Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.
No One Here Gets Out Alive
All is not well in the home of Gretchen and Peter Mansfield. Gretchen, 41 is a sales manager for Durham, N.C.-based pharmaceutical manufacturer BioRealm. Her husband Peter, 44, lost his sales job in mid-2015 and insecurity has been eating away at him.
A big part of Gretchen’s job is working with BioRealm’s SVP for sales, Brian Hatch, 35. Fit, good looking and very well compensated, Brian is Peter’s current nightmare.
Brian and Gretchen spend a lot of time traveling together, sometimes staying in the same hotel for days at a time. Peter, always the jealous sort, stole Gretchen’s work email password long ago and has been following her every move.
He’s read emails between Gretchen and Brian that left no doubt in Peter’s mind they were having an affair.
The last straw was when he picked up a voicemail from Brian that went direct to Gretchen’s email. Hearing Brian describe what he’d like to do with Gretchen the next time he saw her sent Peter over the edge.
At 11:10 am on September 15, 2015, Peter parked his family’s SUV in the parking lot of the Durham location of BioRealm.
From the open windows of the car, Metallica’s “For Whom the Bell Tolls” was blaring.
Peter wore a two-day beard, but there was nothing else in his appearance to warrant alarm.
As he walked to the front door, carrying a large black gym bag and a vinyl grocery bag, he caught the eye of Sandy Brick, Gretchen’s friend and coworker, whom he’d known for years.
Sandy always liked Peter.
“Hey Sandy,” said Peter with a smile.
He was in sales for years. He can do this.
“Hey Peter, what brings you here?” said Sandy.
“Gretchen forgot her lunch bag and her gym bag,” said Peter affably, smiling and holding up the gym bag as he did so.
He did this just as Sandy reached the front door. Not giving her action a second thought, Sandy swiped her security card to open the front door and allowed Peter in ahead of her.
“You know where Gretchen’s office is, right?” Sandy said.
“Sure I do,” said Peter with a smile that faded a little too quickly.
But instead of heading toward Gretchen’s office, Peter made a beeline for Brian’s office, in the opposite direction.
Peter half-jogged to Brian’s office pulling a Glock 9 mm handgun with a 12-round magazine from the grocery bag and an AK-101 with a 30-round clip from the gym bag.
Approaching Brian’s office, he heard his voice, that same confident baritone that Peter last heard on Gretchen’s voicemail. Peter’s rage went from burning red to white hot.
Now running, Peter burst into Brian’s office and shot him three times in the head with the Glock. Peter bit completely through his lower lip as he shot Brian, so intense was his anger.
Not knowing exactly what they heard, BioRealm employees turned their heads to see Peter, with blood running from his mouth, leaving Brian’s office holding the handgun and the assault rifle and heading toward Gretchen’s office.
Now it’s clear what’s happening. Screams begin to rise from the cubicles.
“He’s going for Gretchen!” a woman shouted.
Two men rushed Peter and he shot them down with a burst from the AK-101.
Gretchen poked her head out of her office at the sound of the second round of shots. She saw Peter coming at her. But it wasn’t like it was him at all.
His face was a grey mask and his pupils were pinpoints.
Gretchen’s right hand went up reflexively as Peter fired a 9 mm bullet through her hand and into her temple. Peter fired again and again, some of the bullets hitting Gretchen’s falling body and some of them ricocheting off of office fixtures.
In a half-jog, wiping spasmodically at his bleeding mouth, Peter moved back to the front door.
People attempting to flee the building scattered as he approached. Peter fired with the AK-101 as he neared the front door, striking at least half a dozen people as those more fortunate fled in a different direction.
The exit door was streaked with blood. A woman with sandy hair was propped against the door, dead.
Peter grabbed her by the hair and tossed her aside to clear his exit. The door wouldn’t budge. So he shot the latch to pieces with the AK-101.
Peter walked out to the parking lot, placed the muzzle of the Glock in his mouth and pulled the trigger. Blood splattered on the BioRealm sign adjacent to the front door.
Peter Mansfield’s final visit to BioRealm lasted all of three minutes and 25 seconds.
Falling Short of Competence
BioRealm prided itself on having a state-of-the art emergency response and security system. In the wake of numerous office shootings throughout the country, the company installed swipe card security six months before Peter Mansfield’s shooting rampage.
Within 10 minutes of the attack, a text alert was sent to all BioRealm employees and their preferred emergency contacts informing them of the incident.
The text informed BioRealm employees to punch in a code number to let the system know they were safe and sound.
The text lacked specific detail, however, only informing employees and next of kin that an incident had occurred at the Durham campus and that BioRealm was working with local authorities to resolve any issues.
The texting system also failed to take into account any employees that might have gone into hiding when Peter Mansfield first opened fire.
Peter shot Brian Hatch down at 11:12 am.
At 1:10 pm, Angela Brighton, an event planner who assisted the BioRealm sales team, was still hunkered down in a utility closet on the first floor of the Durham offices. When the shooting started, Angela fled for cover, not having time to take her cell phone with her.
In her haste to pull the closet door shut, Angela lacerated her shin against the edge of a mop bucket. Traumatized and now dehydrated, Angela finally burst out of the closet at 1:15 p.m., overcome by claustrophobia and pain and crying hysterically. The building by then had been evacuated.
Angela suffered the surreal experience of walking through the BioRealm offices, seemingly by herself. In her shock, she saw a smear of blood on a corridor wall, and traced it with her finger, as if to confirm for herself that it was real.
The first person she encountered was a County Police Lieutenant, who looked at her in shock when he saw her.
“Ma’am, have you been in here the whole time?” the Police Lieutenant asked her.
“Nobody….nobody said anything,” Angela said, visibly distraught. “Nobody came looking for me. It’s like I don’t exist,” she said, clearly off-center.
Quickly, the Lieutenant got her a seat and ordered medical attention for her via walkie-talkie. No sooner did he have her seated when Gabe Crooks, an intern from Duke, walked up.
“I was in a second floor bathroom,” Crooks told the Lieutenant. Crooks was less visibly shaken than Brighton, but he was clearly upset.
“I’d like to go home now,” he told the Lieutenant.
In a nearby hotel conference room, BioRealm risk manager Nathalie Galbreath, company CEO Keith Ryerson and chief communications officer Roger Blinton were huddled over scratch pads, cell phones and laptops.
“How many are still unaccounted for?” Ryerson asked Galbreath.
“My latest information is five,” Galbreath said.
“That’s five employees that aren’t in the time and attendance system as being on business travel or vacation and who haven’t responded to the emergency text.”
“Dead and injured, again?” Ryerson asked Galbreath.
“Seven dead, four injured, one critically.”
“Text the families of the missing again,” Ryerson told Blinton. “Let them know that we’re still working with authorities to find their relatives.”
“Text them?” Blinton asked.
“Yep. Do it. It’s the fastest way to get to them,” Ryerson said.
Blinton gave Galbreath a look and then turned away to start texting.
The swirl of events continued.
Social media was alive with cell-phone footage of Peter Mansfield’s exit from the BioRealm offices, when he heartlessly yanked a dead woman’s body from the door and shot his way out.
A gutsy BioRealm intern somehow managed to follow him to the door, shooting video with her phone. She posted the video to Facebook within ten minutes of Peter’s death.
BioRealm’s attempts to comfort bereaved families and provide information to others continued to fall short.
Four hours after the incident, no BioRealm employee had reached out to families in person to tell them what was going on. Contrasting this failure was the excellent effort put out by local emergency responders, who placed personal calls to the homes of every dead or injured employee.
With frustration against BioRealm building to a peak, the grieving sister of a slain employee became outraged when BioRealm couldn’t give her a solid answer as to when she’d be able to enter the building to collect his belongings.
“What do you mean you can’t answer that?” she screamed at a BioRealm employee outside the Durham offices as television cameras recorded the moment.
“My brother is dead! Answer me!” she screamed as the employee, rattled, turned his back on her and headed back into the building, all the while on camera.
Television news producers edit the blood-spattered BioRealm sign into their coverage.
It took BioRealm executives until noon the following day to determine that their time and attendance system malfunctioned and that the five “missing” employees were actually in the building at the time the shooting occurred and had fled to their homes.
None of the five ever came back to work for BioRealm.
No Quarter Asked or Given
Executives at BioRealm were prepared for an active shooter scenario, or so they thought. There was the aforementioned addition of swipe card security. The company was also banking on its text messaging system to get crucial information out to friends and family in a timely manner.
The company had created an evacuation plan and an emergency communications plan in case of an extreme weather event or some other catastrophe. The actual event, someone’s spouse entering the building and killing people, simply overwhelmed all preparations.
BioRealm’s risk management and emergency response management failures would prove costly in human and financial terms.
Keith Ryerson’s inability to realize the importance of speaking directly to employees and their families on the most notorious day in his company’s existence did not play well.
Coupled with the results of investigations that reported that BioRealm failed to adhere to its own crisis response policies, families that felt their loved ones were killed or injured due to corporate security laxity filed suit.
Also filing suit were 25 BioRealm employees who left the company after the shooting. They alleged that the company’s emergency management training and security measures were inadequate.
Included in that class of litigants were Angela Brighton and Gabe Brooks, the two employees who were left behind the day of the shooting.
“Let me get this straight. Nobody made any attempt other than a text message to reach you and no one came looking for you,” one of the attorneys handling the lawsuit asked Brighton and Brooks.
“No one,” Brighton said.
“No one, means no one,” said Brooks, whose usually sunny disposition was under a very dark cloud.
“Who allows a non-employee to enter a supposedly secure building carrying a heavy black bag?” another attorney representing the employees in the lawsuit said to one of his colleagues as they prepared their brief.
The reputational harm caused by social media sharing of the Peter Mansfield shooting video, plus the images of a BioRealm employee turning his back on a grieving family member also wouldn’t go away.
“We’re going to have to up investments in security,” Nathalie Galbreath told Keith Ryerson in a meeting two months after the shooting.
“I’m talking metal detectors on every door and armed security guards. I think it’s the only way we’re going to get any sense of stability in our workplace,” she added.
“Do you know what our legal bill is already from this?” Keith Ryerson said to her.
“Um, no, I don’t know what it is,” Nathalie said, not feeling very patient.
“How about $650,000 and we’re not even at trial with any one of five lawsuits?” Keith said.
Keith Ryerson put his head in his hands.
“Go ahead,” he said.
“Go ahead what?” Nathalie said, sharing his exhaustion and depression.
“Go ahead and order the metal detectors, order the guards,” Keith said weakly.
Risk & Insurance® partnered with Black Swan Solutions to produce this scenario. Below are Black Swan Solutions’ recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance®.
1. Crisis Response and Business Continuity plans must coordinate with community police, fire and emergency medical agencies. In addition, pre-establish coordination with a local chapter of the Red Cross. All organizations rely on community responders to assist in a crisis. Yet most never proactively involve these same agencies in plan development and testing. If a crisis occurs, this can result in significant challenges related to cooperation and coordination.
2. Have a plan for testing, shelter in place and evacuation processes including a reliable means to account for every employee on premise at the time of the event. This information will also be invaluable for first responders involved in the search and rescue effort.
3. Have a secure centralized database for up to date information. This will allow for timely and accurate notifications to stakeholders.
4. Consider contracting with a specialized crisis call center to ensure you have a plan in place to accommodate mass inquires while providing a professional and compassionate response. Families will expect your organization to provide timely information and account for their loved ones who may have been affected by the crisis. The volume of inquiries and requests for information will often overwhelm your expectations and capabilities to respond.
5. Difficult news must be delivered personally. If the news is not good, make the effort to say it either in person or on the telephone – don’t text it. Realizing you have to use the tools and contact information you have, do your best to connect on a personal level, no matter how challenging, when you must deliver bad news.
6. Prior to a crisis, identify and train organizational personnel who will interface with victims and families in a critical event. Understand the importance of self-care for those involved in responding to the incident and debrief them at the end of every shift. Consider contracting with an organization to provide specialized training, as well as to provide guidance and support to those employees during the crisis.
7. Pre-consider strategies for establishing a family assistance center, typically at a hotel, where victim families can gather to obtain information and receive emotional support and psychological first aid. Families also have an opportunity to obtain information from responding authorities.
Beyond the Breach
The old-school protection racket has gone high tech. There’s a whole new crop of criminals threatening businesses — demanding cash in order for the “privilege” of not having their livelihoods destroyed.
The bad guys may have ditched the fedoras and spats in favor of hoodies and Chuck Taylors. But the bottom line remains the same.
It’s all about the Benjamins. Or maybe the Bitcoins, in this case.
Welcome to the new frontier of cyber extortion — the world where a few lines of programming code can take a company hostage — or even shutter it for good.
Sure, the “old-fashioned” data breach is alive and well, but it has declined in profitability as the black market for credit card and Social Security data has become oversaturated. The bad guys, meanwhile, went in search of greener pastures.
Cyber extortion, in the form of distributed denial of service (DDoS) threats with ransom demands, began grabbing the attention of security professionals several years ago. These attacks are designed to cripple victims’ ability to transact any business online until the ransom is paid.
Welcome to the new frontier of cyber extortion — the world where a few lines of programming code can take a company hostage — or even shutter it for good.
The most obvious targets for DDoS attacks, initially, were those that stood to lose the most from a service outage. Payment processing vendors and online gaming sites were early victims.
Podcast: Mother-daughter duo Alina and Inna Simone tell Radiolab about being held hostage by criminals who burrowed into their lives from half a world away.
But the field of targets broke wide open with the birth of automated ransomware — malware that disables a computer system by encrypting data and locking the victim out.
A pop-up window displays a demand for ransom, typically with a threat to delete or publicly share the data if the ransom isn’t paid by a specified time.
Cryptolocker, first appearing in September 2013, netted around $3 million for its operators until it was finally isolated in June 2014. Variants such as Cryptowall, however, were quick to fill the void.
Prior to Cryptolocker, extortion events were somewhat rare and often involved someone with an axe to grind, said Tim Francis, a second vice president with Travelers and the company’s enterprise cyber lead.
“But around two years ago you saw a switch, which was the commoditization of the software that did the extortion for you … . Now it wasn’t somebody who knew anything about your company … it was just somebody out to make a buck.”
Cyber extortion has been propelled into a rather lucrative cottage industry, and potential targets are everywhere.
Reported extortion events have run the gamut from police departments to pizza chains. If criminals cast a wide enough net, they only need a small number of targets to take the email bait in order to collect a respectable payout.
Estimates of the amount being extorted from victims vary wildly. However, in a 2012 report titled “Ransomware: A Growing Menace,” researchers at Symantec were able to estimate the earnings for one particular extortion gang at $394,000 in a single month.
Any current figure would likely be much higher. But the chance of being able to obtain that figure is slim, because no one wants to advertise it.
There are multiple reasons why this type of attack is successful enough to keep criminals engaged.
For one, the rise of Bitcoin and other digital currency has enabled extortionists to operate in a virtually anonymous and untraceable environment.
For another, most criminal actors have shrewdly opted to keep demands modest, increasing the chances that a victim will choose the path of least resistance and simply pay up.
No one is ever eager to capitulate to the demands of an anonymous extortionist. And some have gone to great lengths to avoid giving in. Sometimes, however, that hasn’t been a sound risk management decision.
Code hosting company Code Spaces was hit by a DDoS attack in mid-2014 and refused to give in to ransom demands.
Instead it tried to take back its account by changing passwords. The extortionists, who had created backup logins, retaliated by randomly deleting files.
Most of the company’s data, backups, machine configurations and offsite backups were either partially or completely deleted. The company became a sad statistic — one of the 60 percent of small businesses forced to fold within six months of a serious cyber attack.
Speculation, however, is that many companies opt not to take such a risk, and simply choose the lesser evil and pay off their attackers. The SANS Institute estimated in 2009 that thousands of organizations were quietly paying off cyber extortionists.
“Not disclosing that you’ve been breached, in itself, is one of the main reasons that some decide to pay a cyber extortion threat rather than handling it with assistance from law enforcement,” said Jessica Lindo, vice president, professional lines at Allied World.
Lindo and other experts aren’t quick to opine on whether victims should or shouldn’t pay, because every situation is unique.
“Whether a company decides to pay depends on their assessment of the credibility of the threat,” said Lindo.
“If they are confident … that the threat is legitimate and can be actioned upon, they may be inclined to pay the ransom. … Within the retention it may be solely up to them to decide whether they want to pay the ransom without involving the insurer,” she said.
“Each situation would need to be analyzed on its own merits,” agreed Matt Donovan, national underwriting leader, technology and privacy, with Hiscox USA.
“Many companies are able to thwart ransomware issues if they are able to restore to an earlier backup of the file system. In these instances, the system restoration can potentially be a better option than paying the demand.”
That solution won’t fit every type of threat, however. The very public airing last year of Sony’s dirty laundry understandably rattled plenty of top-level executives. The threat of public exposure rather than outright deletion of data could easily be enough to force the hand of businesses that fear embarrassment or loss of reputational stature.
Lindo noted that in the event an insured is faced with a demand high enough to pierce its retention level, it would be a mistake to assume that an insurer would withhold approval to pay on a ransom demand.
“Once that threat is actioned upon, it could become a much larger cyber loss.” she said.
“And the loss may move from one handled solely by the company within the retention to one involving insurance.”
Cyber, Extortion, or Both?
There are a few gray areas surrounding the question of whether a cyber extortion event would trigger coverage in a typical cyber policy. Some also have questions about whether a kidnap, ransom and extortion policy (KR&E) would exclude a cyber event.
Travelers’ Francis said that as with any policy, it’s going to come down to whether the circumstances of the event align with the wording of the policy.
“Not every K&R policy is the same, not every cyber policy is the same,” he said.
“Like anything else, your agent or the customer needs to make sure their specific policy as written would cover it. … Certainly in any standard cyber policy you should expect to find some degree of coverage. But it would not be unusual for a K&R policy to cover cyber-related events in addition to non-cyber types of extortion events.”
“Having the financial backing of an insurance policy can bring financial security and the breach response expertise needed to navigate the attack when it occurs.” — Matt Donovan, national underwriting leader, technology and privacy, Hiscox USA
Brian Dunphy, senior managing director, management and professional risk group, Crystal & Company, added that because cyber extortion is rarely enacted under a policy, such a policy is fairly easily to obtain.
“But it’s not in many cases a standard grant of cover. It’s one of those things you have to ask for it if you want it.”
Not many are asking though, because they’re not thinking about it as an exposure unless there is a specific reason to consider their data sensitive.
But the bad guys don’t really care who they attack, said Francis, and plenty of organizations simply have no type of coverage in place.
“Cyber policies are still not purchased as frequently as they should be, but still they’re more likely to be purchased than K&R policies generally,” he said.
“Many companies have neither.”
Those companies could easily find themselves in a world of hurt.
“Having the financial backing of an insurance policy can bring financial security and the breach response expertise needed to navigate the attack when it occurs,” said Donovan of Hiscox.
Path of Least Resistance
Most cyber extortion is an opportunistic crime, said Allied World’s Lindo. Organizations with less than adequate security controls are going to be the most vulnerable.
“The controls you implement in a sophisticated security and business continuity program are the same controls that are likely to prevent a cyber extortion threat,” she said.
“So if there’s any good news in cyber, I think it’s that.
“The most important thing [risk managers] can do is to prioritize their assets,” said Lindo.
“Identify the most valuable data, most sensitive data — areas that would give you the greatest financial harm if disclosed, your most critical processes and applications.”
“Segregating the ‘crown jewels’ from the rest of your network can be an easy starting point,” said Donovan.
“You can’t just rip the plug out of the wall and expect the threat to go away.” — Brian Dunphy, senior managing director, management and professional risk group, Crystal & Company
Once you’ve identified those assets, then you can target your resources around preventing access to those assets and ensuring that you’ve built redundant systems around them to ensure business continuity in the event of an attack.
Many of the other precautions that should be in place are the same as those companies employ to protect against other types of network intrusions.
Beyond simple anti-virus software installation, said Donovan, companies should consider penetration testing, bug-bounty programs and data-classification programs.
“Daily backups can help thwart the ransomware attacks as well,” he said.
Travelers’ Francis poses an apt analogy: “There are a dozen houses on the street. One of them is well lit with clear lines of sight, the doors and windows are locked. [Criminals are] going to move on to the other house down the street that doesn’t have lights and leaves the door open; they’re going to take the path of least resistance.
“Lock your doors, turn on your lights. Use firewalls, have a process in place, use the right software, check your logs, have virus detection. It’s not bulletproof, but it may be enough to have the bad guys go after someone else instead of you.”
A far-too-often overlooked piece of the puzzle is having an incident response plan for a cyber extortion event, experts agreed.
“Today, I would say that cyber extortion is probably not a part of [most companies’] incident response plans,” said Lindo. “I’m not sure that most companies have fully considered these type of threats.”
Without a plan in place, there’s little chance for an organization to address an extortion event effectively, or prevent it from escalating.
“You can’t just rip the plug out of the wall and expect the threat to go away,” added Dunphy of Crystal & Company.
“There’s a lot that needs to be addressed. … It’s like practicing a fire drill for kids in school — when the alarm sounds, does everybody know what their roles and responsibilities are? Cyber extortion is just like that. Do you know what to do? Who to contact? The steps in which things are supposed to take place?”
When faced with a threat, said Lindo, you never want that to be “the first time you’re discussing what you’re going to do and how you’re going to respond.”
The threat of cyber extortion is yet another reason why risk managers must help their organizations understand that data security is an enterprise-level issue.
“It’s important to have a culture that understands the value of the data that they’ve got, and the ramifications financially and reputationally if that data was to go missing or to be made public,” said Francis.
And that culture must be driven from the top of the organization down into every department, so that data security is top priority for all.
“There’s no one weak link,” he said.
It’s all in the Code: Five Essential Characteristics of HCPCS that Influence Outcomes
Payers are no stranger to codes. Claim and policy administration systems are filled with them. Moreover, whether designating claim type, feature, branch office, policy term, type of injury, or another classification, their use facilitates consistency and understanding. Codes also guide clinical and financial decision-making. At the foundation of medical cost management are three code sets. The International Statistical Classification of Diseases and Related Health Problems (ICD) diagnostic and procedure codes, ICD-10-CM and ICD-10-PCS respectively, are used to classify diseases, disorders, injuries, infections, and symptoms. National Drug Codes (NDCs) help ensure claimants received the correct strength, dosage form, and type of medication. Their use also helps pharmacists recognize the difference between products that may look or sound alike. Yet another useful code set is the Healthcare Common Procedure Coding System (HCPCS) created to identify services, products, and procedures rendered for the condition. It is on this code set we will focus.
When processing ancillary benefits in workers’ compensation and auto no-fault, HCPCS can determine whether the item is considered medically necessary and therefore, available to the claimant and otherwise related to the compensable condition. Codes can also affect the reimbursement amount. Thus, if a coding error is made, there can be significant adverse impacts to payers and claimants alike. For example, the vendor could stop supplying the item based on insufficient reimbursement, or the payer could deny the product or service completely. Both are detrimental to the claimant or overall claim outcomes. Coding errors may also result in claim leakage if applied incorrectly or misunderstood in the review process. It is therefore essential that payers be mindful of five essential characteristics of HCPCS.
#1 – HCPCS are generic
Like pharmaceuticals, there are many different providers and manufacturers of similar durable medical equipment (DME) items. However, HCPCS are not specific to brand and usually hundreds of different products can fall under the same HCPCS. In addition, some codes include certain services, such as evaluations and fitting fees, whereas some codes do not. For example, some health HCPCS rarely indicate the actual services being provided in the home, such as wound care or home infusion, but instead simply indicate an RN or LPN visit.
#2 – Unit of measure influences coding
Some supply codes have very specific units of measure, which can result in HCPCS quantities that are not whole numbers and can result in mathematical errors or rounding. For example, HCPCS code A4450 has a unit of measure of ‘per 18 square inches’ and is assigned to a roll of tape that is 2 inches by 5.4 yards, equaling 388.8 square inches. The quantity for this HCPCS code would therefore be 21.6. Additionally, some HCPCS codes specify ‘per pair’ or ‘each,’ so understanding the actual supply is important to determine the appropriate quantity.
# 3 – Sometimes, there is not a specific code
Centers for Medicare and Medicaid Services (CMS) has created a number of miscellaneous codes that have generic definitions and can be used when no other CPT or HCPCS code matches the description of the product or service provided. Miscellaneous codes can be easily abused either unintentionally due to lack of time and knowledge, or intentionally by a provider seeking a higher reimbursement rate. This is because miscellaneous codes typically do not carry a fee schedule due to their versatility and, therefore, may be reimbursed at higher amounts than a non-miscellaneous code. For example, K0108 defines a ‘wheelchair component or accessory, not otherwise specified;’ however, most wheelchair parts have a specific code outside of this one which could be more appropriate while also carrying a lower allowable amount.
#4 – Supplemental modifiers are useful
A supplemental modifier or identifier is a billing value that further clarifies the HCPCS/CPT code by telling the payer more about the billed product or service. Their application influences reimbursement because fee schedules largely differ depending on which modifier is reported. A rental (RR) for example, does not warrant the same reimbursement as a purchase (NU) yet both a purchase and rental of the same product carry the same HCPCS. Consider the following codes, K0001 = ‘STANDARD WHEELCHAIR’, K0001 RR = ‘STANDARD WHEELCHAIR’ that has been rented, and K0001 NU = ‘STANDARD WHEELCHAIR’ that has been purchased. Depending on the fee schedule, reimbursement could be $45 or $500.
Modifiers are also useful because they can define the unit of measure. By default, a HCPCS with a modifier of ‘RR’ is a rental per month. However, in some cases a provider may bill for a device daily and therefore interpret the fee schedule as daily rather than monthly. In this scenario, the provider may bill with a daily unit of measure, billing a quantity of 30 instead of the allowable amount of one. For devices that are rented daily, such as a negative pressure wound therapy device or continuous passive motion device, it is important to understand the unit of measure being used (monthly or daily) and be mindful that the daily billing exceeds the monthly allowable.
# 5 – The diagnosis influences allowable amounts
Some HCPCS change based on the diagnosis of the injured person and therefore, the allowable amount may fluctuate. For example, depth-inlay shoes are coded as an Orthotic (L – code) if the patient does not have a diabetic diagnosis and is using the shoes for orthopedic reasons. The same depth-inlay shoe may be used for a diabetic patient, but it would warrant an A-code, which can have a higher reimbursement level.
The use of coding assists claims professionals in compensability decisions, guides clinical decision-making, informs point-of-sale utilization controls, influences claim handling policies and procedures, and provides a valuable data point in statistical and analytics models. Moreover, their use facilitates better clinical and financial claim management in terms of payments that are more accurate, greater processing efficiency and consistency, and improved clinical management as a result of better understanding the medical condition(s) associated with the claim and the various therapies in use. Remaining mindful of the aforementioned five essential characteristics of HCPCS can therefore not only mitigate claim leakage but also achieve a better outcome.