The Devil’s in the Diagnosis Details

I think it is important to challenge one portion of an article that was widely distributed two weeks ago. The article included a statement that, while accurately characterizing the way that Medicare Administrative Contractors (MACs) conduct audits, is still demonstrably incorrect.

The article asserts that “the old auditor’s adage for incident-to services remains true – no new patients, no new problems.” I will readily concede that this old adage is widely repeated. I will further concede that Medicare contractors consistently assert during audits that new problems can’t be covered incident-to. But I am 100-percent certain they are incorrect when they say new problems can’t be handled incident-to.

Why?

Let’s check the relevant regulation.

42 CFR 410.26 says that to be covered incident-to, services must meet a variety of conditions, including the fact that “services and supplies must be an integral, though incidental, part of the service of a physician (or other practitioner) in the course of diagnosis or treatment of an injury or illness.”

First, I should say the regulation is terribly written. “Integral” and “incidental” are opposites, so when the rule says that services must be “integral, though incidental,” I want to scream.

I don’t see how anything can be BOTH. But that isn’t the focus of the article. This is about the word “diagnosis.” 

Incident-to services are covered “in the course of diagnosis or treatment of an injury or illness.” You do not “diagnose” old problems. You only diagnose new problems. The regulation specifically allows “diagnosis” as part of incident-to treatment.

If it were true that you could only treat old problems when providing a service incident-to, the regulation would read “in the course of treatment of an injury or illness,” omitting the word “diagnosis.” By including the word “diagnosis,” the regulation extends coverage to new problems that are part of the course of “diagnosis or treatment.” (The “or” also demonstrates the point. A visit solely for diagnosis can satisfy the regulation without any treatment whatsoever.)

Interestingly, if you search the Medicare Manuals for the phrase “new problems,” you will come up empty. While contractors routinely use those words, there is absolutely no support in the Manuals, let alone a statute or regulation.    

I did what I recommend you all do when you disagree with an expert. I reached out to them. That communication was not terribly helpful.

The consultants in question view their job as lowering audit risk, and to further that end they want to avoid nuance that might confuse people. They correctly note that contractors will assert that new problems can’t be billed incident-to.

While that is true, and I think a wise consultant will explain audit risk, I strongly disagree with the belief that a consultant should ONLY lower audit risk, without explaining what the law actually says, and how to best challenge unreasonable audits.   

It is imperative for us experts to accurately describe the law, even when that explanation is complex. The fact that contractors misapply the law is important for us to understand.

Experts should never incorrectly characterize the law simply because a contractor has done so. You may choose to create an internal policy that says new problems won’t be billed incident-to. You have that absolute right. It might even be a sound business decision.

But to make a sound business decision, you need consultants and lawyers to present the law as it is, while noting that the contractor may misapply it. We should never frame something as a requirement just because some authority acts as if it is.

When you explain the government’s enforcement position, you have to note whether that position is correct or represents government overreaching. Then clients get to decide whether they want to surrender to a contractor or fight for justice.

If you adopt the contractor’s position as a policy, don’t frame it as a requirement. Accurately describe the fact that you’re choosing to accede to an incorrect position taken by contractors. Coding consultants can and should explain audit risk. But if your consultant isn’t willing to point out flaws in the contractor’s position, I would encourage to seek out a consultant who will.