Reimbursement Methodologies

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I have done my research for the following questions but I was hoping someone could check and tell me how I did.

Part A: Answer each of the following questions in a short paragraph.

1. You're the new director of a hospital health information management department. The chief financial officer has hired you for your experience in health care reimbursement and needs to know how your department can help with reimbursement. List the most important functions of health information management.

Answer: Health information management systems are garnering attention in the health arena. Efficient, accurate, and up-to-date information management systems are essential, both in providing care and getting paid for care provided. The Information Management department can ensure smooth reimbursement by first ensuring that the treatment provided is covered by the patient's insurer for the diagnosed medical condition, and that the appropriate Diagnosis Related Group (DRG) code, and any modifiers, are included on the claim to the payer for services. Because hospitals charge for most services on a prospective payment system basis, the Information Management department is responsible for ensuring that cost reporting is accurate and submitted timely and that the hospital is accurately reporting costs, charges, services to indigent populations, and bad debt. With Medicare pay-for-performance initiatives, it is especially important to track and report relevant data, and provide care based upon evidence-based medicine principles.

2. Describe the importance of Blue Cross and Blue Shield plans in the evolution of health care coverage.

Answer: Blue Cross/Blue Shield plans were originally separate concepts. Blue Cross insurance provided coverage for expenses incurred with services of institutional providers such as hospitals. Blue Shield plans insured patients for more commonly encountered physician, laboratory test, imaging studies, and non-institutional therapeutic interventions. Medicare followed this division by creating two initial "Parts," Medicare Part A for providers such as hospitals, skilled nursing facilities, hospice, and Medicare Part B for charges related to physician services and related costs such as physician-administered drugs, laboratory tests that were performed on a non-hospitalized patient.

3. Explain why the task of Universal health care coverage can raise health care costs.

Answer: The absence of universal health coverage implies the existence of an uninsured population. To the extent that uninsured individuals require medical care, receive care, are unable to pay for all or part of their care, the cost of that care is recovered through increased provider charges and tax treatment of bad debt. The U.S. could decrease the impact of uninsured and underinsured patients on health care costs by encouraging individuals who can't afford comprehensive coverage in the individual market to carry a catastrophic policy covering health care costs and prohibiting healthcare providers from charging patients covered by such a policy an amount in excess of its average charge for those services to an individual covered by a plan in which they participate, or if no such plan exists, the limiting charge to Medicare by a nonparticipating provider would apply.

Part B: Answer each question in one or two sentences.

1. You work in the hospital's health information management department. Part of your job is to assist the medical residents with completing records documentation. One of the residents complains that he doesn't understand why insurance companies need so much documentation and the reimbursement system is so complex. How do you respond?

Answer: The documentation requirements may seem burdensome, but they are actually a reasonable compromise that permits hospitals to receive payment more quickly with less of a paperwork burden, and for insurers and governmental payers to have a "checks and balances" system so that they know they are paying only for the necessary care that is actually provided. Hospitals receive payment based on the physicians' assessment of the diagnosis and the necessary care that the hospital will provide, and patient circumstances such as comorbidities, multiple diagnoses, or complications, can change the reimbursement rate. The documentation in the patient's medical record is not submitted to the insurance company, but when a payer conducts post payment review they take a sampling of the treated cases and tries to get back any money based on the errors, omissions.

2. Mary was receiving Medicaid in Texas. When she moves to California, can Mary assume that she'll receive the same coverage there?

Answer: Medicaid is a program that is operated by the States with federal oversight. There may be some measure of variability in the healthcare offerings between the States, particularly if Mary was receiving Medicaid in Texas solely based upon a "waiver" that Texas obtained from CMS. For most patients, Medicaid eligibility and breadth of coverage will be relatively stable due to the requirement that States adhere to specific federal laws and regulations in administering the Medicaid programs.

3. Compare point-of-service (POS) plans with health maintenance organization (HMO) plans.

Answer: In a health maintenance organization, the patient selects a primary care physician who acts as a gatekeeper in determining the care plan for the patient, including the need to see any specialists or have any testing done. In a POS, the patient can choose between utilizing an HMO framework or a Preferred Provider Network (PPO), with the primary care physician acting as a gatekeeper to patient access to reduced coinsurance received when utilizing the primary care physician and in-network providers. HMO patients can not receive benefits for care by out-of-network providers; POS patients pay a higher coinsurance for utilizing out-of-network providers or for seeing a specialist without referral from a primary care physician.

4. You're an inpatient coder in a hospital. You've just coded a Medicare Part A record with a diagnosis-related group (DRG) reimbursement of $12,000. You notice in the hospital's computer billing system that the patient's charges are $19,500. That's $7,500 more than the hospital will be reimbursed. How does the difference between the charges and the DRG reimbursement become resolved?

Answer: The hospital cannot charge the patient any portion of this difference because assuming the hospital is a Medicare participating provider, it has agreed to accept the DRG reimbursement as full payment. The "charges" are higher than the amount the hospital receives or the cost of the services. The relationship between the cost of providing services and the hospital's charges is referred to as the cost-to-charge ratio.

5. You work in a physician's office performing billing. You notice that guidelines haven't been followed accurately in completing the claim form. What will happen if you don't correct the claim form?

Answer: If the claim form is submitted with erroneous information, the office could be paid an amount different from the appropriate amount, or the claim could be denied or paid in error. If the claim is knowingly submitted with errors, the physician office could have liability for filing a false claim, damages and possible criminal charges).

6. Why did the Centers for Medicare and Medicaid Services (CMS) implement the National Correct Coding Initiative in 1996?

Answer: The National Correct Coding Initiative was initiated to promote proper coding of Part B claims and prevent improper payments of mutually exclusive coding combinations. These mutually exclusive coding combinations are included as "edits" in Medicare payment systems so that claims are flagged and/or denied as inappropriately submitted. An example would be to submit a claim that included codes for a PAP smear and a PSA test (prostate specific antigen) on a particular patient.

7. List some of the risk areas that can be identified through the auditing process.

Answer: Services that are performed too frequently on a specific patient, office visit charges in excess of time or services actually documented, tests or other services that are not medically necessary, services performed that are outside the provider's expertise or license, medical supervision charges when a physician is not physically present, "upcoding" of a DRG.

8. You're an HMO director. You would like to ensure that your managed care plan is meeting industry standards. What's one way that you can do this?

Answer: Standard & Poor's Healthcare: Managed Care Industry Survey provides a benchmark for managed care plans. It focuses on performance, trends, and key upcoming challenges for the managed care industry.

9. You work for a third-party payer performing medical records review. Your job is to match codes that were submitted on the claim to documentation in the medical record. You notice that a code has been input for a colonoscopy procedure, but you don't see the procedure report anywhere in the record. As the third-party payer representative, what will your action be regarding the code that was submitted on the claim form?

Answer: I would check to see if the charges for the colonoscopy were from the provider who's records I am examining. If I am reviewing medical records that were received from the patient's medical record in the physician's office, I would inquire about documentation of the "prescription" or referral to the hospital outpatient center or other likely point-of-service for the colonoscopy, but would not expect that the procedure would have been performed in that office. If the physician charged for a colonoscopy for which there was no documentation, I would decline the payment on post payment review and recoup the funds from the provider. If the colonoscopy was performed without a referral from the physician, I would inquire as to its medical necessity before approving the claim as paid or denying it.

10. You're reviewing reimbursement for a Medicare surgical craniotomy case. The case falls into DRG 1, which has a relative weight of 3.0970 and a geometric mean length of stay of 6.3. The hospital's current standard reimbursement rate is $1500. Calculate the DRG reimbursement for this case.

Answer: The reimbursement would be $4,645.50, provided that the patient is not a length of stay outlier or a cost outlier.

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