Reimbursement Methodologies



Reimbursement Methodologies



Learning Objectives



1. Describe the complexities of MS-DRGs and hospital reimbursement


2. Explain the difference between optimization and maximization


3. Identify key elements of a UB-04


4. Describe the elements and purpose of the charge description master (CDM)


5. Explain medical necessity


6. Calculate case-mix index (CMI)


7. Explain the role of Quality Improvement Organizations (QIOs)


8. Explain the purpose of PEPPER


9. Explain the purpose of Recovery Audit Contract (RAC)


10. Describe the purpose of a clinical documentation improvement program



Abbreviations/Acronyms














































Introduction to Reimbursement


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:



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 healthcare 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.







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 PPS 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-9-CM codes are used to determine the 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.


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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
PreMDC Heart Transplant or Implant of Heart Assist System MS-DRG 001/002
  ECMO or Trach with Mechanical Ventilation 96+ Hr or PDX Except Face, Mouth, and Neck with Major OR MS-DRG 003
  Trach with Mechanical Ventilation 96+ Hr or PDX Except Face, Mouth, and Neck without Major OR MS-DRG 004
  Liver Transplant MS-DRG 005/006
  Lung Transplant MS-DRG 007
  Simultaneous Pancreas/Kidney Transplant MS-DRG 008
  Pancreas Transplant MS-DRG 010
  Tracheostomy for Face, Mouth, and Neck Diagnoses MS-DRG 011/012/013
  Allogeneic Bone Marrow Transplant MS-DRG 014
  Autologous Bone Marrow Transplant with cc/mcc MS-DRG 016
  Autologous Bone Marrow Transplant without cc/mcc MS-DRG 017

Related posts:

  1. Diseases of the Digestive System: (ICD-9-CM Chapter 9, Codes 520-579, and ICD-10-CM Chapter 11, Codes K00-K95)
  2. Diseases of the Blood and Blood-Forming Organs: (ICD-9-CM Chapter 4, Codes 280-289, and ICD-10-CM Chapter 3, Codes D50-D89)
  3. Diseases of the Circulatory System: (ICD-9-CM Chapter 7, Codes 390-459, and ICD-10-CM Chapter 9, Codes I00-I99)
  4. Introduction to ICD-10-PCS

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Jun 14, 2017 | Posted by in GENERAL SURGERY | Comments Off on Reimbursement Methodologies

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