Hospital Outpatient Prospective Payment System
Healthcare Reimbursement Methodologies: Hospital Outpatient Prospective Payment System
Course outcome assessed in this Assignment:
Examine the reimbursement processes of different health insurance plans.
Instructions: review the Health Finance Case Studies (there are 2 case studies in this document) answering the case specific questions below for each.
1. After reviewing Case 1 “Primary Care Financial Management” answer the following questions.
• What would you recommend that ABC Primary do to tighten up the financial of the practice? List at least three items along with your rational.
• Review the provided OIG website link for any additional information and background.
2. After reviewing Case 2 “Claims Management” answer the following questions.
• What should WPS do with CMS to improve the process? Review the provided OIG web link for additional background and information.
• As an executive for the Wisconsin Physicians Service (WPS) Insurance Corporation, after reviewing the case, what recommendations would you propose to the Board of Directors that they should prepare for as a response from the OIG? List at least three recommendations along with your rational.
Assignment Requirements
• Quoting should be less than 10% of the entire paper. Paraphrasing is necessary.
• You must cite and reference credible sources.
Health Finance Case Studies
Case 1: Primary Care Financial Management
The Health Center Program provides grants to nonprofit private and public entities that
serve designated medically underserved populations and areas and vulnerable populations
of migrant and seasonal farm workers, homeless individuals, and public housing
residents. These grants are commonly referred to as “section 330 grants.”
Under the American Recovery and Reinvestment Act of 2009, P.L. No. 111-5
(Recovery Act), enacted February 17, 2009, HRSA received $2.5 billion, $2 billion of
which was to expand the Health Center Program by serving more patients, stimulating
new jobs, and meeting the expected increase in demand for primary healthcare services
among the Nation’s uninsured and underserved populations. HRSA awarded a number of
grants using Recovery Act funding in support of the Health Center Program, including
Health Information Technology Implementation (HIT), Capital Improvement Program
(CIP), New Access Point (NAP), and Increased Demand for Services (IDS) grants.
ABC Primary Care, Inc. (ABC Primary), is a nonprofit organization that operates
community health centers in San Antonio, Texas, and the surrounding area. ABC Primary
provides medical, dental, and mental health services and is funded primarily by patient
service revenues and Federal grants. During fiscal years 2010 and 2011 (February 1,
2009, through January 31, 2011), ABC Primary received approximately $9.8 million
(Federal share) in section 330 grant funding to supplement its health center operations.
For project periods ranging from March 2009 through May 2012, HRSA awarded Barrio
funding for five Recovery Act grants totaling $7,518,980: $4,024,697 under two HIT
grants, $1,447,420 under a CIP grant,
$1,300,000 under an NAP grant, and $746,863 under an IDS grant.
ABC Primary did not have adequate controls over its financial management system.
Specifically, ABC Primary did not draw down funds based on the cash needs for each
project and did not prepare and complete bank statement reconciliations in a timely
manner. Also, ABC Primary did not have adequate procurement procedures to ensure
that it obtained reasonable pricing when procuring goods and services.
Source: United States Department of Health and Human Services. (2013). Barrio
Comprehensive Family Health Care Center, Inc., Did not always follow federal
regulations. Retrieved from http://oig.hhs.gov/oas/reports/region6/61100067.asp
OBJECTIVES
Our objectives were to determine whether:
(1) The costs that ABC Primary claimed were allowable and
(2) ABC Primary had adequate controls over its financial management system
SUMMARY OF FINDINGS
Of the $16,020,116 that we reviewed, $3,417,461 was allowable. We could not
determine whether salary and fringe benefit costs totaling $12,543,068 that ABC
Primary claimed were allowable because ABC Primary did not maintain personnel
activity reports for employees who worked on its section 330, HIT, NAP, and IDS
grants and because the accounting records for the section 330 and NAP grants did not
separate expenditures related to the Federal grants from those related to other funding
sources. ABC Primary recorded additional potentially unallowable costs of $50,240
for compensation increases and $9,347 for interest expense.
Case 2: Claims Processing
BACKGROUND
The Centers for Medicare and Medicaid Services (CMS) administers the Medicare
program. CMS employs Medicare contractors, including Wisconsin Physicians Service
(WPS), to process and pay hospital outpatient claims using the Fiscal Intermediary Shared
System (FISS).
CMS implemented an outpatient prospective payment system (OPPS) for hospital
outpatient services. Under the OPPS, Medicare pays for hospital outpatient services on a
rate-per-service basis that varies according to the assigned ambulatory payment classification
group. Under the OPPS, outlier payments are available when exceptionally costly services
exceed established thresholds.
Common medical devices implanted during outpatient procedures include cardiac devices,
joint replacement devices, and infusion pumps. Generally, a provider implants only one
cardiac device during an outpatient surgical procedure. Under the OPPS, payments to
hospitals for medical devices are “packaged” into the payments for the procedures to insert
devices. Hospitals are required to report the number of device units and related charges
accurately on their claims. The failure to report
device units and related charges accurately could result in incorrect outlier payments.
Our audit covered $32,860 in Medicare outlier payments to hospitals for 14
claims for outpatient procedures that included the insertion of more than one of the
same type of medical device. The 14 claims had dates of service during calendar years
(CY) 2008 and 2009.
OBJECTIVE
Our objective was to determine whether Medicare paid hospitals correctly for
outpatient claims processed by WPS that included procedures for the insertion of multiple
units of the same type of medical device.
SUMMARY OF FINDINGS
Of the 14 claims that we reviewed, Medicare paid eight correctly for outpatient
claims processed by WPS that included procedures for the insertion of multiple units of the
same type of medical device. However, for the remaining six claims, Medicare did not pay
hospitals correctly. These incorrect payments were due to hospitals overstating the number
of units and related charges, resulting in excessive or unwarranted outlier payments.
For the six claims, WPS made overpayments to hospitals totaling $17,996. Incorrect
payments occurred because hospitals had inadequate controls to ensure that they billed
accurately for claims that included the insertion of medical devices. In addition, Medicare
payment controls in the FISS were not always adequate to prevent or detect incorrect
payments.
Source: United States Department of Health and Human Services. (2012). Review of
outpatient claims processed by Wisconsin Physicians Service that included procedures
for the insertion of multiple units of the same type of medical device in calendar years
2008 and 2009. Retrieved from http://oig.hhs.gov/oas/reports/region1/11100532.pdf
