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Many EMS managers are familiar with the concept of benchmarking. Whether used for monitoring and improving financial performance, clinical care or other key areas of EMS operations, the consistent measurement of defined parameters over time can yield critical information for management decision-making. With Medicare and Medicaid audits, investigations, overpayment recoveries and other enforcement activity reaching an all-time high, EMS managers must add a new set of metrics to their tool kit: compliance benchmarking.
As with any other type of benchmarking, EMS agencies can monitor critical aspects of billing compliance with specific, measurable performance parameters. The metrics we will discuss below were first presented at the Page, Wolfberg & Wirth Executive Institute. We call these “Compliance Performance Indicators,” or CPIs for short. Here are some of the CPIs that your agency can most likely implement immediately within your current software reporting capabilities.
One of the most fundamental aspects of compliance benchmarking is to measure your service mix. This is a CPI that tracks the percentage of ALS, BLS, specialty care transport, emergency and non-emergency calls your agency handles. In recent years, there have been a number of qui tam whistleblower cases and other enforcement actions against all-9-1-1 EMS agencies alleging that they overbilled Medicare for ALS services. These systems deployed paramedics on every call, and then billed substantially all of their calls at the ALS level, believing that the performance of an ALS assessment justified all ALS-level billing.
However, Medicare’s ALS assessment rule first requires that there be a qualifying ALS-level emergency dispatch (among other things) in order to properly bill for an ALS assessment. In some cases, a full 100% of some agencies’ claims were being billed as ALS emergencies, but Medicare’s own statistics show that the national percentage of ALS to BLS emergency claims is about 67–33%. So, monitoring your service mix is critical to knowing whether a compliance issue may be lurking in your billing.
Other important service mix metrics to benchmark include the percentage of repetitive patient transports, especially dialysis, which are seen as a high compliance-risk area. Also, measuring trends in your agency’s performance of discharges from a healthcare facility to a patient’s home could yield helpful compliance metrics, as many audits have questioned the medical necessity of
these types of ambulance transports.
Likewise, payer mix is equally important to assessing and improving your agency’s compliance. Payer mix refers to the relative percentages of Medicare, Medicaid, commercially insured and private-pay patients you serve. Knowing your payer mix can help you look at important compliance trends in your agency.
For instance, a high percentage of “self-pay” patients may reveal that your agency isn’t doing an adequate job of capturing insurance information or identifying proper payment sources for obtaining your agency’s legitimate reimbursement. A high percentage of write-offs may show that your agency may be improperly waiving copayments or other patient balances in violation of federal law. A percentage of Medicare claims that is out of proportion with the demographics of your service area may show that Medicare is being overbilled for some services.
One standard compliance performance indicator used by Medicare, the Office of the Inspector General (OIG) and other enforcement agencies should likewise be part of your agency’s compliance benchmarking: overpayment rate (the OIG refers to it as a “billing error rate,” but the term “overpayment rate” is more descriptive). This is derived by auditing a random sample of claims over a specific time period and calculating the dollar amount o overpayments divided by the total dollar amount of claims paid in the same sample.
Overpayments are any funds received in excess of what was properly due and payable. The OIG uses a 5% overpayment rate benchmark to trigger full, statistically valid random sampling in its Corporate Integrity Agreements.
Credit balances & refunds
Speaking of overpayments, the Federal False Claims Act was amended a few years ago to require healthcare providers to refund any Medicare overpayments within 60 days of being identified, or they become false claims under the Act. This means that all EMS agencies must have an active process in place to identify overpayments and return them to Medicare within 60 days.
Therefore, your compliance benchmarking program must track “net days in credit balance,” a CPI that monitors the processing of overpayment refunds and the aging of your credit balance—e.g., at 20 days, 30 days and 40 days. As your credit balances start to creep toward 60 days, you may wander into false claims territory if your Medicare overpayments are not refunded within this federal statutory deadline.
Denied claims ratio
The denied claims ratio looks at the percentage of denied claims (i.e., the number of completely or partially denied claims divided by the total claims submitted). By tracking this metric over time, you can help identify potential trouble spots in your compliance landscape.
For instance, if you see a sudden or gradual spike in denied Medicare claims, it may reveal a problem with your procedure coding or modifier usage. It may also reveal underlying issues in documentation of medical necessity by your field providers. It can reveal errors committed by Medicare or other insurers. Your denied claims ratio can be evaluated for each of your major payers (e.g.,
Medicare or Medicaid) to spot potential problems.
Claims billed for denial
Medicare is paying increased attention to the submission of non-covered claims by healthcare providers. Providers may be required to submit claims to Medicare for non-covered services in two circumstances: 1) when the beneficiary requests it (since that is what triggers their right to an appeal); or 2) for “coordination of benefits” purposes (i.e., when a Medicare denial might be required to obtain reimbursement from a secondary insurer). However, submitting a claim to Medicare for a non-covered service has risks if not done properly.
Providers are required to use certain “modifiers” on their claims to inform Medicare that the services aren’t covered. The most commonly used modifiers for this purpose are GY (Notice of Liability Not Issued, Not Required Under Payer Policy), GA (Waiver of Liability Statement Issued as Required by Payer Policy) and GZ (Item or Service Expected to Be Denied as Not Reasonable
If these non-covered service modifiers are used too sparingly, it may indicate that Medicare is being improperly billed for payment instead of being billed for denial. If the modifiers are used too frequently, it may signal that the provider is attempting to bypass Medicare’s payment limitations for covered service and hold the patient responsible for the entire balance (i.e., telling Medicare that the service isn’t covered when it really is, so the provider can bill the patient for 100% percent of its charges, instead of accepting the lower Medicare fee schedule amount).
Because both the underuse and overuse of non-covered service modifiers can raise compliance risks, EMS agencies must measure their usage of these GY, GA and GZ modifiers and respond to deviations. Although there’s no national data of which I’m aware to compare appropriate use rates for these modifiers, agencies should track them internally over time to spot potential compliance risks that may arise.
A final caveat
When measuring any performance indicators, be sure you fully understand the implications of the metrics you’re evaluating, and don’t be deceived. Recognize that metrics that appear positive may really be masking other problems, and vice versa.
For instance, if your organization uses an outside collection agency for delinquent accounts, and reports that they have a whopping 45% collection rate, it may make the collection agency look great, but in reality it is probably a reflection of the fact that your agency is sending accounts to collections that have not been properly worked in the front-end billing process before being sent to collections. In other words, your agency may really be sending easily collectible accounts instead of delinquent accounts to the collection agency, which means you are paying way more than necessary to collect the same amount of money. A good “back end” collection rate may only be a symptom of a flawed “front end” billing process.
These are just some of the CPIs that can be used to track critical areas of your agency’s compliance. Remember, compliance benchmarking can be done at intervals you select (e.g., monthly, quarterly, annually or all of the above), and you can track these CPIs or others that are important to your service. It’s important that your CPIs be measured consistently over time.
In addition, your metrics will be meaningful only if you use a consistent method to measure them. In other words, if you change the calculation formula for certain CPIs from time to time, you can’t make meaningful comparisons to earlier points in time; that would be like comparing apples to oranges. Consistency in the measurement of your CPIs is critical for the results to allow for meaningful management decision-making.