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Medicare PPS is here… now what?

October 21, 2013

The Affordable Care Act (ACA) is full of good intentions not the least of which (via Section 10501) is the planned transition to a Prospective Payment System (PPS) starting for many CHCs as of October 1, 2014.  Your CHC’s start date depends on your Medicare Cost Reporting period but all CHCs will be transitioned as of January 2016. To support the transition to PPS, Change Request (CR) 7038 (January 2011) required CHCs to submit HCPCS (e.g., CPT) codes on their 837-I claims used to obtain encounter rate payment from Medicare.  While nearly all practice management systems being incapable of easily accommodating CR7038’s demands… never mind the new challenge of accurate linking of numerous HCPCS to Revenue Codes beyond the 500 and 900 series… too many CHCs continued to support the mantra… “Coding for Medicare is irrelevant because regardless of our coding, we will just continue to get paid encounter rate.” Well the day of reckoning has arrived… or has it. There are some considerably mixed messages as a result of the ACA’s recommendations in this regard.

  1. New PPS = 30% raise for CHCs. Now that sounds like good news, does it not? For years CHCs have complained that they were being undercompensated since something like 80% of CHCs had a cost per visit ABOVE the ceiling Medicare had in place. Color me controversial but despite my affinity for CHCs and the fact that I make a living helping them make money, was not reducing costs a primary goal of the ACA? How is removal of a justifiable and annually escalating ceiling going to help make this happen? This dramatic increase is largely the result of applying a Geographic Adjustment Factor (GAF; i.e., CHCs existing where cost of living is elevated = payment bump while CHCs residing in areas with lower cost of living = payment drop) and a 33% increase… yes, a 33% INCREASE… of the PPS rate for any new patients. So, perhaps now CHC staff will take more seriously the importance of learning the coding/billing rules around the definition of a “new patient.” The rule: A new patient is a patient not seen by a provider of the same specialty within a group practice (same tax ID), within the preceding three years. Oh yeah, forgot to mention the actual dollar amount of the proposed PPS rate. As of October 1, 2014 it is set to be $155.90. Wow. This taxpayer is definitely bothered by this increase but for now, take the money and run.
  1. Loss of ability to code for >1 encounter on a single DOS. OK, maybe this just irks me cause it ain’t right BUT the rationale Medicare is using to NOT pay for more than one covered CHC encounter rendered to a single patient on a single date of service (DOS) is because… wait for it… health centers have not through existing coding patterns (since Jan 2011) demonstrated that this occurs with any frequency. Are you kidding me??? Ask yourself or better yet, ask your integrated care delivery team how many Medicare patients receive on a single DOS a face-to-face encounter with 1. a medical provider, 2. a behavioral health provider and 3. a diabetic educator (we are assuming you have an “approved” program for the latter).  According to the feds, this happens less than .5% of the time… again, based on coding derived from CHC claims’ data. So the “coding doesn’t matter” mantra strikes again AND now they are willing to pay a CHC 30% more for each of those visits. Yes, we can blame the practice management system limitations, the challenges of CR7038, and employed provider apathy. However, in the end, we lose because CHCs don’t do a good job demonstrating the true breadth and scope of rendered services through optimal and accurate coding. Just nuts.
  1. Co-Insurance Changes. Good for them. FINALLY, a logical and constructive move to assure patients are not bearing the burden of correct coding. Historically at CHCs, a patient’s co-payment was a percentage of the total charge vs. a percentage of Medicare’s fee schedule. The latter is what happens for Medicare beneficiaries in the “private practice” fee-for-service world (and, interestingly, what happens for CHC patient co-pays for diagnostic testing performed at the CHC but sent to Medicare Part B). Again, in the Part B world, the Medicare beneficiary co-payment is based on 20% of the Medicare fee schedule… NOT the charge. At CHCs, another reason for lower than normal coding has been the providers’ fear that patients would be obligated to pay a co-pay that would be 20% of the aggregate charge… which healthcare billing and financial professionals know is intentionally elevated to keep charges above the fee schedule of the highest paying payers. This move to a percentage of the fee schedule makes sense and is a win for patients and providers. AND, since the ACA’s passing, CMS has required $0 copayment for preventive services.  CMS is working to make sense of CHC visits when both preventive and non-preventive (e.g., acute) issues are addressed. Quoting their CFR verbiage: [CMS will] “determine the proportional amount of coinsurance that should be waived for payments based on the PPS encounter rate, and… continue to use… [CHC] reported charges to determine the amount of coinsurance that should be waived… based on the… charge. Total payment to the FQHC, including both Medicare and beneficiary liability,… [will] not exceed the… [CHC’s] charge or the PPS rate.” Again, sensibility. Good for us.

Is there more?  Sure there is. Some of the changes are proposing limitations on payment for certain service for which previously a CHC was paid an encounter rate. However, me thinks the new PPS rate more than makes up for this minimized breadth of benefit. In the end, read through the regulations… even briefly… just to be a bit more well informed and to understand what your Medicaid program might use a foundation for modification of those PPS payments. Afterwards, if so inclined, draft a note to our friends in DC to let them know if you recommend a change one way or another. In the end, we must advocate for ourselves. Certainly no one else will.

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