Sluggish Code Set Updates Create Can of Worms

Point/Counter Point

Payers sometimes don’t update their standard code sets as quickly as required. This can cause a rash of denials at the first of the year, affecting providers’ overhead. Let’s hear what a payer and provider have to say about it.

Payer side: What a Tangled Web CMS Weaves

By Bill Battershall
Payers have many incentives to update their claim operating systems as quickly as possible while overcoming many obstacles standing in their way.
Typically, new CPT® and HCPCS Level II codes are released quarterly from either the Centers for Medicare & Medicaid Services (CMS) or the American Medical Association (AMA); the largest of these releases is for implementation Jan. 1. From strictly a code set perspective, new codes must be accepted by payers on their effective dates, according to the Health Insurance Portability and Accountability Act (HIPAA). The rule states that the use of codes before their effective dates and after their expiration dates are not allowed. In these two situations, services may be denied; however, a responsible payer will communicate the reason for such a denial quickly and timely. Plans must also comply with state regulations around claims payment timeframes. Almost all states have prompt pay legislation requiring either claim payment or status communication within a specified timeframe; typically 30-45 days. Health plans strive to be reliable business partners with providers—this goal, along with responsible legislation, serves to enhance that relationship.
On the surface, a typical payer’s claims operating system may have similarities to a provider’s practice management system. They both capture and maintain demographics and generate reports. Claims operating systems are designed to apply insurance benefits instead of scheduling appointments and performing billing tasks; however, they require specific updates in different places to accommodate new CPT® codes. Payers must first review all new codes and classify them according to clinical characteristics. The codes are then assigned to one of the many benefits offered by the insurance plan. For example, a surgical CPT® code must be reviewed to make sure it can be paid by the proper place of service (inpatient, outpatient, office, etc.), and a payer must link that code to those benefit plans. Other characteristics must be addressed such as unit limitations, surgical pricing rules, modifier compatibility, etc.
Another significant step is determining the reimbursement for the new codes. Many payers benchmark their fees to Medicare, which can be both a benefit and a hindrance. The Resource-Based Relative Value System provides a widely used, common approach to provider payment, and it is easier for providers to generate analyses and reports. Unfortunately, when it comes to annual updates, both payers and providers are at CMS’ mercy. For the past six years, the final Jan. 1 reimbursement updates were delayed, and one year they were not released until February. The updates’ release from industry pricing sources has a direct impact on the timing of payers’ code set updates.
Payers are in the paying health care claims business, and they strive to provide timely and accurate service. A wide variety of challenges, both internal and external, confront them; but, the overall goal is to maintain the best possible relations with their provider partners.
Bill Battershall is manager of pricing databases at Blue Cross Blue Shield of North Carolina

Provider side: Providers Eat the Cost of Delays and Denials

By Kevin B. Shields, CCS, CPC, CCS-P, CPC-H, CPC-P, RCC, CCP-P
Hospitals and providers face steep odds: dealing with separate payers, having different timelines for updating standard codes, and recognizing published guidelines on code usage. This is why there is such a sense of disparity for many billing and coding professionals.
Timeliness—or a lack thereof—poses a threat to health care practices’ revenue processes. Small and single-provider offices can be widely affected fiscally by delays in payments, by the increased administrative costs of coding and billing a claim, and then by reworking the claim as a denial. Anthony Bush, CPC, CCP, CCP-P, a health information manager with experience in the TPO and PRO environments says, “with all this waiting game [providers] have to hire people to collect payments, which lowers profit margin even more.” This prompts the question, how can payers expect and demand appropriate code assignment and use when their own actions and efforts are not nimble enough to set the precedent?
Payers obligate themselves to serve their members and affiliated providers well by creating and maintaining currency on coding issues—just as payers expect of providers on submitted claims; however, many coding professionals know too well that a double standard exists. Payers have the option of hitting the denial button until they deem it necessary to educate staff, or at least plug a new year’s codes into their systems. Providers can take some comfort in knowing that supportive language exists in a Federal Register from 2000: “transactions may not be rejected because the health plan’s system does not recognize valid standard codes.”
Although contextually the response came to Uniform Data Set in HIPAA, those comments oppose dubious rejections from payer delays.
Leaders on the provider side should rally together and actively decide on a strategic plan to encourage local payers to remain abreast of changes. These should include refusals to accept denials brought about from outdated code system edits. Adding language to contracts about honoring and paying new codes may also prove helpful in heading off new code denials. Until the payer and provider are sitting eye-to-eye, incongruity between the entities persist, if in notion alone.
Despite best efforts at avoiding accountability on this issue, the insurance industry has to realize what customer disservice radiates from these actions.
Resources: Federal Register, Aug. 17, 2000, Vol 65, #160, page 20.
Kevin Shields is the HIMS supervisor at the VA Medical Center in Louisville, Ky. He actively participates with the Ingenix advisory board and the AHIMA Action Community for e-HIM Excellence (ACE). He can be reached at

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