Revenue Cycle Management Practice - HCPro Blogs

Revenue Cycle 

Management Practice 

W h i t e p a p e r 

By William Malm, ND, RN 

Practice Director, 

Revenue Cycle Management, 

HCPro, Inc. 

setting the standard for 

excellence in revenue 

cycle management 

Every revenue cycle manager 

needs to understand that 

coverage comes first, and the 

ED is no exception. 

Emergency department revenue 

cycle management 

A primer on maintaining compliance, ensuring accurate 

reimbursement in 2008 

Emergency department (ED) revenue cycle management has never been 

more critical than in 2008. With the advent of evaluation and management 

(E/M) visit guidelines in the 2008 OPPS final rule, composite APCs for 

observation services, new HCPCS and revenue codes for trauma activation, 

and CMS’ recent clarification of critical care services, coding, billing, and 

coverage requirements continue to escalate. The skills of physicians, nurses, 

case managers, HIM, chargemaster staff members, and compliance staff 

members come into play for optimal revenue cycle management in the ED. 

Revenue cycle managers in 2008 should focus on several critical areas in the 

ED, as well as observation patients and ED patients admitted to the hospital. 

Key concerns for each section are: 

1. ED 

Incident-to coverage 

Every revenue cycle manager needs to understand that coverage comes first, 

and the ED is no exception. “Incident-to” requirements apply to hospital 

outpatient services. You can find these requirements in 42 CFR 410.27 and 

in Chapter 6, Section 20.4.1, of the Medicare Benefit Policy Manual. 

Any service provided in the ED must meet the following four salient requirements 

for coverage under the Medicare program: 

1. The service must be furnished by a hospital 

2. Services must be furnished “on a physician’s order” 

3. Services must be furnished under the supervision of a physician 

4. There must be ongoing physician involvement in the care of the patient 

These requirements are often confused during ED visits. In short, the patient 

must receive face-to-face physician care in order for the service to be covered. 

There has been significant discussion regarding how or whether a hospital 

can bill for the expenditure of facility resources when a patient leaves the 

emergency service area without seeing a physician. Arguably, these visits 

emergency department revenue cycle management february 2008

Emergency Department Revenue Cycle Management February 2008 

do not meet Medicare incident-to coverage guidelines and therefore are 

noncovered services. Examples of these types of visits are triage-only and 

patients who leave prior to treatment. 

Coding and charging for ED visits 

In 2007, CMS divided ED visits into two types: Type A and Type B. Medicare 

defines a Type A ED as one that is available to provide services 24 hours per 

day, seven days per week (this requirement is also listed in the CPT Manual), 

and which also meets one or both of the following requirements related to 

the Emergency Medical Treatment and Active Labor Act (EMTALA) definition 

of a dedicated ED (DED): 

1. It is licensed by the state in which it is located under the applicable state 

law as an ER or ED 

2. It is held out to the public as a place that provides care for emergency 

medical conditions on an urgent basis without requiring a previously 

scheduled appointment 

A Type B ED is identical to a Type A in that it also must meet the EMTALA 

requirements and DED definitions. The difference is that a Type B ED is not 

open 24 hours per day, seven days per week. Therefore, the key determinant 

is the time at which the facility department is scheduled to be open. 

You can find further information about the definitions of Type A vs. Type 

B EDs in the 2007 OPPS final rule (Federal Register, Vol. 71, No. 226, pp. 

68127–68145). You can also find additional clarification in the FAQ section 

of the CMS Web site at http://questions.cms.hhs.gov/cgi-bin/cmshhs. 

cfg/php/enduser/std_alp.phpp_sid=CduOttTi. Search for FAQ ID numbers 

8302–8310. 

CMS created five new HCPCS codes to bill Type B ED visits: G0380–G0384 

(G0380 is a level one visit, and G0384 is a level five visit). Type A ED visits 

continue to be represented by CPT codes 99281–99285. 

Under the OPPS, CMS has directed facilities since 2000 to develop and consistently 

apply an E/M methodology that accurately reflects the resources 

expended by the facility. During that time, several organizations, such as the 

American College of Emergency Physicians, the American Health Information 

Management Association, and the American Hospital Association, have created 

templates/guidelines to move forward in the creation of a national-level 

determination methodology. 

CMS in the 2008 OPPS final 

rule stated that it does not 

believe that a single, national 

E/M model is appropriate at 

this time. 

However, CMS in the 2008 OPPS final rule stated that it does not believe that 

a single, national E/M model is appropriate at this time. CMS did say it feels 

that hospitals have achieved this requirement with their own internally developed 

systems. CMS continues to explore the potential for national guidelines; 

in the meantime it listed 11 E/M criteria that hospitals should follow. 

© 2008 by HCPro, Inc. Any reproduction is strictly prohibited. For more information call 877/233-8734 or visit www.hcpro.com/revenuecycle.

February 2008 Emergency Department Revenue Cycle Management 

The coding guidelines should: 

1. Follow the intent of the CPT code descriptor in that the guidelines should 

be designed to reasonably relate the intensity of hospital resources to the 

different levels of effort represented by the code 

2. Be based on hospital facility resources and not on physician resources 

3. Be clear to facilitate accurate payments and be usable for compliance 

purposes and audits 

4. Meet the HIPAA requirements 

5. Only require documentation that is clinically necessary for patient care 

6. Not facilitate upcoding or gaming 

7. Be written or recorded, well-documented, and provide the basis for selection 

of a specific code 

8. Be applied consistently across patients in the clinic or ED to which they 

apply 

9. Not change with great frequency 

10. Be readily available for FI (or, if applicable, Medicare administrator contractor 

[MAC]) review 

11. Result in coding decisions that could be verified by other hospital staff, as 

well as outside sources 

(Source: Federal Register, Vol. 72, No. 227, p. 66805.) 

The tone of this message 

clearly indicates the potential 

for future E/M audits by FIs or 

MACs. 

The tone of this message clearly indicates the potential for future E/M audits 

by FIs or MACs. Additionally, the message gives guidance that the facility 

should audit the coding assignment of the level of care (e.g., CPT codes 

99281–99285). 

It further states that the coding guidelines should not require additional 

effort in regard to documentation but should be consistently applied and not 

facilitate gaming or upcoding. 

Many facilities still lack well-written guidelines. The result is that frequently 

within the same department, personnel do not consistently apply the guidelines. 

This results in inaccurate code assignments. 

Revenue cycle management committees should review these 11 points to 

ensure that their ED level assignments comply with these guidelines. 

Coding and charging for critical care 

Critical care level visits have been a source of controversy since the advent 

of the OPPS. CMS specified facility critical care requirements in the 2007 

OPPS final rule, stating, “The 30-minute minimum requirement has always 

applied and will continue to apply for [calendar year] 2007 and beyond. As 

is currently the case, the hospital can bill the appropriate clinic or emergency 

department visit code if fewer than 30 minutes of critical care is provided.” 

(Source: Federal Register, Vol. 71, No. 226, p. 68134.) 



In other words, in order for the hospital to report code 99291, the physician 

must provide at least 30 minutes of critical care. Hospitals can report critical 

care greater than 74 minutes in duration using code 99292, but CMS will 

package the payment. 

Additionally, CMS has provided guidance stating that critical care should 

follow the “intent of the CPT code,” but it has fallen short of stating whether 

hospitals should follow physician requirements or what is contained within 

the hospital’s resource consumption. CMS FAQ 8312 states the following: 

Under the OPPS, the time that can be reported as critical care is the time 

spent by a physician and/or hospital staff engaged in active face-to-face critical 

care of a critically ill or critically injured patient. If the physician and 

hospital staff or multiple hospital staff members are simultaneously engaged 

in this active face-to-face care, the time involved can only be counted once. 

Based on this FAQ, from a revenue cycle standpoint, time documentation 

should be paramount to ensure that hospitals meet these requirements. 

On December 19, 2007, CMS 

shocked the provider/facility 

community with the release 

of FAQs 8809 and 8813. 

On December 19, 2007, CMS shocked the provider/facility community 

with the release of FAQs 8809 and 8813. Those FAQs state that facilities 

must follow the strict definition of CPT code 99291. Most facilities currently 

charge separately for specific services rendered during the provision of critical 

care. Now, CMS expects that hospitals should not separately bill certain 

specified CPT codes (e.g., chest x-rays, ventilator management, pulse oximetry, 

gastric intubation, transcutaneous pacing) as it considers these services 

to be included in the provision of critical care. 

Because hospitals previously billed these services separately (based on 

guidance in another CMS FAQ from September 2000), it is doubtful that 

the amount CMS reimburses hospitals for 99291 includes the cost of these 

items. This new guidance is now a significant compliance concern for most 

facilities that have charged separately for these items. Without any further 

guidance, facilities should immediately cease the practice of charging 

separately for these items and look for upcoming guidance from CMS. You 

can find these FAQs at the CMS Web site at http://questions.cms.hhs.gov/ 

cgi-bin/cmshhs.cfg/php/enduser/std_alp.phpp_sid=RXlShDMi. 

Coding and charging for trauma activation 

Trauma activation continues to be somewhat difficult for facilities to implement 

because CMS maintains strict rules about which hospitals can report 

trauma activation codes. According to the 2007 OPPS final rule: 

The revenue codes series 068x can only be used by trauma centers/hospitals 

as licensed or designated by the state or local government authority 

authorized to do so, or as verified by the American College of Surgeons. 

Different subcategory codes are reported by the designated Level 1–4 

hospital trauma centers. Only a patient for whom there has been prehospital 

notification based on triage information by prehospital caregivers, 



who meet either local, state, or American College of Surgeons field triage 

criteria, or are delivered by interhospital transfers, and are given the appropriate 

team response can be billed a trauma activation charge. (Source: 

Federal Register, Vol. 71, No. 226, p. 68134.) 

If the facility meets the above requirements and also meets the requirements 

for critical care (i.e., CPT code 99291), CMS instructs the facility to report a 

068x revenue code along with trauma activation HCPCS code G0390. 

However, if the facility does not meet the critical care time requirements, the 

facility should bill two distinct lines on the UB-04. The first line is revenue 

code 068x without a HCPCS code, and the charge should represent the 

resources utilized for trauma activation. Line two should be the ED level of 

care as documented and billed according to the facility documentation and 

coding guidelines. 

You can find further information about trauma activation at the CMS 

FAQ site (http://questions.cms.hhs.gov/cgi-bin/cmshhs.cfg/php/enduser/std_alp. 

phpp_sid=RXlShDMi). Look for FAQ ID numbers 8313 and 8314. 

Coding and charging for infusions and injections 

Infusions and injections have taken center stage in the ED revenue cycle. 

In fact, they’ve taken such a high priority that the remainder of the revenue 

cycle management of ED services has taken a back seat, and providers may 

suffer lost charges or compliance concerns as a result. 

Significant guidance has been provided about infusions and injections and 

is so voluminous that we are prevented from including it within this white 

paper. We would recommend that a member of the revenue cycle management 

committee prepare educational materials for the staff based on CMS 

guidance. Additionally, significant commercially prepared documents and 

tools exist to assist the coding and nursing staff in appropriate documentation 

and coding of these procedures. You can find authoritative guidance in 

the CPT Manual and in CPT Assistant, which you can obtain directly from 

the AMA. 

Orthotics and prosthetics 

can be billed by a facility 

with or without a durable 

medical equipment (DME) 

license. 

Coding and charging for orthotics and prosthetics 

Orthotics and prosthetics can be billed by a facility with or without a durable 

medical equipment (DME) license. However, many facilities miss these 

reimbursable supplies because they are under the impression that they are 

required to obtain a DME license in order to bill them. 

You can find orthotic and prosthetic guidance in Chapter 20 of the Medicare 

Internet Only Manual 100-04 (Claims Processing Manual). This source states 

that “SNFs, CORFs, OPTs, and hospitals bill the FI for prosthetic/orthotic 

devices, supplies, and covered outpatient DME and oxygen” (refer to Section 

40). The revenue cycle management committee should review its hospital 



chargemaster to ensure that orthotics such as Philadelphia collars, foam cervical 

collars, knee immobilizers, air casts, and other similar supplies are defined 

as an orthotic per the “L” HCPCS code section of the HCPCS Level II Manual. 

The facility should inventory these items and ensure that they are included 

within the chargemaster and that ED staff members charge for them. 

Pharmaceuticals 

EDs struggle with the charge capture and billing of pharmaceuticals. This is 

a particular concern when it comes to high-cost pharmaceuticals. 

Common problems include 

errors in the number of units of 

a medication billed as defined 

by the HCPCS J code. 

Common problems include errors in the number of units of a medication 

billed as defined by the HCPCS J code. The HCPCS J codes define how 

many milligrams or units are included in the code. The total dose ordered 

and administered should equal the number specified within the J code. This 

is a constant area of concern. Our practice finds significant lost charges 

because the units of service on the UB-04 do not represent the dosage 

delivered. This is particularly problematic with high-cost drugs. Note that, 

although CMS only provides separate reimbursement for some drugs, the 

agency still recommends that hospitals report all drugs with a corresponding 

HCPCS J code on the claim. 

The other significant problem with pharmaceuticals involves self-administered 

medications. Hospitals should report self-administered drugs on the 

claim in the noncovered column because they represent patient liability. 

Hospital pharmacy departments often consider the following medications 

to always be self-administered: 

■ Pills 

■ Capsules 

■ Inhalants 

■ Topicals 

However, the problem is that many of these types of drugs are covered and 

are not a patient liability because they meet the “integral to” requirements 

and are therefore a covered supply. (Source: Medicare Claims Processing 

Manual, Chapter 4, Section 10.4, and Program Memorandum A-02-129). 

Examples of self-administered drugs that are a covered supply are certain 

sedatives, eye drops, and contrast media. Exercise caution to avoid this 

chargemaster-driven dilemma. 

Widespread packaging 

of services, including 

observation, presents 

a new operational and 

financial wrinkle for 

hospitals to consider. 

2. Observation 

Composite APCs 

One of the most significant changes to the OPPS since its inception took 

effect January 1. Widespread packaging of services, including observation, 

presents a new operational and financial wrinkle for hospitals to consider. 

In the past, patients that had diagnoses of chest pain, congestive heart failure, 

or asthma were eligible for separate observation APC payment. This 



year, CMS eliminated these three diagnostic requirements, making any 

patient eligible for potential observation payment. 

But other requirements exist. Hospitals won’t receive separate APC payment 

unless they bill a level four, five, or critical care E/M level in 

conjunction with observation, or if staff members directly admit the patient 

to observation. And as always, the patient must receive at least eight hours 

of observation care in order for hospitals to qualify for separate payment 

Payment for observation now falls under the following two composite APCs: 

■ APC 8002: Level I Extended Assessment & Management 

Composite 

■ APC 8003: Level II Extended Assessment & Management 

Composite 

More than ever, hospitals must ensure that their observation documentation 

is complete and compliant. Observation admission notes, history 

and physicals, and consults all must be documented. Include the time the 

patient was placed in an observation bed and ensure that the physician 

order is timed and dated. Payment of composite APCs also depends upon 

good documentation of your level of service, using the 11 E/M criteria 

points detailed above. 

Many hospitals are under 

the mistaken belief that 

any and all ED services 

performed prior to an 

inpatient stay must be 

rolled into the subsequent 

inpatient admission. 

3. Inpatient admits 

Three Day Payment Window Rule and ED services 

The Three Day Payment Window Rule represents both a compliance risk 

and a significant source of lost revenue for hospitals. Many hospitals are 

under the mistaken belief that any and all ED services performed prior to an 

inpatient stay must be rolled into the subsequent inpatient admission. 

That’s not the case. In fact, a significant volume of these charges are actually 

separately billable (and separately payable) by Medicare on an outpatient 

claim. This error typically occurs because a hospital’s operational processes 

fail to properly distinguish between diagnostic and nondiagnostic services 

(which are treated differently under the rule). At other times, hospitals 

mistakenly bill for outpatient services on an outpatient claim when these 

services should be moved over to the inpatient claim—an error that poses 

a significant compliance risk. 

The following diagnostic services (including clinical diagnostic laboratory 

tests), when provided to a beneficiary by the admitting hospital within 

three days prior to and including the date of the beneficiary’s admission, 

are considered inpatient services. Under the Three Day Payment Window 

Rule, you must include services with the following revenue codes in the 

inpatient payment: 

■ 0254—Drugs incident to other diagnostic services 

■ 0255—Drugs incident to radiology 



■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

■ 

030X—Laboratory 

031X—Laboratory pathological 

032X—Radiology diagnostic 

0341—Nuclear medicine, diagnostic 

035X—CT scan 

0371—Anesthesia incident to radiology 

0372—Anesthesia incident to other diagnostic services 

040X—Other imaging services 

046X—Pulmonary function 

0471—Audiology diagnostic 

048X—Cardiology, with HCPCS codes 93015, 93307, 93308, 93320, 

93501—93503, 93505, 93510, 93526, 93541, 93542, 93543, 93544– 

93552, 93561, or 93562 

053X—Osteopathic services 

061X—MRT 

062X—Medical/surgical supplies, incident to radiology or other 

diagnostic services 

073X—EKG/ECG 

074X—EEG 

092X—Other diagnostic services 

Additionally, all nondiagnostic services related to a patient’s hospital admission 

that are provided by the admitting hospital to the patient during the 

three days preceding and including the date of the patient’s admission are 

also included in the inpatient payment, but with one critical caveat—there 

must be an exact match (all digits) between the ICD-9-CM principal diagnosis 

code assigned for both the preadmission services and the inpatient stay. If 

there is not an exact match, a hospital may bill all nondiagnostic preadmission 

services to Part B on an outpatient claim. 

Specific to the ED, CMS considers revenue code 045x to be nondiagnostic in 

nature. Therefore, these services are not included in the list of revenue codes 

that must be rolled into the inpatient admission. This means that if the principal 

diagnosis on the emergency record is not an exact match to the principal 

diagnosis for the inpatient admission, a hospital can bill these ED services 

separately and receive compliant separate reimbursement. 

We recommend that you review the Three Day Payment Window Rule in the 

Medicare Internet Only Manual 100-04 (Claims Processing Manual), Chapter 3, 

Section 40.3, titled “Outpatient Services Treated as Inpatient.” ■ 

Note: If you have a question about ED coding or billing, send an e-mail to 

William Malm at revenuecyclemanagement@hcpro.com.

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