Top 10 Outpatient Billing Errors, and How to Fix Them

May 1, 2007

With increased referrals to the outpatient department, hospitals must monitor outpatient revenues to remain financially competitive in today's market,

BALTIMORE—"With increased referrals to the outpatient department, hospitals must monitor outpatient revenues to remain financially competitive in today's market," Karen O. Marlo, MPP, said at the Association of Community Cancer Centers (ACCC) 33rd Annual Meeting.

Ms. Marlo stressed that hospital outpatient departments need to be aware of billing pitfalls and learn how to avoid or correct them to minimize denials and delays in payments.

Here are Ms. Marlo's top 10 hospital outpatient billing errors, along with the solutions:

# 10 Right Patient, Wrong Insurance Card

Denial reason: Expenses incurred prior to coverage or after coverage terminated; noncovered services.

Solution: Verify (re-verify if necessary) patient's eligibility prior to rendering service. Document effective date of coverage, service allowed under patient's plan, and level of benefits (should co-payment be collected?).

# 9 And Doctor, You Are . . . ?

Denial reason: Provider number not valid or not included.

Solution: Effective May 23, 2007, all providers must include the National Provider Identifier (NPI) number on the uniform bill form (UB-04) (FL 56).

# 8 He Came to the Hospital for That?

Denial reason: Missing diagnosis codes or diagnosis code unrelated to the service/procedure. Note: "History of" codes mean the condition is resolved. Don't use if patient is still being treated.

Solution: Ensure that all appropriate diagnosis codes are provided in FL 66 (Diagnosis and Procedure Code Qualifier) and that the diagnoses match the service.

# 7 The 90's Are Over, So Is 2006

Denial reason: Invalid, deleted, or changed diagnosis code; diagnosis not coded to highest degree of specificity.

Solution: Ensure systems are up to date to account for changes in diagnosis codes.

# 6 Annual Code Frenzy

Denial reason: Payment denied due to deleted procedure code.

Solution: In 2006, OPPS (outpatient prospective payment system) used revised CPT drug administration codes and newly created "C" codes to replace CPT codes that included "concurrent, sequential, etc" descriptors. In 2007, OPPS uses only CPT codes for drug administration services.

# 5 Chemo, Not Ampho

Denial reason: Charge/service denied (or underpaid) due to invalid HCPCS (healthcare common procedure coding system) code.

Solution: Transposed numbers can confuse a payer. For example: J3490 "Unclassified drugs" can often be transposed as J4390 or J9340. Ensure system checks for valid HCPCS codes.

# 4 Revenue Code Crosswalks

Denial reason: Whether drug is paid within procedure Ambulatory Payment Classification (APC) or separately.

Solution: For Medicare, separately payable drugs should be billed under revenue code 636 (drugs requiring detailed coding) instead of 25X (general pharmacy); include correct HCPCS code.

# 3 'Buy One' Doesn't Mean 'Get One Free'

Denial reason: Claim denied because of incorrect units (too many or too few to support medical necessity); payment less than expected.

Solution: Each HCPCS code has its own unit measure. Ensure that the unit field reflects individual HCPCS code units so that payment is appropriate for the total amount of drug utilized.

# 2 You Can't Do That With That

Denial reason: Correct coding initiative (CCI) designates the procedures as bundled or mutually exclusive.

Solution: Check multiple procedure billing against CCI; CMS posts CCIs on their website with separate files for physician offices and hospital outpatient departments.

# 1 Prove It

Denial reason: Services deemed not "medically necessary," and payment denied because coverage guidelines were not met.

Solution: Ensure awareness of and adherence to coverage policies/local coverage determinations (LCDs). In cases where medical necessity may be questioned, consider filing paper claims with supporting documentation. If asked, be prepared to provide medical record documentation to support claims.

Ms. Marlo urged physicians to make sure that their compliance software is regularly updated and that documentation of medical necessity is part of standard office protocol. "Continue to educate your staff on appropriate billing and coding. But most important, stay current. It is essential to your bottom line," she concluded.