Corporate Compliance

Note from the instructor: Reimbursement for outpatient services provided to critical access hospital (CAH) patients

Medicare Insider, July 22, 2014

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This week’s note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.  
 
Note from the instructor: Reimbursement for outpatient services provided to critical access hospital (CAH) patients
 
Several weeks ago, we began a review of the complex rules surrounding reimbursement to CAHs. CAHs are a special category of small rural hospitals that provide both inpatient and outpatient services in what would otherwise be medically underserved parts of the country. To assure their ability to continue to do so, CAHs generally receive reimbursement for the facility component of both their inpatient and outpatient hospital services based on 101% of reasonable costs. In this week’s note we will continue our discussion, focusing on specific rules that relate to anesthesia services (both inpatient and outpatient) and the expansion of coverage for certain services performed by anesthesiologists. 
 
Payment for inpatient facility and professional services
 
As noted in our prior discussion, CAHs bill for the facility/technical component of covered Part A inpatient services to the A/B Medicare Administrative Contractor (A/BMAC) on the UB-04 (Type of Bill [TOB] 011X), and are reimbursed on the basis of 101% of reasonable costs, less the applicable Part A deductible and coinsurance amounts. Most professional services provided to CAH inpatients are billed separately to the A/BMAC on the CMS 1500, with the place of service reported as hospital inpatient. With the exception of payment for certain anesthesia services, payment is made under Part B, based on a fee schedule (e.g., Medicare Physician Fee Schedule [MPFS]), charge or other fee basis, less the applicable Part B deductible and coinsurance amounts.
 
Payment for the facility services is made to the CAH, and payment for the professional services is generally made to the respective practitioners.
 
Payment for outpatient facility and professional services under Method I and Method II
 
With respect to outpatient services, CAHs may bill using either Method I or Method II. Under Method I, reimbursement for both the facility and professional services provided to CAH outpatients is similar to reimbursement for the facility and professional services provided to CAH inpatients. Facility services are billed on the UB-04 (TOB 085X), but payment is made to the CAH under Part B, rather than Part A. Professional services are billed on the CMS 1500, with the place of service reported as hospital outpatient, and payment is generally made to the respective practitioners under Part B. 
 
Under Method II, CAHs may elect to receive reimbursement for both the facility and professional services provided to their outpatients. The CAH’s right to receive reimbursement for professional services, however, only applies to the professional services performed by practitioners who have assigned their right to payment to the CAH for services they provide to its outpatients during that cost report period (CRP). 
 
Under Method II, with respect to those outpatient services whose professional component is provided by a practitioner who has assigned his/her right to payment to the CAH for that CRP:
  • The CAH bills for both the respective facility and professional services to the A/BMAC on the same UB-04 (TOB 085X), reporting appropriate revenue and HCPCS codes for all services.
    • Payment for the CAH facility services will be 101% of the reasonable cost for those services, less the applicable Part B deductible and coinsurance amounts.
    • Payment for professional services will be paid at 115% of whatever amount the A/BMAC would pay under the MPFS, etc., based upon the type of service provided and the modifier applied to the HCPCS code.
      • For example, payment for Medicare participating physician services =
MPFS – (deductibles and coinsurance) X 115%.
  • Payment for both the facility and professional services is made to the CAH under Part B.
With respect to those outpatient services whose professional component is provided by a practitioner who has not assigned his/her right to payment to the CAH for that CRP, reimbursement for both the facility and professional services follows Method I. That is, facility services are billed on the UB-04 (TOB 085X) by, and payment is made under Part B to the CAH. On the other hand, professional services are billed on the CMS 1500 by, and payment is generally made under Part B to, the respective practitioners. 
 
Expansion of Method II payment for certain services
 
In the last few years, the scope of outpatient services subject to Method II reimbursement has been expanded to include the following:
  • Certain otherwise covered services performed by anesthesiologists that are reasonable, medically necessary, or surgical; and
  • Any otherwise covered services performed by certified registered nurse anesthetists (CRNAs) within their scope of practice under applicable state law.
For services provided on and after January 1, 2014, a Method II CAH may be reimbursed for otherwise covered services performed by an anesthesiologist (who has assigned his or her right to payment) that are reasonable, medically necessary, or surgical, when those services are submitted with revenue code 0963 (professional fees for Anesthesiologist [MD]). 
 
Unfortunately, the Medicare claims processing system can currently only process Method II payment for services billed with revenue code 0963 that are within the anesthesiology HCPCS code range of 00100-01999. CMS has indicated that the system will be able to appropriately process claims for non-anesthesia HCPCS codes after October 6, 2014. In the meantime, CAHs should contact their A/BMACs for instructions on how to obtain the appropriate reimbursement under Method II for non-anesthesia services billed with revenue code 0963.
 
In addition, for services provided on and after January 1, 2013, a Method II CAH may be reimbursed for any services that a CRNA (who has elected Method II reimbursement) is authorized to perform under applicable state law, when submitted with revenue code 0964 (CRNA professional services). Unfortunately, prior to May 2, 2014, the Medicare claims processing system was also unable to process Method II payment for services billed with revenue code 0964 that were outside of the anesthesiology HCPCS code range of 00100-01999. Therefore, CAHs should contact their A/BMACs for guidance on how to re-bill any claims with dates of service on or after January 1, 2013 that were billed with non-anesthesia HCPCS codes.
 
Ongoing discussion and related resources
 
We will conclude our review of CAH reimbursement issues, focusing on special billing and payment issues relating to CRNA anesthesia services (both inpatient and outpatient), in next week’s Medicare Insider.  For additional information on this week’s discussion, please see the following source authorities:
 
42 CFR 413.70
Medicare Claims Processing Manual, Chapter 4, Section 250
Medicare Claims Processing Manual, Chapter 12
Medicare One Time Notification Transmittal R1379OTN.



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