1. Provided by Coventry Health Care Texas Medical Bill Reviewer Training Program Unit 2: Hospital Guidelines Module 1: Inpatient and Outpatient ©2011 Coventry Health Care. All rights reserved. Proprietary – Do not copy, distribute or disclose without permission of Coventry Health Care.

2. 2 Texas Regulations Training August 2011 Overview Hospital Guidelines  How Inpatient Hospital Fees are Determined  Definition of Payment In this module, you will learn about current hospital billing practices, how fees are determined and how services are billed. Let’s start by discussing how hospital services are determined.

3. 3 Texas Regulations Training August 2011 Hospital Reimbursements There are two tables used in calculating hospital reimbursement: Inpatient Perspective Payment System (IPPS) Medical Severity Diagnosis Related Groups (MS-DRG) Each Diagnosis-Related Group (DRG) is given an unique weighted payment factor to determine reimbursement for specific procedures.

4. 4 Texas Regulations Training August 2011 Diagnosis-Related Group The Diagnosis-Related Group (DRG) system is used to “group” related diagnosis and principle procedures performed. DRG versions (MS-DRG Grouper Version 24.0, 25.0, 26.0, 27.0, and 28.0) are posted on the Bill Review Reference Materials website.

5. 5 Texas Regulations Training August 2011 Diagnosis-Related Group Each version of the DRG contains DRG rate changes used to calculate inpatient and outpatient hospital reimbursements. The chart below shows which version should be used for the applicable date of service in Texas. Grouper VersionService Effective DateService Cancel Date 253/1/20089/30/2008 2610/1/20089/30/2009 2710/1/20099/30/2010 2810/1/201012/31/9999

6. 6 Texas Regulations Training August 2011 Inpatient Reimbursements Key revenue codes. Also, key the billed DRG code and diagnosis information. The system is automated to reduce inpatient bills for DRG reimbursement, regardless of billed charge, without taking a PPO discount. Do not key or deny charges with X-messages. The system populates the correct information in the Assigned DRG field based on the diagnosis and surgical procedures keyed.

7. 7 Texas Regulations Training August 2011 Inpatient Reimbursements For all billed revenue codes, key as billed. The system is automated to recommend payment accordingly. When a surgical revenue code is present on the bill, the system requires you to key a surgical MS-DRG code and an ICD-9 procedure code. Key drug and supply codes as billed.

8. 8 Texas Regulations Training August 2011 Inpatient Reimbursements Acute inpatient bills should be priced based on the inpatient prospective set of rates such as providers’ wage index, capital and operating portions, and adjustments factors. BR4 Payment = [Total Federal Payment + Total Outlier Payment] x 143%

9. 9 Texas Regulations Training August 2011 Cost Outliers Outliers refer to hospital admissions with extraordinary cost warranting additional reimbursement beyond the maximum allowance. To determine outliers, the base payment rates are multiplied by individual DRG weights and adjusted for local market conditions, or geographic adjustments.

10. 10 Texas Regulations Training August 2011 Non-Acute Facilities No rules exist in the Inpatient Fee Schedule for the following types of Non-Acute Care Facilities Skilled Nursing Facilities Inpatient Rehabilitation Facilities Inpatient Psychiatric Facilities Hospice These types of services will be recommended for payment at the billed charge.

11. 11 Texas Regulations Training August 2011 If in doubt, remember that if the patient occupied a bed at midnight, it is an inpatient stay! A hospital bill is considered “outpatient” when a patient’s services are rendered within the same day. Also, the patient does not occupy a bed at midnight or beyond. Outpatient Hospital For Outpatient Facility bills, use CPT or HCPCS codes. Do not use Revenue Codes.

12. 12 Texas Regulations Training August 2011 Outpatient Hospital Reimbursement for outpatient charges will be at the fee schedule calculated rate. The system will recommend payment per the Medicare Outpatient Perspective Payment System (OPPS). For example, non-rural hospitals are paid as follows: [(APC Payment Rate x.60 x Wage Index) + (APC Payment Rate x.40)] + any applicable outlier amount] x 2.00

13. 13 Texas Regulations Training August 2011 Outpatient Hospital Pricing edit P003 will set for Texas Outpatient line charges that should be manually denied due to a procedure code range issue. Deny with edit U634 until automation in the Bill Review system can be implemented. For additional restrictions and formulas for outpatient fees, please refer to the Texas State Reference Guide.

14. 14 Texas Regulations Training August 2011 Outpatient Hospital To view the code listing, access the Texas Outpatient PPS Listing P003 document. The list is available in the BR4 Reference Materials library, under the heading Internal Resources.

15. Provided by Coventry Health Care Texas Medical Bill Reviewer Training Program Unit 2: Hospital Guidelines Module 2: Ambulatory Surgery Centers ©2011 Coventry Health Care. All rights reserved. Proprietary – Do not copy, distribute or disclose without permission of Coventry Health Care.

16. 16 Texas Regulations Training August 2011 Overview  Ambulatory Surgery Center Guidelines  Implants  DME Welcome to the world of ASCs! Let’s start by discussing how services are determined. Then we’ll talk about Implants and DME.

17. 17 Texas Regulations Training August 2011 Ambulatory Surgery Centers The Ambulatory Surgical Center fee schedule applies to all hospital based ambulatory surgery centers as well as free standing ambulatory surgical centers. In order to receive reimbursement for services rendered, ASCs must be certified by Medicare and the State of Texas. Non-certified ASCs will set an edit. These facilities are identified by the absence of Action Reason code ’75’ on the provider record. Follow the edit instructions.

18. 18 Texas Regulations Training August 2011 General Reimbursement Rules There are four different ASC reimbursement formulas. Use of the formulas depend on the type of surgical procedure billed. The four categories are: 1)Non-device intensive procedures where separate implant reimbursement has not been requested 2)Non-device intensive procedures where separate implant reimbursement has been requested 3)Device intensive procedures where separate implant reimbursement has not been requested 4)Device intensive procedures where separate implant reimbursement has been requested

19. 19 Texas Regulations Training August 2011 General Reimbursement Rules Device intensive procedures are defined as surgical procedures in which the cost of the implantables are greater than 50% of the CMS ambulatory payment classification’s median cost. Note: Modifier SG is no longer applicable for Medicare services (effective 09/01/08).

20. 20 Texas Regulations Training August 2011 General Reimbursement Rules For example, the formula for non-device intensive procedures where separate implant reimbursement has not been requested is (i.e. no implant was used): {[(CMS Addendum AA Fully Implemented Payment Rate x 0.50 x CMS Pre-class Wage Index for ASC Payment System) + (CMS Addendum AA Fully Implemented Payment Rate x 0.50)] x 235%} Please refer to the ASC Guidelines section and Appendix G of the State Reference Guide for further details and the additional three formulas.

21. 21 Texas Regulations Training August 2011 Documentation It is also important to know the types of documents that should accompany an ASC bill: 1)A bill on the standard CMS form with correct billing codes 2)A copy of the operative reports, if services exceed $500 3)An invoice for implanted items, if used 4)A signed certification that the implant amount billed represents actual costs for the implantable, if used

22. 22 Texas Regulations Training August 2011 Limited Procedures Effective 09/01/08, certain procedures performed in ASCs are limited in scope to certain diagnoses. If a “limited coverage” procedure is billed with a non-approved ICD-9 diagnosis code, an edit will suspend the bill. No payment is recommended unless medical necessity is proven. Check if adequate documentation accompanies the bill. If so, the line must be manually priced.

23. 23 Texas Regulations Training August 2011 ASC X-Ray Procedures X-rays not directly related to the performance of approved surgical procedures are reimbursable to ASCs. The system is automated to suspend radiology procedures performed by an ASC. Processors are required to determine whether the radiology procedure was related to the approved surgical procedure on the same date of service. If it is related, deny the charge. If it is not related, override the edit to recommend payment at current fee schedule rates.

24. Provided by Coventry Health Care Texas Medical Bill Reviewer Training Program Unit 2: Hospital Guidelines Module 3: Implants ©2011 Coventry Health Care. All rights reserved. Proprietary – Do not copy, distribute or disclose without permission of Coventry Health Care.

25. 25 Texas Regulations Training August 2011 Implants Implants are tangible devices, hardware or instrumentations that are inserted into the patient during surgery. When this occurs, providers submit bills and documentation listing items used during the surgery. These services are considered separate from the surgical procedure and are generally allowed in addition to other facility fees.

26. 26 Texas Regulations Training August 2011 Implants Keep in mind, implants are exceptions to the Inpatient and Outpatient Hospital reimbursement rules. Payment is recommended at a percentage of invoice cost for prosthetics/orthotics, pacemaker, lens implants and implants. The following carve-out categories can be separately reimbursed: 275 (pacemaker) 278 (implants)

27. 27 Texas Regulations Training August 2011 Implants As you remember from the ASC section, an invoice must be submitted with an implant charge. Processors must manually price implants at the lesser of cost plus 10% or $1000 per item, total not to exceed $2000 per admission.

28. 28 Texas Regulations Training August 2011 Summary General Guidelines: Hospital Outpatient Rules Inpatient Rules Ambulatory Surgery Centers Implants