hsmn healthcare payment methodologies

7/31/2019 HSMN Healthcare Payment Methodologies

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HEALTHCARE PAYMENTMETHODOLOGIES

December 12, 2011

HealthSystemsManagementNetwork, Inc


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Course Outcomes

Introduction to hospital billing and Facility E/M guidelines

Payment Methodologies

MS-DRGs

APCs

Addendum B OCE Edits

RBRVS Fee for service

POS 11 vs POS 22 billing

CMS guidelines for facility E/M use

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Reimbursement Methodologies

Fee for Service Reimbursement Providers receive payment for each service rendered

Concepts related to Fee for Service Reimbursement Retrospective payment method

Third Party fee schedules

Discounted fee for service payments

Discounted fee for service payments include: Resource Based Relative Value Scale (RBRVS)

Usual, Customary, and Reasonable (UCR)

% of Charges or Negotiated contract rates

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Prospective Payment Systems

Medicares Reimbursement Reform Initiatives to reducehospital expenses while not impacting the quality of caredelivered

IPPS An Inpatient Prospective Payment System (IPPS) was implemented in

1983

Generally, payment was based on grouping Major Diagnostic Categories(MDCs) into Diagnosis Related Groups (DRGs)

As a result, hospitals started shifting services to the outpatient settingwhere reimbursement was still based on cost.

OPPS Medicares response to the increased spending on outpatient healthcare

services

Authorized by the Balanced Budget Act of 1997 to develop an OPPSculminating in the implementation of APCs in August 2000

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Payment Components

MS-DRGs APCs RBRVS

ICD-9 Codes HCPCS Codes HCPCS codes

MDC APC Group Physician work

MS-DRG Group Status Indicator Practice ExpenseComplications/CoMorbidities

Payment Rate MalpracticeInsurance

Relative Rate Relative weight Geographic PracticeCost Indices

Average LOS Coinsurance Conversion Factor

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MS-DRG ClassificationThe MS-DRGs (Medicare Severity DRGs) are a patientclassification system which provides a means of relating typesof patients a hospital treats (i.e., its case mix) to the costsincurred by the hospital. Payment for inpatient hospital servicesis made on the basis of a rate per discharge that varies

according to the MS-DRG to which a beneficiary's stay isassigned. All inpatient transfer/discharge bills from both PPSand non-PPS facilities, including those from waiver States,long-term care facilities, and excluded units are classified bythe Grouper software program into one of 745 diagnosis relatedgroups (DRGs).

Source: Medicare Claims Processing Manual

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Ambulatory Payment Classification

The Balanced Budget Act of 1997 authorized CMS to implement aprospective payment system for hospital outpatient services, commonlyknown as the Outpatient Prospective Payment System. (OPPS) As aresult, the Ambulatory Payment Classification (APC) has been used byMedicare to reimburse hospitals for outpatient services since 2000.

OPPS applies to all hospital outpatient departments , except for somespecified facility types (for example Critical Access hospitals)

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In the Beginning

Before APCs Outpatient reimbursement was based on

charges Reimbursement was usually not affected ifthe hospital forgot to report a HCPCS code

Levels of E/M didnt exist

Coding was a HIM function


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Integrated Outpatient Code Editor

The OCE software performs the following functions whenprocessing a claim: Edits a claim for accuracy of submitted data

Assigns APCs

Assigns CMS-designated status indicators Assigns payment indicators

Computes discounts, if applicable

Determines a claim disposition based on generated edits

Determines if packaging is applicable

Determines payment adjustment, if applicable

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Integrated Outpatient Code EditorThere are currently 83 different edits in the OCE. An edit can result in 1 of6 dispositions

Disposition DescriptionClaim Rejection The provider can correct and resubmit the claim but

cannot appeal the claim rejection.

Claim Denial The provider can not resubmit the claim but can appealthe claim denial

Claim Return to Provider The provider can resubmit the claim one the problems arecorrected

Claim Suspension The claim is not returned to the provider, but is notprocessed for payment until the FI/MAC makes adetermination or obtains further information.

Line Item Rejection The claim can be processed for payment with some lineitems rejected for payment. The line item can be corrected

and resubmitted but cannot be appealed.

Line Item Denial The claim can be processed for payment with some lineitems denied for payment. The line item cannot beresubmitted but can be appealed

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Possible Challenges

Implementation of APCs increased theimportance of accurate coding.

Incorrect coding leads to incorrectpayments.

Hospitals must review their outpatientdocumentation practices to ensure themedical record supports the servicesreported.


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Possible Challenges

For every service performed, yourdepartment manager should know:

Methodology for reporting charges

HCPCS reporting

Factoring in the charge

Rolling the charge

The status and comment indicators

Applicable modifiers Documentation requirements


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Possible Challenges

Hospitals must regularly review andbecome familiar with National and LocalCoverage Determinations.

Since outdated CDMs create a significantcompliance risk, Hospitals must assuretimely updates, proper use of modifiers,

and correct associations between revenueand procedure codes.


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Resource-Based Relative ValueSystem

Medicare RBRVS was developed throughthe 1980s and implementation began in1992 as a 5-year phase-in from UCR(lower of usual, customary, orreasonable charges)

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RBRVS

ProfessionalFees

APCsOutpatientHospitalPayment

DiscountedRBRVS

Professional Fee

Payment

Physician Office(not eligible for hospital reimbursement)

POS 11

Provider Based Clinic(eligible for hospital reimbursement)

POS 22

PaymentIncrease

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RBRVS

$197.06

HospitalPayment

$168.92

DiscountedRBRVS

$162.41

Physician Office(not eligible for hospital reimbursement)

POS 11

Provider Based Clinic(eligible for hospital reimbursement)

POS 22

PaymentIncrease

Example: Reimbursement for New Patient Visit 99205(Medicare National payment amounts)

$331.33

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CMS Facility EM Guidelines

Federal Register April 7, 2000 CMS emphasizes the importance of hospitals assessing

the intensity of clinic visits and reporting E/M levelsaccordingly

CMS iterates that physician E/M levels do not adequatelydescribe non-physician resources

CMS guides hospitals to develop a system for mappingE/M levels based on differences in resource utilization

Each facility will be held accountable for following its

own system which relates to the intensity of resources CMS does not expect to see a high degree of correlation

between physician and facility E/M levels

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Putting all the Pieces Together

Does your team understand how this all relates to theirindividual functions?

Managing both technical and profee revenue in a manner thatoptimizes revenue generation requires the following:

A broad knowledge base of the differences andsimilarities in payment methodologies for provider types

An understanding of how the pieces of the puzzle fittogether

A global approach to the decision making process

If you make a certain decision for profee billing whatare your considerations and how will you impact thetechnical billing?

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Putting all the Pieces Together

To ensure success, your readiness plan must:

Mentor, Direct and Train coding/billing staff in coding rules toachieve desired outcomes

Produce meaningful and useful financial reports for SeniorManagers

Support and assist faculty in achieving proper reimbursementfor services performed Provide analyses for new technology services performed

in a cutting edge healthcare organization to ensureappropriate payment

Be the advocate when payers are not recognizing thevalue of the new technology services

Who is the go to resource in your organization for allthings financial and revenue operations related for theClinical Partners and the coding billing staff?We can help you formulate the plan that best suits yourorganization.

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