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©2010 Coventry Health Care. All rights reserved. Proprietary – Do not copy, distribute or disclose without permission of Coventry Health Care. Provided.

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Presentation on theme: "©2010 Coventry Health Care. All rights reserved. Proprietary – Do not copy, distribute or disclose without permission of Coventry Health Care. Provided."— Presentation transcript:

1 ©2010 Coventry Health Care. All rights reserved. Proprietary – Do not copy, distribute or disclose without permission of Coventry Health Care. Provided by Coventry Health Care® California Medical Bill Reviewer Re-Certification Unit 4: Hospital Guidelines Module 2: Outpatient/ ASC Guidelines

2 2 CA Regulation Refresher Training March 2010 In this module, you will review current hospital outpatient billing practices, how fees are determined and how services are billed. Lets start by re- examining what outpatient services are and how injured workers are treated as outpatients. Overview Outpatient/ASC Guidelines… What Outpatient/ACS Services Are Where Outpatients are Treated Billing Terminology How Fees are Determined Billing Examples Special Circumstances Summary What Outpatient/ACS Services Are Where Outpatients are Treated

3 3 CA Regulation Refresher Training March 2010 Place holder What are outpatient services? Outpatient services are rendered to patients for the purpose of administering medical treatment that does not require an overnight stay at a hospital. An outpatient receives health care services without being admitted to a hospital. Instead, they are registered as an outpatient in hospital records. Examples of services injured workers might be treated for as an outpatient are… Broken bones Minor burns Wounds

4 4 CA Regulation Refresher Training March 2010 Where are outpatients treated? Outpatient services are performed at hospitals and Ambulatory Surgery Centers (ASCs). In the ASC/outpatient environment, staffing outside the immediate procedural location is minimal, which helps to reduce costs.

5 5 CA Regulation Refresher Training March 2010 Hospital Outpatient Services By definition, hospital outpatient services are furnished by any hospital defined in the California Health and Safety Code Section… or a hospital certified to participate in the Medicare program to treat a patient who has not been admitted as an inpatient, but who is registered as an outpatient in the records of the hospital.

6 6 CA Regulation Refresher Training March 2010 Ambulatory Surgery Centers An ASC on the other hand is any surgical clinic or ambulatory surgical center that is certified to participate in the Medicare program or any surgical clinic accredited by an approved accrediting agency.

7 7 CA Regulation Refresher Training March 2010 Limitations Certain limitations exist to distinguish outpatient from inpatient services and to ensure patient safety during procedures. Only hospitals can charge for emergency room visits. ASCs and hospital outpatient departments are also prohibited from performing extensive surgeries designated in the Federal Register by a C status, like craniotomies, liver transplants, hip fracture repairs, and other inpatient procedures. Only hospitals and ASCs may charge a facility fee for surgical services provided on an outpatient basis.

8 8 CA Regulation Refresher Training March 2010 Limitations In these settings, a patient is guaranteed… Anesthesia services, A sterile environment, and Emergency care …if something unexpected should occur. Cost savings occur because there is no need for an overnight stay, as once the patient is awake and stable they can be discharged home.

9 9 CA Regulation Refresher Training March 2010 With outpatient services, cost savings are experienced since the patient requires less care, as they are typically more self-sufficient and require less medical attention. Cost Savings The costs are very different for an ASC or Outpatient facility compared to Inpatient care facilities. With inpatient services, significant costs are incurred with 24-hour care of a patient… Room Personnel Dietary care Inpatient pharmacy Many other costs

10 10 CA Regulation Refresher Training March 2010 Drugs are paid 100% of Medi-Cal rates from their fee schedule. Ambulance services are paid according to the Ambulance Fee Schedule. Billing Outpatient Services DME, prosthetics, and orthotics are paid by the DMEPOS Fee Schedule. Any incurred charges not represented by CPT codes (emergency room) or (surgery) are included in their respective fee schedules. Clinical diagnostic tests are paid according to the Pathology and Clinical Lab Fee Schedule The ASCs and outpatient hospital departments providing these supplies or services covered by other fee schedules are not paid differently for any of the above items than any other provider. Now lets take a look at some billing examples and associated terminology.

11 11 CA Regulation Refresher Training March 2010 Standard Calculation APC Relative Weight and Adjusted Conversion Factor are two concepts that youll see in the upcoming examples, as we explore Standard Calculation. APC stands for Ambulatory Payment Classification and is a part of the Fee Schedule that deals with outpatient procedures. The APC Relative Weight helps keep reimbursement fees in check or relative to keep insurance companies and patients from overpaying or underpaying for a service. The Adjusted Payment Calculation helps determine the reimbursement a provider receives for rendering a particular service. It adjusts the amount of a reimbursement based on the history of related costs and expenses in previous years. For example, the conversion factor for 2006 is the 2005 unadjusted factor… $ x 1.037, which is the 2006 market basket inflation factor and equals

12 12 CA Regulation Refresher Training March 2010 Standard Calculation The standard calculation used when billing hospital or ASC outpatient services is… APC Relative Weight x Adjusted Conversion Factor x 1.22 APC Relative Weight is taken from a table of all reimbursable CPT procedure codes, which are identified by status indicator codes S, T, X or V. The standard calculation used when billing hospital or ASC outpatient services is… APC Relative Weight x Adjusted Conversion Factor x 1.22 There is a column in the Federal Register marked Relative Weight with a value corresponding to each CPT listed. Status Indicators

13 13 CA Regulation Refresher Training March 2010 Listed and Unlisted Facilities Hospital outpatient departments and ASCs are paid with two different methods. Listed Method Listed hospitals have a Medicare ID number. Medicare ID#: XXXXXX If the hospital is listed, it will have a wage-adjusted conversion factor associated with it. Unlisted Method Unlisted hospitals do not have a Medicare ID number. Medicare ID#:?????? If the hospital is not listed, the zip code will be used to get the county-wide wage-adjusted conversion factor to use for that facility.

14 14 CA Regulation Refresher Training March 2010 Standard Calculation The adjusted conversion factor is a value taken from two different tables, depending upon whether the hospital is listed and has a Medicare ID number or not. APC Relative Weight x Adjusted Conversion Factor x 1.22 The Provider is listed by Medicare ID. Unlisted By County Listed By Facility The adjusted conversion factor is a value taken from two different tables, depending upon whether the hospital is listed and has a Medicare ID number or not. APC Relative Weight x Adjusted Conversion Factor x 1.22 The Adjusted Conversion Factor helps determine the reimbursement a provider receives for rendering a particular service. It adjusts the amount of a reimbursement based on the history of related costs and expenses in previous years.

15 15 CA Regulation Refresher Training March 2010 Standard Calculation Since care in California is more expensive than the average state, the California Workers Compensation system applies a factor of 1.22 to Medicare values to compensate for this expense in the Golden State. APC Relative Weight x Adjusted Conversion Factor x California Workers Comp Compensation Factor Since care in California is more expensive than the average state, the California Workers Compensation system applies a factor of 1.22 to Medicare values to compensate for this expense in the Golden State. APC Relative Weight x Adjusted Conversion Factor x 1.22

16 16 CA Regulation Refresher Training March 2010 Lets look at an example using an unlisted hospital in Alameda County. Berkeley Surgical Center is charging for a diagnostic thoracoscopy (CPT #32601). Unlisted Billing Example

17 17 CA Regulation Refresher Training March x x 1.22 = $ Unlisted Billing Example Remember the formula… APC Relative Weight x Adjusted Conversion Factor x 1.22 From the Federal Register, the APC Relative Weight is From Table A, the Adjusted Conversion Factor is x x 1.22 = $

18 18 CA Regulation Refresher Training March 2010 Math Check This is a pretty straight forward calculation. Take a look! APC Relative Weight Adjusted Conversion Factor (Alameda County) CA Workers Comp Factor 1.22 Standard Calculation APC Relative Weight x Adjusted Conversion Factor x x $ x 1.22 = $ )Multiply, the APC Relative Weight by the Adjusted Conversion Factor, and then 2)Multiply, that product by the CA Workers Comp Factor x $ x 1.22 = $ Next well try one from a listed hospital!

19 19 CA Regulation Refresher Training March 2010 Listed Billing Example Lets look at an example using a listed hospital. Kaiser Hospital is charging for the implant of a patient-activated cardiac event recorder.

20 20 CA Regulation Refresher Training March x x 1.22 = $ Remember the formula… APC Relative Weight x Adjusted Conversion Factor x 1.22 Listed Billing Example From the Federal Register, the APC Relative Weight is From Table B, the Adjusted Conversion Factor is $ Qualifier Status Indicator S

21 21 CA Regulation Refresher Training March 2010 Math Check Again… pretty straight forward. APC Relative Weight Adjusted Conversion Factor CA Workers Comp Factor 1.22 Standard Calculation APC Relative Weight x Adjusted Conversion Factor x x $ x 1.22 = $ )Multiply, the APC Relative Weight by the Adjusted Conversion Factor, and then 2)Multiply, that product by the CA Workers Comp Factor x $ x 1.22 = $ In some cases, facilities can bill outside of the normal payment schedule. Youll see this next in High Cost Outlier Services!

22 22 CA Regulation Refresher Training March 2010 High Cost Outlier Services The Alternative Payment Method permits a facility to bill outside the normal payment schedule, after applying to the State to do so. These facilities are assigned a cost-to-charge ratio, a ratio of the facilitys total operating costs to total gross charges during the preceding calendar year. A provider may select this method if they think their operating costs are higher than the norm and thus losing revenue.

23 23 CA Regulation Refresher Training March 2010 Lower Conversion Factor Although a lower conversion factor is assigned (1.20 instead of 1.22), a provider may be paid more than the standard reimbursement if costs of a procedure are significantly outside the norm. Currently, less than 30 facilities in the whole state are using this method. 1.20

24 24 CA Regulation Refresher Training March 2010 Alternative Method Qualification According to this regulation, the charges must meet two criteria to qualify for the additional outlier payment: 2) The facility charges multiplied by the cost-to-charge ratio must also exceed the standard payment multiplied by ) The facility charges multiplied by the providers cost-to-charge ratio must exceed the standard payment for the code by $1,825.00* (*effective 3/01/07).

25 25 CA Regulation Refresher Training March 2010 Qualifying Hospitals and ASCs This is a list of qualifying hospitals and ASCs, with their respective cost-to-charge ratios. You can see how they differ, based upon their ratio of total operating costs to total gross charges during the previous calendar year. Ready for an example? I knew you would be!

26 26 CA Regulation Refresher Training March 2010 High Cost Outlier Example Pacific Hospital of Long Beach has a cost-to-charge ratio of.231. They are listed on Facility Table B, with a Hospital Specific Wage Index of They have chosen to take the lower conversion factor of According to the Federal Register table for Relative Weight, CPT #33206 has a relative weight of They are listed on Facility Table B, with a Hospital Specific Wage Index of They have chosen to take the lower conversion factor of According to the Federal Register table for Relative Weight, CPT #33206 has a relative weight of You receive a claim from Pacific Hospital of Long Beach for the insertion of a pacemaker, to the tune of $75,000. Pacific Hospital of Long Beach has a cost-to-charge ratio of.231.

27 27 CA Regulation Refresher Training March 2010 High Cost Outlier Example Pacific Hospitals Charge for CPT #33206 $75,000 To qualify for additional outlier payment… 1) The facility charges multiplied by the providers cost-to- charge ratio must exceed the standard payment for the code by $1,825. $75,000 x.231 > ( x x x 1.20)+$1,825* *Effective 03/01/07 AND 2) The facility charges multiplied by the cost-to-charge ratio must also exceed the standard payment times $75,000 x.231 > ( x x x 1.20) x ) The facility charges multiplied by the providers cost-to- charge ratio must exceed the standard payment for the code by $1,825. 2) The facility charges multiplied by the cost-to-charge ratio must also exceed the standard payment times Remember the requirements for the additional outlier payment. Lets see if they qualify!

28 28 CA Regulation Refresher Training March 2010 The facility charges multiplied by the providers cost-to-charge ratio must exceed the standard payment for the code by $1,825. $75,000 x.231 > ( x x x 1.20) + $1,825 $17, > $9, $1,825 $17, > $11, AND The facility charges multiplied by the cost-to-charge ratio must also exceed the standard payment times $75,000 x.231 > ( x x x 1.20) x 1.75 $17, > $9, x 1.75 $17, > $17, High Cost Outlier Example It looks like Pacific Hospital does qualify for the High Cost Outlier Payment. $17, > $11, $17, > $117, The providers cost-to- charge ratio exceeds the standard payment by $1,825 AND The facility charges multiplied by the cost-to- charge ratio exceeds the standard payment when multiplied by 1.75!

29 29 CA Regulation Refresher Training March 2010 Facility charges x Cost-to-Charge Ratio - (Standard Payment x 1.75) x.50 = Outlier Payment $75,000 X.258 $19,350 - $16, $3, $3, x.50 = $1, Math Check Facility charges x Cost-to-Charge Ratio - (Standard Payment x 1.75) x.50 Since both criteria have been met, the additional outlier reimbursement is calculated like this. So, all that work for an additional $ above the standard payment of $ If the charges had not met the criteria, the payment would only have been $ Keep in mind that in determining the additional payment, the facilitys charges and payment for devices with status code indicator H shall be excluded from the computation. Therefore, when additional outlier payment is applicable, implants are allowed at cost plus 10% or a maximum of $250 added to the cost, whichever is the lesser payment. $75,000 (Facility Charges) X.231 (Cost-to-Charge Ratio) $17, $17, (Standard Ratio x 1.75) $ $ x.50 = $ $75,000 (Facility Charges) X.231 (Cost-to-Charge Ratio) $17, $17, (Standard Ratio x 1.75) $ $ x.50

30 30 CA Regulation Refresher Training March 2010 Sole Community Hospitals For services rendered on or after February 15, 2006, by rural, sole community hospitals (SCH) a different calculation must be used. APC Relative Weight x Unadjusted Conversion Factor x x Wage Adjusted Factor x 1.20 APC Relative Weight x Unadjusted Conversion Factor x x Wage Adjusted Factor x 1.20 Example for CPT #33218 in Alameda County x x x x 1.20 Example for CPT #33218 in Alameda County x x x x 1.20 $3, x x 1.20 $6, $3, x x 1.20 $6,192.06

31 31 CA Regulation Refresher Training March 2010 System Calculations Fortunately, as a bill processor you do not have to determine these calculations manually. The Bill Review system has been automated to perform these calculations itself. It is important for you to see what factors are used when determining how to reimburse providers, in the event that Manual processing is required, or Inquiries are made

32 32 CA Regulation Refresher Training March 2010 Summary Due to the limitation of services at sole community hospitals, the operating component of the composite rate shall be allowed at the higher of the prospective operating costs. Reimbursements to transferring hospitals is calculated by multiplying the number of days stayed times the fee schedules per diem rate, with the first day reimbursed at twice the per die Some items are exempt from the Inpatient Fee Schedule. A contract rate supercedes the fee schedule. Outpatient services do not require an overnight stay in a hospital. Ambulatory Surgical Centers are certified by Medicare to perform outpatient services. Care in California is more expensive than the average state, so the California Workers Compensation system applies a factor of 1.22 to Medicare values to compensate for the added expense. With outpatient services, cost savings are experienced since the patient requires less care, as they are typically more self- sufficient and require less medical attention. The Alternative Payment Method permits a facility to bill outside the normal payment schedule, after applying to the State to do so.


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