Medicare
A refresher on Medicare policies and procedures.
BY DONNA McCUNE, C.C.S.-P., C.O.E., San Bernardino, Calif.

The expansion of the scope of optometric practice and therapeutic licensure in recent years has changed the patient base for many optometric practices to include a larger volume of Medicare patients.

The most recent data available from the Centers for Medicare and Medicaid Services (CMS), formerly known as the Health Care Financing Administration (HCFA), indicate that 24 million claims were filed by ophthalmologists and optometrists for office visits in 1999. Of those claims filed, optometrists filed 4.8 million, or 20% of the total.

It pays to understand

If you and your staff have the proper preparation and education, dealing with Medicare is an exciting and challenging opportunity. Without an understanding of the Medicare program structure and basic regulations, however, you're likely to make costly errors.

How much do you know about Medicare? Not sure if what you know is enough? Read on to brush up on the basics.

The basic facts

Established in 1965, the Medicare program was originally called "Health Insurance for the Aged and Disabled." The empowering legislation is Title XVIII of the Social Security Act. Patients enroll in one or a combination of three Parts of Medicare coverage.

1. Part A provides hospital benefits. At age 65, a patient is automatically enrolled and pays no coverage premiums.
2. Part B is supplementary medical insurance and requires the beneficiary to request coverage. Unlike Part A, Part B has an associated premium deducted from the beneficiary's Social Security check.
3. Part C is a managed care Medicare option. The cost associated with Part C plans varies depending on the additional benefits the option provides such as prescription benefits.

Physician services are reimbursed through Medicare Part B. Physicians are defined as M.D.s, D.O.s, O.D.s, D.D.S.s, and D.C.s. Additional Part B benefits include drugs that can't be self-administered, outpatient hospitalization and durable medical equipment (e.g., post-cataract eyeglasses).

Organizational structure

The Office of Inspector General (OIG) is the enforcement arm of the rules and regulations described in the Medicare manual. It monitors the CMS, which contracts with various insurance companies to process the claims filed for reimbursement.

Fiscal intermediaries process Part A claims; Medicare carriers process Part B claims. At present, approximately 20 Medicare Part B carriers exist. Various third-party payers process Part C claims, but it depends on the contract.

Payment rules

Physician services are paid based on a fee schedule. The Medicare fee schedule is updated annually. At the end of the year, all Medicare providers receive a copy of the schedule, which becomes effective on January 1 of the upcoming year.

The Medicare fee schedule identifies each CPT code with the associated reimbursement for a participating provider, as well as the limiting charge for a non-participating provider. The fee schedule is the same for all providers defined as physicians.

Payments are made to either the beneficiary or to the physician who provides the service. Because the insurance benefit belongs to the patient, the provider can't receive payment unless the patient "assigns" the payment to the physician or supplier. The patient does this by signing a "Statement to Permit Payment of Medicare Benefits to Provider, Physicians and Patient." It's more commonly known as the Signature on File/Assignment of Benefits form. (See "Signature on File Form").

Agreement terms

Providers are given a choice whether to "participate" in the Medicare program. Providers who sign a participation agreement with Medicare agree to:

• accept the patient's assignment of benefit
• accept the Medicare fee schedule
• hold the patient responsible for only the deductible and co-insurance.

There are incentives to participate with the Medicare program. A directory of participating providers is available to beneficiaries, and carriers process participating provider claims faster than claims for non-participating providers. A participation agreement is valid for 1 year. The option to change existing status is offered annually to all providers.

Non-participating providers are subject to limiting charges and are required to file claims on behalf of their patients. Coding and documentation rules and regulations apply regardless of your participation status.

Exclusions

Despite your patient's perceptions, Medicare doesn't provide complete medical coverage. Patients are responsible for an annual $100 deductible. Medicare reimburses providers 80% of the Medicare allowable, leaving a 20% liability for the patient. Most patients secure additional co-insurance so they can cover the remaining 20%.

Medicare only pays for services considered reasonable and necessary and excludes those that aren't in Social Security Act §1862(a)(1). The Medicare Carriers Manual §2320 excludes coverage for services such as routine care, preventive care and cosmetic surgery. Vision care examples include refractions, routine eye exams and most glasses (except post-cataract spectacles).

For services that aren't considered medically necessary, the physicians may collect the fee from the patient if the patient signs an "Advance Beneficiary Notice" before the service. This document explains that a specific service that the patient is about to receive will likely be denied by his carrier as not medically necessary, but that he wishes to proceed anyway. To show that a waiver has been signed, append the -GA modifier to the CPT or HCPCS codes that describe the service on your claim.

Coverage clarified

The citation MCM §2320 includes a key coverage point. "The coverage of services rendered by an [optometrist] is dependent on the purpose of the examination rather than on the ultimate diagnosis of the patient's condition. When a beneficiary goes to an [optometrist] with a complaint or symptoms of an eye disease or injury, the [optometrist's] services (except for eye refractions) are covered regardless of the fact that he only prescribed eyeglasses.

However, when a beneficiary goes to his [optometrist] for an eye examination with no specific complaint, the expenses for the examination aren't covered even though as a result of such examination, the doctor discovered a pathologic condition."

Translation: Patients who present with "no problems" or for an annual exam find themselves responsible for payment of their visits even if you find a medical diagnosis. A link between the complaint and the diagnosis is essential.

Regulatory challenges

Your involvement in a federally funded insurance program opens your practice up to potential scrutiny from your local Medicare carrier and possibly the OIG. Governmental actions in the mid-1990s created a heightened awareness of potential fraud and abuse problems in health care. High-profile cases, such as Columbia HCA, made headlines everywhere.

In 1996, the passage of the Health Insurance Portability and Accountability Act (HIPAA) made healthcare fraud a crime. The Balanced Budget Act of 1997 increased civil monetary penalties from $2,000 per occurrence up to $10,000 per occurrence. The government further responded by increasing agency funding and staffing to conduct additional investigations. They also instituted a reward for whistleblowers.

The OIG is responsible for conducting annual audits of the CMS. Although analysis of the past 5 years indicates progress in reducing improper payments, there's still significant room for improvement. The types of errors found in 2000 are contained in "Estimated Improper Payments by Type of Error" on the previous page.

Medicare carriers have been incited to recoup these improper payments by identifying practices that may be filing improper claims for reimbursement.

Better safe than sorry

Education is key to your success when providing care to Medicare beneficiaries and seeking reimbursement from carriers. Your level of risk increases when you and your staff aren't current with coding issues and documentation requirements. Understanding the basic Medicare structure, payment rules and regulations is a starting point to reduce your risk of regulatory criticism.

Donna McCune is a senior consultant with the Corcoran Consulting Group. Contact her at (800) 399-6565, dmccune@corcoranccg.com or visit www.corcoranccg.com to learn more about their consulting services.