Download - Reimbursement, demystified
Reimbursement, demystified.
Charles William Bowkley, III MD
2007-8 James Moorefield Fellow, ACR
Brown University – Warren Alpert Medical School
ACR
CMS
3rd PP
Radiologist
Patient Care
P4P CMS
3rd PP
Industry
RUMC
Radiologist
It’s really not that bad…
I promise
Introduction
CMS defines rate at which you are paidVery complicated . . .
You negotiate with 3rd PPWhat you get paid for (Procedure, E/M)
How much you get paid
A complex series of events determines the final outcome…
Let’s address the basics…
MedicarePart A – Hospital insurance
• Inpt, SNF, Home Health, Hospice• Payroll taxes (FICA), Self Employed tax, RRA
Part B – Medical insurance (Physician Fees)• Otpt Hospital / Physician Office, ASC, “Health
prac.”, Lab/Dx services, etc.• Enrollee pymt, Fed. Revenues, Interest on B fund
Part C – Medicare Advantage (MA)• Entitled to A, enrolled in B, reside in area of MA• Capitated “HMO/PPO” insurance for qualified
Part D – Prescription Drug Plan
Medicaid
Federal financing for low income• Stringent requirements• May require co-pay• $$ paid to state health care provider, not patient
Let’s walk through a simple patient encounter…
46 yo male with CC of Dyspnea
HPI: 36 ppd with new onset of SOB, cough, and hemoptysis.
PMH: NonePSH: Appy, CCYMeds: MVIALL: NKDAIn-office CXR “nl”, CBC nl
A/P: 46 yo smoker w/ hemoptysis, cough, and dyspnea. ? PNA ? CA
- CT Chest I+
Follow the paper trail . . .
ICD-9
International Classification of Diseases, 9thed
BBA 1997 physician ordering test MUST have signs, symptoms, and possibly diagnosis
786 (Cannot specify diagnosis) Symptoms involving respiratory system and other chest symptoms
786.2 Cough786.3 Hemoptysis
CPT
99203 Detailed history, office/outpt visit
Primary care physician billing
71260 CT Chest I+
Radiologist billing
Gray Shield - RI
C.A.
71260
CPT
Current Procedural Terminology
Codes and modifiers used to report services performed by healthcare providers
Chosen as national standard code set
Maintained by AMA CPT Editorial Panel
http://www.ama-assn.org/ama/pub/category/3882.html
CPTCategory I
Widespread use.Peer reviewed literature.Advisor support.
Referred to AMA-RUC for valuation*
Category IIOptional, Performance measurementDecreased need to manually audit chartsNone created to dateNo payment
Category IIILimited disseminationLiterature suggests future growth and utility.Primarily for tracking new procedures.NOT referred to AMA-RUC for valuation.
• Carrier priced if covered.
http://www.ama-assn.org/ama/pub/category/3882.html
CPT Editorial PanelChair: William T. Thorwarth Jr., M.D., (Former president of the ACR and former chair
of the ACR Economics Commission)
18 Members
11 nominations by AMA
2 Vice-Chairmen and representative of Health Care Professionals Advisory Committee (HCPAC)
1 Blue Cross Blue Shield Association
1 Health Insurance Association of America
1 CMS
1 American Hospital Association
1 Performance Measures
http://www.ama-assn.org/ama/pub/category/3882.html
April 11, 2023 18
Code Application
Staff Review
Panel has already addressed the issue
New Issue or SignificantNew Information Received
Specialty Advisors
Advisor(s) Agree No New Code or Revision Needed
Advisors Say Give ConsiderationOr 2 Specialty Advisors Disagree onCode Assignment or Nomenclature
Staff Letter to Requestor Informing Him/Her of Correct Coding Interpretation
or Action Taken by the PanelEditorial Panel
Table for Further Study
Reject Proposal Change
Add New Code/DeleteExisting Code/or Revise Current Terminology
CPT Editorial Panel RUC Panel
Advisory Committee Advisory Committee
RUC
29 members23 appointed by special societies
Chair
American Medical Association Representative
CPT Editorial Panel Representative
American Osteopathic Association Representative
Health Care Professionals Advisory Committee Representative
Practice Expense Review Committee Representative
RUC CycleCoordinated with CPT Editorial Panel schedule
Required to Survey at least 30 practicing physicians **(Essential)**
Recommendations presented to RUC
RUC may adopt or modify before submitting to CMS
RUC recommendations forwarded to CMS in May
CMS meets with Carrier Medical Directors (MAC) to review recommendations
Medicare Physician Fee Schedule (includes CMS’s review of RUC Recommendations) published late Fall. Valued codes from May submission reflected January 1 following year.
April 11, 2023 21
CPT Editorial Panel RUC Panel
Advisory Committee Advisory Committee
CPT Editorial Panel AdoptsCoding Changes
Specialty Society AdvisorsReview New and Revised
CPT Codes
Codes Do Not Require New Values
No CommentComment on OtherSocieties’ Proposals
Survey Physicians Recommended Values
Specialty Society RVS Committee
RVS Update Committee
CMS
Medicare Payment Schedule
What is relative value ?
RBRVSRBRVS: resource based relative value scale
• Pressure to change Part B expenditure
Phased in January 1, 1996
“Customary, Prevailing, Reasonable”• Specialty specific• C: Median of individual charges for a specified time• P: 90th %ile of all peers in a defined area• R: Lowest of the Actual, Customary, Prevailing fee
RVS1
California 1956• Based on median charges reported by C. BS
Harvard RBRVS, third iteration 1985• W. C. Hsiao, MD & P. Braum, MD• Phase I
» 18 medical specialties
• Phase II» 15 additional specialties
• Phase III / IV» Include remaining services coded by CPT
RVS2
Include 3 main variables1. Relative Physician Work (52%)2. Practice Expenses (44%)3. Professional Liability Insurance Costs (4%)
Modifiers1. Adjust for geographic locale
2. Different specialty, same service = same payment3. “Budget Neutral” conversion factor (CF)
(Would not change Medicare spending -/+)4. Include process for annual update in CF5. Limits on Balance billing6. Medicare Volume Performance Standard (SGR)
ICD-9 CPT PC/TC
786.2
71260 55.36 / 263.79
786.3
Black Box
PAYMENT (Physician Component)
Total RVU = Conversion Factor * (_____)
Work: (Work RVU x Work GPCI)
+
CF * PE: (PE RVU x PE GPCI) +
PLI: (PLI RVU x PLI GPCI) +
CF * [(Work RVU * Work GPCI) + (PE RVU * PE GPCI) + (PLI RVU * PLI GPCI)]
Technical Component
MPFS (RVU PE *GPCI(PE) + RVU PLI *GPCI(PLI)) * CF
HOPPS (APC) Payment Rate * Wage Index (Regionally Calculated like the GPCI)
How did we arrive at these calculations?
“Lawmakers See Red Over Meat Packaging”
“…warn consumers to discard any product with an unpleasant odor, slime, or a bulging package.”
- USA Today, 10/31/2007
Pretty Good Advice!!!
HOPPS
MPFS
WORK PE
RVU
PLICPT
APCPAYMENT
RATE
Global Billing
Professional Component
Technical Component“Attempt to devise the best payment system”
Physician Work
Time to perform service
Technical skill and effort
Mental effort and judgment
Psychological stress of iatrogenesis
Currently Based on: ACR Socioeconomic Supplemental Survey Data
Historically Based on:Harvard RBRVS study1992 RVS Refinement ProcessAMA/Specialty Society RVS Update Process
Physician ExpenseWhat it costs the “Practice” to run: Rent, Wages, Equip. / Supplies
Practice Expense Advisory Committee (PEAC)
ACR Socioeconomic Monitoring System Supplemental Survey Data
Clinical Practice Expert Panels (MD’s)• Data for constructing cost estimates• In/Direct cost elements for a service• Estimates extended to related codes in CPT family
CPEP Technical Expert Group• Monitor data collection process
AMA Socioeconomic Monitoring System Data
Common service provided only by X (Avg. Medicare 1991 payment $100), the percentage of PE cost for the given specialty X (Y%), multiply that number by the $100 cost and you get Y (Initial Dollar) RVU’s.
Equipment Utilization and Interest Rate
(Technical Component (Included in Physician Expense RVU) )
[1/(minutes per year * 50% usage)) * Price * ((11% interest rate/1) -
(1/(1+ 11% interest rate) * life of equipment)) + 5% maintenance]
Courtesy of Pam Kassing
Physician Liability Insurance
Initially: Omnibus Budget Reconciliation Act 1989
Now..• Calc. average professional liability premium• Calc. risk factor based on specialty• Mult. % of service (CPT based) by risk factor• Mult. By Work RVU• Rescale for budget neutrality ( x Fudge Factor)
GPCI “Gypsie”Geographic practice cost indexes
AMA SMS 1987 survey
Must be updated Q 3 years
Changes phased in over a two year period
Cost of living: 1990 census college grads, 2000 professional organizations, updates since….
Inputs to medical practice varied by geographic locale
Premiums for policy 1 mil/ 3 mil
Conversion Factor
Updated yearly based on BBA 1997
CFx = CFx-1 * MEIx * UAFx * LCx * BNx
MEI: Medical Economic IndexMeasures average price change for medical goods/services with respect to inflation
UAF: Update Adjustment Factor
Comparison of actual and target Medicare expenditure. Designed to prevent unsustainable increases in Medicare expenditures.
LC: Legislation Change
BN: Budget Neutrality
So, how does it all add up?
Example: CT Chest I+ 712602008
[(Work RVU x Work GPCI) + (PE RVU x PE GPCI) + (PLI RVU x PLI x GPCI)] x CF
Work ((1.24) x Budget Neutrality Adjuster (0.8816)) , PE(0.44), PLI (0.05), CF(34.0682)
RI = (((1.24 x 1.045 x 0.8816) + ((0.44 x 0.991)) + ((0.05 x 0.895)) x (34.0682)) = $ 55.36
Ca (SF) = (((1.24 x 1.060 x 0.8816)) + ((0.44 x 1.546)) + ((0.05 x 0.640)) x (34.0682)) = $ 63.71
Technical Component
MPFS (RVU PE *GPCI(PE) + RVU PLI *GPCI(PLI)) * CF
RI: (7.48 (0.991) + 0.37(0.895)) * 34.0682 * = 263.79
CA(SF): (7.48 (1.546) + 0.37(0.640)) * 34.0682 * = 402.00
HOPPS (APC 0283): Payment Rate * Wage Index(2006)
RI: 289.71 * 1.0954 = 317.35
CA(SF): 289.71 * 1.4974 = 433.81
HOPPS
MPFS
WORK PE
RVU
PLICPT
APCPAYMENT
RATE
Global Billing
Professional Component
Technical Component
OK, now I understand…
But what is the big picture?
Adapted from Woody, I. O.
JACR 2005; 2(2):139-150
Courtesy of CMS and H. Forman, MD
Courtesy of CMS and H. Forman, MD
What can we do…
Well, all politics is local . . .
July 6, 2006
h
AK
NJ
RI (BC/BS of AR)
NM
WA
OR
ID
MT
WY
ND
SD
CO
UT
NV
CA
AZ
NM
TX
OK
HI
NE
KS MO
IA
MN
WI
IL
MI
IN OH
KY
TN
NC
MS
GA
FL
Palmetto Gov. Ben.
WV
PA
MD DC
NY
ME
CT
MA
LA
VT
AR
DE
AK
NH
Noridian
Noridian
BC/BS of MT Noridian
CIGNA Noridian
Noridian
National Heritage Insurance Company
Noridian Noridian Noridian
BC/BS of KS
BC/BS of KS
Noridian
BC/BS of AR
Trailblazer
BC/BS of AR
WPS
WPS
WPS
Noridian
BC/ BS of KS
Noridian
Noridian
WPS Admina- Star
Palmetto Gov. Ben. Admin.
HGSA of PA
Empire
Cahaba Gov. Ben. Admin
First Coast Service Options
Cahaba Gov. Ben. Admin
Admin. SC
CIGNA CIGNA
AdminaStar
Trailblazer Trailblazer
Group Health
BC/BS of Western NY
Empire
Trailblazer
BC/BS of AL (Cahaba Gov. Ben. Admin) AL
National Heritage
First Coast Service Options
National Heritage Insurance Company In
BC/BS of AR
BC/BS of AR
BC/BS of AR
Local Medicare Carriers
VA
MAC
All politics is local…..
>90 % Of Coverage And Payment Decisions Occur At The Local Level
Each MAC is required by CMS to have a physician Contractor Medical Director (CMD), who must follow the Coverage Issues Manual, Program Memoranda and other transmittals from CMS defining the CMS national policy for Medicare reimbursement
ACR involvement helps prevent the spread of reimbursement policy damaging to radiology between contractors
CMS gives authority to the local contractors to determine under what conditions a service is considered medically necessary and claims may be denied if not appropriate.
In most states the CMD has the ultimate authority to determine medical necessity
Adapted from John Patti, MD
CMS
MAC (MD)
Radiologist
State
CAC Rep
CPT
RUC
ACR
Local Coverage Determination
LCDs are produced by CMDs to inform providers of the local Medicare reimbursement rules and the medically necessary reasons for an examination or procedure
LCDs are created for certain CPT codes or a group of CPT codes (with associated ICD-9 codes and established diagnoses) required when submitting a Medicare claim
Procedure Description, Reasons For Denial, and Coding Guidelines are omitted from LCDs and published in separate supporting articles by the Contractor
New LCDs and supporting articles must be posted for public comment prior to integration; this period is 45 days
Traditionally contractors have been receptive to comment on both the LCDs and supporting articles
Adapted from of John Patti, MD
Lines of communication
Courtesy of Bibb Allen, MD
Managed Care Committee / Network
3rd Party Payer
Carrier Advisory Committee Network
Diagnostic Radiology, Radiation Oncology, Nuclear Medicine, SIR CAC, RBMA CAC Network
Link between Medicare Carrier and general membership by ensuring that local policies appropriately represent practice of radiology
CPT III Codes specifically **
Staff assist CAC representative in evaluating Local Coverage Determinations (LCDs)
Why all the doom and gloom?
1. DRA
2. Contiguous Body Part Imaging
3. 5 Year Review
4. The calm _____________ the storm…..
The Perfect Storm
TC capped at the lesser of the Medicare physician fee schedule payment rate or the Ambulatory Payment Category (APC) rate under the hospital outpatient prospective payment system (“HOPPS”).
Includes X-ray, ultrasound (including echocardiography), nuclear medicine (including PET), MRI, CT, and fluoroscopy,
Excludes diagnostic and screening mammography
Professional Component is not affected
Congressional Budget Office (CBO): $2.8B savings over the next 5 years
ACR staff: $1.2 B savings in first year alone
CBO new score at $13B over 10 years
Deficit Reduction Act of 2005: Section 5102(b) limits TC payment for imaging in physician offices
or imaging centers on/after January 1, 2007.
Deficit Reduction ActThe imaging provisions are a public policy disaster
FALSE: Wide variance of payment between hospital outpatient based imaging services and imaging provided in physicians offices/imaging centers
TRUTH: Study done by The Moran Company shows a variance across all imaging modalities of 3%
Provisions written without input from the imaging community, without Congressional hearing, without accountability to its authors
No one takes responsibility for authorship
Eliminates RBRVS and takes lower of payment between the MPFS and HOPPS
DRA Impact
Financial Impact Breakdown By Procedure
Percent Reduction Lost Imaging Revenue
MRI 35 % 490 M
US 30% 300 M
Nuc Med 16% 136 M
CT 9% 69 M
MRA 25% 24 M
CTA 37% 10 M
DRA Impact
Biggest Hits by Lost Revenue
MRI Brain $162 M
MRI Spine $90 M
Myocardial Perfusion SPECT $132 M
Carotid Artery Duplex $87 M
Echocardiography Color Doppler $83 M
PET and PET/CT ??
Multiple Procedure Discount For Contiguous Body Parts
CMS Regulation
Continues the reduction for the second and subsequent examinations at 25% in 2007
At the urging of ACR, CMS did not increase the reduction to 50%– Any savings from multiple examinations goes back to the federal fund
– Application of the reductions to the HOPPS rate would result in 75% reductions for the second procedure in some cases
CMS will apply the 25% reduction to the MFS payment rate and if that payment is higher than the HOPPS payment, the HOPPS payment is paid
The Third 5 Year ReviewBudget Neutrality
Section 1848 (c) (2) (B) (ii) (II) of the Social Security Act requires that adjustments in RVUs may not cause total Medicare Physician Fee Schedule payments to differ by more than $20 million
When this tolerance is exceeded CMS must make a budget neutral adjustment
The Third 5 Year ReviewMandated process for Medicare to review overvalued and undervalued CPT codes (Via evaluation of RVU’s).
Over 160 high utilization codes were reviewed, 40 pertaining to radiology
Major change was 20% increase in E/M value, resulting in greater than $4 billion budget neutral effect
Incidentally, Anesthesia work value inc. 32% - this is reflected in the Budget Neutrality Adjustment in 2008 Final Rule
The Third 5 Year Review
Budget Neutrality Adjustment For Physician Work RVUS
Vigorously opposed by the ACR
Vigorously opposed by the RUC and almost all medical specialties
Reasons For ACR OppositionMajor impact on hospital based physicians
This is a historical precedent for changing the CF
The Third 5 Year ReviewEnter the Budget Neutrality Adjustment…
Professional Component (PC) Payment
(RVUxGPCI) +(RVUxGPCI) + (RVU+GPCI) * CF
(RVUxGPCIx.8816) +(RVUxGPCI) + (RVU+GPCI) * CF
CMS has finalized its 32% increase for anesthesiology physician work values as part of the third 5 year review.
The physician work adjustor will cause the 10.1% cut in physician work values for 2007 (with a work adjustor of .89896) to be increased to a 11.94% cut (changing the work adjustor to .8816) to all physician work values in the physician fee schedule for 2008.
Conversion FactorCalculated each year based on a statutory formula that centers around the
Sustainable Growth Rate - a.k.a. SGR
SGR components
Medical economic index - a.k.a. MEI
Volume of services in prior years
Target volume of services based on the Medicare population
Gross domestic product
SGR now demanding decreases in the conversion to achieve the target ratesFive years of fixes leaves a large amount to repay to the systemWe are at the cliff and if the SGR formula is not changed double digit reductions in the CF will occur
Decreases 10.1% for 2008 to $34.0682
ACR Policy PrioritiesCo-founder of Access to Medical Imaging Coalition (AMIC), ACR will urge AMIC to support Accreditation as a means to address rapid growth in utilization http://www.imagingaccess.org/
ACR will support participation in Accreditation programs BY ANY PHYSICIAN SPECIALTY who commits to quality and appropriate use of imaging studies and further, the ACR will support Medicare development of Accreditation requirements/Appropriateness criteria based on private sector/physician specialty societies programs
AMA and medical community pushing for comprehensive legislation to fix or replace the SGR focusing on those changes not adversely affecting radiology
Because the increase in imaging utilization by ~14% is seen as a driver of SGR spending, radiology remains in the crosshairs
Extensive congressional lobbying with bipartisan co-sponsors re: DRA moratorium bills filed in 2006 and 2007
Advocacy to CMS on contiguous imaging reduction – prevented a 50% cut for 2007, continue to defend TC from attack
Advocacy to CMS on need for valid survey data on equipment utilization rate – CMS proposed to hold rate steady for 2008
Final Rule for 2008 Conversion Factor for HOPPS payments will increase by 3.3%
CMS is proposing not to pay separately for the hospital TC of codes that they describe as dependent items and services
All imaging guidance, supervision, and interpretation (S&I) codes would be bundled into the procedure codes and, also Intraoperative services such as ultrasound would be bundled into the procedure code
Image processing services – 3-D post processing would not be paid separately
Contrast material and radiopharmaceutical cost will not be paid separately
Conversion Factor for MPFS payments will decrease by 10.1%
Anti-Markup Language – if you bill Medicare $50, they will ONLY pay you $50….
Under Arrangements – no joint venture participation by hospitals and referring MD’s
ACR lobbied heavily for the Radiology Practice Expense / Hour increase to $204.86
HO
PP
SM
PF
S
MPFS Final Rule for 2008Practice Expense Methodology
Practice expense per hour (PE/hr) is amount it costs radiology practices in indirect/overhead to run an office or imaging center per hour.
One of only a few specialties to conduct an alternate survey to re-calculate PE/hr – original CMS Socioeconomic Monitoring Survey assigned $54/hr to radiology
ACR survey to replace SMS survey was miscalculated by CMS contractor (Lewin) at $174 PE/hr
ACR vigorously challenged Lewin – CMS agreed
In 2008 CMS will correct the radiology PE/hr to $204– $100m shift to radiology
Will partially balance the DRA effects and CF changes
Courtesy of Pam Kassing
Future• Equipment Utilization
• Interest rate for equipment debt
• Practice Expense
• CF
• P4P
• Radiology Utilization Management Companies– “Steerage”, Pre-Auth.
• Assume no DRA moratorium
• Comparative Effectiveness
Future• Leasing Arrangements
• Resolve Reimbursement Issues for use of RA’s
• More self-referral regulations and Stark III
• Fixing the SGR formula and how the conversion factor is calculated
• Continue to work with private payers to address similar issues
Courtesy of Pam Kassing
Special Thanks and Attributes to…
John Patti, MDBibb Allen, MDHoward Forman, MDPam KassingMaurine Spillman-DennisDiane HayekAnita PenningtonKathryn KeysorHelen OlkabaEvelyn GIlbert