Compliance Today - June 2017

Co mpl i a nce To d a y J u n e2

017 is a set “block” reduction. CMS has resolved this rather awkward, and at times unfair, method of reimbursement for outpatient hospital services since January 1, 2014, but this reimbursement strategy is still employed by CMS for ASCs. [Look for upcoming Part 2 of this article where the continuing importance of device credit modifiers to both ASC and hospital outpatient services is covered, as well as how errors in modifier reporting are still making a huge impact in both settings.]

5. Misinterpretation of the terminology:
“replacement” vs. “replaced” devices

“An original device is replaced with a replacement device.” In and of itself, this statement is straightforward, if a bit awkward. But many healthcare providers, including the best-intentioned compliance staff, have inadvertently misinterpreted these terms. Also, an old CMS “clarification” around the verbiage “replaced” and “replacement” in the CMS literature didn’t actually help the situation.

This clarification, contained in the Inpatient Prospective Payment System (IPPS) Proposed and Final Rules for 2012 (published in 2011), 3 centered around implantable medical device credits of 100% as well as credits of 50% or greater; the verbiage was promulgated in that year’s editions of the Federal Register specifically to align the IPPS device credit policy with the OPPS policy in terms of device credit terminology. Unfortunately, the published information emphasized only “replacement devices” as being reportable with the credit when sometimes the vendor, in remitting the credit memo to the hospital or ASC, has labeled the credit (following a replacement procedure) as attributed to the original “replaced” device. It all became a bit muddy.

So to clarify, both CMS and the OIG take
the correct view that when a credit is received,
whether or not the vendor technically attri-
butes the credit for the original replaced device
or the newer replacement device, the credit will
need to be reported if it meets the reportable
threshold. To wit, the issued credit must be
reported against the replacement device pro-
cedure, whether—again—it technically was
listed as a credit for the original replaced device
or as a credit for the newer replacement device.
How is this remedied? The implantable
medical device credit protocol followed by
the OIG auditors is basic and straightforward:
Original (replaced) device taken out, replace-
ment device put in. If a vendor credit for the
device scenario is issued for the replacement
procedure, the credit is reported against
replacement device cost, if said credit meets
the reportable threshold. No gray areas
around “replaced” vs. “replacement.”

Conclusion

As one can tell, full working knowledge of the guidelines and requirements for reporting implantable medical device credits is tantamount to true compliance in this space. Recognition of which device credits must be reported and documenting those device credits accurately requires a level of intimacy with often dynamic CMS guidelines. The challenge can be in meeting that level of knowledge along the entire workflow process, because managing device credits requires implementing an effective cross-departmental strategy. In the next installment, we will cover five more “top federal audit findings” for device credit reporting, highlighting specific provider errors to avoid or prevent and offering “fixes” in case you find your facility in hot water.

Part- 2 of this article will review the remaining five federal audit findings and offer tips on how to avoid some of the most common errors in implantable medical device credit reporting.