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prospective payment system

reimbursement methodology that establishes predetermined rates based on patient category or type of facility

prospective cost-based rates

healthcare costs from which a prospective per diem rate is determined - this method may be based on case-mix

prospective price-based rates

associated with a particular category of patient & rates are established by the payer prior to the provision of health care services

fee schedule

cost-based, fee-for-service reimbursement methodology - includes a list of maximum fees & corresponding procedures/services which payers use to compensate providers


Medicare PPS Excluded Cancer Hospitals that applied for & were granted waivers from mandatory participation in the hospital inpatient PPS

Tax Equity and Fiscal Responsibility Act 1983 - TEFRA

legislated implementation of the inpatient prospective payment system, which uses diagnosis-related groups (DRGs) to reimburse short-term hospitals a predetermined rate for Medicare inpatient services

diagnosis-related groups

classify inpatient cases into groups that are expected to consume similar hospital resources

major diagnostic categories

DRG's that are mutually exclusive categories that are loosely based on body systems


inpatient cases that are unusually costly & the IPPS payment is increased to protect the hospital from large financial losses


claim form submitted for inpatient care

Medicare Administrative Contractor (MAC)

third-party payer that contracts with Medicare

IPPS 3-day payment window

requires outpatient preadmission services provided by a hospital up to 3 days prior to a patient's admission to be covered by the IPPS DRG payment

Medicare Severity Diagnosis Related Groups

classification that is based on diagnoses, procedures, other demographic information & the presence of complications & comorbidities

IPPS transfer rule

any patient with a diagnosis from one of 10 CMS-determined DRGs who is discharged to a post acute provider is treated as a transfer case

post acute care settings

hospitals or distinct units excluded from the prospective payment system, skilled nursing facilities, patient's homeunder a written plan of care for the provision home health services within 3 days of discharge

present on admission indicator

assigned by the coder to the principal & secondary diagnoses and external cause of injury reported on the UB-04 form

Resident Assessment Validation and Entry/RAVEN

software developed by CMS, allows SNFs to capture & transmit the MDS (mini data sets)

resource utilization groups

prospective payment system implemented by the federal government to control costs in nursing facilities

Home Health PPS

uses home health resource groups to reimburse - requires recertification every 60 days

Outpatient PPS

uses APCs to reimburse hospital outpatient services

status indicator

assigned to each CPT & HCPCS level II code - payment indicator that dictates how each code will be paid or not paid under OPPS

Inpatient PPS

utilizes info from a patient assessment instrument to classify patients into groups based on clinical characteristics & resource needs

Long Term (Acute) PPS

uses info from long term acute care hospital patient records to classify patients into Medicare severity long term (acute) care diagnosis related groups based on clinical characteristics & resource needs

clinical laboratory fee schedule

methodology for determining fees for existing tests

national limitation amount

serves as a "cap" on the amount Medicae could pay for each test

resource based relative value system

used to reimburse physician services covered by Medicare Part B

Medicare physician fee schedule

reimburses providers according to predetermined rates assigned to services - revised by CMS annually

ambulance fee schedule

reimburses ambulance service providers a preestablished fee for each service provided

end stage renal disease composite payment rate system

for dialysis services - based on a case-mix adjusted composite rate - single payment fixed rate that doesn't vary

severity of illness

psysiologic complexity that comprises the extent & interaction of a patient's disease as presented to medical personnel


risk management tools that identify the risk of dying

critical pathways

interdisciplinary guidelines develpoed by hospitals to facilitate management & delivery of clinical care in a time of constrained resources


document that contains a computer generated list of procedures, services & supplies as well as corresponding revenue codes & charges for each

encounter form/superbill

used to record encounter data about office procedures & services

revenue code

a 4 digit UB04 code that is assigned to each procedure, service & supply to indicate the location or type of service provided to an institutional patient (radiology, laboratory)

chargemaster review process

routinely conducted by designated hospital personnel to ensure accurate reimbursement by updating CPT & HCPCS codes & linking to appropriate UB04 codes

Anti Kickback Statute

prohibits the offer, payment, receipt or solicitation of compensation for referring Medicaid/Medicare patients

Federal Claims Collection Act

established uniform procedures for gov't agencies to follow in the collection, compromise, suspension, termination or referral of litigationof debts owed to the government

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