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CPI Experts - Industry Info



Abuse describes practices that directly or indirectly result in unnecessary costs to the Medicare program. Unlike fraud, it is not necessary to establish that acts of abuse were committed knowingly, willfully and intentionally. Examples of abuse may include:

  • Charging excessively for services or supplies
  • Submitting claims for services that are not medically necessary
  • Breaching the Medicare participation or assignment agreements
  • Billing Medicare patients a higher amount than non-Medicare patients
  • Submitting bills to Medicare that are the responsibility of other insurers
Ambulatory Payment Classification (APC)

A numbering and classification scheme for ambulatory services used by the Outpatient Prospective Payment System to assign prospective payment rates to outpatient services. Called “outpatient DRGs”, APCs were established to bring outpatient services under prospective payment. Services in each APC are slimier clinically and in terms of the resources they require.

APC Chart Review

An audit of outpatient medical records and their corresponding bills to assess the accuracy of coding and the completeness of documentation. An important component of revenue cycle management, the APC chart review ensures compliance with Medicare coding regulations by following the flow of clinical services from delivery to billing.

APC Error Resolution and Prevention

A service to provide an audit of a hospital's APC error report to correct existing claims and ensure that corrective actions are taken at the source to prevent future errors.

Bundling and Unbundling

The proper structuring of hospital services for billing purposes. Medicare has specific requirements for services that must be bundled and billed as a single service, as opposed to billing discretely. In some cases, billing for unbundled services is considered Medicare abuse.

Charge Description Master (CDM)

The master file of all services and supplies that a hospital delivers. The CDM is the principal source of data describing hospital activities and corresponding charges, and is the primary vehicle for correct coding, accurate billing, and systems integration. A hospital CDM may contain as many as 100,000 items.

Charge Master Standardization

Multi-hospital systems who are aggressive about revenue cycle management often find that charge master standardization among member hospitals makes Medicare compliance easier to manage and monitory. Charge master standardization means implementing identical charge structures at each hospital and working upstream to ensure proper integration with order entry while also


Maintaining coding, documentation, and billing practices that conform to Medicare regulations. Medicare demands that hospitals maintain compliance with published regulations and has implemented rigorous review and audit processes with stiff penalties for fraud and abuse. Hospitals are implementing multi-faceted compliance management programs to mitigate their risks, including the use of compliance specialists who stay up-to-date with frequent changes and clarifications to the payment system.


Fraud is defined as false statements or representations to obtain benefit or payment for which no entitlement otherwise exists. Medicare fraud must be performed knowingly, willfully and intentionally. Examples of Medicare fraud include:

  • Billing for services or supplies that were not provided
  • Altering claim forms to obtain a higher payment amount
  • Soliciting, offering, or receiving a kickback, bribe or rebate
  • Completing Certificates of Medical Necessity for patients not personally and professionally known by the provider
  • Falsely representing the nature of the services
  • Billing procedures over a period of days when all treatment occurred during one visit
Healthcare Common Procedure Coding System (HCPCS)

A coding system for billing that is composed of Level I codes (CPT codes) and Level II codes (national codes). Level I (CPT) codes are five digit numeric codes developed by the American Medical Association (AMA) that describe procedures and tests. Level II (national) codes are five digit alpha numeric codes developed by CMS that describe pharmaceuticals, supplies, procedures, tests and services.

Examples of CPT codes:

  • 85025 - CBC with automated differential
  • 71020 - Chest x-ray 2 views
  • 45378 - Colonoscopy
  • 93501 - Right heart catheterization

Examples of Level II codes:

  • C8954 - Chemotherapy IV Infusion Up To 1
  • J9190 - Fluorouracil 500mg
  • A4367 - Ostomy belt, any size
  • P9021 - Packed red blood cells, each unit
Lost Charges

Between the complexity of current reimbursement rules and the frequency of updates, many hospitals miss legitimate opportunities to bill for services they provide. These lost charge opportunities may be the result of internal systems or processes that do not track and implement changes effectively. The solution is to periodically audit procedures, processes, and bills to determine whether additional revenue-producing services may be billed. In addition, the source of systematic errors must be documented, corrected, and integrated into daily procedures.

Managed Care Contract Audit

In addition to Medicare billing, lost charge opportunities exist across a hospital's payors, including among managed care contracts. CPI Experts recommends a periodic audit program to identify, document, request, and collect underpayments. A comprehensive audit includes a review of clinical, billing and contract data.


The ‘Medicare Provider Analysis and Review’ (MEDPAR) file is a public source of healthcare claims data for services provided to Medicare patients in hospitals and skilled nursing facilities. MEDPAR contains discharge data on inpatient stays including charge data, LOS, demographics, diagnosis, and entitlement data. CPI Experts creates customized views of scrubbed MEDPAR data for use in benchmarking analysis for client hospitals.


A modifier indicates that a service or procedure was altered or explained by specific circumstances, but not changed in its definition or code.  Modifiers are two digit numeric or alpha numeric codes that are appended to the end of CPT/HCPCS codes and often influence coverage or the extent of allowable reimbursement.

NPI National Provider Identifier

The NPI meets HIPAA requirements for the adoption of a standard unique identifier for all healthcare providers.  NPI applies to all providers, care-givers, suppliers, billing agents—individuals and organizations that render care.  Implementation of the NPI begins with the implementation of the UB-04. NPI is a permanent identifier for all HIPAA and non-HIPAA transactions.

Office of Inspector General (OIG)

The agency of the Federal Government charged with overseeing Medicare compliance and pursuing acts of Medicare fraud and abuse.

Outpatient Prospective Payment System (OPPS)

Under Section 4523 of the Balanced Budget Act of 1997, CMS was given authority to implement a prospective payment system under Medicare for Outpatient services. This system uses APCs to determine prospective payment rates for ambulatory services. The complexities of this system, including the periodic updates and clarifications issued by CMS, make OPPS implementation and Medicare compliance a continuous challenge for hospitals.

POA (Present on Admission) Indicators

Beginning October 6, 2007, CMS requires the POA indicator for all Medicare patients.  This indicator helps distinguish conditions and diagnoses that are present on admission from those manifesting during the hospital stay.  CMS will begin excluding payment for infections not present on admission.

Price Transparency

Most recently arising in the aftermath of Medicare fraud and abuse efforts and RAC audits, hospitals are seeking legal, ethical, and practical ways to yield higher revenue returns while maintaining compliance with stiff Federal guidelines. Hospitals are examining their payor mix for charge-based volume areas in which to make strategic rate adjustments. Unlike the ‘rate optimization’ efforts of the 90’s, today’s price transparency strategies are superimposed over the more structured guidelines imposed by Medicare.

Strategic Pricing

Because of its expertise with charge master structure and Federal fraud and abuse guidelines, CPI offers client hospitals more comprehensive support of rate and pricing structures. Hospitals need to look beyond Medicare regulations to the mix and yield of other payors, understanding the market positioning of their pricing against public data average price benchmarks.


Also, known as CMS-1450, UB-04 is the latest version of the Uniform Billing form, mandated for use beginning May, 2007 and replacing the UB-92 form.  After May, the UB-92 will no longer by accepted.

Key additions include: diagnosis indicator, accident state, NPI/National Health Plan ID, marital status code, PPS/DRG code, pay-to-location, ICD version qualifier.

Key deletions include: covered/non-covered/coinsurance/lifetime reserve days, patient marital status, employment status, employer location, prior payments, procedure coding method used, provider signature.

Key modified fields include provisions to expand fields and field size in the following areas:  bill type, condition codes, occurrence codes, FL44 HCPCS/Rates, treatment authorization number, diagnosis fields, and procedure codes.

UB-92 Code

A “uniform billing” code established by the Healthcare Financing Administration (now Centers for Medicare and Medicaid Services (CMS)) designed to standardize and increase the submission of electronic claims and coordination of benefits exchange.


An abusive or fraudulent practice of assigning incorrect codes to healthcare services that result in excessive reimbursement. Hospitals should perform periodic audits of their coding practices to ensure that safeguards prevent and detect instances of upcoding. For more information on revenue cycle management services, contact Melanie Stewart.