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Basics of Healthcare Financing and Reimbursement
PTH 511 LAMP I
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Assigned Reading Kettenbach, Chapter 4
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Reimbursement Three Essentials Documentation Charge Capture Coding
Therapy services must be skilled, reasonable, and neccessary Charge Capture Coding
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History of Healthcare financing
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Definition: Financing
Health Plan Enrollees Employers Government
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Health Care Financing Out of pocket or Fee For Service (FFS)
Government: Medicare or Medicaid (CMS) Individual private insurance Deductible Copayment coinsurance Indemnity clause Uncovered services
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Definition: Reimbursement
Health Plan Provider
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Definition: Third Party Payment System
1st Patient/client (beneficiary) 2nd Provider 3rd insurance provider
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Definitions Subscriber: Individual who purchases policy from insurance provider Premium: Cost of insurance Claims: Submission by Provider (2nd Party) to Insurance Provider (3rd Party) for payment for health care services rendered Denials Appeals
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Medicare Federally funded Qualification Criteria:
Over 65 years old AND Paid in to Social Security through an employer for at least 10 years Under 65 years old AND Considered medically disabled OR Have end-stage renal disease
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Medicare Part A Part B Part D
Includes inpatient (acute) care, hospice, and some home health care Part B Physician services Outpatient care, including PT & OT Part D Provides prescription drug coverage
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Medicare Part A Entitled
Part A is funded by social security taxes from employers/employees (Federal Insurance Contributions Act or FICA) Hospital, Skilled Nursing Facilities (SNF), Hospice, Home Health Care (HH), Inpatient Rehabilitation (IRF) Paid under Prospective Payment System Method of Payment (vs. Reimbursement) Service Period=Episode Medicare-Severity Diagnostic Related Groups (MS-DRGs)
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Medicare Part A Benefit Period Skilled Nursing Facility:
Admission until 60 days after discharge Skilled Nursing Facility: Care must me skilled Three night/4 day hospital stay before admission, must document neccessity Home Health Care Skilled Homebound Agency must be Medicare provider Hospice Physician certified, patient chooses, Medicare provider
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Medicare Part A: Inpatient Hospital
Medicare-Severity Diagnostic Related Groups (MS-DRGs) Rehabilitation services are not billed separately Hospital acquired conditions (HACs) paid for by hospital
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Medicare Part A: SNF RUGS* (changes in payment system)
Assessment tool: MDS 3.0 66 categories/14 rehab categories 4 day/3 night hospital admission Physician certification for skilled need and/or orders for therapy Patient needs daily skilled services Nursing 7d/week and/or Therapy at least 5d/week
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Medicare A: Inpatient Rehab Facility
Assessment tool = Patient assessment instrument (PAI) Uses Functional Independence Measure Outcome Measure which tracks progress Payment covers entire stay 25% reduction in payment if discharged to SNF vs outpatient or HHC
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Medicare A: Home Health Services
Assessment tool = OASIS Payment dependent upon # of visits* Payment based on 60 day episodes Functional reassessments must be completed by therapy regularly
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Medicare Part B Voluntary– Person doesn’t need to sign up
Provides payment for outpatient, physician services, and some durable medical equipment (DME) Paid through federal taxes and monthly premiums Paid through a fee schedule Resource-Based Relative Value Scale (RBRVS) Work Involved (Knowledge needed to perform) Practice Expense (How much does the service cost? Malpractice associated with the procedure (Risk) Includes a geographic adjustment
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Variations to Medicare Part B
Outpatient Services provided in inpatient settings: Hospital based outpatient department Rehab agency with outpatient department SNF services to people who come in from community HHC services to people who are no longer “homebound” but want therapy in the home
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Changing demographics
Boom in aging population Increase in life expectancy Trend toward independent living More people eligible for services Affordable Care Act
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Medicaid Funded federally AND by each state
Offers medical assistance to those with low incomes Qualification guidelines vary by state Exact coverage varies, but some services included are: Inpatient, hospital care Outpatient care Screenings for children Some PT & OT
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Medicaid: Children’s Health Insurance Program
CHIP Joint funding by federal government and individual states Provide the standard Medicaid benefit package, including Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services, which includes all medically necessary services like mental health and dental services. Serves uninsured children who do not qualify for Medicaid (up to 200% above the poverty level).
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Payment by Commercial Insurance
Negotiated Rate Usual, Customary, Reasonable Per Case Cases identified by diagnostic coding (ICD-10) Payment is based on ICD-10 diagnosis code Per Diem Reimbursement occurs at a cost per day Per Visit Common in rehabilitation Insurer will pay for X number of visits
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Coding for Procedures Heath Care Reimbursement
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What Is CPT? Physician's Current Procedural Terminology, 4th Ed
Over 8000 CPT codes Used to describe procedures Rehabilitative Services codes – 97000 AMA owns copyright APTA Resources for Coding & CPT Commonly used therapy CPT Codes
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HCPCS (Health Care Procedural Coding System) Codes
Level I – identical to CPT codes Procedural codes for care provided to a patient Level II – clinical supplies and equipment Alphabetical character (A-V) followed by 4 numbers (L0510 = custom flexible LS support) Level III Codes utilized by state-funded Medicaid
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Untimed Codes Only one untimed code is allowed per visit. Examples:
Evaluation Re-Evaluation Unattended Modality Charges Unattended Electrical Stimulation
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Timed Codes Timed Codes – 15 minute increments
Need to use a minimum of 8 minutes to bill for a procedure if only 1 service provided 8-22 minute= 1 unit 23-37 minute = 2 unit 38-52 minutes = 3 unit 53-67 minutes = 4 unit 68-82 minutes = 5 unit *if two 15-min timed services are performed for <7 min on the same day, bill as 1 unit for the service performed for the most minutes
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Most Common CPT Codes in Physical Therapy
Descriptor 97001 Physical Therapy Examination 97110 Therapeutic Exercise 97140 Manual Therapy 97112 Neuromuscular Re-Education 97530 Therapeutic Activity 97113 Aquatic Therapy with Therapeutic Exercise 97116 Gait Training 97035 Ultrasound 97014 Unattended Electrical Stimulation
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Post Quiz What does CPT stand for? Who owns CPT codes? What are HCPCS?
Who owns HCPCS? The physical therapist treated the patient with timed codes for 25 minutes. How many units can the PT bill to the insurance company? The physical therapist completed a 40 minute evaluation and 10 minutes of treatment. How many units can the PT bill to the insurance company?
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