Revenue Cycle

CMS implements multiple procedure payment reduction policy for Method II CAHs

Medicare Update for CAHs, November 16, 2011

On October 28, CMS issued a transmittal that implements the multiple procedure payment reduction policy for critical access hospital (CAH) method II providers, which will affect the bottom line for CAHS in 2012.

Physicians and non-physician practitioners billing on an 85X bill type for professional services rendered in a Method II CAH have the option of reassigning their billing rights to the CAH. If the billing rights are reassigned to the Method II CAH, payment is made to the CAH for professional services (revenue code (RC) 96X, 97X, or 98X) based on the Medicare Physician Fee Schedule (MPFS) supplemental file, according to CMS.

If a physician or physicians in the same group perform separate procedures on the same patient at the same operative session, or on the same day for which separate payment is allowed, then these are known as “multiple surgeries.” Medicare pays for these services by ranking from the highest MPFS amount to the lowest MPFS amount. When the same physician performs more than one surgical service at the same session, the allowed amount is 100% for the surgical code with the highest MPFS amount. For subsequent surgical codes, the allowed amount is based on 50% of the MPFS amount. In addition, special endoscopic pricing rules are applied prior to the multiple surgery rules, if applicable, according to CMS.

Transmittal R2333CP implements this payment logic into the fiscal intermediary shared system (FISS) for CAH Method II providers to mirror the logic historically applied to physicians and non-physician practitioners that bill their own services to the multi-carrier system (MCS).

When a CAH elects to go Method II for any of its physicians/non-physician practitioners who perform outpatient services at their facility, it provides additional reimbursement to the facility for the overhead costs of processing the professional billing. This is usually 115% of what the MPFS would have paid the practitioner and can be quite a financial incentive for CAHs, explains Debbie Mackaman, RHIA, CHCO, regulatory specialist at HCPro, Inc .

“When the CAH bills under Method II, it moves the professional fees from the 1500 claim form over to the UB04 claim form reported under specific revenue codes. By moving the professional charges to the hospital claim form, it prevents some of the usual professional fee edits from occurring – one of them being the MPPR (Multiple Procedure Payment Reduction).

CMS recommends that CAH Method II providers review the multiple surgery and special endoscopic pricing rules in Pub. 100-04, Chapter 12, Section 40.6 and section 40.6.D where CMS addresses rare situations in which the CAH claims billed with modifier 22 may be subject to medical review.

Multiple procedures are often performed on the same date of service for the convenience of the patient, physician and facility. CMS takes the stance that it doesn’t cost the same amount to add-on a procedure as it would to do the additional procedure on another day, which is similar to the multiple procedure reduction that OPPS hospitals operate under, explains Mackaman.

“The good news is that CAHs will have until April 2012 until this reduction is implemented; however, they should start to evaluate their data to understand the potential financial impact this may have on their bottom line.”

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