In this episode, we’re pleased to welcome back Olga Barone-Allan, Director of Revenue Integrity at BESLER, to give us a glimpse into our upcoming webinar, IME/GME Revenue Recovery Strategies, on Wednesday, February 7, at 1 PM ET.
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Learn how to listen to The Hospital Finance Podcast® on your mobile device.Highlights of this episode include:
- What IME shadow bills are and why it’s important to IME and GME
- Why the increase of Medicare Advantage patients and the provider’s assumption that IME shadow bills and the shadow process is well established could cause more missed claims.
- What specific condition codes are required to be on the IME billing of a shadow bill claim
- Few reasons why shadow bills are missed during the billing and reporting process
- The benefits of an independent shadow billing review
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back Olga Barone-Allan, Director of Revenue Integrity at BESLER. In this episode, Olga will give us a glimpse into our upcoming webinar, IME/GME Revenue Recovery Strategies that we’re presenting live on Wednesday, February 7th at 1:00 PM Eastern Time. Thank you for joining us today, Olga, and welcome back.
Olga Barone-Allan: Thank you, Kelly, for having me. I appreciate it.
Kelly: Well, all right, let’s jump in. So, tell us briefly what an IME shadow bill is and why it’s important to IME and GME.
Olga: Absolutely. So, a shadow bill is a separate bill submitted to Medicare for informational purposes, while the original claim is sent to the primary Medicare Advantage payer for payment. A shadow bill is also known as a no-pay or information only claim. The importance for shadow billing and reporting a shadow bill is for teaching hospitals to receive two additional payments to their Medicare prospective payment. One type of payment is for direct graduate medical education, and one type of payment is for indirect medical education. And the acronyms that I just said is, obviously, DGME and IME. So, the Direct Graduate Medical Education, also known as DGME, covers the direct fixed costs of training physicians. Payments are received via Cost Report settlement to each hospital based on the number of specialties of the residents it trains. Indirect Medical Education, also known as IME, covers indirect costs that teaching hospitals incur given their broader range of services. So, with the Balance Bill Act of 1997, Medicare has included these additional payments to Medicare Advantage patients who have opted out of traditional Medicare. These additional payments and processes apply to IPPS teaching hospitals, as well as, non-IPPS hospitals such as long-term care, rehab and psych, impacting the DGME reimbursement through their cost report. The non-teaching hospitals, so they can include Medicare Advantage Patient Days to their DSH and S SI ratio. And lastly, hospitals that operate approved nursing and allied health education programs, allowing them to receive an add-on and AH payment.
Kelly: Thank you for that explanation. The combination of the increase of Medicare Advantage patients and the provider’s assumption that IME shadow bills and the shadow process is well established could cause more missed claims, creating a bigger problem in processing IME and reporting GME. Isn’t that right?
Olga: Absolutely. Not only are the number of available plans increasing, but also increasing are the number of beneficiaries selecting those plans and opting out of traditional Medicare. This now includes end-stage renal disease patients who can elect a Medicare Advantage Plan. Keep in mind, before 2006, Medicare Advantage in its current form did not exist. As of 2023, it has been reported that 48% of all Medicare beneficiaries are enrolled in Medicare Advantage Plans and the trending is continuing to grow. During BESLER’s independent reviews, we estimate an on-average 5-8% of shadow bills are missed, which with the growing number of patients enrolling in Medicare Advantage plans could result in a significant amount of missed IME and DGME, reimbursement, and cost report calculations. As more and more patients are opting into Medicare Advantage Plans, this potential missed revenue grows as well. To put things in perspective, the average indirect medical education shadow bill was worth $2,468 a claim in 2023.
Kelly: Wow, so we’re talking about some big numbers there.
Olga: Absolutely.
Kelly: Yeah. The IME billing of a shadow bill requires specific condition codes to be on the claim and could cause issues if they’re missed, correct?
Olga: Yes. We notice many are missing or have an incorrect condition code, which causes the claim to process incorrectly or fail into a return to provider category. We see this mostly with distinct unit-psych and rehab claims, which is a requirement to submit, even though, they are zero pay claims. Due to the zero pay, it is often not noticed that there was an error with the condition codes, resulting in the days not being captured for cost report calculations. In summary, condition codes 04 and 69 are necessary for a claim to be processed as indirect medical education only through Medicare. Without the condition codes, a claim will be rejected. And more importantly is that the provider only has one year from discharge date to get the claims processed to their strict timely filing rules.
Kelly: Wow, that’s interesting. So, tell us a few reasons why shadow bills are missed during the billing and reporting process.
Olga: For sure. Even hospitals with established best practices around the shadow billing process find missed shadow billing opportunities during a system conversion or a program update. Plan codes and billing triggers are complicated to set up, and must be maintained regularly. Processes which previously operated well are at risk of breaking down without the necessary attention during system conversion. System changes may involve a steep learning curve for hospital staff during implementation, and the opportunity for billing errors increases substantially. Some of the top BESLER findings that we’ve come across are: we noticed a trend with billing software conversions where shadow bills are automatically dropping for Medicare Advantage claims after the primary payer paid the claim. We recommend submitting the shadow claim to Medicare at the same time as the claim being billed to the primary Medicare Advantage payer. This would avoid a missed opportunity.
We spend a significant amount of time determining a patient’s Medicare Beneficiary Identifier, which in most cases is not included during registration, therefore never make it to a UB-04. We recommend obtaining the Medicare number at registration and adding Medicare as a secondary payer, including the MBI. This will allow the shadow claim to be submitted and recorded in a timely manner. Some facilities audit their shadow bill submission process on a regular basis. However, if they’re auditing the known Medicare Advantage population, they aren’t uncovering patients that were incorrectly identified initially. And the result can remain as a lost revenue. Although, teaching hospitals have the most at stake when it comes to immediate revenue impact. Even non-teaching hospitals need to correctly report shadow bills for other reimbursement purposes. CMS requires that non-teaching hospitals submit no paid bills so that the SI percentage, part of the DSH calculation, can be properly determined. Hospitals that fail to submit these bills are out of compliance with Medicare billing regulations.
Kelly: Wow, so a lot of good reasons there. Can you tell us about the benefits of an independent shadow billing review?
Olga: Definitely. Missing shadow bills cost teaching hospitals well over $150 million every year. Properly submitting shadow bills is a compliance mandate for all teaching and non-teaching facilities. An independent review of a hospital shadow billing process will identify opportunities for improvement, potentially recover lost revenue, ensure compliance, free up staff time to focus on more productive tasks, and more importantly, ensure that a hospital is well-positioned as Medicare Advantage enrollment continues to expand.
Kelly: Thank you very much for sharing that with us. And thank you so much for joining us, Olga, and for sharing this sneak peek into BESLER’s upcoming webinar, IME/GME Revenue Recovery Strategies that we’re presenting live on February 7th at 1:00 PM, Eastern Time. We really appreciate you being here.
Olga: Thank you, Kelly, for having me again.
Kelly: And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…
[music] This concludes today’s episode of the Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.com/podcasts. The Hospital Finance Podcast is a production of BESLER | SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.
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