Lora DeWald, RHIA, CCS, CCS-P, Vice President
Health Information Management, Avera Health
The information in this article is intended to provide the background and information necessary to successfully match a Medicare Remittance Advice against a claim to determine the accuracy of the payment for an episode of care. If there are several line items on the claim, chances are that more than one data source must be consulted in order to verify payment accuracy.
The Outpatient Prospective Payment System (OPPS) is based on HCPCS codes for medical and other health services. These codes are used for a wide variety of payment systems, including the Medicare Fee Schedule for Physician Services (MPFS), the Durable Medical Equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule, and the Medicare Clinical Laboratory Fee Schedule. For the purposes of OPPS, a system of status indicators with a specific meaning has been established to identify which HCPCS codes are paid under OPPS and those codes to which particular OPPS payment policies apply. There is only one status indicator assigned to each HCPCS code. For the purposes of this article, status indicator “A” and its significance in determining appropriate reimbursement for a hospital outpatient visit will be discussed in detail.
The status “A” indicator is used to indicate services that are paid under some payment method other than OPPS. When this status indicator is assigned to a specific HCPCS code, it means that payment will be made for the service, but it will not be an APC payment. Most commonly, payment is made under one of several fee schedules. If the HCPCS code with a status “A” indicator represents what appears to be a supply or device, the DMEPOS would be the most likely Reference. If the HCPCS code is a laboratory service, the laboratory fee schedule should be consulted for the payment rate. Most of the rest of the HCPCS codes with an “A” status indicator are found in the Medicare Physician Fee Schedule.
Every APC has an assigned national payment rate. However, regional and local factors are considered when developing payment rates for any HCPCS code. Therefore, APC and fee schedule payments vary throughout the country. This is known as the “adjusted payment rate.” This adjusted APC payment is then divided into a Medicare payment and a co-insurance payment (co-pay) rate. The patient is responsible for the allowed co-pay. For Calendar Year 2003, the co-insurance for an APC cannot exceed 55% of the allowed APC payment. For example, in South Dakota, there are four different payment rates. APC 0002, fine needle aspiration, has an adjusted APC payment ranging from $26.79 to $29.85. The co-pay for this APC is 20% of the adjusted APC with a range from $5.36 to $5.97, depending on what part of the state the claim is generated.
The Laboratory Fee Schedule has a long history of pricing strategies beginning in 1984. The Deficit Reduction Act of 1984 (DEFRA) introduced the concept of area-wide fee schedules. The fee schedules varied by local Carrier area. The intent was to move toward a national fee schedule; however, in 1989, this requirement was repealed. Therefore, a review of any Clinical Diagnostic Laboratory Fee Schedule will provide a national limit dollar amount and individual state laboratory fee schedule amounts, which may or may not be the same amount as the National limit. There is no patient co-pay responsibility for services paid under the Laboratory Fee Schedule.
The Medicare Physician Fee Schedule has a similar history in varied pricing strategies and every Carrier (Medicare Part B) fee schedule will include a different dollar value for every HCPCS code covered by that Carrier. Each HCPCS code in the MPFS has three-dollar values. The “PAR” rate is the Medicare allowable for a Medicare participating physician. The “Non-PAR” rate is the Medicare allowable for a physician who does not participate in the Medicare program; and, the “Limiting Charge” is the maximum amount a non-participating physician may bill for the assigned HCPCS code. The same HCPCS code may appear on more than one line in the MPFS. The first line includes the HCPCS code, while the second line includes the same HCPCS code with an asterisk (*) and different dollar value. When a hospital outpatient claim is submitted for a service to be paid under the MPFS, the hospital will receive payment based on the PAR fee for the line without the asterisk. All hospital outpatient payments made on the physician fee schedule are made on the PAR rate for your area. Medicare payment for services allowed on the MPFS is 80% of the PAR fee. The patient must be billed for the remaining 20%.
Examples of charge line from MPFS 2003 provider disclosure report
A Medicare patient presents to a hospital outpatient department with a chief complaint of a non-healing sore on his left hand for several weeks. He also complains of a stiff left knee, which he relates to a boating accident two months ago.
The physician’s examination identifies a raised, red lesion at the base of the left thumb and a significant loss of range of motion of the left knee. A full-thickness 0.7 cm excision of the lesion, including margins, was accomplished. One suture was used to close the wound. A culture of the wound site was taken and the wound was dressed.
The specimen was sent to pathology, where it was diagnosed as a seborrheic wart. A two-view x-ray of the left knee revealed no abnormalities. The physician ordered a physical therapy evaluation. The patient was instructed to keep the hand dressings clean and dry.
He would receive a telephone call regarding the culture results and be given further instructions regarding physical therapy after the physician approved a PT plan of care. He was to return in five days for a recheck of the wound and suture removal.
Summary (See Fig. 1.)
|Total national payment allowance||$566.60|
There are two line items on this claim with an “A” status indicator: the culture (87070) and the PT evaluation (97001GP). To determine the potential payment for this claim, the Laboratory Fee Schedule has to be consulted for the payment for the culture (87070). The PT evaluation HCPCS code (97001) payment is determined by the MPFS. Addendum B identified the pathology HCPCS code (88305) and the x-ray of the knee (73560LT), “X” status indicators, as ancillary services paid under OPPS. The Evaluation & Management (992XX-25) and procedure (11421) HCPCS codes are reimbursed as APC’s. Revenue code 270 is an allowable charge; however, no separate payment is made for that revenue center. Total charges for this claim were $865.00; the Medicare National Payment Rate allowed $566.60 as payable. Out of that $566.60, Medicare made a payment of $395.55 and the patient is responsible for a co-pay of $171.05. The remainder of the charges is considered a contractual allowance which represents the difference between the amount the organization charges and the amount the hospital has agreed to accept as payment in full.
Enlist the aid of the Finance Department to obtain the APC payment rate for your area and obtain copies of the fee schedules from your Medicare Part A and Part B web site. Business Office personnel can teach you how to interpret a Remittance Advice. Start out with a claim with three or four charge lines with HCPCS codes and give it a try. There is no better way to fully understand reimbursement under OPPS! It is important that facilities learn how to match payments to claims - and this article has shown how this can be done.
- • Remittance advice— An electronic or paper format for explaining the payment of a health care claim.
- • Status indicators—Indicates if a service represented by a HCPCS code is payable under OPPS or another payment system and also if particular OPPS policies apply to the code.
- • Status indicator “A”—Indicates that services are paid under some payment other than OPPS, such as the Physician Fee Schedule. See Addendum D–11/01/02 Federal Register for a listing of some, but not all, of these other payment systems.
- • Contractual allowance—Represents the difference between the amount the organization charges and the amount they have agreed to accept as payment in full.
Fig. 1. Claim (UB-92)
|Field||42 Rev Code||43 Description||44 HCPCS||45 Service Rate||46 Unit||47 Total Chgs.||Status Indicator||APC||Nat’l. Payment Allowance||National Co-Pay||Medicare Pays|
*APC selected for demonstration purposes only. The CPT code assignment is dependant on facility criteria.