Transcript Comparison of the Prospective Payment System Methodologies

“Comparison of the
Prospective Payment System
Methodologies
Currently Utilized
in the United States”
Toni Cade, MBA, RHIA, CCS, FAHIMA
University of Louisiana at Lafayette
Overview
 Some of the prospective payment
systems covered will include MS-DRGs,
RBRVS, RUGs, APCs, CMGs, HHRGs,
MS-LTC-DRGs, and IPF-PPS.
Can you speak the jargon
of Prospective Payment Systems?
MS-LTC
DRGs
RBRVS
MSDRGs
IRF-PAI
HHRGs
APCs
CMGs
RUGs
IPF-PPS
 Each of the prospective
payment systems is
unique and quite
complex.
 We are all challenged to
understand the
application of these
prospective payment
systems.
Reimbursement is based upon the:
 third party payer
 healthcare setting or provider
 coding system used
 data set utilized
 encoder, grouper, and data entry
software used
Third Party Payers
 Third party payers are entities or
organizations that pay for some or all of the
covered medical expenses.
 There are many forms of health insurance
coverage in the United States.
 Categories of health insurance include:
– Government plans (i.e., Medicare, Medicaid,
TRICARE, CHAMPVA)
– Commercial or private insurance plans (i.e, Blue
Cross/ Blue Shield, Prudential, Aetna)
– Managed care contracts
– Workers’ compensation plans
Sources of Third Party Payers
U.S. Census Bureau indicated that 84% of Americans
had some type of health insurance and 16% had no
health insurance in the calendar year 2006
Health Insurance Types
U. S. Population with
Coverage (%)
Commercial or private
insurance plans
Medicare
69.9%
Medicaid
12.9%
Military Healthcare
13.6%
3.6%
Healthcare Setting or Providers
 Providers are those persons, institutions, facilities and
firms who are eligible to provide services and supplies.
 Examples of providers include:
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hospitals of all types (i.e., acute care, rehab, psych, long term,
specialty)
skilled nursing facilities
intermediate care facilities
home health agencies
physicians
independent diagnostic laboratories
independent facilities providing x-ray services
outpatient physical, occupational, and speech pathology services
ambulance companies
chiropractors
facilities providing kidney dialysis or transplant services
rural clinics
veterinary clinics
The Coding System
 There are two primary coding systems
utilized in reimbursement:
– ICD-9-CM
– CPT
 These and other coding systems are used
for statistical purposes.
The Data Sets
 Some of the prospective payment systems
require the standardized collection of a core
set of common data items which can be
utilized for many purposes, such as;
measuring patient outcomes, assessing the
quality of services, and measuring the
effectiveness of interventions and treatments.
 These data sets can also be used to form the
basis of reimbursement for the services
provided.
The Data Sets
Data Set
Acronym
Name of Data
Set
Healthcare
Setting
MDS/RAI
Minimum Data
Skilled Nursing Facility
Set/Resident Assessment (SNF)
Instrument
MDS-PAC/PAI
Minimum Data Set for
Post Acute Care/Patient
Assessment Instrument
Inpatient Rehabilitation
Facility (IRF)
OASIS
Outcomes and
Assessment Information
Set
Home Health Agency
(HHA)
CMAT
Case Mix Assessment
Tool
Inpatient Psychiatric
Facility (IPF)
Encoder, Grouper, and Data
Entry Software
 Encoder: a computer software program designed
to assist coders in assigning appropriate clinical
codes to words and phrases expressed in natural
human language. There are two types of
encoders:
– Logic-based: prompts the user through a variety of
questions and the choices are based upon the clinical
terminology entered
– Automated codebook: prompts screen views that
resemble the actual format of the coding book
Grouper
 Grouper: a computer software program
that applies appropriate logic to assign a
particular payment group (i.e, MS-DRG,
APC) according to the information
provided for that episode of care.
Data Entry Software
 Data entry software: computerized data
entry software may be required for the
establishment of a database and for
purposes of transmission of data.
Data Entry Software
Software
Acronym
Name of
Software
Used For
RAVEN
Resident Assessment
Validation and Entry
Skilled Nursing Facility
(electronic transmission of
data in MDS format)
IRVEN
Inpatient
Rehabilitation
Validation and Entry
Inpatient Rehabilitation
Facility (electronic
transmission of data from
the IRF-PAI)
HAVEN
Home Assessment
Validation and Entry
Home Health Agency
(electronic transmission of
data in OASIS format)
Why prospective payment?
 Development of prospective payment
systems was mandated by federal law
for Medicare reimbursement
 Current retrospective payment systems
were not effective in controlling costs or
in controlling government expenditures
for Medicare beneficiaries
Retrospective
Payment Systems
 Reimbursement is established after the
healthcare services are rendered and the costs
are incurred
 Increases in the length of stay translates to
increased charges on the itemized bill and
therefore an increase in the reimbursement
 Increases in the services rendered means
increased charges on the itemized bill and
therefore an increase in the reimbursement
Prospective
Payment Systems
 Reimbursement is established before the
healthcare services are rendered and monies
are expended
 Reimbursement is based upon a specific
prospective payment system methodology
 The length of stay and services rendered will
result in increased charges on the itemized
bill, but will not necessarily result in an
increase in the reimbursement
MS-DRG FACT SHEET
 Reimbursement to (Provider): Acute Care,
Short Term Hospitals
 MS-DRG stands for: Medicare Severity
Diagnosis Related Group
 Reimbursement for: Medicare and TRICARE
Inpatients
 Coding System Used: ICD-9-CM
 Effective Dates for Original DRGs:
– October 1, 1983 for Medicare Inpatients
– October 1, 1987 for TRICARE Inpatients
 Effective Date for MS-DRGs:
– October 1, 2007
 Number of MS-DRGs: about 745
MS-DRG ASSIGNMENT
1.
2.
3.
4.
Diagnoses and major procedures are coded using ICD9-CM codes.
Case is categorized into an MDC (Major Diagnostic
Category), which are divided by body systems.
Case may be further divided into surgical versus
medical partitioning.
Case may be split into one of three alternatives:
- with MCC, with CC, and w/o CC/MCC
- with MCC and w/o MCC
- with CC/MCC and w/o CC/MCC
5.
Each MS-DRG has a CMS “relative weight” and when
multiplied by the “hospital’s specific rate”, the
reimbursement is derived.
MS-DRGs with three subgroups
(MCC, CC, and non-CC); referred to as
“with MCC”, “with CC”, and “w/o CC/MCC)
 MS-DRG 682
Renal Failure w MCC
 MS-DRG 683
Renal Failure w CC
 MS-DRG 684
Renal Failure w/o CC/MCC
MS-DRGs with two subgroups
(MCC and CC/non-CC); referred to as
“with MCC” and “without MCC”
 MS-DRG 725
Benign Prostatic Hypertrophy w MCC
 MS-DRG 726
Benign Prostatic Hypertrophy w/o MCC
MS-DRGs with two subgroups
(non CC and CC/MCC); referred to as
“with CC/MCC” and “without CC/MCC”
 MS-DRG 294
Deep Vein Thrombophlebitis w CC/MCC
 MS-DRG 295
Deep Vein Thrombophlebitis w/o CC/MCC
RBRVS FACT SHEET
 RBRVS stands for: Resource Based Relative
Value System
 Reimbursement to (Provider): Physicians
 Reimbursement for: Medicare Patients
 Coding System Used: HCPCS/CPT
 Effective Date: January 1, 1982
 Number of RBRVSs: each CPT and HCPCS
code has a payment amount (thousands)
RBRVS ASSIGNMENT
1.
2.
3.
4.
5.
Each service and procedure is coded using the
HCPCS/CPT codes.
Each HCPCS/CPT code has RVUs (relative value
units) for the physician’s work, practice expense,
and malpractice.
Each RVU is adjusted by a GPCI (geographical
practice cost indices).
The sum of the adjusted RVUs is multiplied by a
conversion factor which constitutes the Medicare fee
schedule amount.
The physician is reimbursed the lower of the
Medicare fee schedule amount or the actual charges.
ASC FACT SHEET
 ASC stands for: Ambulatory Surgery Center
 Reimbursement to (Provider): FreeStanding Surgery Centers
 Reimbursement for: Medicare Ambulatory
Surgery
 Coding System Used: HCPCS/CPT
 Effective Date: January 1, 1997
 Number of ASCs: Originally only 9 groups,
effective January 1, 2008 there were several
hundred payment groups (APCs)
ASC ASSIGNMENT
1. Ambulatory surgery is coded using
CPT codes.
2. The CPT code should appear on the
approved list of ASC procedures.
3. Each CPT code is categorized into one
of several hundred payment groups.
4. Each payment group has a payment
rate.
RUG FACT SHEET
 RUG stands for: Resource Utilization
Group
 Reimbursement to (Provider): Skilled
Nursing Facilities
 Reimbursement for: Medicare
Inpatients
 Coding System Used: ICD-9-CM
 Effective Date: July 1, 1998
 Number of RUGs: 53
RUG ASSIGNMENT
1. This case mix payment system utilizes
information from the MDS (Minimum Data
Set).
2. The patient is classified into 1 of 7 major
categories depending on the patient type
(rehab, extensive services, special care,
clinically complex, impaired cognition,
behavior problems, and reduced physical
function).
3. Each of these 7 categories is further
differentiated to yield 53 specific patient
groups used for payment.
4. Each of the 53 RUGs has a per-diem rate.
APC FACT SHEET
 APC stands for: Ambulatory Payment
Classification
 Reimbursement to (Provider): Hospitals
 Reimbursement for: Medicare
Outpatients
 Coding System Used: HCPCS/CPT
 Effective Date: August 1, 2000
 Number of APCs: about 850
APC ASSIGNMENT
1. All services (major and minor) are coded
using HCPCS/CPT codes.
2. Each HCPCS/CPT code is grouped to an
APC. There can be many different APCs.
3. Each APC has a Medicare payment amount
and a beneficiary coinsurance amount. The
provider receives the sum of these dollar
amounts as reimbursement for each APC.
CMG FACT SHEET
 CMG stands for: Case Mix Group
 Reimbursement to (Provider):
Rehabilitation Hospitals and Units
 Reimbursement for: Medicare
Inpatients
 Coding System Used: ICD-9-CM
 Effective Date: January 1, 2002
 Number of CMGs: 92
CMG ASSIGNMENT
1. This prospective payment system uses
information from the Inpatient Rehabilitation
Facility-Patient Assessment Instrument (IRFPAI).
2. Patients are classified into distinct Case Mix
Groups (CMGs) based upon clinical
characteristics and expected resource needs.
3. The CMGs were constructed using rehab
impairment categories, functional status (both
motor and cognitive), age, comorbidities, and
other factors.
4. Each CMG has a different payment amount.
HHRG FACT SHEET
 HHRG stands for: Home Health
Resource Group
 Reimbursement to (Provider): Home
Health Agencies
 Reimbursement for: Medicare Patients
 Coding System Used: ICD-9-CM
 Effective Date: October 1, 2000
 Number of HHRGs: 153
HHRG ASSIGNMENT
1. This prospective payment system uses
information from the Outcomes and
Assessment Information Set (OASIS).
2. Each HHRG has an associated weight
value that increases or decreases
Medicare’s payment for an episode of
care and this payment is relative to a
national standard per episode amount.
MS-LTC-DRG FACT SHEET
 MS-LTC-DRG stands for: Medicare Severity
Long Term Care-Diagnosis Related Group
 Reimbursement to (Provider): Long Term
Care Hospitals
 Reimbursement for: Medicare Inpatients
 Coding System Used: ICD-9-CM
 Effective Date: October 1, 2002
 Number of MS-LTC-DRGs: 650
MS-LTC-DRG ASSIGNMENT
1. The assignment of a patient case into a
MS-LTC-DRG is similar to the way a
patient is classified to a MS-DRG.
2. The biggest difference is that the
relative weights are different.
IPF-PPS FACT SHEET
 IPF-PPS stands for: Inpatient Psychiatric
Facility-Prospective Payment System
 Reimbursement to (Provider): Psychiatric
Facilities
 Reimbursement for: Medicare Inpatients
 Coding System Used: ICD-9-CM
 Effective Date: January 1, 2005
 Number of IPF-PPSs: 15
IPF-PPS ASSIGNMENT
1.
2.
3.
4.
This prospective payment system is based on the
cost of an average day of care in a psychiatric
facility.
Payment for the average day or per diem would be
the Federal per diem base rate, to which various
adjustments would be applied applicable to the
patient treated and facility characteristics.
The proposed IPF-PPS uses the existing inpatient
hospital MS-DRG system to group inpatient
psychiatric patients into one of the 15 allowed
psychiatric MS-DRG groups, but does not use the
inpatient PPS payment amount. The IPF-PPS has
its own set of payment adjusters for each of the
MS-DRG codes.
The MS-DRG payment adjustment amount is
applied to the Federal per diem rate along with
the applicable payment adjusters to derive the
final per diem amount for each inpatient
psychiatric stay.
CHALLENGE
YOUR MISSION IS
TO STAY INFORMED
OF THE PARTICULAR PROSPECTIVE
PAYMENT SYSTEM(S) THAT RELATES
TO YOUR JOB!