Medicare/Medicaid reimbursement to hospitals

Asystole RN · Sep 8, 2012

Depends on what setting the nurse is in and what function they are providing.

Medicare reimburses hospitals at a flat rare based upon the patient's primary and secondary diagnosis or their diagnosis related group (DRG). This is where the infamous international classification of disease-9 (ICD-9) codes come into play and why it is so important to have a diagnosis tied to each order. Each DRG is then weighed by the amount of resources it takes the hospital, or should take them, to treat the patient, and the reimbursement is adjusted accordingly. Other factors such as regional cost-of-living adjustments, the percentage of low-income patients, and if the hospital is a teaching hospital or not also adjusts the reimbursement.

Now specific procedures and treatments are also classed but instead of being classed by diagnosis they are classed by the procedure under current procedural terminology (CPT) codes. Each CPT codes has a flat reimbursement rate attached to it, and is adjusted by some of the same factors that adjust the DRG reimbursements.

Now each CPT has specific conditions that are tied to them and decide what procedure, and how it is done, can be reimbursed. For example, in endoscopy if someone receives an EGD they receive a certain CPT code. Now, if there is an anesthesiologist at the bedside the CPT is adjusted, not only for the additional physician who is reimbursed separate, but also the overall procedural reimbursement is adjusted. In this scenario, whether anesthesia was administered or not, the facility can bill for extended recovery time. If there is no anesthesiologist, maybe the physician administered the meds himself, the facility cannot bill for that additional recovery time.

The facility still can bill under a CPT code, it just is adjusted.

Now there are differences in outpatient and inpatient billing, hospital or ambulatory care center, etc, etc. To say that billing is complex is an understatement.

So to answer your question, sort-of, maybe, kind-of.

btoddrn · Sep 11, 2012

Thank you so much for that information. Medicare/Medicaid is definitely complex, and I am sure it will be even more complex when the ICD-10 comes out. However, the question that I am really trying to get at is if Medicare/Medicaid would have any issues with patients receiving care from nurses that are independent contractors filling temporary staffing positions versus staff employees. I am dealing with all of the other payroll, tax, business structure questions and concerns. What I am trying to narrow down is the rumor online that Medicare/Medicaid will not reimburse for patients receiving care by nurse independent contractors. That makes no sense to me since CRNAs do it every day. But if anyone can confirm or deny this, it would be greatly appreciated. And if this is the case, I would really like some direction as to where I can get written confirmation. Thanks!!!!!!

NedRN · Sep 11, 2012

All contingent staff are independent contractors. Either directly, or via the independent contracting staffing agencies. Sometimes there are several independent contractors in the chain. I've been an IC contracted to an agency, contracted to a vendor management company, contracted to the hospital. None of that matters to Medicare, effectively nurses are the employees of the hospital, either directly or indirectly, and under no condition do we bill Medicare directly anyway staffing a hospital (unless advanced practice nurses).

All agencies are independent contractors. IC is a somewhat confusing term as many associate it with an individual only. It is the contractual relationship, not the entity type per se.

Medicare wants contracted care to be provided. It is not up to them to decide the staffing mix of an accredited hospital. Most hospitals use contingent staffing, whether registry or travelers. Most hospitals receive Medicare payments. Do the math and forget about rumors propagated for who knows what vicious reason. Seems a bit silly to suggest that the tax status of an individual or a contractor supplying staff affects hospital reimbursement from any source. But there are often rumors going around that IC is illegal. Pure ignorance of what the term means, and who they are.

Hospital employees operate under the oversight of the hospital, no matter direct staff or contingent (contract) staff. Medicare can say nothing about that arrangement unless oversight is not provided, or requirements for licensed provider care are not met. And a ton of other requirements, such as hospital accreditation and so on.

One other thought to leave you with, nurses are a cost center. Our actions do not produce billable events. Other types of licensed providers, from allied health to advanced practice nurses to physicians create billable events, and as such are a profit center, not a cost center. Saying that ICs cannot be reimbursed is like saying that using other vendors, like an outside laundry or the medical supply house mean a hospital cannot be paid by Medicare. Silly.

btoddrn · Sep 13, 2012

That was my thought, but I wanted to make sure I wasn't missing something. However, the quote came from someone who you wouldn't think would be making crazy statements like that. But I guess anyone can put a big title behind their name and start an association.

NedRN · Sep 13, 2012

There are a lot of hidden agendas out there. Some nurse employees are jealous of independently contracted nurses and make stuff up. In fact, for some reason "illegal" is something I hear a lot of nurses say about a wide variety of things that are not law, but in the domain of hospital policy.

And of course it will be administrative policy to discourage regular employees from becoming IC's. Can you imagine the chaos if every worker had an independently negotiated IC agreement?

Finally, no matter the source, even a well meaning person tends to repeat something they have heard a couple of times as gospel. That is how stuff like this gets "sticky"!