Health Information Management

QA: CMS has reformulated payments for some bilateral procedures

APCs Insider, April 3, 2009

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Q. We have noticed an increase in our Medicare payment for bilateral procedures that have a status indicator of T. While this is a nice thing, is this going to be one of those "automatic claims adjustments" when CMS or our FI/MAC notice the incorrect payment in the OCE?

A. Actually, this change slipped through without notice by many facilities. In the January 2008 update to the OCE, CMS added a new formula to the mix for use when calculating payments for bilateral procedures. They retired two other formulas for the Type T Multiple and Terminated Procedure Discounting.

Transmittal 1403, CR 5865 reflects this change in Appendix D – Calculating of Discounting Fraction (OPPS only). CMS added formula #9 "2D/U". This formula takes the discounting fraction (0.5), multiplies it by 2, and divides that number by the number of units reported "2*0.5/1=1".

This formula is applicable to type T procedures that are conditionally or independently bilateral (as indicated on the physician fee schedule) and impacts OPPS facility payment when multiple T procedures appear on a claim. This new formula directly affects the way that the discount is calculated.

There is a hierarchy for applying the T-status discounts. The OCE finds the T procedures with the highest payment rate based on relative weight. This becomes the procedure that will be paid at 100%. All others are subject to the T procedure discounting.

Under the previous formula, "D(1+D)/U", procedures with modifier -50 were paid at 150% of the APC payment amount for a single procedure. When the discounting formula was applied, "0.5(1+0.5)/1=0.75", 150% was discounted by half, making the payment 75% of the single line APC payment.

Under the new formula noted above, the calculation results in a multiple of one, which is calculated against the single procedure payment. This new formula has allowed the bilateral procedure modifier to be preserved for its real intent—reporting more resources because more work was performed. In turn, this “increases” the payment amount for a bilateral procedure when multiple T procedures appear on the same claim where the bilateral procedure is not the highest weighted T.

Here is an example that compares the old versus new. The payments below are based on the national unadjusted payment. These codes are all in the same APC and have the same relative value. CPT code 31255 is the first code that appears on the claim without modifier -50. It is the non-discounted code. CPT code 31256 is discounted by 50% in both examples. CPT codes 31267 and 31276 both appear with modifier -50. The payment calculations are shown below.

CPT Code Pre-2008 payment Calculation Beginning Jan 2008 Calculation
31255 $1500 100% payment $1500 100% payment
31256 $750 50% payment $750 50% payment
31267-50 $1125 Bilateral pays 150% more than single procedure. Discounting rules under multiple T procedures decrease this by half, so bilateral pays 75%. $1500 New formula applied (2x.05)/1=1. Multiply this by $1500.
31276-50 $1125 Bilateral pays 150% more than single procedure. Discounting rules under multiple T procedures decrease this by half, so bilateral pays 75% $1500 New formula applied (2x.05)/1=1. Multiply this by $1500.
         
Total payment $4500   $5250  

The new formula calculation produces a payment increase for each bilateral procedure of 33%. Because CMS intentionally implemented this new formula, you should not expect to see any automatic claims adjustments and refunds.



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