September 9, 1999

FROM:	Director Program Development and Information Group Center for Health Plans and Providers
SUBJECT:	Additional Information Regarding Encounter Data and Risk Adjustment
TO:	Medicare+Choice Organizations (M+COs)

During March and April 1999, the Health Care Financing Administration (HCFA) and its contractor PricewaterhouseCoopers conducted onsite consultations with twenty M+COs pertaining to encounter data and risk adjustment. These consultations enabled HCFA to learn about the M+COs' experiences with the encounter data submission process during the start-up year. HCFA is preparing a document that summarizes its findings from this effort. This document will be sent to all M+COs in the near future.

The purpose of this memorandum is to augment the summary document by providing M+COs with additional information on encounter data and risk adjustment. Attached to this memorandum are the schedule for encounter data submission through June 30, 2001, and HCFA's responses to technical issues that were raised by M+COs during the consultations. As shown, we have endeavored to address the issues that were of particular interest to the organizations. This technical assistance is provided so that the data submission process may work more smoothly in the future.

We hope this information is helpful. If you have any questions, you may contact Ron Lambert at (410) 786-6624.

/S/

Sharon B. Arnold, Ph.D.

Attachment

Schedule for Encounter Data Submission
Through June 30, 2001

                 Date                                Action

Encounter Data / Risk Adjustment Questions and Responses

1. How will Medicare+Choice Organizations (M+COs) be kept informed regarding HCFA's encounter data processes?

   Response: HCFA is currently meeting with the American Association of Health Plans (AAHP), the Health Insurance Association of America (HIAA) and the Blue Cross/ Blue Shield Association (BC/BSA) as well as organizations selected by these associations, for the purpose of discussing ongoing encounter data issues. As in the past, HCFA will also hold national meetings, prepare operational policy letters, and conduct mass mailings of informational materials. We will hold national and regional training related to the submission of encounter data. We will take questions raised in these and other forums into consideration as we move forward with the process of collecting encounter data.

2. What is HCFA doing to assure that its mailings are sent to the correct contact person and address for each M+CO?

   Response: HCFA Operational Policy Letter (OPL) 99.097 has been released that instructs the organizations on how to update the address information that is currently maintained in the Plan Information Control System (PICS) at HCFA. It includes procedures for accessing the system and updating the contact information resident there. This OPL is available on HCFA's internet site: "www.hcfa.gov/medicare/index'. Each M+CO is now responsible for keeping this information current. HCFA will use each organization's most current address in the file for its mailings, so it is important that it be accurate.

3. Are M+COs supposed to submit encounter data to the Fiscal Intermediary (FI) prior to adjudicating the data, or post adjudication?

   Response: Encounter data should be submitted to the FI so that the encounter record is substantiated by the hospital's medical record. If the organization receives a record from a provider that contains an incorrect code in a critical field (i.e., diagnosis code, procedure code, admission date or discharge date), the organization must make sure that its database matches and supports the provider's database for these fields. In that case, it is recommended that the organization return the record to the provider for correction and resubmission. The organization may use its own databases to fill in or correct other items on the record. Regarding denied claims, if the organization has reason to believe that the information from the provider is incorrect or that the services were not rendered, the claim should not be submitted to the FI. However, if the claim is denied due to coverage reasons but the information is valid, then the claim should be submitted to the FI. More information on this issue can be found in HCFA's letter to Section 1876 Risk Plans dated July 28, 1998, entitled, "Additional Information Concerning OPL98.070".

4. How does HCFA handle encounters that are sent in more than one submission such as an interim bill followed up by a final bill?

   Response: The processing of full UB-92s follows the fee-for-service claims processes. In the processing of full UB-92s, "duplicates" are not recognized. Rather, the Common Working File (CWF) overlays the interim claim with the final claim, therefore there is not a "duplicate" count. This process differs between Prospective Payment System (PPS) hospitals and non-PPS hospitals. A final claim from a PPS hospital would result in an adjustment to the original claim. For example, if the original (or interim) claim had a service date of 7/1 through 7/15, and the final claim had a service date of 7/16 through 7/31, then the original claim would need to be adjusted (via a resubmission of the claim) to have a service date of 7/1 through 7/31. But for non-PPS hospitals, the final claim cannot overlap the service dates of an interim or original claim. For example, an original claim with a service date of 7/1 through 7/15 and a final claim with a service date of 7/16 through 7/31 would each stand on its own. For more information, please refer to "Hospital Manual", which is available on the Internet at "www.hcfa.gov". For abbreviated UB-92s, each claim stands on its own. As we prepare the data sets for risk adjustment, we will use the last (fully processed and accepted) abbreviated UB-92 for each discharge in the risk adjustment process.

5. How long should M+COs continue to submit start-up year data?

   Response: Our system will accept the data for an indefinite period of time. However, HCFA does not intend to use these data to update its previous estimates of the impact of risk adjustment on payment. M+COs should focus their effort on completing the submission of data for the period July 1, 1998 through June 30, 1999. Also, our system edits the use of the abbreviated UB-92. The abbreviated UB-92 for encounters with service dates prior to July 1, 2000 must be submitted by December 31, 2000.

6. To what extent should M+COs expect to participate in encounter data validation activities, specifically the onsite consultations to discuss encounter data submission processes and the medical record reviews?

   Response: It is likely that the validation of encounter data through medical record reviews will become a routine practice conducted on an annual basis. It is unlikely that all organizations would be involved in these activities in any one year. Nevertheless, each organization should be prepared to participate every year. For the startup year it is expected that the medical record reviews will provide considerable insight into the information recorded in the encounter data. However, the startup year results will not directly impact payment. The onsite consultations have been viewed as a successful activity in the startup year, particularly with regard to improving communication between everyone involved in the submission and use of the encounter data. HCFA will reconsider on an annual basis whether to conduct these visits.

7. What is the stop date for using the abbreviated UB-92?

   Response: Please refer to the June 30 HCFA memorandum: Inpatient Encounter Data Update. Organizations will be allowed to submit an abbreviated UB-92 for all hospital discharges occurring through June 30, 2000. These data must be submitted to your FI by December 31, 2000, and must be millennium compliant. No further extension of the abbreviated UB-92 format is anticipated.

8. Can hospitals still submit UB-92s for inpatient encounters?

   Response: Hospitals are no longer being permitted to submit encounter data, unless the discharge date is on or before June 30, 1998. Discharges after June 30,1998 have to be submitted by the providers to their M+COs.

9. How should M+COs obtain Medicare provider numbers for hospitals, physicians and other providers?

   Response: M+COs should contact the hospitals to obtain the provider number for the facility and the provider numbers for the physicians.

10. What reports should M+COs expect to receive from the FI?

    Response: The FI sends reports to each organization's mailbox. Four different kinds of reports are issued. Soon after the M+CO transmits data, the FI issues a front-end report on the formatting of the data. After the data pass the front-end edits, there is an "071 report" that shows the encounters that are returned to provider from the FI Standard System or the Common Working File (CWF) because of coding or entitlement errors. There is an "065" report showing the encounters that are awaiting processing at CWF. Finally, there is an "070" report that shows the encounters that were posted at CWF. M+COs should check their mailbox at least weekly to pick up their reports.

11. If HCFA's check on enrollee eligibility could be done up front, and all file errors could be identified by the FI in one pass, the M+COs could be more efficient in correcting their data.

    Response: Encounter data are processed in the same manner as fee-for-service claims. As such, the data pass through a sequence of screening processes that involve different systems. The data cannot be processed by all systems simultaneously.

    12. How can a M+CO obtain a copy of the Medicare Code Editor?

    Response: The Medicare Code Editor is a commercial product, and is not available from HCFA.

12. During testing, M+COs receive verbal feedback from the FI concerning problems with the test file but do not get "live" reports. It would help M+COs correct problems more quickly if plans could get live reports during testing.

    Response: Systems changes cannot be made yet because Y2K issues have priority. But we recognize this issue and anticipate making systems changes as we implement the collection of outpatient and physician data.

13. When will M+COs receive error reports from the FI electronically? The need for this will become overwhelming when outpatient and physician data submission begins due to the sheer volume of data.

    Response: The necessary systems changes cannot be made because of Y2K. We recognize this issue and anticipate that these systems changes will be made as we implement the collection of outpatient and physician data.

14. Will HCFA or the FIs establish user groups to discuss encounter data processes?

    Response: FIs are currently in the process of establishing user groups with plans. Contact your FI if you wish to participate in a user group.

15. Is there a way for M+COs to submit data directly to the FI without going through the IBM Global network?

    Response: No. M+COs are required to use the established channels.

16. Does HCFA intend to establish a formal reconciliation process between the M+COs and the FIs?

    Response: M+COs should continue to follow the current reconciliation process. M+COs should contact the FI to resolve any issues related to their data submissions. If an organization is still dissatisfied, it may set up a conference call with the FI and HCFA to discuss unresolved issues.

17. How is HCFA assuring that FIs are providing satisfactory service to the M+COs?

    Response: The FIs are under contract to HCFA to provide assistance to the M+COs. HCFA also conducts conference calls with all FIs on a biweekly basis, during which time issues raised by the plans are discussed. HCFA also contacts FIs as necessary to discuss issues on an ad hoc basis. Three-way discussions between an individual organization, their FI and HCFA have been successful in resolving issues.

18. May M+COs switch to another FI if they are unhappy with service?

    Response: Not at this time. A massive movement by M+COs to switch FIs would disrupt the data collection process. We will consider the possibility of changes in the future.

19. Some providers may not submit complete and accurate data to the M+COs. Providers may not understand the impact of failing to submit complete, accurate data to the organizations in a timely manner. Could HCFA educate providers and/or impose requirements on providers?

    Response: In the past, HCFA has participated in conferences conducted by the American Hospital Association (AHA) in order to educate providers about the importance of encounter data. However, encounter data requirements are not imposed on providers directly by HCFA since HCFA contracts with the M+COs, not the providers. Furthermore, the specific impact on providers will vary by organization depending on the reimbursement provisions that the organization has established with the providers. M+COs should use their contractual relationships to assure that providers comply with data requirements.

20. If problems with provider compliance exist, will HCFA allow exceptions to the encounter data attestation? Will HCFA recognize a good faith effort on the part of the M+COs to submit the data?

    Response: HCFA requires M+COs to certify all data that are used to calculate payments (including encounter data), based on "best knowledge, information and belief". This certification standard is not one of absolute accuracy. Rather, the "best knowledge, information and belief" language has been included in the encounter data certification form to indicate that HCFA expects M+COs to design and implement effective systems to monitor the accuracy of encounter data and to exercise due diligence in reviewing the information provided to HCFA. The Department of Justice, the Office of the Inspector General and HCFA acknowledge that the volume and variety of data make some inaccuracies inevitable, and they will take into account any legitimate difficulties M+COs may have with provider compliance. However, this certification standard does not relieve the M+COs of their obligation to comply fully with the Medicare+Choice program's encounter data requirements.

21. May M+COs have access to historical diagnosis information for members that are new to their organization?

    Response: Upon enrollment, M+COs may obtain permission from the beneficiary to have access to past medical records of their enrollees. However, diagnostic information cannot be passed from HCFA to the M+COs because of privacy concerns.

22. What is HCFA doing to address the situation that data from M+COs that have terminated may not be complete?

    Response: HCFA is monitoring the encounter data submissions from terminated organizations. If the ratio of hospital discharges to enrollees appears to be too low, HCFA will follow up with these organizations to assure their compliance with the regulations.

23. What is the deadline for submission of the encounter data that will impact the year 2000 payments?

    Response: M+COs should submit encounter data for the period July 1, 1998 through June 30, 1999 by September 10, 1999. This is referenced in HCFA's Announcement of Calendar Year 2000 Medicare+Choice Payment Rates dated March 1, 1999, and OPL 99.089 dated April 23, 1999.

24. What happens if a M+CO does not submit all encounters by September 10?

    Response: Monthly payments during calendar year 2000 will be based on the data that are received by HCFA by the beginning of October. The September 10 deadline allows three weeks for the data to be completely processed. We intend to conduct a reconciliation after the payment year to account for encounter data received after that date. Therefore, the total payment will ultimately reflect late encounters. M+COs will have until June 30, 2000 to submit encounters for the period ending June 30, 1999.

25. How frequently will HCFA provide M+COs with information regarding the encounters it has received? Will the monthly payment reports under risk adjustment show this information?

    Response: On June 30 and August 12, HCFA sent each organization a report showing the start-up year (July 1997 - June 1998) and year 2 (July 1998 - June 1999) encounter data profile for that organization. This report shows aggregate and monthly counts of encounters posted to date. In the future we intend to send this report on a periodic basis. The monthly payment reports will also be generated and will show information related to the calculation of each member's risk adjustment payment.

26. Will HCFA provide information to each M+CO on the number of encounters received by provider?

    Response: The encounter data reports will not show the information by provider.

27. What payment information will M+COs receive once risk adjusted payment begins? Will the information be sufficient to allow an o`organization to reconcile its records with risk adjuster scores and payment amounts?

    Response: HCFA has issued Operational Policy Letter (OPL) 99.096 dated June 21, 1999, which describes the changes we will make to our managed care system to reflect the risk adjustment payment methodology. The monthly membership reports will show the parameters that were used to calculate each member's risk adjusted payment amount, including a previously disabled indicator, a Medicaid status indicator, the Principal Inpatient Diagnostic Cost Group (PIP-DCG) category and the risk adjustment factor.

28. Considering that 1-day stays do not result in a higher payment, how should M+COs deal with situations where a patient moves between different cost center beds in a hospital, or a patient is transferred from one facility to another and does not remain in the same location for more than a day?

    Response: All discharges reflecting inpatient stays should be submitted. If a patient moves from a 1-day hospital stay to a swing bed or skilled nursing facility bed, then this is simply a 1-day stay. If the patient is transferred to a rehabilitation facility, then the diagnoses from the rehabilitation facility stay are used to determine the risk adjusted payment.

29. If the principal diagnosis is missing, does the PIP-DCG model use the secondary diagnosis as the principal diagnosis?

    Response: Encounter records that do not have a principal discharge diagnosis are not accepted. The records will be shown on the "071 report" as returned to provider.

30. What impact is there on the payment if a M+CO does not include the secondary diagnoses on any of the encounter records it submits to the FI?

    Response: Generally the PIP-DCG model uses only the principal diagnosis to assign a beneficiary to a PIP-DCG category. However, there are two exceptions. For beneficiaries with a principal diagnosis related to chemotherapy (ICD-9 codes V58.1 and V66.2), the PIPDCG category is assigned based on the type of cancer using a secondary diagnosis. And, all beneficiaries with a secondary diagnosis of AIDS will be placed in the same PIP-DCG category as those with a principal diagnosis of AIDS. If an organization does not report secondary diagnoses, it may not receive the payment to which it is entitled. M+COs should assure that they obtain all diagnosis information from their providers and submit all diagnoses to their FIs.

31. Hospitals do not generate a UB-92 claims form for patients who only have Part B coverage. How does HCFA intend to risk adjust these enrollees?

    Response: The volume of claims for Part B-only beneficiaries is small. For payment year 2000, encounters for Part B-only beneficiaries may be considered during the reconciliation process. The data will not come through normal channels, but will be submitted directly to a contractor. Organizations that need to submit data for Part B-only members may contact Nancy Keates at (410) 786-5004. For payment year 2001, we expect that changes will be completed that will allow data to be processed through our system in time for the reconciliation.

32. Does HCFA intend to use an abbreviated HCFA 1500 or abbreviated outpatient UB-92 format for the next phase of encounter data submission?

    Response: We realize that this is a significant issue with the M+COs, and we will make every attempt to do this. We will provide more information regarding this issue over the next several months.

33. When outpatient and physician data are collected, will M+COs be required to submit data pertaining to evaluation and management services? Will these data impact the payments to the M+COs?

    Response: These data will be required. We anticipate that diagnoses from evaluation and management encounters may be used by the comprehensive payment model to be implemented in 2004. Also, development of new payment models for risk adjustment may depend upon these data. And if HCFA recalibrates the comprehensive model using managed care data, we will need these data in order to measure the resources provided under managed care.

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Last Updated September 15, 1999