How to Create a Defensible Pricing Strategy National Rural Health Resource Center Rural Hospital Performance Improvement (RHPI) Project November 30, 2012 John Behn, MPA
Pricing Policies and Procedures Hospitals typically do not have written policies governing the pricing of: Technical Procedures Professional Procedures Pharmaceuticals 250 Revenue Code 636 Revenue Code Radiopharmaceuticals / Radioactive Isotopes Contrast Agents Supplies Room and Board rates Observation hourly charges
Pricing Policies and Procedures Pricing policies ensure: Consistency across departments Consistency across same procedure codes Compliant and equitable billing process Increased customer service Defensible pricing structure Increased departmental ownership and accountability
Medical and Surgical Procedural Pricing Policy
Professional and Technical Charges Professional and technical charges should have separate and distinct pricing baselines Administration must decide which payor baseline to utilize Medicare APC Medicare Local or National Part B Fee Schedule BCBS Contract Commercial Contract Pricing policy should be flexible enough to allow for different markups by modality Pricing markup should be based on only one payor Be consistent Utilize markup values to ensure proper revenue capture by modality Pay attention to payor mix
Professional and Technical Charges Analysis must be undertaken to identify current pricing structure by department and modality Analysis should include top 3 payors Include Medicare APC values Identify comparative payor multiplier range Identify current payor markup averages Utilize results to identify ongoing markup by modality Analysis mitigates the impact of lesser of charge logic Eliminates pricing variability
Department: 00.3120 APC Multiplier Range: 0.70-8.74 BCBS Multiplier Range: 0.24-4.53 COMM Multiplier Range: 0.33-2.24 Mnemonic Gl Dept Charge description HCPCS HCPCS SI Rev Current Charge Amt. APC Payment Rate APC Multiplier Variance APC to Current 3S517010 00.3120 INSERT NON-INDWELLING CATHETER 51701 51701 X 761 $54.00 $42.69 1.26-11.31 3S517020 00.3120 INSERT TEMP INDWEL CATH SIMPLE 51702 51702 X 761 $160.00 $42.69 3.75-117.31 3S517200 00.3120 BLADER INSTALATION 51720 51720 T 761 $133.00 $190.50 0.70 57.50 3S976050 00.3120 WOUND VAC SURFACE <= 50 SQCM 97605 97605 T 761 $318.50 $54.70 5.82-263.80 3S976060 00.3120 WOUND VAC SURFACE > 50 SQCM 97606 97606 T 761 $478.00 $54.70 8.74-423.30 3S008000 00.3120 OBSERVATION PER HOUR G0378 G0378 N 762 $23.00 #DIV/0! -23.00 3S008001 00.3120 TELEMETRY OBSERVATION PER HOUR G0378 G0378 N 762 $26.00 #DIV/0! -26.00 3SG02640 00.3120 DIRECT ADMIT TO OBS NOT MEET G0379 G0379 Q3 761 $69.50 $54.68 1.27-14.82 Mnemonic Gl Dept Charge description HCPCS HCPCS SI Rev Current Charge Amt. BCBS Fee Schedule BCBS Multiplier Variance BCBS to Current 3S517010 00.3120 INSERT NON-INDWELLING CATHETER 51701 51701 X 761 $54.00 $222.06 0.24 168.06 3S517020 00.3120 INSERT TEMP INDWEL CATH SIMPLE 51702 51702 X 761 $160.00 $273.44 0.59 113.44 3S517200 00.3120 BLADER INSTALATION 51720 51720 T 761 $133.00 $532.80 0.25 399.80 3S976050 00.3120 WOUND VAC SURFACE <= 50 SQCM 97605 97605 T 761 $318.50 $97.92 3.25-220.58 3S976060 00.3120 WOUND VAC SURFACE > 50 SQCM 97606 97606 T 761 $478.00 $105.44 4.53-372.56 3S008000 00.3120 OBSERVATION PER HOUR G0378 G0378 N 762 $23.00 $0.00 #DIV/0! -23.00 3S008001 00.3120 TELEMETRY OBSERVATION PER HOUR G0378 G0378 N 762 $26.00 $0.00 #DIV/0! -26.00 3SG02640 00.3120 DIRECT ADMIT TO OBS NOT MEET G0379 G0379 Q3 761 $69.50 $0.00 #DIV/0! -69.50 Mnemonic Gl Dept Charge description HCPCS HCPCS SI Rev Current Charge Amt. COMM PRICE COMM Multiplier Variance COMM to Current 3S517010 00.3120 INSERT NON-INDWELLING CATHETER 51701 51701 X 761 $54.00 $94.16 0.57 $40.16 3S517020 00.3120 INSERT TEMP INDWEL CATH SIMPLE 51702 51702 X 761 $160.00 $71.45 2.24 -$88.55 3S517200 00.3120 BLADER INSTALATION 51720 51720 T 761 $133.00 $407.48 0.33 $274.48 3S976050 00.3120 WOUND VAC SURFACE <= 50 SQCM 97605 97605 T 761 $318.50 #DIV/0! -$318.50 3S976060 00.3120 WOUND VAC SURFACE > 50 SQCM 97606 97606 T 761 $478.00 #DIV/0! -$478.00 3S008000 00.3120 OBSERVATION PER HOUR G0378 G0378 N 762 $23.00 #DIV/0! -$23.00 3S008001 00.3120 TELEMETRY OBSERVATION PER HOUR G0378 G0378 N 762 $26.00 #DIV/0! -$26.00 3SG02640 00.3120 DIRECT ADMIT TO OBS NOT MEET G0379 G0379 Q3 761 $69.50 #DIV/0! -$69.50 7
Professional and Technical Charges Create models with actual utilization data Compare current methodology with new pricing levels by payor and location Calculate gross revenue variance by payor Calculate gross revenue variance by location IP OP ER Analysis allows you to identify the impact of pricing changes on Medicare co-insurance amounts Self-Pay population Deductible plans 8
Department: 1.3231 Facility ER APC Multiplier Range: 0.20-14.42 Average APC Multiplier: 2.28 ( National APC Values utilized for comparison ) Procedure Code Description Department Rev Code HCPCS Charge APC Value APC Multiplier 3X APC Variance to Current 1800240 ID SUB Q ABSCESS SIMPLE 1.3231 450ER 10060 $226.50 $93.33 2.43 $279.99 $53.49 1800245 ID SUB Q ABSCESS COMPLEX 1.3231 450ER 10061 $226.50 $93.33 2.43 $279.99 $53.49 1800250 ID PILONIDAL SIMPLE 1.3231 450ER 10080 $226.50 $93.33 2.43 $279.99 $53.49 1800255 ID PILONIDAL COMPLEX 1.3231 450ER 10081 $700.50 $832.03 0.84 $2,496.09 $1,795.59 1800150 FB REMOVAL SUB Q SIMPLE 1.3231 450ER 10120 $226.50 $180.26 1.26 $540.78 $314.28 1800155 FB INCISIONAL REMOVAL COMPLEX 1.3231 450ER 10121 $875.50 $1,050.17 0.83 $3,150.51 $2,275.01 1800260 ID HEMATOMA 1.3231 450ER 10140 $700.50 $832.03 0.84 $2,496.09 $1,795.59 1800265 ASPIRATION PUNCTURE ABSCESS 1.3231 450ER 10160 $109.75 $93.33 1.18 $279.99 $170.24 1800370 WOUND DEBRIDE SKIN PART THICK 1.3231 450ER 11040 $214.75 $100.21 2.14 $300.63 $85.88 1800375 WOUND DEBRIDE SKIN FULL THICK 1.3231 450ER 11041 $214.75 $100.21 2.14 $300.63 $85.88 1800380 WOUND DEBRIDE SKIN & SQ TISSUE 1.3231 450ER 11042 $314.25 $180.26 1.74 $540.78 $226.53 1800385 WOUND DEBRIDE SKIN/SQ TIS/MUS 1.3231 450ER 11043 $314.25 $180.26 1.74 $540.78 $226.53 1800390 AVULSION NAIL PLATE 1.3231 450ER 11730 $142.00 $54.70 2.60 $164.10 $22.10 1800395 AVULSION NAIL PLATE EACH ADDL 1.3231 450ER 11732 $68.50 $54.70 1.25 $164.10 $95.60 1800270 ID SUBUNGUAL HEMATOMA 1.3231 450ER 11740 $65.50 $27.63 2.37 $82.89 $17.39 1800400 EXCISE INGROWN NAIL 1.3231 450ER 11750 $437.75 $295.69 1.48 $887.07 $449.32 1800405 NAIL BED REPAIR 1.3231 450ER 11760 $236.50 $227.34 1.04 $682.02 $445.52 1800745 REPAIR SIMPLE TO 2.5 CM T,E,S, 1.3231 450ER 12001 $255.25 $86.70 2.94 $260.10 $4.85 1800750 REPAIR SIMPLE 2.6-7.5 CM T,E,S 1.3231 450ER 12002 $255.25 $86.70 2.94 $260.10 $4.85 1800755 REPAIR SIMPLE 7.6-12.5 CM T,E, 1.3231 450ER 12004 $236.50 $86.70 2.73 $260.10 $23.60 1800760 REPAIR SIMPLE 12.6-20 CM T,E,S 1.3231 450ER 12005 $236.50 $86.70 2.73 $260.10 $23.60 1800765 REPAIR SIMPLE 20.1-30.0 CM T,E 1.3231 450ER 12006 $236.50 $86.70 2.73 $260.10 $23.60 1800770 REPAIR SIMPLE OVER 30 CM T,E,S 1.3231 450ER 12007 $236.50 $86.70 2.73 $260.10 $23.60 1800695 REPAIR SIMPLE TO 2.5 CM F,E,E, 1.3231 450ER 12011 $236.50 $86.70 2.73 $260.10 $23.60 1800705 REPAIR SIMPLE 2.6-5.0 CM F,E,E 1.3231 450ER 12013 $255.25 $86.70 2.94 $260.10 $4.85 1800710 REPAIR SIMPLE 5.1-7.5 CM F,E,E 1.3231 450ER 12014 $255.25 $86.70 2.94 $260.10 $4.85 1800715 REPAIR SIMPLE 7.6-12.5 CM F,E, 1.3231 450ER 12015 $255.25 $86.70 2.94 $260.10 $4.85 1800720 REPAIR SIMPLE 12.6-20 CM F,E,E 1.3231 450ER 12016 $255.25 $86.70 2.94 $260.10 $4.85 1800725 REPAIR SIMPLE 20.1-30.0 CM F,E 1.3231 450ER 12017 $236.50 $86.70 2.73 $260.10 $23.60 1800730 REPAIR SIMPLE OVER 30.0 CM F,E 1.3231 450ER 12018 $236.50 $86.70 2.73 $260.10 $23.60 1800200 FB REMOVAL OCULAR SURFACE 1.3231 450ER 65205 $211.75 $61.69 3.43 $185.07 ($26.68) 1800210 FB REMOVAL OCULAR EMBEDDED 1.3231 450ER 65210 $211.75 $61.69 3.43 $185.07 ($26.68) 1800208 FB REMOVAL CORNEAL WO SL 1.3231 450ER 65220 $211.75 $61.69 3.43 $185.07 ($26.68) 1800195 FB REMOVAL AUDITORY CANAL 1.3231 450ER 69200 $88.00 $42.69 2.06 $128.07 $40.07 1800145 REMOVAL IMPACTED CERUMEN 1.3231 450ER 69210 $88.00 $42.69 2.06 $128.07 $40.07 1800460 GASTRIC INTUBATION/LAVAGE 1.3231 450ER 91105 $337.25 $99.83 3.38 $299.49 ($37.76) 1800490 CPR 1.3231 450ER 92950 $631.25 $159.74 3.95 $479.22 ($152.03) Department Composition 9
Procedure Code Description Dept Rev Code HCPCS Charge APC Comm MCR Self Pay PEIA MCD Other Gov Total Units Current Gross Gross at 3X APC Variance to Current 1800240 ID SUB Q ABSCESS SIMPLE 1.3231 450ER 10060 $226.50 $93.33 8 3 22 2 22 1 58 $13,137.00 $16,239.42 $3,102.42 1800245 ID SUB Q ABSCESS COMPLEX 1.3231 450ER 10061 $226.50 $93.33 1 2 3 6 12 $2,718.00 $3,359.88 $641.88 1800250 ID PILONIDAL SIMPLE 1.3231 450ER 10080 $226.50 $93.33 1 1 $226.50 $279.99 $53.49 1800150 FB REMOVAL SUB Q SIMPLE 1.3231 450ER 10120 $226.50 $180.26 2 2 4 $906.00 $2,163.12 $1,257.12 1800155 FB INCISIONAL REMOVAL COMPLEX 1.3231 450ER 10121 $875.50 $1,050.17 1 1 $875.50 $3,150.51 $2,275.01 1800260 ID HEMATOMA 1.3231 450ER 10140 $700.50 $832.03 1 1 $700.50 $2,496.09 $1,795.59 1800390 AVULSION NAIL PLATE 1.3231 450ER 11730 $142.00 $54.70 1 2 2 5 $710.00 $820.50 $110.50 1800270 ID SUBUNGUAL HEMATOMA 1.3231 450ER 11740 $65.50 $27.63 1 1 2 $131.00 $165.78 $34.78 1800400 EXCISE INGROWN NAIL 1.3231 450ER 11750 $437.75 $295.69 1 1 $437.75 $887.07 $449.32 1800405 NAIL BED REPAIR 1.3231 450ER 11760 $236.50 $227.34 1 1 $236.50 $682.02 $445.52 1800745 REPAIR SIMPLE TO 2.5 CM T,E,S, 1.3231 450ER 12001 $255.25 $86.70 19 6 7 5 28 7 72 $18,378.00 $18,727.20 $349.20 1800745 REPAIR SIMPLE TO 2.5 CM T,E,S, 1.3231 450ER 12001 $255.25 $86.70 1 1 1 3 $765.75 $780.30 $14.55 1800750 REPAIR SIMPLE 2.6-7.5 CM T,E,S 1.3231 450ER 12002 $255.25 $86.70 2 3 7 1 8 1 22 $5,615.50 $5,722.20 $106.70 1800755 REPAIR SIMPLE 7.6-12.5 CM T,E, 1.3231 450ER 12004 $236.50 $86.70 1 2 1 4 $946.00 $1,040.40 $94.40 1800695 REPAIR SIMPLE TO 2.5 CM F,E,E, 1.3231 450ER 12011 $236.50 $86.70 19 16 16 10 33 4 98 $23,177.00 $25,489.80 $2,312.80 1800705 REPAIR SIMPLE 2.6-5.0 CM F,E,E 1.3231 450ER 12013 $255.25 $86.70 3 5 3 4 12 4 31 $7,912.75 $8,063.10 $150.35 1800705 REPAIR SIMPLE 2.6-5.0 CM F,E,E 1.3231 450ER 12013 $255.25 $86.70 1 1 $255.25 $260.10 $4.85 1800710 REPAIR SIMPLE 5.1-7.5 CM F,E,E 1.3231 450ER 12014 $255.25 $86.70 4 3 2 0 1 10 $2,552.50 $2,601.00 $48.50 1800715 REPAIR SIMPLE 7.6-12.5 CM F,E, 1.3231 450ER 12015 $255.25 $86.70 1 1 2 1 5 $1,276.25 $1,300.50 $24.25 1800670 LAYER CLOSURE 2.6-7.5 CM S,A,T 1.3231 450ER 12032 $236.50 $227.34 1 1 2 $473.00 $1,364.04 $891.04 1800675 LAYER CLOSURE 7.6-12.5 CM S,A, 1.3231 450ER 12034 $236.50 $86.70 1 1 2 $473.00 $520.20 $47.20 1800635 LAYER CLOSURE TO 2.5 CM N,H,F, 1.3231 450ER 12041 $236.50 $86.70 0 1 1 $236.50 $260.10 $23.60 1800640 LAYER CLOSURE 2.6-7.5 CM N,H,F 1.3231 450ER 12042 $236.50 $86.70 1 1 $236.50 $260.10 $23.60 1800600 LAYER CLOSURE 2.5 CM LIP,MU MB 1.3231 450ER 12051 $236.50 $86.70 0 1 1 $236.50 $260.10 $23.60 1800605 LAYER CLOSURE 2.6-5.0 LIP,MUMB 1.3231 450ER 12052 $236.50 $86.70 2 2 $473.00 $520.20 $47.20 1800610 LAYER CLOSURE 5.1-7.5CM LIP,MU 1.3231 450ER 12053 $236.50 $86.70 2 2 $473.00 $520.20 $47.20 1800615 LAYER CLOSURE 7.6-12.5CM LIP,M 1.3231 450ER 12054 $236.50 $86.70 1 1 2 $473.00 $520.20 $47.20 1800585 REPAIR CMX 1.1-2.5 CM TRUNK 1.3231 450ER 13100 $352.00 $292.68 1 1 $352.00 $878.04 $526.04 10
Procedure Code Description Dept Rev Code HCPCS Charge APC Commercial Current Commercial Gross Commercial Gross at 3X APC Variance to Current 1800240 ID SUB Q ABSCESS SIMPLE 1.3231 450ER 10060 $226.50 $93.33 8 $1,812 $2,240 $428 1800245 ID SUB Q ABSCESS COMPLEX 1.3231 450ER 10061 $226.50 $93.33 1 $227 $280 $53 1800250 ID PILONIDAL SIMPLE 1.3231 450ER 10080 $226.50 $93.33 $0 $0 $0 1800150 FB REMOVAL SUB Q SIMPLE 1.3231 450ER 10120 $226.50 $180.26 $0 $0 $0 1800155 FB INCISIONAL REMOVAL COMPLEX 1.3231 450ER 10121 $875.50 $1,050.17 $0 $0 $0 1800260 ID HEMATOMA 1.3231 450ER 10140 $700.50 $832.03 $0 $0 $0 1800390 AVULSION NAIL PLATE 1.3231 450ER 11730 $142.00 $54.70 $0 $0 $0 1800270 ID SUBUNGUAL HEMATOMA 1.3231 450ER 11740 $65.50 $27.63 1 $66 $83 $17 1800400 EXCISE INGROWN NAIL 1.3231 450ER 11750 $437.75 $295.69 $0 $0 $0 1800405 NAIL BED REPAIR 1.3231 450ER 11760 $236.50 $227.34 $0 $0 $0 1800745 REPAIR SIMPLE TO 2.5 CM T,E,S, 1.3231 450ER 12001 $255.25 $86.70 19 $4,850 $4,942 $92 1800745 REPAIR SIMPLE TO 2.5 CM T,E,S, 1.3231 450ER 12001 $255.25 $86.70 1 $255 $260 $5 1800750 REPAIR SIMPLE 2.6-7.5 CM T,E,S 1.3231 450ER 12002 $255.25 $86.70 2 $511 $520 $10 1800755 REPAIR SIMPLE 7.6-12.5 CM T,E, 1.3231 450ER 12004 $236.50 $86.70 1 $237 $260 $24 1800695 REPAIR SIMPLE TO 2.5 CM F,E,E, 1.3231 450ER 12011 $236.50 $86.70 19 $4,494 $4,942 $448 1800705 REPAIR SIMPLE 2.6-5.0 CM F,E,E 1.3231 450ER 12013 $255.25 $86.70 3 $766 $780 $15 1800705 REPAIR SIMPLE 2.6-5.0 CM F,E,E 1.3231 450ER 12013 $255.25 $86.70 $0 $0 $0 1800710 REPAIR SIMPLE 5.1-7.5 CM F,E,E 1.3231 450ER 12014 $255.25 $86.70 4 $1,021 $1,040 $19 1800715 REPAIR SIMPLE 7.6-12.5 CM F,E, 1.3231 450ER 12015 $255.25 $86.70 1 $255 $260 $5 1800670 LAYER CLOSURE 2.6-7.5 CM S,A,T 1.3231 450ER 12032 $236.50 $227.34 $0 $0 $0 1801130 ER INTERMEDIATE 1.3231 450ER 99283 $240.00 $136.70 581 $139,440 $238,268 $98,828 1801130 ER INTERMEDIATE 1.3231 450ER 99283 $240.00 $136.70 14 $3,360 $5,741 $2,381 1801130 ER INTERMEDIATE 1.3231 450ER 99283 $240.00 $136.70 1 $240 $410 $170 1801135 ER EXTENDED 1.3231 450ER 99284 $545.75 $217.91 337 $183,918 $220,307 $36,389 1801135 ER EXTENDED 1.3231 450ER 99284 $545.75 $217.91 23 $12,552 $15,036 $2,484 1801135 ER EXTENDED 1.3231 450ER 99284 $545.75 $217.91 6 $3,275 $3,922 $648 1801140 ER COMPREHENSIVE 1.3231 450ER 99285 $992.25 $323.90 43 $42,667 $41,783 -$884 1801140 ER COMPREHENSIVE 1.3231 450ER 99285 $992.25 $323.90 34 $33,737 $33,038 -$699 1801140 ER COMPREHENSIVE 1.3231 450ER 99285 $992.25 $323.90 4 $3,969 $3,887 -$82 1801145 CRITICAL CARE 30-74 MIN 1.3231 450ER 99291 $1,561.50 $485.39 4 $6,246 $5,825 -$421 1801145 CRITICAL CARE 30-74 MIN 1.3231 450ER 99291 $1,561.50 $485.39 $0 $0 $0 1801145 CRITICAL CARE 30-74 MIN 1.3231 450ER 99291 $1,561.50 $485.39 1 $1,562 $1,456 -$105 2,093 $565,727 $720,834 $155,107 % Increase 27%
Description Dept Rev Code HCPCS Charge APC Comm MCR Self Pay PEIA MCD Other Gov Total Units Current Gross Gross at 3X APC Variance to Current ID SUB Q ABSCESS SIMPLE 1.3231 450ER 10060 $226.50 $93.33 8 3 22 2 22 1 58 $13,137.00 $16,239.42 $3,102.42 ID SUB Q ABSCESS COMPLEX 1.3231 450ER 10061 $226.50 $93.33 1 2 3 6 12 $2,718.00 $3,359.88 $641.88 ER COMPREHENSIVE 1.3231 450ER 99285 $992.25 $323.90 43 121 55 16 110 14 359 $356,217.75 $348,840.30 ($7,377.45) CRITICAL CARE 30-74 MIN 1.3231 450ER 99291 $1,561.50 $485.39 4 32 11 1 7 5 60 $93,690.00 $87,370.20 ($6,319.80) 1,811 2,417 2,146 666 3,951 461 11,452 $3,157,015.75 $4,143,254.70 $986,238.95 % of Total ER Utilization 16% 21% 19% 6% 35% 4% % Increase 31% Description Dept Rev Code HCPCS Charge APC Comm MCR Self Pay PEIA MCD Other Gov Total Units Current Gross Gross at 3X APC Variance to Current REPAIR SIMPLE 2.6-5.0 CM F,E,E 1.3231 450ER 12013 $255.25 $86.70 1 1 $255.25 $260.10 $4.85 THORACENTESIS W/ INSERT TUBE 1.3231 450ER 32002 $476.50 1 1 $476.50 $0.00 ($476.50) ER COMPREHENSIVE 1.3231 450ER 99285 $992.25 $323.90 4 49 3 5 5 66 $65,488.50 $64,132.20 ($1,356.30) CRITICAL CARE 30-74 MIN 1.3231 450ER 99291 $1,561.50 $485.39 4 1 5 $7,807.50 $7,280.85 ($526.65) 38 576 53 23 107 15 812 $252,111.75 $271,063.46 $18,951.71 % of Total IP Utilization 5% 71% 7% 3% 13% 2% % Increase 8% Description Dept Rev Code HCPCS Charge APC ` MCR Self Pay PEIA MCD Other Gov Total Units Current Gross Gross at 3X APC Variance to Current REPAIR SIMPLE TO 2.5 CM T,E,S, 1.3231 450ER 12001 $255.25 $86.70 1 1 1 3 $765.75 $780.30 $14.55 STRAPPING SHOULDER 1.3231 450ER 29240 $132.50 $71.64 1 0 0 1 $132.50 $214.92 $82.42 ER COMPREHENSIVE 1.3231 450ER 99285 $992.25 $323.90 34 108 14 5 33 194 $192,496.50 $188,509.80 ($3,986.70) CRITICAL CARE 30-74 MIN 1.3231 450ER 99291 $1,561.50 $485.39 1 1 1 2 5 $7,807.50 $7,280.85 ($526.65) 244 600 131 38 297 4 1,314 $453,976.75 $477,633.93 $23,657.18 % of Total OP Utilization 19% 46% 10% 3% 23% 0.3% 5% 12
Surgical procedures Professional charges should be set at the procedural level Majority of facilities bill all surgical procedures via increments of time Issues arise around procedures with minimal time increments: Colonoscopy Endoscopy Podiatry Ophthalmology Minor General Surgery (Lump and Bump) 13
Surgical procedures Analysis must take place to compare incremental time methodology versus billing via fixed procedural pricing methodology Actual CAH Example: Colonoscopy 30 minute surgery CPT 45380 Colonoscopy and biopsy Time Methodology $600 / half hour Total Charge $600.00 Procedural charge at 3X APC Total Charge $1,781.28 BCBS reimbursement $1.162.16 Ophthalmology Cataract 30 minute surgery CPT 66984 Cataract surg w/iol, 1 stage Time Methodology $600 / half hour Total Charge $600.00 Procedural charge at 3X APC Total Charge $4,814.82 BCBS reimbursement $2,299.85 14
Surgical Many hospitals cannot handle multiple charging methodologies within a department Limits placed by Billing system Personnel Coding If limits cannot be overcome, bill all surgeries at the procedural level Reimbursement impact of lesser of logic is to great to ignore Utilize all available contractual information available 15
Lab Most hospitals have multiple lab platforms Reference labs In-house tests In-house charge based on fee schedule analysis Reference lab charges based on cost Best practice designates separate GL or departmental designation for reference labs Allows lab to conduct real time cost analysis conduct utilization analysis conduct reimbursement review ensure proper pricing determination 16
Lab Specific lab CPT designation should live within a lab department only once Multiple listing of same CPTs within the same department creates unnecessary chargemaster complexity opportunity for pricing variability lost gross and net revenue Analyze major payors and determine current payor multiplier Determine base line and create specific, consistent markup Review reference lab invoices on a consistent basis and modify where necessary 17
Supplies Hospitals typically do not have written policies governing chargeable versus non-chargeable supplies To be chargeable, supplies should be Patient specific One time patient use Disposable Meet cost threshold Hospitals must create, implement, communicate and maintain a policy governing Supply pricing methodology Chargeable vs. Non Chargeable 18
Supplies policy 19
Supplies Involve purchasing to review all supplies within the CDM Purchasing review identifiers: Description issues Identifies outdated items for deletion / inactivation Identifies proper EACH cost Many hospitals have supplies in the chargemaster listed with the box, pack, kit, case price Supplies should be exempt from yearly price increase Allow actual cost to determine base for markup 20
Dept Rev I do not know Does facility still Correct Number Num Description Code what this is. use this supply? EACH Price Price Comment MS1255 9 4 X 4'S 8PLY STERILE 0.07 0 MS1018 9 CANNISTER SUCT. 1100ML ER 0 X 0 not recognized MS1067 9 5 IN 1 CLEAN CONNECTOR 0 0.18 0 MS1254 9 ACE BANDAGE 2" 0.99 0 MS1306 9 ADAPT FLAT BARRIER RINGS 0 MS1302 9 ADAPT OSTOMY BELT MED 26" 0 MS1007 9 AIRWAY BERMAN 100MM ADULT 0 0.21 0 MS1178 9 ALCOHOL 1.41 0 OS1059 9 TYPEWRITER RIBBON NUK7800 0 6.81 14005 49 DRESSING CHARGE 270 X 7 not recognized 90270 49 CIDA-STAT SCRUB 270 7 96004 49 FRACTURE PAN 270 0.84 7.1 91005 9 CATHETER SUCTION 270 0.44 7.13 90506 9 CRUTCH TIPS 270 7.13 91018 9 ENEMA OIL 270 7.13 90296 9 ADAPTIC / XERO 16-48 SQ " 272 X 7.2 not recognized OS1060 9 PRINTER RIBBON GSX190 CIT 0 7.47 91009 9 COLOSTOMY BAG 270 X 7.5 not recognized 90257 9 DE LEE SUCTION 270 X 7.5 not recognized 91074 9 DISPOSABLE VAGINAL SPEC. 270 X 7.5 not recognized 90264 9 NITRAZINE TEST 270 X 7.5 not recognized 90255 9 AMNIO HOOK 270 7.5 90258 9 DISPOSABLE STRAPS 270 7.5 98041 9 STAPLE REMOVER 270 7.5 90293 9 WOUND CLEANSER 272 7.66 90707 49 SIMPLE DRESSING 270 X 8 not recognized 17118 17 STER-STRIPS 272 X 8 not recognized 90239 49 POPE EAR-WICKS 270 8 91049 49 UNDERPADS 270 8 FM1073 9 CT DEPT & NUCLEAR MED 0 8.01 98035 9 ALLDRESS 4x4 16" OR < 272 X 8.12 not recognized 91007 9 CATHETER PLUGS 270 0.46 8.33 91008 9 CLEAN CATCH KIT 270 0.8 8.33 90302 9 FACE MASK 270 X 8.5 not recognized 91042 9 SUTURE REMOVAL KIT 270 8.55 91025 49 KOTEX 270 0.96 8.6 96023 49 PERI WASH 270 8.7 FM1015 9 CCH SUPPLY REQUISITION 0 8.75 OS1061 9 PRINTER RIBBON OKI192PREM 0 8.96 94024 9 JOINT ASPIRATING/INJECTIO 270 X 9 not recognized 90204 9 MEDIUM DRESSING PHY.THER. 420 9 FM1063 9 PATIENT FAMILY EDUCATION 0 9.05 FM1085 9 DAILY WORKSHEET 0 9.35 FM1130 9 MEDICAL/SURGICAL 8 1/2X14 0 9.35 21
Pharmaceuticals, Contrast Agents, Radiopharmaceuticals and Radioactive Isotopes 22
Pharmaceuticals, Contrast Agents, Radiopharmaceuticals and Radioactive Isotopes Create specific designations within the CDM for the utilization of pharmacological agents Revenue Code 25X Utilize for pharmacological agents provided on the IP floors, within the ER and OR Utilize for contrast agents which do not have specific HCPCS designation Pricing based on administration dose / vial size Units are usually 1 Facilities will base price on cost or AWP Be Consistent Items are generally billed via interface directly onto the billing system Investigate options for the pharmacy system to control pricing Pricing and markup stored in pharmacy system CDM codes set to charge editable with a price of $0.00 23
Pharmaceuticals, Contrast Agents, Radiopharmaceuticals and Radioactive Isotopes Create specific designations within the CDM for the utilization of pharmacological agents Revenue Code 63X Utilize for all OP services Pricing based on HCPCS value Differs from the pricing of 25X drugs Drugs are billed with appropriate unit designation Pharmacy must be involved in setting the appropriate price Facilities will base price on cost or AWP Be Consistent. 24
Pharmaceuticals, Contrast Agents, Radiopharmaceuticals and Radioactive Isotopes Create specific designations within the CDM for the utilization of pharmacological agents Revenue Code 63X All contrast agents, radiopharmaceuticals and radioactive isotopes with HCPCS designation fall under this methodology Pricing is based on acquisition cost correlated to HCPCS value Identify who purchases the items: Pharmacy Purchasing Department Involve the purchasing agent and technical expert to determine HCPCS price This is vital for Nuclear Medicine 25
Room and Board Hospitals should have a policy governing the constitution of Room and Board rates Does your facility have a policy which identifies components? What is included / excluded Nursing bed side procedures Facility component of physician bed side procedures Overhead, salaries, etc. How is it calculated? Do you have multiple rates based on acuity and location? Do you differentiate between pediatric and adult services? Does administration steering committee know what is included and excluded? Do you currently bill for non physician bedside procedures? PT/OT/ RT/ ST Does the hospital bill for physician bedside procedures? How do you bill for oxygen? Daily, hourly? 26
Observation Set rates for G0378, G0379, 99218, 99219 and 99220 All but G0379 Direct Admit to Observation are hourly charges Majority of hospitals set observation hourly rates lower than average nursing salary rates 99218 99220 should be priced incrementally to reflect increased acuity Majority of facilities will match G0378 to 99218 Direct admit should be based on established fee schedule markup Observation rates should not be included in the automatic pricing increase Increases should be based on the actual costs for providing the services When prices are set to cover nursing costs observation rates will exceed inpatient room rates Administration, business office and customer service must be aware in order to handle patient inquiries 27
Next presentation How to Implement Departmental Revenue Cycle Accountability and Ownership Date: 12/5/2012 Time: 11:00 12:00 pm CT