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The New FQHC PPS Rate for Medicare

Tuesday, March 31, 2015   (0 Comments)
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The New FQHC PPS Rate for Medicare

What We Know Now



Authored by:
Anne Frunk, Consultant, PMG, Inc.
& Ray Jorgensen, CEO, President & Co-Founder, PMG, Inc.

Editor's Note: Ray Jorgensen will be presenting on Understanding Charge Setting/Charge Capture Strategies/Maximizing KPI at the Spring Primary Care Conference May 16-19 in Portland, OR


In the Beginning…

Our journey begins in March 2010, when the Affordable Care Act (ACA) was signed into law, requiring development and implementation of a Medicare Prospective Payment System (PPS) for CHCs receiving Medicare encounter rate compensation. The catalyst was the government’s desired shift away from cost-based reimbursement.  We remember, in January 2011, Change Request 7038 was imposed. It required practice management functionality to support coding detail (i.e., HCPCS such as CPT) on all 837-I claims for the purpose of gathering data as part of the transition to the new Medicare PPS model.  Lastly, beginning October 2014, the first wave of CHCs began the transition, based on the timing of their cost reporting period.

How Do We Get From Here to There?

As CHCs transition from the All Inclusive Rate (AIR) system to the Medicare PPS model, organizations must prepare for several changes. These include but are not limited to:

·         Learning which G codes will be used by your CHC

o   Your CHC might not provide all services included in the G codes. For instance, does your scope of service include behavioral health? If not, you can ignore.

·         Learning how to crosswalk the HCPCS selected by providers to the G codes required by Medicare

·         Setting charges for these G codes (If not above the $158.85 ceiling, you lose money.)

·         Creating the necessary links between your EMR/EHR and your practice management system to make this all happen - seamlessly.


Most of these changes surround billing department workflows and the introduction of new practice management functionality. The challenge is to get  your entire CHC team (not just the billing department) to fully comprehend how to not just capture but maximize data representative of the “typical bundle of charges” and services. This is essential for each of the individual G Codes (i.e.G0466, G0467, G0468, G0469, and G0470) in order for your CHC to thrive in this new model. 

The Skinny - Coding of Services

We have learned Medicare differentiates between CHC-covered services and Medicare-covered services and also redefines commonly understood billing and coding definitions.

·   Procedure-only-visits are not on the Medicare PPS Specific Payment visits so, while they are FQHC services, they do not trigger payment.

o   For instance, just last week we spoke with a CHC rep who is contemplating hiring a podiatrist. However, if the visit coding is only for a procedure (e.g., nail debridement for a diabetic, ingrown toe nail repair, etc.), making an Evaluation and Management (E&M, a.k.a., office visit) not an appropriate code, the service is not at this moment reimbursable by Medicare.


·   Preventive E&M are no longer reimbursable for CHCs

o   We have learned that, while CHCs receiving denials for 99395 and 99397 is fairly recent (just the last couple of years), this was an oversight by Medicare. Until the ACA mandating coverage of preventive care, Medicare had gradually allowed certain preventive/screening services (e.g., breast and pelvic, prostate screening, etc.), but in private practice had always denied the preventive E&M codes (e.g., 99397). Services like the Annual Wellness Visit (AWV, G0438/G0439) and Initial Periodic Preventive Exam (IPPE, G0402) were newly covered in all settings, not just CHCs, thanks to the ACA.

·   Medicare PPS New Patient Definition differs from AMA CPT definition

o   We have always used a “three-year rule” for the definition of “new patient,” based on the language in the CPT textbook. Further, the definition has always been (and we are paraphrasing here), a patient who has not been seen by a provider of the same specialty within a group practice during the preceding three years. The key differentiation is that CHCs, due to PPS language, might not distinguish between different “specialties” which have been commonly delineated by national board certification. So, while your providers need to code using CPT services (“code what you did” is our mantra), someone at your CHC needs to convert these services to comply with the new G code definitions.

The Additional Skinny - Charging for Services

The crosswalk between HCPCS (e.g., CPT) and the new G codes, despite needing some revision for the sake of practicality, is fairly straightforward. However, setting charges is a different story. There is no mandatory or approved methodology for charge setting. So, here are few suggestions:

·   Aggregate all your charges for Medicare (either all Part A or all Parts A and B - remember, no directive on methodology) and divide this sum by the total number of Medicare encounters. The quotient is the average charge per Medicare patient. To match the new vs. established patient G codes, you could even delineate new patient charges vs. established patient charges, but we don’t recommend it unless we are directed to do so. It would most likely diminish the value of your average charge.

·   Aggregate total Relative Value Units (RVU) for all Medicare services (again, for Parts A and B), and divide this sum by total visits. The quotient is the average RVU for each visit. Next, determine how much higher you want your conversion factor to be vs. Medicare’s historic conversion factor, which has hovered around $36 for nearly a decade. If that is the amount Medicare uses to set charges, you can easily justify elevating the number to $45 or higher. As all healthcare financial folks know, you always charge more than what you expect to get paid.

·   Finally, take one of the first two options, and don’t limit data to just Medicare; use ALL your patient data. If the resulting charge data is more optimal (i.e., higher), use them. If not, stick with Medicare only.


Next Steps

If you don’t have the time or expertise to make this happen successfully at your CHC, get help. Attend a program, hire a consultant, or become an expert yourself. The population of Medicare beneficiaries is rapidly expanding. Make certain your CHC is well prepared to capture all it is due while being vigilant about compliance with these complicated new requirements.

We all know there is no perfect plan. However, that phrase calls to mind the adage, “If you fail to plan, you plan to fail.” Plan to succeed, thrive, and solidify the financial foundation of your CHC. You are the only one holding you back.

NWRPCA welcomes and regularly publishes white papers and articles submitted by members, partners and associates with subject matter expertise. The appearance of any guest publication in our Health Center News database represents the views of the author and does not constitute endorsement by NWRPCA of the stated opinions or perspectives, nor does it suggest endorsement of the contributor's products or services.

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