You may have heard the news last week that CMS will be collapsing the five levels of service for outpatient visit into a single flat rate.
What you may not have realized, though, is that this news relates only to HOSPITAL outpatient visits, and not to the professional (physician fee) component, but only to the facility (hospital) component. Let’s unpack this announcement and understand exactly what it means.
First, some clarifying terminology:
Professional Billing versus Facility Billing
Professional Billing is billing for physician and non-physician provider services. Claims are billed using the CMS 1500 form. The fee schedule for Professional Billing is the Medicare Physician Fee Schedule, known as MPFS. If a coder or biller says they do “professional billing”, they most likely work for a physician practice or the physician arm of a large health system.
Facility Billing is billing for the hospital clinic exam room, supplies and nursing time. Claims are billed on the UB-04 form, also known as CMS-1450. The fee schedule for outpatient facility billing is the Hospital Outpatient Prospective Payment System, known as OPPS. If a coder or biller says they do “facility billing,” they most likely work in the Central Billing Office for a hospital.
And just to make things a little more confusing…
Professional Billing has two different type of payments for physician services – facility and non-facility.
A non-facility payment is for the physician (or other provider) services and there will be one inclusive charge for the physician service and overhead expense, for example, in an independent medical practice office. For an established patient level 3 visit (99213) in 2013, the average national Medicare payment is $72.81, which covers the physician service as well as the practice expense for the service.
A facility payment is for the physician (or other provider) service only. An example includes physician services provided in the Emergency Department, operating room or to an inpatient. For an established patient level 3 visit (99213) in 2013, the average national Medicare payment is $49.67, which covers ONLY the physician service. The hospital, however, will file a second claim just for the expenses of the facility. Together, the two charges are typically more than the single charge for the non-facility payment.
Splitting a hospital outpatient charge into professional and facility components is also called “provider-based billing” and in this model patients receive two charges on their bill for services provided. One charge represents the facility or hospital charge and one charge represents the professional or physician fee. In some systems, the patient bill is not combined and patients will receive two separate bills.
It is the payment for the hospital charge portion of the outpatient visit that is being impacted by the new Medicare rule in 2014. Instead of five levels of service, there will be only one.
Why a single hospital outpatient payment?
Here is what CMS says about collapsing the five levels of service:
“CMS will replace the current five levels of hospital clinic visit codes for both new and established patients with a single code describing all outpatient clinic visits. A single code and payment for clinic visits is more administratively simple for hospitals and better reflects hospital resources involved in supporting an outpatient visit. The current five levels of outpatient visit codes are designed to distinguish differences in physician work. Provisions in the final Hospital Outpatient Prospective Payment System (OPPS) rule encourage more efficient delivery of outpatient facility services by packaging the payment for multiple supporting items and services into a single payment for a primary service similar to the way Medicare pays for hospital inpatient care.”
If you stuck with me through this long explanation, you know now that the new 2014 single flat fee for outpatient visits relates solely to the facility (hospital) portion of the outpatient visit in a hospital setting, and will not impact the professional services of physicians and non-physician providers.
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