1. Copyright © 2008 Delmar Learning. All rights reserved. Chapter 9 CMS Reimbursement Methodologies

2. Copyright © 2008 Delmar Learning. All rights reserved. 2 Federal Health Care Programs CHAMPVA Indian Health Service Medicaid Medicare TRICARE Workers’ Compensation

3. Copyright © 2008 Delmar Learning. All rights reserved. 3 Ambulance Fee Schedule Ambulance suppliers to accept Medicare assignment Reporting of HCPCS codes on claims for ambulance services Revision of the verification requirements for coverage of nonemergency ambulance services

4. Copyright © 2008 Delmar Learning. All rights reserved. 4 Ambulatory Surgical Center Surgical health care services that must accept assignment on Medicare claim Must be a separate entity distinguishable from any other entity or facility –Must have its own employer identifier number as well as processes for:

5. Copyright © 2008 Delmar Learning. All rights reserved. 5 Ambulatory Surgical Center Accreditation Administrative function Clinical services Financial and accounting systems Governance Professional supervision Recordkeeping State licensure

6. Copyright © 2008 Delmar Learning. All rights reserved. 6 Clinical Laboratory Fee Schedule Data set based on a local fee schedule Deficit Reduction Act of 1984 –Established the Medicare Clinical laboratory fee schedule

7. Copyright © 2008 Delmar Learning. All rights reserved. 7 Clinical Laboratory Fee Schedule Medicare reimburses laboratory services according to the: –Submitted charge –National limitation amount –Local fee schedule amount Whichever one of these is the lowest

8. Copyright © 2008 Delmar Learning. All rights reserved. 8 Clinical Laboratory Fee Schedule CMS divided ESRD items and services into two different groups for the purposes of payment These two groups are:

9. Copyright © 2008 Delmar Learning. All rights reserved. 9 Clinical Laboratory Fee Schedule Dialysis and associated routine services are reimbursed according to a composite rate. –Paying according to a composite rate is a common form of Medicare payment –Known as bundling

10. Copyright © 2008 Delmar Learning. All rights reserved. 10 Clinical Laboratory Fee Schedule Injectable drugs and certain laboratory tests that were not routine or not available in 1983 when Medicare implemented the ESRD composite rate –Reimbursed separately according to a per-service basis

11. Copyright © 2008 Delmar Learning. All rights reserved. 11 Clinical Laboratory Fee Schedule Each diagnosis-related group (DRG) has a fee weight given to it –Based on the average resources used to treat Medicare patients in that DRG

12. Copyright © 2008 Delmar Learning. All rights reserved. 12 Clinical Laboratory Fee Schedule Repayment rate can be adjusted according to the following guidelines: –Disproportionate share hospital adjustment –Indirect medical education adjustment –Outliers

13. Copyright © 2008 Delmar Learning. All rights reserved. 13 Clinical Laboratory Fee Schedule Several DRG systems were developed for use in the United States, including:

14. Copyright © 2008 Delmar Learning. All rights reserved. 14 Clinical Laboratory Fee Schedule Diagnosis-related groups: –Original system used by CMS to reimburse hospitals for inpatient care provided to Medicare beneficiaries

15. Copyright © 2008 Delmar Learning. All rights reserved. 15 Clinical Laboratory Fee Schedule Diagnosis-related groups: –Based on intensity of resources, which is the relative volume and types of diagnostic, therapeutic, and inpatient bed services used to manage an inpatient disease –Replaced in 2008 by all patient refined DRGs

16. Copyright © 2008 Delmar Learning. All rights reserved. 16 Clinical Laboratory Fee Schedule All patient diagnosis-related groups –Original DRG system adapted for use by third party payers to reimburse hospitals for inpatient care provided to non-Medicare beneficiaries. –Based on intensity of resources

17. Copyright © 2008 Delmar Learning. All rights reserved. 17 Clinical Laboratory Fee Schedule All patient refined diagnosis-related groups –Adopted by Medicare in 2008 to reimburse hospital for inpatient care provided to Medicare beneficiaries

18. Copyright © 2008 Delmar Learning. All rights reserved. 18 Clinical Laboratory Fee Schedule All patient refined diagnosis-related groups –Expanded original DRG system to add two subclasses to each DRG that adjusts Medicare inpatient hospital reimbursement rates for severity of illness

19. Copyright © 2008 Delmar Learning. All rights reserved. 19 Clinical Laboratory Fee Schedule Each subclass, in turn, is subdivided into four areas: 1.Minor 2.Moderate 3.Major 4.Extreme

20. Copyright © 2008 Delmar Learning. All rights reserved. 20 Clinical Laboratory Fee Schedule IPPS three day payment window entails outpatient pre-admission services given by a hospital, up to three days earlier to a patient’s inpatient admission –To be covered by the IPPS DRG payment for:

21. Copyright © 2008 Delmar Learning. All rights reserved. 21 Clinical Laboratory Fee Schedule Diagnostic services Therapeutic services for which the inpatient principal diagnosis code exactly matches that for preadmission services

22. Copyright © 2008 Delmar Learning. All rights reserved. 22 Clinical Laboratory Fee Schedule All the procedures and services are included in a outpatient encounter that was provided on the same day

23. Copyright © 2008 Delmar Learning. All rights reserved. 23 Inpatient Psychiatric Facility Prospective Payment System Implemented as a result of Medicare, Medicaid, and SCHOP Balanced Budget Refinement Act of 1999

24. Copyright © 2008 Delmar Learning. All rights reserved. 24 Elements of the IPFPPS Minimum date set for post acute care Case mix groups CMG relative weights CMG payment rates

25. Copyright © 2008 Delmar Learning. All rights reserved. 25 Elements of the IPFPPS BBRA of 1999 authorized implementation of a per-discharge DRG long-term care hospital prospective payment system for cost reporting periods beginning on or after October 1, 2002

26. Copyright © 2008 Delmar Learning. All rights reserved. 26 Major Elements of LTCHPPS Patient classification system Relative weights Payment rate

27. Copyright © 2008 Delmar Learning. All rights reserved. 27 Skilled Nursing Facility Prospective Payment System Modified repayment for Medicare Part A skilled nursing facility services Starting 1998 –SNFs were no longer paid on a reasonable cost basis but rather on the basis of a prospective payment system

28. Copyright © 2008 Delmar Learning. All rights reserved. 28 Major Elements of SNFPPS Payment rate Case mix adjustment Geographic adjustment Adjustments

29. Copyright © 2008 Delmar Learning. All rights reserved. 29 Medicare Physician Fee Schedule As of 1992, medical doctors’ services and procedures are: –Paid back according to a payment system identified as the Resource-Based Relative Value Scale

30. Copyright © 2008 Delmar Learning. All rights reserved. 30 Medicare Physician Fee Schedule System is currently known as” Medicare physician fee schedule” –Reimburses providers according to pre- determined rates assigned to services –Improved by CMS annually

31. Copyright © 2008 Delmar Learning. All rights reserved. 31 Payment Components Physician work –Physician’s time and intensity in providing the service Practice expense –Overhead costs involved in providing a service Malpractice expense

32. Copyright © 2008 Delmar Learning. All rights reserved. 32 Payment Components Medicare physician fee schedule is used to determine payment for Medicare Part B services –Other services, such as anesthesia, pathology/laboratory, and radiology, require special consideration

33. Copyright © 2008 Delmar Learning. All rights reserved. 33 Payment Components Anesthesia services payments –Based on the actual time an anesthesiologist spends with a patient and the American Society of Anesthesiologists’ relative value system

34. Copyright © 2008 Delmar Learning. All rights reserved. 34 Payment Components Radiology services payments vary according to place of service

35. Copyright © 2008 Delmar Learning. All rights reserved. 35 Payment Components Pathology services payment vary according to number of patients served: –Includes clinical laboratory management and supervision of technologists covered and paid as hospital services. –Directed to an individual patient in a hospital setting and are paid under physician fee schedule

36. Copyright © 2008 Delmar Learning. All rights reserved. 36 Nonparticipating Physicians Nonparticipating providers who don’t accept assignment from Medicare, which means the amount Medicare pays back for services presented –Subject to a five percent decrease of the Medicare physician fee schedule

37. Copyright © 2008 Delmar Learning. All rights reserved. 37 Medicare Secondary Payer Automobile medical or no-fault insurance Disabled individual covered by a large group health plan or who has coverage under the LCHP of a family member who is currently employed

38. Copyright © 2008 Delmar Learning. All rights reserved. 38 Medicare Secondary Payer End-stage renal disease program Federal black-lung program Other liability insurance Veteran Administration benefits

39. Copyright © 2008 Delmar Learning. All rights reserved. 39 Medicare Secondary Payer Working group health plan maintained by an employer, or an individual age 65 or older who is covered by a working spouse’s EGHP

40. Copyright © 2008 Delmar Learning. All rights reserved. 40 Medicare Secondary Payer Upon claims submission, amount of secondary benefits payable is the lowest of: –Actual charges by physician or supplier minus amount paid by primary payer

41. Copyright © 2008 Delmar Learning. All rights reserved. 41 Medicare Secondary Payer Amount Medicare would pay if services were not covered by the primary payer –Higher of the Medicare physician fee schedule minus the amount actually paid by the primary payer

42. Copyright © 2008 Delmar Learning. All rights reserved. 42 Medicare Secondary Payer To calculate amount of Medicare secondary benefits payable on a given claim, the following information is required: –Amount paid by primary payer –Primary payer’s allowable charge

43. Copyright © 2008 Delmar Learning. All rights reserved. 43 Chargemaster Computer generated list of procedures, services, and supplies with charges for each: –Department code –Service codes –Service description –Revenue code –Charge amount –Relative value units

44. Copyright © 2008 Delmar Learning. All rights reserved. 44 Claims Submission Ambulance companies Ambulatory surgery centers Home health care agencies Hospice organizations

45. Copyright © 2008 Delmar Learning. All rights reserved. 45 Claims Submission Hospitals Psychiatric drug/alcohol treatment facilities Skilled nursing facilities Sub-acute facilities Stand-alone clinical/laboratory facilities Walk-in clinics