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Professional Coding: Part One

Professional Coding: Part One

Robert C. Fifer, PhD

September 11, 2000

In response to requests for information on procedural and diagnostic coding, I am writing the first of a multi-part series.

This first section will address CPT (Current Procedural Terminology) coding. Part Two will focus on ICD-9 diagnosis coding. Part Three will deal with V-codes, HCPCS, and the new CPT-5 and ICD-10 codes.

CPT codes are copyrighted and owned by the American Medical Association. These codes were established in the mid-1960s. The first CPT manual was published in 1983. The codes were written by physicians for physicians with no consideration of non-physician health care professionals. They were established as a first step toward standardizing health care terminology and to provide a means of objectively tracking services rendered.

As those of us who were in practice in 1983 will recall, if someone had asked you what your facility called a basic evaluation, the responses would be ''Comprehensive diagnostic evaluation'', ''Basic audiological evaluation'', ''Audiological assessment'', ''Basic evaluation'', ''Comprehensive evaluation'', and so forth. The point is, there were as many descriptors as there were clinics. Insurance companies had no standardized gauge by which to judge the value of our services. As a result, the AMA established a formal editorial panel to examine all medical procedures (of which speech, language, and hearing services were included). The AMA solicited input from various specialty disciplines. The section of the manual that covers what we do collectively is known as ''Special Otolaryngology Procedures''.

During the decade of the 1980s, the cost of health care skyrocketed. There were various reasons for this, perhaps the most famous of these was ''physician greed''. Without a doubt, that was a contributing factor, but I submit it was a relatively small part of the entire picture. Another part of the picture was ''Managed Health Care,'' which too, established a foothold in the 1980s. The first appearance of managed health care was in the form of HMOs and then various forms evolved. Several of the first HMOs were established by physician groups. The first HMOs were ''prepaid'' plans through which health care could be provided in a more cost effective manner. These prepaid plans quickly evolved into managed care plans as indemnity insurance companies became part of the picture. Also of note, through the 1970s and into the 1980s, insurance companies started to sell individual policies to single persons or to families. Employer supplied health insurance existed but was not necessarily the predominant factor in non-union situations.

And then, two things happened. Somewhere along the way, health care coverage was declared a ''right'', not an element of self-responsibility; and, more employers started to offer health care insurance as a paid benefit. As more employers joined the bandwagon offering employee coverage, insurers found this to be less expensive and more profitable because they could deal with larger volumes. Starting in the middle to late 1980s, they began to drop individual policies in favor of group plans. They also promised employers cost savings if they would select managed care plans instead of fee-for-service options.

Another factor which directly influenced our use of CPT codes was a question asked by Congress in 1986. The question was, ''How much does it cost to practice medicine?'' Congress contracted with Harvard Medical School and Harvard Business School to answer this question. They surveyed thousands of physicians' practices and determined not only the cost of medicine, but also developed a formula by which the cost of a procedure could be valued. This formula is now known as RBRVS or Resource Based Relative Value Scale. It is a multi-part formula that takes into account ''physician work'' (which includes difficulty of the task and level of decision making), ''fixed overhead'' (which includes such items as rent, equipment depreciation, administrative support personnel, etc.), ''technical or ancillary support'' (which includes support services provided by a nurse, technician, audiologist, speech-language pathologist, and others), and ''malpractice'' (which focuses on malpractice premiums for that specialty area). For some codes, this formula is broken down into two general components: Professional component (physician work) and technical component (which includes essentially all other elements of the formula). Congress adopted the RBRVS and directed the Health Care Finance Administration to use it in determining the value of various procedures for Medicare and Medicaid.

As a result, each and every CPT code is evaluated for its relative value by HCFA with assigned value used as the basis for reimbursement by both Medicare and Medicaid. The difference in reimbursement between the two is based on the dollar multiplier assigned by Congress for Medicare and by each state for Medicaid. For example, the dollar multiplier used for Medicare this year is approximately $36.00. If a CPT procedure has a relative value from the formula of 2.83, then the reimbursement for that procedure from Medicare would be $101.88. If another code had an assigned value from the formula of .92, then the Medicare reimbursement would be $33.12. Medicaid works the same way except the dollar multiplier is usually lower than the one set for Medicare. The moral of this story is that Medicare drives the value of all procedure codes, either directly or indirectly. Remember this as the story continues to unfold.

CPT codes are 5-digit codes that describe much of what we do. They are predominantly in the Special Otolaryngology Procedures section of the CPT manual and are today used as a common language for procedures among all physicians and other health care providers, all third party payers, for patients, and for the government (both state and federal). We view CPT codes primarily as having a billing purpose, and indeed they do. But they are also used for tracking service utilization, establishing monthly premiums, monitoring referral patterns, and for demographic health care statistics.

The procedure to establish a new CPT code can be rather long and arduous. The general guidelines that a new code must adhere to are: 1. It must describe a unique service or procedure that is not covered by another code; 2. The procedure must not be investigational; 3. The work involved in the procedure must be measurable; 4. Presentation of the procedure to the CPT Editorial Panel must have the backing of a member academy or association (e.g., physician specialty academies); 5. Whenever possible, a procedure should be universal, meaning that more than one health care discipline can use it on a routine basis; 6. The procedure must have relatively common use (meaning that it is not a procedure performed only 5 times a year across the country); 7. The procedure must not benefit a single manufacturer of equipment whenever possible (this was one reason posturography testing was delayed for so long - only one manufacturer made the equipment). I have frequently been asked, ''Why don't we get a new CPT code for _______.'' Each proposal for a new code must meet these criteria in order to receive procedure code designation.

Interestingly, I frequently encounter CPT code numbers from individual facilities with descriptors that are quite different from the descriptors in the CPT manual. In such instances, the facility may not be fully aware of what it is billing when it deviated from the manual. There are also many facilities that use ''in-house pseudo-codes'' that look like CPT codes -- but are not. These often evolved by virtue of the computer billing system used by that facility over the years or are used to designate the correct procedure code according to whether the payer is private (e.g., HMO), Medicaid, or Medicare. Each clinician should speak with their billing department (if they work in a large facility) to know first-hand exactly which code is being billed, and why.

Once the AMA approves a code, it is assigned a 5-digit number and a descriptor. But it is still without value. To assign the value, the code and descriptor are then presented to HCFA for their Relative Value Utilization Committee (RUC). The RUC determines value based on surveys and example vignettes. Assigning the value of the new code can be a ''Catch-22'' at times. Congress has designated that Medicare will be budget neutral. This means that if a new code is added to an already existing series of codes, then the value of the older codes may go down to accommodate utilization of the new code. If a facility uses the new code extensively and was not being reimbursed for that procedure previously, then it is a ''win'' situation for the ''biller.'' However, if a facility rarely uses the new code, and indeed, elects the older codes more often, its level of reimbursement may decrease, based on the introduction of the newer code. Therefore, overall utilization of the code is an important consideration.

Also note, values are assigned based on the ''average'', taking into consideration short contacts and periodic extended contacts. I am sometimes asked whether a facility can bill extra for extended contact time. The answer is usually no. Periodic extended contacts are typically taken into consideration when establishing the value of the procedure.

Importantly, each third party payer determines which codes are allowed. For example, Medicaid in Florida has a specific list of CPT codes that audiologists can use. In a pediatric situation, if the audiologist performs Visual Reinforcement Audiometry, the professional cannot bill Medicaid for VRA because it is not an allowable code. At our facility, the closest we can get to the truth is to code Pure Tone Audiometry - Air Only. Many third party payers do not allow audiologists and speech-language pathologists to use Evaluation and Management (E/M) codes. These are predominantly physician office visit codes the include duration of contact, level of complexity, and level of decision-making. However, there are some HMOs that will reimburse for using E/M codes and desire audiologists and speech-language pathologists to do so. Using this as one example, and because all third party payers are unique, each professional or group should contact the respective payers to find out which codes are acceptable and which are not.

The AMA recognized that special circumstances could exist, so they developed a series of modifiers to the CPT codes. Of these modifiers, the one we encounter most often is ''-52''. This is the modifier for abbreviated procedure. Examples would be a speech and language screening in lieu of a full evaluation (92506-52) or an ABR screening in lieu of a full evaluation (92585-52). However, each provider needs to check with their billing section to determine if the submission process (or software) will accept modifiers.

The last note on coding is documentation. For any procedure performed, if the documentation is not in the chart, the procedure did not occur. Documentation is vital to ensure the service was delivered and to justify the use of a particular code. My final thought until next time: Document, document, document.

EDITOR'S NOTE: Although Audiology Online strives to publish exclusively original papers, we have on occasion found papers which are so important and noteworthy, that we seek permission to republish these fine papers. The above paper is one such example. We are grateful to the FLASHA Forum and to Robert C. Fifer, Ph.D., for allowing us to edit, revise and reprint this manuscript. Thank you very much, Douglas L. Beck Au.D., Editor-In-Chief, Audiology Online. September, 2000.


robert c fifer

Robert C. Fifer, PhD

Director of Audiology and Speech Language Pathology at the Mailman Center for Child Development at the University of Miami

Robert C. Fifer, Ph.D. is Director of Audiology and Speech Language Pathology at the Mailman Center for Child Development at the University of Miami.  Dr. Fifer represents ASHA on the AQC. 



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