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Medical Coding News Archives

Medicare PPS for Federally Qualified Health Centers Slated for Fiscal 2015

 
August 1, 2014:

Regina Magnani, RHIT, Clinical/Technical Editor

On May 2, the Centers for Medicare & Medicaid Services (CMS) issued a final rule implementing a methodology and payment rates for a prospective payment system (PPS) for federally qualified health center (FQHC) services under Medicare Part B beginning on October 1, 2014. The regulations, mandated by the Affordable Care Act, were published in the Federal Register.

Medicare payment for FQHCs is currently based on reasonable costs subject to established payment limits for covered services. The ACA requires that the new Medicare PPS account for a number of factors, including the type, intensity, and duration of services provided in this setting. The new PPS system will be implemented beginning on October 1, 2014, and FQHCs will be transitioned to the new payment system throughout 2015.

Under the new PPS, Medicare will pay FQHCs a single encounter rate per beneficiary per day for all services provided, with some exceptions. The rate will be adjusted for geographic variation in costs by applying an adaptation of the geographic practice cost indexes (GPCIs) used to adjust payments under the physician fee schedule (PFS).

Beginning January 1, 2016, updates to the FQHC PPS would be on a calendar year basis. FQHCs must continue to submit cost reports to comply with statutory requirements, but the reports would not be used to reconcile Medicare payments with FQHC costs. Medicare payments for the reasonable costs of the influenza and pneumococcal vaccines and their administration, allowable graduate medical education costs, and bad debts would continue to be determined and made through the cost report.

Each locality will have an FQHC geographic adjustment factor (GAF), which will be used to adjust the encounter rate when FQHCs furnish new patient visits, initial preventive physical examinations (IPPEs), or annual wellness visits (AWVs). The GAF will be calculated as follows: GAF = (0.53149 × Work GPCI) + (0.46851 × PE GPCI). Each delivery site will have two geographically adjusted PPS rates for each period: one rate for a visit furnished to a patient who is not new to the FQHC and is not receiving an IPPE or AWV, and one rate for a new patient visit, IPPE, or WV that is eligible for an adjustment.

The final base payment rate will be $158.85 per beneficiary per day. Payments to FQHCs calculated as follows: Base payment rate × FQHC GAF = PPS payment, with the FQHC GAF based on the locality of the delivery site.

If the patient is new to the FQHC or the FQHC is furnishing an IPPE, initial AWV, or subsequent AWV, payment will be calculated as follows: Base payment rate × FQHC GAF ×1.3416 = PPS payment. The estimated 34.16 percent increase in costs will account for the greater intensity and resource use associated with these types of services when FQHCs furnish care to new patients or when they furnish an IPPE, initial AWV, or subsequent AWV.

Medicare will pay FQHCs based on 80 percent of the lesser of the actual charge reported for the specific payment code or the PPS rate on each claim. Beneficiary coinsurance will be 20 percent of the lesser of the actual charge for the specific payment code or the PPS rate. At the point of service, a FQHC could determine whether its own charge or its estimate of the applicable PPS rate (which will be one of two discrete values) is lower, and could estimate beneficiary coinsurance based on 20 percent of the lesser amount. Note that remittance advices issued by the Medicare administrative contractor (MAC) will continue to include the coinsurance amount and will reflect the amount of coinsurance Medicare recognizes.

A new set of HCPCS Level II G codes for FQHCs will be used to report an established Medicare patient visit, a new or initial patient visit, and an IPPE or AWV. These G codes will describe an FQHC visit in accordance with the regulatory definitions of a Medicare FQHC visit. Each FQHC will establish a charge to the beneficiary with which to bill Medicare for the encounters. The FQHC will set the charge for a specific payment code based on its own determination of what is appropriate for the services normally provided and the population the FQHC serves. CMS expects that the charge for a specific code would reflect the sum of regular rates charged to both beneficiaries and other paying patients for a typical bundle of services furnished per diem to a Medicare beneficiary. FQHCs will still be required to report detailed HCPCS codes with the associated line item charges for data gathering (for example, providing information about the ancillary services furnished), to support applying adjustments for new patients, IPPE, and AWV, and to facilitate waiving coinsurance for preventive services.

The codes and billing instructions will be announced through program instructions, most likely transmittals.

 

 
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