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The Hospital Revenue Cycle

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Megan Harper

on 18 April 2013

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Transcript of The Hospital Revenue Cycle

The Hospital Revenue Cycle: MSDRGS IPPS and OPPS CASE MIX Present on Admission/ Hospital Acquired Conditions Medical Necessity Medical necessity refers to a decision by your health plan that your treatment, test, or procedure is necessary for your health or to treat a diagnosed medical problem. Health insurance companies provide coverage only for health-related serves that they define or determine to be medically necessary. Medicare, for example, defines medically necessary as: “Services or supplies that are needed for the diagnosis or treatment of your medical condition and meet accepted standards of medical practice.” Most health plans will not pay for healthcare services that they deem to be not medically necessary. The most common example is a cosmetic procedure, such as the injection of medications (such as Botox) to decrease facial wrinkles or tummy-tuck surgery. Many health insurance companies also will not cover procedures that they determine to be experimental, or not proven to work.
Not Sure That It's Covered, Check with Your Health Plan!!! Appropriate Services and Supplies are those that are neither more nor less than what the patient requires at a specific point in time.

Following are medical necessity rules/guidelines:

1. Determinations of medical necessity must adhere to the standard of care that applies to the actual direct care and treatment of the patient
2. Medical necessity is the standard terminology that all health care professionals and entities will use in the review process when determining if medical care is appropriate and essential
3. Determinations of medical necessity must reflect the efficient and cost-effective application of patient care including, but not limited to, diagnostic testing, therapies, disability ratings, rehabilitating an illness, injury, disease or its associated symptoms, impairments or functional limitations, procedures, psychiatric care, levels of hospital care, extended care, long-term care, hospice care and home health care. Medical Necessity rules/guidelines cont.: 4. Determinations of medical necessity made in a concurrent review should include discussions with the attending provider as to the current medical condition of the patient whenever possible. A physician advisor/reviewer can make a positive determination regarding medical necessity without necessarily speaking with the treating provider if the advisor has enough available information to make an appropriate medical decision. A physician advisor cannot decide to deny care not medically necessary without speaking to the treating provider and these discussions must be clearly documented.
5. Determinations of medical necessity must be unrelated to payors' monetary benefit Medical Necessity Rules/Guidelines cont.: 6. Determinations of medical necessity must always be made on a case-by-case basis consistent with the applicable standard of care and must be available for peer review
7. Recommendations approving medical necessity may be made by a non-physician reviewer. Negative determinations for the initial review regarding medical necessity must be made by a physician advisor who has the clinical training to review the particular clinical problem under review. A physician reviewer or advisor must not delegate his/her review decisions to a non-physician reviewer.
8. The process to be used in evaluating medical necessity should be made known to the patient.
9. All medical review organizations involved in determining medical necessity shall have uniform, written procedures for appeals of negative determinations that services or supplies are not medically necessary. The Centers for Medicare &: Medicaid Services require a form called a certificate of medical necessity, CMN, to be used by the four durable medical equipment medicaid administrative contractors (DME MACs). A CMN helps a physician, physician assistant, nurse practitioner, or clinical nurse specialist provide medical necessity information in a concise manner formatted for efficient claims processing of certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

A CMN also serves as a tool to confirm what is being provided to patients and to ensure that the proper therapy is being rendered.

The supplier must receive a signed original, faxed, photocopied, or electronic CMN (e-CMN), from the treating physician, physician assistant, nurse practitioner, or clinical nurse specialist and retain this in the record before the supplier can submit a claim for payment to Medicare. DMEPOS items that require a CMN are: Oxygen
Pneumatic Compression Devices
Osteogenesis Stimulators
Transcutaneous Electrical Nerve Stimulators (TENS) (when purchasing, not renting)
Seat Lift Mechanisms CMN form for Pneumatic Compression Devices Under Medicare Part A payment for acute care hospital inpatient stays is based on set rates. This system for payment - Inpatient Prospective Payment System (IPPS) categorizes cases into Diagnosis Related Groups (DRG's) which are then weighted based on resources used to treat Medicare beneficiaries in those groups. Providers and hospitals that treat a large share of low-income patients receive additional add-on payments in the form of Disproportionate Share Hospital (DSH). Teaching hospitals also receive additional add-on payments, which are based on resident to average daily census ratios. The Goal for IPPS System Excluded Facilities Certain types of specialty hospitals and units are excluded from IPPS because IPPS does not accurately account for the facilities resources costs for treating Medicare beneficiaries.
Not included.......
Critical Access Hospitals (CAH)
Long Term Care Hospitals (LTCH)
Inpatient Rehab (IRF)
Inpatient Psychiatric facilities (IPF)
Children's Hospitals
Cancer Hospitals
Religious Nonmedical Health Care Institutions (RNHCI) Outpatient Prospective Payment System
OPPS The OPPS reimburses Medicare providers a pre-set amount by services. Each January 1st, the weights associated with the (APC) are revised based upon updated median cost data. That weight is multiplied by a conversion factor (set dollar amount) that has been adjusted for differences in labor costs in the area to yield a base payment rate. Providers may bill for more than one APC per encounter. - Ease of understanding Medicare Part A
-Simplicity of administration and billing for medicare purposes
-Predictability of payment
-Establishing the Federal Government as a prudent purchaser of services.
-Rewarding efficient operation.
-Reduction of admission burdens. Inpatient Prospective Payment System
IPPS Example - A visit code might be billed with a seprately payable drug code and an imaging code. However, many items and services are packaged within the APC's to which they are integral, such as contrast with imaging services or drugs below $60.00 with surgeries. There are also a minimal number of composite APC's that provide one part for several major services such as partial hospitalization for health services. The APC's are adjusted to reflect geographic wages variation as under the inpatient payment system and are intended to cover both operation and capital costs. Medicare Severity Diagnosis Related Groups DRG The federal government phased in a system over a three year period known as Diagnosis Related Groups (DRG) in the year 1983. This was an Inpatient Prospective Payment System(IPPS), that would determine the payment to the hospital for services to patients in advance. A software known as a grouper is used to assign DRG codes based on the ICD codes that were assigned for a patients stay, as well as any comorbidities, complications, the discharge status of the patient, their sex and age. The Change The Centers for Medicare and Medicaid Services for the 2008 fiscal year made changes to the DRG system and changes it's name to Medicare Severity Diagnosis Related Groups, MS-DRG. The change in the system allowed the severity of the stay to be determined, so a hospital would now be paid more for treating complicated cases.

There is more than one DRG system currently used in the United States. However, the MS-DRG system is used only by CMS. Updates MS-DRG's are reviewed, revised, and updated annually. Propositions and final regulations can be found in the 'Federal Register'.

https://www.federalregister.gov/articles/search?conditions%5Bterm%5D=drg&commit=Go How do I find a DRG? As LSSC student's in HIM programs we were given access to the quantum coder.

Ahima#12 All general acute-care healthcare providers must identify whether a diagnosis was present upon an inpatient admission. Hospitals will not receive additional payment for cases in which one of the selected HACs was not present on admission. POA-Present on Admission As required by law all general acute care healthcare providers must identify whether a diagnosis was present on inpatient admission. Providers Must Report One of Five Indicators Y = Yes (Present at time of admission)
N = No (Not present at time of admission)
U = Unknown (Documentation insufficient at time of admission)
W = Clinically undetermined (Provider is unable to clinically determine if present on admission
1 on electronic claims or blank on paper claims = Exempt from POA reporting HAC-Hospital Acquired Conditions The Deficit Reduction Act also mandated financial incentives to reduce hospital-acquired conditions.
The goal is to cut costs and provide a better quality of care for patients. Conditions That made the Medicare No-Pay List Stage III or IV pressure ulcers
Fall or Trauma
Vascular catheter-associated infection
Catheter-associated urinary tract infection
Foreign object retained after surgery
Certain surgical site infections
Air Embolism
Blood incompatibility
Certain manifestations of poor control of blood sugar
Deep-vein thrombosis and pulmonary embolism after total knee or hip replacement
Surgical site infection following bariatric surgery for obesity Guidelines Following these guidelines will improve the quality of care for the patient. It will also cut costs that should not have been incurred in the first place. The term Casemix refers to the type or mix of patients treated by a hospital or unit. The term is often used to describe the billing system of the hospital or unit, since the "cost per item" of healthcare is based on the casemix.
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