Corporate Compliance

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

Medicare Insider, July 30, 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 conclude our review of CAH reimbursement issues, focusing on special billing and payment issues relating to both inpatient and outpatient services performed by certified registered nurse anesthetists (CRNAs). Beginning with dates of service on and after January 1, 2013, these special billing and payment rules may apply not only to CRNA anesthesia services, but to other services that the CRNA is legally authorized to perform in the state in which the services are furnished.
 
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 CRNA 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. With the exception of payment for certain CRNA services, 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 by practitioners who have assigned their right to payment to the CAH for that cost report period (CRP). Under Method II, with respect to those outpatient services whose professional component is provided by a practioner who has elected Method II reimbursement:
  • 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.
  • 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 practioner who has not assigned his/her right to payment to the CAH, reimbursement for both the facility and professional services follows Method I. 
 
Special reimbursement for CRNA services under the pass-through exemption
 
Since 1989, a CAH that meets certain requirements has been able to receive a pass-through exemption for anesthesia services provided by a qualified non-physician anesthetist (CRNA) who is either employed by the CAH or who provides those services under arrangements with the CAH. For services provided on and after January 1, 2013, CMS has extended the pass-through exemption to other services that a CRNA is legally authorized to perform in the state in which the services are furnished. A CAH may qualify for the pass-through exemption so long as:
  • The CAH is located in a rural area or has been reclassified as rural;
  • The CAH employs or contracts with at least one full-time CRNA. (The CAH may employ or contract with more than one CRNA, but the total number of hours furnished by all CRNAs may not exceed 2080 hours per year); and,
  • The CAH’s total volume of surgical procedures requiring anesthesia (including both inpatients and outpatients) does not exceed 800 procedures during the calendar year. (To maintain its qualification for the pass-through exemption, a CAH must demonstrate prior to January 1 of each respective year that its volume of surgical procedures requiring anesthesia during the prior year did not exceed this limitation).
 
Under the pass-through exemption, a CAH may be reimbursed for CRNA professional services at 101% of reasonable costs (less the applicable deductible and coinsurance amounts), rather than the otherwise applicable MPFS amount. This exemption applies to both inpatient and outpatient CRNA professional services. Since CAHs also receive 101% of the reasonable costs of related CRNA inpatient and outpatient facility services, CAHs that qualify for and elect the CRNA pass-through exemption receive 101% of the reasonable costs for both inpatient and outpatient facility and professional CRNA services, less the applicable deductible and coinsurance amounts.
 
A CAH that qualifies for the pass-through exemption for CRNA services may elect Method II payment for all outpatient professional services except CRNA professional services. In that case, the CAH may retain pass-through payment for the CRNA professional services (both inpatient and outpatient) and receive payment under Method II for all other outpatient professional services performed by practitioners who have assigned their right to payment to the CAH.
 
When billing for CRNA services subject to the pass-through exemption, a CAH should include both facility and professional services on a single UB-04 claim form, with TOB 011X (inpatient) or TOB 085X (outpatient), as appropriate. CRNA facility services for anesthesia should be billed with revenue code 037X, and non-anesthesia facility services which the CRNA is authorized to perform under state law should be billed with a more appropriate revenue code. In both instances, the services should be reported with a HCPCS code that identifies the services performed. CRNA professional services should be billed with revenue code 0964, along with the relevant HCPCS code.
 
Billing for outpatient facility and professional CRNA services under Method II
 
If a CAH fails to qualify for the pass-through exemption or elects to receive payment for outpatient CRNA services under Method II, the exemption is withdrawn for both outpatient and inpatient CRNA professional services. Under Method II, the CAH will bill for outpatient CRNA facility and professional services on a single UB-04 (TOB 085X), reporting the facility and professional services with an appropriate revenue code (e.g., 037X for facility CRNA anesthesia services and 0964 for all professional CRNA services). Reimbursement will follow applicable Method II reimbursement, as set out below:
  • Payment for the CRNA facility services will be 101% of the reasonable cost for those services, less the applicable Part B deductible and coinsurance amounts
  • Payment for the CRNA professional services will be paid at 115% of whatever amount the A/BMAC would pay for those services under the MPFS, etc. For example, CRNA professional anesthesia services will be paid, as follows:
    • 115% of the MPFS amount for not medically directed anesthesia, when designated by the “QZ” modifier; or
    • 115% of the reduced amount (0.50) of the MPFS amount for medically directed anesthesia, when designated by the “QY” modifier.
  • Payment for both the facility and professional services is made to the CAH under Part B.
 
As noted above, when the pass-through exemption for CRNA services does not apply, a CAH will submit the inpatient facility CRNA services on the UB-04, TOB 011X, and will be reimbursed for those services on the basis of 101% of reasonable costs, less the applicable Part A deductible and coinsurance amounts. The professional CRNA inpatient services will be submitted separately to the A/BMAC on the CMS 1500, with the place of service reported as hospital inpatient. Payment will be made under Part B, based on the MPFS, less the applicable Part B deductible and coinsurance amounts.
 
Related resources
 
For additional information on this week’s discussion, please see the following source authorities:
 
42 CFR 412.113(c)
Medicare Claims Processing Manual, Chapter 4, Section 250.3.3
Medicare One Time Notification Transmittal 1379



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