Take Control


How to approach the Functional limitation reporting system.

By Connie Ziccarelli, Larry Briand, PT, MT, ATC, and Jodi Woodward

“Control what you can control and control it well.” These words can be an inspiration to those of us in health care, as we see uncontrollable changes in third party payor rules and regulations on an ongoing basis. Control gives us a sense of power and authority; so when we lose control, it causes sleepless nights and ongoing headaches. Unfortunately, this is why so many practices struggle with the Functional Limitation Reporting System. With such a new system, we run into snags and see the “forbidden” denials come into our offices time and time again. However, by putting an effective denial management procedure in place, we can regain control of our revenue cycle and continue to receive healthy payment.

In July of 2013, the Functional Limitation Reporting System was made mandatory by the Centers for Medicare & Medicaid Services (CMS) to better understand beneficiary conditions, outcomes, and expenditures. Once grasped, the concept of functional limitation reporting can be quite manageable. To create a successful matrix for reporting, providers must:

  • Report functional limitation codes at evaluation, at every 10 visits, and at re-evaluations, if applicable.
  • Bill out the appropriate two limitation codes at each reporting interval and assign the appropriate discipline and severity modifiers to each functional limitation code.
  • Be sure to discharge the functional limitation at the end of care or prior to starting a new limitation.

To receive payment from Medicare, you must be compliant with the requirements listed above. However, with reporting being less than a year old, there are still several kinks in the system, and no one is exempt from denials. If you are seeing more Medicare denials than you are used to, then it is time to take control and create an effective denial management plan.

Every time a denial is received regarding functional limitation reporting, it will show up on your Medicare remittance advice as a CO-16 code. This code can apply to a single date of service or to the entire episode of care. Unfortunately, the code does not offer any explanation on the cause of the denial. Our team has done extensive research and interviewed several Medicare carriers that represent the states of Illinois, Michigan, Missouri, Utah, and Wisconsin to learn the cause of these denials. The areas of denials we found encompass issues at the provider and billing level and issues at the payor level.

The Problem: Issues at the provider level

As a licensed rehabilitation health care provider, it is your responsibility to willfully and knowingly understand all third party payor rules and regulations, and the Functional Limitation Reporting System is no exception. Some of the most common denial causes that stem from the provider level are due to an incomplete knowledge of the requirements:

  • Providers do not understand how to properly initiate and discharge limitations.
  • Providers are incorrectly managing limitations for patients with more than one episode of care.
  • Providers are not assigning the appropriate discipline and severity modifiers.
  • Providers are not reporting limitations at every 10 visits.

The Solution

If you lack knowledge on limitation reporting, make continuing education a top priority. Plenty of resources are available both in print and online, and you should take the initiative to find them and apply them in your practices. Effective and efficient use of your Electronic Medical Record (EMR) program can assist in reporting limitations correctly as some programs flag providers when they are nearing a reporting interval. Your administrative team can be of great benefit by assisting in tracking visits, cuing you when reporting needs to be completed, and helping to ensure all documentation and functional tools (e.g., Lower Extremity Functional Scale) are complete prior to submission. Lastly, put systems in place to doublecheck your claims prior to submission so you can avoid unnecessary denials.

The Problem: Issues at the payor level

When denial issues occur at the provider level, we have the opportunity to control the situation and make the appropriate behavior changes. However, when it comes to issues at the payor level, it is often out of our control. Providers are being told that they did not report limitation codes accurately or timely, but in reality, the following may be occurring:

  • Claims are being split when passing through the clearinghouse or payor and therefore, not all limitation codes are included on the same claim.
  • Claims are being processed in nonsequential order and, consequently, not being recognized in the system.
  • Self-discharged patients are not being closed properly. When a patient self-discharges, a provider is not required to report any limitation codes, and the Medicare system should automatically close the limitation after 60 days. However, we have seen situations in which this has not been completed and returning patients are denied due to an inaccurate open limitation. At this time, the carriers we interviewed do not have a resolution and are advising providers to hold their claims and follow-up at a later date.

The Solution

Contact your payor to learn the cause of the denial. Issues such as claims being split or not being processed sequentially are areas that we can correct ourselves. We have the control to change our methods of submitting claims to pass through the Medicare system correctly. If the issue is within the payor’s system, it is suggested you create a follow-up plan to continue communication moving forward.

Functional limitation reporting is here to stay. To effectively control your revenue cycle and maximize your Medicare payment, your entire team must grasp this concept and be active in denial management. When a denial does occur, let your internal detective loose and investigate whether the issue is caused at the provider and billing or payor level. Ensure that your provider staff is fully educated on functional limitation requirements and that your billing team is cross-checking all claims prior to submission. Communicate with your payors often and make any necessary adjustments to your operations to meet their system requirements. By dissecting the reasons for denials and making the appropriate adjustments, you can once again regain control and feel empowered, avoid headaches, and sleep soundly at night.

Connie Ziccarelli is chair of the PPS Administrator’s Council and co-founder, principal, and chief operating officer of Rehab Management Solutions in Sturtevant, Wisconsin. She can be reached at cziccarelli@rehabmgtsolutions.com.

Larry Briand, PT, MS, ATC is founder and chief executive officer of Rehab Management Solutions and can be reached at lbriand@rehabmgtsolutions.com.

Jodi Woodward is the director of medical billing and reimbursement at Rehab Management Solutions and can be reached at jwoodward@rehabmgtsolutions.com.

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