The therapy coding overhaul

This year, a seismic shift occurred in how therapists document and choose Current Procedural Terminology (CPT) codes for physical therapy (PT) and occupational therapy (OT) evaluations, but many nursing homes aren’t paying sufficient attention to the potential aftershocks.

Since Jan. 1, therapists in nursing homes have been required to use eight new CPT codes (97161-97168) for PT and OT evaluations and re-evaluations, replacing the previous four-code set. Both the PT and OT code sets include three new evaluation codes—low, moderate and high complexity—and one code for re-evaluation. The Centers for Medicare & Medicaid Services (CMS) finalized this change in the Final Rule for the Calendar 2017 Medicare Physician Fee Schedule, adding the new codes to the 2017 Therapy Code List via Transmittal 3654.

“The new evaluation codes, based on patient complexity and the level of clinical decision-making, represent a different mindset,” says Christine Kroll, OTD, MS, OTR, FAOTA, consultant for Healthcare Therapy Services Inc. in Greenwood, Indiana. “This new way of thinking about evaluations requires more than the therapist just documenting, ‘I evaluated the patient.’”

By and large, many nursing homes have opted to let therapists deal with this change,” Kroll says. “However, providers that want to avoid long-term complications have an active role to play in ensuring that these CPT codes are used correctly.”

The coding changes are also a sign of what’s coming down the road, Kroll adds. “Medicare Part B therapy basically is the only Medicare payment system that is still fee for service, not a prospective payment system. These low, moderate and high complexity evaluation codes for PT and OT are a baby step toward CMS developing an alternative payment system.”

Steps toward compliance

Taking the following steps can help administrative teams in nursing homes reduce the fallout from these CPT code changes:

Realize the stakes are higher than Part BCPT codes must be used by any HIPAA-compliant payer except for limited carve-outs, such as auto or workman’s compensation insurers, says Mark McDavid, OTR, RAC-CT, president of Seagrove Rehab Partners in Santa Rosa Beach, Florida. “Nursing homes must use the new evaluation/re-evaluation CPT codes for multiple payers, including Medicare Part A and Medicare Advantage. While these codes don’t drive payment for these other payers the way they do for Part B, they are documented in the medical record and coded on claims to serve as descriptors of the services that therapy provided.”

Even though CPT codes don’t determine therapy payments under Part A or Medicare Advantage, they can still impact payment in a medical review scenario, Kroll adds. “Historically, there have been situations, especially with Medicare Advantage, where the medical reviewer will say, ‘We don’t pay for this particular CPT code,’ and then re-RUG the claim. So it would be unwise for nursing homes to think that CPT codes cannot affect the medical review of Part A or Medicare Advantage claims.”

Stress the need to use the most appropriate codes.  This year, the low, moderate, and high evaluation codes are all tied to a single Part B payment, McDavid says. “Basically, CMS chose to pay the moderate payment for all three complexity levels in calendar 2017.”

As a result, there have been concerns in the industry that therapists might just pick one evaluation code and use it across the board, Kroll says. “For example, they could choose to use a low-complexity code for all patients because it requires the least documentation. However, in most nursing homes, the majority of therapy patients most likely will be high or moderate complexity due to the case mix.”

Providers need to make sure therapists are choosing the appropriate CPT code for the types of patients they admit and are backing up their codes with documentation in the electronic health record, McDavid says.

Learn the documentation basics.  The new evaluation codes require therapists to document differently. “For PT, four components of the evaluation must be assessed as high, moderate or low complexity to determine what level of complexity the code should be,” says McDavid. These four factors are as follows:

  1. A history with personal factors or comorbidities impacting the therapy plan of care
  2. Examination of body systems using standardized tests
  3. Clinical presentation, i.e., whether the resident is stable, evolving, or unstable
  4. Clinical decision-making, i.e., the level of complexity that the physical therapist is using to do the evaluation

“Those four components should be documented on for the PT evaluation,” McDavid explains. “And the therapist must choose the code that fits the lowest common denominator for the four factors. For example, if the therapist determines that three of the components are high complexity but clinical decision-making is moderate complexity, the therapist most code that evaluation at a moderate because that is the lowest common denominator among all four factors. So the only way to get the high-complexity evaluation code is for all four components to be at that high level.”

For OT, therapists must assess and document on three components to determine what level of complexity the code should be, says McDavid. These three components are as follows:

  1. An occupational profile and medical and therapy history
  2. An assessment with performance deficits with resulting limitations (i.e., How many limitations does the patient have?)
  3. Clinical decision-making

“As with PT, the occupational therapist must determine whether each factor is low, moderate, or high complexity and then choose the CPT code that meets the lowest common denominator,” says McDavid.

Providers should note that standardized tests are now required for PT evaluations—a first for the therapy world, he stresses. “Standardized tests have always been recommended, but they were never required in therapy before. Based on the language in the Final Rule, it is my interpretation that a standardized test is now required as part of a PT evaluation. However, the Final Rule doesn’t mention standardized tests for OT, so while they are highly recommended, they aren’t required.”

Keep therapy software updated.  Many therapists haven’t had to create documentation systems to accommodate the new evaluation/re-evaluation codes, McDavid says. “Most therapy software providers have offered assistance documenting the four components for PT and the three components for OT. However, the key is that your in-house therapy department or contract therapy provider must choose to activate or turn on this new feature.”

Watch for documentation conflicts between nursing and therapy.  “Nursing homes always have had to watch for nursing documentation saying one thing and therapy documentation saying another, and that holds true for these new evaluation/re-evaluation codes as well,” Kroll says. “For example, if therapy documentation shows a resident has multiple comorbidities and is very complex, but nursing documentation doesn’t really reflect a high level of complexity, that potentially could be an issue. It’s OK if therapy has the resident as more independent than nursing does. However, it’s not OK if nursing has them as more independent than therapy.”

Almost every facility has a weekly Medicare meeting, she says. “That would be a good time for the therapist and the clinical team to discuss each therapy patient’s complexity level to ensure they are all on the same page with the documentation.”

Audit supporting documentation.  Nursing homes should review the documentation and coding of the new evaluation codes to ensure they match the level of complexity that patients present with, Kroll says. “There needs to be some type of quality assurance.”

Providers may be able to defer those audits to contract therapy companies. “If auditing is part of their agreement with the therapy company, it’s OK to do that,” Kroll notes. “However, they do need to have that discussion with the therapy company and ask: ‘Are you auditing your charts? How are you doing it to ensure the evaluation codes are being coded accurately to the complexity of the patient?’”

Contract therapy companies should have an incentive to ensure their documentation is appropriate since most contracts indemnify their services if denied under medical review, points out Kroll. “However, providers can’t turn a blind eye. They need to have a good, honest conversation about how the therapy company is making sure the documentation is correct. If medical reviewers identify a trend that is perceived as abuse, the nursing home will always be first held liable, so they need to stay on top of what is happening with therapy.”

Get ready to track Part B data.  The next step on the Part B side will be to striate the therapy evaluation payment to a low, moderate and high payment, McDavid says. “Essentially this means that there will be winners and losers in Part B therapy. Facilities that attract patients who have low comorbidities and low clinical problems will end up with low evaluation codes and lower evaluation payment, but facilities that, for example, attract a neurologically impaired patient with multiple comorbidities and a hip fracture will receive higher payment.”

In the Final Rule, CMS noted that it needed more data—likely an entire year’s worth— to evaluate utilization of the evaluation codes and set individualized rates that are appropriate and meet budget-neutrality requirements. “While CMS could striate payment for the evaluation codes in calendar 2018, it’s unlikely to happen that quickly,” Kroll surmises.

However, the timetable won’t be known until July when CMS issues the Proposed Rule for the Calendar 2018 Medicare Physician Fee Schedule. “If striated payment is in play for 2018, providers will quickly need to begin reviewing what types of Part B therapy patients they are admitting and what types of CPT codes their therapists are choosing for evaluations to see how striation could impact next year’s Part B payment,” McDavid says.

Caralyn Davis is a freelance writer in Asheville, N.C.


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