Medicare and Medicaid Reimbursement

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Medicare and Medicaid Reimbursement

• Joyce Mohler
• System Director, Reimbursement
• Summa Health System
• mohlerj_at_summahealth.org
• 330-996-8532

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Introduction and Objectives

• Introduction
• CGS/Palmetto
• NEW Wage index Pension expense
• HIT Payments
• Overview of Medicare and Medicaid reimbursement
  principles
• Introduction to online resources

3
Terms

APC Ambulatory Payment Classification IME
Indirect Medical Education CCR Cost-to-Charge
Ratio IPF Inpatient Psych Facility CMG Case
Mix Group IRF Inpatient Rehab Facility CMS
Center for Medicare Medicaid Services LIP Low
Income Patient Adj DSH Disproportionate Share
Hospital PPS Prospective Payment System GME
(DGME) Graduate Medical Education RUG- SNF
Resource Utilization
-or Direct Medical Education
Group HCAP Hospital Care Assurance
Program
http//www.cms.gov/apps/acronyms/
http//www.cms.gov/apps/glossary/
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CGS/Palmetto
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CGS/Palmetto
Contacts per CGS Website All CGS Outlook email
accounts will be moved from CIGNA to BCBSSC after
close of business on Friday, January 13, 2012.
Email addresses will be converted to a new
_at_cgsadmin.com domain suffix. Email addresses
formerly firstname.lastname_at_cigna.com will become
firstname.lastname_at_cgsadmin.com. After
1/31/2012 old e-mail addresses will reject as
invalid
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Pension expense for Wage Index
2 parts to Defined Benefit Pension
adjustment Current expense allowed 3 year
average of prior year, current year and
subsequent year cash payments to fund Prefunding
2002 forward accrual 1/10th of prefunding
payments. Start with year of first positive but
can not exclude negative years after a positive
year that is counted.
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Medicare Eligibility Qualifications

• Federal Insurance for the elderly and disabled
• Must be at least 65, disabled, or have End Stage
  Renal Disease to qualify
• Must be a legal resident or citizen
• Either you or your spouse must have worked in
  Medicare-covered employment for at least 10
  years.
• http//www.medicare.gov/MedicareEligibility/hom
  e.asp

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Medicaid Eligibility Qualifications

• State Insurance for the poor
• Eligibility administered at the County level can
  be difficult and bureaucratic
• Certain counties are have mandatory Medicaid
  managed care enrollment (must have at least 3
  managed care plans)
• Certain classifications of individuals are NOT
  required to enroll in Medicaid managed care
  plans
• http//jfs.ohio.gov/ohp/bmhc/index.stm

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Whats Covered - Medicare

• Part A (think Inpatient) is usually is premium
  free, helps cover hospitalization, skilled
  nursing, home health and hospice care.
• Part B (think Outpatient) is usually with a very
  low premium, helps cover doctor visits,
  outpatient care and medical services.
• Part C refers to Medicare Advantage (HMO)
  benefits vary by plan but are often comprehensive
• Part D Prescription Drugs

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Payment Systems Overview

• Inpatient
• Per Discharge DRG
• Per Diem
• of Charge
• Bundled (mom baby - commercial

• Outpatient
• APC
• Fee Schedule
• of Charge

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Inpatient PPS

• PPS Prospective Payment System
• Payment is Based on Diagnosis of Patient
• http//www.cms.hhs.gov/AcuteInpatientPPS/FFD
• No Additional Settlement on PPS Portion of
  Payment

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Medicare Inpatient

• PPS Prospective Payment System
• What you get is final
• DRG Diagnosis Related Groups
• MS-DRG began in 2008
• 745 MSDRGs in 2011 ( 2 ungroupable)
• Heavily dependent on physician documentation
• Capital for equipment, buildings Federal rate
• Some small hospital add-on for IME, DSH (no 15
  threshold if gt 100 beds)
• Small settlement on cost report

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Medicare Inpatient

• Included in patient payment but settled on cost
  report
• Hospital specific values
• Indirect Medical Education Add-on .
• Incidental costs of training interns and
  residents
• Settled on cost report
• Will be paid IME on Medicare Managed Care if you
  bill Medicare a shadow bill or ghost bill.
  Mandatory for IRF and IPF now.
• Look at Report 118 of your PSR to verify
  billings
• Disproportionate Share Add-on
• for high SSI/Medicaid days
• http//www.cms.gov/MLNProducts/downloads/Dispropor
  tionate_Share_Hospital.pdf

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Medicare Inpatient

• Not included in patient payment - settled on
  cost report
• (Pass thru payments every 2 weeks based on
  history)
• GME
• Paid based on Medicare and Medicare managed care
  days
• Must shadow bill Medicare for Medicare HMO
  days to receive credit for GME on final cost
  report settlement
• Look on PSR reports 118 for Days/Discharges
• Pre-transplant costs
• Testing of potential donors and recipients to
  determine if match
• Allied Health costs
• EMT, Pharmacy Resident, Pastoral Resident, Lab or
  Rad Tech
• Medicare Bad Debt
• Currently at 70

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Medicare Payment

• Componets of the DRG Payment
• DRG Rate
• Labor Non-Labor portion of the rate federal
  rate
• Wage index Area specific X Labor Portion
• Case Weight for Each DRG federal rate
• CMI
• Case weight of 2 is paid twice as much as a case
  weight of 1

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Inpatient PPS Methodologies

• Capital (Medicare, Medicaid)
• Medicare federal rate, CMI adjusted
• Medicaid hospital specific rate, settled on
  cost report. Per D/C, not case weight adjusted
• Cost of our buildings and equipment
• Cost of leasing buildings and equipment
• All building and equipment leases are
  reclassified to capital
• Make sure invoices are coded to actual expense
  not to where you have money left in your budget.

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Inpatient PPS Methodologies
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Inpatient PPS Methodologies

• DSH continued
• Since patients have to be eligible for Medicaid,
  registering Medicaid account correctly is
  important
• For every patient fail to enroll or register
  properly you could lose between 350- 500

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Inpatient PPS Methodologies

• Medical Education
• Indirect Medical Education
• Payments made to the hospital to cover additional
  indirect costs due to interns training. Example
  additional tests.
• Direct/Graduate Medical Education
• Pays for direct expenses to run program
• Intern salary fringes, Teachers, Program
  employees

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Medicare DRG calculation

• IME calculation
• Medicare Formula
• ((((1(Interns/Available Beds))0.0405)-1)1.35
• Ratio based on last audited Medicare Cost Report
• Settle final payment with current Medicare Cost
  Report
• Intern/Available Bed ratio lower of current
  year or prior year used
• Less beds available, higher the will be

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Medicare DRG Calculation

• Federal Specific from the Federal Register
• Labor Portion 3230.04
• X wage index .8892
• Adjusted Labor Portion 2872.15
• Non-labor Portion 1979.70
• DRG Rate before add-ons 4851.85
• Capital 461.92
• Hosptial Specific
• IME (15.5081) 752.43
• DSH (9.340) 453.16
• Total DRG for CMI of 1 6519.36

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MS-DRGs

• Highly dependent on physician documentation
• Medical record coding guidelines require specific
  words or phrases in physician progress notes in
  order to use higher paying MS-DRGs
• Query physicians to clarify arrive at the
  correct MS-
• DRG
• Correct coding important for
• Appropriate Reimbursement
• Quality Reporting (i.e. Health Grades)
• Future Pay for Performance initiatives

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MSDRG Example
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Inpatient PPS Methodologies

• Outliers
• Day outliers (Medicaid)
• Cost outliers (Medicare, Medicaid)
• Managed Care outliers determined by contract

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Inpatient PPS - Outliers

• Day Outliers (Medicaid)
• Length of Stay over Threshold
• Threshold Depends on DRG
• Paid Calculated Daily Rate X Outlier Days
• If patient qualifies for both Day and Cost
  Medicaid pays based on the cost outlier
  calculation

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Inpatient PPS - Outliers

• Cost Outliers (Medicare, Medicaid, Managed Care)
• Charges over threshold
• Medicaid - Charges over threshold X Cost/Charge
  Ratio
• Medicare Charges over threshold X CCR X 80
• Managed Care Based on what is contracted

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Inpatient PPS - Outliers

• Cost Outlier Example Medicaid
• DRG 1XX
• Payment 5,000
• Charge Threshold 50,000
• Billed Charges 80,000
• Outlier Payment would be 10,800
• 80,000 - 50,000 30,000 X 36 (CCR) 10,800
• Total payment 15,800 (5,000 10,800)

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Inpatient PPS - Outliers

• Cost Outlier Example Medicaid
• What you can do.
• All payor cost outlier reimbursement is based on
  Gross charges Medicare, Medicaid, Managed Care
• If charges are not accumulated and billed
  potential reimbursement is lost
• No matter who the payor is Gross charges are
  IMPORTANT.. EVEN SELF PAY, CHARITY

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Non-acute Inpatient Methodologies

• Rehab
• Rehab PPS methodology based on CMGs (similar to
  DRGs)
• Must meet so-called 60 rule to be paid under
  Rehab CMGs otherwise would be paid under
  inpatient DRGs (significantly less than Rehab
  CMGs)
• Psych
• DRGs with certain per-diem adjustments for age,
  days hospitalized, if hospital has an ER,
  Medicare Education, specific ICD-9 condition
  codes
• Skilled Nursing (SNF)
• Per-diem PPS methodology based on RUGs

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Medicare Outpatient PPS - APC

• APC Ambulatory payment classification
• Similar to inpatient DRG (but different)
• Based on CPT codes
• Adjusted for Wage Index (60 of the national rate
  adjusted for wage index)
• Grouped into categories that are discounted or
  multiplied depending on what other services are
  billed
• Example Get full APC for first item/procedure
  and ½ for each additional on the bill
• Only get paid for the first item/procedure
• If you bill APC X with APC W you get nothing for
  X
• There is an outlier system in APC, but there is
  a high threshold that has to be met

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Outpatient PPS - APC

• Addendum A shows lists APCs
• Addendum B shows how CPT codes map to APCs
• Need to adjust 60 of APC amount by the wage
  index
• http//www.cms.hhs.gov/HospitalOutpatientPPS/AU/li
  st.aspTopOfPage

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Outpatient PPS - APC

• New technology/drugs
• CMS will sometimes break out payments for new
  costs for a couple of years to give them time to
  calculate costs
• Incorporate it into new APC rates in later years
• To get payment must bill specific HCSPCS/CPT
  codes
• Extremely important to keep up on CPT changes as
  they occur throughout the year applicable to your
  department(s) and review items sent by Charge
  master people
• http//www.cms.gov/HospitalOutpatientPPS/04_passth
  rough_payment.asp

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Other Outpatient Methodologies

• Medicare Fee Schedules
• Lab
• Durable Medical Equipment
• Ambulance
• PT / OT / Mammography (Physician Non-Fac)
• http//www.cms.hhs.gov/home/medicare.asp
• Medicaid Fee Schedules
• Based on CPT code
• http//jfs.ohio.gov/OHP/bhpp/FeeSchdRates.stm
• Be familiar with rates for services provided by
  your department(s)!

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Cost Reporting Overview

• Similar to Tax Return
• Starts with Hospital Expenses and Revenues
• Adjust for Medicare non-allowable items
• Advertising, Alcohol, Taxes, Non-patient related
  expenses
• Statistical Data Days, Discharges, Beds,
  Interns
• Calculating Add on payments
• Calculation for wage index
• Important to report high-cost labor (dollars and
  hours)
• Settlement data (DSH, GME, IME, Bad Debt)
• How much we should have received vs. how much we
  did receive
• Payment due with filing

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HCAP

• HCAP Hospital Care Assurance Program
• State of Ohio program to distribute federal DSH
  funding (State DSH)
• All Ohio hospitals are required to participate
• By rule, 10 of hospitals must be economic
  contributors pay into system
• Our reimbursement is directly tied to identifying
  these patients properly
• Patients below the federal poverty level (FPL)
• Patients above the FPL but qualifying for charity
• Bad Debts
• of Medicaid population OBRA survey
• Insured vs. Uninsured (Cap on what you receive)

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HCAP

• New for 2010
• Must file Disability IP and OP by Cost report
  line on Sch F1
• Must File UC lt 100 FPL on Sch F2
• Must File UC gt 100 FLP on Sch F3
• Each Schedule broken out between IP and OP,
  insured and uninsured
• Due when you file 2011 Medicaid Cost Report
• 2011 details are due when you file 2011 Medicaid
  Cost Report too.
• Get 2010 done so you can get 2011 data finalized
  , audited and reported by Cost Report Line.

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HCAP Model

• Assessments
• Based on Operating Expenses
• Two tiered
• 1.35 of the first 235 Million
• 1 of costs above 235 Million
• Matching Federal Dollars
• State utilizes the assessments to receive
  matching funds
• Redistributes the money based on the HCAP Model
• Economic contributors
• Assessments gt HCAP distribution
• 10 of hospitals must be economic contributors
  (20 hospitals)

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HCAP
2009 Hospital Assessments 213,761,512
2009 Federal Share  349,243,178
2009 Total Available HCAP Funds 563,004,690
Preliminary 2009 Uncompensated Care Data

• 2009 HCAP Distribution Model (handout)
• http//www.ohanet.org/Issue/HCAP

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HCAP

• HCAP Reimbursement Model
• High DSH hospitals paid first OBRA Survey
• Disability and Care Assurance
• Paid at approx. 70 of cost in 2009
• Charity and Bad Debt
• Paid at approx. 6 of cost in 2009
• Medicaid shortfall
• Timing 2011 distribution based on 2009 data

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Other Reimbursement Hot Topics

• Transfer DRG Reductions
• Verify patients qualified. Sometimes the
  reduction is better than keeping patient
• Never Events began 10/1/08 currently 73
  conditions
• Hospital Acquired Conditions began 10/1/08
• Recovery Audit Contractors (RAC)
• Medicare Contracting Reform creation of MACs
• Significant because many rules are defined
  locally
• Cigna takes over Ohio 10/17/2011 instead of NGS
• National Healthcare Reform multi-faceted
  reductions in Medicare reimbursement to offset
  cost of covering uninsured
• Medicaid assessments fees (tax)

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Recap of Whats Important

• In no particular order . . .
• Pay attention when using high priced contract
  labor so it is captured and accounted for in the
  Wage Index calculation.
• Correctly categorize all capital-related costs
  including leases as this is cost-reimbursed for
  Medicaid.
• Must capture accurate information in the
  pre-registration / registration processes
• Be familiar with the applicable CPT codes for
  your department(s) including how they are paid by
  Medicare and Medicaid
• Capture all patient charges regardless of
  patients insurance
• Physician documentation to code the medical
  properly

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Online References

• CMS http//www.cms.hhs.gov/
• Medicare Eligibility http//www.medicare.gov/Med
  icareEligibility
• Medicaid Eligibility http//jfs.ohio.gov/ohp/bmh
  c/index.stm
• Medicare DRGs http//www.cms.hhs.gov/AcuteInpati
  entPPS/FFD
• Medicare Outpatient PPS Addendums A and B
  http//www.cms.hhs.gov/HospitalOutpatientPPS/AU/li
  st.aspTopOfPage
• Medicare Fee Schedules http//www.cms.hhs.gov/ho
  me/medicare.asp
• Medicaid - Ohio Dept Job Family Services
  http//jfs.ohio.gov/OHP/provider.stm
• Medicaid Fee Schedules http//jfs.ohio.gov/OHP/b
  hpp/FeeSchdRates.stm
• HCAP Info http//www.ohanet.org/Issue/HCAP

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Medicare Medicaid Reimbursement

Questions ???