healthcare reimbursement methodologies

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Case Mix

Categorizes patients in such a way as to reflect the complexity of the hospitals caseload
Method which patients are grouped together based on a set of characteristics, such as resource consumption, diagnosis or procedure

Case Mix Index

C M I
Used to represent the facilities case mix
Calculated by the sum of the Total MS-DRG "Medicare Severity-Diagnosis-related groups" RW "relative weights" divided by the total number of cases.

Chargemaster

A financial management system that lists the individual charges for every element entailed in providing a service

Complex Diagnosis

A further subdivision of a C/C's
To be classified to some MS-DRGs the patient must have an additional or secondary diagnosis that CMS "Centers for Medicare and Medicaid Services" has labeled a "complex diagnosis"

Co-Morbidity

Pre-existing condition
For MS-DRG "Medicare Severity-Diagnosis-related groups" calculation a preexisting condition that CMS has determined will increase a patient's length of stay by one day in 75% of cases

Complication

A condition that arises during hospitalization
For MS-DRG calculation a complication is a condition that CMS "Centers for Medicare and Medicaid Services" has determined will increase a patient's length of stay by one day in 75% of cases

Four organizations that approve coding policy.

American Health Information Management Association "A H I M A"
American Hospital Association "A H A"
National Center for Health Statistics "N C H S"
Centers for Medicare and Medicaid Services "C M S"

Geometric Mean Length of Stay

CMS "Centers for Medicare and Medicaid Services" determined length of stay associated with each MS-DRG "Medicare Severity-Diagnosis-related groups"
Used in determining payments in transfer cases

Grouper

Computer software that analyzes ICD-9-C M codes, patient age and discharge status to determine the MS-DRG "Medicare Severity-Diagnosis-related groups"

Hospital Specific Rate

Dollar figure assigned to each individual hospital by "Centers for Medicare and Medicaid Services" CMS
Used in calculating reimbursement

Major Complication / CoMorbidity

A further subdivision of the secondary diagnosis list Conditions specified as MCCs are typically significant acute manifestations or advanced stages of chronic conditions that would result in higher resource utilization in the course of treatment

Medicare Code Editor

Edits medical record data to help identify coding errors and inconsistencies between clinical data and coding
Example. Age conflicts, Sex Conflicts, Incomplete Codes, Missing Codes, Unacceptable Principal diagnosis

MDC "Major Diagnostic Category"

Classification of a case to its MDC is the first step in MS-DRG determination
The MDC is determined by principal diagnosis

Other or additional diagnosis

Secondary diagnosis that coexsist at the time of admission or developes during the hospitalization and affect management of the patient

Per Diem

Latin for "per day" or "for each day" is a daily allowance for expenses.

PPS Prospective Payment System

is a method of reimbursement in which payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service.

POA "Present on Admission" Indicator

Present on Admission indicator differentiates between patient conditions present on admission and those that develop during hospitalization.

Principal Procedure

Procedure performed for definitive treatment rather than for diagnostic or exploratory purposes or for treatment of a complication

Relative Weight "RW"

Numeric weight assigned to each DRG, which is used in calculating reimbursement

Retrospective Payment System

Hospital payments determined after services rendered.
Type of fee-for-service payment system before DRGs "Diagnosis-related groups"

T E F R A

Tax Equity and Fiscal Responsibility Act
The prospective payment system is a result of this legislation

Title (XVIII) 18

Medicare program, designated "Health Insurance for the Aged and Disabled,"

Title (XIX) 19

Medicaid program, is a Federal/State entitlement program that pays for medical assistance for certain individuals and families with low incomes and resources.

Encoder

Computer software which assists the coder in
assigning diagnosis and procedure codes

Type 2 Transfers

"Post Acute Care Transfer Policy"
Hospital will recieve adjusted perdiem payment rather than the full MS-DRG payment if patient is discharged to certain post acute care settings

Type 1 Transfers

Patient is discharged from one acute care facility to another acute care facility on the same day
The transferring hospital receives a per diem payment and the receiving hospital receives the FULL MS-DRG payment

Type 1 Transfer Calculation

LOS + 1 at transferring hospital /
Geometric mean length of stay "GMLOS" times (X) PPS amount "of transferring hospital"

The ICD-9 code places a case into a

DRG "Diagnosis-related groups"

What is the purpose of the relative weight?

To compare the costs associated with treating patients in a particular MS-DRG "Medicare Severity-Diagnosis-related groups" to the average cost of treating any Medicare patient

Relative Weights are assigned by.......

CMS "Centers for Medicare and Medicaid Services"
Hospital cannot change a relative weight.
RW "relative weight" are updated annually in the Federal Register

Highest Relative Weight is the same as?

Highest Per Case Reimbursement

Highest Total Relative Weight is the same as?

Highest Total Reimbursement

This is the formula for calculating the total MS-DRG "Medicare Severity-Diagnosis-related groups" payment

DRG RW X Hospital Base Rate = Hospital Payment
"Medicare Severity-Diagnosis-related groups" "Relative Weight" times Hospital Base Rate = Hospital Payment

This is the first step in MS-DRG assignment is?.

is to classify the case into one of the 25 major diagnostic categories "MDC". These MDCs are based on the principal "first" diagnosis and, with a few exceptions, are based on body systems.

Pre-MDC "major diagnostic categories"

Organ transplant cases are not assigned to MDCs, but are immediately classified based on procedure, rather than diagnosis. These are called pre-MDC DRGs. No additional steps are needed to arrive at the MS-DRG

"Off Switch"

A secondary diagnosis that normally appears on the CC's list may be ignored or "switched off" when it is submitted with a specific principal diagnosis

Geometric Mean Length of Stay "GMLOS"

CMS "Centers for Medicare and Medicaid Services" determined LOS associated with each MS-DRG. Is used in determining payments in transfer cases. The DRG payment is divided by the geometric mean length of stay to determine a per-diem rate.

How does discharge disposition impact reimbursement?

Discharge status determines if a case is subject to the post acute care transfer rule.
Because a portion of the acute care is provided by another facility.

Fraud

Intentional practices that violate medicare guidelines

Abuse

Non-Intentional practices that violate the guidelines of medicare

These examples of Abuse

Billing for services in excess of those needed by the patient
Misuse of modifiers
Upcoding
Unbundling
Collecting fees from patient in excess of allowable deductible
Requiring patient to make a deposit as conditions of treatment

Upcoding

Selecting an inaccurate code in order to increase reimbursement

Unbundling

Seperately billing for services or diagnosis which could be identified with a combination code

National Coverage Determinations

Establish the extent to which Medicare will cover specific services, procedures or technologies on a national basis

Local Coverage Determinations

An expansion of NCD's "national coverage determination " that establish which diagnosis are considered medically necessary for individual tests

What are possible penalties that may apply to those found guilty of acts of fraud or abuse?

Criminal or Civil Charges
Financial Penalties "US attorneys office"
Sanctions rather than prosecute "CMS or OIG" such as, warnings, mandatory education etc

What is a Compliance Plan?

A formalized statement of how a health care provider practices.
It is an internal organizations watchdog.

What is the purpose of a Compliance Plan?

Decrease instances of Fraud and Abuse.
Provide a mechanism to correct and report problems to the government.
Help establish ethical business practices.

Recovery Audit Contractors "RACs"

Prevent improper payments made to providers.
Improper payments may take the form of underpayment or overpayment

DRG Creep

The practice of billing using a DRG "Diagnosis-related groups" that provides a higher payment than the DRG code that accurately reflects the service furnished to the patient

PEPPER Report

PEPPER "Program for Evaluating Payment Patterns for Electronic Report"
Electronic report that contains statistics on hospital-specific Medicare claims for those target DRGs that have been determined to be at high risk for payment errors

Qui Tam Litigation

"Whistleblower"
Allows a private citizen who has knowledge of a false claim to bring action in a Federal Court on behalf of the government.

The AHIMA Standards of Ethical Coding are intended to:

Assist coding professionals and managers in decision-making

OPPS " outpatient prospective payment system"

"Prospective payment system" PPS based on Ambulatory Payment Classification System "APCs"

"Packaging"

In DRGs "Diagnosis-related groups" all services are included in the payment

What is needed to calculate an APC group?

CPT Code "HCPCS"
CPT modifiers
ICD-9 codes "for medical necessity"

"Ambulatory Payment Classification" APCs are........

Determined by CPT codes and modifiers
Divided into sergical and medical APCs

"Diagnosis-related groups" DRGs are based on.......

ICD-9-C M codes

Composite APC "Ambulatory Payment Classification"

Encounter based
A single fixed payment is made for a certain combination of procedures that are performed together

Hospital Charge Master "CDM"

Computerized file that contains info for all hospital procedures.
Streamlines process of entering charges on the UB-04.

"Hard Coding"

Process by which a "Healthcare Common Procedure Coding System" HCPCS code is identified and transferred to the UB-04

Revenue Code

A 3-4 digit code that describes "what was performed"

Accounts Receivable

is money owed to a business by its clients (customers) and shown on its Balance Sheet as an asset.

Scrubber

Internal Auditing Software that check claims for accuracy and completeness

What are the 3 main types of NCCI "National Correct Coding Initiatives" edits?

Mutually Exclusive
Column 1 &Column 2 "formerly Comprehensive/Component" "code combinations where 1 of the codes is a component of a more comprehensive code"
Medically Unlikely Edits "MUE"

Automated RAC "Recovery Audit Contractors" Review

RAC Recovery Audit Contractors" is able to make an overpayment or underpayment determination without reviewing the medical record

Complex RAC Recovery Audit Contractors" Review

RAC Recovery Audit Contractors" makes an overpayment or underpayment determination after reviewing the medical record

Discharged Not Final Billed Report

Report contains a list of accounts that cannot be billed for various reasons.

NPI "National Provider ID"

Each provider has this unique number that must be included on a claim formS.
Object is to speed up claims processing and provide uniformity in provider identification.

What is the definition of a "Clean Claim"

A claim completed correctly including ICD9 and CPT codes
The 3rd party payer will reimburse the 1st time

EOB "Explanation of Benefits"

This letter informs the patient that the claim was received and how it was paid

The Medicare EOB "Explanation of Benefits" has been replaced with the....

Medicare Summary Notice "MSN"

Medicare Summary Notice "MSN"

Sent to the provider to explain services provided, amounts billed and payments made.
Lists all the services or supplies that were billed to Medicare for a 30 DAY TIME PERIOD

Remittance Advice "RA"

is a document supplied by the insurance payer that provides notice of and explanation reasons for payment, adjustment,denial and/or uncovered charges of a medical claim.

The linking of the diagnosis with the procedure code allows payers to determine?

Medical Necessity

Local Coverage Determination "LCD"

Guideline and lists of conditions/diagnosis developed by payers that state what they will cover for specific services on a local level
Change annually

Advance Beneficiary Notice "ABN"

Patient signs this and agrees to pay for services if the payer denies the claim.
Specific to the test/procedure being performed.
Must be signed "before" the test/procedure is done.

Participating Provider

Physician agrees to accept the Medicare approved amount as "payment in full"
Medicare "80%" Patient "20%" of MPFS "Medicare Physician Fee Schedule"

Non Participating Provider that Accepts Assignment

Receive 5% less of the MPFS "Medicare Physician Fee Schedule" as a participating provider

Private Contracting

Physicians contract with the patient directly

"Centers for Medicare and Medicaid Services" CMS 1500

Accepted by all 3rd party payers
Most physicians submit this form electronically
Revised to include the NPI number "National Provider ID"

Payer Remittance Report

Payer sends to provider
States outcome of claim
Used by provider for quality review

Non Participating Provider who DOES NOT ACCEPT ASSIGNMENT

May charge 115% of the Medicare Approved Amount
Medicare pays the patient not the physician
Physician must collect the entire payment from the patient

Usual Reasonable and Customary Fee

are based on data closest to the place of service. This method gives greater accuracy in calculating medical charges.

Provider Fee Profile

Database that insurers maintain of charges submitted by a physician for certain procedures over a certain period of time

When determining payment the insurance company pays the lower of the following?

Current charges
Physicians profile amount
Area customary fee "or any schedule of benefits"

Negotiated Fee Schedule

Created between the physician and insurance company to ensure a flat rate per procedure, visit, or service
BASED ON SUPPLY AND DEMAND

Resource Based Relative Value System "RBRVS"

National fee system for Medicare payments to physicians
Developed to control the cost of increasing healthcare expenditures
This system assigns a "Relative Value Unit" "RVU" to each CPT code

The total "Relative Value Unit" for a code is based on?

Providers work involved
Practice Expenses
Malpractice Expense associated with the particular procedure

Fee Schedule Management

Setting and adjusting fees
"Lifeblood of medical practice"
know your "business"
Track whether being reimbursed properly
Revised annually

MD practice establishes fees based on?

National Surveys
RBRVS "resource based relative value system" used by Medicare

Discounted Charges

Reduced fees in exchange for patient volume
Contract between MD and other entity "HMO, PPO etc"

Linking on "Centers for Medicare and Medicaid Services" CMS 1500 is done why?

To link what was done "CPT" with why it was done "ICD9"

IPF PPS

Inpatient Psychiatric Facility Prospective Payment System
Payment based on per diem rate
Specific comorbidities

IRF PPS

Inpatient Rehabilitation Facility Prospective Payment System
PAI "patient assessment instrument" must be completed Effective 2002

To qualify as a "Centers for Medicare and Medicaid Services" "Inpatient Rehabilitation Facility" CMS IRF the patient must be treated for one of the following?

Stroke
Spinal Cord Injury
Congenital Deformity
Amputation
Major multiple trauma
Fracture of hip
Brain injury
Neurological disorders
Burns
Active polyarticular RA

The following services are included in the IRF PPS/Inpatient Rehabilitation Facility Prospective Payment System system?

Routine Costs
Ancillary Costs
Capital Costs

The following services are not included in the IRF PPS/Inpatient Rehabilitation Facility Prospective Payment System?

Approved educational activities
Bad debts

Patient Assessment Instrument "PAI"

Collects Information on the physical, cognitive, functional, and psychosocial status of the patient.
Must be completed at time of admission and then again discharge

IRF-PAI "Inpatient Rehabilitation Facility-Patient Assessment Instrument" data includes the following

Patient History
Social Cognition
Functional Status
Bowel Bladder Managemnt
Diagnosis
Medical Complexities
Pain Status
Oral/Nutrition Status
Functional Prognosis
Safety
Resource for Discharge

The admission PAI/Patient Assessment Instrument is used to?

Classify each patient into a Case Mix Group that is used to determine the IRF payment

The discharge PAI/Patient Assessment Instrument is used to?

Determine the relevant weighting factors if applicable associated with comorbities

What is the key data element for determining a CMG "case mix group"?

ICD-9-C M

Rehabilitation Impairment Category

Based on ICD-9-C M
Similar to MDC "major diagnostic category"

Long Term Care Hospital Prospective Payment System "LTCH PPS"

Facility that provides an acute hospital level of care and services to patients who require longer hospitalization "more than 25 days"
also known as LTACH or LTCH "long term acute care hospital"
Exempt from acute hospital PPS reimbursment

MS-LTC-DRG "Medical Severity-long-term (acute) care hospital-diagnosis-related groups"

LTCH reimbursment system

The Home Health Prospective Payment System "HH PPS" This system uses a classification system called?

Home Health Resource Group "HHRGs"

Home Health Resource Groups "HHRGs" are based on the following payment categories?

Severity of illness
Ability to perform activities of daily living
Hospitilizations
Need for SNF

OASIS

Outcome and Assessment Information Set
Assess patients condition
Data collection tool

What form must be completed when determining the case mix group?

Patient assessment Instrument "PAI"

Long Term Acute Care PPS is most similar to the....

Acute Care MS-DRG system

The IPF-PPS "Inpatient Psychiatric Facility Prospective Payment System" is based on

A Per Diem Rate

This documentation tool is used in the home health care setting and is vital for patient assessment and reimbursement.

OASIS "Outcome and Assessment Information Set"

The SNF PPS "Skilled Nursing Facilities Prospective Payment System" is based on

resource utilization

RUG's "Resource Utilization Groups" are determined by completion of?

Minimum Data Set

This act required the creation of the SNF PPS "Skilled Nursing Facilities Prospective Payment System"?

Balanced Budget Act

Based upon the MDS "major diagnostic category" assessment time, a skilled nursing home resident's RUG "Resource Utilization Groups"

will vary.

Which element of the MDS "major diagnostic category" is vital in the final RUG "Resource Utilization Groups" determination?

Activities of daily living

How does an IPPS "Inpatient Prospective Payment System" work?

IPPS is based on MS-DRG reimbursement
MS-DRG represent an inpatient reimbursement system classification scheme that categorizes patients who are medically related with respect to diagnosis,treatment and consumption of medical resources

What is the purpose of MS-DRG's "Medicare Severity-Diagnosis related groups"

More adequately group patients by the severity of their diagnosis
More adequately reflect hospital resource utilization
Group more severely ill patients into higher paying MS-DRG's

These services are packaged via APCs "Ambulatory Payment Classification"

Pharmacy
Medical and surgical supplies
Operating Room
Anesthesia
Recovery Room
Observation
Surgical Dressings
Capital-related costs
Various incidental services

Status Indicator T

Surgical services subject to discount when multiple

Status Indicator S

Significant Procedure "not discounted"

Status Indicator V

Medical Visits

Status Indicator X

Ancillary Tests and Procedures

Status Indicator A

Paid by other methods "fee schedule"

Outpatient Code Editor

Electronically checks claims for errors
Similar to the Medicare Code Editor.
Uses "National Correct Coding Initiatives" "NCCI". Assigns APCs "Ambulatory Payment Classification" and status indicators

Ambulatory Surgical Centers

Distinct stand alone facilities that provide ambulatory surgery services
Not hospital based
Based on APC "Ambulatory Payment Classification" payment rates
Created via group of physicians

Similarites between DRGs "Diagnosis related groups" and APCs "Ambulatory Payment Classification"

Grouped by resource consumption
Packaging
Each has a RW "Relative Weight"

These are users of the UB 04

ALL HOSPITAL CLAIMS
Ambulatory care centers
Home Health

Limiting Charge

Maximun amout that can be charged for the services of a physician who does not accept assignement

The total relative value unit "RVU" for a code is based on?

Providers work involved
Practice Expenses
Malpractice expense associated with particular procedure

Case Mix Group "CMG"

Determined by patients Rehabilitation Impairment Category "RIC"
Monitor cognitive scores
Each Case Mix Group "CMG" has Relative Weight "RW"
ICD9 codes determine Case Mix Group "CMG"
Payment equals CMG RW times Conversion Factor

HHRG "home health resource group"

Based on payment classifications
Points on OASIS determine which HHRG applies
payment equals HHRG weight times base payment

Skilled Nursing Facility PPS

Requires "consolidated billing"
Uses MDS "major diagnostic category" form to obtain correct payment "form completed at admission and other established days"

Consolidated Billing

Requires SNFs "Skilled Nursing Facility" to submit medicare claims for all Part A and B services recevied by its residents

Resource Utilization Group "RUG"

Has an assigned weight which represents the average resource required to care for the resident who is placed into that group relative to the average resource required to care for all residents in all other RUGs

This form must be filled out when determining the Case Mix Group?

PAI "Patient Assessment Instrument"

This is not an edit performed by the Outpatient Code Editor.

Validating accuracy of DRG "Daignosis Relative Group" assignment

Cost Report

Report that must be completed by all facilities
Includes various pieces of information concerning facilities costs to Medicare

MDS "major diagnostic category"

Vital tool for correct payment under the SNF PPS
Must be completed upon patient admission to a SNF
Nursing staff complete the form

The following factors predict resource utilization of a resident.

ADL "Activity of Daily Living
Dx "Diagnosis
Service types

MS-DRG

Medicare Severity Diagnosis Related Groups
Adopted by "Centers for Medicare and Medicaid Services" CMS 10/1/07
Replaced the original DRG system

DRG relative weights were changed

and now are based on hospital costs rather than charges and are used to calculate inpatient reimbursement. Categorizes patients who are medically related with respect to diagnosis, treatment, and consumption of resources

Outlier

Cases in the IPPS system with exceptionally high costs
Hospitals may receive additional reimbursement for cost outliers

To qualify for outlier payments

a case must have costs above a fixed-loss cost threshold amount. This amount is established by "Centers for Medicare and Medicaid Services" CMS and changes annually

These are examples of Fraud

Billing for services not provided
Falsifying certificates of medical necessity, plans of treatment, and medical records to justify payment

Other examples of Fraud

Consistently using codes that describe more extensive services than actually performed
Offering, accepting or soliciting kickbacks

Components of a compliance plan.

Policy, procedures and a commitment to compliance
Appointment of a compliance officer
Implementation of a training and education program

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