Nebraska Department of Insurance

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THE NEBRASKA HEALTH INSURANCE INFORMATION, COUNSELING, AND ASSISTANCE (NICA) PROGRAM

MARCH 2002 NICA NEWS

CHANGES

UNDERSTANDING THE OUTPATIENT PROSPECTIVE PAYMENT SYSTEM (OPPS)

The Outpatient Prospective Payment System (OPPS) is a relatively new way that Medicare pays for outpatient hospital and community health services. Under the old system, each hospital or community health center decided how much it was going to charge Medicare for each service. Patients with Medicare only, and no Medigap or Medicare HMO coverage, would be responsible for 20% of these charges, called "the coinsurance." However, 20% of the total charges could be any amount and sometimes was more than the 80% of the Medicare-approved amount that was paid by Medicare.

Under OPPS, Medicare now decides how much a hospital or community health center will be paid for each outpatient service received by patients with Medicare. The outpatient payment rate is determined by the average wage per geographic area so rates will vary by hospital and community health center and by the specific service provided.

Medicare does not pay for all outpatient services under this new system. If Medicare covers the procedure using OPPS, the individual would pay:

the yearly Part B deductible ($100 in 2002) if he/she has not already paid it;
the coinsurance or fixed co-payment amount for each outpatient service, which cannot be more than the Medicare Part A inpatient hospital deductible ($812 in 2002);
all charges for items or services that Medicare does not cover.

After OPPS is in place for a few years, Medicare expects that people with Medicare will pay less for services. For now, payments depend on the area where the facility is located and the amount it charged in the past for the outpatient service.

For example, if an individual went for a particular service at a hospital that had high charges under the old system, the coinsurance or fixed co-payment should be less under OPPS. However, if an individual went to a hospital that had low charges for the same service, the coinsurance or fixed co-payment might very well be higher than it was.

(Note: Your Guide to the Outpatient Prospective Payment System brochure is available through the NICA office.)

MEDICARE ESTABLISHES NEW AMBULANCE FEE SCHEDULE

The Centers for Medicare & Medicaid Services (CMS) announced a regulation creating a fee schedule to ensure that both beneficiaries and Medicare pay appropriately for ambulance services. Congress mandated this new payment mechanism in the Balanced Budget Act of 1997.

Under the new system ambulance service providers will be paid a pre-established fee for each different service provided. This is similar to the method of payment Medicare has progressively adopted for hospitals, nursing homes, home health agencies and other health care providers, which has proven to be better for patients, providers and the program. Previously, payment for ambulance services was based on providers' costs or charges.

An important new protection for beneficiaries requires ambulance service providers to accept the Medicare approved fee as their full payment. This means beneficiaries will not pay more than 20 percent of the approved amount, once they have met their annual $100 Medicare Part B deductible.

"This new system will ensure that beneficiaries continue to get needed ambulance services and that Medicare pays ambulance service suppliers more fairly and accurately," said CMS Administrator Tom Scully.

Under the new fee schedule:

Seven categories of ground ambulance services, ranging from basic life support to specialty care transport, and two categories of air ambulance services are established.
Payment for each category is based on the relative value assigned to the service, adjusted to reflect wage differences in different parts of the country. Mileage also will affect payment levels.
Ambulance providers will not be allowed to charge beneficiaries more than their deductible and 20% of Medicare's fee for the service. Under the old payment system, providers could charge beneficiaries higher rates.
The fee schedule allows for increased payments when an ambulance service is provided in rural areas.

The final regulation contains a number of significant changes made in response to the large number of public comments CMS received following publication of a proposed rule in September 2000.

The new ambulance payment system was produced under a negotiated rulemaking process that included affected industry, professional and governmental groups.

The negotiating committee that developed the fee schedule expressed particular concern about ambulance access for beneficiaries in rural areas. While the new plan includes several bonuses for rural providers, CMS will continue to consider alternative approaches to ensure adequate payment for isolated, essential, low-volume, rural ambulance suppliers as experience under the fee schedule becomes available.

The new fee schedule will be phased-in over five years, starting April 1, 2002, blending current payment with the new fee schedule rates.

By law Medicare pays for medically necessary ambulance services in emergencies and other situations when other methods of transportation are contraindicated by the beneficiary's condition. Medicare covers almost 9 million ambulance transports each year on behalf of 39 million elderly and disabled Americans enrolled in the program.

BLOOD GLUCOSE TEST STRIPS

Effective October 1, 2001, CMS requires DMERC (Durable Medical Equipment supplier) to reject any claims a beneficiary submits for blood glucose test strips and other supplies. These claims can still be filed, but they must now be filed by the supplier - not the beneficiary. This new policy responds to several reports done by the HHS Office of Inspector General regarding the growth of Medicare claims for blood glucose test strips.

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--Adapted from Mother Jones