Watch for Regulations Affecting Reimbursement

Improve claims payment rates by knowing what dictates coding and billing policies.

I was presenting at a local chapter meeting when a medical coding student asked a question about the topic I was covering. “I don’t mean to be dense, but why do we do it that way?” she asked. I am sure the look on my face was priceless, but she pressed on. “Did all the coders get together and decide to do things a certain way?” she asked. I realized she was asking why we code the way we do. Great question!

Why We Code the Way We Do

I explained that we generally follow the American Medical Association’s CPT® guidelines for procedural coding, but there are often extenuating circumstances. Federal and state agencies establish rules and regulations that may overrule CPT® guidelines, for example, and payers set coverage and coding policies that may contradict CPT®. It’s up to us, as healthcare business professionals, to know the rules and to know which to follow, when.

Who Makes the Rules for How We Code?

The U.S. Department of Health and Human Services (HHS) is charged with protecting the public’s health. HHS has 11 operating divisions, one of which is the Centers for Medicare & Medicaid Services (CMS).

CMS is responsible for managing the Medicare program and the Children’s Health Insurance Program (CHIP); they also partner with state governments to administer the Medicaid program. Congress grants federal agencies, such as CMS, the authority to regulate activities for which they are responsible. Medicare Administrative Carriers (MACs) process Medicare claims and enforce national coverage determinations put in place by CMS. MACs also establish local coverage determinations applicable to their geographical jurisdictions.

How Does Policy-Making Work?

Congress may pass legislation that requires CMS (and private payers) to make certain policy changes, or they may determine a need to make policy changes on their own. These changes may affect coverage, coding, billing, compliance, and/or other areas of the revenue cycle. CMS publishes several communications to announce policy changes, starting with proposed rules.

CMS publishes proposed rules in the Federal Register, typically with a 60-day comment period, at which time stakeholders can voice their opinions about the changes. (Federal mandates are not up for discussion.) The agency then publishes a final rule in the Federal Register to implement the policy changes. CMS responds to every public comment in the final rule, explaining why it either agrees or disagrees with the commentor. Figure A shows a flow chart depicting the rulemaking process.

When a policy change is finalized, CMS releases a transmittal to the MACs, informing them of the change they must implement. CMS also releases an MLN Matters® article to educate the healthcare community. Applicable healthcare entities must follow the new policy per the effective date.

When Are CMS Rules Usually Published?

CMS publishes annual proposed and final rules to implement policy changes for every aspect of healthcare it oversees, including payment updates to the Medicare Physician Fee Schedule (MPFS), the Outpatient Prospective Payment System (OPPS), the Inpatient Prospective Payment System (IPPS), and many others. Figure B shows the typical timeline for new rules.

CMS published the calendar year (CY) 2022 MPFS proposed rule July 13, 2021, with comments due Sept. 15, 2021 — a 60-day comment period. In this proposed rule, there are several proposed updates to evaluation and management (E/M) coding, critical care, and teaching physician documentation requirements — to name a few. The CY 2022 OPPS proposed rule was published July 19, 2021, with comments due Sept. 17, 2021. CMS traditionally publishes the hospital IPPS proposed rule in the spring and finalizes it in the summer.

Certain events may prompt CMS to shorten the timeline for rulemaking or even skip the comment period. The COVID-19 Public Health Emergency, for example, required quick action by Congress and CMS, and the medical community found itself inundated with policy and code changes almost daily for several months in 2020.

Get the Facts About Rules

Ideally, you’ll have someone in your organization whose job it is to review the Federal Register and share the information organization-wide, someone responsible for implementing the changes, and another to ensure compliance with the new policy. Monitoring regulatory activity is not easy, but it must be done. Here is an example from a recent proposed rule:

The 2021 Outpatient Prospective Payment System/Ambulatory Surgery Center (OPPS/ASC) final rule eliminated 298 services from an Inpatient-only list. The plan outlined a three-year phase out time frame. In the 2022 OPPS/ASC proposed rule, based in public comments, the 298 services will now remain on the list.

This information is vital for any hospital revenue cycle team, and this is just one of the thousands of provisions published in just one of CMS’ rules. Yes, there are more!

Annual final rules are usually hundreds, even thousands, of pages, and they do not make for light reading. Luckily, with each rule, CMS also puts out a fact sheet, which is a high-level overview of the provisions. If you just want an overview to stay informed, fact sheets are sufficient, but if you’re in charge of implementing or overseeing compliance with the policy changes in your office, you’ll need to do more reading.

Consider Applicable Laws

Final rules are not the only legislation that can affect your claims and processes. There are six key laws that regulate the healthcare industry. There are many other laws that supplant or amend those or other laws. Here are a few examples:

  • Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA, also known as the Gramm-Rudman-Hollings Act; P.L. 99-177, as amended) – this act is responsible for the automatic reduction of your Medicare payment, called sequestration.
  • Transparency in Coverage (Price Transparency Initiative; CMS-9915-F) – among other things, requires hospitals to post their standard pricing information online in a machine-readable format and update it yearly.
  • The Protecting Access to Medicare (PAMA) of 2014, Section 218(b) – when a practitioner orders an advanced diagnostic imaging service for a Medicare beneficiary, they are required to consult a qualified Clinical Decision Support Mechanism (CDSM). CDSMs are electronic portals through which appropriate use criteria (AUC) are accessed. The CDSM provides a determination of whether the order adheres to AUC.

There are many more, and each one often amends regulations set forth in others. It’s a tangled mess that keeps us on our toes!

Keep Up With the Times

If you are new to coding, recognize that healthcare has a long regulatory history it’s always changing. If no one in your organization is assessing regulatory sites on a weekly basis, you are probably doing things incorrectly. As coders, we must stay on top of changes, including annual and quarterly updates to ICD-10, CPT®, and HCPCS Level II code sets. When your organization’s processes change due to regulatory updates, do not be afraid to ask what the source is. Check out the source for yourself! Remember, whoever communicated the change is not the authority for the change. In other words, if your compliance department is responsible for sharing the changes, they did not make the rules.


H.J.Res.372 – 99th Congress (1985-1986): Balanced Budget and Emergency Deficit Control Act of 1985 | | Library of Congress

CMS Completes Historic Price Transparency Initiative | CMS

Appropriate Use Criteria Program | CMS

CPB : Online Medical Billing Course

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