How to protect your reimbursement as payers narrow payable diagnosis codes

A troubling trend among insurance companies is threatening orthopedic ASCs across the country: narrowing payable diagnosis codes for osteoarthritis of the knee. Surgeons need to prove patients have a very specific diagnosis of knee osteoarthritis before payers will preauthorize surgery. Several payers will no longer preauthorize surgery based on "knee pain" and look for patients to meet certain criteria before an osteoarthritis diagnosis can be applied.

For example, Aetna considers patients with mild-to-moderate osteoarthritis, as calculated by Outerbridge classification I and II, with knee pain as well as mechanical symptoms from loose bodies and meniscal tears candidates for arthroscopic debridement based on medical necessity. The payer considers "arthroscopic debridement for persons with osteoarthritis presenting with knee pain only or with severe osteoarthritis (Outerbridge classification III or IV)" to be experimental.

"If you want to do arthroscopic debridement for people with osteoarthritis presenting with knee pain, you'll have a hard time getting that paid by payers," says Terry Coleman, president of in2itive Business Solutions. "You have to get the preauthorization, and insurance companies are narrowing the payable diagnosis codes. We hope this isn't the beginning of a trend across the board, and we advise ASCs to monitor insurance company policies."

Identify the right diagnosis
According to the Proceedings of the National Academy of Sciences of the United States, knee osteoarthritis has doubled since the mid-20th century. Knee osteoarthritis affects around 19 percent of Americans 45 years old and older due to longer life expectancies and higher body mass index among U.S. adults. The number of Americans with knee pain is expected to increase over the next several years, and those with osteoarthritis will need additional treatment.

Surgeons must be aware of the coverage and preauthorization guidelines for payers and indicate the specific diagnosis on their reports. The knee osteoarthritis diagnosis has specific requirements, and as a result surgeons may shy away from using that diagnosis even when it's appropriate. ASC owners and operators should know the range of acceptable diagnosis codes by payer and ensure surgeons use them for preauthorization.

The ASC must also follow through with claims the physician's office submits after achieving preapproval so the diagnosis codes match.

"If you get an authorization for osteoarthritis and the diagnosis comes through as knee pain, there will be issues getting reimbursement," said Mr. Coleman. "It's more of an issue for the surgery center than the physician practice because we have more skin in the game. It's more important than ever for an ASC to make sure everything is authorized appropriately and not rely on the physician's office to do it."

When an insurance company denies preauthorization, patients have few options to proceed with surgery; they can either contact their insurance company to advocate for coverage or pay for the procedure out of pocket.

How to proceed when surgery is denied
ASCs can take a proactive step to protect against denied preauthorization and payment by negotiating carve-outs in their contracts to fully reimburse for certain CPT codes under diagnoses. Gather data on the full cost and medical necessity of a procedure and then present the data to insurance companies during the negotiation. Surgeons can help pull evidence-based literature and write letters to the payer about why they feel patients should have surgery for a specific diagnosis.

"Go into the contracting process with information," says Mallory Simmons, director of client services at in2itive Business Solutions. "If you know the ASC performs a procedure routinely and have letters to back up why that procedure is necessary for specific diagnosis codes, you will have an advantage during reimbursement negotiations."

Medical societies can also provide resources on medical necessity and coverage for certain diagnoses. The American Academy of Orthopaedic Surgeons released a clinical guideline for treating knee osteoarthritis in 2013, making recommendations for nonsurgical and surgical treatment. The report outlines studies supporting various treatments for knee osteoarthritis as well as the strength of each recommendation.

ASCA also provides advocacy support for surgery centers and patients.

"You have to arm yourself with knowledge," says Ms. Simmons. "Make sure you are getting the preauthorization, even for procedures that seem mundane, and monitor insurance carrier websites weekly. Inform your patients if you come across issues. Then the patients can take the issue back to their insurance carrier and advocate for themselves and the ASC."

If insurance companies continue to balk at coverage when the patient inquires, the surgeon and/or referring physician can write a letter to the insurance company explaining why the patient is a good candidate for surgery. Every time the insurance company updates its coverage policy, be sure to update your contracts to maintain coverage.

Proactively negotiate contracts and track processed claims
Develop keen knowledge of diagnosis codes, especially for orthopedic and spine procedures because many orthopedic and spine codes aren't clearly defined. Arm yourself with knowledge and expertise on each code before heading into contract negotiations and seek carve-outs for the center's high-volume procedure diagnoses to ensure reimbursement. Following the negotiation, keep track of processed claims and conduct regular audits to detect issues and prevent future unpaid or underpaid claims.

Preventative audits can help an ASC detect denial patters for certain procedures and correct minor errors that are responsible for a large percentage of the denials; a small underpayment on one claim becomes much more damaging when the same issue arises on 100 claims. Key points to remember when auditing claims include:

• Keep up with the insurance company's standards and know your center's contract.
• Just because you received payment doesn't mean the claim was coded correctly.
• Focus on diagnosis codes as well as final payment.

"Look for the amount you receive for each code," says Ms. Simmons. "The insurance company could skim off the top if they don't have to pay based on the diagnosis code. The CPT and dollar amount can't be the only information you check on the claim. Get into the details and have a professional organization review your contracts."

Bundled payments
Diagnosis codes will become increasingly important as surgery centers enter into new payment models, such as bundled payments, with private insurers or self-funded employers. A Strategy& report released February 2017 shows 80 percent of payers find bundled payments appealing, and more than half of the hospitals currently participating in bundled payments want to increase the number of procedures and care settings for bundled payments in the future; the trend is similar in the outpatient setting.

"We are seeing more insurance companies being open to bundled payments, and those bundled payments are directly tied to the diagnosis," says Mr. Coleman. "Make sure your patients are good candidates for the bundled payments and obtain carve-outs in the insurance contracts for that."

Maintain lines of communication with payers so you're aware of any new changes or requirements that occur within the bundles, and make sure the ASC and affiliated physicians are providing the right documentation and verification for the value-based reimbursement.

Forty percent of hospitals with bundled payments report achieving 5 percent or more savings, and 57 percent of physicians are willing to adopt bundled payments if payers adopt them as well. Last year CMS released results for the Bundled Payments for Care Improvement program, with 11 of 15 hospitals showing improvement; the Model 2 hospitals saved $864 per episode of care on average. Private payers are taking notice and working with physicians to develop bundled payment contracts.

However, if the diagnosis code is incorrect, the surgery won't apply for the bundled payment and the ASC could lose money on that procedure.

This article is sponsored by in2itive.

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