Physician Payment Systems by Steven Lash

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Physician Payment Systems

• By
• Steven Lash

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Affordable Care Act (ACA)

• Passed in 2010, effective January 1, 2014
• ACA provides health coverage for more people,
  more benefits and protections (Guaranteed issue)
  and establishes marketplace exchanges
• Provides specific guidelines for incentives for
  wellness and prevention and that selected
  wellness and prevention services be at no cost to
  individual
• All plans must have additional Essential
  Benefits
• Mistakenly characterized as healthcare law that
  bends cost curve
• It is about Insurance reform than healthcare
  reform
• Elimination of lifetime cap
• No pre-existing conditions exclusions
• Portability

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Medicare Medicaid

• July 30, 1965, President Lyndon B. Johnson signed
  into law the bill that led to the Medicare and
  Medicaid. 
• Medicare
• Over 65 years of age
• Part A Hospital coverage - automatic
• Part B Physician Coverage sign up and pay a
  premium
• Medicaid
• Block funding grants for states to provide
  medical coverage for families meeting financial
  assistance thresholds
• Medicare Rx Drug Improvement Modernization Act
  of 2003 (MMA)
• Biggest change in 38 years
• Created Medicare Advantage Plans
• Part D Rx coverage implemented

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What is a Medicare Advantage (MA) Plan

•  A type of Medicare health plan offered by a
  private company that contracts with Medicare to
  provide Part A and Part B benefits
• Characterized by a defined network of hospitals
  and doctors
• Similar to a HMO on the commercial side
• Has a limit on out of pocket costs maximum is
  6,700
• Traditional Medicare has no maximum out of pocket
• Pays doctors on a capitated basis or Fee For
  Service basis
• Capitation is a fixed amount usually a PMPM
• If physician is capped CCM not paid
• Requires getting a referral from a PCP to see a
  specialist

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What is the basis for physician payments

• Fee For Service (FFS)
• Relative Value Unit (RVU) measure of effort and
  cost
• Physician payments under Part B have 3 components
  
• PE (Physician Effort)
• OE (Office Expense)
• MP (Malpractice)
• These units are then totaled and multiplied by a
  Conversion Factor (35.8279)
• The formula for 2016 is
• .67 .57.04 1.28 X 35.8279 45.86
• This rate is then adjusted for Geography,
  professional shortage areas, and other modifiers
  including quality measures a statutory
  reduction

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Key Jargon for Payments

• ICD-9 Code International Classification of
  Diseases

• CPT Code Current Procedural Terminology

• Ensures description/diagnosis uniformity around
  symptoms, injuries, diseases, and conditions
• Updated to provide for new medical discoveries
• ICD -10 will be implemented October 1, 2015

• Published by the AMA
• Ensures description uniformity around all
  medical, surgical, and diagnostic procedures
• 7800- 5 digit codes

There exists a critical relationship between an
ICD-10 code and a CPT code which is to ensure
that the diagnosis supports the medical
necessity  of the procedure performed.