When hospital labs disregard AMA-approved panels of tests in favor of custom panels, they invite both regulatory scrutiny and potential payment denials. But hospitals sometimes take this risk because “there’s still the tendency to want to please physicians who want different combinations” of tests rather than the predetermined bundle on the panels, said Los Angeles consultant Jeffrey Sinaiko.

This is one example of the challenges faced simultaneously by compliance and revenue cycle departments. Medicare auditors could accuse the hospitals of false claims if they unbundle tests that should have been billed together or bill for more tests included in a custom panel than necessary. Or if the claims are denied, the hospital loses money for tests that were billed appropriately.

Artificial divisions between the revenue cycle and compliance departments can hamper the effectiveness of hospital operations, Sinaiko and Washington, D.C., attorney David Matyas said during a recent Health Care Compliance Assn. audioconference. Though each has its own role in the organization, there is “maximum impact and benefit” if compliance and revenue cycle work together. They address many of the same issues, but revenue cycle and compliance can’t be merged because compliance must maintain its independence, Sinaiko says, adding: “Why not do everything possible to make sure there is as much information shared that can lead to performance improvement as opposed to keeping it siloed?”

Site of Service Affects Compliance, Revenue

Site of service is a hot topic that straddles the two worlds of compliance and revenue cycle, with all kinds of ripple effects. “We are seeing a significant increase in the number of transactions that take place between doctors and hospitals, and many include a change of setting,” says Sinaiko, president of Sinaiko Healthcare Consulting. “There is a lot of confusion with respect to the proper billing based on differences that exist by site — either hospital-based or physician office, particularly when there are changes in status.” With greater hospital-physician integration, private-practice physicians might switch to provider-based clinics (perhaps through an employment arrangement). That triggers all kinds of billing and coding changes.

For example, while in private practice, physicians may have provided chemotherapy, with a nurse practitioner (NP) overseeing the infusion and the chemo services billed “incident to” the physician’s professional services. Claims were submitted under the physician’s National Provider Identifier (NPI) and reimbursement was credited to the physician even though the services were provided by the NP. Now that the physicians are part of the health system, they may offer chemo in a hospital-based infusion therapy space, with hospital-employed NPs overseeing the chemo. However, Medicare forbids incident-to billing in any hospital setting. That means the services are billed under the NP’s NPI and paid at 85% of the Medicare physician payment rate. “If this is an integrated health system with a central business office, they need to really make sure that the IT system and CDM [charge description master] are set up to recognize this difference and make sure it’s right,” Sinaiko said. “If the physicians are billing separately for their own professional fees and still billing as they always have,” that must stop.

Site of service is a risk from other angles as well. If a freestanding surgery center is converted to a hospital-based surgery center, “there may be opportunities for significant additional revenue depending on the services and specialty,” Sinaiko says. He says hospitals often lose revenue when they don’t update codes or the site of service in the CDM, especially when things change due to integration.

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