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CodeMap® 9/12/08: The Terminology of Reimbursement CodeMap®-9/12/08: The Terminology of Reimbursement Archive

CodeMap® Compliance Briefing: 9/12/2008


Editor's Welcome:

As promised, this week's CodeMap Compliance Briefing will continue our examination of the terminology associated with Medicare coding and reimbursement. Last week, we provided definitions and accompanying explanations for several basic coding terms. This week, we will take a look at the vocabulary often associated with Medicare reimbursement systems. 

As many of our long term subscribers know, we publish a similar series of CodeMap Compliance Briefings towards the end of each year to help remind our readers of the definitions and implications of the many unique terms used in conjunction with federally funded health care programs. Hopefully, by the end of this briefing our subscribers will obtain a better understanding of such terms as prospective payment systems, fee-for-service payment systems, fee schedules, RBRVS, RVUs, OPPS, APCs, deductibles, and copayments. This briefing also includes updated guidance from previous years to help our subscribers understand how some of these terms continue to develop. As always, please email us your questions, concerns, and/or comments.

Sincerely,

Gregory Root, Esq.


The Terminology of Reimbursement

by: Gregory Root, Esq.

Introduction

Health Plans: In the United States, patients and providers may choose to participate in a wide array of private health plans including HMOs, PPOs, and many differing hybrids comprised of components of both traditional indemnity plans and managed care programs. However, this briefing will only examine the reimbursement systems utilized by the federal government in its administration of the Medicare and Medicaid programs. As far as diagnostic providers are concerned, federally funded health care programs typically are based on one of two types of reimbursement systems, prospective payment and fee-for-service.

Update: Medicare HMO plans are now called Medicare Advantage Programs. These programs are administered by private health insurance payers and often include the name of the insurer in the plan's title as well. Examples include Aetna Medicare Advantage, Humana Gold Plus HMO, Cigna Medicare Advantage, etc. These plans are paid a fixed amount per member per month by CMS.

Prospective Payment: Prospective payment systems typically determine reimbursement on some predetermined basis, such as the patient's diagnosis, other than the tests and/or services actually provided by the health care practitioner. By using a predetermined measure not associated with the services actually rendered, prospective payment systems encourage providers to use fewer tests and services. Those providers that do not efficiently deliver care are typically penalized by prospective payment systems. One example of a prospective payment system is Medicare Part A, which covers inpatient hospitalization costs for Medicare beneficiaries. Medicare prospectively reimburses hospitals for an inpatient's care based upon a Diagnosis Related Group or DRG. A set amount of reimbursement is associated with each DRG which depends primarily on the patient's condition and diagnosis.

Fee-for-Service: Health insurance plans or reimbursement systems that pay providers on the basis of a fixed fee for each health service provided to the patient are known as fee-for-service plans. Typically, a fee-for-service plan publishes a comprehensive listing of all fees, otherwise known as a Fee Schedule.

The Medicare Laboratory Fee Schedule contains a list of payable clinical laboratory tests and procedures along with a National Limitation Amount (NLA), and the individual payment amount for each state or locality. The NLA is the maximum amount that any Medicare Carrier or Medicare Administrative Contractor (MAC) will pay for any given CPT code. Each year, Medicare contractors publish revised fee schedules for their state or locality. For the most part, each state has its own Medicare Laboratory Fee Schedule.

Update: The Medicare Improvements for Patients and Providers Act of 2008 includes a 4.5% increase for the 2009 Medicare Laboratory Fee Schedule. This is the biggest increase since 1990.

The Medicare Physician Fee Schedule lists payments for all physician services, including surgical pathology and radiology services. The payment amount for any given CPT code is determined by the Relative Value Units (RVUs) assigned to the service or procedure. This payment system is referred to as the Resource Based Relative Value System (RBRVS). The payment amount is calculated by taking the total RVUs assigned to each CPT code and multiplying by Geographic Practice Cost Indices (GPCIs) to account for geographic cost differences such as wages and rent and a National Conversion Factor (NCF) (currently $38.087 per RVU). Thus, Physician fees vary not only by state but also by locality, for example, fees are different in Atlanta than in the rest of Georgia. Physician fees can be adjusted by changing either the RVU, GPCI or National Conversion Factor.

Update: The Medicare Improvements for Patients and Providers Act of 2008 includes a 1.1% increase for the 2009 Medicare Physician Fee Schedule.

Outpatient Prospective Payment Systems (OPPS): When laboratory tests or imaging studies are performed for hospital outpatients, the technical component of the service is paid under the Outpatient Prospective Payment System (OPPS). In this case, each CPT code is assigned to a Ambulatory Procedure Classification (APC) consisting of clinically similar services with similar resource requirements. A separate payment rate and patient co-payment is assigned to each APC. All services listed on the Medicare Laboratory Fee Schedule plus the professional component of services listed on the Medicare Physician Fee Schedule are paid separately.

Patient Obligations: As with most private health plans, Medicare requires certain patient obligations, such as an annual deductible and copayments. The annual deductible is the amount each Medicare beneficiary must pay each year before Medicare coverage begins. The deductible amount is typically applied by Medicare to the beneficiary's first claim(s) of the year. For most services, Medicare beneficiaries are also responsible for a 20% copayment. However, Medicare does not require a copayment for any tests and/or services listed on the Medicare Laboratory Fee Schedule.

Update: HIPAA prohibits providers from offering or providing remuneration to Medicare beneficiaries if the provider knows the remuneration will influence the beneficiary's selection of a particular provider for covered services. The OIG has always viewed the routine waiver of patient obligations as a violation of HIPAA. However, in a 2002 Special Advisory Bulletin, the OIG specifically states that non-routine, unadvertised waivers of copayments are not violations of HIPAA if the waivers are based upon the patient's financial needs or exhaustion of reasonable collection efforts. Also, the OIG states that paying a beneficiary's premium is a violation of HIPAA, regardless of financial need.




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07/24/2009: Health Care Reform and the Future
07/24/2009: Ultrasound Coding, Part 2
07/17/2009: New Information and Hospital Lab Direct Billing Rules
07/10/2009: Ultrasound Coding, Part 1
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06/17/2009: Documentation Requirements: Part 2
06/05/2009: NPI Issues
05/29/2009: Documentation Requirements
05/22/2009: Who Can Order Tests for Medicare Patients?
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4/24/2009: Diagnostic Test Orders
4/17/09: Comparative Effectiveness Studies
4/03/2009: Fluoroscopy Coding Part 2
4/03/09: Medicare Recovery Audit (RAC) Contractor Program
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03/13/09: The Terminology of Reimbursement
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02/27/2009: New ABN Form
Q2 NCD Updates
02/20/2009: Discounts for Financially Needy Patients
02/13/2009: The Terminology of Coding
2/06/09: In Vivo Lab Procedures
1/30/09: ICD-10 Implementation, Final Rule
1/23/09: 2009 Laboratory Fee Schedule
CodeMap Radiology Briefing: 01/14/2009
CodeMap Compliance Briefing: 01/14/2009
CodeMap Compliance Briefing: 12/19/08: Prostate Saturation Biopsies
12/19/2008: Year End Radiology Wrap-Up
NCD Q1 2009 Breaking News
12/05/2008: Anti-Markup Provisions
12/2/2008: Interventional Radiology Coding Conclusion 2
11/25/2008: Interventional Radiology Coding Conclusion
11/21/2008: Civil Monetary Penalties
11/12/08: Clinical Laboratory Interpretation Services
11/07/2008: Interventional Radiology Coding 3
10/29/08: MUE Update
10/24/2008: Interventional Radiology Coding 2
10/15/08: The NCD Update Process
10/10/2008: Interventional Radiology Coding 1
10/08/2008: 2009 Payment Recommendations
10/01/08: Two Issues Resolved
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9/12/08: The Terminology of Reimbursement
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8/22/08: Recent Subscriber Questions
08/08/2008: New PSA Screening Criteria
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7/17/2008: Medicare Improvements Act
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05/30/2008 Physician Signature Policy for Lab Claims
05/23/2008: Medicare Payment Systems for Lab Tests
05/09/2008: HCPCS Coding System
05/02/2008: Fecal Occult Blood Tests
04/25/2008 Routine Monitoring vs. Diagnostic Glucose Testing
04/11/2008: Subscriber Questions
04/04/2008: Relying on Guidance
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03/14/2008: New ABN Form
02/22/08: Standing Orders
02/15/2008: New Metabolic Panels
2/8/2008: Diagnosis Coding Rules for Labs
02/01/2008: Using Unlisted CPT Codes
01/18/2008: Home PT/INR Testing and Monitoring
01/11/2008: Significant Changes to 2008 Physician Fee Schedule
CodeMap Compliance Briefing: 01/03/2008: Annual Compliance Audits
CodeMap Compliance Briefing: 12/14/07: 2008 PFS: New Direct Billing Provisions
12/07/07: Reconsideration of Medicare Payment for New Lab Codes
11/30/07 - Changes in Pathology Reimbursement for 2008
11/16/2007 Medical Necessity Data Files
11/9/2007: Direct Billing Rules for Hospital Laboratories
11/2/07: Payment Jurisdiction for Referred Lab Tests
10/19/07: OIG Work Plan 2008
10/12/07: Medicare Coverage of Hospital-Acquired Conditions
9/28/2007: Medicare Reimbursement for 2008 Lab Codes
9/21/07: Coding and Reimbursement for MRSA Tests
9/14/07: Coding Pap Smears
9/7/07: Date of Service Rules
8/24/07: TeleConference Tools
CodeMap Compliance Briefing: 8/17/07: Medicare Claims Processing Rules
8/10/07: Procedure Code Modifiers
7/27/07 Billing Medicare for Peripheral Blood Smear Interpretations
7/20/07: 2008 ICD-9 Code Changes
7/13/07: New 2008 Laboratory CPT Codes
6/22/07: Excessive Charges to Medicare
6/15/07: Compliance Training
6/08/07: Glucose Testing for Hospital Patients
6/01/07: Reimbursement for Unlited Procedures
5/11/07: Molecular Diagnostic Codes and Reimbursement II
5/4/07: Molecular Diagnostic Codes and Reimbursement
04/20/2007: Medicare Coverage Vocabulary
04/13/2007: Coding Vocabulary
03/30/2007: Reimbursement Vocabulary
03/23/07: Compliance Vocabulary
3/16/07: Medically Unlikely Edits (MUE) Implementation
3/2/07: The Physician Quality Reporting Initiative (PQRI)
CodeMap Compliance Briefing: 2/23/07: New Anticoagulant Management Codes
2/09/07: Glycosylated Hemoglobin (A1c) Test Codes
02/02/2007 National Provider Identifiers
CodeMap Compliance Briefing: 1/26/07: The Deficit Reduction Act
CodeMap Compliance Briefing: 1/19/07: The Civil False Claims Act
12/19/06 Medically Unlikely Edits (MUEs)
12/11/06 - 2007 Medicare Laboratory Fee Schedule
CodeMap Compliance Briefing: 12/1/06: Category III Codes
11/17/2006 2007 Radiology CPT Codes
11/10/06 New and Revised CPT Codes for Laboratory and Pathology Procedures
11/03/06 Logical Observation Identifier Names and Codes
10/20/06 Dealing with Medicare Overpayments 
10/13/06 Stark II Issues, Part 2
10/6/06: Stark II Issues, Part 1
09/29/2006 Medical Necessity Updates
09/15/06: Medicare Coverage of PSA Testing
9/8/06 Public Consultation on Medicare Payment for Lab Tests
08/25/06: Point of Care Hemoglobin A1c Testing
08/21/06 Subscriber Questions
08/11/06 CMS Awards First A/B MAC Contract
7/21/06 Medicare Coding Vocabulary
7/14/06 Setting Reimbursement Amounts for New 2007 Codes
07/07/06: New 2007 Laboratory CPT Codes
06/09/2006 Competitive Bidding III
06/02/2006 Competitive Bidding II
05/26/2006 Competitive Bidding I
05/12/2006 Briefing: ABN Update
CodeMap Compliance Briefing: 5/5/06: Subscriber Questions
04/28/2006: Billing for Purchased Interpretations
CodeMap Compliance Briefing 4/21/06
03/31/2006: Physician Voluntary Reporting System
03/24/06 Medicare Organization/ Administration
03/17/2006: Compliance Disclosure Programs
03/10/06: Automated Test Coding and Reimbursement
02/24/2006 Pay for Performance
02/17/2006: Inherent Reasonableness
2/10/06: Microarray Codes
02/03/2006 Refresher Course: Compliance Programs
01/20/2006 Refesher Course: Medicare Reimbursement
01/13/06: Laboratory Phlebotomists in Physician Offices
CodeMap Compliance Briefing: 1/06/06 2006 Federal Budget
CodeMap Compliance Briefing: 12/16/05: Lipid Codes
CodeMap Compliance Briefing: 12/9/05: Important Year End Dates
12/02/05 Fecal Occult Blood Tests
11/18/05 Employee Compliance Training
11/04/2005 New CPT Codes for Radiology
Compliance Policy Manual
10/21/2005: New CPT Codes for Lab and Pathology
CodeMap Compliance Briefing: 10/14/05: Providing Regulatory Information to Customers
CodeMap Compliance Briefing: 10/07/05: Employee Screening
CodeMap Compliance Briefing: 9/29/05: Waived Testing
CodeMap Compliance Briefing: 09/23/05: Drafting Compliance Policies
09/16/2005 2006 Lab Codes and Proposed Payments
09/09/2005: LIS and Medical Necessity
08/19/2005: Lab Tests on the 2006 Physician Fee Schedule
08/05/2005 Coding Bone Marrow and Bone Biopsies
CodeMap Compliance Briefing 07/22/05: Coding Antibody and Antigen Assays II
07/08/2005 Coding Antibody and Antigen Assays: I
06/24/2005 Resubmitting Denied Medicare Claims
06/17/2005 Diagnosis Coding Rules-Part 2
05/20/05 Diagnosis Coding Rules Part 1
05/13/2005 Reflex Manual WBC Differentials
05/06/2005 Incident To Services
04/29/2005 CMS Manuals
04/22/2005 Reflex Testing
04/15/2005 Custom Panels
04/08/2005 Medicare Administrative Contractors (MACs)
04/01/2005 Place of Service (POS) Codes
03/18/2005 Subscriber Questions
03/11/2005 Medically Unbelieveable Edits
03/04/2005: Final Hospital Compliance Guidance 4
02/25/2005: Final Hospital Compliance Guidance 3
02/18/2005 Final Hospital Compliance Guidance 2
02/11/2005 Final Hospital Compliance Guidance
02/04/2005 Final Diabetes Screening Rules
01/28/2005 Medicare Appeals II
01/21/2005: Medicare Appeals I
01/14/2005 Providing Services to SNFs
01/07/2005 Medicare Errors
12/17/2004 Year End Subscriber Questions
12/10/2004 Coding Flow Cytometry Services
12/08/2004 Alert: 2005 CodeMap Manual Production Schedule
12/03/2004 Diabetes Screening Tests
11/22/2004 Announcing CodeMap Data Files
11/19/2004 Flow Cytometry Coding and Reimbursement
11/12/2004 New Venipuncture Rules
11/05/2004 Medicare Cardiovascular Screening Benefits
10/29/2004 Subscriber Questions
10/22/2004 Genetic Testing Modifiers
10/15/2004 Coding Glucose Tests
10/08/2004 Shared Laboratories
10/01/2004 Stark II and POLs
09/24/2004 New CPT Codes for Pathology Services
09/17/2004 New CPT Codes for Lab Services
08/27/2004 SNF Consolidated Billing Exceptions
08/20/2004 The OIG Exclusion Program
08/13/2004 Medicare Initial Preventive Physical Exam
08/06/2004 New Medicare Coverage for Screening Tests
07/30/2004 Discounts to Financially Needy Patients
07/23/2004 Date of Service for Lab Tests
07/16/2004 New CPT Codes for 2005
06/25/2004 Updates to NCDs and LMRPs
06/18/2004 New Compliance Program Guidance for Hospitals II
06/11/2004 New Compliance Program Guidance for Hospitals II
06/04/2004 Annual Physician Notices
05/21/2004 Screening Pap Smear Coverge
05/14/2004 Transfusion Medicine Codes II
05/07/2004 Transfusion Medicine Codes I
04/23/2004 Anti-Mark-Up Controversy
04/16/2004 Subscriber Questions
04/09/2004 Genetic Testing Codes II
04/02/2004 Genetic Testing Codes I
03/26/2004 Laboratory Marketing Practices III
03/19/2004 Laboratory Marketing Practices II
03/12/2004 Laboratory Marketing Practices I
03/05/2004 Medicare Payment for CLIA Waived Tests
02/27/2004 Medicare Payment for ReferredTests
02/20/2004 Grace Period for CPT Codes Eliminated
02/14/2004 CCI Edits Associated with New Lab and Pathology Codes
02/06/2004 CCI Edits Associated with New Radiology Codes
01/30/2004 Venipunctures
01/23/2004 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
01/16/2004 Travel Allowances
12/19/2003 Medicare Modernization Act
12/12/2003 Medicare Reform Bill Part 2
12/05/2003 Medicare Reform Bill Part 1
11/21/2003 New HCPCS Codes for CBCs without Platelets
11/07/2003 GA, GY and GZ Modifiers
10/31/2003 Specimen Collection
10/24/2003 Coding Qualitative Drugs-of-Abuse Tests
10/17/2003 The OIG's Work Plan, Medicare CDs, Recent Enforcement Actions.
10/10/2003 ESRD Composite Rate Lab Tests
10/03/2003 End Stage Renal Disease (ESRD) Reimbursement for Automated Tests
09/26/2003 Proposed Rules from the OIG
09/12/2003 Category III (Tracking) CPT Codes
09/05/2003 New Proposed Rules for Flow Cytometry
08/15/2003 Thyroid Testing
08/01/2003 CMS Lab Reimbursement Meeting
07/25/2003 NCD Misconceptions
07/18/2003 The -GZ Modifier
07/11/2003 Screening Mammogram Codes
06/27/2003 Correct Coding Edits II
06/20/2003 Correct Coding Edits I
06/13/2003 Diagnosis Coding Rules II
06/06/2003 Diagnosis Coding Rules I
05/23/2003 Revised Medicare Appeals Provisions II
05/16/2003 Revised Medicare Appeals Provisions I
05/09/2003 Business Associates Agreements
05/02/2003 Pathologist Interpretation of Clinical Lab Tests
04/25/2003 TC Billing of Pathology Services
04/18/2003 Medicare Reimbursement for Pathology Services
04/11/2003 How to Respond to a Search Warrant
03/28/2003 How to Respond to Subpoenas
03/21/2003 How to Respond to Investigators
03/14/2003 Mandatory Claim Submission
03/07/2003: Who Can Order Diagnostic Tests?
02/28/2003 Changes in 2003 Physician Fee Schedule
02/21/2003 Medical Necessity Requirements for Chemistry Panels, Part II
02/14/2003 Medical Necessity Requirements for Chemistry Panels I
02/07/2003: ABNs and Client Cooperation
01/31/2003: Patient Ordered and/or Performed Testing
01/24/2003: The Beneficiary Anti-Kickback Statute
01/17/2003: Significant Changes in 2003 Medicare Reimbursement
01/10/2003: 2003 Medicare Lab and Physician Fee Schedules
12/13/2002: More National Coverage Policies
12/06/2002: How Medicare Sets Fees for New CPT Codes
11/22/2002: Critical Year End Dates
11/15/2002: 2003 Medicare Laboratory Fee Schedule
11/08/2002: Stark Self-Referral Prohibitions
11/01/2002: Using Modifiers -59 and -91
10/25/2002: Introduction to Privacy Regulations
10/18/2002: New Codes for Obstetrical Ultrasound
10/11/2002: National Coverage Determinations (NCDs)
10/04/2002: Implementing a Radiology Compliance Program
09/27/2002: New 2003 Lab CPT Codes
09/20/2002: Automated Order Entry
09/13/2002: National Coverage Policy for Lipids
09/06/2002: The Anti-Kickback Statute
08/23/2002: Using the New ABN Forms
08/16/2002: Advance Beneficiary Notices
08/09/2002: Medicare Coverage for PET Scans
08/02/2002: Reflex Testing
07/26/2002: 2003 Hematology CPT Code Changes II
07/19/2002: 2003 Hematology CPT Code Changes I
07/12/2002: Direct Billing Rules II
06/28/2002: Direct Billing Rules I
06/21/2002: Medicare Reimbursement for Lipid Panels
06/14/2002: Bone Density Studies
06/07/2002: CLIA Waived Testing Rules
05/31/2002: Blood Draws and the Anti-kickback Statute
National Coverage Determination (NCD) Updates
05/01/2002 - CodeMap® Quarterly Reports, Volume I, No. 2
01/15/2002 - CodeMap® Quarterly Reports, Volume I, No. 1