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CHAPTER 16

CHAPTER 16. THIRD-PARTY REIMBURSEMENT ISSUES. Third-Party Reimbursement Issues. Each coding system plays critical role in reimbursement Your job is to optimize payment. Your Responsibility. Ensure accurate coding data Obtain correct reimbursement for services rendered

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CHAPTER 16

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  1. CHAPTER 16 THIRD-PARTY REIMBURSEMENT ISSUES

  2. Third-Party Reimbursement Issues • Each coding system plays critical role in reimbursement • Your job is to optimize payment

  3. Your Responsibility • Ensure accurate coding data • Obtain correct reimbursement for services rendered • Upcoding (maximizing) is never appropriate

  4. Population Changing • Elderly fastest growing patient segment • By 2030, there will be one elderly person for each person 19 and under • Medicare primarily for elderly

  5. Medicare—Getting Bigger All the Time! • Over the next 10 years, Medicare spending will exceed $3trillion • Health care will continue to expand to meet enormous future demands • Job security for Coders!

  6. Basic Structure Medicare • Medicare program established in 1965 • 2 parts: A and B • Part A: Hospital insurance • Part B: Supplemental—nonhospital • Example: Physicians’ services and medical equipment • Part C: Quality Improvement Organizations (QIOs)—health care options (Added later and formerly termed Medicare + Choice) • Part D: Prescription Drugs

  7. Those Covered • Originally established for those 65 and over • Later disabled and ESRD added • Persons covered “beneficiaries”

  8. Officiating Office • Department of Health and Human Services (DHHS) • Delegated to Centers for Medicare and Medicaid Services (CMS) • CMS runs Medicare and Medicaid • CMS delegates daily operation to Medicare Administrative Contractors (MAC) • MACs usually insurance companies

  9. Funding for Medicare • Social security taxes • Equal match from government • CMS sends money to MACs • MACs handles paperwork and pays claims

  10. Medicare Covers (Part B) • Beneficiary pays • 20% of cost of service • + annual deductible • Medicare pays • 80% covered services

  11. Participating QIO Providers • Signed agreement with MACs • Agree to accept what MACs pay as payment in full • Accept Assignment • Block 27 on CMS-1500 (Cont’d…)

  12. Participating QIO Providers (…Cont’d) • Block 27 on CMS-1500, Accept Assignment

  13. Why Be a Participating QIO Provider? • MACs usually do not pay charges provider submits • Significant decrease • Participating QIO providers receive 5% more than non-QIOs (Cont’d…)

  14. More Good Reasons to Participate: (…Cont’d) • Check sent directly from MACs to QIO provider • Faster claims processing • Provider names listed in QIO directory • Sent to all beneficiaries

  15. Part A, Hospital • Hospitals submit charges on UB04 • ICD-9-CM codes basis for payment • MS-DRG (Medicare Severity Diagnosis Related Groups) (Cont’d…)

  16. Part A, Covered In-Hospital Expenses (…Cont’d) • Semiprivate room • Meals and special diets in hospital • All medically necessary services (Cont’d…)

  17. Part A, Non-Covered In-Hospital Expenses (…Cont’d) • Personal convenience items • Example: • Slippers, TV • Non-medically necessary (Cont’d…)

  18. (…Cont’d) Rehabilitation Skilled-nursing Some personal convenience items for long-term illness or disabilities Home health visits Hospice care Not automatically covered Must meet certain criteria Part A, Other Covered Expenses

  19. Part B, Supplemental • Part B pays services and supplies not covered under Part A • Not automatic • Beneficiaries purchase • Pay monthly premiums (Cont’d…)

  20. Type of Items Covered by Part B (…Cont’d) • Physicians’ services • Outpatient hospital services • Home health care • Medically necessary supplies and equipment

  21. Coding for Medicare Part B Services • Three coding systems used to report Part B • CPT • HCPCS • ICD-9-CM (Vol. 1 & 2)

  22. Federal Register • Government publishes changes in laws • Coding supervisors keep current on changes (Cont’d…)

  23. Issues of Importance in Federal Register (…Cont’d) • Octobercontains hospital facility changes • November and December contain outpatient facility changes and physician fee schedule

  24. Federal Register Figure: 16.3 From Federal Register, January 29, 2008, Vol. 73, No. 19, Proposed Rules.

  25. MS-DRGs (Formerly DRGs) • Diagnosis Related Groups (DRG) • Medicare Severity Diagnosis Related Groups (MS-DRG) • Inpatient reimbursement system • Development began in 1960s at Yale • In 1970s, New Jersey piloted forerunner to current DRG system (Cont’d…)

  26. MS-DRGs (Formerly DRGs) (…Cont’d) • 1982, TEFRA was implemented • Reduced health care costs • Changed way hospitals were paid • 1983, DRGs implemented • Based on ICD-9-CM code as payment in full • ONLY for inpatients

  27. Prospective Payment Systems (PPS) • Medicare historically reimbursed 100% of submitted charges • Retrospective system • Now identifies what is paid for each service • Prospective system

  28. How ICD-9-CM Forms DRGs • 25 major diagnosis categories (MDC) • Represents • organ system (e.g., cardiovascular) • nonorgan system (e.g., burns)

  29. Major Diagnostic Categories Figure: 16.4 From Medicare Severity Diagnosis Related Groups, Version 25.0, Definitions Manual, 3M Health Information Systems.

  30. Typical MS-DRG Structure • 1st choice • OR procedure or no OR procedure • 2nd choice • Type of Surgery or principal diagnosis Figure: 16.5 From Medicare Severity Diagnosis Related Groups, Version 25.0, Definitions Manual, 3M Health Information Systems.

  31. Grouper • Coder enters ICD-9-CM code number(s) into grouper • Grouper manipulates data through flow chart • Presents correct DRG (now MS-DRG)

  32. ICD-9-CM and MS-DRG • ICD-9-CM codes grouped into MS-DRG 84 Figure: 16.7 From Medicare Severity Diagnosis Related Groups, Version 25.0, Definitions Manual, 3M Health Information Systems.

  33. CMS Payment • Hospitals notified of changes in MS-DRG system • October in Federal Register • Changes for • Covered charges • Amount received for each DRG

  34. Quality Improvement Organizations (QIOs) • Social Security Act was amended to establish QIO • Purpose was to ensure that hospitals adhered to MS-DRG system (Cont’d…)

  35. QIO Reviews (…Cont’d) • Admission • Discharge • Quality • Coverage • Procedure (Cont’d…)

  36. The Review (…Cont’d) • MACs refer to QIO providers for review • QIOs determine if changes were medically necessary

  37. Outpatient Resource–Based Relative Value Scale • RBRVS • Physician payment reform implemented in 1992 • Paid physicians lowest of • 1. Physician’s charge for service • 2. Physician’s customary charge • 3. Prevailing charge in locality

  38. National Fee Schedule • Replaced RBRVS • Termed Medicare Fee Schedule (MFS) • Payment 80% of MFS, after patient deductible • Used for physicians and suppliers

  39. Relative Value Unit • Nationally, unit values assigned to each CPT code • Local adjustments made: • Work and skill required • Overhead costs • Malpractice costs (Cont’d…)

  40. Relative Value Unit (…Cont’d) • Often referred to as fee schedule • Annually, CMS updates RVU based on national and local factors

  41. Prospective Payment and Skilled Nursing Facilities • Similar to MS-DRG system for hospital facilities • Established per day payment • Resource Utilization Groups III (RUGSIII)

  42. Information Standards • Collected by completing Minimum Data Set 2.0 resident assessment instrument (RAI) • Determines amount per day payment • Based on care level

  43. Outpatient Prospective Payment System (OPPS) • MS-DRG-type system for hospital outpatient settings • Based on groups of service, Ambulatory Patient Classifications(APC) • Implemented August 1, 2000 (Cont’d…)

  44. APCs (…Cont’d) • Payment rates for each APC published in Federal Register (Cont’d…) Figure: 16.10 Website: http://www.cms.hhs.gov/ASCPayment

  45. Impact of APCs on Hospitals (…Cont’d) • When MS-DRGs fully implemented, hospital revenue dropped • MS-DRGs only covered inpatient procedures • Many procedures began to be done on an outpatient basis • APCs curtailed outpatient revenues

  46. Medicare Fraud and Abuse • Program established by Medicare • To decrease fraud and abuse • Fraud • Intentional deception to benefit • Example: • Submitting for services not provided

  47. Beneficiary Signatures • Beneficiary signatures on file • Service, charges submitted without need for patient signature • Presents opportunity for fraud (Cont’d…)

  48. Fraud (…Cont’d) • Anyone who submits for Medicare services can be violator • Physicians • Hospitals • Laboratories • Billing services • YOU

  49. Fraud Can Be • Billing for services not provided • Misrepresenting diagnosis • Kickbacks • Unbundling services • Falsifying medical necessity • Consistent waiver of copayment

  50. Office of the Inspector General (OIG) • Each year develops work plan • Outlines monitoring Medicare program • MACs monitor those areas identified in plan

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