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Medicare reimbursement is a term referred to the payments received by physicians and hospitals for the services provided to patients covered by the Medicare program. Physicians who decide to participate in Medicare programs have to accept the rates established by Medicare as prices for particular services. Medicare is responsible for 80 percent of the price for the service, while the rest of the amount is covered by the patient (Green & Rowell, 2010, p. 308). To illustrate the application of this scheme into healthcare practice, an example of Medicare physician’s fee schedule amount code 99213 (office visit) can be used. If the usual charge of participating provider is $ 125, the 80 percent of $ 125 ($ 100) would be Medicare payment, and the rest of the price 20 percent of $ 125 ($ 25) would be covered by the patient. Therefore, the total Medicare reimbursement amount for a participating physician would be $ 125.
The purpose of reporting diagnosis codes on insurance claims is to ensure uniformity among the different institutions and avoid any mistakes in calculating the reimbursement amounts for particular services provided by particular physicians. Additionally, the diagnosis codes allow institutions to simplify the procedures of calculating the total Reimbursement coverage for the Medicare guidelines. Current Procedural Terminology (CPT) comprises descriptive terms identifying healthcare services and procedures. Green and Rowell (2010) stated that the purpose of this system is to provide a uniform language and improve communication between the service providers, insurance companies, and patients (p. 203). These five-digit codes were adopted in 1983 to replace the four-digit codes which were used previously. The CPT codes should comply with the ICD-9-CM codes to explain the need for the performance of particular services and procedures. The CPT codes simplify the process of reporting the procedures and assist all participating parties inaccurate identification of procedures which is necessary for preserving the consistency among reports of different institutions and particularly the third-party insurance payers. Additionally, in case there is no CPT code for a particular procedure, a practitioner should attach a special report describing the extent, time, effort, and equipment that were required for carrying out the procedure. This report should also contain the justification of the need for certain procedures or services.
The Medicare physicians’ fee schedules are a system of reimbursing the service providers according to the rates predetermined by Medicare. These schedules are revised each year. All services and operations are standardized to measure their value as compared to the value of other operations. The respective standards are referred to as relative value units (RVUs) and consist of three main payment components, including those of physician work (time, skills, and efforts), costs of performing a procedure (utilities and equipment) and malpractice expenses (the costs of insurance). Additionally, the payment limits depend upon the geographic location and are reflected in geographic adjustment factors (GAF). Consequently, physicians participating in Medicare are paid differently in different states because the geographic cost practice indices (GCPI) are included in the formula used for determining the fee schedule payments for Medicare physicians (Green & Rowell, 2010, p. 307). Though Medicare physician fee schedule applies to identifying the payment for physician services, anesthesia, laboratory, and radiology procedures also deserve serious consideration. A different fee schedule would be applied to the practitioners not participating in the Medicare program.
Reference
Green, M. & Rowell, J. A. (2010). Understanding health insurance: A guide to billing and reimbursement. New York, NY: Delmar Cengage Learning.
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