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Charge Setting at your CHC…Maximize Opportunities with Prudent Planning

November 6, 2014

New HRSA SFDS PIN, Medicare Rate Hike, & Medicare “G” Codes Create Perfect Storm

Too often when we ask a CHC CEO or CFO about their fee schedules or the sliding scale, we are met glazed eyes and/or defensive posturing.  Many CFOs claim they inherited the schedule, CEOs don’t necessarily understand it, and board treasurers… well, most don’t know where to begin.  Just keeping up with legislative updates can be tedious.

Sliding Fee Absolutes

In September, HRSA released a long awaited Policy Information Notice (PIN) surrounding development of a Sliding Fee Discount Scale (SFDS). After years of HRSA staff telling CHCs what was or was not permissible based on his/her subjective thoughts on the subject… we finally have concrete guidance. This 16-page document reiterated some historic imperatives. Here a few biggies:

  1. Cover reasonable costs and make your fee/charge schedule commensurate with local prevailing rates.
  2. Assure uniform and consistent application of SFDS policies and FPL determinations.
  3. Disallow SFDS eligibility if no paperwork provided. If patients don’t present necessary paperwork as defined in your SFDS policy and procedure, your CHC does NOT have to discount charges.
  4. Allow a CHC to have policy around charging a “nominal fee” to patients  at or below100% of FPL… even for SFDS eligible patients.
  5. Allow a CHC policy to release (i.e., stop seeing) patients who do not comply with payment of these predetermined nominal fees… emergencies obviously excluded.
  6. Utilize a “flat rate” sliding scale vs. discounts for each HCPCS (e.g., CPT) code… the latter making your team dependent on accurate and timely provider coding which is often wanting.
  7. Require annual approval/review by the board so they can assure your CHC’s SFDS is not creating a barrier to care.
  8. Afford non-SFDS discounts for patients above 200% of FPL… as long the determination or funding source is separate/distinct from your CHC’s published SFDS and the discount can be applied without preferential treatment.

In the end, a CHC uses the SFDS to meet mission expectations; i.e., bring down barriers to care felt by your community members. You exist to assure access to affordable health care, for all who seek it. However, optimizing the sliding scale.. and over all charge schedule… is paramount to affording your patients ongoing access to a fiscally viable institution. As we say at PMG, “You need to get paid when you can so you can afford to give it away when you want.” Sliding fee scale development is just part of the overall charge setting process that requires annual attention.

Healthcare providers (e.g., doctors, hospitals, CHCs, etc.) should always charge more than they expect to get paid. If ever you are paid what you charge, your charge is too low. Yet, we still visit scores of CHCs who are paid what they charge. For instance, they set a charge for CPT code 99213 at $50 and are paid $50 by Blue Cross, Aetna, United, etc.  This means they would likely have paid you more. You always want a contractual adjustment, a write-off, which assures your charge exceeds the total amount a payer is/was willing to pay.  We know you know a CHC exception exists around encounter rate compensation when/if paid “direct” from Medicaid and Medicare… but wait even Medicare is now changing their position on this.

Raising rates is a bad thing?

Surprising to PMG, the elevation of the Medicare encounter rate ceiling from $108 and $128 (rural and urban, respectively) to $158.85… was met with consternation and negativity. How could THE federal payer raising rates… the payer from which most other payers get their payment policy… and a payer representing a rapidly expanding market for CHCs… make CHC leadership angsty? Well, CHCs are now obligated to assure their charge schedule is set to maximize this elevated rate.

Historically or the time being, CHCs submitting claims directly to Medicare are remitted payment at 80% of the encounter rate. Your current Medicare cost report rules until you file one post Oct 1, 2014.  CHCs will transition to the new rate with late arrivals finally gaining access to the new rate by early 2016. According to historic conversation and reading of NACHC research, the vast majority of CHCs (if memory serves better than 80%) are at the rural and urban encounter rate ceiling. Stated otherwise, the cost of each Medicare visit is above the $10/$128 ceiling. Again, elevating rates to almost $159 is good news right?

Well, Medicare payment policy for CHCs has afforded the CHC payment of the encounter rate regardless of the charge. If a CHC only coded, say, for a 99212 at $40… they would receive the full encounter rate of $108/$129 dependent on the rate approved by Medicare after acceptance of a CHC’s Medicare cost report. Sure you had to perform some negative net adjustments but geez, who would complain if you got paid 2-3 times what you charged? Not most CHCs. They gladly took the money and ran.

With the new Medicare rate and updated policy, CHCs will now receive 80% of the new rate or80% of the charge… whichever is less. So, suddenly setting charges and correct coding become seemingly more significant. Truth is, and don’t believe me, ask your providers… if your core providers accurately use the full compliment of HCPCS (e.g., CPT) and ICD codes at their disposal to capture the breadth and scope of services rendered to Medicare patients seen AND you set charges commensurate with local prevailing rates… it will be a rare exception that charges will fall below the new rate. However, people fear what they don’t know or understand.

And now G Codes!!

I will admit this next part… the new G codes… is particularly vexing. This is due largely because it is truly unprecedented with no formal/approved guidance on how to determine pricing for the G codes. Secondarily, it requires a level of coding and billing expertise that is all too rare at most CHCs. Let me back up and show you the G codes:

  • G0466 – FQHC visit, new patient
  • G0467 – FQHC visit, established patient
  • G0468 – FQHC visit, IPPE or AWV
  • G0469– FQHC visit, mental health, new patient
  • G0470 – FQHC visit, mental health, established patient

So, several questions your CHC has to answer:

  1. What services are included in each of these codes? They don’t crosswalk directly to any singular CPT codes so you get to decide.
  2. Do you average fees for all new vs. established patients divvying data by medical vs. mental (behavioral) health?
  3. All services must be submitted on the same claim. What if you submit claims to more than one Medicare Administrative Contractor?
  4. Who assigns the G code? Your EMR/EHR has required your providers to perform “charge entry” (i.e., selecting CPT and ICD) which starts billing but you don’t want them coding Medicare patients differently from other payers, right?

We meet a surprising number of CHCs who choose to not seek any reimbursement from Medicare because to them it is too complicated. To us at PMG, that is nuts. Don’t get me wrong, the G codes and the new encounter rate upped the ante in terms of your revenue cycle team needing an expanded knowledge base. These new statutes are neither easy to understand nor implement. We don’t expect a CEO or CFO to know the answers but you better have a pretty savvy bunch to work you through this. And, if in-house expertise is less than stellar, don’t be too proud to ask for assistance from an outside firm. The last thing your CHC needs is OIG investigation of abusive coding practices or false claims filing… all stemming from incompetence (or ignorance) and confusion.

What to do?

So, some quick suggestions:

  1. Design a process for annual review and setting of charges including SFDS. HRSA says you have to and it is just good business with fiduciary accountability at the core.
  2. Move to a flat rate sliding fee. It is easier to explain internally and for patients while simultaneously removing dependence on provider coding.
  3. Monitor coding patterns by your providers. You must hold them accountable around documentation and corresponding coding to assure what they document/code demonstrates the acuity/complexity of rendered services. This will help with Medicare changes AND elevate your game as risk adjusted compensation moves in.
  4. Create a methodology for determining pricing for G codes. This is not going away so whether you simply add up all Medicare charges and divide it by total visits (and decide whether to include “carve out” services that go to Part B via ANSI 837P)… create a process and follow it.
  5. Assign a C level person to be accountable. Normally this is the CFO but we have met many CEOs who feel this is so important; they want to be in the know. Don’t be caught off guard. Create a chain of command, a timeline for creation, and subsequent checks and balances. Follow it through with diligence.

I regularly raise a glass to toast to the complexities of health care. It’s how I’ve made a living the past 20+years. It is a crazy, ever-changing environment and (oddly) I love it.  The aforementioned changes, if embraced and faced head-on, will put your CHC in a markedly improved position. Getting charges “right,” creating a SFDS that is uniformly and equitably applied to benefit all patients, and holding your providers accountable around optimal coding… these make your CHC more fiscally sound… an elevated performer.

I like to play golf and as I hit an errant shot (thankfully with less regularity), I remind myself of that old saying, “If golf were easy, nobody would play.” If CHC revenue cycle were easy, we would all have different careers because perhaps we would not be needed. The fact is, healthcare coding, billing, and reimbursement is complex, morphing, and a domain where only the hearty survive. It ain’t easy, so play hard. And win.

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