Revenue Cycle

CMS clarifies Method II CAH billing for anesthesiologist services

Medicare Update for CAHs, August 24, 2011

On August 1, CMS issued a transmittal that clarifies payment calculations for anesthesia services performed by an anesthesiologist in a Method II critical access hospital (CAH).

CAHs have the option to select Method I billing (standard method) or Method II billing (optional method) when submitting claims for outpatient services. The differences between the two, according to CMS, are as follows:

  • Method I billing – A CAH bills for its outpatient services on the UB04 claim and is reimbursed 101% of its reasonable costs for furnishing those services from its FI or MAC. The related professional fees are billed on the 1500 claim form and payment is made by the carrier or MAC on a fee schedule, charge, or other fee basis, with the place of service reported as a hospital outpatient department.Beginning on or after January 1, 2004, the payment to CAHs for outpatient services will be:
    • 80% of 101% of the reasonable cost of the CAH in furnishing those services; or
    • 101% of the reasonable cost of the CAH in furnishing those services, less applicable Part B deductible and coinsurance amounts.
  • Payment for the professional services furnished in a CAH to its outpatients is made by the carrier or MAC on a fee schedule, charge, or other fee basis, with the place of service reported as a hospital outpatient department.

  • Method II billing - A CAH bills for its outpatient services on the UB04 claim and is reimbursed 101% of its reasonable costs for furnishing those services from its FI or MAC. In addition, the CAH also bills for the related professional fees for those selected services on the UB04 claim form using specific revenue codes. The CAH is reimbursed 115% of whatever the carrier or MAC would have paid under the physician fee schedule. The additional reimbursement is to help cover the overhead costs for billing the professional fees on the hospital’s outpatient claim.
  • For services furnished on or after July 1, 2001, under Method II billing, the payment—which comes from the FI or MAC—to a critical access hospital will include both the hospital outpatient services and the related professional service. For Method II billing:
    • The CAH will be paid 101% of the reasonable cost of the outpatient services.
    • The CAH will also be paid 115% of whatever amount the carrier or MAC would pay under the physician fee schedule.
  • Payment to a CAH for inpatient services does not include any costs of physician services or other professional services and is subject to Part A hospital deductible and coinsurance.

Payment is currently calculated for the anesthesiologist’s professional services identified with a modifier AA  in a Method II CAH on a 20% reduction of the fee schedule amount before the deductible and coinsurance are calculated, according to the CMS release. This new transmittal removes the 20% reduction so it should not be applied in the payment calculation for these services.

“This is great news for CAHs billing for physicians’ anesthesiology services,” says Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc. “Since an anesthesiologist is an MD, the 20% reduction in the payment under Method II billing seemed unwarranted in this setting.”

For dates of services on or after January 1, 2008, contractors will pay for anesthesia services submitted by a Method II CAH on an 85X bill type with revenue code 963 and modifier AA based on the lesser of the actual charges or the actual fee schedule amount.   

Medicare contractors will not search for and adjust claims that have been paid prior to the implementation date; however, they will adjust claims that are brought to their attention, according to the accompanying MLN Matters article.

Since this transmittal is effective on January 1, 2008  but it was just announced, if a facility does not send those claims back through they are potentially missing out on a lot of reimbursement based on their surgical case volume,” says Mackaman. “Method II CAHs who plan to resubmit these claims for the additional reimbursement should be aware that their FIs’ or MACs’ implementation date for overriding the timely filing edit for rebilling these old claims is not until January 1, 2012.”

She continued, “Facilities may get timely filing denials for these until their contractor is ready to accept and process them. If facilities run into this problem, they should contact their contractor for more information and resubmit the claims once they are able.”

 

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