Another pitfall for many therapists is that the billing codes don t reflect the type of treatment they have provided. People who keep track of this sort of thing have a good idea of what is going on in terms of how many [therapy] visits an injury needs and what has to be > p. 4

2 HIPAA < p. 1 HIPAA rules later on. 2. Patients have the right to read and copy their medical records, as well as to request corrections or amendments. 3. Providers must tell patients about how their information is being used and to whom it is disclosed. 4. Providers must establish privacy-conscious business practices and designate a privacy officer. You should start training staff about privacy issues if you don t already. This has always been an important aspect of practice management and will become critical under HIPAA. For example, stress that staff members should not make even casual comments about patients conditions in the waiting room or at the reception desk, where they may be easily overheard. You should also make sure there are appropriate safeguards in place to protect health information. For example, take a look at your computerized Free resources for BRRR subscribers Beginning this month, our new Web site, www. rehabregs.com, is going to have a special locked section. BRRR subscribers will be able to gain access to the latest news and interesting features that will remain unseen by those who have not subscribed. It is important that you make note of the new user name and password because it will change monthly. The information for March is as follows: User name: Rehab3 Password: dinpkh Each month, please look for this box in order to find the new user name and password. You can also receive the latest news in your inbox each week. Simply call customer service at 800/ and give them your address. records system. Does everyone in your office have access to patients records, or does your system require a password? 5. Individuals, including therapists and their staff, who violate the privacy rules will face new criminal and civil penalties. Violators who unintentionally disclose protected health information will face civil fines of $100 per violation, up to a total of $25,000 per year. If the disclosure was intentional and for personal gain, the violator will face criminal sanctions including fines up to $250,000 and as many as 10 years in prison. The new regulations could exact a heavy toll on all health care providers, but especially smaller organizations. For example, one potentially costly provision is that health care organizations must have a privacy officer someone to ensure that HIPAA regulations are followed. This cost most likely will not be reimbursed, says Nancy Garland, director of government affairs for the American Physical Therapy Association. She advises rehab providers to be cautious when thinking about preparing for the HIPAA regulations. I wouldn t start setting up all of the new procedures [required by HIPAA] yet, until we know more about how the change in the [presidential] administration will impact HIPAA, she says. The final HIPAA regulations were passed by the Clinton administration. When President Bush took office this year, he put on hold many measures that were passed in the last few months of President Clinton s administration, pending review by the current administration. Garland says she suspects HIPAA will not be placed on hold, but has not heard anything definitive. In the meantime, she says providers should not dismiss the new regulations. I would say people need to be aware of them and start thinking about the potential costs, Garland says. Editor s note: To see the final rule on HIPAA, go to Page 2 Briefings on Outpatient Rehab Reimbursement & Regulations March 2001

3 A minute for managers Late collections driving you crazy? Enlist a lawyer s help When collections become difficult, the advice of an attorney certainly carries more collection clout than a letter from a rehab practice. But your practice has to do some preliminary work before getting an attorney involved. It may be financially prudent for you to write a collection letter and have your attorney approve, sign, and mail it out on his or her own letterhead. After all, you ll save money if the letter refers the patient back to your accounts manager rather than to the attorney. However, your attorney should be prepared for calls and other communications from patients. Your attorney should check the language of the letter carefully to make sure the patient isn t misled into thinking that you ve initiated a lawsuit. When using a technique like this especially when your attorney isn t directly involved in your day-to-day collections be sure to review the circumstances of each account before you refer it to the lawyer. Some accounts may require a more expensive customized letter. For most accounts, you can give the sample letter provided to your attorney. This will prevent you from spending too much time on a small account. Try to spend only the amount of time that you consider to be worthwhile with regard to the size of the debt and how much money you think you can collect. In some cases, merely mentioning that the debt is now in the hands of an attorney tells patients that you re serious, and they ll know it s time for them to pay up. These letters can be very effective for patients who are willing to pay but who have been slow. After all, most patients pay closer attention to a certified letter from an attorney than to a certified letter from their therapist. If the patient doesn t respond within your 10-day requirement, you must follow through with the collection action you promised. As with any collection technique, be sure you re conforming to federal, state, and local laws before taking any action. Also, you ll want to be careful not to confuse or upset a patient who is willing to pay but who is having financial difficulties. See below for a sample letter that an attorney might send to a patient on your behalf. JOAN MCCABE, ESQ. Simpson & Smith th Street Bahama, MD / March 1, 2001 Elias Smith 15 Artemis Street Bahama, MD Dear Mr. Smith, Walter Jones, PT, has referred your account to me for collection. In my review of services you received from Mr. Jones, I agree that $ is now due and payable by you to Mr. Jones. I don t want to alarm you, but serious collection efforts must be considered if this debt isn t paid in full within 10 days of the receipt of this notice. In situations like this, a collection agency may be retained or small claims court action may be pursued to secure payment. To avoid this costly experience, please contact Darlene Williams, accounts manager, at Mr. Jones office at 555/ immediately with any questions you may have. Otherwise, this letter will serve as your official notice that I intend to collect on this account. Thank you for your prompt attention to this serious matter. Sincerely, Joan McCabe, Esq. Briefings on Outpatient Rehab Reimbursement & Regulations March 2001 Page 3

4 Denials < p. 1 done, Perry says. To guard against denials, Perry makes the following suggestions: Give only the appropriate care to each of your patients never go longer than needed Be aware of all of your fiscal intermediary s (FI) medical policies If the guidelines are not already in your office, contact your FI for a copy of its local medical review policies Even if you do everything right, there are times when a denial will still come your way. Sometimes a document did not accurately reflect the patient s problem as clearly as it should have, and the reviewer is having trouble understanding the justification for therapy. Briefings on Outpatient Rehab Reimbursement & Regulations Subscriber Services Coupon Start my subscription to BRRR immediately. Please include a $15.00 shipping and handling charge (option 1 or option 3 only). Delivery options (please select one only): Option 1: Print subscription (just $219 for 12 full issues) ORR12 Option 2: Electronic subscription (just $219 for 12 full issues) ORRON Option 3: Print and Electronic subscription (just $274 for 12 full issues of each) ORROB1 To activate your subscription immediately, order at Payment enclosed. Please bill me. Please bill my organization using PO # Charge AmEx MasterCard VISA Signature (Required for authorization) Card # Expires Your credit card bill will reflect a charge to Opus Communications, the publisher of Briefings on Outpatient Rehab Reimbursement & Regulations. Name & Title Organization Address City State ZIP Phone ( ) Fax ( ) (Required for electronic subscriptions) Mail to: Opus Communications, P.O. Box 1168, Marblehead, MA Call: 800/ Fax: 800/ Source code: N0001 Perry suggests keeping the following things in mind when writing treatment notes: Paint a picture through objective measures Record any abnormalities Note whether the patient is experiencing any pain Measure and quantity is the key, Perry says. This is so the reviewer will have a clear picture on what the problem is and why the therapy is needed. Perry said being exact with the notes is the key because the reviewer is not in the office when you re treating the patient. He or she will not understand what you are trying to say if there are no specifics. This is where the documents often fall short, he says. We get sloppy, mainly because we don t like to write. If we did, we would ve probably been English or journalism majors in college. Once you are notified of a denial, Perry says it is important that you study the charts carefully. He Yes, I m finished. He ll need some neuromuscular re-education. Illustration by Dave Harbaugh Page 4 Briefings on Outpatient Rehab Reimbursement & Regulations March 2001

5 cautions that without good documentation, the chances for winning the case are poor. If you lose the case, the FI will not pay for the treatment your office will. If the therapy was already paid in advance, then the intermediary will begin to take money out of subse- quent claims until the denied bill is paid off. Unless you made a legal, written agreement with the patient prior to the treatment, the money will not come from his or her pocket it is illegal to try and recoup your losses this way. Four steps to appealing a Medicare denial The Medicare appeal process can take up a lot of time and ultimately prove to be very expensive says David Perry, PT, MS, owner of Perry Therapeutics in Grosse Pointe Woods, MI. He does not recommend appealing a denied claim unless you are confident that you had the best interests of your patient in mind and that your documentation notes are second to none. Here are four steps for appealing a denied Medicare claim: 1. Write a letter of justification asking for reconsideration. Check your records thoroughly to make sure you followed all rules and regulations and that you met all coverage criteria. Perry says that oftentimes the initial reviewers are not from the therapist s discipline, so something they feel is superfluous may actually be commonplace for most therapists. You can prove this by using professional literature in the justification letter to the fiscal intermediary (FI). 2. Wait for a decision. After the information is submitted, hopefully it will be enough to reverse the case. Perry says the FI will notify you whether the denial is reversed, modified, or kept the same. The FI will use guidelines set by the Health Care Financing Administration (HCFA). 3. Meet with the FI. If you are unsatisfied with the decision, you will then have a face-to-face conference with the FI, where it is up to you to provide additional information to prove your case. 4. Contact an administrative law judge (ALJ). Perry says this is much like a normal courtroom setup. However, the FI is not there to give its side of the story. The ALJ will be very familiar with the case and will rule after hearing your comments. The judge is only concerned with interpreting Congress laws; if you are within those guidelines, chances are pretty good that you will win. HCFA s interpretations are not always accurate, Perry says. If you have a strong case, you should probably take it to an ALJ. The probability for them to overturn a ruling is high, about 85%. Perry explains that the farther you go through an appeals process should correlate to how strongly you feel about your notes. If your notes aren t that good, the best thing to do is to take the financial hit, learn a valuable not to mention expensive lesson, and change your documentation style. To appeal when you know that you are at fault is a waste of time and money. The key to beating a denial is to fight it while you have a leg to stand on, he says. But if your documentation was shoddy, learn your lesson and change your practice so this will never happen again. Briefings on Outpatient Rehab Reimbursement & Regulations March 2001 Page 5

6 Spa + therapy = happy customers Heidi Herman Wright MBA, OTR, CHT, is out to change perceptions about the way some people look at spas. A lot of people think that spas are places to go when you want to pamper yourself while on vacation. Wright is challenging that idea by combining her 14-year-old therapy practice with a new medical spa. Wright said that not only have her profits been increasing, but also her client base. In October, she officially launched the Helping Hands Work Wellness Spa in Indianapolis, IN. This spa offers massage therapy, yoga, and aesthetics (skin care, facials, and waxings). In addition she continues to provide the OT and PT that were the cornerstone of her original practice. Why would she want to expand her old practice? I was ready to do something different, she says. I have always received spa treatments at many resorts, and I believe in the restorative value of spa treatments. Owning a spa was a dream that has become my midlife passion. Nancy Beckley, MS, MBA, president of the Bloomingdale Consulting Group in Brandon, FL, has been to the spa numerous times as a consultant and applauds the chance that Wright took. Everyone has to branch out into wider venues, she says. Reimbursements are down, and it can be tough to get money. Heidi is doing something very unique here and it s working. Beckley speaks to many therapists who want to expand their practices by going into alternative medicine but aren t exactly sure how. She praises Wright for doing it the correct way. The name of the game is research In order to make sure her concept of a therapeu- tic spa would work, Wright did a lot of research. She notes that the spa industry has grown significantly in the last five years. According to an article in USA Today, $5.3 billion were spent by Americans in spas last year, she says. That number had increased $2.1 billion since The number of people going to spas grew more in that time than the number of people who went skiing or to the movies. This was more than a 50% growth in the industry, which she compares to the way the therapy industry exploded during the 1980s. Beckley agrees. Heidi studied a lot, looked at demographics, visited other spas, and she also networked with other therapists, Beckley says. Not to mention that she had a high level of interest in wanting to do what she is now doing. Of course just setting up a facility that offers therapy and spa treatments will not automatically garner customers. Wright had to work diligently to make sure she provides regular OT, while at the same time bringing in new customers who may not need traditional therapy. I had to get out and beat a lot of bushes, she says. We have been doing some print advertising and of course our location is a positive factor. The spa is located about two miles from an upscale mall, which means that customers, as well as its retail workers, pass her place every day. This site was also not picked by chance again, research was the key. Beckley says that Wright s up-scale décor has helped her attract a clientele that may not have known that she was there. Getting the word out Beckley says Wright almost had to devise a new way of marketing because traditionally, there has Page 6 Briefings on Outpatient Rehab Reimbursement & Regulations March 2001

7 not been one surefire set of rules for medical marketing. She spent a lot of time with doctors explaining what she was doing because she did not want to lose their referrals. She also sees huge potential for offering skin care and massage services to postcosmetic patients. The majority of Wright s patients have hand and upper-extremity trauma or overuse problems. After patients with overuse problems receive therapy sessions from Wright, she recommends they continue with a monthly massage. Keeping current and learning new things One of the by-products of owning a new business is the amount of learning that comes every day. This knowledge goes a long way in helping her deal with obstacles. My biggest challenge is keeping and attracting quality employees, she explains. We have five now, but with such a great economy and low unemployment rate people change jobs every two or three years. We take the interviewing process very seriously and only hire high achievers who fit into our entrepreneurial team. Beckley feels that Wright has more than met the challenge. She is doing a lot of innovative things to pay her staff, she says. There s always been a traditional way to pay staff, but she has taken a look at how the workers in spas have been paid and used that here. According to Beckley most spa employees get paid on a different type of reimbursement scale than therapists mostly through commissions. Wright has adopted a blend of hourly plus commissions for her team. Wright says the amount that her practice is getting for therapy reimbursement is somewhere between 80% to 85%, and the average number of visits per patient is seven. In order to better understand billing and reimbursement issues in a new type of practice, Wright suggests going to a seminar on the subject. Last year she attended a reimbursement session given by the American Society of Hand Therapists an organization of which she was once president in Seattle. This was a helpful experience because many of the course instructors are on various American Medical Association coding boards. You also need to be knowledgeable about the policies and procedures of the various payers in your state, she says. I suggest contacting each payer directly and obtaining the name of a supervisor or manager. Then invite that person to your facility and begin building a positive relationship. When you have a reimbursement problem, they will be familiar with your practice. She also recommends that the billing staff members keep current with codes. With Wright s hard work and attention to detail, Beckley predicts a strong future. My guess is that she is going to have to expand soon, she says. Want more information? To get in touch with Heidi Herman Wright, call 317/ or write to Helping Hands Wellness Spa 2727 East 86th Street, Suite 206 Indianapolis, IN To contact Nancy Beckley, call 813/ or To contact the American Society of Hand Therapists, go to call 312/ , or To contact the American Physical Therapy Association, go to or call 800/ To contact the American Occupational Therapy Association, go to or call 301/ Briefings on Outpatient Rehab Reimbursement & Regulations March 2001 Page 7

8 BRRR Q & A The following questions were answered by Nancy J. Beckley, MS, MBA, president of Bloomingdale Consulting Group, in Brandon, FL. To submit a question, please complete the form on the next page and fax it to Christine Seymour, BRRR managing editor, at 781/ Q Do you have any input as to how we should schedule our PT and OT outpatients? I m trying to determine whether we need to overschedule by 25% (which corresponds to our cancellation rate and no-show average) or whether we should move to scheduling patients every 15 minutes rather than every 30 minutes? A In checking with other clinics and practices I found a different answer at each clinic I encountered. In general, I found the cancellation and no-show rate was higher for pediatrics than adult populations. In addition, it is higher at this time of the year in parts of the country that experience inclement weather. I recommend that prior to instituting any changes, you first do a study of your data on no-shows and cancellations. In other words, look for trends. You should ask yourself the following questions: Do certain payers (such as Medicare, managed care, workers comp, etc.), or different age groups miss more appointments than others? Do certain clinical types miss more than others (e.g., orthopedic v. neurological patients)? Are certain time slots more susceptible to cancellations? Next, interview clients who have missed appointments to determine the reason and ask for their recommendations as to how to handle this. Another important aspect of research is getting the input of all members of your staff office staff as well as clinical staff. Armed with this data, you are now ready to begin developing a policy that is right for your clinic. Most clinics that I spoke with indicated the first step they took in eliminating no-shows was to make a reminder call to the patient the day before. Another common theme was to have the therapist stress to the patient the importance of attending all therapy sessions as scheduled in order to receive maximum results. In some instances, where therapists are paid by the number of patients seen, the therapist compensation will suffer in direct proportion to the no-show/cancellation rate. I found one clinic in an aggressive, capitated managed care environment that called the referring physician if the patient was a no-show (this was at the referring physician s request). Q We are currently a PT clinic that does not take Medicare. We are considering becoming a rehab agency or a comprehensive outpatient rehab facility (CORF). What are some of the differences? Do you have to take Medicaid patients if you take Medicare patients in a rehab agency or a CORF? I am assuming that you are considering A becoming a rehab agency or CORF in order to take Medicare patients. If that is the case, you may also want to consider obtaining Medicare standing as a PT in private practice. The regulations are less cumbersome than for rehab agencies or CORFs, and the certification is substantially easier. For helpful information on this, contact the private practice section of the American Physical Therapy Association. Becoming a rehab agency allows you to offer PT, OT, and speech therapy and have extension sites certified under the same Medicare number. This is a perfect vehicle if you have multiple disciplines, several clinic sites, and desire to have nursing home contracts. A CORF allows more services (such as nursing, pulmonary rehab programs, social work, and physician Page 8 Briefings on Outpatient Rehab Reimbursement & Regulations March 2001

9 services), but the requirements to participate are substantially more stringent with no appreciable increase in reimbursement. I recommend looking at a CORF if you have a high number of patients needing multiple therapies or if you have medically complex patients needing skilled nursing. All of these Medicare certification types have been covered previously in this column. For additional research we recommend that you contact your state agency responsible for Medicare surveys and certifications to receive a packet of information that will detail the federal requirements (including Conditions of Participation) and any state requirements such as a certificate of need or licensure. Once you receive Medicare certification, it is not necessary to accept Medicaid patients. However, you may find that Medicaid reimbursement in your state is more favorable if you are a CORF. Q Is it illegal under the new fraud regulations to market to physicians? If so, how do we let them know about our outpatient rehab services, or is our only resource advertising (which is very expensive)? A It is not illegal to market to physicians. It is, however, inadvisable to offer enticements for referrals to your clinic, or to enter into arrangements that provide illegal kickbacks. These activities will get you in trouble with the Office of the Inspector General. Your corporate compliance program should detail the types of marketing activities that are acceptable as well as specifically note those activities that are prohibited. The basis of a good marketing program is to provide information to various markets about your programs and services. When marketing to receive Medicare referrals, I recognize that the main source of those referrals is referring physicians, as patients rely on them to direct them to ancillary services. In general, it is perfectly acceptable to provide referring physicians (and potential referring physicians) information about your facility, programs, and services in the form of brochures, fact sheets, and prescription pads that include directions to your facility. Prescription pads also serve the dual purpose of detailing the type of patient information that is required to establish a rehab plan of care a critical rehab documentation requirement. Before pursuing other marketing activities that are out of the realm of basic communications, I suggest you talk to your compliance officer to ensure that you are in compliance with not only health care regulations but Internal Revenue Service regulations. Editor s note: For more information about compliance, go to and click on outpatient rehab. BRRR Q&A My question is: Please tell us how to contact you in case we need more information. Name: Rehab setting: Fax this form to BRRR Managing Editor Christine Seymour at 781/ Briefings on Outpatient Rehab Reimbursement & Regulations March 2001 Page 9

10 Coding Corner This column was written by David O. Lane, PT, MHS, president of CBL Solutions, Inc., of Oviedo, FL. After heavy lobbying by trade groups such as the American Speech and Hearing Association, Medicare has developed new coverage policies that allow for reimbursement of augmentative communication devices and services. Prior to a national coverage decision that became effective January 1, Medicare did not cover voice prosthetics, speech-generating devices, or related services. In addition, the 2001 Medicare Physician Fee Schedule introduces five new temporary HCPCS codes that describe the services related to the evaluation and modification of speech-generating devices and voice prosthetics. You can find the Health Care Financing Administration s (HCFA) Transmittal 132 which documents the new coverage rules in the Medicare Coverage Issues Manual (HCFA Publication 6). The transmittal announces additions to the durable medical equipment portion of the manual that defines speech-generating devices. Mark your calendars! Coding for speech devices and services Section of the manual says that augmentative communication devices or communicators referred to as speech-generating devices will be considered covered benefits, as determined by the medical staff of the fiscal intermediary (FIs) or carriers. Speech-generating devices must be deemed reasonable and necessary for patients who suffer from severe speech impairments and whose medical conditions warrant the use of these devices. Speech-generating devices are defined as speech aids that provide an individual who has a severe speech impairment with the ability to meet his [or her] functional speaking needs. For more information about what qualifies as a speech-generating device, see the box on p. 11. In some cases, there is a fine line between what Medicare will and will not cover. You would be wise to work with your FI or carrier to address your specific coverage questions before ordering and dispensing equipment you believe to be covered items. New HCPCS codes for speech devices The 2001 Medicare Physician Fee Schedule describes on p five new temporary HCPCS codes for services related to speech-generating devices and voice prosthetics. Just a reminder that the Medicare Correct Coding Initiative edits are updated quarterly. There can be many subtle changes to these edits that can have a dramatic effect on your billing and receivables. Consult your billing office or company about changes. Or get the most complete and up-to-date version of the edits through the National Technical Information Service at 800/ A subscription to the edits is available. Specifically, HCFA replaced CPT (evaluation for use and/or fitting of voice prosthetic or speech-generating device to supplement oral speech) and (modification of voice prosthetic or speech-generating device or supplemental oral speech). HCFA published the following codes, which all include direct one-to-one involvement with the patient by the provider: G0197. Evaluation of the patient for the prescription of a speech-generating device. This Page 10 Briefings on Outpatient Rehab Reimbursement & Regulations March 2001

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