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					For March 2012

Table of Contents
Contractor Medical Director Message ........................................................................................ 3
General News ............................................................................................................................ 4
Evaluation and Management Services-Common Comprehensive Error Rate Testing (CERT)
Findings ..................................................................................................................................... 4
Total Joint Replacement - Understanding Documentation Requirements for Inpatient Admission
and the Primary Care Provider’s Involvement ............................................................................ 5
Fax Development Responses Today ......................................................................................... 7
Pharmacy Billing for Drugs Provided "Incident To" a Physician Service ..................................... 8
Additional Provider and Supplier Enrollment Requirements for Fixed Wing and Helicopter Air
Ambulance Operators ...............................................................................................................10
Intensive Behavioral Therapy (IBT) for Cardiovascular Disease (CVD) .....................................11
Therapy Cap Values for Calendar Year (CY) 2012 ...................................................................16
2012 Annual Update to the Therapy Code List ..........................................................................17
Update to Medicare Deductible, Coinsurance and Premium Rates for 2012 .............................18
Screening for Depression in Adults ...........................................................................................20
Screening and Behavioral Counseling Interventions in Primary Care to Reduce Alcohol Misuse
.................................................................................................................................................24
Format Revisions to the Special Incentive Remittance Advice Used to Report Quarterly
Incentive Payments for Health Professional Shortage Areas (HPSAs), the Primary Care
Incentive Payment Program (PCIP), and the HPSA Surgical Incentive Payment Program (HSIP)
 .................................................................................................................................................28
Advanced Diagnostic Imaging (ADI) Accreditation Enrollment Procedures. (Change Request
(CR) 7681 Fully Rescinds and Replaces CR 7177) ...................................................................30
End Stage Renal Disease (ESRD) Prospective Payment System (PPS) and Consolidated Billing

March 2012 Medicare Report                                                                                                                  Page 1
for Limited Part B Services ........................................................................................................32
Use of Revised Remittance Advice Remark Code (RARC) N103 When Denying Services
Furnished to Federally Incarcerated Beneficiaries .....................................................................39
Quarterly Update to Correct Coding Initiative (CCI) Edits, Version 18.1, Effective April 1, 2012 40
Reimbursement.........................................................................................................................41
April 2012 Quarterly Average Sales Price (ASP) Medicare Part B Drug Pricing Files and
Revisions to Prior Quarterly Pricing Files ..................................................................................41
Emergency Update to the CY 2012 Medicare Physician Fee Schedule Database (MPFSDB) ..43
Reasonable Charge Update for 2012 for Splints, Casts, and Certain Intraocular Lenses ..........46
CY 2012 Fee Schedule Update for Durable Medical Equipment, Prosthetics, Orthotics and
Supplies (DMEPOS) .................................................................................................................49
January 2012 Quarterly Average Sales Price (ASP) Medicare Part B Drug Pricing Files and
Revisions to Prior Quarterly Pricing Files ..................................................................................55
Influenza Vaccine Payment Allowances - Annual Update for 2011-2012 Season......................56
Summary of Policies in the Calendar Year (CY) 2012 Medicare Physician Fee Schedule (MPFS)
Final Rule and the Telehealth Originating Site Facility Fee Payment Amount ...........................58
Multiple Procedure Payment Reduction (MPPR) on Certain Diagnostic Imaging Procedures....63
Coverage Issues .......................................................................................................................65
Procedure Code 95951 .............................................................................................................65
New Influenza Virus Vaccine Code ...........................................................................................66
Billing for Donor Post-Kidney Transplant Complication Services ...............................................67
Autologous Cellular Immunotherapy Treatment of Metastatic Prostate Cancer .........................69
Specialty News .........................................................................................................................74
Implementation of the PWK (Paperwork) Segment for X12N Version 5010 ...............................74
January 2012 Update of the Ambulatory Surgery Center (ASC) Payment System ....................76
Electronic Data Interchange (EDI) News ...................................................................................84
New Fax Number for Highmark Medicare Services EDI ............................................................84
Medical Policy ...........................................................................................................................85
Local Coverage Determination (LCD) and Local Coverage Article Updates ..............................85
Education & Training Feedback ................................................................................................87
Request for Education Form .....................................................................................................87
Join our Electronic Mailing Lists ...............................................Error! Bookmark not defined.87




March 2012 Medicare Report                                                                                                          Page 2
Contractor Medical Director Message
As the Vice President of Clinical Affairs, I rely heavily on the excellent work done by our three
Contractor Medical Directors (CMD’s). They provide critical support to our Clinical Affairs staff in many
ways; such as drafting LCD’s, supporting the nurses in our Medical Review and Appeals unit, reviewing
scientific literature related to new treatments and devices, and working closely with CMS and other
CMD’s across the country to help bring consistency to the Medicare Program at a national level. I want to
take this opportunity to publically thank them for their hard work. Listed below is a brief biography of our
three CMD’s; their knowledge and expertise are greatly appreciated by everyone at Highmark Medicare
Services.

Mitchell I. Burken, M.D.

Dr. Burken received his MD degree from the University of Maryland Medical School. He is a Board
Certified Clinical Pathologist. Dr. Burken gained experience in laboratory management, quality
improvement, and epidemiology and technology evaluation while working at the Department of Veterans
Affairs. He has also worked at the CMS central office in the Coverage & Analysis Group, developing
National Coverage Determinations (NCDs). Dr. Burken has over 15 years of diverse Medicare program
experience in a variety of positions; including local coverage policy and program integrity contracting,
and Medicare Advantage

Eileen M. Moynihan, M.D., FACR, FACP

Dr. Eileen Moynihan received her MD degree from the Temple University School of Medicine. She is
boarded in Internal Medicine and Rheumatology. She is a Fellow of the American College of
Rheumatology and the American College of Physicians. Dr. Moynihan is a former president and current
Fellow of the Medical Society of New Jersey and an immediate past board member of both the US Bone
and Joint Initiative and the American College of Rheumatology. Dr. Moynihan has over 20 years of
experience in the Medicare fee for service program.

Mitchell D. Resnick, D.O., MBA, MPH

Dr. Mitch Resnick is a graduate of the Kansas City University of Medicine and Biosciences. He is board
certified in Internal Medicine. Dr. Resnick obtained a Masters of Business Administration degree from
Bryant University and a Masters in Public Health from the University of Massachusetts. Dr. Resnick has
previously served as a medical director for several commercial insurance carriers and has also served as a
medical director in the Medicare Advantage Program.

Robert S. Muscalus, DO
Vice President and Contractor Medical Director
Highmark Medicare Service
robert.muscalus@highmarkmedicareservices.com


March 2012 Medicare Report                                                                            Page 3
General News

Evaluation and Management Services-Common Comprehensive
Error Rate Testing (CERT) Findings
Highmark Medicare Services (HMS), in concert with the Centers for Medicare & Medicaid Services
(CMS), is continuing to focus on lowering the CERT claims paid error rate. Currently, one area of
concern identified in the CERT data is Evaluation and Management Codes. This has lead to HMS
recouping overpayments totaling over $347.00. More importantly, when CMS and CERT extrapolate
these errors to the universe they will account for approximately $17,350,000 in claims payment errors for
the May 2012 report.

The areas of concern are Office or Other Outpatient Services (99201-99205 and 99211-99215), Critical
Care Services (99291-99292), and Hospital Discharge Services (99238-99239). Reviews have found that
the criteria to support these services is not met, more specifically, documentation of a face to face
encounter and time spent with the patient is lacking.

The American Medical Association Current Procedural Terminology (CPT) guidelines define Office or
Other Outpatient Services as “services provided in the physician’s office or in an outpatient or other
ambulatory facility.” The CPT guidelines further state that “professional services are those face to face
services rendered by a physician and reported with a specific CPT code.” The level of service billed
would depend on if the patient was new or established, the amount of documentation to support the level
of three key components (history, examination, and medical decision making), and the amount of time
spent with the patient.

For example, to bill an Evaluation and Management Level of 99201 the documentation must reflect a
problem focused history, a problem focused examination and straightforward medical decision making.
The CPT manual gives further guidance that 99201 is “usually a presenting problem that is self limiting
or minor and the physician typically spends 10 minutes face to face with the patient and/or family.”

Unless the provider is billing based on time spent in counseling and/or coordination of care with the
patient and/or family, the time does not have to specifically be documented for office or other outpatient
evaluation and management codes, as long as the three key components are met for the level billed.

However, with the Critical Care and Hospital Discharge Services, the time is a key component and time
spent caring for the patient must be documented.

The CPT defines critical care services as “direct delivery by a physician of medical care for a critically ill
or critically injured patient. A critical illness or injury acutely impairs one or more vital organ systems
such that there is a high probability of imminent or life threatening deterioration in the patient’s
condition.” There are two codes that are billable for critical care services and these codes are based on
the time the physician spends with the individual patient. The CPT states “time spent with the individual
patient should be recorded in the patient’s record.” CPT code 99291 is critical care services of 30-74
minutes on a given date. CPT code 99292 is an add-on code for each additional block of time, up to 30
minutes, beyond the first 74 minutes. As an example, 90 minutes (one and one half hour) of critical care

March 2012 Medicare Report                                                                              Page 4
time would be billed with 99291 X 1 and 99292 X 1. Keeping in mind that the time spent in the care of
the individual patient must be clearly documented in the patient’s record for the service(s) to be payable
by Medicare.

Hospital Discharge Services are defined, by CPT, as “total duration of time spent by a physician for final
hospital discharge of a patient and includes, final examination of the patient, discussion of the hospital
stay, instructions for continuing care to all relevant caregivers, and preparation of discharge records,
prescriptions, and referral forms.” As with the critical care codes, there are two codes that are billable for
hospital discharge and they are based on the time the physician spends with the patient and/or family.
CPT code 99238 is hospital discharge services of 30 minutes or less and CPT code 99239 is hospital
discharge services of more than 30 minutes. Again, time spent with the patient and each of the criteria
listed (i.e. final examination of the patient) must be clearly documented in the patient’s record for the
service to be payable by Medicare.

Highmark Medicare Services offers training on all Evaluation and Management services on our website in
our Evaluation and Management Center. A listing of our Provider Outreach and Education webinars and
trainings can also be found at this site.

Total Joint Replacement - Understanding Documentation
Requirements for Inpatient Admission and the Primary Care
Provider’s Involvement
Highmark Medicare Services (HMS), in concert with the Centers for Medicare & Medicaid Services
(CMS), is continuing to focus on lowering the Comprehensive Error Rate Testing (CERT) claims paid
error rate. Currently, one area of concern identified in the CERT data is DRG 470- Joint Replacement or
Reattachment of Lower Extremity without major complications and comorbidities. This has lead to HMS
recouping overpayments totaling over $23K. More importantly, when CMS and CERT extrapolate these
errors to the universe they will account for approximately $171,513,654.00 in claims payment errors for
the May 2012 report.

The areas of concern are total knee and total hip replacements. Reviews have found that the criteria to
support the joint replacement is not met, therefore the procedure is determined to be not medically
necessary and the inpatient admission and stay are therefore also denied as not medically necessary.

When claims reporting a total knee replacement procedure are selected by CERT for review, the inpatient
admission and stay are often denied because the procedure code is denied as not medically necessary and
reasonable. The denials are based on the lack of documentation by the provider supporting the signs and
symptoms experienced by the patient and the conservative treatment that was attempted and failed.

In order to meet the criteria for a total knee replacement procedure, all of the following must be
documented in the patient’s medical record and submitted to CERT or Highmark Medicare Services when
requested for medical review:

       Documentation of pain at the knee, including the level of pain and worsening of pain


March 2012 Medicare Report                                                                              Page 5
       Pain that is increased with activity

       Pain that is increased with weight bearing

       Pain that interferes with activities of daily living

       Pain with passive range of motion • Limited range of motion

       Crepitus

       Joint effusion/swelling

An x-ray must be obtained and must have at least two of the following findings:

    •   Subchondral cysts

    •   Subchondral sclerosis

    •   Periarticular osteophytes

    •   Joint subluxation

    •   Joint space narrowing

In addition, the documentation must indicate that there were continued symptoms after a trial of
medication (i.e. NSAIDs) or the contraindication of medication due to the patient’s inability to tolerate.
There must also be documentation of a trail of physical therapy or external joint support greater than or
equal to 12 weeks.

As with knee replacements, reviews have found that the documentation submitted for total hip
replacements does not support the signs and symptoms experienced by the patient and/or that
conservative treatment was trialed and failed. Due to lack of supporting documentation, the total hip
procedure and the inpatient admission are denied as not reasonable and necessary.

In order to meet the criteria for a total hip procedure, all of the following must be documented in the
patient’s medical record

    •   Pain at hip

    •   Pain increased with activity

    •   Pain increased with weight bearing

    •   Pain that interferes with activities of daily living

    •   Pain with passive range of motion

    •   Limited range of motion


March 2012 Medicare Report                                                                                Page 6
    •   Antalgic gait

    •   Again, an x-ray must be obtained and have at least two of the following findings:

    •   Subchondral cysts

    •   Subchondral sclerosis

    •   Periarticular osteophytes

    •   Joint subluxation

    •   Joint space narrowing

As with the total knee replacement, the medical record documentation must indicate continued symptoms
after a trial of medication (i.e. NSAIDs) or the contraindication of medication due to the patient’s inability
to tolerate. There must also be documentation of a trail of physical therapy or external joint support
greater than or equal to 12 weeks.

When a request from the CERT contractor or from Highmark Medicare Services is received by a Part A
Provider to provide documentation to support a total joint replacement, be sure to not only send in the
hospital record, but to also send in the physician office progress notes that support worsening symptoms
not relieved with conservative treatments, as well as confirmation that the total joint replacement surgery
was discussed and agree upon by both the provider and the patient.

Typically, the Part A Provider will submit the hospital record, but will not submit the physician office
progress note. Thus, the Part A claim is denied as not medically necessary due to insufficient
documentation.

The Part A Provider may appeal the denial and submit the pre-surgical documentation which is typically
obtained from the primary care provider who referred the patient for the total joint procedure. As a
primary care provider, you may be receiving calls from the Inpatient Facility’s Compliance or Billing
Department requesting this documentation. Many primary care providers’ offices are questioning if they
should provide this information to the Inpatient Facility. The answer is yes. In fact, when making the
referral for a total joint procedure, the primary care provider should be including the necessary
documentation requirements, as they relate to pre-surgical interventions, in the referral letter to the
surgeon.

Fax Development Responses Today
Were you aware records for an Additional Development Request (ADR) can be faxed directly to
Highmark Medicare Services? The fax to image option allows for documentation to be submitted directly
to Highmark Medicare Services. This feature is available 24 hours a day, 7 days a week.

Fax your ADR response to 1-877-439-5479

For successful submission, a few guidelines must be followed. Faxes should not exceed 200 pages. The
original ADR request must be submitted as the cover sheet to the records. Supporting documentation, or
March 2012 Medicare Report                                                                              Page 7
requested medical records, should follow the ADR letter (cover sheet). Lastly, each ADR request must be
faxed separately. All ADR requests will follow the same guidelines related to timeliness, legibility and
completeness.

To make the fax to image process as efficient as possible, please review the following tips so as to not
delay the review process.

       Fax the original ADR request as the cover letter to the records. Make certain the top of the ADR
        is scanned first; the systems will not be able to scan the ADR if it is submitted with the bottom of
        the ADR is received first. Also, the system is not designed to read the facilities personal fax cover
        sheets.

       Do not highlight medical records. Highlighted medical records do not copy or fax clearly.

       Do not attach a spreadsheet. Spreadsheets with multiple names or Internal Control Numbers
        (ICN) can result in confusion.

       Clearly fax each medical record separately. This will ensure that all medical documentation is
        recorded under the correct ICN.

Review medical records prior to submission to ensure all the documentation requested is provided, and
that the documentation is legible.

As always, we encourage you to submit your ADR responses in a timely manner in order to prevent
unnecessary denials.

Pharmacy Billing for Drugs Provided "Incident To" a Physician
Service
MLN Matters® Number: MM7397 Revised
Related Change Request (CR) #: 7397
Related CR Release Date: December 15, 2011
Effective Date: January 1, 2013
Related CR Transmittal #: R2368CP
Implementation Date: January 1, 2013

Note: This article was revised on December 16, 2011, to reflect the revised CR7397 issued on December
15. The effective and implementation dates were changed. Also, the CR release date, transmittal number,
and the Web address for accessing CR7397 were revised. All other information remains the same.

PROVIDER TYPES AFFECTED
Pharmacies that submit claims for drugs to Medicare contractors (Fiscal Intermediaries (FIs), Carriers,
Regional Home Health Intermediaries (RHHIs), A/B Medicare Administrative Contractors (A/B MACs),
and Durable Medical Equipment MACs) are affected.

WHAT YOU SHOULD KNOW
March 2012 Medicare Report                                                                             Page 8
This article is based on Change Request (CR) 7397, which clarifies policy with respect to restrictions on
pharmacy billing for drugs provided “incident to” a physician service. The CR also clarifies policy for the
local determination of payment limits for drugs that are not nationally determined.
This article notes that CR 7397 rescinds and fully replaces CR 7109. Please be sure your staffs are aware
of this update.

BACKGROUND

Pharmacies billing drugs

Pharmacies may bill Medicare Part B for certain classes of drugs, including immunosuppressive drugs,
oral anti-emetic drugs, oral anti-cancer drugs, and drugs self-administered through any piece of durable
medical equipment.

• Claims for these drugs are generally submitted to the Durable Medical Equipment Medicare
Administrative Contractor (DME MAC). The carrier or A/B MAC will reject these claims as they need to
be sent to the DME MAC.

• In the rare situation where a pharmacy dispenses a drug that will be administered through implanted
DME and a physician’s service will not be utilized to fill the pump with the drug, the claim is submitted
to the A/B MAC or carrier.

The DME MAC, A/B MAC, or carrier will make payment to the pharmacy for these drugs, when deemed
to be covered and reasonable and necessary. All bills submitted to the DME MAC, A/B MAC, or carrier
must be submitted on an assigned basis by the pharmacy.

When drugs may not be billed by pharmacies to Medicare Part B

Pharmacies, suppliers and providers may not bill Medicare Part B for drugs dispensed directly to a
beneficiary for administration “incident to” a physician service, such as refilling an implanted drug pump.
These claims will be denied.

Pharmacies may not bill Medicare Part B for drugs furnished to a physician for administration to a
Medicare beneficiary. When these drugs are administered in the physician’s office to a beneficiary, the
only way these drugs can be billed to Medicare is if the physician purchases the drugs from the pharmacy.
In this case, the drugs are being administered “incident to” a physician’s service and pharmacies may not
bill Medicare Part B under the “incident to” provision.

Payment limits

The payment limits for drugs and biologicals that are not included in the average sales price (ASP)
Medicare Part B Drug Pricing File or Not Otherwise Classified (NOC) Pricing File are based on the
published Wholesale Acquisition Cost (WAC) or invoice pricing, except under the Outpatient Prospective
Payment System (OPPS) where the payment allowance limit is 95 percent of the published average
wholesale price (AWP). In determining the payment limit based on WAC, the payment limit is 106
percent of the lesser of the lowest-priced brand or median generic WAC. Medicare contractors will not
search their files to either retract payment for claims already paid or to retroactively pay claims, but will
March 2012 Medicare Report                                                                             Page 9
adjust claims brought to their attention.

ADDITIONAL INFORMATION

The official instruction, CR 7397 issued to your Medicare contractor regarding this issue may be viewed
at http://www.cms.gov/Transmittals/downloads/R2368CP.pdf on the Centers for Medicare & Medicaid
Services (CMS) website.

The following manual sections regarding billing drugs and biological and “incident to” services may be
helpful:

•“Medicare Claims Processing Manual”, chapter 17, sections 20.1.3 and 50.B, available at
http://www.cms.gov/manuals/downloads/clm104c17.pdf and

•“Medicare Benefit Policy Manual”, chapter 15, sections 50.3 and 60.1, available at
http://www.cms.gov/manuals/Downloads/bp102c15.pdf on the CMS website.

Additional Provider and Supplier Enrollment Requirements for
Fixed Wing and Helicopter Air Ambulance Operators
MLN Matters® Number: MM7363 Revised
Related Change Request (CR) #: 7363
Related CR Release Date: November 21, 2011
Effective Date: February 3, 2012
Related CR Transmittal #: R400PI
Implementation Date: February 3, 2012

Note: This article was revised on November 22, 2011, to reflect a revised CR7363. The article shows a
revised CR release date, transmittal number, and revised Web address for accessing CR7363. All other
information is the same.

PROVIDER TYPES AFFECTED
Ambulance suppliers submitting claims for air ambulance services to Medicare Carriers and A/B
Medicare Administrative Contractors (A/B MACs) are affected by this article.

PROVIDER ACTION NEEDED
This article, based on Change Request (CR) 7363, informs you that, on November 29, 2010, the Centers
for Medicare & Medicaid Services (CMS) published a final rule that clarified the reporting requirements
for air ambulance suppliers. The rule states that within 30 days of any revocation or suspension of a
Federal or State license or certification including Federal Aviation Administration (FAA) certification, an
air ambulance supplier must report the revocation or suspension of its license or certification to the
applicable Medicare contractor.

You must maintain all applicable Federal and State licenses and certifications and report the following
FAA certifications: Specific pilot certification, instrument and medical certifications, and air worthiness

March 2012 Medicare Report                                                                            Page 10
certification.

BACKGROUND
Medicare contractors will ensure that the air ambulance suppliers are consistently meeting all Federal and
State requirements for Medicare enrollment. That process will include accessing the FAA website
available at http://www.faa.gov/about/office_org/headquarters_offices/agc/operations/agc300/reports/ at
least quarterly in order to validate the air ambulance supplier’s licenses and certifications. In addition,

       Medicare contractors will deny enrollment to an air ambulance supplier if you do not maintain
        your FAA certification; and

       Medicare contractors will revoke enrollment to an air ambulance supplier if you do not maintain
        your FAA certification.

ADDITIONAL INFORMATION

The official instruction, CR7363 issued to your carrier and A/B MAC regarding this change may be
viewed at http://www.cms.gov/Transmittals/downloads/R400PI.pdf on the CMS website.

Intensive Behavioral Therapy (IBT) for Cardiovascular Disease
(CVD)
MLN Matters® Number: MM7636
Related Change Request (CR) #: 7636
Related CR Release Date: November 23, 2011
Effective Date: November 8, 2011
Related CR Transmittal #: R137NCD and R2357CP
Implementation Date: December 27 for local Medicare Contractor system edits; April 2, 2012, for
Medicare shared system edits; and July 2, 2012, CWF provider screens and HICR changes

PROVIDER TYPES AFFECTED

Primary care practitioners in a primary care setting such as the beneficiary’s family practice physician,
internal medicine physician, or Nurse Practitioner in the doctor’s office who bill Medicare contractors
(carriers, Fiscal Intermediaries (FIs) or Medicare Administrative Contractors (A/B MACs)) for providing
Intensive Behavioral Therapy (IBT) for Cardiovascular Disease (CVD) to Medicare beneficiaries.

PROVIDER ACTION NEEDED
This article is based on Change Request (CR) 7636 which states that effective for claims with dates of
service on and after November 8, 2011, the Centers for Medicare & Medicaid Services (CMS) covers IBT
for CVD, inclusive of one face-to-face CVD risk reduction visit annually. The Medicare patient receiving
this care must be competent and alert at the time the service is rendered and the service must be furnished
by a qualified primary care physician or other primary care practitioner in a primary care setting. Ensure
that your billing staffs are aware of this update.


March 2012 Medicare Report                                                                          Page 11
BACKGROUND
According to Section 1861 of the Social Security Act, CMS may add coverage of "additional preventive
services" through the National Coverage Determination (NCD) process. The preventive services must
meet all of the following criteria:

    1) Reasonable and necessary for the prevention or early detection of illness or disability;

    2) Recommended with a grade of A or B by the United States Preventive Services Task Force
       (USPSTF); and

    3) Appropriate for individuals entitled to benefits under Part A or enrolled under Part B.

CMS reviewed the USPSTF recommendations and supporting evidence for IBT for CVD and determined
that the criteria listed above was met, enabling CMS to cover this preventive service.

Coverage of IBT for CVD, referred to as a CVD risk reduction visit, consists of the following three
components:

    1) Encouraging aspirin use for the primary prevention of CVD when the benefits outweigh the risks
       for men age 45-79 years and women 55-79 years;

    2) Screening for high blood pressure in adults age 18 years and older; and,

    3) Intensive behavioral counseling to promote a healthy diet for adults with hyperlipidemia,
       hypertension, advancing age, and other known risk factors for cardiovascular and diet-related
       chronic disease.

KEY POINTS

       A new HCPCS code, G0446, Annual, face-to-face IBT for CVD, individual, 15 minutes, will be
        included in the January 2012 updates of the Medicare Physician Fee Schedule Database
        (MPFSDB) and Integrated Outpatient Code Editor (IOCE), effective for services on or after
        November 8, 2011.

       Medicare deductibles and coinsurance do not apply to claim lines containing HCPCS code
        G0446.

       For these services provided on or after November 8, 2011, through December 31, 2011, Medicare
        contractors will apply their pricing to claims for G0446 when billed for IBT for CVD.

       Effective for claims with dates of service on and after November 8, 2011, CMS covers one face-
        to-face CVD risk reduction visit annually for Medicare beneficiaries who are competent and alert
        at the time that counseling is provided, and whose counseling is furnished by a qualified primary
        care physician or other primary care practitioner in a primary care setting.

       For the purposes of this covered service, a primary care setting is defined as one in which there is
        provision of integrated, accessible health care services by clinicians who are accountable for
March 2012 Medicare Report                                                                            Page 12
        addressing a large majority of personal health care needs, developing a sustained partnership with
        patients, and practicing in the context of family and community. The following provider specialty
        types may submit claims for CVD risk reduction visits:

             o   01-General Practice

             o   08-Family Practice

             o   11-Internal Medicine

             o   16-Obstetrics/Gynecology

             o   37-Pediatric Medicine

             o   38-Geriatric Medicine

             o   42-Certified Nurse Midwife

             o   50-Nurse Practitioner

             o   89-Certified Clinical Nurse Specialist

             o   97-Physician Assistant

       Medicare Contractors will pay claims for G0446 only when services are provided for the
        following Place of Service (POS):

             o   11-Physician’s Office;

             o   22-Outpatient Hospital;

             o   49-Independent Clinic ; or,

             o   71-State or local public health clinic.

NOTE: Emergency departments, inpatient hospital settings, ambulatory surgical centers, independent
diagnostic testing facilities, skilled nursing facilities, inpatient rehabilitation facilities, and hospices are
not considered primary care settings under this definition. See below for information relative to these
services billed on institutional claims by RHCs, Type of Bill (TOB) 71X, and FQHCs, TOB 77X.

       The behavioral counseling intervention for aspirin use and healthy diet should be consistent with
        the Five As approach that has been adopted by the USPSTF to describe such services:

             o   Assess: Ask about/assess behavioral health risk(s) and factors affecting choice of
                 behavior change goals/methods.

             o   Advise: Give clear, specific, and personalized behavior change advice, including
                 information about personal health harms and benefits.


March 2012 Medicare Report                                                                                 Page 13
            o   Agree: Collaboratively select appropriate treatment goals and methods based on the
                patient’s interest in and willingness to change the behavior.

            o   Assist: Using behavior change techniques (self-help and/or counseling), aid the patient in
                achieving agreed-upon goals by acquiring the skills, confidence, and
                social/environmental supports for behavior change, supplemented with adjunctive
                medical treatments when appropriate.

            o   Arrange: Schedule follow-up contacts (in person or by telephone) to provide ongoing
                assistance/support and to adjust the treatment plan as needed, including referral to more
                intensive or specialized treatment.

       Medicare contractors do not need to search their files for claims that may have been processed in
        error. However, contractors may adjust claims that are brought to their attention.

CLAIMS PROCESSING/PAYMENT INFORMATION
When IBT for CVD claims are submitted with a POS code that is not applicable, they will be denied
using:

       Claim Adjustment Reason Code (CARC) 58: “Treatment was deemed by the payer to have been
        rendered in an inappropriate or invalid place of service. “ Note: Refer to the 835 Healthcare
        Policy Identification Segment (loop 2110 Service Payment Information REF), if present.

       Remittance Advice Remark Code (RARC) N428: “Not covered when performed in this place of
        service.”

       Group Code PR (Patient Responsibility) assigning financial liability to the beneficiary, if a claim
        is received with a GA modifier indicating a signed Advance Beneficiary Notice (ABN) is on file.

       Group Code CO (Contractual Obligation) assigning financial liability to the provider, if a claim is
        received with a GZ modifier indicating a signed (ABN) is not on file.

Medicare will deny claims for G0446 when provided by provider specialty types other than those
identified above. When such claims are denied, Medicare will use the following messages:

       CARC 185: “The rendering provider is not eligible to perform the service billed.” Note: Refer to
        the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF),
        if present.

       RARC N95: “This provider type/provider specialty may not bill this service.”

       Group Code PR assigning financial liability to the beneficiary, if a claim is received with a GA
        modifier indicating a signed ABN is on file.

       Group Code CO assigning financial liability to the provider, if a claim is received with a GZ
        modifier indicating a signed ABN is not on file.

March 2012 Medicare Report                                                                           Page 14
RHCs using TOB 71X and FQHCs using TOB 77X may submit additional revenue lines containing
G0446 and Medicare will pay those lines based on the all-inclusive payment rate. However, Medicare
will not pay G0446 separately with another encounter/visit on the same day billed on TOBs 71X or 77X.
This does not apply, however, to claims with the Initial Preventive Physical Examination (IPPE)
containing modifier 59 or to 77X claims containing Diabetes Self-Management Training or Medical
Nutrition Training services. If G0446 is billed when an encounter/visit is billed with the same line item
date of service, Medicare will assign:

       Group Code CO to the G0446 revenue line; and

       RARC 97: “The benefit for this service is included in the payment/allowance for another
        service/procedure that has already been adjudicated.” Note: Refer to the 835 Healthcare Policy
        Identification Segment (loop 2110 Service Payment Information REF), if present.

Institutional claims billed by hospital outpatient departments (TOB 13X) will be paid based on the
outpatient prospective payment system. Those billed by Critical Access Hospitals (CAHs) on TOB 85X
will be paid based on reasonable cost, except those G0446 services billed with revenue codes 096X,
097X, or 098X by Method II CAHs will receive 115% of the lesser of the fee schedule amount or
submitted charge. Institutional claims submitted on TOBs other than 13X, 71X, 77X, or 85X will be
denied using the following:

       CARC 170: “Payment is denied when performed/billed by this type of provider.” Note: Refer to
        the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF),
        if present.

       RARC N428: “Not covered when performed in this place of service.”

       Group Code PR assigning financial liability to the beneficiary, if a claim is received with a GA
        modifier indicating a signed ABN is on file.

       Group Code CO assigning financial liability to the provider, if a claim is received with a GZ
        modifier indicating a signed ABN is not on file.

For claims processed on or after April 2, 2012, Medicare will allow payment for G0446 no more than
once in a 12-month period. However, Medicare will allow both a claim for the professional service and,
for TOB 13X and TOB 85X with a revenue code of 96X, 97X, or 98X, a claim for a facility fee. Claim
lines for G0446 that exceed this limit will be denied using:

       CARC 119: “Benefit maximum for this time period or occurrence has been reached.”

       RARC N362: “The number of days or units exceeds our acceptable maximum.”

       Group Code PR assigning financial liability to the beneficiary, if a claim is received with a GA
        modifier indicating a signed ABN is on file.

       Group Code CO assigning financial liability to the provider, if a claim is received with a GZ

March 2012 Medicare Report                                                                          Page 15
        modifier indicating a signed ABN is not on file.

As of July 2, 2012, provider inquiry screens (HUQA, HIQA, HIQH, ELGA, ELGB, ELGH) will display a
next eligibility date for this service.

ADDITIONAL INFORMATION
The official instruction, CR7636, was issued to your Medicare FI, carrier, or A/B MAC regarding this
change via two transmittals. The first transmittal modifies the “National Coverage Determinations
Manual” at http://www.cms.gov/Transmittals/downloads/R137NCD.pdf on the CMS website. The second
transmittal at http://www.cms.gov/Transmittals/downloads/R2357CP.pdf modifies the “Medicare Claims
Processing Manual”.

Therapy Cap Values for Calendar Year (CY) 2012
MLN Matters® Number: MM7529 Revised
Related Change Request (CR) #: 7529
Related CR Release Date: November 18, 2011
Effective Date: January 1, 2012
Related CR Transmittal #: R2351CP
Implementation Date: January 3, 2012

Note: This article was revised on December 7, 2011, to provide a statement in the Background section,
which indicates further changes may be needed if Congress extends the therapy cap exceptions process.
All other information remains the same.

PROVIDER TYPES AFFECTED
Physicians, providers, and suppliers submitting claims to Medicare contractors (carriers, Medicare
Administrative Contractors (MACs), Fiscal Intermediaries (FIs), and/or Regional Home Health
Intermediaries (RHHIs)) for therapy services provided to Medicare beneficiaries.

PROVIDER ACTION NEEDED
This article is based on Change Request (CR) 7529, which describes the Centers for Medicare &
Medicaid Services (CMS) policy for outpatient therapy caps for Calendar Year (CY) 2012. Therapy
caps for 2012 will be $1880.00. Be sure your billing staff is aware of the update.

BACKGROUND

The Balanced Budget Act of 1997, P.L. 105-33, Section 4541(c) set annual caps for Part B Medicare
patients. These limits change annually. The Deficit Reduction Act of 2005 directed the Secretary to
implement a process for exceptions to therapy caps for medically necessary services. The Affordable
Care Act extended the exceptions to therapy caps through December 31, 2010; and, the Medicare and
Medicaid Extenders Act (MMEA) of 2010 extended the therapy caps exceptions through CY 2011. If
Congress extends the therapy cap exceptions process, CMS will provide an update to inform
providers of the details of such extension. Note that the therapy caps apply to outpatient services and

March 2012 Medicare Report                                                                           Page 16
do not apply to Skilled Nursing Facility (SNF) residents in a covered Part A stay, including swing
beds. Rehabilitation services are included within the global Part A per diem payment that the SNF
receives under the prospective payment system (PPS) for the covered stay. Also, therapy caps do not
apply to any therapy services billed under the home Health PPS, inpatient hospitals, or the outpatient
department of hospitals, including critical access hospitals.

ADDITIONAL INFORMATION

The official instruction, CR7529 issued to your carrier, FI, RHHI and A/B MAC regarding this change
may be viewed at http://www.cms.gov/Transmittals/downloads/R2351CP.pdf on the CMS website.

2012 Annual Update to the Therapy Code List
MLN Matters® Number: MM7648
Related Change Request (CR) #: 7648
Related CR Release Date: November 18, 2011
Effective Date: January 1, 2012
Related CR Transmittal #: R2350CP
Implementation Date: January 3, 2012

PROVIDER TYPES AFFECTED
Physicians, therapists, and providers of therapy services billing Medicare Carriers, Fiscal Intermediaries
(FIs), A/B Medicare Administrative Contractors (A/B MACs), and/or Regional Home Health
Intermediaries (RHHIs) for outpatient rehabilitation therapy services should take note of this article.

PROVIDER ACTION NEEDED
This article is based on Change Request (CR) 7648, which updates the therapy code list for Calendar Year
(CY) 2012 with one “Always Therapy” Code 92618, Evaluation for prescription of non-speech-
generating augmentative and alternative communication device, face-to-face with the patient; each
additional 30 minutes (List separately in addition to code for primary procedure). Please make sure your
billing and coding staff are aware of this change.

BACKGROUND

The Social Security Act (Section 1834(k)(5); (see http://www.ssa.gov/OP_Home/ssact/title18/1834.htm)
requires that all claims for outpatient rehabilitation therapy services and all comprehensive outpatient
rehabilitation facility services be reported using a uniform coding system. The Healthcare Common
Procedure Coding System/Current Procedural Terminology 2012 Edition (HCPCS/CPT-4) is the coding
system used for the reporting of these services. CR7648 updates the list of codes that sometimes or
always describe therapy services. The additions, changes, and deletions to the therapy code list reflect
those made in the CY 2011 and 2012 Healthcare Common Procedure Coding System and Current
Procedural Terminology, Fourth Edition (HCPCS/CPT-4). The list of codes can be found at
http://www.cms.gov/TherapyServices/05_Annual_Therapy_Update.asp#TopOfPage on the Centers for
Medicare & Medicaid Services (CMS) website. CR 7648 updates the therapy code list by adding one
“always therapy” code for CY 2012 shown in the table below.
March 2012 Medicare Report                                                                           Page 17
            Therapy Code                                       Descriptor

                                         Evaluation for prescription of non-speech-generating
                                      augmentative and alternative communication device, face-to-
                 92618
                                         face with the patient; each additional 30 minutes (List
                                          separately in addition to code for primary procedure)



ADDITIONAL INFOMATION

The official instruction, CR 7648, issued to your carrier, FI, A/B MAC, and RHHI regarding this change
may be viewed at http://www.cms.gov/Transmittals/downloads/R2350CP.pdf on the CMS website.

Update to Medicare Deductible, Coinsurance and Premium
Rates for 2012
MLN Matters® Number: MM7567 Revised
Related Change Request (CR) #: 7567
Related CR Release Date: December 16, 2011
Effective Date: January 1, 2012
Related CR Transmittal #: R74GI
Implementation Date: January 3, 2012

Note: This article was revised on December 19, 2011, to reflect a revised CR7567 issued on December
16, 2011. In the article, the CR release date, transmittal number, and the Web address for accessing
CR7567 were revised. All other information is the same.

PROVIDER TYPES AFFECTED
Physicians, providers, and suppliers submitting claims to Medicare contractors (carriers, Fiscal
Intermediaries (FIs), A/B Medicare Administrative Contractors (A/B MACs), and/or Regional Home
Health Intermediaries (RHHIs)) for services provided to Medicare beneficiaries.

PROVIDER ACTION NEEDED

This article is based on Change Request (CR) 7567, which provides the Medicare rates for deductible,
coinsurance, and premium payment amounts for Calendar Year (CY) 2012. Be sure billing staffs are
aware of these updates.

BACKGROUND

2012 Part A - Hospital Insurance (HI)
Beneficiaries who use covered Part A services may be subject to deductible and coinsurance
requirements. A beneficiary is responsible for an inpatient hospital deductible amount, which is deducted

March 2012 Medicare Report                                                                         Page 18
from the amount payable by the Medicare program to the hospital, for inpatient hospital services
furnished in a spell of illness. When a beneficiary receives such services for more than 60 days during a
spell of illness, he or she is responsible for a coinsurance amount equal to one-fourth of the inpatient
hospital deductible per-day for the 61st-90th day spent in the hospital.

Note: An individual has 60 lifetime reserve days of coverage, which they may elect to use after the 90th
day in a spell of illness. The coinsurance amount for these days is equal to one-half of the inpatient
hospital deductible.

In addition, a beneficiary is responsible for a coinsurance amount equal to one-eighth of the inpatient
hospital deductible per day for the 21st through the 100th day of Skilled Nursing Facility (SNF) services
furnished during a spell of illness. The 2012 inpatient deductible is $1,156.00. The coinsurance amounts
are shown below in the following table:

                                                                             Skilled Nursing Facility
     Hospital Coinsurance                 Hospital Coinsurance
                                                                                   Coinsurance

                                     Days 91-150 (Lifetime Reserve
           Days 61-90                                                              Days 21-100
                                                Days)

             $289.00                             $578.00                              $144.50



Most individuals age 65 and older, and many disabled individuals under age 65, are insured for Health
Insurance (HI) benefits without a premium payment. The Social Security Act provides that certain aged
and disabled persons who are not insured may voluntarily enroll, but are subject to the payment of a
monthly premium. Since 1994, voluntary enrollees may qualify for a reduced premium if they have 30-39
quarters of covered employment. When voluntary enrollment takes place more than 12 months after a
person’s initial enrollment period, a 2-year 10% penalty is assessed for every year they had the
opportunity to (but failed to) enroll in Part A. The 2012 Part A premiums are as follows:



                        Voluntary Enrollees Part A Premium Schedule for 2012

                Base Premium (BP)                                      $451.00 per month

        Base Premium with 10% Surcharge                                $496.10 per month

                                                           $248.00 per month (for those who have 30-39
        Base Premium with 45% Reduction
                                                                       quarters of coverage)

   Base Premium with 45% Reduction and 10%
                                                                       $272.80 per month
                  Surcharge



March 2012 Medicare Report                                                                          Page 19
2012 Part B - Supplementary Medical Insurance (SMI)
Under Part B of the Supplementary Medical Insurance (SMI) program, all enrollees are subject to a
monthly premium. Most SMI services are subject to an annual deductible and coinsurance (percent of
costs that the enrollee must pay), which are set by statute. When Part B enrollment takes place more than
12 months after a person’s initial enrollment period, there is a permanent 10 percent increase in the
premium for each year the beneficiary could have enrolled and failed to enroll.

       Standard Premium: $99.90 a month

       Deductible: $140.00 a year

       Coinsurance: 20 percent

In addition, some beneficiaries may pay higher premiums based on their incomes. These amounts change
each year. There may be a late-enrollment penalty.

Additional Information

The official instruction, CR7567, issued to your carriers, FIs, A/B MACs, and RHHIs regarding this
change may be viewed at http://www.cms.gov/Transmittals/downloads/R74GI.pdf on the CMS website.

Screening for Depression in Adults
MLN Matters® Number: MM7637
Related Change Request (CR) #: 7637
Related CR Release Date: November 23, 2011
Effective Date: October 14, 2011
Related CR Transmittal #: R139NCD and R2359CP
Implementation Date: April 2, 2012

PROVIDER TYPES AFFECTED
Physicians, non-physician practitioners, Rural Health Clinics (RHCs) and Federally Qualified Health
Centers (FQHCs) who bill Medicare contractors (carriers, Fiscal Intermediaries (FIs), and Medicare
Administrative Contractors (A/B MACs)) for services provided to Medicare beneficiaries are affected.

WHAT YOU NEED TO KNOW
Effective October 14, 2011, Medicare covers annual screening for adults for depression in the primary
care setting that has staff-assisted depression care supports in place to assure accurate diagnosis, effective
treatment, and follow-up.

Medicare contractors will recognize new Healthcare Common Procedure Coding System (HCPCS) code,
G0444, annual depression screening, 15 minutes, as a covered service.

NOTE: This code will appear on the January 2012 Medicare Physicians Fee Schedule update. The Type
of Service (TOS) for HCPCS code G0444 is 1. Effective October 14, 2011, beneficiary coinsurance and
deductibles do not apply to claim lines with annual depression screening, G0444. For Dates of Service on

March 2012 Medicare Report                                                                             Page 20
or after October 14, 2011, through December 31, 2011, Medicare contractors will use their pricing for
paying G0444 and update their HCPCS files accordingly.

BACKGROUND
Among persons older than 65 years, one in six suffers from depression. Depression in older adults is
estimated to occur in 25% of those with other illness including cancer, arthritis, stroke, chronic lung
disease, and cardiovascular disease. Other stressful events, such as the loss of friends and loved ones, are
also risk factors for depression. Opportunities are missed to improve health outcomes when mental illness
is under-recognized and under-treated in primary care settings.

Older adults have the highest risk of suicide of all age groups. These patients are important in the primary
care setting because 50-75% of older adults who commit suicide saw their medical doctor during the prior
month for general medical care, and 39% were seen during the week prior to their death. Symptoms of
major depression that are felt nearly every day include, but are not limited to, feeling sad or empty; less
interest in daily activities; weight loss or gain when not dieting; less ability to think or concentrate;
tearfulness, feelings of worthlessness, and thoughts of death or suicide.

Section1861(ddd) of the Social Security Act permits the Centers for Medicare & Medicaid Services
(CMS) to add coverage of "additional preventive services" through the National Coverage Determination
(NCD) process if all of the following criteria are met:

       Reasonable and necessary for the prevention or early detection of illness or disability;

       Recommended with a grade of A or B by the United States Preventive Services Task Force
        (USPSTF); and,

       Appropriate for individuals entitled to benefits under Part A or enrolled under Part B.

Screening for depression in adults is recommended with a grade of B by the USPSTF. The CMS reviewed
the USPSTF recommendations and supporting evidence for screening depression in adults preventive
services and determined that the criteria listed above was met, enabling the CMS to cover these
preventive services.

Thus, effective October 14, 2011, Medicare covers annual screening for adults for depression in a primary
care setting, as defined below, that has staff-assisted depression care supports in place to assure accurate
diagnosis, effective treatment, and follow-up. For the purposes of this NCD:

       A primary care setting is defined as one in which there is provision of integrated, accessible
        health care services by clinicians who are accountable for addressing a large majority of personal
        health care needs, developing a sustained partnership with patients, and practicing in the context
        of family and community. Emergency departments, inpatient hospital settings, ambulatory
        surgical centers, independent diagnostic testing facilities, skilled nursing facilities, inpatient
        rehabilitation facilities, and hospice are not considered primary care settings under this definition.

       Effective for claims with Dates of Service on and after April 2, 2012, contractors shall pay for
        annual depression screening claims, G0444, only when services are provided at the following
March 2012 Medicare Report                                                                             Page 21
        Places of Service (POS):

            o   11 - Office

            o   22 - Outpatient hospital

            o   49 - Independent clinic

            o   50 – FQHCs

            o   71 - State or local public health clinic

            o   72 – RHCs

       At a minimum level, staff-assisted depression care supports consist of clinical staff (e.g., nurse,
        Physician Assistant) in the primary care office who can advise the physician of screening results
        and who can facilitate and coordinate referrals to mental health treatment. More comprehensive
        care supports include a case manager working with the primary care physician; planned
        collaborative care between the primary care provider and mental health clinicians; patient
        education and support for patient self-management; plus attention to patient preferences regarding
        counseling, medications, and referral to mental health professionals with or without continuing
        involvement by the patient’s primary care physician.

       Note: Coverage is limited to screening services and does not include treatment options for
        depression or any diseases, complications, or chronic conditions resulting from depression, nor
        does it address therapeutic interventions such as pharmacotherapy, combination therapy
        (counseling and medications), or other interventions for depression. Self-help materials,
        telephone calls, and web-based counseling are not separately reimbursable by Medicare and are
        not part of this NCD.

       Screening for depression is non-covered when performed more than one time in a 12-month
        period. Eleven full months must elapse following the month in which the last annual depression
        screening took place. Medicare coinsurance and Part B deductible are waived for this preventive
        service.

CLAIMS PROCESSING/PAYMENT INFORMATION
When claim line items for annual depression screening (G0444) are submitted with a POS code that is not
applicable, they will be denied using:

       Claim Adjustment Reason Code (CARC) 58: “Treatment was deemed by the payer to have been
        rendered in an inappropriate or invalid place of service. “ Note: Refer to the 835 Healthcare
        Policy Identification Segment (loop 2110 Service Payment Information REF), if present.

       Remittance Advice Remark Code (RARC) N428: “Not covered when performed in this place of
        service.”

       Group Code PR (Patient Responsibility) assigning financial liability to the beneficiary, if a claim
March 2012 Medicare Report                                                                           Page 22
        is received with a GA modifier indicating a signed Advance Beneficiary Notice (ABN) is on file.

       Group Code CO (Contractual Obligation) assigning financial liability to the provider, if a claim is
        received with a GZ modifier indicating a signed ABN is not on file.

RHCs using Type of Bill (TOB) 71X and FQHCs using TOB 77X may submit additional revenue lines
containing G0444 and Medicare will pay those lines based on the all-inclusive payment rate. However,
Medicare will not pay G0444 separately with another encounter/visit on the same day billed on TOBs
71X or 77X. This does not apply, however, to claims with the Initial Preventive Physical Examination
(IPPE) containing modifier 59 or to 77X claims containing Diabetes Self-Management Training or
Medical Nutrition Training services. If G0444 is billed when an encounter/visit is billed with the same
line item Date of Service, Medicare will assign:

       Group Code CO to the G0444 revenue line; and

       RARC 97: “The benefit for this service is included in the payment/allowance for another
        service/procedure that has already been adjudicated.” Note: Refer to the 835 Healthcare Policy
        Identification Segment (loop 2110 Service Payment Information REF), if present.

Institutional claims billed by hospital outpatient departments (TOB 13X) will be paid based on the
Outpatient Prospective Payment System (OPPS). Those billed by Critical Access Hospitals (CAHs) on
TOB 85X will be paid based on reasonable cost, except those G0444 services billed with revenue codes
096X, 097X, or 098X by Method II CAHs will receive 115% of the lesser of the fee schedule amount or
submitted charge. Institutional claims submitted on TOBs other than 13X, 71X, 77X, or 85X will be
denied using the following:

       CARC 170: “Payment is denied when performed/billed by this type of provider.” Note: Refer to
        the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF),
        if present.

       RARC N428: “Not covered when performed in this place of service.”

       Group Code PR assigning financial liability to the beneficiary, if a claim is received with a GA
        modifier indicating a signed ABN is on file.

       Group Code CO assigning financial liability to the provider, if a claim is received with a GZ
        modifier indicating a signed ABN is not on file.

For claims processed on or after April 2, 2012, Medicare will allow payment for G0444 no more than
once in a 12-month period. However, Medicare will allow both a claim for the professional service, and,
for TOB 13X, and TOB 85X when the revenue code is not 96X, 97X, or 98X, a claim for a facility fee.
Claim lines for G0444 that exceed this limit will be denied using:

       CARC 119: “Benefit maximum for this time period or occurrence has been reached.”

       RARC N362: “The number of days or units exceeds our acceptable maximum.”

March 2012 Medicare Report                                                                          Page 23
       Group Code PR assigning financial liability to the beneficiary, if a claim is received with a GA
        modifier indicating a signed ABN is on file.

       Group Code CO assigning financial liability to the provider, if a claim is received with a GZ
        modifier indicating a signed ABN is not on file.

As of July 2, 2012, provider inquiry screens (HUQA, HIQA, HIQH, ELGA, ELGB, ELGH) will display a
next eligibility date for this service and the Multi-Carrier System Desktop Tool shall display the HCPCS
G0444 depression screening sessions.

A MACs/FIs shall hold institutional claims received before April 2, 2012, with TOBs 13X, 71X, 77X,
and 85X reporting HCPCS G0444.

ADDITIONAL INFORMATION

The official instruction, CR7637, was issued to your carrier, FI, or A/B MAC regarding this change via
two transmittals. The first transmittal updates the “National Coverage Determinations Manual” and is
available at http://www.cms.gov/Transmittals/downloads/R139NCD.pdf on the CMS Website. The
second transmittal is at http://www.cms.gov/Transmittals/downloads/R2359CP.pdf and it updates the
“Medicare Claims Processing Manual”.

Screening and Behavioral Counseling Interventions in Primary
Care to Reduce Alcohol Misuse
MLN Matters® Number: MM7633
Related Change Request (CR) #: 7633
Related CR Release Date: November 23, 2011
Effective Date: October 14, 2011
Implementation Date: December 27, 2011, for local contractor system edits; April, 2, 2012-for
Medicare’s shared system edits, July 2, 2012 for provider inquiry screens & HICR changes

PROVIDER TYPES AFFECTED
This article is for physicians, providers, and suppliers submitting claims to Medicare contractors (carriers,
Fiscal Intermediaries (FIs), or Part A/B Medicare Administrative Contractors (A/B MACs)) for services
provided for Medicare beneficiaries.

PROVIDER ACTION NEEDED
This article is based on Change Request (CR) 7633, which announces that effective with dates of service
on and after October 14, 2011, the Centers for Medicare & Medicaid Services (CMS) will cover annual
alcohol screening, and for those that screen positive, up to 4, brief, face-to-face behavioral counseling
interventions annually for Medicare beneficiaries, including pregnant women. Make sure your billing
staff is aware of these changes.

BACKGROUND
Pursuant to Section1861(ddd) of the Social Security Act, CMS may add coverage of "additional
March 2012 Medicare Report                                                                            Page 24
preventive services" through the National Coverage Determination (NCD) process if all of the following
criteria are met. They must be: (1) reasonable and necessary for the prevention or early detection of
illness or disability, (2) recommended with a grade of A or B by the United States Preventive Services
Task Force (USPSTF), and, (3) appropriate for individuals entitled to benefits under Part A or enrolled
under Part B of the Medicare Program. CMS reviewed the USPSTF’s “B” recommendation and
supporting evidence for “Screening and Behavioral Counseling Intervention in Primary Care to Reduce
Alcohol Misuse” preventive services and determined that all three criteria were met.

According to the USPSTF (2004), alcohol misuse includes risky/hazardous and harmful drinking which
place individuals at risk for future problems; and in the general adult population, risky or hazardous
drinking is defined as >7 drinks per week or >3 drinks per occasion for women, and >14 drinks per week
or >4 drinks per occasion for men. Harmful drinking describes those persons currently experiencing
physical, social or psychological harm from alcohol use, but who do not meet criteria for dependence.

Effective for claims with dates of service October 14, 2011, and later, CMS shall cover annual alcohol
screening, and for those that screen positive, up to four, brief, face-to-face behavioral counseling
interventions per year for Medicare beneficiaries, including pregnant women:

       who misuse alcohol, but whose levels or patterns of alcohol consumption do not meet criteria for
        alcohol dependence (defined as at least three of the following: tolerance, withdrawal symptoms,
        impaired control, preoccupation with acquisition and/or use, persistent desire or unsuccessful
        efforts to quit, sustains social, occupational, or recreational disability, use continues despite
        adverse consequences); and,

       who are competent and alert at the time that counseling is provided; and,

       whose counseling is furnished by qualified primary care physicians or other primary care
        practitioners in a primary care setting.

Each of the four behavioral counseling interventions must be consistent with the 5As approach that has
been adopted by the USPSTF to describe such services:

    1. Assess: Ask about/assess behavioral health risk(s) and factors affecting choice of behavior change
       goals/methods.

    2. Advise: Give clear, specific, and personalized behavior change advice, including information
       about personal health harms and benefits.

    3. Agree: Collaboratively select appropriate treatment goals and methods based on the patient’s
       interest in and willingness to change the behavior.

    4. Assist: Using behavior change techniques (self-help and/or counseling), aid the patient in
       achieving agreed-upon goals by acquiring the skills, confidence, and social/environmental
       supports for behavior change, supplemented with adjunctive medical treatments when
       appropriate.

    5. Arrange: Schedule follow-up contacts (in person or by telephone) to provide ongoing
March 2012 Medicare Report                                                                          Page 25
        assistance/support and to adjust the treatment plan as needed, including referral to more intensive
        or specialized treatment.

NOTE: Two new G codes, G0442 (Annual Alcohol Misuse Screening, 15 minutes), and G0443 (Brief
face-to-face behavioral counseling for Alcohol Misuse, 15 minutes), are effective October 14, 2011, and
will appear in the January quarterly update of the Medicare Physician Fee Schedule Database
(MPFSDB) and Integrated Outpatient Code Editor (IOCE). For claims with Dates of Service on or after
October 14, 2011, through December 31, 2011, your Medicare contractor will use their pricing to pay for
G0442 and/or G0443. Deductible and coinsurance do not apply. Contractors will hold institutional
claims received prior to April 2, 2102, with TOBs 13X, 71X, 77X, and 85X and release those claims
beginning April 2, 2012.

For the purposes of this covered service, the following provider specialty types may submit claims for
G0442 and G0443:

       01-General Practice

       08-Family Practice

       11-Internal Medicine

       16-Obstetrics/Gynecology

       37-Pediatric Medicine

       38-Geriatric Medicine

       42-Certified Nurse Midwife

       50-Nurse Practitioner

       89-Certified Clinical Nurse Specialist

       97-Physician Assistant

For purposes of this covered service, the following place of service (POS) codes are applicable:

       11-Physician’s Office

       22-Outpatient Hospital

       49-Independent Clinic

       71-State or local public health clinic

CLAIMS PROCESSING/PAYMENT INFORMATION
When claims for G0442 or G0443 are submitted with a Place of Service (POS) code that is not applicable,
line-items on those claims will be denied using:
March 2012 Medicare Report                                                                          Page 26
       Claim Adjustment Reason Code (CARC) 58: “Treatment was deemed by the payer to have been
        rendered in an inappropriate or invalid place of service. “ Note: Refer to the 835 Healthcare
        Policy Identification Segment (loop 2110 Service Payment Information REF), if present.

       Remittance Advice Remark Code (RARC) N428: “Not covered when performed in this place of
        service.”

       Group Code CO (Contractual Obligation)

Medicare will deny claims for G0442 or G0443 when provided by provider specialty types other than
those identified above. When such claims are denied, Medicare will use the following messages:

       CARC 185: “The rendering provider is not eligible to perform the dservice billed.” Note: Refer to
        the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF),
        if present.

       RARC N95: “This provider type/provider specialty may not bill this service.”

       Group Code CO.

Rural Health Clinics (RHCs) using type of bill (TOB) 71X and Federally Qualified Health Centers
(FQHCs) using TOB 77X may submit additional revenue lines containing G0442 or G0443. Medicare
will pay G0442 and G0443 in TOBs 71X and 77X based on the all-inclusive payment rate. However,
Medicare will not pay G0442 or G0443 separately with another encounter/visit on the same day billed on
TOBs 71X or 77X. This does not apply to claims for the Initial Preventive Physical Examination (IPPE),
claims containing modifier 59, or to 77X claims containing Diabetes Self-Management Training or
Medical Nutrition Therapy services. If G0442 or G0443 is billed when an encounter/visit with the same
line item date of service, Medicare will assign:

       Group Code CO to the G0442/G0443 revenue lines; and

       RARC 97: “The benefit for this service is included in the payment/allowance for another
        service/procedure that has already been adjudicated.” Note: Refer to the 835 Healthcare Policy
        Identification Segment (loop 2110 Service Payment Information REF), if present.

Institutional claims billed by hospital outpatient departments (TOB 13X) will be paid based on the
Outpatient Prospective Payment System. Those billed by Critical Access Hospitals (CAHs) on TOB 85X
will be paid based on reasonable cost, except those G0442 or G0443 services billed with revenue codes
096X, 097X, or 098X by Method II CAHs will receive 115% of the lesser of the fee schedule amount or
submitted charge. Institutional claims submitted on TOBs other than 13X, 71X, 77X, or 85X will be
denied using the following:

       CARC 5: “The procedure code/bitt type is inconsistent with the place of service.” Note: Refer to
        the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF),
        if present.


March 2012 Medicare Report                                                                        Page 27
       RARC M77: “Missing/incomplete/invalid place of service.”

       Group Code CO.

Medicare will allow payment for both G0442 and G0443 on the same date (except in RHCs and FQHCs),
but will not pay for more than one G0443 service on the same date. However, Medicare will allow both a
claim for the professional service and, for TOB 13X and TOB 85X without a revenue code of 96X, 97X,
or 98X, a claim for a facility fee. Claim lines for G0443 that exceed the limit of one on the same date of
service will be denied using:

       CARC 151: “Payment adjusted because the payer deems the information submitted does not
        support this many/frequency of services.”

       RARC M86: “Service denied because payment already made for same/similar procedure within
        set time frame.”

       Group Code CO.

Medicare will track payments for G0442 screening services and G0443 counseling services so as to not
permit payment for G0442 more than once in a 12-month period, and for G0443 no more than 4 times in a
12-month period, beginning with the date of the G0442 service. Claim lines exceeding these limits will be
denied using:

       CARC 119: “Benefit maximum for this time period or occurrence has been reached.”

       RARC N362: “The number of days or units exceeds our acceptable maximum.”

       Group Code CO.

As of July 2, 2012, provider inquiry screens (HUQA, HIQA, HIQH, ELGA, ELGB, ELGH) along with
HICR changes.

Format Revisions to the Special Incentive Remittance Advice
Used to Report Quarterly Incentive Payments for Health
Professional Shortage Areas (HPSAs), the Primary Care
Incentive Payment Program (PCIP), and the HPSA Surgical
Incentive Payment Program (HSIP)
MLN Matters® Number: MM7561
Related Change Request (CR) #: 7561
Related CR Release Date: October 27, 2011
Effective Date: April 1, 2012
Related CR Transmittal #: R975OTN
Implementation Date: April 2, 2012


March 2012 Medicare Report                                                                         Page 28
PROVIDER TYPES AFFECTED
This article is for physicians and non-physician practitioners submitting claims to Medicare carriers and
Part A/B Medicare Administrative Contractors (A/B MACs) for primary care services; and for general
surgeons submitting claims to Medicare carriers and A/B MACs for major surgical procedures furnished
in Health Professional Shortage Areas (HPSAs).

WHAT YOU NEED TO KNOW
A revision to the special remittance advice used to report quarterly incentive payments for Health
Professional Shortage Areas (HPSAs), the Primary Care Incentive Payment Program (PCIP), and the
HPSA Surgical Incentive Payment Program (HSIP) will allow you to know your total individual incentive
payment amount for HPSA, PCIP, and/or HSIP (which ever applies).

Change Request (CR) 7561, from which this article is taken, announces that the special remittance advice
currently used for quarterly HPSA, PCIP, and the HSIP incentive payments is being revised to include a
summary page with a grand total incentive payment amount per performing National Provider Identifier
(NPI), per incentive payment.

WHAT YOU NEED TO KNOW
Section 5501(a)(3) of the Affordable Care Act (the Act) provides payment of the Primary Care Incentive
Payment Program (PCIP) as an additional payment amount for specified primary care services regardless
of any other additional payment for services under Section 1833(m) of the Act; and Section 5501(b)
revises Section 1833(m) of the Act to authorize the HPSA Surgical Incentive Payment Program (HSIP),
an incentive payment program for major surgical services furnished by general surgeons in Health
Professional Shortage Areas (HPSAs).

Note: An eligible primary care physician furnishing a primary care service in an HPSA may receive both
a HPSA physician bonus payment and a PCIP payment; however, a general surgeon in an HPSA is only
eligible to receive a HSIP payment.

In order to coordinate these payments, the Centers for Medicare & Medicaid Services (CMS) instructed
Medicare carriers and A/B MACs to revise the Special Incentive Remittance to include the PCIP and
HSIP programs in: 1) Change Request (CR) 7060 (Incentive Payment Program for Primary Care Services,
Section 5501(a) of the Affordable Care Act), released on February 25, 2011; and 2) CR7063 (Section
5501(b) Incentive Payment Program for Major Surgical Procedures Furnished in Health Professional
Shortage Areas under the Affordable Care Act), released August 27, 2010. These CRs also instructed the
Medicare contractors, when appropriate, to pay the primary care incentive payment and the HPSA general
surgery payment at the same time and in the same payment as the HPSA physician bonus.

Note: The MLN Matters® Articles related to these CRs are available at
http://www.cms.gov/MLNMattersArticles/downloads/MM7060.pdf and
http://www.cms.gov/MLNMattersArticles/downloads/MM7063.pdf, respectively.

The first PCIP and HSIP payments were made in April 2011; and at that time, many providers reported to
CMS that the accompanying Special HPSA Remittance report was long (in some cases several hundred

March 2012 Medicare Report                                                                         Page 29
pages), and did not total the incentive payments by an individual practitioner’s NPI. After a review of
public comments, CMS is responding to the request to modify this report (now re-named the “Special
Incentive Remittance”) to provide detailed incentive billing and payment information.

CR7561 announces that CMS has revised the Special Incentive Remittance currently used for quarterly
HPSA, PCIP, and HSIP incentive payments to include a summary page with a total incentive amount paid
per performing NPI, per incentive program. At a minimum, it includes the following information per
performing NPI:

       Performing NPI;

       Sum total HPSA amount paid for all claims on the remittance advice;

       Sum total number of HPSA claims on the remittance advice;

       Sum total PCIP amount paid for all claims on the remittance advice;

       Sum total number of PCIP claims on the remittance advice;

       Sum total HSIP amount paid for all claims on the remittance advice; and

       Sum total number of HSIP claims on the remittance advice.

ADDITIONAL INFORMATION
You can find the official instruction, CR7561, issued to your carrier or A/B MAC by visiting
http://www.cms.gov/Transmittals/downloads/R975OTN.pdf on the CMS website.

Advanced Diagnostic Imaging (ADI) Accreditation Enrollment
Procedures. (Change Request (CR) 7681 Fully Rescinds and
Replaces CR 7177)
MLN Matters®Number:MM7681
Related Change Request (CR) #: 7681
Related CR Release Date: January 13, 2012
Effective Date: January 27, 2012
Related CR Transmittal#: R402PI Implementation
Date: January 27, 2012

PROVIDER TYPES AFFECTED

Physicians, providers, and suppliers submitting claims to Medicare contractors (carriers and/or A/B
Medicare Administrative Contractors (A/B MACs)) for Advanced Diagnostic Imaging (ADI) services
provided to Medicare beneficiaries.

WHAT YOU NEED TO KNOW

March 2012 Medicare Report                                                                          Page 30
CR7177 established that ADI providers/suppliers would need to provide their ADI accreditation
information by completing an Internet-based Provider Enrollment, Chain, and Ownership System
(PECOS) application or a CMS-855 application. CR7681 changes this requirement and allows for the
accrediting organizations to provide the listing of who is accredited through a weekly file. Since this
change, providers/suppliers no longer need to complete the ADI information in Internet-based PECOS or
on a CMS-855 form(s).

BACKGROUND
The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA – Section 135(a); see
http://www.gpo.gov/fdsys/pkg/PLAW-110publ275/pdf/PLAW- 110publ275.pdf on the Internet) amended
the Social Security Act (Section 1834(e); see http://www.ssa.gov/OP_Home/ssact/title18/1834.htm on the
Internet) and required the Secretary of the U.S. Department of Health and Human Services (HHS) to
designate organizations to accredit suppliers, including but not limited to physicians, non-physician
practitioners, and Independent Diagnostic Testing Facilities, that furnish the Technical Component (TC)
of ADI services.

MIPPA specifically defines Advanced Diagnostic Imaging (ADI) procedures as including diagnostic
Magnetic Resonance Imaging (MRI), Computed Tomography (CT), and Nuclear Medicine Imaging
(NMI) such as Positron Emission Tomography (PET). The law also authorizes the HHS Secretary to
specify other diagnostic imaging services in consultation with physician specialty organizations and other
stakeholders.

In order to furnish the TC of advanced diagnostic imaging services for Medicare beneficiaries,
providers/suppliers must be accredited by January 1, 2012.

The Centers for Medicare & Medicaid Services (CMS) implemented (effective January 1, 2012) the
requirement that ADI providers and/or suppliers must be accredited for ADI services specific to each
modality for which they will submit claims. Originally, CMS required the providers/suppliers to provide
their accreditation information on their respective CMS-855 form, or through the internet-based PECOS.

Change Request (CR) 7681 establishes a new process that allows for ADI providers and/or suppliers to
bypass ADI information collection on the appropriate CMS 855 form or in the internet-based PECOS web
application. CR7681 instructs that Medicare contractors will:

       Not require documentation from the ADI provider/supplier for proof of their accreditation; and

       Not require providers/suppliers to complete the ADI section in the internet-based PECOS
        application nor in the appropriate CMS-855 form.

Instead, Medicare and its contractors will receive this information directly from the accrediting
organizations.

ADDITIONAL INFORMATION
The official instruction, CR7681, issued to your carriers and A/B MACs regarding this change may be
viewed at http://www.cms.gov/Transmittals/downloads/R402PI.pdf on the CMS website.

March 2012 Medicare Report                                                                          Page 31
End Stage Renal Disease (ESRD) Prospective Payment System
(PPS) and Consolidated Billing for Limited Part B Services
MLN Matters® Number: MM7064 Revised
Related Change Request (CR) #: 7064
Related CR Release Date: January 14, 2011
Effective Date: January 1, 2011
Related CR Transmittal #: R2314CP
Implementation Date: January 3, 2011

Note: This article was revised on December 21, 2011, to clarify the cost report language for low volume
facility adjustments on page 6. All other information remains the same.

PROVIDER TYPES AFFECTED
Physicians, providers, and suppliers submitting claims to Medicare contractors (carriers, DME Medicare
Administrative Contractors (DME MACs), Fiscal Intermediaries (FIs), and/or A/B Medicare
Administrative Contractors (A/B MACs)) for ESRD services provided to Medicare beneficiaries.

IMPACT TO YOU

This article is based on Change Request (CR) 7064 which announces the implementation of an End Stage
Renal Disease (ESRD) bundled prospective payment system (PPS) effective January 1, 2011.

WHAT YOU NEED TO KNOW
Once implemented, the ESRD PPS will replace the current basic case-mix adjusted composite payment
system and the methodologies for the reimbursement of separately billable outpatient ESRD related items
and services. The ESRD PPS will provide a single payment to ESRD facilities, i.e., hospitalbased
providers of services and renal dialysis facilities, that will cover all the resources used in providing an
outpatient dialysis treatment, including supplies and equipment used to administer dialysis in the ESRD
facility or at a patient’s home, drugs, biologicals, laboratory tests, training, and support services. The
ESRD PPS provides ESRD facilities a 4-year phase-in (transition) period under which they would receive
a blend of the current payment methodology and the new ESRD PPS payment. In 2014, the payments will
be based 100 percent on the ESRD PPS payment.

WHAT YOU NEED TO DO
Since the ESRD PPS is effective for services on or after January 1, 2011, it is important that providers not
submit claims spanning dates of service in 2010 and 2011. ESRD facilities have the opportunity to make
a one time election to be excluded from the transition period and have their payment based entirely on the
payment amount under the ESRD PPS as of January 1, 2011. Facilities wishing to exercise this option
must do so on or before November 1, 2010. See the Background and Additional Information Sections of
this article for further details regarding the ESRD PPS.


March 2012 Medicare Report                                                                           Page 32
BACKGROUND
The Medicare Improvements for Patients and Providers Act (MIPPA); Section 153(b); see
http://www.govtrack.us/congress/billtext.xpd?bill=h110-6331 on the Internet) requires the Centers for
Medicare & Medicaid services (CMS) to implement an End Stage Renal Disease (ESRD) bundled
prospective payment system (PPS) effective January 1, 2011. Once implemented, the ESRD PPS will
replace the current basic case-mix adjusted composite payment system and the methodologies for the
reimbursement of separately billable outpatient ESRD related items and services. Specifically, the ESRD
PPS combines payments for composite rate and separately billable services into a single base rate. The
per dialysis treatment base rate for adult patients is subsequently adjusted to reflect differences in:

       Wage levels among the areas in which ESRD facilities are located;

        Patient-level adjustments for case-mix;

       An outlier adjustment (if applicable);

       Facility-level adjustments;

       A training add-on (if applicable); and

       A budget neutrality adjustment during the transition period through 2013.

Patient-level Adjustments

The patient-level adjustments are patient-specific case-mix adjusters that were developed from a two
equation regression analysis that encompasses composite rate and separately billable items and services.
Included in the case-mix adjusters for adults are those variables that are currently used in basic case-mix
adjusted composite payment system, that is, age, body surface area (BSA), and low body mass index
(BMI). In addition to those adjusters that are currently used, the ESRD PPS will also incorporate
adjustments for six co-morbidity categories and an adjustment for the onset of renal dialysis.

Outlier Adjustment

ESRD facilities that are treating patients with unusually high resource requirements, as measured through
their utilization of identified services beyond a specified threshold, will be entitled to outlier payments.
Such payments are an additional payment beyond the otherwise applicable case-mix adjusted prospective
payment amount.

ESRD outlier services are the following items and services that are included in the ESRD PPS bundle:

1. ESRD-related drugs and biologicals that were or would have been, prior to January 1, 2011, separately
billable under Medicare Part B;

2. ESRD-related laboratory tests that were or would have been, prior to January 1, 2011, separately
billable under Medicare Part B;

3. Medical/surgical supplies, including syringes, used to administer ESRD-related drugs that were or
March 2012 Medicare Report                                                                            Page 33
would have been, prior to January 1, 2011, separately billable under Medicare Part B; and

4. Renal dialysis service drugs that were or would have been, prior to January 1, 2011, covered under
Medicare Part D, notwithstanding the delayed implementation of ESRD-related oral-only drugs effective
January 1, 2014.

Note: Services not included in the PPS that remain separately payable, including blood and blood
processing, preventive vaccines, and telehealth services, are not considered outlier services.

Facility-level Adjustments

The facility-level adjustments include adjusters to reflect urban and rural differences in area wage levels
using an area wage index developed from Core Based Statistical Areas (CBSAs). The facility-level
adjustments also include an adjuster for facilities treating a low-volume of dialysis treatments.

Training Add-On

Facilities that are certified to furnish training services will receive a training add-on payment amount of
$33.44, which is adjusted by the geographic area wage index to account for an hour of nursing time for
each training treatment that is furnished. The training add-on applies to both peritoneal dialysis (PD) and
hemodialysis (HD) training treatments.

Adjustments Specific to Pediatric Patients

The pediatric model incorporates separate adjusters based on two age groups (<13, 13-17) and dialysis
modality (hemodialysis, peritoneal dialysis). The per-treatment base rate as it applies to pediatric patients
is the same base rate that applies for adult patients, which is also adjusted by the area wage index.
However, due to the lack of statistical robustness, the base rate for pediatric patients is not adjusted by the
same patient-level case-mix adjusters as for adult patients. Instead, the pediatric payment adjusters reflect
the higher total payments for pediatric composite rate and separately billable services, compared to that of
adult patients.

       Treatments furnished to pediatric patients: Can qualify for a training add-on payment (when
        applicable), and
       Are Eligible for an outlier adjustment.

Note: Pediatric dialysis treatments are not eligible for the low-volume adjustment.

ESRD PPS 4-year Phase-in (Transition) Period

The ESRD PPS provides ESRD facilities with a 4-year transition period under which they would receive
a blend of payments under the prior case-mix adjusted composite payment system and the new ESRD
PPS as noted in the following table:




March 2012 Medicare Report                                                                              Page 34
              Calendar Year                                     Blended Rate
                                               75 percent of the old payment methodology, and
                   2011
                                                     25 percent of the new PPS payment
                                               50 percent of the old payment methodology, and
                   2012
                                                     50 percent of the new PPS payment
                                               25 percent of the old payment methodology, and
                   2013
                                                     75 percent of the new PPS payment
                   2014                                100 percent of the PPS Payment


For Calendar Year (CY) 2011, CMS will continue to update the basic case-mix composite payment
system for purposes of determining the composite rate portion of the blended payment amount. CMS
updated the composite payment rate, the drug add-on adjustment to the composite rate, the wage index
adjustment, and the budget neutrality adjustment.

The ESRD PPS base rate is $229.63, which is applicable for both adult and pediatric ESRD patients
effective January 1, 2011. This base rate will be wage adjusted as mentioned above where

• The labor-related share of the base rate from the ESRD PPS market basket is 0.41737, and

• The non labor-related share of the base rate is $133.79 ((229.63 X (1 - 0.41737) = $133.79).

During the transition, the labor-related share of the case-mix adjusted composite payment system will
remain 0.53711.

The payment rate for a dialysis treatment is determined by wage adjusting the base rate and then applying
any applicable:

• Patient-level adjustments;

• Outlier adjustments;

• Facility-level adjustments; and

• Training add-on payments (adjusted for area wage levels)

Once the payment rate for the dialysis treatment is determined, the last item in the computation to
determine the final payment rate is the application of the transition budget neutrality factor of .969, that is,
a 3.1 percent reduction.

The ESRD PRICER will provide the payment for existing composite rate, the new ESRD PPS payment
rate, and the outlier payment (when applicable). These reimbursement amounts must be blended during a
transition period for all ESRD facilities except those facilities opting out of the transition and electing to
be paid 100 percent of the payment amount under the new ESRD PPS.

March 2012 Medicare Report                                                                              Page 35
Note: Providers wishing to opt out of the transition period blended rate must notify their Medicare
Contractor on or before November 1, 2010. Providers shall not submit claims spanning date of service in
2010 and 2011.

Three New Adjustments Applicable to the Adult Rate

    1. Comorbid Adjustments: The new ESRD PPS provides for 3 categories of chronic comorbid
       conditions and 3 categories for acute comorbid conditions. A single adjustment will be made to
       claims containing one or more of the comorbid conditions. The highest comorbid adjustment
       applicable will be applied to the claim. The acute comorbid adjustment may be paid no greater
       than 4 consecutive months for any reported acute comorbid condition, unless there is a
       reoccurrence of the condition. The 3 chronic comorbid categories eligible for a payment
       adjustment are:

                • Hereditary hemolytic and sickle cell anemia;

                • Monoclonal gammopathy (in the absence of multiple myeloma); and

                • Myelodysplastic syndrome.

        The 3 acute comorbid categories eligible for a payment adjustment are:

                • Bacterial Pneumonia;

                •Gastrointestinal Bleeding; and

                • Pericarditis.

    2. Onset of Dialysis Adjustment: An adjustment will be made for patients that have Medicare ESRD
       coverage during their first 4 months of dialysis. This adjustment will be determined by the
       dialysis start date in Medicare’s Common Working File as provided on the CMS Form 2728,
       completed by the provider. When the onset of dialysis adjustment is provided, the claim is not
       entitled to a comorbid adjustment or a training adjustment.
    3. Low-Volume Facility Adjustment: Providers will receive an adjustment to their ESRD PPS rate
       when the facility furnished less than 4,000 treatments in each of the three cost report years
       preceding the payment year and has not opened, closed, or received a new provider number due
       to a change in ownership during the three (3) years preceding the payment year. The provider
       must notify their Medicare Contractor if they believe they are eligible for the low-volume
       adjustment.

Change in Processing Home Dialysis Claims

For claims with dates of service on or after January 1, 2011, the payment of home dialysis items and
services furnished under Method II, regardless of home treatment modality, are included in the ESRD
PPS payment rate.

Therefore, all home dialysis claims:

March 2012 Medicare Report                                                                       Page 36
• Must be submitted by a renal dialysis facility and

• Will be processed as Method I claims.

Note: CR 7064 instructs the DME MACs to stop separate payment to suppliers for Method II home
dialysis items and services for claims with dates of service on or after January 1, 2011. Medicare will,
however, allow separate billing for ESRD supply HCPCS codes (as shown on attachment 4 of CR 7064)
by DME suppliers when submitted for services not related to the beneficiary’s ESRD dialysis treatment
and such services are billed with the AY modifier.

Consolidated Billing

CR 7064 provides an ESRD consolidated billing requirement for limited Part B services included in the
ESRD facility bundled payment. Certain laboratory services and limited drugs and supplies will be
subject to Part B consolidated billing and will no longer be separately payable when provided for ESRD
beneficiaries by providers other than the renal dialysis facility. Should these lab services, and limited
drugs be provided to a beneficiary, but are not related to the treatment for ESRD, the claim lines must be
submitted by the laboratory supplier or other provider with the new AY modifier to allow for separate
payment outside of ESRD PPS. ESRD facilities billing for any labs or drugs will be considered part of the
bundled PPS payment unless billed with the modifier AY. In addition, as noted above, Medicare will,
however, allow separate billing for ESRD supply HCPCS codes (as shown on attachment 4 of CR 7064)
by DME suppliers when submitted for services not related to the beneficiary’s ESRD dialysis treatment
and such services are billed with the AY modifier.

Other Billing Reminders

• Note that with the ESRD PPS changes, Medicare systems will also reject any lines reporting revenue
code 0880 as of January 1, 2011. These rejections will be made with remittance advice remark code
(RARC) M81 (You are required to code to the highest level of specificity), and assign a group code of CO
(provider liability) to such lines.

• Medicare will return claims to the provider with dates of service spanning 2010 and 2011.

• Telehealth services billed with HCPCS Q3014, preventive services covered by Medicare, and blood and
blood services are exempt from the ESRD PPS and will be paid based on existing payment
methodologies.

• When claims are received without the AY modifier for items and services that are not separately payable
due to the ESRD PPS consolidated billing process, the claims will be returned with claim adjustment
reason code (CARC) 109 (Claim not covered by this payer/contractor. You must send the claim to the
correct payer/contractor.), RARC N538 (A facility is responsible for payment to outside providers who
furnish these services/supplies/drugs to its patients/residents.), and assign Group code CO.

• All 72X claims from Method II facilities with condition code 74 will be treated as Method I claims as of
January 1, 2011. Effective that same date, Medicare will no longer enter Method selection forms data into
its systems.

March 2012 Medicare Report                                                                         Page 37
• Services included in the existing composite rate continue to not be reported on the claim unless they are
clinical lab services subject to the 50/50 rule. The only additional data that must be reported on or after
January 1, 2011 are any oral and other equivalent forms of injectable drugs identified as outlier services.
Oral and other equivalent forms of injectable drugs should be reported with the revenue code 0250. The
drug NDC code must be reported with quantity field reflecting the smallest available unit.

• Payment for ESRD-related Aranesp and ESRD-related Epoetin Alfa (EPO) is included in the ESRD PPS
for claims with dates of service on or after January 1, 2011.

• Effective January 1, 2011, section 153b of the MIPPA requires that all ESRD-related drugs and
biologicals are included in the ESRD PPS and must be billed by the renal dialysis facility.

ADDITIONAL INFORMATION
The official instruction, CR 7064, issued to your carriers, DME MACs, FIs and/or A/B MACs regarding
this change may be viewed at http://www.cms.gov/Transmittals/downloads/R2134CP.pdf on the CMS
website. Attached to CR 7064, you may find the following documents to be helpful:

• Attachment 3, which is a list of outlier services;

• Attachment 4, which is a list of DME ESRD Supply HCPCS codes used in for ESRD PPS consolidated
billing edits;

• Attachment 5, which contains a list of DME ESRD Supply HCPCS codes that are NOT payable to DME
suppliers;

• Attachment 6, which is a list of laboratory CPT/HCPCS codes subject to ESRD consolidated billing;

• Attachment 7, which lists the drug codes subject to ESRD consolidated billing; and

• Attachment 8, which lists by ICD-9-CM codes, the comorbid categories and diagnosis codes.

Also see MM7388 (http://www.cms.gov/MLNMattersArticles/downloads/MM7388.pdf) for the criteria
for a low volume facility and instructions on how to receive the ESRD low volume adjustment for low
volume facilities.

You may also want to review the following articles:

• MLN Matters® article MM7476 (http://www.cms.gov/MLNMattersArticles/downloads/MM7476.pdf),
which alerts providers to changes to Attachments 4, 5 and 8 of CR7064; and

• MM7497 (http://www.cms.gov/MLNMattersArticles/downloads/MM7497.pdf), which informs
independent laboratories (ILs) that effective January 1, 2012, CMS has eliminated the requirement for ILs
to bill separately for each individual AMCC laboratory test included in organ disease panel codes for
ESRD eligible beneficiaries. It states that organ disease panels will be paid under the Clinical Laboratory
Fee Schedule and will not be subject to the 50/50 rule when billed by ILs.



March 2012 Medicare Report                                                                           Page 38
Use of Revised Remittance Advice Remark Code (RARC) N103
When Denying Services Furnished to Federally Incarcerated
Beneficiaries
MLN Matters ® Number: MM7678
Related Change Request(CR)#: 7678
Related CR Release Date: January 6, 2012
Effective Date: July 1, 2012
Related CR Transmittal #: R1012OTN
Implementation Date: July 2. 2012

PROVIDER TYPES AFFECTED
Providers submitting claims to Medicare contractors (Fiscal Intermediaries (FIs), carriers, A/B Medicare
Administrative Contractors (MACs) and Durable Medical Equipment MACs or DME MACs) for
Medicare beneficiaries who are incarcerated in a Federal facility.

WHAT YOU NEED TO KNOW
CR7678 is limited to providers billing for services for beneficiaries while they are in Federal, State, or
local custody and the goal of this CR7678 is to be more specific in explaining the accompanying
adjustment.

BACKGROUND
The following exclusions presumptively apply to individuals who are incarcerated in a

Federal facility under Federal authority:

       According to Federal regulations at 42 Code of Federal Regulations (CFR)Section 411.4
        Medicare does not pay for services furnished to a beneficiary who has no legal obligation to pay
        for the service and no other person or organization has a legal obligation to provide or pay for the
        service;

       Under 42 CFR 411.6, Medicare does not pay for services furnished by a federal provider of
        services or by a federal agency; and

       Under 42 CFR 411.8, Medicare does not pay for services that are paid for directly or indirectly by
        a governmental entity.

KEY POINTS
When denying claims for services furnished to federally incarcerated Medicare beneficiaries, the newly
modified RARC N103 will be used (in addition to remittance advice language already in use) and it reads
as follows:

“Social Security records indicate that this patient was a prisoner when the service was rendered. This
payer does not cover items and services furnished to an individual while he or she is in a Federal facility,
March 2012 Medicare Report                                                                             Page 39
or while he or she is in State or local custody under a penal authority, unless under State or local law, the
individual is personally liable for the cost of his or her health care while incarcerated and the State or
local government pursues such debt in the same way and with the same vigor as any other debt.”

ADDITIONAL INFORMATION
The official instruction, CR7678, issued to your Medicare contractors (FIs, A/B MACs, DME MACs, and
carriers) regarding this change, may be viewed at
http://www.cms.gov/Transmittals/downloads/R1012OTN.pdf on the CMS website.

Quarterly Update to Correct Coding Initiative (CCI) Edits,
Version 18.1, Effective April 1, 2012
MLN Matters® Number: MM7726
Related Change Request (CR) #: 7726
Related CR Release Date: January 13, 2012
Effective Date: April 1, 2012
Related CR Transmittal #: R2384CP
Implementation Date: April 2. 2012

PROVIDER TYPES AFFECTED
This article is for physicians submitting claims to Medicare Carriers and/or A/B Medicare Administrative
Contractors (A/B MACs) for services provided to Medicare beneficiaries.

PROVIDER ACTION NEEDED
This article is based on Change Request (CR) 7726 which provides a reminder for physicians to take note
of the quarterly updates to Correct Coding Initiative (CCI) edits. The last quarterly release of the edit
module was issued in January, 2012.

BACKGROUND
The Centers for Medicare & Medicaid Services (CMS) developed the National Correct Coding Initiative
(CCI) to promote national correct coding methodologies and to control improper coding that leads to
inappropriate payment in Part B claims.

The coding policies developed are based on coding conventions defined in the:

       American Medical Association’s (AMA’s) Current Procedural Terminology (CPT) Manual;

       National and local policies and edits;

       Coding guidelines developed by national societies;

       Analysis of standard medical and surgical practice; and by

       Review of current coding practice.


March 2012 Medicare Report                                                                             Page 40
The latest package of CCI edits, Version 18.1, is effective April 1, 2012, and includes all previous
versions and updates from January 1, 1996, to the present. It will be organized in two tables:

       Column I/Column 2 Correct Coding Edits, and

       Mutually Exclusive Code (MEC) Edits.

Additional information about the CCI, including the current CCI and Mutually Exclusive Code (MEC)
edits, is available at http://www.cms.gov/NationalCorrectCodInitEd on the CMS website.

ADDITIONAL INFORMATION
The CCI and MEC file formats are defined in the “Medicare Claims Processing Manual,” (Chapter 23,
Section 20.9) which is available at http://www.cms.gov/manuals/downloads/clm104c23.pdf on the CMS
website.

The official instruction, CR7726, issued to your carrier or and A/B MAC regarding this change may be
viewed at http://www.cms.gov/Transmittals/downloads/R2384CP.pdf on the CMS website.


Reimbursement

April 2012 Quarterly Average Sales Price (ASP) Medicare Part B
Drug Pricing Files and Revisions to Prior Quarterly Pricing Files
MLN Matters® Number: MM7734
Related Change Request (CR) #: 7734
Related CR Release Date: January 26, 2012
Effective Date: April 1, 2012
Related CR Transmittal #: R2396CP
Implementation Date: April 2, 2012

PROVIDER TYPES AFFECTED
Physicians, providers, and suppliers submitting claims to Medicare contractors (carriers, Fiscal
Intermediaries (FIs), A/B Medicare Administrative Contractors (A/B MACs), Durable Medical
Equipment Medicare Administrative Contractors (DME MACs), and/or Regional Home Health
Intermediaries (RHHIs)) for services provided to Medicare beneficiaries.

PROVIDER ACTION NEEDED

Medicare will use the April 2012 quarterly Average Sales Price (ASP) Medicare Part B drug pricing files
to determine the payment limit for claims for separately payable Medicare Part B drugs processed or
reprocessed on or after April 2, 2012, with dates of service April 1, 2012, through June 30, 2012.

What You Need to Know
Change Request (CR) 7734, from which this article is taken, instructs your Medicare contractors to

March 2012 Medicare Report                                                                             Page 41
download and implement the April 2012 Average Sales Price (ASP) Medicare Part B drug pricing file for
Medicare Part B drugs and, if released by the Centers for Medicare & Medicaid Services (CMS), to also
download and implement the revised January 2012, October 2011, July 2011, and April 2011 files.

What You Need to Do
You should make sure that your billing staffs are aware of the release of these April 2012 ASP Medicare
Part B drug files.

BACKGROUND

The Medicare Modernization Act of 2003 (MMA; Section 303(c); (see
http://www.cms.gov/MMAUpdate/downloads/PL108-173summary.pdf on the Centers for Medicare &
Medicaid Services (CMS) website) revised the payment methodology for Part B covered drugs and
biologicals that are not priced on a cost or prospective payment basis.

The Average Sales Price (ASP) methodology is based on quarterly data submitted to CMS by
manufacturers. CMS will supply Medicare contractors with the ASP and Not Otherwise Classified (NOC)
drug pricing files for Medicare Part B drugs on a quarterly basis. Payment allowance limits under the
OPPS are incorporated into the Outpatient Code Editor (OCE) through separate instructions that can be
located in the "Medicare Claims Processing Manual" (Chapter 4 (Part B Hospital (Including Inpatient
Hospital Part B and OPPS)), Section 50 (Outpatient PRICER); see
http://www.cms.gov/manuals/downloads/clm104c04.pdf on the CMS website.)

The following table shows how the quarterly payment files will be applied:



                         Files                            Effective for Dates of Service

           April 2012 ASP and ASP NOC                  April 1, 2012, through June 30, 2012

          January 2012 ASP and ASP NOC               January 1, 2012, through March 31, 2012

          October 2011 ASP and ASP NOC             October 1, 2011, through December 31, 2011

            July 2011 ASP and ASP NOC                July 1, 2011, through September 30, 2011

         April 2011 ASP and ASP NOC files              April 1, 2011, through June 30, 2011



ADDITIONAL INFORMATION

You can find the official instruction, Change Request (CR) 7344, issued to your FI, carrier, A/B MAC,
RHHI, or DME MAC by visiting http://www.cms.gov/Transmittals/downloads/R2396CP.pdf on the CMS
website.



March 2012 Medicare Report                                                                       Page 42
Emergency Update to the CY 2012 Medicare Physician Fee
Schedule Database (MPFSDB)
MLN Matters® Number: MM7737
Related Change Request (CR) #: 7737
Related CR Release Date: January 20, 2012
Effective Date: January 1, 2012
Related CR Transmittal #: R1015OTN
Implementation Date: No later than January 26, 2012

PROVIDER TYPES AFFECTED
Physicians, non-physician practitioners, and providers who bill Medicare contractors (Fiscal
Intermediaries (FIs), Regional Home Health Intermediaries (RHHIs), carriers or A/B Medicare
Administrative Contractors (A/B MACs)) for services provided to Medicare beneficiaries are affected.

WHAT YOU NEED TO KNOW
This article is based on Change Request (CR) 7737, which informs you that new Medicare Physician Fee
Schedule (MPFS) payment files have been created and are available to Medicare contractors.

       Payment files were issued to Medicare contractors based upon the CY 2012 Medicare Physician
        Fee Schedule (MPFS) Final Rule, issued on November 1, 2011, and published in the “Federal
        Register” on November 28, 2011.

       CR7737 amends those payment files to include corrections described in the CY 2012 MPFS Final
        Rule Correction Notice, as well as relevant statutory changes applicable January 1, 2012.

BACKGROUND
Medicare Physician Fee Schedule Revisions and Updates

Some physician work, practice expense, and malpractice Relative Value Units (RVUs) published in the
CY 2012 MPFS Final Rule have been revised to align their values with the CY 2012 MPFS Final Rule
policies. These changes are discussed in the CY 2012 MPFS Final Rule Correction Notice and revised
RVU values are found in Addendum B and Addendum C of the CY 2012 MPFS Final Rule Correction
Notice.

In addition to RVU revisions, changes have been made to some HCPCS code payment indicators in order
to reflect the appropriate payment policy. Procedure status indicator changes will also be reflected in
Addendum B and Addendum C of the CY 2012 MPFS Final Rule Correction Notice.

Other payment indicator changes will be included, along with the RVU and procedure status indicator
changes, in the CY 2012 MPFS Final Rule Correction Notice public use data files, which are located at:
http://www.cms.gov/PhysicianFeeSched/PFSRVF/list.asp#TopOfPage on the CMS website.

Changes to the physician work RVUs and payment indicators can be found in the attachment associated
with CR7737, which is cited in the Additional Information section below. Changes to practice expense
March 2012 Medicare Report                                                                       Page 43
RVUs are reflected in Addendum B and Addendum C of the CY 2012 MPFS Final Rule Correction
Notice.

Legislative changes subsequent to issuance of the CY 2012 MPFS Final Rule, specifically, the Temporary
Payroll Tax Cut Continuation Act of 2011 (TPTCCA), have led to the further revision of the values
published in the CY 2012 MPFS Final Rule Correction Notice, including a change to the conversion
factor. This new law prevents a scheduled payment cut for physicians and other practitioners who treat
Medicare patients from taking effect immediately. While the negative update for the 2012 MPFS is now
scheduled to take effect on March 1, 2012, the Administration remains strongly opposed to letting this cut
take effect. The Centers for Medicare & Medicaid Services (CMS) will work quickly to update MPFS
payment rates in the event Congress passes legislation to prevent the negative update from going into
effect. Please be on the alert for more information about the 2012 physician update as it becomes
available.

Temporary Payroll Tax Cut Continuation Act of 2011

On December 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation
Act of 2011 (TPTCCA). This law contains a number of Medicare provisions, which extend current
Medicare fee-for-service program policies, and, as previously mentioned, prevents a scheduled payment
cut for physicians and other practitioners who treat Medicare patients from taking effect immediately. A
summary of the TPTCCA provisions relevant to the MPFS payment files are provided below.

Medicare Physician Payment Update

Section 301 of the TPTCCA prevents a payment cut for physicians that would have taken effect on
January 1, 2012. An update of zero percent is effective for claims with dates of service January 1, 2012,
through February 29, 2012. While the physician fee schedule update will be zero percent, other changes
to the relative value units used to calculate the fee schedule rates must be budget neutral. To make those
changes budget neutral, the conversion factor must be adjusted for 2012. Therefore, the conversion factor
will not be unchanged in CY 2012 from CY 2011. The revised conversion factor to be used for physician
payment as of January 1, 2012, is $34.0376. The calculation of the CY 2012 conversion factor is
illustrated in the following table.

                              TPTCCA of 2011
   December 2011                                      CY 2012 RVU Budget           CY 2012 Conversion
                               “Zero Percent
  Conversion Factor                                   Neutrality Adjustment        Factor thru 2/29/12
                                 Update”

       $33.9764               0.0 percent (1.000)       0.2 percent (1.0018)             $34.0376



The revised CY 2012 MPFS payment files will reflect this conversion factor through February 29, 2012.

Extension of Medicare Physician Work Geographic Adjustment Floor

Current law requires payment rates under the MPFS to be adjusted geographically to reflect area
differences in the cost of practice. The following three components of the MPFS payment are adjusted:
March 2012 Medicare Report                                                                          Page 44
physician work, practice expense (PE), and malpractice expense. Section 303 of the TPTCCA extends he
existing 1.0 floor on the physician work geographic practice cost index through February 29, 2012. This
change is included in the revised CY 2012 MPFS payment files. Updated CY 2012 geographic practice
cost indices (GPCI) are included in the attachment to CR7737. See the “Additional Information” section
below for information on accessing CR7737.

Extension of MPFS Mental Health Add-On
For calendar year 2011, certain mental health services' payment rates continued to be increased by five
percent over what they would otherwise be paid using the standard MPFS payment methodology. Section
307 of the TPTCCA extends the five percent increase in payments for these mental health services
through February 29, 2012. This five percent increase is reflected in the revised CY 2012 MPFS payment
files. The lists of Psychiatry Current Procedural Terminology (CPT) codes that represent the specified
services subject to this payment policy are included in the attachment to CR7737.

Extension of Exceptions Process for Medicare Therapy Caps
Section 304 of the TPTCCA extends the exceptions process for outpatient therapy caps. Outpatient
therapy service providers may continue to submit claims with the KX modifier (Specific required
documentation on file), when an exception is appropriate, for services furnished on or after January 1,
2012, through February 29, 2012.

The therapy caps are determined on a calendar year basis, so all patients begin a new cap year on January
1, 2012. For physical therapy and speech language pathology services combined, the limit on incurred
expenses is $1,880. For occupational therapy services, the limit is $1,880. Deductible and coinsurance
amounts applied to therapy services count toward the amount accrued before a cap is reached and also
apply for services above the cap where the KX modifier is used.

Extension of Payment for the Technical Component (TC) of Certain Physician Pathology Services
In the CY 2000 PFS Final Rule, published in the “Federal Register” on November 2, 1999, CMS finalized
a policy to pay only the hospital for the TC of physician pathology services furnished to hospital patients.
Under prior policy, independent laboratories continued to be paid for the TC of a pathology service
provided to a hospital patient. At the request of the industry, to allow those independent laboratories that
were separately paid for the TC of a physician pathology service provided to a hospital patient sufficient
time to negotiate new arrangements with hospitals, the implementation of this rule was administratively
delayed until 2001. Subsequent legislation formalized a moratorium on the implementation of the rule.

Although the most recent extension of the moratorium expired at the end of 2011, section 305 of the
TPTCCA restores the moratorium through February 29, 2012. Therefore, those independent laboratories
that are eligible may continue to submit claims to Medicare for the TC of physician pathology services
furnished to patients of a hospital, regardless of the beneficiary's hospitalization status (inpatient or
outpatient) on the date that the service was furnished. This policy is effective for claims with dates of
service on or after January 1, 2012, through February 29, 2012.

Extension of the Minimum Payment for Bone Mass Measurement
Section 3111(a) of the Affordable Care Act changed the payment calculation for dual-energy x-ray
absorptiometry (DXA) services described CPT codes 77080 (Dual-energy X-ray absorptiometry (DXA),

March 2012 Medicare Report                                                                           Page 45
bone density study, 1 or more sites; axial skeleton (e.g., hips, pelvis, spine)) and 77082 (Dual-energy X-
ray absorptiometry (DXA), bone density study, 1 or more sites; vertebral fracture assessment) for CYs
2010 and 2011. This provision required payment for these services at 70 percent of the product of the CY
2006 RVUs for these DXA codes, the CY 2006 conversion factor (CF), and the geographic adjustment
for the relevant payment year. CMS provided for payment in CYs 2010 and 2011 under the Physician Fee
Schedule (PFS) for CPT codes 77080 and 77082 at the specified rates. Because this provision did not
include CY 2012, the CY 2012 PFS final rule with comment period listed resource-based, rather than
imputed, RVUs for CPT codes 77080 and 77082. However, Section 309 of the TPTCCA extended the
Affordable Care Act minimum payment for bone mass measurement for the first two months of CY 2012.
For claims with dates of service on or after January 1, 2012, through February 29, 2012, CPT codes
77080 and 77082 will be paid at 70 percent of the product of the CY 2006 RVUs, the CY 2006 CF, and
the geographic adjustment for the CY 2012. The revised CY 2012 work, PE, and malpractice RVUs for
CPT codes 77080 and 77082 are shown below.

                               RVUs for DXA Codes 77080 and 77082,
                             January 1, 2012, through February 29, 2012

                         Fully                    Fully
                                  Transitional              Transitional
CPT              Work Implemented              Implemented                                   Malpractice
        Modifier                  Non-facility              Facility PE
Code             RVU Non-Facility               Facility PE                                    RVU
                                   PE RVU                      RVU
                        PE RVU                    RVU

77080               0.23         2.50            2.50            N/A             N/A             0.14

77080      TC       0.00         2.42            2.42            N/A             N/A             0.13

77080      26       0.23         0.08            0.08            0.08            0.08            0.01

77082               0.13         0.63            0.63            N/A             N/A             0.05

77082      TC       0.11         0.58            0.58            N/A             N/A             0.04

77082      26       0.13         0.05            0.05            0.05            0.05            0.01



ADDITIONAL INFORMATION
The official instruction, CR 7737, issued to your FI, RHHI, carrier and A/B MAC regarding this change,
may be viewed at http://www.cms.gov/Transmittals/downloads/R1015OTN.pdf on the CMS website.

Reasonable Charge Update for 2012 for Splints, Casts, and
Certain Intraocular Lenses
MLN Matters® Number: MM7628
Related Change Request (CR) #: 7628
Related CR Release Date: November 18, 2011

March 2012 Medicare Report                                                                         Page 46
Effective Date: January 1, 2012
Related CR Transmittal #: R2349CP
Implementation Date: January 3, 2012

PROVIDER TYPES AFFECTED
This article is for physicians, providers, and suppliers billing Medicare contractors (carriers, Fiscal
Intermediaries (FIs), and Medicare Administrative Contractors (MACs)) for splints, casts, and certain
intraocular lenses.

WHAT PROVIDERS NEED TO KNOW
Change Request (CR) 7628, on which this article is based, announces that payment of claims for splints,
casts, and for intraocular lenses implanted in a physician’s office (codes V2630, V2631, V2632)
continues to be made on a reasonable charge basis subject to certain payment limits. CR7628 also
announces that the update factor for the Inflation Indexed Charge (IIC) for 2012 is 3.6 percent.

BACKGROUND
 Payment continues to be made on a reasonable charge basis for splints, casts, and intraocular lenses
(codes V2630, V2631, and V2632) implanted in a physician’s office. For splints and casts, the Q-
codes are to be used when supplies are indicated for cast and splint purposes. This payment is in
addition to the payment made under the Medicare Physician Fee Schedule for the procedure for
applying the splint or cast.

CR7628 provides instructions regarding the calculation of reasonable charges for payment of claims
for splints, casts, and intraocular lenses furnished in Calendar Year 2012. Payment on a reasonable
charge basis is required for these items by regulations contained in 42 CFR 405.501.

The Inflation Indexed Charge (IIC) is calculated using the lowest of the reasonable charge screens
from the previous year updated by an inflation adjustment factor or the percentage change in the
Consumer Price Index (CPI) for all urban consumers (United States city average) or CPI-U for the
12-month period ending with June 30, 2011. The 2012 payment limits for splints and casts will be
based on the 2011 limits that were announced in CR7225 last year, increased by 3.6 percent, the
percentage change in the CPI-U for the 12-month period ending June 30, 2011. (You can read the
MLN Matters® article associated with CR7225 at
http://www.cms.gov/MLNMattersArticles/downloads/MM7225.pdf on the Centers for Medicare &
Medicaid (CMS) website.) The IIC update factor for 2012 is 3.6 percent.

A list of the 2012 payment limits for splints and casts are listed in the table that follows.




March 2012 Medicare Report                                                                          Page 47
                             2012 Payment Limits for Splints and Casts
   A4565         $8.12        Q4013       $14.88       Q4026        $111.41        Q4039     $7.78

   Q4001        $46.21        Q4014       $25.08       Q4027         $17.85        Q4040     $19.44

   Q4002       $174.65        Q4015       $7.44        Q4028         $55.72        Q4041     $18.88

   Q4003        $33.19        Q4016       $12.54       Q4029         $27.29        Q4042     $32.23

   Q4004       $114.91        Q4017       $8.60        Q4030         $71.83        Q4043     $9.45

   Q4005        $12.24        Q4018       $13.71       Q4031         $13.64        Q4044     $16.12

   Q4006        $27.58        Q4019       $4.31        Q4032         $35.91        Q4045     $10.96

   Q4007         $6.13        Q4020       $6.86        Q4033         $25.45        Q4046     $17.63

   Q4008        $13.79        Q4021       $6.36        Q4034         $63.30        Q4047     $5.47

   Q4009         $8.17        Q4022       $11.48       Q4035         $12.72        Q4048     $8.82

   Q4010        $18.39        Q4023       $3.20        Q4036         $31.66        Q4049     $2.00

   Q4011         $4.08        Q4024       $5.74        Q4037         $15.53        Q4012     $9.20

   Q4025        $35.68        Q4038       $38.90



ADDITIONAL INFORMATION
You can find the official instruction, CR7628, issued to your carrier, FI, MAC by visiting
http://www.cms.gov/Transmittals/downloads/R2349CP.pdf on the CMS website.

Detailed instructions for calculating:

    1. Reasonable charges are located in the "Medicare Claims Processing Manual," Chapter 23 (Fee
       Schedule Administration and Coding Requirements), Section 80 (Reasonable Charges as Basis
       for Carrier/DMERC Payments);

    2. Customary and prevailing charges are located in "Medicare Claims Processing Manual," Chapter
       23 (Fee Schedule Administration and Coding Requirements), Sections 80.2 (Updating Customary
       and Prevailing Charges) and 80.4 (Prevailing Charge); and

    3. The IIC are located in "Medicare Claims Processing Manual," Chapter 23 (Fee Schedule
       Administration and Coding Requirements), Sections 80.6 (Inflation Indexed Charge (IIC) for
       Nonphysician Services).


March 2012 Medicare Report                                                                     Page 48
Chapter 23 of the "Medicare Claims Processing Manual" is available at
http://www.cms.gov/manuals/downloads/clm104c23.pdf on the CMS website.

CY 2012 Fee Schedule Update for Durable Medical Equipment,
Prosthetics, Orthotics and Supplies (DMEPOS)
MLN Matters® Number: MM7635
Related Change Request (CR) #: 7635
Related CR Release Date: November 4, 2011
Effective Date: January 1, 2012
Related CR Transmittal #: R2340CP
Implementation Date: January 3, 2012

PROVIDER TYPES AFFECTED
Providers and suppliers submitting claims to Medicare contractors (carriers, DME Medicare
Administrative Contractors (DME MACs), Fiscal Intermediaries (FIs), Medicare Administrative
Contractors (MACs), and/or Regional Home Health Intermediaries (RHHIs)) for DMEPOS items or
services paid under the DMEPOS fee schedule need to be aware of this article.

WHAT YOU NEED TO KNOW
This article, based on Change Request (CR) 7635, advises you of the Calendar Year (CY) 2012 annual
update for the Medicare DMEPOS fee schedule. The instructions include information on the data files,
update factors, and other information related to the update of the DMEPOS fee schedule.

Key points about these changes are summarized in the Background section below. These changes are
effective for DMEPOS provided on or after January 1, 2012.

BACKGROUND AND KEY POINTS OF CR7635
Payment on a fee schedule basis is required for durable medical equipment, prosthetic devices, orthotics,
prosthetics, and surgical dressings (DMEPOS) by Sections 1834(a), (h), and (i) of the Social Security Act
(the Act); and for parenteral and enteral nutrition (PEN) by 42 CFR, Section 414.102.

In accordance with these statutes and regulations, the DMEPOS fee schedules are updated annually; and
the process for this update is documented in the "Medicare Claims Processing Manual", Chapter 23 Fee
Schedule Administration and Coding Requirements) , Section 60 (Durable Medical Equipment
Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule at
http://www.cms.gov/manuals/downloads/clm104c23.pdf on the Centers for Medicare & Medicaid
Services (CMS) website.

CR 7635, from which this article is taken, provides instructions regarding annual the DMEPOS fee
schedule annual update for 2012.

Fee Schedule Files

The DMEPOS fee schedule file will be available on or after November 16, 2011, for State Medicaid
March 2012 Medicare Report                                                                         Page 49
Agencies, managed care organizations, and other interested parties at
http://www.cms.hhs.gov/DMEPOSFeeSched/ on the CMS website.

HCPCS Codes Added

The following new codes are effective as of January 1, 2012:

       A9272 which has no assigned payment category;

       A5056 and A5057 in the ostomy, tracheostomy, and urological supplies (OS) payment category;

       E0988 in the capped rental (CR) category;

       L5312, L6715, and L6880 in the prosthetics and orthotics category; and

       E2358, E2359, E2626, E2627, E2628, E2629, E2630, E2631, E2632, and E2633 in the
        inexpensive/routinely purchased (DME) payment category.

The fee schedule amounts for the above new codes will be established as part of the July 2012 DMEPOS
Fee Schedule Update, when applicable. Also when applicable, DME MACs will establish local fee
schedule amounts to pay claims for the new codes from January 1, 2012 through June 30, 2012. The new
codes are not to be used for billing purposes until they are effective on January 1, 2012.

Please note that the HCPCS codes listed as new codes in this CR may not be final and are subject to
change pending release of the CY 2012 HCPCS file.

For gap-filling purposes, the 2011 deflation factors by payment category are listed in the following table:

                             Factor                   Category

                             0.485                      Oxygen

                             0.488                  Capped Rental

                             0.490             Prosthetics and Orthotics

                             0.621                Surgical Dressings

                             0.676          Parenteral and Enteral Nutrition



HCPCS Codes Deleted

The following codes are being deleted from the HCPCS effective January 1, 2012, and are therefore being
removed from the DMEPOS fee schedule files:

       E0571


March 2012 Medicare Report                                                                           Page 50
       L1500, L1510, L1520, L3964, L3965, L3966, L3968, L3969, L3970, L3972, L3974, L4380,
        L5311, L7266, L7272, L7274, and L7500.

Specific Coding and Pricing Issues

CMS has learned that the current language in the "Medicare Claims Processing Manual", Chapter 23 (Fee
Schedule Administration and Coding Requirements), Section 60.3(Gap-filling DMEPOS Fees), that
describes the longstanding methodology for calculating gap-filled fee schedule amounts, can be
misinterpreted.

For this reason, CR 7635 revises the first paragraph of this section by replacing the phrase “previous data
base period” with “fee schedule data base year,” and later in the same sentence replacing the phrase
“database year” with “fee schedule database year.” These revisions closely approximate the original gap-
fill instructions as they appeared in the "Medicare Carriers Manual", Part 3 (Claims Process), Section
5102 (Fee Schedules For Durable Medical Equipment and Orthotic/Prosthetic Devices). In addition, CR
7635 revises this section to include the addition of the 2011 deflation factors, as noted above.

CR 7635 also announces other coding and pricing changes, effective January 1, 2012:

    1. New HCPCS codes: E2626, E2627, E26268, E 2629, E2630, E2631, E2632, and E2633 (for
       wheelchair accessories for shoulder elbow arm supports) are re-designated from codes L3964-
       L3974 and the fee schedule amounts will be directly assigned from the deleted codes to the new
       codes.

    2. The fee schedule amounts for shoe modification HCPCS codes A5503 through A5507 are being
       adjusted to reflect more current allowed service data. Section 1833(o)(2)(C) of the Act required
       that the payment amounts for shoe modification codes A5503 through A5507 be established in a
       manner that prevented a net increase in expenditures when substituting these items for therapeutic
       shoe insert codes (A5512 or A5513). To establish the original fee schedule amounts for the shoe
       modification codes, the base fees for codes A5512 and A5513 were weighted based on the
       approximated total allowed services for each code for items furnished during the second quarter
       of calendar year 2004. For 2012, the base fees for A5512 and A5513 will be weighted based on
       the approximated total allowed services for each code for items furnished during the calendar
       year 2010 and the fee schedule amounts for shoe modification codes A5503 through A5507 are
       being revised to reflect this change.

KE Modifier Update

To ensure appropriate modifier processing when submitting claims for HCPCS code E0776 (IV Pole),
suppliers should bill using the following modifiers depending upon the type of pump that the IV pole is
used with:

       For use with infusion pumps – submit E0776RR, E0776NU, or E0776UE;

       For use with parenteral pumps – submit E0776RRBAKE, E0776NUBAKE, or E0776UEBAKE;


March 2012 Medicare Report                                                                           Page 51
       For use with enteral pumps – submit E0776RRBA, E0776NUBA or E0776UEBA; or

       For use with enteral pumps by beneficiaries that permanently reside in Round I Rebid
        competitively bid areas - submit E0776RRBAKG, E0776NUBAKG or E0776UEBAKG.

Similarly, when submitting claims for a replacement HCPCS code E2373 (POWER WHEELCHAIR
ACCESSORY, HAND OR CHIN CONTROL INTERFACE, COMPACT REMOTE JOYSTICK)
suppliers should bill using the following modifiers depending upon the associated base wheelchair:

       For use with a power wheelchair HCPCS code that was bid in Round I of the DMEPOS
        Competitive Bidding Program – submit E2373KCRR, E2373KCNU or E2373KCUE;

       For use with a power wheelchair HCPCS code that was not bid in Round I of the DMEPOS
        Competitive Bidding Program – submit E2373KCRRKE, E2373KCNUKE or E2373KCUEKE;
        or

       For beneficiaries that permanently reside in Round I Rebid competitively bid areas when used
        with a power wheelchair HCPCS code that was bid in the Round I Rebid of the DMEPOS
        Competitive Bidding Program – submit E2373KCRRKK, E2373KCNUKK or E2373KCUEKK.

Note: The above billing instructions supersede the E0776 and E2373 KC billing instructions furnished in
Transmittal 1630, CR6270, dated November 7, 2008.

Attachment B to CR 7635 contains a list of the HCPCS codes that were selected in 2008 for Round I of
the DMEPOS Competitive Bidding Program. For beneficiaries who permanently reside in Round I Rebid
competitive bid areas, a list of the Round 1 Rebid competitively bid items is available in the single
payment amount charts located at
http://www.dmecompetitivebid.com/palmetto/cbic.nsf/DocsCat/Single%20Payment%20 Amounts on the
Competitive Bidding Implementation Contractor (CBIC) website.

CY 2012 Fee Schedule Update Factor

For CY 2012, the update factor of 2.4 percent is applied to the applicable CY 2011 DMEPOS fee
schedule amounts.

In accordance with section 1834(a)(14) of the Act, the DMEPOS fee schedule amounts are to be updated
for 2012 by the percentage increase in the consumer price index for all urban consumers (United States
city average) or CPI-U for the 12-month period ending with June of 2011, adjusted by the change in the
economy-wide productivity equal to the 10-year moving average of changes in annual economy-wide
private non-farm business multi-factor productivity (MFP).

The MFP adjustment is 1.2 percent and the CPI-U percentage increase is 3.6 percent. Thus, the 3.6
percentage increase in the CPI-U is reduced by the 1.2 percentage increase in the MFP resulting in a net
increase of 2.4 percent for the MFP-adjusted update factor.

2011 Update to Labor Payment Rates


March 2012 Medicare Report                                                                         Page 52
2012 Fees for Healthcare Common Procedure Coding System (HCPCS) labor payment codes K0739,
L4205, L7520 are increased by 3.6 percent effective for dates of service on or after January 1, 2012
through December 31, 2012, and those rates are as follows:

         STATE       K0739      L4205      L7520     STATE       K0739      L4205      L7520

            AK       $26.47     $30.16     $35.48      NC        $14.05     $20.94     $28.43

            AL        14.05     20.94      28.43       ND         17.51      30.10      35.48

            AR        14.05     20.94      28.43        NE        14.05      20.92      39.64

            AZ        17.37     20.92      34.98       NH         15.08      20.92      28.43

            CA        21.56     34.38      40.07        NJ        18.96      20.92      28.43

            CO        14.05     20.94      28.43       NM         14.05      20.94      28.43

            CT        23.47     21.41      28.43       NV         22.39      20.92      38.75

            DC        14.05     20.92      28.43       NY         25.88      20.94      28.43

            DE        25.88     20.92      28.43       OH         14.05      20.92      28.43

            FL        14.05     20.94      28.43       OK         14.05      20.94      28.43

            GA        14.05     20.94      28.43       OR         14.05      20.92      40.88

            HI        17.37     30.16      35.48        PA        15.08      21.54      28.43

            IA        14.05     20.92      34.03        PR        14.05      20.94      28.43

            ID        14.05     20.92      28.43        RI        16.75      21.56      28.43

            IL        14.05     20.92      28.43        SC        14.05      20.94      28.43

            IN        14.05     20.92      28.43        SD        15.70      20.92      38.00

            KS        14.05     20.92      35.48        TN        14.05      20.94      28.43

            KY        14.05     26.81      36.35        TX        14.05      20.94      28.43

            LA        14.05     20.94      28.43        UT        14.09      20.92      44.27

           MA         23.47     20.92      28.43       VA         14.05      20.92      28.43

           MD         14.05     20.92      28.43        VI        14.05      20.94      28.43

            ME        23.47     20.92      28.43        VT        15.08      20.92      28.43


March 2012 Medicare Report                                                                        Page 53
         STATE       K0739      L4205      L7520     STATE       K0739      L4205      L7520

            MI        14.05     20.92      28.43       WA         22.39      30.69      36.45

           MN         14.05     20.92      28.43        WI        14.05      20.92      28.43

           MO         14.05     20.92      28.43       WV         14.05      20.92      28.43

            MS        14.05     20.94      28.43       WY         19.59      27.91      39.64

            MT        14.05     20.92      35.48



2012 National Monthly Payment Amounts for Stationary Oxygen Equipment

CR 7635 implements the 2012 national monthly payment amount for stationary oxygen equipment
(HCPCS codes E0424, E0439, E1390 and E1391), effective for claims with dates of service on or after
January 1, 2012. As required by statute, the payment amount must be adjusted annually, as necessary, to
ensure budget neutrality of the new payment class for oxygen generating portable equipment (OGPE).

The updated national 2012 monthly payment amount of $176.06 for stationary oxygen equipment codes is
included in the DMEPOS fee schedule.

Please note that when the stationary oxygen equipment fees are updated, corresponding updates are made
to the fee schedule amounts for HCPCS codes E1405 and E1406 for oxygen and water vapor enriching
systems. Since 1989, the fees for codes E1405 and E1406 have been established based on a combination
of the Medicare payment amounts for stationary oxygen equipment and nebulizer codes E0585 and
E0570, respectively.

2012 Maintenance and Servicing Payment Amount for Certain Oxygen Equipment

CR 7635 also updates the 2012 payment amount for maintenance and servicing for certain oxygen
equipment.

You can read more about payment for claims for maintenance and servicing of oxygen equipment in
MLN Matters® Articles, MM6792 Maintenance and Servicing Payments for Certain Oxygen Equipment,
which you can find at http://www.cms.gov/MLNMattersArticles/downloads/MM6792.pdf and MM6990

Clarification of the Date of Service for Maintenance and Servicing Payments for Certain Oxygen
Equipment after July 1, 2010, which you can find at
https://www.cms.gov/MLNMattersArticles/downloads/MM6990.pdf on the CMS website.

To summarize, payment for maintenance and servicing of certain oxygen equipment can occur every 6
months beginning 6 months after the end of the 36th month of continuous use or end of the supplier’s or
manufacturer’s warranty, whichever is later for either HCPCS code E1390, E1391, E0433 or K0738,
billed with the “MS” modifier. Payment cannot occur more than once per beneficiary, regardless of the
combination of oxygen concentrator equipment and/or transfilling equipment used by the beneficiary, for
March 2012 Medicare Report                                                                        Page 54
any 6-month period.

Per 42 CFR Section 414.210(5)(iii), the 2010 maintenance and servicing fee for certain oxygen equipment
was based on 10 percent of the average price of an oxygen concentrator. For CY 2011 and subsequent
years, the maintenance and servicing fee is adjusted by the covered item update for DME as set forth in
Section 1834(a)(14) of the Act. Thus, the 2011 maintenance and servicing fee is adjusted by the 2.4
percent MFP-adjusted covered item update factor to yield a CY 2012 maintenance and servicing fee of
$67.51 for oxygen concentrators and transfilling equipment.

ADDITIONAL INFORMATON
You can find the official instruction, CR 7635, issued to your carrier, DME MAC, FI, A/B MAC, or
RHHI by visiting http://www.cms.gov/Transmittals/downloads/R2340CP.pdf on the CMS website. You
will find the updated "Medicare Claims Processing Manual", Chapter 23 (Fee Schedule Administration
and Coding Requirements, Section 60.3 (Gap-filling DMEPOS Fees) as an attachment to that CR.

January 2012 Quarterly Average Sales Price (ASP) Medicare
Part B Drug Pricing Files and Revisions to Prior Quarterly
Pricing Files
MLN Matters® Number: MM7624
Related Change Request (CR) #: MM7624
Related CR Release Date: October 27, 2011
Effective Date: January 1, 2012
Related CR Transmittal #: R2331CP
Implementation Date: January 3, 2012

PROVIDER TYPES AFFECTED
Physicians, providers, and suppliers submitting claims to Medicare contractors (carriers, Durable Medical
Equipment Medicare Administrative Contractors (DME MACs), Fiscal Intermediaries (FIs), A/B
Medicare Administrative Contractors (A/B MACs), and/or Regional Home Health Intermediaries
(RHHIs)) for services provided to Medicare beneficiaries.

PROVIDER ACTION NEEDED
This article is based on Change Request (CR) 7624 which instructs your Medicare contractors to
download and implement the January 2012 Average Sales Price (ASP) Medicare Part B drug pricing file
for Medicare Part B drugs and, if released by the Centers for Medicare & Medicaid Services (CMS), also
to download and implement the revised October 2011, July 2011, April 2011, and January 2011 files.
Medicare will use these files to determine the payment limit for claims for separately payable Medicare
Part B drugs processed or reprocessed on or after January 3, 2012, with dates of service January 1, 2012,
through March 31, 2012.

BACKGROUND
The Medicare Modernization Act of 2003 (MMA; Section 303(c); see

March 2012 Medicare Report                                                                         Page 55
http://www.cms.gov/MMAUpdate/downloads/PL108-173summary.pdf on the Centers for Medicare &
Medicaid Services (CMS) website) revised the payment methodology for Part B covered drugs and
biologicals that are not priced on a cost or prospective payment basis. The Average Sales Price (ASP)
methodology is based on quarterly data submitted to CMS by manufacturers. CMS will supply
contractors with the ASP and Not Otherwise Classified (NOC) drug pricing files for Medicare Part B
drugs on a quarterly basis. Payment allowance limits under the OPPS are incorporated into the Outpatient
Code Editor (OCE) through separate instructions that can be located in the "Medicare Claims Processing
Manual" (Chapter 4, Section 50; see http://www.cms.gov/manuals/downloads/clm104c04.pdf on the CMS
website.

The following table shows how the quarterly payment files will be applied:

                        Files                            Effective for Dates of Service

         January 2012 ASP and ASP NOC              January 1, 2012, through March 31, 2012

         October 2011 ASP and ASP NOC            October 1, 2011, through December 31, 2011

           July 2011 ASP and ASP NOC               July 1, 2011, through September 30, 2011

        April 2011 ASP and ASP NOC files              April 1, 2011, through June 30, 2011

         January 2011 ASP and ASP NOC
                                                   January 1, 2011, through March 31, 2011
                      files



ADDITIONAL INFORMATION
The official instruction, CR7624, issued to your carriers, DME MACs, FIs, A/B MACs, and RHHIs
regarding this change may be viewed at http://www.cms.gov/Transmittals/downloads/R2331CP.pdf on
the CMS website.

Influenza Vaccine Payment Allowances - Annual Update for
2011-2012 Season
MLN Matters® Number: MM7575 Revised
Related Change Request (CR) #: MM7575
Related CR Release Date: November 9, 2011
Effective Date: September 1, 2011
Related CR Transmittal #: R2345CP
Implementation Date: No later than January 27, 2012

Note: This article was revised on December 7, 2011, to add a reference to MLN Matters® article SE1136
(http://www.cms.gov/MLNMattersArticles/downloads/SE1136.pdf) for educational products related to the
seasonal flu vaccines and vaccine administration to Medicare beneficiaries for the 2011-2012 flu season.
All other information remains the same.

March 2012 Medicare Report                                                                       Page 56
PROVIDER TYPES AFFECTED

This article is for physicians and providers submitting claims to Medicare contractors (carriers,
Fiscal Intermediaries (FIs), and/or Part A/B Medicare Administrative Contractors (A/B MACs))
for influenza vaccines provided to Medicare beneficiaries.

PROVIDER ACTION NEEDED
The Centers for Medicare & Medicaid Services (CMS) issued Change Request (CR) 7575 in order to
update payment allowances, effective September 1, 2011, for influenza vaccines when payment is based
on 95 percent of the Average Wholesale Price (AWP). Be sure your billing staffs are aware of this update.

BACKGROUND
CR7575 provides the payment allowances for the following seasonal influenza virus vaccines: Current
Procedural Terminology (CPT) codes 90654, 90655, 90656, 90657, 90660, and 90662 and Healthcare
Common Procedure Coding System (HCPCS) codes Q2035, Q2036, Q2037, Q2038, and Q2039 when
payment is based on 95 percent of the AWP. The payment allowances for influenza vaccines are updated
on an annual basis effective September 1 of each year.

Effective for dates of service on or after September 1, 2011, (except payment is based on reasonable cost
where the vaccine is furnished in a hospital outpatient department, a Rural Health Clinic, or a Federally
qualified health center), the Medicare Part B payment allowance for:

       CPT 90655 is $15.705;

       CPT 90656 is $12.375;

       CPT 90657 is $6.653;

       HCPCS Q2035 (Afluria®) is $11.543;

       HCPCS Q2036 (Flulaval®) is $8.784

       HCPCS Q2037 (Fluvirin®) is $13.652; and

       HCPCS Q2038 (Fluzone®) is $13.306.

Note: The Medicare Part B payment allowance for HCPCS Q2039 (Flu Vaccine Adult - Not Otherwise
Classified) will be determined by your local Medicare contractor.

Payment for CPT 90654 (Flu vaccine, Intradermal, Preservative free (Fluzone ID®)), for CPT 90660
(FluMist®, a nasal influenza vaccine), or CPT 90662 (Fluzone High-Dose®) may be made if your local
Medicare contractor determines its use is medically reasonable and necessary for the beneficiary.
Effective for dates of service on or after September 1, 2011, when payment is based on 95 percent of the
AWP, the Medicare Part B payment allowance for CPT 90654 is $18.383, for CPT 90660 is $22.316, and
for CPT 90662 is $30.923.


March 2012 Medicare Report                                                                         Page 57
CPT 90654 is a valid code effective January 1, 2011. However, the product was not FDA approved until
May 9, 2011. Therefore, the code is non-payable for Medicare purposes from January 1, 2011 until May
8, 2011. For any claims containing dates of service May 9, 2011 through August 31, 2011, Medicare
contractors shall price the vaccine. Effective for dates of service on and after September 1, 2011, CMS
has established a price for CPT 90654.

The payment allowances for pneumococcal vaccines are based on 95 percent of the AWP and are updated
on a quarterly basis via the Quarterly Average Sales Price (ASP) Drug Pricing Files.

Note: Medicare contractors will not automatically adjust claims processed prior to implementation of
CR7575. However, they will adjust such claims that you bring to their attention.

ADDITIONAL INFORMATION
The official instruction, CR7575 issued to your carrier, FI, or A/B MAC regarding this change may be
viewed at http://www.cms.gov/Transmittals/downloads/R2345CP.pdf on the CMS website.

Summary of Policies in the Calendar Year (CY) 2012 Medicare
Physician Fee Schedule (MPFS) Final Rule and the Telehealth
Originating Site Facility Fee Payment Amount
MLN Matters® Number: MM7671 Revised
Related Change Request (CR) #: 7671
Related CR Release Date: January 18, 2012
Effective Date: January 1, 2012
Related CR Transmittal #: R2379CP
Implementation Date: January 3, 2012

Note: This article was revised on February 2, 2012, to reflect a revised CR7671 issued on January 18,
2012. The CR was revised to amend language in the summary of the multiple procedure payment
reduction and revisions to the practice expense geographic adjustment policies described below in the
“Background” section of this article. In addition, the article now reflects a new transmittal number, CR
release date, and a revised Web address for accessing the CR. All other information remains the same.

PROVIDER TYPES AFFECTED

Physicians and non-physician practitioners who submit claims to Fiscal Intermediaries (FIs), carriers, and
A/B Medicare Administrative Contractors (MACs) are affected by this article.

WHAT YOU NEED TO KNOW

This article is based on Change Request (CR) 7671, which summarizes the policies in the CY 2012
Medicare Physician Fee Schedule Final Rule and announces the Telehealth Originating Site Facility Fee
payment amount for CY 2012. Please be sure that your staffs are aware of these changes.

BACKGROUND

March 2012 Medicare Report                                                                         Page 58
The purpose of this article is to inform you about the CR7671, which summarizes the policies in the CY
2012 Medicare Physician Fee Schedule (MPFS) and announces the telehealth originating site facility fee
payment amount. Section 1848(b)(1) of the Social Security Act requires the Secretary to establish by
regulation before November 1 of each year, fee schedules that establish payment amounts for physicians’
services for the subsequent year.

       The Centers for Medicare & Medicaid Services (CMS) issued a final rule with comment period
        on November 1, 2011, that updates payment policies and Medicare payment rates for services
        furnished by physicians and Non-Physician Practitioners (NPPs) that are paid under the MPFS in
        CY 2012.

       The final rule (published in the “Federal Register” on November 28, 2011) addresses Medicare
        public comments on payment policies that were described in two separate proposed notices
        earlier this year:

            o   The Five-Year Review of Work Relative Value Units Under the Physician Fee Schedule
                (published in the “Federal Register” on June 6, 2011), and

            o   The Medicare Program: Payment Policies under the Physician Fee Schedule and Other
                Revisions to Part B for CY 2012 (published in the “Federal Register” on July 19, 2011).

       The final rule also addresses interim final values established in the CY 2011 MPFS final rule with
        comment period (published in the “Federal Register” on November 29, 2010).

       Finally, the final rule assigns interim final values for new, revised, and potentially misvalued
        codes for CY 2012 and requests comments on these values. CMS will accept comments on those
        items open to comment in the final rule with comment period until January 3, 2012.

UPDATED POLICIES

Summary of Policies in the CY 2012 Medicare Physician Fee Schedule (MPFS)

Misvalued Codes Under the Physician Fee Schedule

The Affordable Care Act requires CMS to periodically review and identify potentially misvalued codes
and make appropriate adjustments to the relative values of the services that may be misvalued. CMS has
been engaged in a vigorous effort over the past several years to identify and revise potentially misvalued
codes. The final rule adopts coding changes and revisions to values for about 300 services that have been
identified as misvalued, reducing payments for these services by approximately $100 million. CMS also
identified additional categories of services that may be misvalued, including some of the highest
expenditure codes in each specialty that have not been reviewed in the past five years.

Multiple Procedure Payment Reduction Policy

Medicare has a longstanding policy to reduce payment by 50 percent for the second and subsequent
surgical procedures performed on the same patient by the same physician or group practice in the same
session, based on efficiencies in the practice expense (PE) and pre- and post-surgical physician work.
March 2012 Medicare Report                                                                          Page 59
Beginning on July 1, 2010, the Affordable Care Act increased the established MPFS multiple procedure
payment reduction (MPPR) for the technical component of certain single-session imaging services to
consecutive body areas from 25 to 50 percent for the second and subsequent imaging procedures
performed in the same session. For CY 2012, CMS is applying the MPPR to the professional component
(PC) of certain diagnostic imaging services. The MPPR currently applies only to the technical component
(TC). The procedure with the highest PC and TC payment would be paid in full. Beginning CY 2012, the
PC payment will be reduced for subsequent procedures furnished to the same patient, by the same
physician, in the same session. Although the final rule also applies this policy to procedures furnished to
the same patient in the same session by physicians in the same group practice, CMS is not applying the
imaging MPPR to group practices for 2012 due to operational considerations.

Revisions to the Practice Expense Geographic Adjustment

As required by the Medicare law, CMS adjusts payments under the MPFS to reflect local differences in
practice costs. CMS assigns separate geographic practice cost indices (GPCIs) to the work, practice
expenses (PE), and malpractice cost components of each of more than 7,000 types of physician services.
The Affordable Care Act revised the methodology for calculating the PE GPCIs for CY 2010 and CY
2011 so that the employee compensation and rent components of the PE GPCIs reflect only one-half of
the relative cost differences for each locality compared to the national average while CMS studied the
changes that are being undertaken in the 2012 physician fee schedule final rule.

CMS is applying several changes to the GPCIs as a result of additional analyses conducted both in
accordance with section 3102 (b) of the Affordable Care Act and commitments made in the CY 2011
final rule with comment period. For CY 2012, CMS will use the Bureau of Labor Statistics Occupational
Employment Statistics specific to the offices of physicians industry to calculate the PE employee wage
index. In addition, CMS is replacing the U.S Department of Housing and Urban Development rental data
as the proxy for physician office rent with rent data from the 2006-2008 American Community Survey.
Lastly, CMS is creating a purchased service index to account for the labor-related industries within the
“all other services” and “other professional expenses” Medicare Economic Index (MEI) categories. These
changes result in very little change to the GPCIs and indicate that the data CMS has used to adjust for
geographic variation is consistent and accurate. However, the expiration of statutory provisions, including
a floor of 1.0 for the work GPCI and the limited recognition of cost differences for employee wage and
office rent in the PE GPCI, will result in some payment reductions in the areas that benefitted from them
in 2010 and 2011. Congress may choose to extend one or both of these provisions for CY 2012
subsequent to the release of this CR. In the event that Congress decides to extend either of these
provisions for CY 2012, CMS will update the GPCIs for all impacted areas appropriately.

CMS is additionally basing the GPCI cost share weights on the revised and rebased 2006 MEI finalized
by OACT in the CY 2011 final rule with comment period. CMS opted not to adopt the 2006-based MEI
for GPCI cost share weights in the 2011 final rule in response to public comments. CMS subsequently
addressed many of these commenters concerns in the CY 2012 final rule through the changes that are
described above.

The Institute of Medicine (IOM) also has been evaluating the accuracy of the geographic adjustment
factors used for Medicare physician payment. Their first report released in full in September includes an
March 2012 Medicare Report                                                                          Page 60
evaluation of the accuracy of geographic adjustment factors for the hospital wage index and the GPCIs
and the methodology and data used to calculate them. CMS already is implementing many of the IOMs
recommendations through the revisions to the GPCIs adopted in the CY 2012 final rule with comment
period. Some IOM recommended revisions to the GPCIs will require a change in law.

Implementation of the 3-day Payment Window Policy in Wholly Owned or Wholly Operated
Entities On June 25, 2010, the Preservation of Access to Care for Medicare Beneficiaries and Pension
Relief Act of 2010 (PACMBPRA) was enacted. Section 102 of this Act, entitled "Clarification of 3-Day
Payment Window," clarified when certain non-diagnostic services furnished to Medicare beneficiaries in
the three days (or, in the case of a hospital that is not a subsection (d) hospital, (e.g. psychiatric, inpatient
rehabilitation, or long-term care) during the one day) preceding an inpatient admission should be
considered “operating costs of inpatient hospital services” and therefore included in the hospital’s
payment under the Hospital Inpatient Prospective Payment System (IPPS). This policy is generally
known as the "3-day payment window," and a hospital must include on the inpatient claim for a Medicare
beneficiary’s inpatient stay, the technical portion of all outpatient diagnostic services and admission-
related non-diagnostic services provided during the payment window. The statute makes no changes to
the existing policy regarding billing of diagnostic services.

When a physician’s office or clinic that is wholly owned or wholly operated by a hospital furnishes a
service subject to the 3 day payment window policy, Medicare will pay the Professional Component of
services with payment rates that include a professional and technical split and at the facility rate for
services that do not have a professional and technical split. Once a physician’s office or practice has
received confirmation of a beneficiary’s inpatient admission from the admitting hospital, it should, for
services furnished during the 3 day payment window, append CMS payment modifier PD (Diagnostic or
related non-diagnostic item or service provided in a wholly owned or operated entity to a patient who is
admitted as an inpatient within 3 days) to all claim lines for diagnostic services and for those non-
diagnostic services that have been identified as related to the inpatient stay. The new modifier will be
available for use on January 1, 2012, and CMS encourages wholly owned or wholly operated physician
offices and entities to begin to use the modifier when services are subject to the 3 day payment window
policy. CMS will delay implementation of the policy until July 1, 2012, so that physician’s offices and
entities may coordinate their internal claims and payment practices. Physician non-diagnostic services
that are unrelated to the hospital admission are not subject to the payment window and should be billed
without the payment modifier.

Annual Wellness Visit Providing a Personalized Prevention Plan

The Affordable Care Act provided for Medicare coverage for an Annual Wellness Visits (AWV)
providing personalized prevention plan services. The statute required that a Health Risk Assessment
(HRA) be included and taken into account in the provision of personalized prevention plan services as
part of the annual wellness visit. As a result, CMS included the HRA as a part of the AWV.

The Centers for Disease Control and Prevention (CDC) published “A Framework for Patient-Centered
Health Risk Assessments: Providing Health Promotion and Disease Prevention Services to Medicare
Beneficiaries.” This framework includes sections on:


March 2012 Medicare Report                                                                                Page 61
       History of health risk assessments,

       Defining the HRA framework and rationale for its use

       Use of HRAs and follow-up interventions that evidence suggests can influence health behaviors;
        and

       A suggested set of HRA questions.

As discussed in the preamble to the CY 2012 Physician Fee Schedule Final Rule, we believe it is
important that health professionals have the flexibility to address additional topics as appropriate, based
on patient needs, consistent with the final rule. Thus, there is not only one type of HRA that will meet the
CDC guidelines.

CMS is providing payment for the AWV through the same Level II HCPCS codes as were used in CY
2011 and is adjusting the payment rate for these HCPCS codes to accommodate the additional physician
office staff time that is expected to be expended in assisting a beneficiary with the completion of the
HRA.

Molecular Pathology Procedure Codes

Beginning January 1, 2012, there will be 101 additional molecular pathology procedure codes released by
the American Medical Association (AMA). However, each of these new molecular pathology procedure
codes represents a test that is currently being furnished and which may be billed to Medicare. When these
types of tests are billed to Medicare, the existing CPT codes are “stacked”, or billed in combination with
each other, to represent one given test. Under the new CPT coding structure for these molecular pathology
services, a physician or laboratory would bill Medicare the new, single CPT procedure code that
corresponds to the test represented by the “stacked” codes rather than billing each component of the test
separately. CMS notes that not all of the current “stacked” molecular pathology CPT codes represent
physicians’ services paid on the Physician Fee Schedule (PFS); many are only payable on the Clinical
Laboratory Fee Schedule (CLFS).

For payment purposes under the PFS and CLFS, these 101 new molecular pathology procedure codes will
be assigned a MPFS procedure status indicator of “B” (Bundled Code). Payments for covered services are
always bundled into payment for other services not specified. If RVUs are shown, they are not used for
Medicare payment. If these services are covered, payment for them is subsumed by the payment for the
services to which they are incident (for example, a telephone call from a hospital nurse regarding care of a
patient)). While these services would traditionally be assigned a procedure status indicator of “I” (Not
Valid for Medicare purposes Medicare uses another code for the reporting of, and the payment for these
services.), assigning these CPT codes a procedure status of B will allow CMS to gather claims
information important to evaluating eventual pricing of these new molecular pathology CPT codes.

To that end, as of January 1, 2012, Medicare requests that Medicare claims for molecular pathology
procedures reflect both the existing “stacked” CPT codes that are required for payment and the new single
CPT code that would be used for payment purposes if the new CPT codes were active. While the allowed
charge amount will be $0.00 for the new molecular pathology procedure codes that carry the procedure
March 2012 Medicare Report                                                                           Page 62
status indicator of B, Medicare requests that Medicare claims also reflect a charge for the non-payable
service. Please note that these CPT codes are listed in the CY 2012 PFS final rule as having a procedure
status indicator of I---the CY 2012 final rule text and accompanying files will be corrected to reflect the
procedure status indicator of B for these 101 molecular pathology CPT codes.

Telehealth Services

CMS is adding smoking and tobacco cessation counseling to the list of Medicare telehealth services.
These services are similar to other services, such as Kidney Disease Education (KDE) counseling services
and Medical Nutrition Therapy (MNT) services, already on the telehealth list. In addition, CMS is
changing the criteria for adding codes to the List of Medicare Telehealth services under the “category 2”
methodology (“category 1” are services that are similar to services already on the telehealth list).
Currently, CMS requires evidence of similar diagnostic findings or therapeutic interventions of a
requested service via telehealth to an in-person service prior to adding it to the telehealth list under
category 2. In the 2012 final rule with comment period, CMS eases the standard by no longer requiring
telehealth services to demonstrate equivalence to the same service provided face-to-face and instead
requires that the service demonstrate clinical benefit when furnished through telehealth. The refined
category 2 review criteria are effective for services requested to be added to the telehealth benefit
beginning in CY 2013.

Telehealth Originating Site Facility Fee Payment Amount

Section 1834(m) of the Social Security Act established the payment amount for the Medicare telehealth
originating site facility fee for telehealth services provided from October 1, 2001, through December 31,
2002, at $20.00. For telehealth services provided on or after January 1 of each subsequent calendar year,
the telehealth originating site facility fee is increased, as of the first day of the year, by the percentage
increase in the Medicare Economic Index (MEI) as defined in Section 1842(i)(3) of the Act. The MEI
increase for CY 2012 is 0.6 percent.

For CY 2012, the payment amount for Healthcare Common Procedure Coding System (HCPCS) code
Q3014 (Telehealth originating site facility fee) is 80 percent of the lesser of the actual charge or $24.24.
The beneficiary is responsible for any unmet deductible amount or coinsurance.

ADDITIONAL INFORMATION

For more information and access to the CY 2012 Final Rule, go to the “Physician Fee Schedule” available
at http://www.cms.gov/PhysicianFeeSched/01_Overview.asp#TopOfPage on the CMS website. The
official instruction, CR7671, issued to your FI, carrier and A/B MAC regarding this change, may be
viewed at http://www.cms.gov/Transmittals/downloads/R2371CP.pdf on the CMS website.

Multiple Procedure Payment Reduction (MPPR) on Certain
Diagnostic Imaging Procedures
MLN Matters® Number: MM7442
Related Change Request (CR) #: 7442
Related CR Release Date: November 4, 2011
March 2012 Medicare Report                                                                             Page 63
Effective Date: January 1, 2012
Related CR Transmittal #: R995OTN
Implementation Date: January 3, 2012


PROVIDER TYPES AFFECTED
This article is for physicians, clinical diagnostic laboratories, and other providers who bill Medicare
contractors (carriers or Medicare Administrative Contractors (A/B MACs)) for providing diagnostic
imaging services to Medicare beneficiaries.

PROVIDER ACTION NEEDED
Change Request (CR) 7442, from which this article is taken, announces that Medicare is expanding the
Multiple Procedure Payment Reduction (MPPR) to the Professional Component (PC) in addition to the
Technical Component (TC) of certain diagnostic imaging procedures. You should make sure that your
billing staffs are aware of these changes.

BACKGROUND
Section 3134 of the Affordable Care Act (ACA) added Section 1848(c)(2)(K) of the Social Security Act
which specifies that the Secretary of the Department of Health and Human Services must identify
potentially misvalued codes by examining multiple codes that are frequently billed in conjunction with
furnishing a single service. As a further step in implementing this provision, Medicare is making a change
to the MPPR on the certain diagnostic imaging procedures. Specifically, the Centers for Medicare &
Medicaid Services (CMS) is applying the MPPR to the PC services as well as to TC services.

 The MPPR on diagnostic imaging applies when multiple services are furnished by the same physician to
the same patient in the same session on the same day. Currently, the MPPR on diagnostic imaging
services applies only the TC services. It applies to both TC-only services and to the TC portion of global
services. Full payment is made for the service with the highest TC payment. Payment is made at 50
percent for the TC of subsequent services furnished by the same physician to the same patient in the same
session on the same day.

CMS is expanding the MPPR by applying it to PC services. Full payment is made for each PC and TC
service with the highest payment under the Medicare Physician Fee Schedule (MPFS). Payment is made
at 75 percent for subsequent PC services furnished by the same physician to the same patient in the same
session on the same day. Payment is made at 50 percent for subsequent TC services furnished by the same
physician to the same patient in the same session on the same day. Due to operational considerations,
CMS is not applying the imaging MPPR to group practices at this time.

The complete list of codes subject to the MPPR on diagnostic imaging is in Attachment 1 of CR7442,
which is at http://www.cms.gov/Transmittals/downloads/R937OTN.pdf on the CMS website. The
individual PC and TC services with the highest payments under the MPFS of globally billed services
must be determined in order to calculate the reduction.

The current and proposed payments are summarized in the following table:

March 2012 Medicare Report                                                                            Page 64
                                     Current       Current        Proposed
          Procedure     Procedure                                                 Proposed Payment
                                      Total         Total           Total
              1             2                                                        Calculation
                                     Payment      Calculation     Payment

                                                      No
 PC          $68             $102       $170                        $153           $105 + (.75 x $68)
                                                   Reduction

                                                  $476 + (.50 x
 TC          $476            $340       $646                        $646          $476 + (.50 x $340)
                                                     $340)

                                                  $170 + $476
                                                                               $102 + (.75 x $68) + $476
Global       $544            $442       $816        + (.50 x        $799
                                                                                    + (.50 x $340)
                                                     $340)



When applying the reduction, Medicare contractors will use modifier 51 to identify reduced PC services
and reduced global services as they do today for TC services. In addition, they will append Claim
Adjustment Reason Code 59 (Processed based on multiple or concurrent procedure rules. (For example
multiple surgery or diagnostic imaging, concurrent anesthesia) Note: Refer to the 835 Healthcare Policy
Identification Segment (Loop 2110 Service Payment Information REF), if present.) They will also assign
Group Code CO (contractual obligation).

ADDITIONAL INFORMATION
You will find the complete list of codes subject to the MPPR on diagnostic imaging and an example of
how payments are calculated in CR7442, which is the official instruction issued to your carrier or A/B
MAC on this issue. CR7442 is available at http://www.cms.gov/Transmittals/downloads/R995OTN.pdf
on the CMS website.


Coverage Issues

Procedure Code 95951
Highmark Medicare Services has identified documentation errors when providers bill procedure code
95951. The definition of this code per The 2012 Current Procedural Terminology (CPT) Manual is as
follows: Monitoring for localization of cerebral seizure focus by cable or radio, 16 or more channel
telemetry, combined electroencephalographic (EEG) and video recording and interpretation, (e.g., for pre-
surgical localization) each 24 hours.
March 2012 Medicare Report                                                                        Page 65
Procedure code 95951 is used per 24 hours of recording. This is used for recordings in which
interpretations can be made throughout the recording time, with interventions to alter or end the
recording, or to alter the patient care during the recordings as needed. For recording 12 hours or less, use
modifier 52.

Please ensure your documentation supports the proper use of procedure code 95951. Also, this code is
not to be used as a diagnostic procedure.

New Influenza Virus Vaccine Code
MLN Matters® Number: MM7580 Revised
Related Change Request (CR)#: 7580
Related CR Release Date: October 28, 2011
Effective Date: May 9, 2011
Related CR Transmittal #: R2337CP
Implementation Date: April 2, 2012

Note: This article was revised on December 7, 2011, to add a reference to MLN Matters® article SE1136
(www. cms.gov/MLNMattersArticles/downloads/SE1136.pdf) for educational products related to the
seasonal flu vaccines and vaccine administration to Medicare beneficiaries for the 2011-2012 flu season.
All other information remains the same.

PROVIDER TYPES

Providers and physicians submitting claims to Medicare contractors (Fiscal Intermediaries (FIs), Part A/B
Medicare Administrative Contractors (A/B MACs), and/or Regional Home Health Intermediaries
(RHHIs)) for influenza vaccines provided to Medicare beneficiaries are affected by this article.

WHAT YOU NEED TO KNOW
Effective May 9, 2011, claims with influenza virus vaccine code 90654 (influenza virus vaccine, split
virus, preservative-free, for intradermal use, for adults ages 18 – 64) will be payable by Medicare for
claims with dates of service on or after May 9, 2011, if submitted on or after April 2, 2012. HCPCS code
90654 was added to the 2011 HCPCS file effective January 1, 2011. However, 90654 didn’t become
payable by Medicare until May 9, 2011. Please make sure your billing staff is aware of these changes.
Medicare contractors will not adjust claims submitted prior to May 9, unless you bring such claims to
their attention.

BACKGROUND

Change Request (CR) 7580 advises that payment for this code to institutional providers is as follows:

       Hospitals (Types of Bill (TOB) 12X and 13X, Skilled Nursing Facilities (SNFs) (TOBs 22X and
        23X), Home Health Agencies (HHAs) (TOB 34X), hospital-based Renal Dialysis Facilities
        (RDFs) (TOB 72X) and Critical Access Hospitals (CAHs) (TOB 85X) are paid on reasonable
        cost;


March 2012 Medicare Report                                                                           Page 66
       Indian Health Service (IHS) hospitals (TOB12X and 13X) and IHS CAHs (TOB 85X) are paid
        based on the lower of the actual charge or 95% of the Average Wholesale Price (AWP); and

       Comprehensive outpatient rehabilitation facilities and independent RDFs (TOB 72X) are paid
        based on the lower of the actual charge or 95% of the AWP.

ADDITIONAL INFORMATION

The official instruction, CR7580, issued to your carrier, RHHI, FI or A/B MAC regarding this change
may be viewed at http://www.cms.gov/Transmittals/downloads/R2337CP.pdf on the CMS website.

Billing for Donor Post-Kidney Transplant Complication Services
MLN Matters® Number: MM7523 Revised
Related Change Request (CR) #:7523
Related CR Release Date: October 28, 2011
Effective Date: April 1, 2012 for claims processing, but policy effective November 28, 2011
Related CR Transmittal #: R148BP and R2334CP
Implementation Date: April 2, 2012

Note: This article was revised on November 7, 2011, to include sample claims as examples at the end of
the article. All other information is the same.

PROVIDER TYPES AFFECTED
Providers submitting claims to Medicare contractors (Fiscal Intermediaries (FIs), Part A/B Medicare
Administrative Contractors (A/B MACs), and/or Regional Home Health Intermediaries (RHHIs)) for
services provided to Medicare beneficiaries.

WHAT YOU NEED TO KNOW
Change Request (CR) 7523 does not convey any new or changed policy, but does convey clarification
language for two Medicare manuals. This clarification is being provided to ensure consistency among all
Medicare contractors in processing claims for Donor Post-Kidney Transplant Complications services. Be
sure your staff is aware of the clarifications.

KEY POINTS OF CR7523

Section 140.9 of Chapter 11 of the “Medicare Benefit Policy Manual” is being updated to show the
following:

The donor of an organ for a Medicare transplant is covered for an unlimited number of days of care in
connection with the organ removal operation. Days of inpatient hospital care used by the donor in
connection with the organ removal operation shall not be charged against either party’s utilization record.

Regarding donor follow-up:

       Expenses incurred by the transplant center for routine donor follow-up care are included in the

March 2012 Medicare Report                                                                          Page 67
        transplant center’s organ acquisition cost center.

       Follow-up services performed by the operating physician are included in the 90-day global
        payment for the surgery. Beyond the 90-day global payment period, follow-up services are billed
        using the recipient’s health insurance claim number.

       Follow-up services billed by a physician other than the operating physician for up to 3 months
        should be billed under the recipient’s health insurance claim number.

Regarding donor complications:

       Expenses incurred for complications that arise with respect to the donor are covered only if they
        are directly attributable to the donation surgery. Complications that arise after the date of the
        donor’s discharge will be billed under the recipient’s health insurance claim number. This is true
        of both facility cost and physician services. Billings for donor complications will be reviewed.

       In all of these situations, the donor is not responsible for co-insurance or deductible.

In addition, CR7523 is adding language to Section 90.1.3 of Chapter 3 of the “Medicare Claims
Processing Manual” to provide clarifications as follows:

       Expenses incurred for complications that arise with respect to the donor are covered and
        separately billable only if they are directly attributable to the donation surgery.

       All covered services (both institutional and professional) for complications from a Medicare
        covered transplant that arise after the date of the donor’s transplant discharge will be billed under
        the recipient’s health insurance claim number and are billed to the Medicare program in the same
        manner as all Medicare Part B services are billed.

       All covered donor post-kidney transplant complication services must be billed to the account of
        the recipient (i.e., the recipient's Medicare number).

       Modifier Q3 (Live Kidney Donor and Related Services) appears on each covered line of the
        claim.

       Institutional claims will be required to also include:

            o   Occurrence Code 36 (Date of Inpatient Hospital Discharge for covered transplant
                patients); and

            o   Patient Relationship Code 39 (Organ Donor).

Sample claims appear at the end of this article to provide examples of the above coding instructions.

ADDITIONAL INFORMATION

The official instruction, CR7523, was issued to your RHHI, FI or A/B MAC via two transmittals. The
first modifies the “Medicare Benefit Policy Manual” and it is at
March 2012 Medicare Report                                                                            Page 68
http://www.cms.gov/Transmittals/downloads/R148BP.pdf and the second at
http://www.cms.gov/Transmittals/downloads/R2334CP.pdf modifies the “Medicare Claims Processing
Manual”.

Autologous Cellular Immunotherapy Treatment of Metastatic
Prostate Cancer
MLN Matters® Number: MM7431 Revised
Related Change Request (CR) #: MM7431
Related CR Release Date: January 6, 2012
Effective Date: June 30, 2011
Related CR Transmittal #: R2380CP and R140NCD
Implementation Date: August 8, 2011

Note: This article was revised on January 10, 2012, to reflect a revised CR7431 issued on January 6,
2012. The article has been revised to show that a separate payment for the cost of administration is
allowed. In addition, the transmittal numbers, release date, and the Web address for accessing CR7431
have been revised. All other information is the same.

PROVIDER TYPES AFFECTED
Physicians, providers, and suppliers submitting claims to Medicare contractors (carriers, Fiscal
Intermediaries (FIs) and/or A/B Medicare Administrative Contractors (A/B MACs)) for metastatic
prostate cancer treatment services provided to Medicare beneficiaries are affected.

WHAT YOU NEED TO KNOW
The Centers for Medicare & Medicaid Services (CMS) finds that the evidence is adequate to
conclude that the use of autologous cellular immunotherapy treatment - Sipuleucel-T; PROVENGE®
improves health outcomes for Medicare beneficiaries with asymptomatic or minimally symptomatic
metastatic castrate-resistant (hormone refractory) prostate cancer. It is therefore reasonable and
necessary to use for this on-label indication under the Social Security Act (1862(a)(1)(A)) effective
for services performed on or after June 30, 2011.

BACKGROUND
In 2010 the Food and Drug Administration (FDA) approved Sipuleucel-T (APC8015) for patients with
castration-resistant, metastatic prostate cancer. The posited mechanism of action, immunotherapy, is
different from that of anti-cancer chemotherapy such as Docetaxel. This is the first immunotherapy for
prostate cancer to receive FDA approval.

The goal of immunotherapy is to stimulate the body's natural defenses (such as the white blood cells
called dendritic cells, T-lymphocytes and mononuclear cells) in a specific manner so that they attack and
destroy, or at least prevent the proliferation of, cancer cells. Specificity is attained by intentionally
exposing a patient's white blood cells to a particular protein (called an antigen) associated with the
prostate cancer. This exposure "trains" the white blood cells to target and attack the prostate cancer cells.
Clinically, this is expected to result in a decrease in the size and/or number of cancer sites, an increase in
March 2012 Medicare Report                                                                              Page 69
the time to cancer progression, and/or an increase in survival of the patient.

Change Request (CR) 7431 instructs that, effective for services performed on or after June 30, 2011,
CMS concludes that the evidence is adequate to support the use of autologous cellular immunotherapy
treatment - Sipuleucel-T; PROVENGE® for Medicare beneficiaries with asymptomatic or minimally
symptomatic metastatic castrate-resistant (hormone refractory) prostate cancer.

Medicare contractors will continue to process claims for PROVENGE® with dates of service on June 30,
2011, as they do currently when providers submit Not Otherwise Classified Healthcare Common
Procedure Coding System (HCPCS) code(s) J3590, J3490 or C9273. HCPCS code C9273 will be deleted
on June 30, 2011.

The new HCPCS code Q2043 will:

       Replace C9273 (Sipuleucel-T, minimum of 50 million autologous CD54+ cells activated with
        PAP-GM-CSF, including leukapheresis and all other preparatory procedures, per infusion);

       Be implemented in the July 2011 Update of Quarterly HCPCS Drug/Biological Code Changes
        (CR 7303 (Transmittal R2227CP); see http://www.cms.gov/transmittals/downloads/R2227CP.pdf
        on the CMS website); and

       Have an effective date of July 1, 2011.

The Ambulatory Surgical Center (ASC) Payment System will be updated to reflect these coding changes,
and these changes will be announced in the ASC Quarterly Update CR for July 2011.

Coverage for PROVENGE®, Q2043, for asymptomatic or minimally symptomatic metastatic castrate-
resistant (hormone refractory) prostate cancer is limited to one (1) treatment regimen in a patient’s
lifetime, consisting of three (3) doses with each dose administered approximately two (2) weeks apart for
a total treatment period not to exceed 30 weeks from the first administration.

The language given in the long descriptor of Provenge® that states “all other preparatory procedures”
refers to the transportation process of collecting immune cells from a patient during a non-therapeutic
leukapheresis procedure, subsequently sending the immune cells to the manufacturing facility, and then
transporting the immune cells back to the site of service to be administered to the patient, as well as the
infusion of the immune cells to the patient. Q2043 is all-inclusive and represents all routine costs with the
exception of its administration - the cost of Provenge® administration can be billed separately.

Note: For a local coverage determination by an individual MAC to cover PROVENGE® “off-label” for
the treatment of prostate cancer, the International Classification of Diseases, Ninth Revision (ICD-9)
diagnosis code must be either 233.4 (carcinoma in situ of prostate) or 185 (malignant neoplasm of
prostate). ICD-9 diagnosis code 233.4 may not be used for “on-label” coverage claims.

CODING AND BILLING INFORMATION
For claims with dates of service on and after July 1, 2011, for PROVENGE®, the on-label indication of
asymptomatic or minimally symptomatic metastatic, castrate-resistant (hormone refractory) prostate

March 2012 Medicare Report                                                                            Page 70
cancer, must be billed using ICD-9 code 185 (malignant neoplasm of prostate) and at least one of the
following ICD-9 codes:

       ICD-9 Code       Description

                        Secondary and unspecified malignant neoplasm of intrathoracic lymph
       196.1
                        nodes

                        Secondary and unspecified malignant neoplasm of intra-abdominal lymph
       196.2
                        nodes

                        Secondary and unspecified malignant neoplasm of lymph nodes of
       196.5
                        inguinal region and lower limb

                        Secondary and unspecified malignant neoplasm of intrapelvic lymph
       196.6
                        nodes

                        Secondary and unspecified malignant neoplasm of lymph nodes of
       196.8
                        multiple sites

                        Secondary and unspecified malignant neoplasm of lymph node site
       196.9            unspecified - The spread of cancer to and establishment in the lymph
                        nodes.

                        Secondary malignant neoplasm of lung – Cancer that has spread from the
       197.0            original (primary) tumor to the lung. The spread of cancer to the lung.
                        This may be from a primary lung cancer, or from a cancer at a distant site.

                        Malignant neoplasm of liver secondary –

                        Cancer that has spread from the original (primary) tumor to the liver. A
       197.7            malignant neoplasm that has spread to the liver from another (primary)
                        anatomic site. Such malignant neoplasms may be carcinomas (e.g., breast,
                        colon), lymphomas, melanomas, or sarcomas.

                        Secondary malignant neoplasm of kidney –

       198.0            The spread of the cancer to the kidney. This may be from a primary
                        kidney cancer involving the opposite kidney, or from a cancer at a distant
                        site.

       198.1            Secondary malignant neoplasm of other urinary organs

                        Secondary malignant neoplasm of bone and bone marrow – Cancer that has
                        spread from the original (primary) tumor to the bone. The spread of a malignant
       198.5
                        neoplasm from a primary site to the skeletal system. The majority of metastatic
                        neoplasms to the bone are carcinomas.


March 2012 Medicare Report                                                                                Page 71
       ICD-9 Code        Description

       198.7             Secondary malignant neoplasm of adrenal gland

       198.82            Secondary malignant neoplasm of genital organs



Coding for Off-Label PROVENGE® Services

At the discretion of the local Medicare Administrative Contractors, claims with dates of service on and
after July 1, 2011, for PROVENGE® paid off-label for the treatment of prostate cancer must be billed
using either ICD-9 code 233.4 (carcinoma in situ of prostate) or 185 (malignant neoplasm of prostate) in
addition to HCPCS Q2043. Effective with the implementation date for ICD-10 codes, off-label
PROVENGE® services must be billed with either ICD-10 code D075 (carcinoma in situ of prostate) or
C61 (malignant neoplasm of prostate) in addition to HCPCS Q2043.

ICD-10 Diagnosis Coding

The appropriate ICD-10 code(s) that are listed below are for future implementation.

               ICD -10                                 Description

          C78.01             Secondary malignant neoplasm of right lung

          C78.02             Secondary malignant neoplasm of left lung

          C78.7              Secondary malignant neoplasm of liver

                             Secondary malignant neoplasm of unspecified kidney and renal
          C79.00
                             pelvis

          C79.01             Secondary malignant neoplasm of right kidney and renal pelvis

          C79.02             Secondary malignant neoplasm of left kidney and renal pelvis

          C79.10             Secondary malignant neoplasm of unspecified urinary organs

          C79.11             Secondary malignant neoplasm of bladder

          C79.19             Secondary malignant neoplasm of other urinary organs

          C79.51             Secondary malignant neoplasm of bone

          C79.52             Secondary malignant neoplasm of bone marrow




March 2012 Medicare Report                                                                        Page 72
                                                       Description
              ICD -10


          C79.70             Secondary malignant neoplasm of unspecified adrenal gland

          C79.71             Secondary malignant neoplasm of right adrenal gland

          C79.72             Secondary malignant neoplasm of left adrenal gland

          C79.82             Secondary malignant neoplasm of genital organs



Types of Bill (TOB) and Revenue Codes

The applicable TOBs for PROVENGE® are: 12X, 13X, 22X, 23X, 71X, 77X, and 85X.

On institutional claims, TOBs 12X, 13X, 22X, 23X, and 85X, use revenue code 0636 - drugs requiring
detailed coding.

Payment Methods

Payment for PROVENGE® is as follows:

       TOBs 12X, 13X, 22X and 23X - based on the Average Sales Price (ASP) + 6%,

       TOB 85X – based on reasonable cost,

       TOBs 71X and 77X – based on all-inclusive rate (drugs/supplies are not reimbursed separately).

       For Medicare Part B practitioner claims, payment for PROVENGE® is based on ASP + 6%.

Note: Medicare Contractors will not pay separately for routine costs associated with PROVENGE®.
HCPCS Q2043 is all-inclusive and represents all routine costs associated with its administration.

Remittance Advice Remark Codes (RARCs), Claim Adjustment Reason Codes (CARCs), and
Group Codes

Medicare will use the following messages when denying claims for the on-label indication for
PROVENGE®, HCPCS Q2043, submitted without ICD-9-CM diagnosis code 185 and at least one
diagnosis code from the ICD-9 table shown above:

       RARC 167 - This (these) diagnosis (es) are not covered. Note: Refer to the 835 Healthcare Policy
        Identification segment (loop 2110 Service Payment Information REF), if present.

       Group Code - Contractual Obligation (CO)

       Medicare will use the following messages when denying line items on claims for the off-label

March 2012 Medicare Report                                                                       Page 73
        indication for PROVENGE®, HCPCS Q2043, submitted without ICD-9-CM diagnosis code
        233.4 or 185:

       RARC 167 - This (these) diagnosis (es) are not covered. Note: Refer to the 835 Healthcare Policy
        Identification segment (loop 2110 Service Payment Information REF), if present.

       Group Code – CO.

When denying claims for PROVENGE®, HCPCS Q2043® that exceed three (3) payments in a patient’s
lifetime, contractors shall use the following messages:

       RARC N362 - The number of Days or Units of Service exceeds our acceptable maximum.

       CARC 149 - Lifetime benefit maximum has been reached for this service/benefit category.

       Group Code - CO.

When denying claims for PROVENGE®, HCPCS Q2043® that are provided more than 30 weeks from
the date of the 1st PROVENGE® administration, contractors shall use the following messages:

       CARC B5 – Coverage/program guidelines were not met or were exceeded.

       Group Code – CO.

ADDITIONAL INFORMATION
The official instruction, CR 7431, was issued to carriers, FIs, and A/B MACs via two transmittals. The
first modifies the National Coverage Determinations manual and it is at
http://www.cms.gov/Transmittals/downloads/R140NCD.pdf on the CMS website. The second updates the
Medicare Claims Processing Manual and it is at
http://www.cms.gov/Transmittals/downloads/R2380CP.pdf on the CMS website.


Specialty News

Implementation of the PWK (Paperwork) Segment for X12N
Version 5010
MLN Matters® Number: MM7041 Revised
Related Change Request (CR) #: 7041
Related CR Release Date: April 20, 2011
Effective Date: July 1, 2011
Related CR Transmittal #: R874OTN
Implementation Date: July 5, 2011

Note: This article was revised on April 21, 2011, to reflect a revised CR7041 issued on April 20, 2011. In
this article, the CR release date, transmittal number, and the Web address for accessing CR7041 have

March 2012 Medicare Report                                                                          Page 74
been revised. Also, a reference to MLN Matters® article SE1106 was added in the Additional Information
section to give important reminders about the implementation of HIPAA 5010 and D.O., including Fee
For Service implementation schedule and readiness assessments

PROVIDER TYPES AFFECTED
This article is for physicians, suppliers, and providers billing Medicare contractors (carriers, Part A/B
Medicare Administrative Contractors (MACs), Durable Medical Equipment (DME) MACs, and fiscal
intermediaries (FIs) including regional home health intermediaries (RHHIs)).

PROVIDER ACTION NEEDED
This article is based on Change Request (CR) 7041 which announces the implementation of the PWK
(paperwork) segment for X12N Version 5010. Be sure your billing staff is aware of these changes.

BACKGROUND
Since 2003, the Centers for Medicare & Medicaid Services (CMS) has believed that a complete Health
Insurance Portability & Accountability Act of 1996 (HIPAA) implementation involves implementing the
PWK (paperwork) segment. The PWK is a segment within the 837 Professional and Institutional
electronic transactions. The PWK segment provides the “linkage” between electronic claims and
additional documentation which is needed for claims adjudication. Although the PWK segment allows for
an electronic submission of the additional documentation, this preliminary implementation will only
allow for submission of additional documentation via mail and fax.

The implementation of a dedicated PWK process, involving OCR/imaging technology, allows providers
to continue using cost effective electronic data interchange (EDI) technology as well as providing cost
savings for the Medicare program. Medicare contractors will be responsible for imaging, storage, and
retrieval of the additional documentation for their claims examiners. Having the documentation available
to claims examiners eliminates the need for costly automated development.

KEY POINTS FOR MEDICARE BILLERS
       Your Medicare contractor will implement the appropriate PWK fax/mail cover sheet for their line
        of business which must be used by trading partners when mailing or faxing additional
        documentation which is indicated in the PWK segment. Sample versions of the fax/mail cover
        sheets are attached to CR 7041, which is available at
        http://www.cms.gov/Transmittals/downloads/R874OTN.pdf on the CMS website.

       Your Medicare contractor will provide the cover sheet to their trading partners via hardcopy
        and/or electronic download.

       Submitters must send the additional documentation AFTER the claim has been electronically
        submitted with the PWK segment.

       Submitters will need to accurately and completely record data on the fax/mail cover sheet that
        relates the faxed/mailed data to the PWK Loop on the claim.


March 2012 Medicare Report                                                                            Page 75
       Medicare contractors will manually return PWK data submissions (cover sheet) which are
        incomplete or incorrectly filled out.

       Medicare contractors will allow seven calendar “waiting” days (from the date of receipt) for
        additional information to be faxed or ten calendar “waiting” days for additional information to be
        mailed.

       Submitters must send ALL relevant PWK data at the same time for the same claim.

       If the additional documentation is not received within the seven calendar waiting days (fax) or ten
        calendar waiting days for mailed submissions, your contractor will begin normal processing
        procedures on your claim.

       Medicare will not crossover PWK data to the Coordination of Benefits contractor.

ADDITIONAL INFORMATION
The official instruction (CR 7041) issued to your MAC and/or FI/carrier is available at
http://www.cms.gov/Transmittals/downloads/R874OTN.pdf on the CMS website.

You may also want to review MLN Matters® article MM7306 at
http://www.cms.gov/MLNMattersArticles/downloads/MM7306.pdf on the CMS website.

You may also want to review MLN Matters® article SE1106 available at
http://www.cms.gov/MLNMattersArticles/downloads/SE1106.pdf for important reminders about the
implementation of HIPAA 5010 and D.O., including Fee For Service implementation schedule and
readiness assessments.

January 2012 Update of the Ambulatory Surgery Center (ASC)
Payment System
MLN Matters® Number: MM7682 Revised
Related Change Request (CR) #: 7682
Related CR Release Date: December 29, 2011
Effective Date: January 1, 2012
Related CR Transmittal #: R2378CP
Implementation Date: January 3, 2012

Note: This article was revised on January 10, 2012, to show the correct effective and implementation
dates above as being 2012, not 2011. All other information is the same.

PROVIDER TYPES AFFECTED
This article is for Ambulatory Surgery Centers (ASCs), which submit claims to Medicare Administrative
Contractors (MACs) and carriers, for services provided to Medicare beneficiaries paid under the ASC
payment system.


March 2012 Medicare Report                                                                          Page 76
WHAT YOU NEED TO KNOW
This article is based on Change Request (CR) 7682 which describes changes to and billing instructions
for payment policies implemented in the January 2012 ASC Procedure Coding System (HCPCS).
Included in CR7682 are Calendar Year (CY) 2012 payment rates for separately payable drugs and
biologicals, including long descriptors for newly created Level II HCPCS codes for drugs and biologicals
(ASC DRUG files), and the CY 2012 ASC payment rates for covered surgical and ancillary services
(ASCFS file). Many ASC payment rates under the ASC payment system are established using payment
rate information in the Medicare Physician Fee Schedule (MPFS). The payment files associated with
CR7682 reflect the most recent changes to CY 2012 MPFS payment.

KEY POINTS OF CR7682
New Device Pass-Through Category and Device Offset from Payment

       CMS is establishing one new device pass-through category as of January 1, 2012, for the
        Outpatient Prospective Payment System (OPPS) and the ASC payment system. HCPCS code
        C1886 (Catheter, extravascular tissue ablation, any modality (insertable)), which is assigned ASC
        Payment Indicator (PI) of J7 (OPPS pass-through device paid separately when provided integral
        to a surgical procedure on ASC list; payment contractor-priced).

       CMS has determined that it is able to identify a portion of the OPPS payment associated with the
        cost of HCPCS code C1840 for the insertion procedure described by new HCPCS code C9732
        (Insertion of ocular telescope prosthesis including removal of crystalline lens). Therefore, ASC
        payment for the nondevice facility resources for the insertion procedure will be based upon the
        nondevice portion of the related OPPS payment weight for HCPCS code C9732. The ASC Code
        Pair File will be used to establish the reduced ASC payment amount for HCPCS code C9732 only
        when billed with HCPCS code C1840.

Billing Instructions for C9732 and C1840

       Pass-through category C1840 (Lens, intraocular (telescopic)), is to be billed and paid for as a
        pass-through device only when provided with C9732 (Insertion of ocular telescope prosthesis
        including removal of crystalline lens) beginning on and after the effective date for C9732 of
        January 1, 2012.

New Procedure Code

       CMS is establishing two new procedure codes effective January 1, 2012. The following table
        provides a listing of the descriptor and payment information for these new codes:




March 2012 Medicare Report                                                                          Page 77
               Effective                                                                       CY2012
   HCPCS                     Short Descriptor                  Long Descriptor
                 Date                                                                            PI

                                Insert ocular       Insertion of ocular telescope prosthesis
    C9732     01-01-2012                                                                          G2
                               telescope pros        including removal of crystalline lens

                                                    Insertion or replacement of a permanent
                                                      cardioverter-defrillator system with
                             Place perm pacing          transvenous led(s) single or dual
    G0448     01-01-2012                                                                           J8
                                 cardiovert            chamber with insertaion of pacing
                                                     electrode, cardiac, venous system, for
                                                             left ventricular pacing



Cardiac Resynchronization Therapy Payment for Calendar Year (CY) 2012

       Effective for services furnished on or after January 1, 2012, cardiac resynchronization therapy
        involving an implantable cardioverter defibrillator (CRT-D) will be recognized as a single,
        composite service combining implantable cardioverter defibrillator procedures (described by
        Current Procedural Terminology (CPT) code 33249 (Insertion or repositioning of electrode
        lead(s) for single or dual chamber pacing cardioverter-defibrillator and insertion of pulse
        generator)) and pacing electrode insertion procedures (described by CPT code 33225 (Insertion of
        pacing electrode, cardiac venous system, for left ventricular pacing, at time of insertion of pacing
        cardioverter-defibrillator or pacemaker pulse generator (including upgrade to dual chamber
        system))) when performed on the same Date of Service in an ASC.

       The payment rate for CRT-D services in ASCs will be based on the OPPS payment rate
        applicable to APC 0108 and ASCs will use the HCPCS Level II G-code G0448 (Insertion or
        replacement of a permanent pacing cardioverter-defibrillator system with transvenous lead(s)
        single or dual chamber with insertion of pacing electrode, cardiac venous system, for left
        ventricular pacing) for proper reporting when the procedures described by CPT codes 33225 and
        33249 are performed on the same Date of Service. When these procedures are not performed on
        the same Date of Service, the ASC payment rate will be based on the standard APC assignment
        for each service and ASCs should report the appropriate CPT codes for the individual procedures.

Reporting HCPCS Codes for All Drugs, Biologicals, and Radiopharmaceuticals

       CMS strongly encourages ASCs to report charges for all separately payable drugs and
        biologicals, using the correct Healthcare Common Procedure Coding System (HCPCS) codes for
        the items used. ASCs billing for these products must make certain that the reported units of

March 2012 Medicare Report                                                                           Page 78
        service for the reported HCPCS codes are consistent with the quantity of the drug or biological
        that was used in the care of the patient. ASCs should not report HCPCS codes and separate
        charges for drugs and biologicals that receive packaged payment through the payment for the
        associated covered surgical procedure.

       CMS reminds ASCs that under the ASC payment system if two or more drugs or biologicals are
        mixed together to facilitate administration, the correct HCPCS codes should be reported
        separately for each product used in the care of the patient. The mixing together of two or more
        products does not constitute a "new" drug as regulated by the Food and Drug Administration
        (FDA) under the New Drug Application (NDA) process. In these situations, ASCs are reminded
        that it is not appropriate to bill HCPCS code C9399. HCPCS code C9399, Unclassified drug or
        biological, is for new drugs and biologicals that are approved by the FDA on or after January 1,
        2004, for which a HCPCS code has not been assigned.

       Unless otherwise specified in the long description, HCPCS descriptions refer to the non-
        compounded, FDA-approved final product. If a product is compounded and a specific HCPCS
        code does not exist for the compounded product, the ASC should include the charge for the
        compounded product in the charge for the surgical procedure performed. HCPCS payment
        updates are posted to the CMS website quarterly at:
        http://www.cms.gov/ASCPayment/11_Addenda_Updates.asp on the Centers for Medicare &
        Medicaid Services (CMS) website.

Drugs and Biologicals with Payment Based on Average Sales Price (ASP) Effective January 1, 2012

       Payments for separately payable drugs and biologicals based on the Average Sales Prices (ASPs)
        are updated on a quarterly basis as later quarter ASP submissions become available. Effective
        January 1, 2012, payment rates for many covered ancillary drugs and biologicals have changed
        from the values published in the CY 2012 OPPS/ASC final rule with comment period as a result
        of the new ASP calculations based on sales price submissions from the third quarter of CY 2011.
        In cases where adjustments to payment rates are necessary, the updated payment rates will be
        incorporated in the January 2012 release of the ASC DRUG file. CMS is not publishing the
        updated payment rates in CR7682 implementing the January 2012 update of the ASC payment
        system. However, the updated payment rates effective January 1, 2012, for covered ancillary
        drugs and biologicals can be found in the January 2012 update of the ASC, Addendum BB. That
        addendum is available at: http://www.cms.gov/ASCPayment/11_Addenda_Updates.asp on the
        CMS Website.


New CY 2012 HCPCS Codes and Dosage Descriptors for Certain Drugs, Biologicals, and
Radiopharmaceuticals

       For CY 2012, several new HCPCS codes have been created for reporting drugs and biologicals in
        the ASC setting, where there have not previously been specific codes available. These new codes
        are listed in the table below.


March 2012 Medicare Report                                                                         Page 79
         CY 2012
                                                                                              CY2012
          HCPC                            CY 2012 Long Descriptor
                                                                                                PI
          Code

        A9585         Injection gadabutrol, 0.1 ml                                           NI

        C9287         Injection, brentuximab vedotin, 1mg                                    K2

        C9366         Epifix, per square centimeter                                          K2

        J0257         Injection, alpha 1 proteinase inhibitor (human), (glassia), 10 mg      K2

        J7180         Injection, factor xiii (antihemophilic factor, human), 1 i.u.          K2

                      Hyaluronan or derivative, gel-one, for intra-articular injection,
        J7326                                                                                K2
                      per dose

        J8561         Everolimus, oral, 0.25 mg                                              K2

        Q4122         Dermacell, per square centimeters                                      K2



Other Changes to CY 2012 HCPCS for Certain Drugs, Biologicals, and Radiopharmaceuticals

       Many HCPCS and CPT codes for drugs, biologicals, and radiopharmaceuticals have undergone
        changes in their HCPCS and CPT code descriptors that will be effective in CY 2012. In addition,
        several temporary HCPCS C-codes have been deleted effective December 31, 2011, and replaced
        with permanent HCPCS codes in CY 2012. ASCs should pay close attention to accurate billing
        for units of service consistent with the dosages contained in the long descriptors of the active CY
        2012 HCPCS and CPT codes. These changes are reflected in the following table:

    CY 2011                                                    CY 2012
                        CY 2011 Long Descriptor                                 CY 2012 Long Descriptor
 HCPCS Code                                                  HCPCS Code
                   Injection, immune globulin                                 Injection, immune globulin,
C9270              (Gammaplex), intravenous, non-           J1557             (Gammaplex), intravenous, non-
                   lyophilized (e.g. liquid), 500 mg                          lyophilized (e.g. liquid), 500 mg

                                                                              Injection, denosumab, 1 mg
C9272              Injection, denosumab, 1 mg               J0897


March 2012 Medicare Report                                                                              Page 80
                                                          CY 2012
   CY 2011                                                                CY 2012 Long
                      CY 2011 Long Descriptor              HCPCS
HCPCS Code                                                                   Descriptor
                                                            Code
                   Sipuleucel-t, minimum of 50                      Sipuleucel-t, minimum of 50
                   million autologous cd54+ cells                   million autologous cd54+
                   activated with pap-gm-csf,                       cells activated with pap-gm-
C9273                                                    Q2043*
                   including leukapheresis and all                  csf, including leukapheresis
                   other preparatory procedures, per                and all other preparatory
                   infusion                                         procedures, per infusion

                                                                    Injection, crotalidae
                   Crotalidae Polyvalent Immune Fab
C9274                                                    J0840      polyvalent immune fab
                   (Ovine), 1 vial
                                                                    (ovine), up to 1 gram

C9276              Injection, cabazitaxel, 1 mg          J9043      Injection, cabazitaxel, 1 mg

                   Injection, alglucosidase alfa                    Injection, alglucosidase alfa,
C9277                                                    J0221
                   (Lumizyme), 1 mg                                 (lumizyme), 10 mg

                   Injection, incobotulinumtoxin A, 1               Injection, incobotulinumtoxin
C9278**                                                  J0588
                   unit                                             A, 1 unit

                   Injection, incobotulinumtoxin A, 1               Injection, incobotulinumtoxin
Q2040**                                                  J0588
                   unit                                             A, 1 unit

                                                                    Injection, eribulin mesylate,
C9280              Injection,eribulin mesylate, 1 mg     J9179
                                                                    0.1 mg

C9281              Injection, pegloticase, 1 mg          J2507      Injection, pegloticase, 1 mg

                   Injection, ceftaroline fosamil, 10               Injection, ceftaroline fosamil,
C9282                                                    J0712
                   mg                                               10 mg

                                                                    Injection, acetaminophen, 10
C9283              Injection, acetaminophen, 10 mg       J0131
                                                                    mg

C9284              Injection, ipilimumab, 1 mg           J9228      Injection, ipilimumab, 1 mg

                   Oasis Ultra Tri-Layer matrix, per                Oasis ultra tri-layer wound
C9365                                                    Q4124
                   square centimeter                                matrix, per square centimeter

                                                                    Iodine i-123 ioflupane,
                   Iodine I-123 ioflupane, diagnostic,
C9406                                                    A9584      diagnostic, per study dose, up
                   per study dose, up to 5 millicuries
                                                                    to 5 millicuries



March 2012 Medicare Report                                                                  Page 81
                                                             CY 2012
   CY 2011                                                                    CY 2012 Long
                      CY 2011 Long Descriptor                 HCPCS
HCPCS Code                                                                      Descriptor
                                                               Code
                                                                       Injection, alglucosidase alfa,
J0220              Injection, alglucosidase alfa, 10 mg     J0220      10 mg, not otherwise
                                                                       classified

                                                                       Injection, alpha 1 proteinase
                   Injection, alpha 1 - proteinase
J0256                                                       J0256      inhibitor (human), not
                   inhibitor - human, 10 mg
                                                                       otherwise specified, 10mg

                                                                       Injection, immune globulin,
                   'Injection, immune globulin,                        (Gamunex/Gamunex-
J1561              (Gamunex), intravenous, non-             J1561      c/Gammaked), non-
                   lyophilized (e.g. liquid), 500 mg                   lyophilized (e.g., liquid), 500
                                                                       mg

Q2044              Injection, belimumab, 10 mg              J0490      Injection, belimumab, 10 mg

                                                                       Injection,
                   Injection, hydroxyprogesterone
Q2042                                                       J1725      hydroxyprogesterone
                   caproate, 1 mg
                                                                       caproate, 1 mg

                   Hypertonic saline solution, 50 or                   Hypertonic saline solution, 1
J7130                                                       J7131
                   100 meq, 20 cc vial                                 ml

                   Injection, von willebrand factor                    Injection, von willlebrand
Q2041              complex (human), wilate, 1 i.u.          J7183      factor complex (human),
                   vwf:rco                                             wilate, 1 i.u. vwf:rco

                                                                       Ondansetron 1 mg, oral, fda
                   Ondansetron hydrochloride 8 mg,
                                                                       approved prescription anti-
                   oral, fda approved prescription anti-
                                                                       emetic, for use as a complete
                   emetic, for use as a complete
                                                                       therapeutic substitute for an iv
Q1079              therapeutic substitute for an iv anti-   Q0162
                                                                       anti-emetic at the time of
                   emetic at the time of chemotherapy
                                                                       chemotherapy treatment, not
                   treatment, not to exceed a 48 hour
                                                                       to exceed a 48 hour dosage
                   dosage regimen
                                                                       regimen

*HCPCS code Q2043 was effective July 1, 2011 ** HCPCS code C9278 was replaced with HCPCS code
Q2040 effective April 1, 2011. HCPCS code Q2040 was subsequently replaced with HCPCS code J0588,
effective January 1, 2012.

Updated Payment Rates for Certain HCPCS Codes Effective October 1, 2011, through December 31,
2011
March 2012 Medicare Report                                                                      Page 82
       The payment rates for HCPCS codes J9600 and Q4121 were incorrect in the October 2011 ASC
        Drug file. The corrected payment rates are $19,143.46 for J9600 and $20.77 for Q4121. They
        have been included in the revised October 2011 ASC Drug file, effective for services furnished
        on October 1, 2011, through implementation of the January 2012 update. Suppliers who think
        they may have received an incorrect payment between October 1, 2011, and December 31, 2011,
        may request contractor adjustment of the previously processed claims.

Correct Reporting of Biologicals When Used As Implantable Devices

       ASCs are reminded that HCPCS codes describing skin substitutes (Q4100 – Q4130) should only
        be reported when used with one of the CPT codes describing application of a skin substitute
        (15271-15278). These Q codes for skin substitutes should not be billed when used with any other
        procedure besides the skin substitute application procedures.

ASC Quality Measures

In Transmittal 934, issued August 1, 2011, CMS announced that the G codes tied to the M5 PI indicator
would be effective 1/1/2012. CMS intends to include these HCPCS and further clarification in the April
2012 ASC quarterly update.

Billing for Thermal Anal Lesions by Radiofrequency Energy

       For CY 2012, the CPT Editorial Panel created new CPT code 0288T (Anoscopy, with delivery of
        thermal energy to the muscle of the anal canal (e.g., for fecal incontinence)) to describe the
        procedure associated with radiofrequency energy of thermal anal lesions. Prior to CY 2012, this
        procedure was described by HCPCS code C9716 (Creations of thermal anal lesions by
        radiofrequency energy). In Addendum B of the CY 2012 OPPS/ASC final rule, both HCPCS
        code C9716 and 0288T were assigned to specific APCs. Specifically, HCPCS code C9716 was
        assigned to APC 0150 (Level IV Anal/Rectal Procedures) and CPT code 0288T was assigned to
        APC 0148 (Level I Anal/Rectal Procedures). Because HCPCS code C9716 is described by CPT
        code 0288T, CMS is deleting HCPCS code C9716 on December 31, 2011, since it will be
        replaced with CPT code 0288T effective January 1, 2012. In addition, CMS is reassigning CPT
        code 0288T from APC 0148 to APC 0150 effective January 1, 2012. The table below lists the
        final ASC payment indicator for HCPCS codes C9716 and 0288T. The ASCPI file will reflect
        this deletion with PI=D5 for C9716 effective 1/1/2012.

                       HCPCS
                                         Short Descriptor            CY 2012 PI
                        Code

                        C9716      Radiofrequency energy to anu          D5

                        0288T         Anoscopy w/rf delivery             G2



Payment When a Device is Furnished With No Cost or With Full or Partial Credit

March 2012 Medicare Report                                                                       Page 83
       For CY 2012, CMS updated the list of ASC covered device intensive procedures and devices that
        are subject to the no cost/full credit and partial credit device adjustment policy. Contractors will
        reduce the payment for the device implantation procedures listed in Attachment A of CR7682, by
        the full device offset amount for no cost/full credit cases. ASCs must append the modifier “FB”
        to the HCPCS procedure code when the device furnished without cost or with full credit is listed
        in Attachment B of CR7682, and the associated implantation procedure code is listed in
        Attachment A of CR7682. In addition, contractors will reduce the payment for implantation
        procedures listed in Attachment A of CR7682 by one half of the device offset amount that would
        be applied if a device were provided at no cost or with full credit, if the credit to the ASC is 50
        percent or more of the device cost. If the ASC receives a partial credit of 50 percent or more of
        the cost of a device listed in Attachment B of CR7682, the ASC must append the modifier “FC”
        to the associated implantation procedure code if the procedure is listed in Attachment A of
        CR7682. A single procedure code should not be submitted with both modifiers “FB” and “FC.”

       More information regarding billing for procedures involving no cost/full credit and partial credit
        devices is available in the “Medicare Claims Processing Manual,” Chapter 14, Section 40.8. This
        manual section is at http://www.cms.gov/manuals/downloads/clm104c14.pdf on the CMS
        website.

ADDITIONAL INFORMATION

Three attachments are included in CR7682. They are:

       Attachment A: CY2012 ASC COVERED SURGICAL PROCEDURES AND ANCILLARY
        SERVICES THAT ARE NEWLY PAYABLE IN ASCs;

       Attachment B: CY 2012 ASC PROCEDURES TO WHICH THE NO COST/FULL CREDIT
        AND PARTIAL CREDIT DEVICE ADJUSTMENT POLICY APPLIES;

       Attachment C: CY 2012 DEVICES FOR WHICH THE “FB” OR “FC” MODIFIER MUST BE
        REPORTED WITH THE ASC.

CR 7682 may be viewed at http://www.cms.gov/Transmittals/downloads/R2378CP.pdf on the CMS
website.


Electronic Data Interchange (EDI) News

New Fax Number for Highmark Medicare Services EDI
Beginning on March 1, 2012, Highmark Medicare Services EDI has a new fax number, 1-877-439-5479,
for submitting enrollment forms and general correspondence. The new fax number is beneficial in
ensuring timely processing of requests from the provider community. EDI Enrollment forms have been
updated to include the new fax number. It is important to use the most recent version of the EDI
Enrollment form when enrolling for EDI or updating existing EDI status. There is also a new fax cover
sheet available to use when faxing any type of written requests to Highmark Medicare Services EDI. This

March 2012 Medicare Report                                                                           Page 84
is anticipated to significantly increase the efficiency of handling these requests. Always visit our Web
site to obtain the most up-to-date documents.

As a reminder, the EDI Enrollment forms should be completed on the Web site, printed, and then faxed.
Completing the form on the Web site will help ensure accurate form processing, and reduce the number of
errors commonly found on hand-written forms.


Medical Policy
Local Coverage Determination (LCD) and Local Coverage Article
Updates
Final, Effective LCDs

The following LCD, which was posted for notice on September 22, 2011, became effective on November
11, 2011:

       Qualitative Drug Testing (L32050)

The following LCD was posted for notice on December 1, 2011 and will become effective January 23,
2012:

       Radiation Therapy Services (L27515)

The following LCDs are on hold and will not be posted as final until we have completed our review of the
comments received. When the policies are finalized, they will be posted for a 45 day notice period before
becoming effective.

       Transcranial Magnetic (DL32055)

       Non-Vascular Extremity Ultrasound for Guidance of Injection and Aspiration Procedures
        (DL31683)

Draft LCDs

The comment period ended on November 9, 2011 for the following Draft LCDs:

       3-D Interpretation and Reporting of Imaging Studies (DL32248)

       Ambulance (Ground) Services (DL32252)

       Chiropractic Services (DL27480)

       Hyaluronan Acid Therapies for Osteoarthritis of the Knee (DL32237)

       Neuromuscular Junction Testing (DL32239)

       Services That Are Not Reasonable and Necessary (DL31686)
March 2012 Medicare Report                                                                           Page 85
The next set of draft LCDs is expected to be posted for comment in late January 2012.

Other LCD and Local Coverage Article Updates

In addition to the items above, the following LCDs and/or Articles were added, revised, or retired; and
were published on the Highmark Medicare Services website between 10/02/11 and 01/11/12. Please refer
to the specific LCD or Article for the revision history information. The date listed is the LCD or Article
effective date; some changes were retroactive.

            Title                   LCD          LCD Added /        Local Coverage       Local Coverage
                                   Retired         Revised          Article Retired      Article Added /
                                                                                            Revised

End Diastolic Pneumatic          10/26/2011
Compression Therapy (L27491)

NCD on Pneumatic                                                                             10/27/2011
Compression Therapy
(A51475)

Magnetic Resonance Imaging                         07/07/2011
(MRI) of the Breast (L27502)

Thermotherapies (Minimally                         11/09/2011
Invasive Surgical Techniques
[MISTs]) for Benign Prostatic
Hyperplasia (BPH) (L27534)

Non-Invasive Peripheral                                                                      11/09/2011
Venous Studies (A47801)

Chiropractic Services (L27480)                     10/05/2009

Wound Care (L27547)                                12/14/2011

Sleep Disorders Testing                                                                      12/14/2011
(A50380)

Magnetic Resonance                                 03/22/2011
Angiography (MRA) (L31399)

NCD Coding Article for                                                                       02/26/2010
Positron Emission Tomography
(PET) Scans Used for
Oncologic Conditions (A49325)




March 2012 Medicare Report                                                                          Page 86
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The Medicare Report is published quarterly as an informational reference source by Highmark Medicare Services
for health care professionals in Pennsylvania, Maryland, New Jersey, Delaware and the District of Columbia
Metropolitan Area. This material is intended to compliment and not replace Medicare program requirements as set
forth in statue, regulations and manual instructions. It is the responsibility of each healthcare professional/ supplier
submitting claims to Highmark Medicare Services to familiarize themselves with Medicare coverage requirements.
Highmark Medicare Services makes efforts to ensure the information contained in this publication is accurate and
current. However, because the Medicare program is constantly changing, it is the responsibility of each provider/
supplier to remain abreast of the Medicare program requirements. Questions concerning this publication or its
contents may be directed in writing to: Outreach & Education Highmark Medicare Services PO Box 890089
Camp Hill, PA 17089-0089

CPT codes, descriptors, and other data only are copyright 2010 American Medical Association. All Rights Reserved.
Applicable FARS/ DFARS apply.

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This bulletin should be shared with all health care practitioners and managerial members of the physician/supplier staff. Medicare
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March 2012 Medicare Report                                                                                                  Page 87

				
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