June 15, 2015

H.R. 2652: A Provider Liability in Disguise?

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On June 4, a new bill titled “Protecting Patients and Physicians Against Coding Act of 2015” (H.R. 2652) was introduced by U.S. Rep. Gary Palmer (R-AL) in the U.S. House of Representatives. With 35 co-sponsors as of June 10, the bill proposes a two-year ICD-10 grace period to allow physicians and healthcare providers to transition to the new coding set with no further implementation delays.

According to Congressman Palmer, the bill is critical since smaller physician practices are still not fully prepared for the ICD-10 transition to date. Rural practices are also at risk because they too are behind in their preparations. He states that “patient care should not suffer” due to the implementation of ICD-10 on Oct. 1.   

The two-year grace period would protect providers from claims denials from the Centers for Medicare & Medicaid Services (CMS) coming as a direct result of coding errors. It offers providers a reprieve from the consequences of immediate denials that could impact revenue and operations. The bill generously extends leniency in not withholding payment and applying penalties during the expected settings among the healthcare providers. Incorrectly coded claims — better yet, those not meeting the necessary level or degree of accuracy, and not just the highest specificity – would not be denied and rejected. The bill allows providers to be paid for two years even with incorrect ICD-10 codes.

Yet herein lies a potential problem if H.R. 2652 is passed:

Perhaps six months is reasonable, but two years could be problematic. While it sounds enticing to have all claims paid regardless of coding accuracy among small physician groups and the rural health sector, this can translate to a massive risk in terms of audits. If the bill is passed, there could be a day of reckoning when Recovery Auditors (RACs) invite themselves to your office to sift through medical records to determine whether improper payments have been made.

This is a long and arduous process — it’s complex, burdensome, and simply a nuisance to all providers, regardless of size, especially in the event of negative findings coming with recoupment demands. An audit is not a one-time visit. It’s not an inconsequential event. Audits are systematic and concurrent to organizational and clinical operations, promising to disrupt schedules, workflow, and overall daily operations. High costs associated with the process, administrative overload, lengthy legal processes for appeals, and repayment concerns all are significant issues that will need to be considered if the bill is passed.

Physicians already have been concerned about increasing levels of audits unrelated to ICD-10 for some time. However, because of ICD-10’s level of specificity, laterality, and higher degree of accuracy in identifying patient condition and current state, it should not in itself increase the likelihood of audits.

In previous articles, I’ve noted that although its implementation may be cumbersome, ICD-10 should have an “audit–protective” effect. Due to the more thorough clinical documentation required and more specific codes available, ICD-10 will better justify medical necessity and reimbursement for care and procedures rendered. I’ve also noted previously that in some instances, ICD-10 may even shorten audit duration, and perhaps even reduce the frequency.

Yet if H.R. 2652 is passed, any and all audit-protective effect of ICD-10 will be null and void. Congressman Palmer’s bill will almost guarantee a RAC visit for all providers that will submit claims with ICD-10 codes between Oct. 1, 2015 and Sept. 30, 2017, since inaccurate ICD-10 codes apparently will be used without regard to specificity, accuracy, and last but not least, fraud audits.

CMS surely cannot afford a bill that condones “runaway costs” through lenient reimbursement strategies at a time when fraud and abuse seem to be so rampant in healthcare.

As it is, U.S. healthcare costs continue to escalate due to a variety of factors. Can CMS really afford allowing providers the luxury of payment without accountability for accuracy and proof through documented medical records? Are the two years of unrestricted payment worth the price to providers of facing an inevitable RAC audit, with a high likelihood for recoupment demands? Is this bill really going to help anyone, long-term? Is it opening up the doors for more fraud? Have legislators truly considered what it would cost CMS to conduct a large-scale, industry-wide RAC audit campaign after two years of possible improper payments? Providers will spend the reimbursement for operations as soon as they receive it. Are we asking them to put it in escrow somewhere to avoid spending it in the event of an audit with recoupment demands two years later? Is this bill setting up providers for more financial and operational headaches than it promises to solve? Is there a better middle ground that protects the interests of providers, but minimizes their exposure?

It would behoove legislators and the healthcare industry to consider the comprehensive ramifications of H.R. 2652. “Receive payment now but maybe give it back later” is not good policy.  

H.R. 2652 might actually be a provider liability in disguise, contrary to the intent of lawmakers.

About the Author

Juliet Santos is the ICD-10 principal for Leidos Health. Santos was formerly the senior director for HIMSS Business Centered Systems and was the EVP for the Lott QA Group. She played key roles in the creation of the ICD-10 PlayBook, ICD-10 National Pilot Program, and the ICD-10 National Testing Platform.

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Juliet A. Santos, MSN, CCRN, FNP-BC

Juliet Santos is the ICD-10 principal consultant for Leidos Health. Santos formerly was EVP of Lott QA Group and assisted with the creation of the ICD-10 PlayBook, ICD-10 National Pilot Program, and the ICD-10 National Testing Platform.

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