REIMBURSEMENT METHODOLOGIES Flashcards
third-party payers
patient doesn’t have to pay the physician or hospital directlly
prospective payment system
This means that the reimbursement amount is determined before the patient receives healthcare services.
Episode-of-Care (EOC) reimbursement
means that one payment is made to compensate providers for all the healthcare services provided to a patient for a specific period of time. Reimbursement based on episode-of-care has been supported as a way to decrease the overall cost of medical care while at the same time increasing quality of care and reimbursement. The payments made in episode-of-care reimbursement are called bundle payments- payments covering several services that are lumped together.
Episode-of-care reimbursement methods include:
Capitation
Global payments
Managed care capitation differs from traditional fee-for-service methods.
With capitation….
reimbursement is based on pre-established payments for a specific period of time.
This means that the managed care plan pays the healthcare provider a fixed amount on a per capita- or per person- basis.
If the reimbursed amount is more than the services that the physician provides, then the physician keeps the additional payment (and a profit is thus made). If the services provided cost more than the capitation amount, then the physician doesn’t get reimbursed for the difference and loses money.
Per member per month (PMPM), or per patient per month (PPPM)
describes how capitated premiums are calculated. The term premiums, in this case, refers to the price of insurance protection for a specified period of time.
Global payments
another example of episode-of-care reimbursement methodologies.
Global payments are made to the provider in one lump, some for all services given to a patient for a specific illness or disease.
Two types of global payments are global surgery payments and Medicare ambulatory surgery payments; both of these payment types are based on a classification system.
ambulatory payment classification (APC) system
was formerly called ambulatory patient groups (APGs). APCs are based on outpatient procedures performed and replace the previous fee-for-service payment method for outpatient services. The terms ambulatory and outpatient are used synonymously to define healthcare that doesn’t require hospitalization.
APCs refer to a payment system for ambulatory (or outpatient) procedures provided by ambulatory surgery centers (ASCs). ASCs are state-licensed suppliers of healthcare services that are certified by Medicare. ASCs use the APC and outpatient prospective payment system (OPPS) for reimbursement.
prospective payment system
Medicare implemented. response to the rising cost of inpatient care.
Later, the prospective payment system was adopted by commercial and private insurance providers.
In response to rising costs of other, non acute care services, the government expanded the prospective payment system to cover some of these services.
Traditional fee-for-service reimbursement
he patient or provider must submit a claim to the third-party payer for healthcare services provided.
Managed fee-for-service reimbursement
includes retrospective and prospective review of the healthcare provider’s treatment and discharge planning.
Retrospective review
the patient’s case is reviewed for appropriateness of service after discharge. Prospective review means that some case review is done before services are delivered, such as in precertification.
Episode-of-care (EOC) reimbursement
one payment is made to compensate providers for all the healthcare services provided to a patient for a specific period of time. Methods include capitation and global payments.
DRG
are classification groups of diseases, illnesses and injuries.
DRG Formula
It sounds complicated, but DRG reimbursement is actually a simple formula and calculation. Each DRG is assigned a relative weight. (The standard relative weight is 1.00). Each hospital is assigned a specific standard fee. To calculate reimbursement amount for a specific DRRG, simply multiply the DRG relative weight by the hospital’s standard fee. The formula looks like this:
DRG Relative Weight x Hospital Standard Fee = Reimbursement Amount
DRGs explained
Because related diseases and treatments often utilize a similar amount of resources, a classification system was developed to aid in reimbursement assignment.
There are hundreds of DRGs that are grouped into one of 25 MDCs, or Major Diagnostic Categories, based on the patient’s principal diagnosis.
MDCs are categorized as either medical or surgical cases.
For example, a patient with pneumonia would be grouped the following way in the prospective payment system:
Principal diagnosis: pneumonia due to other aerobic gram-negative bacteria-
ICD-10 CM Diagnosis Code: J15.6
DRG Assignment: 179
The assignments of DRGs/MS-DRGs, MDCs, relative weights, reimbursement calculations, and so on are all done with a computer software program called an encoder. The coder abstracts, or retrieves, pieces of information from the medical record, enters the data into the encoder, and uses the encoder to generate the diagnosis codes, procedure codes, DRGs, and relative weights for the reimbursement purpose.
MS-DRG
Medicare severity DRGs
MS-DRGs explained
Within the MS-DRG system, there are still 25 MDCs, but there are added MS-DRGs. The basic DRG structuring remained the same, but the use and assignment of complications affecting reimbursement completely changed.
The MS-DRG system developed three levels of severity for each DRG:
Diagnosis with major complicating condition (MCC)
Diagnosis with complicating condition (CC)
Diagnosis without complicating condition
Under the MS-DRG system, CCs are now based on the number of resources that were utilized instead of on length of stay. This meant that many of the CCs that previously changed or increased reimbursement rates were removed from the formula.
RBRVS
Resource-Based Relative Value Scale System
When a patient visits a hospital, the physicians are paid separately from the hospital. When a patient receives hospital care, the hospital is reimbursed one amount, usually called the_________
Facility fee
When a patient visits a hospital, the physicians are paid separately from the hospital.
Physicians who treat the patient receive a separate amount for the services that they provide. Service fees include costs such as______
medical consultation and surgery.
When the prospective payment system and DRGs are used for inpatient services, physicians’ offices use the RBRVS system.
The RBRVS system is based on the resources used when treating patients- or the “relative value of services” based on a formula that includes:
Amount of work a physician does to treat a patient (RVUw, or relative value units (work))
Expenses associated with the treatment (RVUpe, or relative value units (practice expenses))
Professional liability assessed for that treatment (RVUm, or relative value units (malpractice costs))
The CMS publishes the RVUs, or relative value units, as part of the ______ each year in a publication called the _______The list helps physicians understand what’s reimbursed under Medicare.
Medicare fee schedule (MFS)
Federal Register
To calculate fee amounts, Medicare devised a formula that takes into account the value of services, geographic considerations, and a national _____
conversion factor (CF).
The conversion factor, which is assigned by CMS each year, helps convert the RVUs into actual payments.
Skilled Nursing Facility
a facility designed for treating Medicare-eligible patients. The SNF may be part of a hospital; often, it’s part of a nursing facility. SNF care is generally needed for just a short period of time after a hospitalization. Treatment in SNFs includes 24-hour nursing coverage, physical therapy, occupational therapy, and speech therapy. Once a patient no longer needs continuous medical evaluation, he or she is no longer qualified for skilled nursing care. If a patient still needs continuous care, or custodial care, the patient or the patient’s family must find an alternate care solution to the SNF.
The Balanced Budget Act (BBA) of 1997 provided for
implementation of a skilled nursing prospective payment system set up on a per diem basis.
Per diem
means that reimbursement is based on service by the day (that is, paid daily).
reasonable costs
what would be a regular cost to treat a patient with that disease, illness, or injury.
SNF PPS
uses resource utilization groups, or RUGs. The RUG system works by using SNF patient (or resident) assessment data and then assigns one of the RUGs for reimbursement calculation reported by HCPCS codes.
