ch. 7: reimbursement methodologies

relative value units (RVUs)

* physician work (RVUw) *practice expenses (RVUpe) *malpractice costs (RVUm) Geographic practice cost indices: *physician work (GPCIw) *practice expenses (GPCIpe) *Malpractice costs (GPCIm)

case mix

1) a description of a patient population based on any number of specific characteristics, including age, gender, type of insurance, diagnosis, risk factors, treatment received, and resources used 2) the distribution of patients into categories reflecting differences in severity of illness or resource consumption

complication

1) a medical condition that arises during an inpatient hospitalization (for example a postoperative wound infection) 2) condition that arises during the hospital stay that prolongs the length of stay at least one day in approximately 75 percent of the cases

comorbidity

1) a medical condition that coexists with the primary cause for hospitalization and affects the patient's treatment and length of stay 2) pre-existing condition that, because of it prescence with a specific diagnosis, causes an increase in length of stay by a least one day in approximately 75% of the cases

diagnosis related group (DRG)

1) a unit of case mix classification adopted by the federal governemnt and some other payers as a prospective payment mechanism for hospital inpatients in which diseases are placed into groups because related diseases of healthcare resources and incur similiar amounts one of more than 500 diagnostic classifications in which cases demonstrate similar resource consumption and LOS patterns; under a prospective payment system (PPS), hospitals a re paid a set fee for treating patients in a single DRG category, regardless of the actual cost of care for the individual 2) a classification system that groups patients according to diagnosis, type of treatment, age, and other relevant criteria

managed care

1) payment method in which the 3rd party payer has implemented some provisions to control the costs of healthcare while maintaining quality care 2) systematic merger of clinical, financial, and administrative processes to manage access, cost, and quality of healthcare

primary care physician (PCP)

1)physician who provides, supervises, and coordinates the healthcare of a member and who manages referrals to other healthcare providers and utilization of healthcare servicers both inside and outside a managed care plan, also a physician who makes the initial diagnosis of patient's medical condition

hospital acquired conditions (HAC)

CMS identified eight hospital acquired conditions (not present on admission (POA)) as "reasonably preventable" and hospitals will not receive additional payment for cases in which one of the eight selected conditions was not present on admission; the eight originally selected conditions include: foreign object retained after surgery, air embolism, blood incompatibility, stage III and IV pressure ulcers, falls and trauma, catheter associated UTI, vascular catheter associated infection, and surgical site infection, and mediastinitis after coronary artery

resource utilization groups version IV (RUG-IV)

a case mix adjusted resident classification system based on the MDS used in skilled nursing facilities for resident assessments; the RUG-IV classification system uses resident assessment data from the MDS collected by the SNFs to assign residents to one of 66 groups

home health resource group (HHRG)

a classification system for the home health prospective payment system (HHPPS) derived from the data elements in the outcome assessment information set (OASIS) with 80 home health episoderates established to support the prospective reimbursement of covered home care and rehabilitation services provided to Medicare rehabiliation during 60 day episodes of care; a six character alphanumeric code is used to represent a severity level in three domains ie. the classification of a patient into 1 of 153 HHRGs is based on OASIS data, which establishes the severity of clinical and functional needs and services utilized

inpatient rehabilitation validation and entry system (IRVEN)

a computerized data entry system used by inpatient rehabilitation facilities. Captures data for the IRF Patient Assessment Instrument (IRF PAI) and supports electronic submission on the IRF PAI. Also allows data import and export in the standard record format of the CMS

present on admission (POA)

a condition present at the time of inpatient admission

principal diagnosis

a disease or condition that was present on admission, was the principal reason for admission, and received treatment or evaluation during the hospital stay or visit or the reason established after the study to be chiefly responsible for occasioning the admission of the patient to the hospital for care

medicare fee schedule(MFS)

a feature of the resource-based relative value system that includes a complete list of the payments medicare makes to physicians and other providers

global payment

a form of reimbursement used for radiological and other procedures that combines the professional and technical components of the procedures and disperses payment as lump sums to be distributed between the physician and the healthcare facility

preferred provider organization (PPO)

a managed care contract coordinated care plan that: (a) has a network of providers that have agreed to a contractually specified reimbursement for covered benefits with the organ. offering the plan (b) provides for reimbursement for all covered benefits regardless of whether the benefits are provided with the network of providers and (c) is offered by an organ. that is not licenses or organized under state law as an HMO

national conversion factor (CF)

a mathematical factor used to convert relative units into monetary payments for services provided to medicare beneficiaries

fee for service reimbursement

a method of reimbursement through which providers retrospectively receive payment based on either billed charges for services provided or on annually updated fee schedules

packaging

a payment under the medicare outpatient prospective payment system that includes items such as anesthesia, supplies, certain drugs, and the use of recovery and observation rooms

skilled nursing facility prospective payment system (SNF PPS)

a per diem reimbursement system implemented for costs (routine, ancillary, and capital) associated with covered SNF services furnished to medicare part A beneficiaries

medicare administrative contractor (MAC)

a private healthcare insurer that has been awarded a geographic jurisdiction to process medicare part a and b medical claims for durable medical equipment (DME) claims for medicare fee for service beneficiaries

children's health insurance program (CHIP)

a program initiated by the BBA that allows states to expand existing insurance programs to cover children up to age 19 recipients in all states must meet three eligibility criteria: *they must come from low-income families *they must be otherwise ineligible for medicaid *they must be uninsured services offered: *inpatient hospital services *outpatient hospital services *physicians surgical and medical services *lab and x-ray services *well-baby and child care services *age-appropriate immunization

home health agency (HHA)

a program or organ. that provides a blend of home based medical and social services to homebound patients and their families for the purpose of promoting, maintaining, or restoring health or of minimizing the effets of illness, injury, or disability; these services include skilled nursing care, PT, OT, speech therapy, and personal care by home health aides

medical home

a program to provide comprehensive primary care that partners physicians with the patient and their family to allow better access to healthcare and improved outcomes

discounting

a reduction form the full rate of payment. this can be the result of a fee for service contract, multiple procedures, or due to third party payer guidelines

claim

a request for payment for services, benefits, or costs by a hospital, physician or other provider that is submitted for reimbursement to the healthcare insurance plan by either the insured party or by the provider

resource based relative value scale (RBRVS)

a scale of national uniform relative values for all physicians services. the realitive value of each service must be the sum of relative value units representing the physician's work, practice expenses net of malpractice insurance expenses, and the cost of professional liability insurance

outpatient code editor (OCE)

a software program linked to the Correct Coding Initiative that applies a set of logical rules to determine whether various combinations of codes are correct and appropriately represent the services provided

capitation

a specified amount of money paid to a health plan or doctor; this used to cover the cost of a health plan member's healthcare services for a certain length of time

outcome and assessment information set (OASIS)

a standard core assessment data tool developed to measure the outcomes of adult patients receiving home health services under the medicare and medicaid programs; forms the basis for measuring patient outcomes for the purpose of outcome-based quality improvement (OBQI)

explanation of benefits (EOB)

a statement issued to the insured and the health care provider by an insurer to explain the services provided, amounts billed, and payments made by a health plan

medicare summary notice (MSN)

a summary sent to the patient from medicare that summarizes all services provided over a period of time with an explanation of benefits provided

staff model HMO

a type of health maintenance that employs physicians to provide healthcare services to subscribers; is a closed pannel arrangement

group model HMO

a type of health plan in which an HMO contracts with an independent multispecialty physician group to provide medical services to members of the plan; group model HMO are closed panel arrangement in other words, the physician are not allowed to treat patients from other managed care plans. Enrollees of group model HMOs are required to seek services from the designated physician group

point of service (POS) plan

a type of managed care plan in which enrollees encouraged to select healthcare providers from a network of providers under contract with the plan but are also allowed to select providers outside the network and pay a larger share of the cost

retrospective payment system

a type of reimbursement system where the exact amount of the payment is determined after the service has been delivered

prospective payment system (PPS)

a type of reimbursement system where the exact amount of the payment is determined before the service is delivered; the federal medicare program uses this

medicare advantage plan (part c)

a type of supplemental plan sometimes , a type of medicare health plan offered by a private company that contracts with medicare to provide the beneficiary with all Part A and B benefits. These plans include HMO's, Preferred Provider Organ. (PPO), Private fee for service plans, Special Needs Plans, HMO point of service, and Medical savings account (MSA). Enrollees in medicare advantage plans have their services covered through the plan are not paid for under original medicare

home assessment validation and entry (HAVEN)

a ype of data entry software used to collect outcome and assessment information set (OASIS) data is then transmit them to state databases; the data entry software imprts and exports data in standard OASIS record format; maintains agency, patient, and employee information; maintains data integrity through rigorous edit checks; and provides comprehensive online help

cost outlier adjustment

additional reimbursement for certain high cost home care cases based on the loss sharing ratio of costs in excess of a threshold amount for each home health resource group; the threshold is the 60 day episode payment plus a fixed dollar loss that is constant across the home health resource groups (HHRGs)

managed care organ. (MCO)

also called coordinated care organ., a type of healthcare organ. that delivers medical care and manages all aspects of the care or the payment for care by limiting providers of care, discounting payment to providers of care, or limiting access to care

premium

amount of money that a policyholder or certificate holder must periodically pay an insurer in return for helathcare coverage

administrative services only (ASO) contract

an agreement between an employer and an insurance organ. to administer the employer's self insured health plan

payment status indicator (PSI)

an alphabetic code assigned to CPT/HCPCS codes to indicate whether a service or procedure is to be reimbursed under the medicare outpatient prospective payment system (OPPS) Notable payment status indicators: A=fee schedule payment F= reasonable cost payment C= procedure performed on an inpatient basis only G= pass through payment K= APC payment S= APC payment T= APC payment

low utilization payment adjustment (LUPA)

an alternative (reduced) payment made to home health agencies instead of the home health resource group reimbursement rate when a patient receives fewer than four home care visits during a 60 day episode

remittance advice (RA)

an explanation of payments (for examples claim denials) made by third party payers

geographic practice cost index (GPCI)

an index developed by the CMS to measure the differences in resource costs among fee schedule areas compared to the national average in the three components of the relative value unit (RVU): physician work, practice expenses, and malpractice coverage; separate GPCI exist for each element of the RVU and are used to adjust the RVUs, which are national averages, to reflect local costs

group practice without walls (GPWW)

an integrated delivery system (IDS) model, a type of managed care contract that allows physicians to maintain their own offices and share administrative services

physician-hospital organ. (PHO)

an integrated delivery system (IDS) model, an IDS formed by hospitals and physicians (usually through managed care contracts) that allows for cooperative activity but permits participants to retain some level of independence

integrated provider organ. (IPO)

an integrated delivery system (IDS) model, an organ. that manges the delivery of healthcare services provided by hospitals, physicians (employees of the IPO), and other healthcare organ. (for example nursing facilites)

medical foundation

an integrated delivery system (IDS) model, multipurpose nonprofit service organ. for physicians and other healthcare providers at the local and county level

management service organ. (MSO)

an integrated delivery system (IDS) model, under diagnosis related groups (DRGs), one of 25 categories based on single or multiple organ systems into which all diseases and disorders relating to that system are classified

independent practice association (IPA)

an open panel health maintenance organ. that provides contract healthcare services to subscribers through independent physicians who treats patients in their own offices ; the HMO reimburses the IPA on a capitated basis; the IPA may reimburse the physicians on a fee for service or a capitated basis

medically needy option

an option in the medicaid program that allows states to extend eligibility to persons who would be eligible for Medicaid under one of the mandatory or optional groups but whose income and resources fall above the eligibility level set by their state

employer based self insurance

an umbrella term used to describe health plans that are funded directly by employers to provide coverage for their employees exclusively in which employees' medical expenses and retain control over the funds but bear the risk of paying claims greater than their estimate

categorically needy eligibility group

categories of individuals to whom states must provide coverage under the federal medicaid program

global surgery payment

covers all healthcare services entailed in planning and completing a specific surgical procedure; every element of the procedure from the treatment decision through normal postoperative patient care is covered by a single bundled payment

medicare part d

covers prescription drugs

resident assessment validation an entry (RAVEN)

data entry software that imports and exports data in standard MDS record format; maintains facility, resident, and employee information; enforces data integrity via rigorous edit checks; and provides comprehensive online help

minimum data set 3.0 (MDS)

document created when OBRA required CMS to develop an assessment instrument to standardize the collection of SNF patient data; the MDS serves as the core of defined and categorized patient assessment data that serves as the basis for documentation and reimbursement in an SNF

health maintenance organ. (HMO)

entity that combines the provision of healthcare insurance and the delivery of healthcare services characterized by 1) an organized healthcare delivery system to a geographic area 2) a set of basic and supplemental health maintenance and treatment services 3) voluntarily enrolled members, and 4) predetermined fixed periodic prepayments for members' coverage

cost outlier

exceptionally high costs associated with inpatient care when compared with other cases in the same diagnosis related group

case mix groups (CMG) relative weight

factors that account for the variance in cost per discharge and resource utilization among case mix groups

omnibus budget reconciliation act (OBRA)

federal legislation passed in 1987 that required the health care financing administration (renamed CMS) to develop an assessment instrument (resident assessment instrument (RAI)) to standardize the collection of patient data from skilled nursing facilites

medicare part b

fee for service, to help pay for physicians services, medical services, and medical surgical supplies not covered by the hospitalization plan (part A) covers two types of services: *medically necessary services: services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice *preventive services: health care to prevent ilnness (like the flu) or detect it at an early stage, when treatment is most likely to work best covers: * physician and surgeons services *clinical research *ambulance services *durable medical equipment (DME) *mental health (inpatient, outpatient, partial hospitalization) *limited outpatient prescription drugs *ambulatory surgery center (ASC) services in Medicare approved facilities *most physical and occupational therapy and speech pathology services * lab tests, x-rays, and other diagnostic radiology services *home healthcare not provided under part A *radiation therapy, renal dialysis and kidney transplants, and heart and liver transplants under certain limited conditions

medicare part a

generally provided free of charge to individuals age 65 and over who are eligible for social Security or Railroad Retirement benefits; provides hospitalization insurance; each benefit period begins the day the Medicare beneficiary is admitted to the hospital and ends when he or she has not been hospitalized for a period of 60 consecutive days. Inpatient hospital care is usually limited to 90 days during each benefit period. There is no limit to the number of benefit periods covered by Medicare hospital insurance during a beneficiary lifetime Services covered: *inpatient care in a hospital *SNF care *nursing home care (inpatient care in a SNF that's not custodial or long term care) *hospice care *home health care

worker compensation

insurance that employers are required to have to cover employees who get sick or injured on the job

balanced budget refinement act of 1999 (BBRA)

mandated the establishment of a per-discharge, DRG-based PPS for longer term care hospitals

episode of care reimbursement

method that issues lump sum payments to providers to compensate them for all the healthcare services delivered to a patient for a specific illness or over a specific period of time

Medicare Severity Long Term Care Diagnosis Realated Group (MS-LTC-DRG)

patients are classified into distinct diagnosis groups based on clinical charateristics and expected resource use. These groups a re based on the current inpatient MS-DRG. The payment system includes the following three primary elements: 1) patient classification into a MS-LTC-DRG weight 2) relative weight of the MS-LTC-DRG, as the weight reflect the variation in cost per discharge as they take into account the utilization for each diagnosis 3) federal payment rate. Payment is made at a predetermined per discharge amount for each MS-LTC-DRG

Medigap or supplemental insurance

private supplemental health insurance that pays, within limits, most of the healthcare service charges not covered by medicare part A or B

coordination of benefits (COB) transaction

process for determining the respective responsibilities of two or more health plan that have some financial responsibility for a medical claim

network model HMO

program in which participating HMOs contract for services with one or more multispecialty group practices

programs of all inclusive care for the elderly (PACE)

provides an alternative to institutional care for individuals 55 years old or older who require a level of care usually provided at nursing facilities; it offers and manages all of the health, medical, and social services needed by a beneficiary and mobilizes other services, as needed, to provide preventive, rehabilitative, curative, and supportive care

respite care

temporary or periodic care provided in a nursing home, assisted living residence, or other type of long term care program so that the usual caregiver can rest or take some time off

case mix groups (CMG)

the 97 function related groups into which inpatient rehabilitation facility discharges are classified on the basis of the patient's level of impairment, age, comorbidities, functional ability, and other factors

case mix index

the average relative weight of all cases treated at a given facility or by a given physician, which reflects the resource intensity or clinical severity of a specific group in relation to the other groups in the classification system; calculated by dividing the sum of the weights of diagnosis related groups for patients discharged during a given period by the total number of patients discharged

indian health services (IHS)

the federal agency within the Department of Health and Human Services that is responsible for providing federal helathcare services to American Indian and Alaska natives

civilian health and medical program veterans administration (CHAMPVA)

the federal healthcare benefits program for dependents (spouse or widow(er) and children) of veterans rated by the veteran's administration (VA) as having a total and permanent disability, for survivors of veterans who died from VA rated service-connected conditions or who was rated permanently and totally disabled at the time of death from a VA rated service-connected condition, and for survivors of persons who died in the line of duty *difference between tricare and champva: tricare is for individuals currently serving in the armed froces, and champva is for retired military personnel

tax equity and fiscal responsibility act of 1982 (TERFA)

the federal legislation that modified medicare's retrospective reimbursement system for inpatient hospital stay requiring implementation of diagnosis related groups and the acute care prospective payment system

outpatient prospective payment system (OPPS)

the medicare prospective payment system used for hospital based outpatient services and procedures that is predicated on the assignment of ambulatory payment classification

acute care prospective payment system

the medicare reimbursement methodology sysytem referred to as the inpatient prospective payment system (IPS). Hospital providers subject to the IPPS utilize the medicare severity diagnosis related groups (MS-DRG) classification system which determines payment rates

ambulatory surgery center (ASC)

under Medicare, an outpatient surgical facility that has its own national identifier; is a separate entity with respect to its licensure, accreditation, governance, professional supervision, administrative functions, clinical services, record keeping, and financial and accounting systems

major diagnostic category

under diagnosis related groups (DRGs), one of 25 categories based on single or multiple organ system into which all diseases and disorders relating to that system are classified

medicare severity diagnosis related groups (MS-DRGs)

updated revision to the DRG system, better accounts for severity of illness and resource consumption