The Medicare Condition Codes are Here – Now What?
By Doug Wolfberg, Esq., Steve Wirth, Esq. and John Mayernick, Esq.
of Page, Wolfberg & Wirth, LLC

The Centers for Medicare and Medicaid Services (CMS) in December released the long-awaited ambulance condition codes, giving hope to the industry that Medicare will ultimately revamp the way it processes ambulance claims in the 21^st Century.  The condition codes are basically a subset of 74 primary ICD-9 codes that have been “crosswalked” (or linked up) to ambulance-specific conditions instead of medical diagnoses.  Given that ambulance providers don’t diagnose, most of the thousands of diagnosis codes in existence are largely irrelevant to the kinds of services that EMS organizations provide, and by reducing the number of primary condition codes to 74, the new codes hold promise in simplifying the ambulance billing process.

Prior to the implementation of the condition codes, choosing the proper ICD-9 code from a potential universe of thousands of codes was a cumbersome, time-consuming and expensive task, even for those services that have automated the process with help from pick lists in their billing software.  By reducing the number of codes, and using ones that are ambulance-specific, ambulance providers can hopefully better communicate a patient’s condition to Medicare, and make better decisions about billing for the appropriate levels of service. 

However, the new condition code system has some drawbacks.  For one, CMS, bowing to pressure primarily from the American Hospital Association, has not made the codes mandatory.  The use of the new codes is voluntary on the part of ambulance services.  While it appears that providers will have the choice of whether or not the use the new codes, CMS has as of yet made no official announcement that Medicare carriers must begin to accept them. 

Another unresolved issue as of mid-January 2005 is the implementation of the new ground and air modifiers that were released as part of the condition code list.  The new modifiers have simple designations of A, B, C, etc., but those were intended as “placeholder” designations, so the modifiers might change.  In addition, while carriers are already geared up to deal with ICD-9 codes, the new modifiers will almost certainly be unrecognized in most carriers’ systems at the present time, which could create confusion and lead to denials.  So, if you do start using the condition codes, you may wish to start with the crosswalked ICD-9 condition codes but hold back on using the new modifiers until the carriers specifically advise you they can be used.  After all, the carriers’ systems will be able to recognize the ICD-9-based condition codes right away, but the modifiers may be a different story, at least for now.

It is also important to keep in mind that commercial insurers are under no obligation to accept the new ambulance condition codes at all.  It is therefore important for ambulance services to meet with their commercial carriers, auto carriers, HMOs and other payors to educate them about the condition codes and arrive at an agreement for their use.

Another critical point to remember is that the new condition code system does not replace the mandatory billing codes you currently use.  Ambulance services must still use HCPCS codes that accurately describe the level of service provided, and must use origin and destination modifiers if they want to get paid for their services.  Ambulance services must also continue to pay attention to their documentation techniques and medical necessity requirements, and continue to obtain Physician Certification Statements.  The condition codes do not change the existing Medicare rules, policies and payment requirements, which continue in full force and effect.

Because the ambulance condition codes are voluntary, and because most Medicare carriers themselves are not yet up to speed on the new codes, what should your ambulance service do right now?  Here are a few suggestions:

-                          First, spend some time reviewing the codes and getting familiar with their definitions.  You can review information about the codes on our website’s Medicare page, www.pwwemslaw.com, or on the Medicare ambulance page,  www.cms.hhs.gov/suppliers/ambulance. 

-                          Second, contact your Medicare carrier and find out what, if any, steps they are taking to implement the new system.  You may want to do the same with some of your higher-volume commercial insurers as well.

-                          Third, if the carrier tells you they are prepared to accept the condition codes, you may nevertheless want to start slowly.  Submit a sample batch of claims and monitor their progress through the system.  If a disproportionate amount of claims are rejected, you will need to work out how the new codes are being received and interpreted.  You can use the same strategy with commercial insurers too.  One note of warning though: select the claims carefully.  If you have a disproportionate amount of rejections for a particular type of claim you could expose yourself to increased scrutiny from the carrier in the form of audits, postpayment reviews or development letters. 

-                          Fourth, if the implementation of condition codes seems to be going well after appropriately testing the waters, migrate your claim system to full-time use of the condition codes.  Make software pick list modifications.  Provide education and training to your billing staff on proper claim preparation, and to your field staff on proper documentation.  If the industry makes this experiment a success, perhaps we can collectively keep the pressure on CMS to make the codes mandatory and permanent, so the ambulance industry has a set of codes that make sense and improve the claims process.

While the condition codes are a positive step, showing that CMS is trying to take steps to accommodate ambulance suppliers and streamline our billing process, the system still has some kinks and uncertainty that must be worked out.  During the implementation of the condition codes, your ambulance service should closely monitor the latest developments, by visiting your carrier’s web site, the CMS web site, and other sources, like www.pwwemslaw.com (where you can sign up for free EMS Law Bulletins by e-mail to stay current on these and other developments in the industry).

Doug Wolfberg, Steve Wirth and John Mayernick are attorneys with Page, Wolfberg & Wirth, LLC (‘PWW’) the nation’s leading EMS, ambulance and medical transportation industry law firm.  The firm’s web site, www.pwwemslaw.com, contains a wealth of information about Medicare, HIPAA and other EMS legal issues, as well as information on their publications, including “The Ambulance Service Guide to HIPAA Compliance,” recently released in a new Third Edition.  Contact Doug Wolfberg at dwolfberg@pwwemslaw.com.