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Accurately report HCPCS codes

APCs Weekly Monitor, July 29, 2004

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QUESTION: I have heard that if we charge less for a service than Medicare reimburses, Medicare will pay us the lesser of the two amounts. For example, a charge code tied to a CPT is priced at $250 and billed to CMS. The addendum B reimbursement for that CPT is $500. Thus, CMS pays us the lesser, which is what we billed, $250. Is this true?

ANSWER: The above statement is false. Medicare triggers the APC payment based on the HCPCS codes only. Yes, charges and the cost-to-charge ratio (the charge amount divided by the cost amount) come into play; however, if your cost is less than the APC payment, Medicare always pays the APC payment amount and not the lesser. In this case, the hospital should review the line item in question and adjust the charge. Because Medicare's APC amounts are based on average cost, it is likely your item is priced below cost.

If the cost-to-charge ratio is 2.6 times greater than the APC payment, you will trigger additional payment or an outlier. This occurs because Medicare makes certain assumptions about your cost for an item based on the amount you charge.

Fifty-percent discounting will come into play only for multiple status indicators of T on the claim. In other words, CPT codes with status indicator T will be subsequently discounted by 50% of the APC payment-not charges.

Therefore, charges are important and must be represented on the UB92 claim form, but more important ultimately is accurate reporting of HCPCS code(s) with the associated charge.

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