Steven Lash describe in depth about physician payment systems.This is must watched PPT.

1. Physician Payment Systems
By
Steven Lash

2. Affordable Care Act (ACA)
• Passed in 2010, effective January 1, 2014
• ACA provides health coverage for more people, more benefits and protections
(Guaranteed issue) and establishes marketplace exchanges
• Provides specific guidelines for incentives for wellness and prevention and that
selected wellness and prevention services be at no cost to individual
• All plans must have additional “Essential Benefits”
• Mistakenly characterized as healthcare law that bends cost curve
• It is about Insurance reform than healthcare reform
– Elimination of lifetime cap
– No pre-existing conditions exclusions
– Portability
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3. Medicare & Medicaid
• July 30, 1965, President Lyndon B. Johnson signed into law the bill that led to
the Medicare and Medicaid.
• Medicare
– Over 65 years of age
– Part A Hospital coverage - automatic
– Part B Physician Coverage – sign up and pay a premium
• Medicaid
– Block funding grants for states to provide medical coverage for families
meeting financial assistance thresholds
• Medicare Rx Drug Improvement & Modernization Act of 2003 (MMA)
– Biggest change in 38 years
– Created Medicare Advantage Plans
– Part D Rx coverage implemented

4. What is a Medicare Advantage (MA)
Plan
• A type of Medicare health plan offered by a private company that contracts
with Medicare to provide Part A and Part B benefits
• Characterized by a defined network of hospitals and doctors
– Similar to a HMO on the commercial side
• Has a limit on out of pocket costs – maximum is $6,700
– Traditional Medicare has no maximum out of pocket
• Pays doctors on a capitated basis or Fee For Service basis
– Capitation is a fixed amount usually a PMPM
– If physician is capped CCM not paid
• Requires getting a referral from a PCP to see a specialist

5. What is the basis for physician
payments
• Fee For Service (FFS)
– Relative Value Unit (RVU) – measure of effort and cost
• Physician payments under Part B have 3 components
– PE (Physician Effort)
– OE (Office Expense)
– MP (Malpractice)
– These units are then totaled and multiplied by a Conversion Factor
($35.8279)
• The formula for 2016 is
– .67 +.57+.04 = 1.28 X $35.8279 = $45.86
– This rate is then adjusted for Geography, professional shortage areas, and
other modifiers including quality measures + a statutory reduction

6. Key Jargon for Payments
ICD-9 Code: International Classification of Diseases
– Ensures description/diagnosis
uniformity around symptoms,
injuries, diseases, and conditions
– Updated to provide for new
medical discoveries
– ICD -10 will be implemented
October 1, 2015
CPT Code: Current Procedural
Terminology
– Published by the AMA
– Ensures description uniformity
around all medical, surgical, and
diagnostic procedures
– 7800- 5 digit codes
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There exists a critical relationship between an ICD-10 code and a CPT code
which is to ensure that the diagnosis supports the medical necessity of the
procedure performed.