Long term care facilities are often reimbursed for the therapy services they provide through Medicare Part B reimbursement. After 100 days in a nursing home, a resident will no longer be covered by Medicare Part A for certain services. It is at that point that Medicare Part B is utilized for physical therapy, occupational therapy, and speech-language pathology.
Medicare Part B reimbursement is conducted through a series of codes that number in the thousands and are updated quarterly. It is, then, important for long term care facility owners and administrators to understand how Medicare Part B works and what can be billed through it.
For an overview of the process by which Medicare Part B is used in nursing homes, watch this interview between Jason Long, CEO of Experience Care, and Sue Friesth, Experience Care’s financial product manager:
The third category, Part C, is called Managed Medicare or Medicare Advantage. It allows patients or residents to choose a health plan that includes the services of Part A and Part C but also includes an annual out-of-pocket expense limit. Part D, meanwhile, mostly covers self-administered prescription drugs.
- Inpatient care, whether in a hospital or a skilled nursing facility care
- Hospice care
- Home health care
This means that Medicare Part A covers inpatient care that occurs in a nursing home but is not considered long term care or custodial care.
- Medically necessary services: Services or supplies needed to diagnose or treat a medical condition and meet certain standards.
- Preventative services: Health care that can help prevent or detect illness or disease early.
Examples of the services Medicare B provides are:
- Clinical research
- Ambulance services
- Durable medical equipment (DME)
- Mental health
- Limited outpatient prescription drugs
In long term settings, the care services that are most often reimbursed through Medicare Part B are:
- physical therapy
- occupational therapy
- speech-language pathology
Residents, of course, must fulfill certain conditions to receive Medicare Part A coverage in a nursing home, which, in turn, makes them potentially eligible for receiving Medicare Part B coverage. These conditions include:
- Prior hospitalization – A resident must have entered a skilled nursing facility only after an inpatient hospital stay of three consecutive days or more. They must then enter the SNF shortly after leaving the hospital.
- Required inpatient services – A resident must need or a doctor must order care related to the skills of professional personnel like registered nurses, licensed practical nurses, physical therapists, occupational therapists, speech-language pathologists, and audiologists.
- Skilled care required on a daily basis – This means that the resident must require the services described above every day, even if in some cases, like skilled therapy services, they are only available five or six days a week.
For more, read this PDF provided by the CMS about Medicare coverage in skilled nursing facilities.
Medicare Part B Reimbursement in Recent Decades
In the 1990s, the Office of Inspector General detected fraudulent activity at nursing homes in the form of excessive billing and charges for unused supplies. The Benefits Improvement and Protection Act of 2000 limited the consolidated billing requirement to Medicare services not covered by Part A. Further, Congress required the OIG to monitor Medicare Part B payments that were not covered by Part A.
The Balanced Budget Act of 1997, meanwhile, established annual per-beneficiary Medicare spending limits or a therapy cap for outpatient physical therapy, occupational therapy, and speech-language pathology services provided under Medicare Part B. Under the Bipartisan Budget Act of 2018, the cap was repealed though cap limits were retained, meaning, additional claims must be filed after reaching the cap.
For instance, if a resident meets the cap for occupational therapy, which is $2,110 in 2021, the long term care facility will have to put a modifier on the claim for any other service for which the resident has a diagnostic code. This applies to physical therapy and speech-language pathology as well, for which the combined cap is $2,110.
How to Fill Out Medicare Part B Reimbursement Forms
Some seniors and disabled individuals are automatically enrolled in Medicare Part B, while others must sign up for it, which can either be done online or by mail.
Those who want to enroll in Medicare Part B must either send or fax the following to their local Social Security office:
- CMS 40B, the enrollment form for Medicare Part B
- CMS L564, the form to request employment information
- Proof of employment
- Proof of Group Health Plan (GHP) or Large Group Health Plan (LGHP) coverage
Those who are not enrolled in Medicare Part A must first do so. They can apply online here. Those unsure whether or not they have Part A can look on their red, white, and blue Medicare card, which will show “Hospital (Part A)” on the lower-left corner.
Alternatively, they can call their local Social Security office or call Social Security at 1-800-772-1213.
It is important that those who wish to sign up for Part B do so quickly, as delaying the process may require them to pay a late enrollment penalty. The form for recurring Medicare Part B services, meanwhile, can be found here.
Who Pays for Medicare Part B coverage?
There is also a deductible, which is $203 for 2021, that must be paid, either by the patient/resident or a co-insurer. The deductible can be paid to any provider of Medicare Part B services.
In other words, prior to entering a facility, a senior may have already met his or her deductible elsewhere and will, thus, not have to pay it at the facility. Once that deductible is met, one will be covered by Medicare.
Medicare covers 80% of the fee schedules of Part B that will be detailed below. Certain states will pay the remaining twenty percent, or, the coinsurance amount. In most states, it is possible to get Medicaid to pay the Medicare coinsurance, but this process is not automatic in all states.
Co-insurance is provided in accordance with state regulations. States that do not pay the coinsurance will most likely ask a long term care facility to write off the remaining amount.
How is Medicare Part B Billed?
Medicare Part B, like the other three branches of Medicare, is billed through a system of thousands of codes in the Healthcare Common Procedure Coding System (HCPCS), more specifically HCPCS Level II.
These are medical codes used for claims related to items and services like devices, supplies, medications, and transportation.
Codes in HCPCS are updated by the Centers for Medicare and Medicaid (CMS) throughout the year based on public input and feedback from providers, manufacturers, vendors, and special societies. So how do you stay on top of so many codes when they are changing all the time?
Advancing the Business of Healthcare (AAPC) provides a tool that allows you to search HCPCS by keyword, code, or code range. This site is updated every quarter. In long term care, HCPCS is most often used for billing therapy services or evaluation.
Each HCPCS code has a specific fee schedule amount that is the limit to be paid for that particular code. For instance, Medicare will pay 80% of the fee schedule amount for therapy services.
The remaining 20% is coinsurance that is paid privately by the resident or through Medicaid. Fee schedules are, then, the allowable amount for a given item in the HCPCS.
It is important that long term care providers do not write off the coinsurance amount, as this will lead to Medicare treating the amount reported as the total amount, meaning, Medicare will only reimburse the facility for 80% of the 80% being reported.
Medicare will then expect another payer to account for the remaining 20%, when, in reality, that 20% has not been reported. In other words, the entire fee schedule amount, the gross price, for therapy services must be documented. For instance, your facility may charge $75 for therapy evaluation, regardless of whether it is charged to Medicare or a private payer.
Medicare Part B, meanwhile, might have $69 as its fee schedule amount for that service, meaning, you cannot charge more than that. What you should not do is charge 80% of the $69, or, $55.20, because that will result in only receiving 80% of what you charge, or, $44.16. Instead, you bill the entire $69 or $75 and then end up receiving $55.20 in Medicare Part B reimbursement.
So what happens to the amount you charge that is above the fee schedule? In the example above, Medicare will only allow you to charge $69, which means you will not receive 80% of the remaining $6. That amount will end up being written off by the facility, which is why it is not entirely necessary to enter the amount that exceeds the fee schedule when services are being paid through Medicare Part B.
It is also important to stay on top of the allowable amounts, as fee schedules increase every year. By not charging the most recent allowable amount, a facility will be leaving money on the table. Facilities should, then, go through the list of fee schedules annually and update their own costs. This is not as time-consuming as it may seem, as only about 50 of the thousands of HCPCS codes change on a yearly basis.
The CMS has created a Medicare Physician Fee Schedules (MPFS) look-up tool that allows you to find the most recent allowable amounts. Further, the CMS has provided a guide to help you navigate this tool.
Of course, the state may also ask a facility to write off the remaining twenty percent, or the co-insurance amount, in cases in which Medicaid does not pay for state insurance. In these situations, it is not necessary for the facility to account for the coinsurance amount.
How are fee schedules calculated?
The MPFS uses a resource-based relative value system (RBRVS) to determine the relative value assigned to current procedural terminology (CPT) codes as developed by the American Medical Association in accordance with health care professionals.
The RBRVS consists of three parts, elaborated by the National Center for Technology Information as:
- Total physician work – This represents the relative value of physician work required for a particular service in relation to other services. Such work includes time, physical effort and skill, mental effort and judgment, and stress from iatrogenic risk.
- Practice expenses – These are taken from the average portion of total revenues attributed to equipment, rent, and salaries for ancillary personnel
- Malpractice expenses – This accounts for the probability of malpractice exposure on account of performing a particular procedure.
Reduced reimbursement for multiple procedures
When a facility utilizes two different codes for therapy on the same day, the CMS uses a Multiple Procedure Payment Reduction (MPPR) to save costs.
It looks at the fee schedule amounts of the two services and then, for the second service, it will deduct from the practice expenses component but not the other two components.
This is because the facility is already accounting for the work, time, and liability of physicians and others involved in the therapy. Typically, the first service will be reimbursed at 100%, while the second service will be reimbursed at around 50% of its fee schedule.
Similarly, if two services with the same code are entered on the same day, the second service will be reimbursed for a lower amount.
Medicare Part B pays for up to 80% of the costs of physical therapy, occupational therapy, and speech-language pathology in long term care facilities.
However, it is up to the facility to document the services it provides. Further, it is up to elders to opt into Medicare Part B and submit their forms. When the proper paperwork is filed, seniors usually only have to pay a small deductible.
And nursing homes will generally get reimbursed for most of the value of their services. This, though, is contingent upon each facility taking care to charge the gross prices and update charges in accordance with the most recent HCPCS codes and fee schedules to ensure that it is reimbursed fully.
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