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Here are examples of the correct and incorrect ways of reporting charges and credits for replaced medical devices that will generate outlier payments, which is the target of a new audit by the HHS Office of Inspector General (“With Request for Vendor Memos, OIG Begins Audit of Outlier Payments and Device Credits,” RMC 28, no. 10). These examples were developed by Stephen Gillis, director of compliance coding, billing and audit at Partners HealthCare in Boston. Contact him at sjgillis@partners.org.
Assumptions: | ||||
---|---|---|---|---|
device cost = $10,000 | ||||
charge amount for device based on a markup of 2x = $20,000 | ||||
Original Claim | ||||
Original Claim total charges (includes device) | $50,000 | |||
Original claim total payment | $15,000 | |||
Difference between charges and payments | $35,000 | |||
Outlier triggered? | No | |||
Hypothetical Scenario 1 | ||||
Device credit received, greater than 50% of cost | $6,000 | New cost for the device is $4,000 with 2x markup equals new charge of $8,000. | ||
Claim adjusted to reflect FD value code with $6,000 value code will decrease APC payment by $6,000. | ||||
Forgot to reduce the $20,000 charge to reflect a reduction in the cost of the device so total charges remain at $50,000 | ||||
Revised claim #1 - with incorrect charges | Revised claim #1 - with correct charges | |||
Revised Claim total charges (includes device) | $50,000 | Revised Claim total charges (includes device) | $38,000 | |
Revised claim total payment (from FD = 6,000) | $9,000 | Revised claim total payment (from FD = 6,000) | $9,000 | |
Difference between charges and payments | $41,000 | Difference between charges and payments | $29,000 | |
Outlier triggered? | Yes | Outlier triggered? | No | |
Hypothetical Scenario 2 | ||||
Device credit received (full replacement cost) | $10,000 | New cost for the device 0 and a token charge of .00 or .01 should be reported. | ||
Claim adjusted to reflect FD value code with $6,000 value code will decrease APC payment by $6,000. | ||||
Forgot to reduce the $20,000 charge to reflect a reduction in the cost of the device so total charges remain at 50,000 | ||||
Revised claim scenario 2 - with incorrect charges | Revised claim scenario 2 - with correct charges | |||
Revised Claim total charges (includes device) | $50,000 | Revised Claim total charges (includes device) | $30,001 | |
Revised claim total payment (from FD = 10,000) | $5,000 | Revised claim total payment (from FD = 10,000) | $5,000 | |
Difference between charges and payments | $45,000 | Difference between charges and payments | $25,001 | |
Outlier triggered? | Yes | Outlier triggered? | No | |
Reporting the device credit with FD value code reduces the APC payment amount by the amount of the credit. | ||||
If you forget to reduce the charges to reflect the lower cost for the device, the gap between charges and payment increases and can sometimes cause an outlier situation. |