PPS Billing Overview - PM
PPS Billing
Medicare’s Prospective Payment System (PPS) is a method of reimbursement for services delivered in hospitals and psychiatric units in acute care hospitals that are currently under the (TEFRA) payment system.
This documentation outlines the functionality that is supported by myAvatar PM to meet Medicare Inpatient PPS requirements.
PPS modifications were initially introduced to myAvatar PM in 2004 as an enhancement.
Changes to PPS Billing
- You no longer need to populate the Covered Days in the Billing Maintenance Screen when there are leaves in the episode. This is now based on the Covered Days in the Benefit Plan and the system will keep track of the Leaves.
- For Medicare Part A there really is no such thing as a Leave so the following need to be set up:
- The Type Of Leave From Dictionary needs to be set up to trigger the end of an Institutional Claim
- The Return From Leave Dictionary needs to be setup to trigger the beginning of and Institutional Claim
Note, the 3 day Billing Rule applies to Leaves as it does Discharges and Re-Admissions meaning if the Client returns within 3 days, the Episodes (or Sub-Episodes) will be combined into one claim.
- PPS Billing logic allows a client to be billed if the coverage has expired (Avatar PM 2014 Update 185).
- 1) The new fields 'Include No-Pay ##0 Claims In Separate 837 File' and 'Override 837 Institutional PPS Claim Statement Dates and Claim Frequency Code For Expired Coverage' are added to the 'Guarantors/Payors' form. 2) The SQL table 'SYSTEM.billing_guar_table' is updated accordingly. 3) The 837 Institutional billing logic is modified to include the No-Pay claims into separate file if the new setting is enabled (Avatar PM 2014 Update 193).
- The Electronic Billing form is modified not to create the No-pay ##0 Claims prior to the 60-day cycle or discharge when the 'Override 837 Institutional PPS Claim Statement Dates and Claim Frequency Code For Expired Coverage' field is enabled (Avatar PM 2015 Update 006).
Examples of Contractual Allowance Calculations
For those guarantors who are affected by the PPS billing rules, the Federal Per Diem Base Rate should be defined in the ‘Per Diem Rate’ field of the Benefit Plan level.
PLEASE NOTE: If Cost Of Living Adjustment (COLA) affects your facility, apply the adjustments to the Federal Per Diem Base Rate before entering the rate in the ‘Per Diem Rate’ field of the Benefit Plan Level.
The examples below assume the Federal Per Diem Base Rate is defined as $575.95 (based on the final rule published in the November 15, 2004, Federal Register) in the Benefit Plan Level and the Room and Board service fee is defined as $1200.00 in the Service Fee table.
Example 1
A 78-year-old female patient is admitted to a psychiatric unit within an acute general hospital located in Richmond, Virginia, which has a full-service emergency department. The patient was admitted to this hospital’s unit directly. The hospital is a teaching facility. Patient presents with signs and symptoms indicating a primary diagnosis of Major Depressive Disorder (ICD 296.33, DRG 430). Her medical history includes Uncontrolled Type 1 Diabetes with Ophthalmic manifestations (ICD 250.53) and Chronic Renal Failure (ICD 585). The patient remains in the hospital for 11 days.
Calculation of Federal Base Prospective Payment Rate
Start with Federal Per Diem Base Rate From the Benefit Plan Table
$ 575.95
Calculate Labor portion of the Federal Base Rate by retrieving the Labor Proportion from PPS Rate/Adjustment Factor Definition, ‘Labor Proportion’ field. ($575.95 x 0.72528)
$417.73
Apply Wage Index Adjustment to the Labor portion of the Federal Base Rate by retrieving the Wage Index Adjustment factor from PPS Rate/Adjustment Factor Definition, Adjustments By Program tab ‘Wage Index Adjustment’ field. Wage Index Adjustment factor for Richmond, Virginia is 0.9397 ($417.73 x 0.9397)
$392.54
Calculate Non-labor portion of the Federal Base Rate by retrieving the Non-labor Proportion from PPS Rate/Adjustment Factor Definition, ‘Non-Labor Proportion’ field. ($575.95 x 0.27472)
$158.22
Calculate total wage-adjusted federal base rate ($392.54 + $158.22)
$550.76
Calculate Facility Level Adjustments
Retrieve teaching adjustment from PPS Rate/Adjustment Factor Definition, ‘Teaching Adjustment’ field.
1.07
Retrieve rural adjustment from the PPS Rate/Adjustment Factor Definition, Adjustments By Program tab ‘Rural Adjustment’ field.
---
Calculate total Facility Level Adjustment Factors by multiplying teaching adjustment with rural adjustment, if both defined. Does not apply to this example.
1.07
Calculate Patient Level Adjustments
Retrieve the DRG code from the client’s diagnosis record. This client’s DRG is submitted as 430. Retrieve adjustment factor for DRG Code 430 from the PPS Rate/Adjustment Factor Definition, DRG Adjustments tab, ‘Adjustment Factor’ field.
1.00
Calculate client’s age by retrieving the ‘Date Of Birth’ from the client demographics and ‘Admission Date’ from the ‘Admission’ option. This client is 78 years old. Retrieve the appropriate adjustment factor from the PPS Rate/Adjustment Factor Definition, Age Adjustments tab, ’75 and under 80’ field.
1.15
Retrieve the comorbidity adjustment factor for Diabetes from the PPS Rate/Adjustment Factor Definition, Comorbidity Adjustments tab.
1.05
Retrieve the comorbidity adjustment factor for Chronic Renal Failure from the PPS Rate/Adjustment Factor Definition, Comorbidity Adjustments tab.
1.11
Calculate total Patient Level PPS adjustment factors (1.00 x 1.15 x 1.05 x 1.11)
1.3403
Calculate Adjusted Federal Per Diem
Multiply wage-adjusted federal base rate with total Facility and Patient Level PPS adjustment factors ($550.76 x 1.07 x 1.3403)
$789.86
Apply Variable Per Diem Adjustments
The system retrieves the adjustment factor for each day of client’s stay from the PPS Rate/Adjustment Factor Definition, Variable Per Diem Adjustments tab and applies it to the adjusted per diem rate. Since this was a facility with a full-service facility department, the adjustment factor defined in the ‘Day 1 – Facility With A 24/7 Full-Service Emergency Department’ field from the PPS Rate/Adjustment Factor Definition, Variable Per-Diem Adjustments tab will be used for the first day adjustment.
|
Day |
Room And Board Total Charge |
Medicare Responsibility/ Adjusted Per Diem Rate |
Contractual Adjustment Amount |
|
1 |
$1200.00 |
$789.86 x 1.31 = $1034.72 |
$165.28 |
|
2 |
$1200.00 |
$789.86 x 1.12 = $884.64 |
$315.36 |
|
3 |
$1200.00 |
$789.86 x 1.08 = $853.05 |
$346.95 |
|
4 |
$1200.00 |
$789.86 x 1.05 = $829.35 |
$370.65 |
|
5 |
$1200.00 |
$789.86 x 1.04 = $821.45 |
$378.55 |
|
6 |
$1200.00 |
$789.86 x 1.02 = $805.66 |
$394.34 |
|
7 |
$1200.00 |
$789.86 x 1.01 = $797.76 |
$402.24 |
|
8 |
$1200.00 |
$789.86 x 1.01 = $797.76 |
$402.24 |
|
9 |
$1200.00 |
$789.86 x 1.00 = $789.86 |
$410.14 |
|
10 |
$1200.00 |
$789.86 x 1.00 = $789.86 |
$410.14 |
|
11 |
$1200.00 |
$789.86 x 0.99 = $781.96 |
$418.04 |
|
Total Amount |
$13,200.00 |
$9,186.07 |
$4013.93 |
Estimated Medicare Responsibility
Total PPS payments for IPF Stay
$9,186.07
Example 2
A 55-year-old male patient is admitted to a facility in rural Mississippi. Patient presents with signs and symptoms indicating a primary diagnosis of Agoraphobia w/Panic Attacks (ICD 300.21, DRG 425). His medical history includes Toxic Effect of unspecified substance, chiefly non-medical as to source (ICD 989.9) and Urinary Complications, NEC (ICD 997.5). The patient remains in the hospital for 9 days and receives 3 ECT treatments.
Calculation of Federal Base Prospective Payment Rate
Start with Federal Per Diem Base Rate From the Benefit Plan Table
$ 575.95
Calculate Labor portion of the Federal Base Rate by retrieving the Labor Proportion from PPS Rate/Adjustment Factor Definition, ‘Labor Proportion’ field. ($575.95 x 0.72528)
$417.73
Apply Wage Index Adjustment to the Labor portion of the Federal Base Rate by retrieving the Wage Index Adjustment factor from PPS Rate/Adjustment Factor Definition, Adjustments By Program tab ‘Wage Index Adjustment’ field. Wage Index Adjustment factor for rural Mississippi is 0.8020 ($417.73 x 0.8020)
$335.02
Calculate Non-labor portion of the Federal Base Rate by retrieving the Non-labor Proportion from PPS Rate/Adjustment Factor Definition, ‘Non-Labor Proportion’ field. ($575.95 x 0.27472)
$158.22
Calculate total wage-adjusted federal base rate ($335.02 + $158.22)
$493.24
Calculate Facility Level Adjustments
Retrieve teaching adjustment from PPS Rate/Adjustment Factor Definition, ‘Teaching Adjustment’ field.
---
Retrieve rural adjustment from the PPS Rate/Adjustment Factor Definition, Adjustments By Program tab ‘Rural Adjustment’ field.
1.17
Calculate total Facility Level Adjustment Factors by multiplying teaching adjustment with rural adjustment, if both defined. Does not apply to this example.
1.17
Calculate Patient Level Adjustments
Retrieve the DRG code from the client’s diagnosis record. This client’s DRG is submitted as 425. Retrieve adjustment factor for DRG Code 425 from the PPS Rate/Adjustment Factor Definition, DRG Adjustments tab, ‘Adjustment Factor’ field.
1.05
Calculate client’s age by retrieving the ‘Date Of Birth’ from the client demographics and ‘Admission Date’ from the ‘Admission’ option. This client is 55 years old. Retrieve the appropriate adjustment factor from the PPS Rate/Adjustment Factor Definition, Age Adjustments tab, ’55 and under 60’ field.
1.04
Retrieve the comorbidity adjustment factor for Toxic Effect of unspecified substance, chiefly non-medical as to source, from the PPS Rate/Adjustment Factor Definition, Comorbidity Adjustments tab.
1.11
Retrieve the comorbidity adjustment factor for Urinary Complications NEC, from the PPS Rate/Adjustment Factor Definition, Comorbidity Adjustments tab.
1.08
Calculate total Patient Level PPS adjustment factors (1.05 x 1.04 x 1.11 x 1.08)
1.3090
Calculate Adjusted Federal Per Diem
Multiply wage-adjusted federal base rate with total Facility and Patient Level PPS adjustment factors ($493.24 x 1.17 x 1.3090)
$755.41
Apply Variable Per Diem Adjustments
The system retrieves the adjustment factor for each day of client’s stay from the PPS Rate/Adjustment Factor Definition, Variable Per Diem Adjustments tab and applies it to the adjusted per diem rate. Since this was a facility without a full-service facility department, the adjustment factor defined in the ‘Day 1 – Facility Without A 24/7 Full-Service Emergency Department’ field from the PPS Rate/Adjustment Factor Definition, Variable Per-Diem Adjustments tab will be used for the first day adjustment.
|
Day |
Room And Board Total Charge |
Medicare Responsibility/ Adjusted Per Diem Rate |
Contractual Adjustment Amount |
|
1 |
$1200.00 |
$755.41 x 1.19 = $898.94 |
$301.06 |
|
2 |
$1200.00 |
$755.41 x 1.12 = $846.06 |
$353.94 |
|
3 |
$1200.00 |
$755.41 x 1.08 = $815.84 |
$384.16 |
|
4 |
$1200.00 |
$755.41 x 1.05 = $793.18 |
$406.42 |
|
5 |
$1200.00 |
$755.41 x 1.04 = $785.62 |
$414.38 |
|
6 |
$1200.00 |
$755.41 x 1.02 = $770.52 |
$429.48 |
|
7 |
$1200.00 |
$755.41 x 1.01 = $762.96 |
$437.04 |
|
8 |
$1200.00 |
$755.41 x 1.01 = $762.96 |
$437.04 |
|
9 |
$1200.00 |
$755.41 x 1.00 = $755.41 |
$444.59 |
|
Total Amount |
$10,800.00 |
$7191.49 |
$3608.51 |
Calculate ECT payments
It is assumed ECT service code service fee is defined as $350.00 in the Service Fee table. Retrieve the PPS ECT Rate from the PPS Rate/Adjustment Factor Definition, ‘PPS ECT Rate (Per Treatment)’ field.
$247.96
Calculate Labor portion of the PPS ECT Rate by retrieving the Labor Proportion from PPS Rate/Adjustment Factor Definition, ‘Labor Proportion’ field. ($247.96 x 0.72528)
$179.84
Apply Wage Index Adjustment to the Labor portion of the PPS ECT Rate by retrieving the Wage Index Adjustment factor from PPS Rate/Adjustment Factor Definition, Adjustments By Program tab ‘Wage Index Adjustment’ field. Wage Index Adjustment factor for rural Mississippi is 0.8020 ($179.84 x 0.8020)
$144.53
Calculate Non-labor portion of the PPS ECT Rate by retrieving the Non-labor Proportion from PPS Rate/Adjustment Factor Definition, ‘Non-Labor Proportion’ field. ($247.96 x 0.27472)
$68.12
Calculate total wage-adjusted PPS ECT rate ($144.53 + $68.12)
$212.65
|
Procedure # |
ECT Service Total Charge |
Medicare Responsibility / Adjusted PPS ECT Rate |
Contractual Adjustment Amount |
|
1 |
$350.00 |
$212.65 |
$137.35 |
|
2 |
$350.00 |
$212.65 |
$137.35 |
|
3 |
$350.00 |
$212.65 |
$137.35 |
|
Total Amount |
$1,050.00 |
$637.95 |
$412.05 |
Estimated Medicare Responsibility
Total PPS payments for IPF Stay and total ECT payments ($7191.49 + $637.95)
$7829.44