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Claims denied

New software could help TMH avoid loss on Medicare claims

The Memorial Hospital is implementing software that could save $50,000 a year or more in unpaid Medicare claims.

Currently, Medicare patients who undergo physician-requested tests at TMH may or may not be covered by Medicare in the end.

Local Medicare Review Policies (LMRPs) establish guidelines for the payment of claims for testing and procedures based on an individual patient’s diagnosis, according to Hospital Administrator Randy Phelps.

When a patient’s diagnosis doesn’t explicitly call for a given test, Medicare, or the “fiscal intermediary” acting on behalf of the government program, will deny payment of the claim. In that case the patient cannot be charged, so the hospital loses that money.

“When we do a test and it fails to comply with the LMRPs, we get denied payment,” Phelps said.

The Memorial Hospital lost $41,410 in unpaid Medicare claims in the nine months in which the claims were tracked in 2003, according to Doris Sadvar, one of TMH’s Medicare billers.

A new software called Info-X, which TMH recently purchased for $8,500, can inform the hospital and the patient that Medicare will not cover a certain procedure. And the software performs the check at the “point of service,” which could be the laboratory or the radiology department, for example.

Instead of discovering, after billing is complete, that Medicare will not cover a procedure, the hospital learns of the discrepancy much sooner.

“It identifies the tests Medicare will not pay for,” Sadvar said.

At that point the hospital has several options.

The hospital informs the patient that the test or procedure likely will not be covered by Medicare. The hospital can ask the patient to sign an “advance beneficiary notice,” which shifts responsibility to the patient in the event the procedure is not covered by Medicare. If the patient does not wish to assume responsibility for paying the claim, he or she can refuse service.

There’s a third possibility.

“But we can also call the physician and see if a diagnosis is overlooked,” Sadvar said.

Although physicians orders and the diagnoses behind those orders are written in English, hospital staff must convert those diagnoses to an “ICD-9” code for Medicare billing.

“As far as Medicare is concerned, (the diagnosis) they see from us is a code,” Sadvar said.

If the code and the LMRP guidelines aren’t compatible, it doesn’t necessarily mean the proposed laboratory test or procedure isn’t warranted. It may simply mean the doctor didn’t specify the correct diagnosis.

At this point, TMH can call the doctor, who may revise the diagnosis.

There are times, Phelps said, when the Medicare review policies are at odds with actual medical facts. A patient’s medication may explicitly call for a test the review policies forbid, for example. The actual drug packaging may demand lab testing that conflicts with the LMRPs.

Cases like these periodically come under review and the LMRPs are changed accordingly, Phelps said. The policies are constantly being updated.

Fortunately, the new Info-X software frequently is updated as well. TMH can download the changes as soon as they take effect, keeping the software up-to-date.

While the majority of the unpaid claims result from laboratory tests, Medicare has expanded the kinds of services that come under scrutiny, according to Chris Carr, who works with Sadvar in TMH’s patient financial services department. Increasingly, X-rays and surgeries also must comply strictly with the LMRPs. In the past, surgery and X-ray claims weren’t nearly as closely watched, Carr said.

“The more they deny, the more we have to check,” Carr said.

Jeremy Browning can be reached at 824-7031 or jbrowning@craigdailypress.com.