CMS to require a positive COVID-19 viral test result for additional 20 percent Medicare payment

9/21/2020 Update: On September 11, 2020, CMS updated MLN SE20015 to instruct hospitals to notify their MACs that there is no evidence of a positive COVID-19 lab test documented in the patient’s medical record by entering a Billing Note NTE02 “No Pos Test” on an electronic claim 837I or a remark “No Pos Test” if billing on a paper claim.

As Bricker & Eckler previously reported, Section 3710 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act directs the Secretary of the Department of Health and Human Services to increase the weighting factor for payments under the Inpatient Prospective Payment System (IPPS) by 20 percent for Medicare beneficiaries diagnosed with COVID-19 who are discharged from the hospital during the COVID-19 public health emergency. The CARES Act provision provided the Centers for Medicare and Medicaid Services (CMS) with discretion on how to identify beneficiaries diagnosed with COVID-19. Initially, CMS addressed this issue through a collection of Frequently Asked Questions, indicating that for Medicare purposes, discharges for individuals diagnosed with COVID-19 were to be identified by the presence of one of the following ICD-10-CM codes:

• B97.29 (other coronavirus as the cause of diseases classified elsewhere) for discharges occurring on or after January 27, 2020, and on or before March 31, 2020
• U07.1 (COVID-19) for discharges occurring on or after April 1, 2020, through the duration of the COVID-19 public health emergency period

In our previous article, we noted that this bump in reimbursement could incentivize fraudulent behavior. We suggested that hospitals ensure that COVID-19 diagnoses were being properly assigned and that hospitals consider providing additional education to physicians and billers/coders on the correct coding of the COVID-19 diagnosis.

To address the potential program integrity risks associated with this 20 percent additional reimbursement, CMS has issued updated guidance regarding implementation of Section 3710 of the CARES Act for hospitals paid under the IPPS. Effective for admissions occurring on or after September 1, 2020, claims eligible for the 20 percent increase must have a positive COVID-19 laboratory test documented in the patient’s medical record. Positive tests may be demonstrated using the results of viral testing only (molecular (also known as PCR) testing or antigen testing). The test may be performed during hospital admission or prior to hospital admission. CMS instructs hospitals that when the viral COVID-19 test is performed within 14 days of the hospital admission (including tests performed by entities other than the hospital), the test results, such as a copy of positive test results from a local government-run testing site, can be manually entered into the patient’s medical record to satisfy the documentation requirement. If the test results relate to a test performed more than 14 days prior to the hospital admission, “CMS will consider whether there are complex medical factors in addition to that test result for purposes of this documentation requirement.”

The Medicare Pricer system will continue to automatically apply the 20 percent adjustment factor to claims that report the U07.1 diagnosis code. CMS stated that it “may conduct post-payment medical review to confirm the presence of a positive COVID-19 laboratory test and, if no such test is contained in the medical record, the additional payment resulting from the 20 percent increase in the MS-DRG relative weight will be recouped.” 

To avoid the risk of an audit and recoupment, a hospital that diagnoses a patient with COVID-19 consistent with coding guidelines but without a positive test result can decline the additional 20 percent payment at the time of claims submission by informing its Medicare Administrative Contractor (MAC). The MAC will then notate the claim so that the Pricer does not apply the 20 percent increase to the claim. CMS will be releasing updated Pricer software to prevent the application of the 20 percent increase in October 2020. Hospitals should watch for further guidance from CMS about the release of this software update to ensure they accurately report claims for beneficiaries with a COVID-19 diagnosis.