Reimbursement or payment for healthcare services has evolved over time into a complicated system with many rules and guidelines that must be followed if proper payment is to be received from third party payers. Rules and guidelines vary, depending on which healthcare setting or third party payer is involved. A third party payer makes payments on behalf of the patient for health services. Third party payers may include government programs, insurance companies, and managed care plans.

Private Plans

A variety of private plans (commercial payer) are provided by companies such as Blue Cross/Blue Shield, Aetna, Cigna, and Travelers. These plans are available in different formats, including the following:

• Self-insured plans—self-insurance fund set up by an employer to provide health claim benefits for employees.

• Health Maintenance Organization (HMO)—type of managed care in which hospitals, physicians, and other providers contract to provide health care for patients, usually at a discounted rate.

• Preferred Provider Organization (PPO)—type of managed care in which hospitals, physicians, and other providers have an arrangement with a third party payer to provide health care at discounted rates to third party payer clients.

Because Medicare is the predominant payer for healthcare services, this text focuses on Medicare’s reimbursement system. Of note, many private and commercial payers have adopted the Medicare reimbursement system.

Government Plans

Medicare is a federal entitlement program administered by the Centers for Medicare and Medicaid Services (CMS) for patients over 65 years of age, certain disabled individuals, and those with end-stage renal disease.

Medicaid is a federal and state insurance plan, administered by the states and managed by the Social Security Administration of the federal government for patients whose income and resources are insufficient to pay for health care.

TRICARE, previously known as CHAMPUS (Civilian Health and Medical Program for the Uniformed Services), is a medical program for active duty military members, qualified family members, non–Medicare-eligible retirees and their family members.

Workers’ Compensation is a requirement of the federal government for employers to cover employees who are injured or become sick on the job. It is managed by various plans chosen by the employer or by state governments.

Medicare

After many years of debate in Congress, in July 1965, the House and Senate passed the bill that established Medicare, an insurance program designed to provide all older adults with comprehensive health care coverage at an affordable cost. In 1972, Medicare eligibility was extended to people with disabilities and those with end-stage renal disease.

The Social Security Act was responsible for the establishment of the Medicare program. As a result of this, the government became more involved in the delivery of health care. The government wanted to ensure that Medicare participants received both quality health care and medically necessary services.

Medicare is a federal health insurance program that is divided into parts according to the type of coverage.

Part A: Hospital Insurance.

To be eligible for Part A hospital insurance, one must have worked or must have had a spouse who worked a minimum of 40 quarters of Medicare-covered employment. Part A of Medicare pays for inpatient hospital, skilled nursing facility, and some home health care. Medicare pays all costs for each benefit period (60 days), except for the deductible (which changes each year).

Part B: Medical Insurance.

To be eligible for Part B insurance, one must meet the same requirements as for Part A. A premium (that changes each year) is deducted from a person’s Social Security check for Part B coverage. Part B Medicare covers Medicare-eligible physician services, outpatient hospital services, certain home health services, and durable medical equipment. A yearly deductible (that changes each year) and a 20% co-payment amount are applied to these services.

Part C: Medicare Advantage Plans.

Medicare Advantage Plans are run by private companies and are similar to HMOs and PPOs. They provide more choices and sometimes additional benefits. They offer all the benefits provided by Part A and Part B, but some also may provide prescription drug coverage (Part D). Patients may be required to use certain hospitals and physicians in the service area.

Part D: Prescription Drug Coverage.

This is an optional program for prescription drug coverage. Medicare prescription drug coverage is available to anyone who is covered by Medicare.

Diagnosis-Related Groups/Medicare Severity Diagnosis-Related Groups

DRGs were developed at Yale University in the late 1960s to monitor quality of care and utilization of services. DRGs were not intended to be a means of determining hospital reimbursement. In 1982, the Tax Equity and Fiscal Responsibility Act (TEFRA) mandated limits on Medicare payments to hospitals. The government decided to use the DRG classification system, a prospective payment system (PPS), to pay for services rendered to Medicare inpatients. A prospective payment system is a method of reimbursement in which payment is made according to a predetermined, fixed amount rather than on the basis of billed charges.

The government implemented a prospective payment system in an effort to control the costs of inpatient hospital stays. The DRG system had some inequities in that a patient with multiple complication(s) or comorbid condition(s) is assigned that same DRG and receives the same payment as the patient who has just one complication or comorbid condition. Larger hospitals and tertiary care centers may present greater financial risks because they routinely care for patients who are severely ill. As a result, CMS implemented the Medicare Severity diagnosis-related groups (MS-DRGs), which became effective on October 1, 2007.

ICD-10-CM/PCS codes will be used to determine the Medicare Severity diagnosis-related group (MS-DRG). First, a patient is assigned to an MDC (Figure 26-1) on the basis of the principal diagnosis code; next, it is determined whether the case is a “medical” or a “surgical” case. If no procedures are identified, a medical MS-DRG is assigned. Patients who undergo a valid operating room procedure or another non–operating room procedure that affects MS-DRG assignment are assigned a surgical MS-DRG. It is logical that a patient who has undergone a surgical procedure would use more resources because of costs associated with anesthesia, operating and recovery rooms, and additional nursing care.

FIGURE 26-1 MS-DRG structure for a major diagnostic category (MDC).

The MS-DRG classification system is divided into 25 major diagnostic categories (MDCs), which are based on all possible principal diagnoses that often correspond with an organ system.

MDC 1	Diseases and Disorders of the Nervous System
MDC 2	Diseases and Disorders of the Eye
MDC 3	Diseases and Disorders of the Ear, Nose, Mouth, and Throat
MDC 4	Diseases and Disorders of the Respiratory System
MDC 5	Diseases and Disorders of the Circulatory System
MDC 6	Diseases and Disorders of the Digestive System
MDC 7	Diseases and Disorders of the Hepatobiliary System and Pancreas
MDC 8	Diseases and Disorders of the Musculoskeletal System and Connective Tissue
MDC 9	Diseases and Disorders of the Skin, Subcutaneous Tissue, and Breast
MDC 10	Endocrine, Nutritional, and Metabolic Diseases and Disorders
MDC 11	Diseases and Disorders of the Kidney and Urinary Tract
MDC 12	Diseases and Disorders of the Male Reproductive System
MDC 13	Diseases and Disorders of the Female Reproductive System
MDC 14	Pregnancy, Childbirth, and the Puerperium
MDC 15	Newborns and Other Neonates with Conditions Originating in the Perinatal Period
MDC 16	Diseases and Disorders of the Blood and Blood-Forming Organs and Immunologic Disorders
MDC 17	Myeloproliferative Diseases and Disorders, and Poorly Differentiated Neoplasms
MDC 18	Infectious and Parasitic Diseases (Systemic or unspecified sites).
MDC 19	Mental Diseases and Disorders
MDC 20	Alcohol/Drug Use and Alcohol/Drug-Induced Organic Mental Disorders
MDC 21	Injuries, Poisonings, and Toxic Effects of Drugs
MDC 22	Burns
MDC 23	Factors Influencing Health Status and Other Contacts with Health Services
MDC 24	Multiple Significant Trauma
MDC 25	Human Immunodeficiency Virus Infections
Pre MDC	MS-DRG
	Heart transplant or implant of heart assist system with MCC	001
	Heart transplant or implant of heart assist system without MCC	002
	ECMO or trach with mechanical ventilation 96+ hr or PDX except face, mouth, and neck with major OR	003
	Trach with mechanical ventilation 96+ hr or PDX except face, mouth, and neck without major OR	004
	Liver transplant with MCC or intestinal transplant	005
	Liver transplant without MCC	006
	Lung transplant	007
	Simultaneous pancreas/kidney transplant	008
	Pancreas transplant	010
	Tracheostomy for face, mouth, and neck diagnoses with MCC	011
	Tracheostomy for face, mouth, and neck diagnoses with CC	012
	Tracheostomy for face, mouth, and neck diagnoses without CC/MCC	013
	Allogeneic bone marrow transplant	014
	Autologous bone marrow transplant with CC/MCC	016
	Autologous bone marrow transplant without CC/MCC	017

Other factors influencing MS-DRG assignment include:

Patient’s sex

Patient’s discharge disposition or status

Secondary diagnoses and the presence or absence of complications or comorbidities (CC) or major complication or comorbidities (MCC)

Birth weight for neonates

Procedures used as proxy for CC/MCC

There are 751 MS-DRGs which group patients who have similar diagnoses, lengths of stay, and need for resources into a particular MS-DRG with a set payment rate. Specialized software called a grouper is used to assign the appropriate MS-DRG. Groupers are often included in the encoder or coding software that is used to assign diagnosis and procedure codes.

After completing a thorough review of the health record, the coder must determine the principal diagnosis on the basis of the UHDDS definition. The principal diagnosis is “the condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care.” Then, codes for all secondary diagnoses and procedures can be assigned. Grouper software is used to determine the appropriate MS-DRG.

Changes may be made to ICD-10-CM/PCS codes each year. The government also makes changes to the MS-DRG system annually on October 1. These changes are published in the Federal Register, which is the official daily publication for rules, proposed rules, and notices of U.S. federal agencies and organizations, as well as for Executive Orders and other Presidential documents. MS-DRG changes are first published as a proposed rule, and a comment period is generally provided for the public prior to publishing of the final rule. The conversion of the MS-DRGs to ICD-10-CM/PCS was completed, and the ICD-10 Definitions Manual was posted in October of 2009. A team of researchers, physicians, clinical coding experts, MS-DRG analysts, and software programmers were involved in this conversion project.

MS-DRG Optimization

Optimization is the process of striving to obtain optimal reimbursement or the highest possible payment to which the facility is legally entitled on the basis of coded data supported by documentation in the health record. It is often said that “If it is not documented, it was not done.” If services were performed and not documented, payment for these services may be denied. On the other hand, maximization is the manipulation of codes to receive maximum reimbursement without supporting documentation in the health record or with disregard for coding conventions, guidelines, and UHDDS definitions. Maximization is unethical and is addressed in the American Health Information Management Association (AHIMA) Standards of Ethical Coding, which can be found in Chapter 1.

Not all MS-DRGs are affected by the presence of a secondary diagnosis. It can be determined by the MS-DRG title whether the MS-DRG is affected by the absence or presence of a CC or MCC. A complication is a condition that arises during a patient’s hospitalization which may lead to increased resource use. A comorbidity is a preexisting condition (is present on admission) which may lead to increased resource use. The fact that a physician documents that a diagnosis is a complication during a patient’s stay does not necessarily mean that diagnosis will fit the definition of a complication in the MS-DRG assignment. A physician may also document that the patient had no complications during hospital stay, and an assigned secondary diagnosis may qualify as a CC or MCC for that particular MS-DRG.

Example

MS-DRG 193, Simple pneumonia and pleurisy with MCC, 1.4893

MS-DRG 194, Simple pneumonia and pleurisy with CC, 0.9996

MS-DRG 195, Simple pneumonia and pleurisy without MCC/CC, 0.7078

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Tags: ICD-10-CMPCS Coding Theory and Practice 2014 Edition

Jun 3, 2017 | Posted by admin in GENERAL SURGERY | Comments Off

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