Objectives for Training Purpose of todays training is to provide an - PDF document

1/22/2015 Objectives for Training  Purpose of today’s training is to provide an overview of how benefits in Part A Payments Part A of Medicare are paid.  Will also present any programs/policies/rules that will Diane Caradeuc Trainer increase or decrease a payment.  Will review the 2015 Beneficiary This special regional educational effort is supported by funding provided by the California HealthCare responsibility for Part A payments. Foundation and The California Wellness Foundation California Health Advocates (c) 2015 2 California Health Advocates (c) 2015 Historical Perspective on Medicare Payments  Prior to passage of the 1965 law establishing the Medicare program, approximately 50% of seniors did not BACKGROUND INFORMATION have hospital insurance.  When Medicare coverage began on July 1, 1966, it covered more than 19 million beneficiaries. 3 4 California Health Advocates (c) 2015 California Health Advocates (c) 2015 Reasonable Costs  When the law was passed, it was  Until 1983, providers were paid the modeled on the private sector lower of their reasonable costs or their insurance plans. customary charges for services  Hospitals nominated an intermediary provided to Medicare beneficiaries. that would process their claims.  At the close of a provider’s fiscal year,  Payment methods for facilities the provider submits a cost report to (including hospitals, skilled nursing the intermediary showing all cost facilities, home health agencies) was incurred and the portion allocated to based on reasonable costs. the Medicare program. 5 6 California Health Advocates (c) 2015 California Health Advocates (c) 2015 1

1/22/2015 Why this Approach?  Reasonable costs were defined by  Made sure Medicare beneficiaries law that stated it was: would have access to care like privately insured patients. “the cost actually incurred, excluding therefrom any part of  Allowed faster implementation of the incurred cost found to be new program partly because the unnecessary in the efficient model looked familiar to providers, delivery of needed health services” insurance companies and the beneficiaries. 7 8 California Health Advocates (c) 2015 California Health Advocates (c) 2015 Concerns Part A Coverage - 1965  Over time, Congress became concerned  Inpatient hospital services, including that while reimbursing reasonable costs, inpatient psychiatric hospital services the system did not encourage providers and inpatient tuberculosis hospital to provide services efficiently or services otherwise limit their costs.  Post-hospital extended care services  Original payment methods turned out to  Post-hospital home health services be inflationary which resulted in  Outpatient hospital diagnostic significant changes to how Medicare services pays claims. 9 10 California Health Advocates (c) 2015 California Health Advocates (c) 2015 Part A Coverage Today  Inpatient Hospitals  Psychiatric Hospitals INPATIENT HOSPITAL  Rehabilitation Hospitals  Skilled Nursing Facility COVERAGE  Home Health Benefits  Hospice  Blood 11 12 California Health Advocates (c) 2015 California Health Advocates (c) 2015 2

1/22/2015 Inpatient Hospital Coverage Services Covered, cont. 42 C.F.R. 409.10 – included services:  (6) Certain other diagnostic or therapeutic services.  (1) Bed and board.  (7) Medical or surgical services  (2) Nursing services and other related provided by certain interns or services. residents-in-training.  (3) Use of hospital or CAH facilities.  (8) Transportation services, including  (4) Medical social services. transport by ambulance.  (5) Drugs, biologicals, supplies, appliances, and equipment. 13 14 California Health Advocates (c) 2015 California Health Advocates (c) 2015 Services Excluded Services Excluded, cont.  (1) Posthospital SNF care, as described in §409.20, furnished by a hospital or a  (3) Physician services that meet the critical access hospital that has a swing- requirements of §415.102(a) of this bed approval. chapter for payment on a fee  (2) Nursing facility services, described in schedule basis. §440.155 of this chapter, that may be  (4) Physician assistant services, as furnished as a Medicaid service under defined in section 1861(s)(2)(K)(i) of title XIX of the Act in a swing-bed the Act. hospital that has an approval to furnish nursing facility services. 15 16 California Health Advocates (c) 2015 California Health Advocates (c) 2015 Services Excluded, cont. Services Excluded, cont.  (5) Nurse practitioner and clinical  (7) Qualified psychologist services, as nurse specialist services, as defined defined in section 1861(ii) of the Act. in section 1861(s)(2)(K)(ii) of the Act.  (8) Services of an anesthetist, as  (6) Certified nurse mid-wife services, defined in §410.69 as defined in section 1861(gg) of the Act. 17 18 California Health Advocates (c) 2015 California Health Advocates (c) 2015 3

1/22/2015 Beneficiary Costs - currently Determining the Deductible  For in-patient hospital stays, the The law requires the Secretary to adjust beneficiary is subject to a deductible the inpatient hospital deductible each and copay amounts, per benefit year to reflect changes in the average period. cost of hospital care. The inpatient hospital deductible is increased each year by about the same percentage as the increase in the average Medicare daily hospital costs. 19 20 California Health Advocates (c) 2015 California Health Advocates (c) 2015 Medicare Payments to Refresher for 2015 Hospitals  Part A Deductible for 2015 is $1260  From 1966 to 1983: reasonable cost (per benefit period) methodology  1983 – an inpatient Prospective  Hospital coinsurance for days 61-90 is $315 (25% of the deductible) Payment System (IPPS) replaced the cost-based payments; it was a pre-  Hospital coinsurance for days 91-150 determined rate that was paid based (life-time reserve days) is $630 (50% on a patient’s diagnosis of the deductible) 21 22 California Health Advocates (c) 2015 California Health Advocates (c) 2015  Each discharge is assigned to a  Since October 1, 2007, CMS is using diagnosis-related group (DRG) a new DRG system called Medicare  DRGs group similar clinical conditions Severity (MS)-DRGs. and the procedures furnished during  It was phased in and fully operational the hospital stay to a patient as of October 1, 2008.  Grouping is based on the primary  System takes into account severity of diagnosis and up to 24 secondary the illness and the resource diagnoses as well as up to 25 consumption in treating the patient. procedures 23 24 California Health Advocates (c) 2015 California Health Advocates (c) 2015 4

1/22/2015 Levels of Severity for a MS- IPPS Per Discharge DRG Payment  Level of severity is based on the  Based on 2 national base payment secondary diagnosis code rates (standardized amounts)  Listed from highest to lowest:  One is for operating expenses  MCC-Major Complication/Comorbidity  One is for capital expenses  CC-Complication/Comorbidity  Non-CC – Non-Complication/Comorbidity 25 26 California Health Advocates (c) 2015 California Health Advocates (c) 2015 Other Adjustments to IPPS DRG Payments Both amounts can be affected by:  Over time, various other programs policies and laws have been  the costs associated with the established that will increase or beneficiary’s clinical condition and decrease a specific DRG payment for treatment relative to costs of average a specific hospital and/or a specific Medicare case, as well as, discharge.  Market conditions in the hospital’s location relative to national conditions. 27 28 California Health Advocates (c) 2015 California Health Advocates (c) 2015 Outlier Payments Graduate Medical Education Outlier Payments are for extremely costly cases. Hospitals with an approved Graduate Medical Education program, receive  To qualify for an outlier payment, a additional payments for training case must have a dollar amount by residents. which the costs of a case exceed payments in order to qualify for the  Also, the operating and capital outlier payments. payments for these teaching hospitals are increased to reflect the higher  Outliers account for about 5.1% of indirect patient care costs. total hospital payments. 29 30 California Health Advocates (c) 2015 California Health Advocates (c) 2015 5