25 March 2014 0800 – 0900 27 March 2014 1400 – 1500

1. Re-Engineering UBO Billing and Collections ActivitiesPresented byDHA UBO Program Office Contract Support 25 March 2014 0800 – 0900 27 March 2014 1400 – 1500 For entry into the webinar, log into: http://altarum.adobeconnect.com/ubo.  Enter as a guest with your full name and Service affiliation for Service attendance verification. Instructions for CEU credit are at the end of this presentation. View and listen to the webinar through your computer or Web–enabledmobile device. Note: The DHA UBO Program Office is not responsible for and does not reimburse any airtime, data, roaming or other charges for mobile, wireless and any other internet connections and use. If you need technical assistance with this webinar, contact us at webmeeting@altarum.org. You may submit a question or request technical assistance at any during a live broadcast time by entering it into the “Question” field of Adobe Connect.

2. Agenda • Billing Rates Authority • New Billing and Collection Capabilities • Rates and Charges • Inpatient Institutional Billing • Ambulatory Institutional Billing • Ambulatory Payment Classification Charges • Ambulatory Surgery Center Charges • Professional Services Billing (inpatient and outpatient) • Anesthesia Billing • Emergency Department Billing • DHA UBO Rates Packages • Wrap Up

3. Billing Authority • 10 USC § § 1095(a)(1) and 1079b • “authorize the calculation of all third party payer collections [for care provided to uniformed services beneficiaries] on the basis of reasonable charges and the computation of reasonable charges [for care provided to civilians who are not uniformed services beneficiaries] on the basis of per diem rates, all-inclusive per-visit rates, diagnosis related groups rates, rates used by the TRICARE/Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) program to reimburse authorized providers, or any other method the Assistant Secretary of Defense (Health Affairs) considers appropriate and establishes.” • 32 CFR § 220.8(a)(2) • “The general rule is that reasonable charges under this part are based on the rates used by CHAMPUS under 32 CFR 199.14 to reimburse authorized providers.”

4. Rates Authority • Inpatient hospital charges --“routine service charges associated with the hospital stay and ancillary charges”(32 CFR § 220.8(b)) • “Reasonable charges for inpatient hospital services provided on or after April 1, 2003, are based on the TRICARE/CHAMPUS Diagnosis Related Group (DRG) payment system rates under 32 CFR 199.14(a)(1). Certain adjustments are made to reflect differences between the TRICARE/CHAMPUS payment system and the Third Party Collection Program billing system. Among these are to include in the inpatient hospital service charges adjustments related to direct medical education …. Additional adjustments are made for long stay outlier cases.” • Inpatient professional charges (32 CFR § 220.8(b) and 220.8(e)) • “Like the TRICARE/CHAMPUS system, inpatient professional services are not included in the inpatient hospital services charges, but are billed separately in accordance with paragraph (e) of this section.” • Professional services—inpatient and outpatient (32 CFR § 220.8(e)) • “The CHAMPUS Maximum Allowable Charge rate table, established under 32 CFR 199.14(h), is used for determining the appropriate charge for professional services in an itemized format, based on Healthcare Common Procedure Coding System (HCPCS) methodology. This applies to outpatient professional charges only prior to implementation of the method described in paragraph (b) of this section, and to all professional charges, both inpatient and outpatient, thereafter.”

5. New Billing and Collection Capabilities • Central Billing Events Repository (CBER) • CBER is an extension of the MHS Data Repository (MDR) • Uses MDR (e.g., CHCS, DEERS, MEPRS) source inputs. Builds encounter extracts shaped to provide most of the data required for HIPAA 5010 transactions • 837I • 837P • NCPDP D.0 • Provides reference files for billing (e.g., HIPAA taxonomy, CPT/HCPCS claim format business rules, National Plan & Provider Enumeration System (NPPES) , and rate files) • Will not create actual claims or provide encounter documentation beyond files processed by the MDR • Armed Forces Billing and Collection Utilization Solution (ABACUS) • Will be used by all Services and NCR MD • Receives CBER encounter extract files and reference files • Implements business rules to apply DHA UBO rates and business rules • Generates 837I, 837P and NCPDP D.0 claims as well as required paper claims for all 3 MHS cost recovery programs MSA, TPCP and MAC • Supports billing and collections functions including denial management and interfacing with Service and NCR MD financial systems • CBER and ABACUS provide the infrastructure tools (IT support) and support for industry standard processes and procedures that allow us to re-engineer billing and collections functions to more fully meet the billing authority requirements

6. Rates and Charges • Rates –a unit measure charge for a healthcare service • Pharmaceutical services require two rates • Ingredient unit measure charge – charge per tablet, ML, etc • Dispensing fee - charge per prescription filled • Inpatient institutional services • The inpatient rate is the Adjusted standardized amount (ASA) - the charge per 1.0 DRG weight or charge per relative weighted product (RWP) • Professional services • CMAC rate is the charge per unit of a CPT/HCPCS procedure – in many cases there will be a one-to-one relationship between a CMAC rate and it’s charge but not always • Observation • The observation rate is the charge for each hour patient is in observation status • Anesthesia • The anesthesia rate, also called a conversion factor, is charge per anesthesia unit. Each anesthesia procedure has a number of base units that is combined with individual encounter units of service to obtain total units. • Charges - the amount we bill for a healthcare service. In most cases, the charge is the rate multiplied by the quantity • Subject to multiple procedure discounting and other adjustments

7. Inpatient Institutional Billing - Diagnosis Related Groups • Operating costs of inpatient hospital services furnished by MTFs are billed on the basis of prospectively determined rates and applied on a per discharge basis using Diagnosis Related Groups (DRGs) • The DRG charge is the MTF’s institutional charge for the inpatient stay • This differs from the legacy DRG charge which includes institutional charges plus professional charges • The TRICARE/CHAMPUS DRG-based payment system is modeled on the Medicare PPS • Many of the procedures in the TRICARE/CHAMPUS DRG-based payment system are similar or identical to the procedures in the Medicare PPS • Actual payment amounts, DRG weights, and certain procedures are different • Necessary because of the differences in the two programs, especially in the beneficiary population • The MHS uses a “Grouper” program to classify specific hospital discharges within DRGs so that each hospital discharge is appropriately assigned to a single DRG based on essential data abstracted from the inpatient bill for that discharge • The TRICARE/CHAMPUS Grouper, also used by MTFs is based on the Centers for Medicare and Medicaid Services (CMS) Grouper but incorporates some changes • Under the TRICARE/CHAMPUS DRG-based system, inpatient MTFs bill a predetermined amount per discharge for inpatient hospital institutional services furnished to patients (subject to adjustments for inlier, outlier, and transfer discharges)

8. Inpatient Institutional Billing - Services Included in the DRG Charge • The TRICARE/CHAMPUS DRG-based payment system provides a payment amount for inpatient operating costs, including • Operating costs for routine services, such as the costs of room, board, therapy services (physical, speech, etc.), and routine nursing services as well as supplies necessary for the treatment of the patient • Operating costs for ancillary services, such as radiology and laboratory services furnished to hospital inpatients • The professional component of these services is not included and should be billed separately • Take-home drugs for less than $40 • Special care unit operating costs (intensive care type unit services)

9. Inpatient Institutional Billing - DRG Weights • The DRG weights reflect the relative resource consumption associated with each DRG • The weight reflects the average resources required by all hospitals to treat a case classified as a specific DRG relative to the resources required to treat cases in each of the other DRGs • All weights are standardized to a theoretical average weight of 1.0 which is the average weight of all TRICARE/CHAMPUS claims in the data base • This is the relative weight of the national average charge per discharge • Every fiscal year during the annual DRG update DHA recalculates all DRG weights

10. Inpatient Institutional Billing - Adjusted Standardized Amounts • The TRICARE ASA represents the adjusted average operating cost for treating all TRICARE/CHAMPUS beneficiaries in all DRGs during the database period • Is the inpatient billing rate – it is the charge for each 1.0 increment of disposition case weight • Are separated into labor and non-labor components • The labor component of National ASA is adjusted by the wage index of the MTF’s location • With CBER and ABACUS, you will no longer use DHA UBO ASAs that include both institutional and professional services costs • Submit both institutional 837I and professional 837P claims for inpatient care

11. Inpatient Institutional Billing - IDME Adjustment to ASAs • Indirect medical education (IDME) - Used to standardize the charges for the cost effects of indirect medical education, each teaching hospital’s charges are adjusted based on standard formula • See Tricare Reimbursement Manual (TRM) Chapter 6, Section 6 • IDME operates a multiplier that raises the teaching hospital’s ASA • Example IDME Factors: • 60th Medical Group/Travis (.2456) • NH Lemoore (.0000) • NMC San Diego (.5638) • NH Pensacola (.1894) • Womack AMC (.1232) • William Beaumont AMC (.2226) • 88th Medical Group/Wright Patterson (.3300)

12. Inpatient Institutional Billing - DRG (Inpatient) Charge Calculation Adjustments • DRG Base Charge = Adjusted Standardized Amount (ASA) x DRG Weight x (Labor-Related Portion x Wage Index + Non-Labor Portion) • IDME Adjustment • DRG Charge with IDME Adjustment = DRG Base Charge x (1 + IDME Factor) • Area Wage Indexes • The labor-related portion of the ASA will be adjusted to account for the differences in wages among geographic areas and will correspond to the labor market areas used in the Medicare PPS • Actual indexes used are those used in the Medicare PPS. The wage index used is to be the one for the hospital’s actual address--not for the hospital’s billing address

13. Inpatient Institutional Billing - Sample DRG (Inpatient) Charge Calculation • Date of Service – FY 2014 • MTF – Naval Medical Center San Diego • Zip Code - 92134 • Wage Index - 1.2477 • DRG 259 – Cardiac Pacemaker Device Replacement W/O MCC • DRG Weight – 1.3177 • Length of Stay (LOS) – 3 days (inlier) • National ASA Rate - $5,573.80 • IDME Factor - .5638 • DRG Charge (Amount Billed) = ASA x (1 + IDME Factor) x DRG Weight x (Labor-Related Percentage x Wage Index + Non-Labor Percentage) = $5,573.80 x 1.5638 x 1.3177 x (.6960*1.2477 + .3040) =$ 5,573.80 x 1.5638 x 1.3177 x 1.17 =$13,438.01

14. Inpatient Institutional Billing - Other DRG Charge Calculations • The previous calculation was for a length of stay inlier disposition. There are other calculations required for non-inliers: • Short Length of Stay Outliers • Long Length of Stay Outliers • Transfers • Special treatment for neonatal claims other than normal newborns

15. Ambulatory Institutional Billing - Ambulatory Payment Classification Background • Ambulatory Payment Classification (APC) charges are used to recover the institutional costs for many hospital based outpatient services. APC charges may only be billed by MTFs that provide inpatient services. • TRICARE has adopted Medicare’s prospective payment system for reimbursement of hospital outpatient services • To receive TRICARE reimbursement under the Outpatient Prospective Payment System (OPPS), providers must follow all Medicare specific coding requirements, except in those instances where DHA develops specific APCs for those services that are unique to the TRICARE beneficiary population • Hospital outpatient services are paid on a rate-per-service basis that varies according to the APC group to which the services are assigned. • The CBER will assign APCs (group procedures into APC groups) based on services provided • APC charges are submitted on the institutional claim form at 837I

16. Ambulatory Institutional Billing - OPPS Services Subject to APC Billing (included in the APC charge) • The following are included under OPPS • Surgical procedures • Radiology, including radiation therapy • Clinic visits • Emergency Department visits • Diagnostic services and tests • Surgical pathology • Cancer chemotherapy • Implantable medical items • Certain preventive services, colorectal screening • Acute dialysis • End Stage Renal Disease (ESRD)

17. Ambulatory Institutional Billing - Services Excluded From OPPS(Not Included in the APC Charge) • Services excluded under the hospital OPPS and paid under the CHAMPUS Maximum Allowable Charge (CMAC) or other TRICARE recognized allowable charge methodology and billed separately include • Physician services • Nurse Practitioners (NP) and Clinical Nurse Specialists (CNS) services • Physician Assistant (PA) services • Certified Nurse-Midwife (CNM) services • Services of qualified psychologists • Clinical Social Worker (CSW) services • Services of an anesthetist • Screening and diagnostic mammography • Clinical diagnostic laboratory services • Take home surgical dressings • Non-implantable DME, prosthetics (prosthetic devices), orthotics, and supplies • Services excluded by statute • Ambulance services • Physical therapy • Occupational therapy • Speech-language pathology

18. Ambulatory Institutional Billing - APC Charges • APC Charge = (APC Rate *.6*Wage Index) + (APC Rate *.4) • Billable APCs have national rates • APC charges are derived from the national rate adjusted for geographic wage variation based on the labor-related portion of the operating for the hospital Inpatient Prospective Payment System (IPPS) wage index. Sixty percent (60%) is used to represent the estimated portion of costs attributable, on average, to labor • With an APC there is a Status Indicator (SI) that provides additional business rules for billing. Partial SI list below • C to indicate inpatient services that are not paid under the OPPS • E to indicate items or services are not covered by TRICARE • N to indicate services that are incidental, with payment packaged into another service or APC group • S to indicate significant procedures for which payment is allowed under the hospital OPPS, but to which the multiple procedure reduction does not apply • T to indicate surgical services for which payment is allowed under the hospital OPPS. Services with this payment indicator are the only services to which the multiple procedure payment reduction applies • V to indicate medical visits (including clinic or Emergency Department (ED) visits) for which payment is allowed under the hospital OPPS

19. Ambulatory Institutional Billing - Sample APC Charge Calculation • Date of Service – CY 2014 • MTF – Naval Medical Center San Diego • Zip Code - 92134 • Wage Index - 1.2477 • Procedure – 47600, Cholecystectomy (excludes laparoscopic method) • APC – T0010, Removal of Gallbladder • APC Rate – $907.41 • Payment Status Indicator – T, Significant procedures subject to multiple procedure discounting • APC Charge (amount billed) = (APC Rate *.6*Wage Index) + (APC Rate *.4) = ($907.41*.6*1.2477) + ($907.41*.4) =$679.31 + $362.96 =$1,042.27

20. Ambulatory Institutional Billing - Ambulatory Surgery Center Background • Ambulatory Surgery Center (ASC) charges are used to recover the institutional cost for surgery procedures performed in freestanding ASCs (surgical locations not providing inpatient services) • The payment rates established under this system apply only to the facility charges for ambulatory surgery. The facility rate is a standard overhead amount that includes nursing and technician services • Use of the facility • Drugs including take-home drugs for less than $40 • Biologicals, surgical dressings, splints, casts and equipment directly related to provision of the surgical procedure • Materials for anesthesia; Intraocular Lenses (IOLs); and administrative, recordkeeping and housekeeping items and services.

21. Ambulatory Institutional Billing - ASC Charge Exclusions and Reductions • ASC charges do not include • Physicians’ fees (or fees of other professional providers authorized to render the services and to bill independently for them) • Laboratory, X-rays or diagnostic procedures (other than those directly related to the performance of the surgical procedure) • Prosthetic devices (except Intraocular Lenses) • Ambulance services • Leg, arm, and back braces; artificial limbs; and Durable Medical Equipment (DME) for use in the patient’s home • ASC charges are subject to multiple procedure discounts • 100% of the group payment rate for the major procedure (the procedure which allows the highest payment) • 50% of the group payment rate for each of the other procedures

22. Ambulatory Institutional Billing - Computing ASC Charges • ASC Groups – Procedures are sorted into eleven ASC Groups • Metropolitan Statistical Area (MSA) Code – Facilities grouped into MSAs based on zip code • ASC Rates are established as a combination of ASC Group and MSA • Example: • Date of Service – CY 2014 • MTF – Naval Medical Center San Diego • Zip Code – 92134 • MSA Code - 7320 • Procedure – 48102, Biopsy of Pancreas • ASC Payment Group - 02 • ASC Charge - $368.00

23. Ambulatory Institutional Billing - Use of APCs and ASCs • Both APCs and ASCs represent institutional charges for ambulatory procedures • They replace charging which has historically been billed under the APV rate – 99199 due to MHS system limitations • For procedures billed through ABACUS with dates of care on or after the transition of new billing to ABACUS, UBOs should recover facility institutional costs through APC and ASC charges and not bill 99199 • Billing under 99199 is appropriate for dates of service before the transition of new billing to ABACUS and for billing done through legacy systems lacking the ability to determine APC and ASC charges (e.g., CHCS)

24. Professional Services Billing – TRICARE Provider Categories TRICARE CHAMPUS Maximum Allowable Charge (CMAC) rates are the basis of UBO billing rates for most professional and laboratory procedures. UBO CMAC-based charges are dependent on site of service and type of provider (see User Guide) • Category 1 - Services of MDs, DOs, optometrists, podiatrists, psychologists, oral surgeons, audiologists, and certified nurse midwives (CNMs) provided in a facility including hospitals (both inpatient and outpatient care), ambulances, ASCs, etc • Category 2 - Services of MDs, DOs, optometrists, podiatrists, psychologists, oral surgeons, audiologists, and CNMs provided in a non-facility including provider offices and other non-facility settings • The non-facility CMAC rate applies to Occupational Therapy (OT), Physical Therapy (PT), or Speech Therapy (ST) regardless of the setting • Category 3 - Services, of all other providers not found in Category 1, provided in a facility including hospitals (both inpatient and outpatient care), ambulances, ASCs, etc • Category 4 - Services, of all other providers not found in Category 2, provided in a non-facility including provider offices and other non-facility settings

25. Professional Services Billing – CMAC Rate Structure • TRICARE CHAMPUS Maximum Allowable Charge (CMAC) rates are the basis of UBO billing rates for most professional and laboratory procedures • Non-facility CMAC for physician class • Facility CMAC for physician class • Non-facility CMAC for non-physician class • Facility CMAC for non-physician class • Physician class Professional Component (PC) rate • Physician class TC rate • Non-physician class PC rate • Non-physician class TC rate • CMAC rates are further adjusted based on locality (zip code of MTF mapped to CMAC locality)

26. Professional Services Billing – Billing Concepts • Services provided by physicians, and those included under the term "physician" will be billed with either Category 1 or Category 2 rates • Category 1 for "Physician Facility" when care is in a facility which will generate a separate bill (e.g., hospital, ambulatory surgery center, ED) • Category 2 for "Physician Non-facility” when the bill covers both the professional and institutional component (e.g., clinic) • Physical Therapists, Occupational Therapists and Speech Pathologists are included as "Physicians”, but bills will always use Category 2 "Physician Non-facility” • Category 2 for "Physician Non-facility" the claim is for both the professional and institutional component (e.g., doctor's office) • Non-physicians are all those not included in the term "physician" • Claims will be generated at a lesser amount than "physician” • Category 3 for "Non-physician Facility" non-physician where the institutional charge is billed on a separate claim • Category 4 for "Non-physician Non-facility” where the claim includes both the professional and institutional charges

27. Emergency Department Services • Legacy system: Emergency Department (ED) evaluation & management codes (i.e., 99281-99285) have UBO CMAC rates that are built using APC rates for ED services • Cannot bill both professional and institutional charges for the same service • Institutional charge is TRICARE APC rate mapped from the ED code • Charges for 99281-99285 are submitted on the institutional claim, 837I, based on APC rates because the APC rates are higher than the CMAC rates • Future ABACUS billing system: • MTFs will submit both institutional and professional claims for ED services • 99281-99285 will represent professional services, and charges will be based on professional services (CMAC – facility physician rate) and submitted using the professional 837P claim • Institutional charges will be APC based and submitted using the institutional, 837I, claim

28. Billing for Anesthesia Services - Overview • This section refers to billing for anesthesia providers; not anesthesia pharmaceuticals • Charges for the anesthesia provider are dependent on • Anesthesia procedure performed • Base units for anesthesia procedure • Minutes of service units • Except for 99100, 99116, 99135, 99140 • Minutes of service are converted to units of service (minutes/15) and rounded up • Provider conversion factor dependent on • TRICARE locality • Provider category • Example: • Date of Service – CY 2014 • MTF – Naval Medical Center San Diego • Zip Code – 92134, TRICARE Locality 313 • Procedure – 00103, Anesthesia for reconstructive procedures of eyelid • Provider HIPAA Taxonomy 207L00000X, Anesthesiologist • Anesthesia Charges = Total Units x conversion factor • Total Units = Procedure Base Units + Units of Service

29. Billing for Anesthesia Services - TRICARE Anesthesia Calculator Input

30. Billing for Anesthesia Services TRICARE Anesthesia Calculator Results

31. DHA UBO Rates Packages • UBO Inpatient and Outpatient Rates packages and letters will continue to be developed by DHA UBO and approved by ASD (HA) • Calendar Year Outpatient and Fiscal Year Inpatient rates will remain the same for all UBO Programs: TPCP, MSA, and MAC • Computed based on what TRICARE allows (see slides 4 & 5) • Delay in effective date of MAC rates because must be approved by the Office of Management and Budget (OMB) • UBO Pharmacy Rates packages will continue to be developed and published by DHA UBO • Computed based on what TRICARE allows (see slides 4 & 5)

32. Wrap Up • Inpatient Institutional Billing • Migration to TRICARE ASA rates adjusted for zip code wage index and IDME consistent with TRICARE • Charges for DRG bundled services should not be billed separately (e.g., lab procedures, technical components of procedures, therapy services) • Separate billing for professional services at provider facility rates in most cases • APC Billing • Recovers the institutional cost of outpatient services provided at hospitals (bedded MTF) • Charges based on TRICARE APC reimbursement adjusted for zip code wage index • Subject to multiple procedure discounting depending on procedures, and discontinue billing 99199 in most cases • ASC Billing • Recovers the institutional cost of selected (surgical) procedures at MTS that don’t provide inpatient services (non-bedded) • Charges based on TRICARE ASC reimbursement adjusted for MSA • Subject to multiple procedure discounting, and discontinue billing 99199 in most cases

33. Wrap Up, cont. • Professional Services Billing • Use of TRICARE provider categories and appropriate rates • Billed at provider facility rates, in most cases, when a separate institutional claim is submitted (DRG, APC, ASC) • Billed at provider non-facility rates when there is not separate institutional billing for the service • Therapy services not billed at all for inpatient care • Anesthesia Billing • Discontinuation of flat rates • Encounter billing based on procedure, locality, provider, and minutes of service • Anesthesia Providers will be billed on professional claims • Depending on HIPAA Taxonomy, anesthesia providers may be physician category or non-physician category • Emergency Department Billing • E&M Codes 99281-99285 will represent professional services and be submitted on the professional 837P claim • Institutional hospital services will be charged using APCs

34. Thank You Questions?

35. Instructions for CEU Credit This in-service webinar has been approved by the American Academy of Professional Coders (AAPC) for 1.0 Continuing Education Unit (CEU) credit for DoD personnel (.mil address required). Granting of this approval in no way constitutes endorsement by the AAPC of the program, content or the program sponsor. There is no charge for this credit. • Live broadcast webinar (Post-Test not required) • Login prior to the broadcast with your: 1) full name; 2) Service affiliation; and 3) e-mail address • View the entire broadcast • After completion of both of the live broadcasts and after attendance records have been verified, a Certificate of Approval including an AAPC Index Number will be sent via e-mail to participants who logged in or e-mailed as required. This may take several business days. • Archived webinar (Post-Test required) • View the entire archived webinar (free and available on demand at http://www.tricare.mil/ocfo/mcfs/ubo/learning_center/training.cfm) • Complete a post-test available within the archived webinar • E-mail answers to UBO.LearningCenter@altarum.org • If you receive a passing score of at least 70%, we will e-mail MHS personnel with a .mil email address a Certificate of Approval including an AAPC Index Number • The original Certificate of Approval may not be altered except to add the participant’s name and webinar date or the date the archived Webinar was viewed. Certificates should be maintained on file for at least six months beyond your renewal date in the event you are selected for CEU verification by AAPC • For additional information or questions regarding AAPC CEUs, please contact the AAPC. • Other organizations, such as American Health Information Management Association (AHIMA), American College of Healthcare Executives (ACHE), and American Association of Healthcare Administrative Managers (AAHAM), may also grant credit for DHA UBO Webinars. Check with the organization directly for qualification and reporting guidance.