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CMS former name

healthcare financing administration

First Prospective Payment System (PPS)

implemented in 1983 by CMS/HFA to control cost of hospital inpatient.

Retrospective Reasonable Cost System

Hospitals reported ACTUAL charge AFTER discharge-included EVERYTHING. good for inventory-bad for floor staff-made bills go UP

Prospective COST Based Rates

1)payments are established in advance
2)daily rate is predermined and adjusted yearly.
3)based on case mix, RUG-reasonable utilization group.

Prospective PRICE Based Rates

associated with particular category of patients ESTABLISHED BY PAYER (ie:medicare)

Ambulance Fee Schedule


Balanced Budget act of 1997

established for services provided to Medicare beneficiaries.
1) Required ambulance systems to accept Medicare.
2)Report services using HCPCS for billing
3)Medicare agrees to pay for services when other means of transport are contraindicated.
4)Rates established in advance.
also covers life flight and boat rescue.

Ambulatory Surgical Centers

Provides surgical services to patients in non hospital location.
tax id
administrative function
clinical services (lab, xray)
financial accounting systems
medical staff
professional supervision
record keeping
state licensure

Laboratory Fee Schedule

Medicare reimburses laboratory charges according to:
-local fee schedule amount
-national limit
-whatever is lowest of the 2...they base payment off of.


Reimbursement of 80% of the acutal charge for the item or the fall schedule.
ex: prosthetics, wheelchairs...usually covered at 80/20 of scheduled payment.

End Stage Renal Disease

allows pt to receive dialysis treatments, items adn services and drugs. Reimbursement based on AGE RANGE.

Home Health Prospective Payment System

Reimbursement rates for each 60 day episode of home health care. Rates established by PAYER for each 60 day episode.

Hospital Inpatient Prospecitve Payment System

-predetermined rate for each discharge
-categorized by diagnostic resource groups (DRG)
-have a payment weight
Discharge Assessment used to determine how difficult was to treat, get better, get discharged.

Hospital Outpatient Prospective System (OPPS)

outpatient visit or encounter-
-same day surgeries
-lab tests
-wage index, geographic variations, hospital labor costs.

Inpatient Rehab Facility Prospective Payment System

Per discharge payment system
-emphasis on patient care needs
-97 function related groups
-reimbursement national formulary
-includes operating and capitol costs.

Long Term Acute Hospital Prospective Payment System

Patient having an average inpatient length of stay greater than 25 days.
-resources required to treat complex cases
-variations in cost per discharge
-predetermined d/c rates
-wages + costs of living adjustments

Skilled Nursing

-facility cost reports
-case mix
-geographic variations.

Medicare Fee Schedule

-physician work -specialist vs general
-judgement- how difficult is it?
-technical skill
-physical effort
-practice expense
-medical waste
-equipment(purchase, lease, share)
-staff salaries
-malpractice costs

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