1.0 GENERAL
1.1 Reimbursement
of a non-network individual health care professional or other non-institutional health
care provider shall be determined under the allowable charge method
specified in
Chapter 1, Section 7 and
Chapter 5, Section 1. For network providers,
the contractor is free to negotiate rates that would be less than
the rates established under the allowable charge methodology.
1.2 Unless
otherwise stated in the TRICARE Policy Manual (TPM), inpatient or
outpatient services rendered by all individual professional providers
and suppliers must be billed on the Centers for Medicare and Medicaid
Services (CMS) 1500 Claim Form, except as indicated in
paragraphs 1.4 and
1.5. This
requirement also applies to individual professional providers employed
by or under contract to an institution. When inpatient services
are rendered by a provider employed by or under contract to a participating
institution, the services must be billed on a participating basis.
1.3 Contractors
are not required to individually certify the professional providers
employed by or under contract to an institutional provider billing
for their services under the institution’s federal tax number since
these types of providers are not recognized as authorized TRICARE
professional providers because of their “contracted” status (
32 CFR 199.6(c)(1)). However, reimbursement
for services of institutional-based professional providers is limited
to the services of those providers that would otherwise meet the
qualifications of individual professional providers except that
they are either employed by or under contract to an institutional
provider. Institutional-based professional services are subject
to the allowable charge methodology; see
32 CFR 199.14(j).
For TRICARE Encounter Data (TED)/TRICARE Encounter Provider (TEPRV)
reporting, refer to the TRICARE Systems Manual (TSM),
Chapter 2.
1.4 Some
institutions are required to include the institutional-based professional
charges on the CMS 1450 UB-04 claim form. The contractor’s system
must recognize these charges as noncovered institutional charges
when the CMS 1450 UB-04 indicates professional component charges
using Value Code “05” (see the CMS 1450 UB-04 Instructions Manual,
Form Locator (FL) 39 - 41). Value code “05” indicates that the charges
are included on the CMS 1450 UB-04 and will also be billed separately
on the CMS 1500 Claim Form. The CMS 1450 UB-04 may be used by institutional
providers and Home Health Care (HHC) Agencies to bill for professional
services. The CMS 1450 UB-04 must include all the required information
needed to process the professional services and reimburse the services
using the allowable charge payment methodology, to include any negotiated
rates. The contractors shall contact any HHC Agency that has requested
to bill for professional services on the CMS 1450 UB-04 to assist them
with the proper billing requirements, e.g., Current Procedural Terminology,
4th Edition (CPT-4) procedure codes, name of the actual provider,
etc.
1.5 Professional
charges may be billed on a CMS 1450 UB-04, either on the same claim
as the facility charges or on a separate claim. If professional
charges are submitted on the same CMS 1450 UB-04 claim form as other
outpatient facility charges, the contractor shall require the provider
to submit them on a separate claim form.
2.0 ALLOWABLE
CHARGE METHOD
2.1 General
2.1.1 The allowable
charge for a service or supply shall be the lowest of the billed
charge, the prevailing charge, or the Medicare Economic Index (MEI)
adjusted prevailing charge (known as the maximum allowable prevailing
charge). The profiled amount (the prevailing charge or the maximum allowable
prevailing charge, whichever is lower) to be used is based upon
the date of service. Regardless of the profiled amount, no more
than the billed amount may ever be allowed.
Note: If, under a program approved by Defense Health
Agency (DHA), a provider has agreed to discount his or her normal
billed charges below the profiled amounts, the amount allowed may
not be more than the negotiated or discounted charges. When calculating
the allowable charge, use the discounted charge in place of the
provider’s actual billed charge unless the discounted amount is above
the billed charge. When the discounted amount is above the billed
charge, the actual billed charge shall be used.
2.1.2 The contractor
has primary responsibility for determining allowable charges according
to the law, the Regulation, and the broad principles and policy
guidelines issued.
2.1.3 Allowable charge determinations
made by contractors are not normally reviewed by DHA on a case-by-case
basis. However, DHA will review allowable charge determinations
of contractors through profile analysis, sample case review and
periodic review of profile development procedures. Therefore, each
contractor shall maintain, in accessible form, the following data:
2.1.3.1 The charge
data used to develop prevailing charges. For every prevailing charge,
this must include a list identifying each provider whose charges
were used in developing the prevailing charge as well as the provider’s
charges. The list shall be arrayed in ascending order by the amount
of the billed charges.
2.1.3.2 The summary
data used to develop prevailing conversion factors. This is to include
every prevailing charge (identified by amount, procedures, weighted
frequency, and Relative Value Units (RVUs)) which was used in calculating
each conversion factor.
2.2 Database And Profile Updating
2.2.1 The 80th
percentile of charges shall be determined on a date or dates specified
by DHA. Profile update data used shall be charges for services and
supplies provided during the 12 month period ending on June 30 prior
to the update. The contractor shall maintain two sets of profiles;
the current profiles and the previous year’s profiles. The contractor
shall apply profiles based on the date of service. The fee screen
year is the calendar year.
2.2.2 Each contractor shall develop
procedures to ensure that the data base used to develop the profile
for any procedure contains only charges actually made for that procedure.
Thus, edits must be developed which will eliminate charges for individual
consideration cases, and charges for multiple surgery, as well as
aberrant data resulting from coding errors and other data problems.
A description of these procedures is to be available for DHA review.
2.2.3 All charges,
except those identified above, made by individual providers for
services rendered to TRICARE beneficiaries during the data base
period must be included in the data base. The usual (pre-discount)
charges of network providers or the contractor’s or a subcontractor’s
private business may be included if the billing arrangement with
the provider or other source of data for the data base is such that
accurate data for the state will be obtained.
2.2.4 Except
when an error has occurred, updated actual prevailings are not to
be lower than the previous year’s actual prevailings. However, if
for two consecutive years the rates are lower than the established
profiles, then, in the second year, the rates will be lowered to
the higher of the two profiles which are below the established profile.
However, if the updated prevailing charge is lower, contractors shall
continue using the previous actual prevailing charge. When the updated
prevailing charge is 25% or more lower than the previous prevailing
charge, the contractor shall review the development of both profiles.
If no errors are found, the new profile is to be increased to the
level of the previous profile. If the previous profile is higher
due to an error in its calculation, the updated profile shall be
used. The same rules apply to conversion factors when the updated
conversion factor is less than the previous one. However, in all
cases an actual profile on a procedure takes precedence over an
allowance based on a conversion factor.
2.2.4.1 When the
current allowance based on a conversion factor is less than the
previous allowance based on an actual profile, the previous profile
amount is to be used.
2.2.4.2 When the
current allowance based on an actual profile is less than the previous
allowance based on a conversion factor, the actual profile is to
be used.
Note: This provision does not apply to
those instances where profiles are initially developed for a distinct
class of provider which was previously included with providers having
higher profiles.
2.2.5 Once the contractor has completed
the update of its profiles, further revisions in the profiles will
not be permitted, except to correct erroneous calculations or to
establish profiles for new services. If the contractor finds it
necessary to correct profiles or to establish a profile fee for
a new procedure, the action will be thoroughly documented and retained
in accessible form for not less than the retention period for the
claims processed during the active life of that profile.
2.3 Prevailing
Charges
2.3.1 Prevailing charges are those charges which
fall within the range of charges that are most frequently used in
a state for a particular procedure or service. The top of this range
establishes an overall limitation on the charges which the contractor
shall accept as allowable for a given procedure or service, except
when unusual circumstances or medical complications warrant an additional
charge (see
Chapter 5, Section 4).
2.3.2 Unless
DHA, has made a specific exception, prevailing profiles shall be
developed on a statewide basis. Localities within states are not
to be used, nor are prevailing profiles to be developed for any
area larger than individual states.
2.3.3 Prevailing profiles shall
be developed on a nonspecialty basis. Of course, types of services are
to be differentiated. For example, for a given surgical procedure
the surgeon, assistant surgeon, and the anesthesiologist would all
be reimbursed based on different profiles. However, reimbursement
for the actual surgery shall be based on only one profile, regardless
of whether the surgery was performed by a specialist or a general
surgeon. An exception to this rule is that when services are performed
by different classes of providers; e.g., a physician vis-a-vis a
non-physician, separate profiles shall be developed for each class
of provider. For example, there are three distinct classes of providers
who render similar psychiatric services; psychiatrists, psychologists
and others (medical social workers (MSWs), marriage and family counselors,
pastoral counselors, mental health counselors, etc.). Moreover, two
distinct classes of providers render obstetrical services; physicians
and nurse midwives. Separate profiles shall be developed for each
of the classes. Since a physician can render more comprehensive services
than non-physicians (and likewise for psychologists as opposed to
MSWs) the profile for the lesser-qualified class of provider shall
never be higher than that for a higher-qualified class of provider. For
example, in cases in which psychologists’ profiles are higher than
psychiatrists’, the psychologists’ profiles shall be lowered to
that of the psychiatrists’ profiles.
2.3.4 When there are two or more
procedures which are identical except for the amount of time involved
(e.g., CPT procedure codes 90843 and 90844), the contractor shall
ensure that the profile for the shorter procedure does not exceed
the profile for the longer procedure. In those cases in which it does,
the contractor shall reduce the profile for the shorter procedure
to that of the longer procedure (see
Chapter 5, Section 3).
2.4 Conversion
Factors
2.4.1 General
Submitted charges shall be compared with the
applicable prevailing charge to determine the allowable charge for
the service. If there is insufficient actual charge data to determine
the prevailing charge in the state for a service, the contractor
shall calculate a prevailing charge by multiplying the appropriate
prevailing charge conversion factor by the appropriate RVUs.
2.4.1.1 Conversion
factors shall be developed for broad types of services. As a minimum,
the types of service shall include medicine, surgery, anesthesia,
radiology, and pathology. In addition, separate conversion factors
shall be developed for each class of provider which can provide
a particular type of service. For example, there should be three
medicine conversion factors - one for physicians, one for psychologists,
and one for other non-physician providers.
2.4.1.2 Conversion
factors shall be used to derive “approximate” prevailing charges.
Since prevailing charges based on conversion factors are estimates
of actual (but unknown) “average” charges, their reliability is
only as good as the known, but often limited, data. Contractors
shall exercise extreme care in developing conversion factors. When
beneficiaries, physicians, and suppliers inquire regarding reimbursement
based on the use of a conversion factor, the contractor shall use
its best judgment based on the data available to it (including information
the physician or supplier may furnish) to resolve the issue.
2.4.1.3 In those
cases in which a profile has been increased to the previous year’s
level, the contractor shall also use the higher previous amount
in calculating a conversion factor. A conversion factor is simply
a mathematical representation of what is currently being paid for
similar services, and thus it should be based on the profiles actually
in use.
2.4.2 Relative Value Scales
Relative value scales developed or adopted
by the contractor shall be carefully reviewed and validated before
they are used. The contractor is responsible for ensuring that a
relative value scale which is used to estimate prevailing charges
accurately reflects charge patterns in the area serviced by the
contractor. When a conversion factor results in an obviously incorrect
amount (either high or low), the contractor is to make an adjustment
in its relative value scale which will correct the error. Such corrections
are to be reviewed in subsequent profile updates to ensure they
are accurate.
2.4.3 Calculation Of Prevailing
Charge Conversion Factors
2.4.3.1 Prevailing
charge conversion factors used with relative value scales to fill
gaps in contractor prevailing charge screens shall be calculated
from the following formula:
|
C/F
|
=
|
Prevailing
charge conversion factor.
|
|
CHG
|
=
|
The
fully adjusted prevailing charge for a procedure.
|
|
SVC
|
=
|
The
number of times the procedure was performed by all physicians in
the state.
|
|
RVU
|
=
|
The
RVU assigned to the procedure.
|
|
SUM OF SVC
|
=
|
The
total number of times all procedures for which actual prevailing
charges have been established and were performed in the state.
|
|
|
|
C/F
|
=
|
CHG
RVU
|
x
|
SVC
|
+
|
CHG
RVU
|
x
|
SVC
|
+
|
...
|
+
|
CHG
RVU
|
x
|
SVC
|
|
|
|
Sum
of SVC
|
Example: Compute a prevailing charge
conversion factor on the basis of known prevailing charges within
the same type of service.
|
Procedure
|
Frequency
|
Actual Charge
|
Relative
Value
|
|
1
|
30
|
$5.00
|
1
|
|
2
|
70
|
12.00
|
2
|
|
3
|
50
|
35.00
|
5
|
|
4
|
40
|
20.00
|
3
|
|
5
|
60
250
|
8.00
|
1.5
|
2.4.3.2 Method
• For
each procedure, divide the prevailing charge by the relative value
and multiply the result by the frequency of that procedure in the
charge history.
• Add
all the results of these computations.
• Divide the result
by the sum of all the frequencies.
2.4.3.3 Solution
|
(5 x 30)
1
|
+
|
(12 x 70)
2
|
+
|
(35 x 50)
5
|
+
|
(20 x 40)
3
|
=
|
(8 x 60)
1.5
|
=
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
(5 x 30)
|
+
|
(6 x 70)
|
+
|
(7 x 50)
|
+
|
(6.67 x 40)
|
=
|
(5.33 x 60)
|
=
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
150
|
+
|
420
|
+
|
350
|
+
|
266.8
|
+
|
319.8
|
=
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
1,506.6
|
=
|
$6.03
|
|
|
|
|
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
2.4.3.4 The conversion
factors calculated for any profile year shall reflect prevailing
charges calculated on the basis of charge data for the applicable
profile year. Also, prevailing charges established through the use
of a relative value scale and conversion factors, in effect, consist
of two components. Consequently, the conversion factors used shall
be recalculated when there is an extensive change in the RVUs assigned
to procedures (as may occur if the contractor begins to use a different
or updated relative value scale but not if the unit value of a single
procedure is changed) in order to ensure that the change(s) in unit
values do not change resultant conversion factors.
2.4.3.5 Since conversion
factors are a calculated amount and shall only be used when multiplied by
a relative value, conversion factors are to be rounded only to the
nearest whole cent. It is not acceptable to round to the nearest
dollar or tenth dollar (dime).
2.5 Procedure
Codes
The CPT Coding System includes Level
I: CPT Codes and Level II: Alpha Character and DHA approved codes
for retail and Mail Order Pharmacy (MOP). (Reference the TSM,
Chapter 2, Addendum E.)
2.8 Prevention
Of Gross Dollar Errors
Parameters Consistent
With Private Business. The contractor shall establish procedures
for the review and authorization of payment for all claims exceeding
a predetermined dollar amount. These authorization schedules shall
be consistent with the contractor’s private business standards.
2.9 Industry
standard modifiers and condition codes may be billed on individual
professional claims to further define the procedure code or indicate
that certain reimbursement situations may apply to the billing.
Recognition and utilization of modifiers are essential for ensuring
accurate processing and payment of these claims.
3.0 CHAMPUS
MAXIMUM ALLOWABLE CHARGE (CMAC) SYSTEM
3.1 General
The
CMAC system is effective for all services. The zip code where the
service was rendered determines the locality code to be used in
determining the allowable charge under CMAC. In most instances the
zip code used to determine locality code will be the zip code of
the provider’s office. For processing an adjustment, the zip code
which was used to process the initial claim must be used to determine
the locality for the allowable charge calculation for the adjustment.
Adjustments shall be processed using the appropriate rate based
on the date of service. Post office box zip codes are acceptable
only for Puerto Rico and for providers whose major specialty is
anesthesiology, radiology or pathology (see
Chapter 5, Section 3).
3.2 Locality
Code
For TED reporting, the locality code
used in the reimbursement of the procedure code shall be reported
for each payment record line item, i.e., on each line item where
payment is based on a CMAC, the locality shall be reported. Any
adjustment to a claim originally paid under CMAC without a locality code,
shall include the locality code that it was priced on at the time
of the initial payment. The locality code reported on the initial
claim shall be used to process any future adjustments of that claim
unless one of the conditions listed below occurs:
• The
adjustment is changing the type of pricing from CMAC to a different
payment method, in which case the locality code should be blank
filled, or;
• The
initial claim was priced incorrectly because of using a wrong locality
code, in which case the correct locality code should be used.
4.0 BALANCE
BILLING LIMITATION FOR NON-PARTICIPATING PROVIDERS
4.1 General
Non-participating
providers may not balance bill the beneficiary more than 115% of
the allowable charge.
Note: When the billed
amount is less than 115% of the allowed amount, the provider is
limited to billing the billed charge to the beneficiary. The balance
billing limit shall be applied to each line item on a claim.
Example 1: No Other Health Insurance (OHI)
|
|
Billed
charge
|
$500
|
|
|
Allowable
charge
|
$200
|
|
|
Amount
billed to beneficiary (115% of $200)
|
$230
|
Example 2: OHI
|
|
Billed
charge
|
$500
|
|
|
Allowable
charge
|
$200
|
|
|
Amount
paid by OHI to the beneficiary
|
$200
|
|
|
Amount
billed to beneficiary (115% of $200)
|
$230
|
Note: When payment
is made by OHI, this payment does not affect the amount billable
to the beneficiary by the non-participating provider except, when
it can be determined, that the OHI limits the amount that can be
billed to the beneficiary by the provider.
Example 3: Provider Refuses To File Claim Or Has Charged
An Administrative Fee
|
|
Billed
charge
|
$100.00
|
|
|
CMAC
|
$110.00
|
|
|
Allowed
amount
|
$100.00
|
|
|
10%
abatement ($100 x 0.10)
|
$10.00
|
|
|
Adjusted
allowed amount ($100 - $10)
|
$90.00
|
|
|
Provider
billed charge to beneficiary
(Limited
to billed amount.)
|
$100.00
|
Example 4: Non-Participating Provider
Refuses To File Claim Or Has Charged An Administrative Fee
|
|
Billed
charge
|
$150.00
|
|
|
CMAC
|
$100.00
|
|
|
Allowed
amount
|
$100.00
|
|
|
10%
abatement ($100 x 0.10)
|
$10.00
|
|
|
Adjusted
allowed amount ($100 - $10)
|
$90.00
|
|
|
Provider
billed charge to beneficiary ($90.00 x 115%)
|
$103.50
|
4.1.1 Provider bulletins shall be
used to notify authorized providers of the balance billing limitation
of the amount that may be billed by a non-participating provider
to the beneficiary.
4.1.2 The contractor shall notify
beneficiaries of the balance billing limitation and the amount that
may be legally billed by a non-participating provider to the beneficiary
through stuffers.
4.1.3 The following language shall
be used to respond to beneficiary inquiries concerning the TRICARE
non-participating provider balance billing provision. Routine stuffers
shall not be used to convey this information.
Note: In accordance with 32 CFR 199, a balance billing
limitation for services provided by non-participating providers
was effective on and after November 1, 1993. This provision limits
non-participating providers from billing TRICARE beneficiaries more
than 115% of the allowable charge authorized by TRICARE which is
shown on the Explanation Of Benefits (EOB). Please note when the provider’s
billed charge is less than 115% of the allowed amount, the billed
charge becomes the billable amount to the beneficiary. However,
this restriction does not apply to noncovered services. Nonparticipating
providers who do not comply with the limitation shall be subject
to exclusion from the TRICARE program as authorized providers and
may be excluded as a Medicare provider. If a non-participating provider
bills and/or collects more from the beneficiary than the amount
the provider may bill, contact the contractor’s Program Integrity
department in writing. The beneficiary should include information
which documents the higher billed amount, such as a copy of the
EOB, bills from the non-participating provider to the beneficiary,
demand letter from the non-participating provider to the beneficiary
requesting an amount above the 115% of the allowable amount, and
copies of cancelled checks that would identify excessive amounts
paid by the beneficiary to the non-participating provider.
4.2 Failure To
Comply
4.2.1 If a non-participating provider fails to comply
with this balance billing limitation requirement, the provider shall
be subject to exclusion from the TRICARE Program as an authorized provider
and may be excluded as a Medicare provider.
4.2.2 When the
contractor receives a complaint that a non-participating provider
is balance billing a beneficiary for an amount greater than 115%
of the allowable charge, the contractor shall follow the instructions
in the TRICARE Operations Manual (TOM),
Chapter 13, Section 5.
4.3 Granting
of Waiver Of Limitation
When requested by
a TRICARE beneficiary, the contractor, on a case-by-case basis,
may waive the balance billing limitation. If the beneficiary is
willing to pay the non-participating provider for his/her billed
charges, then the waiver shall be granted. The contractor shall
obtain a signed statement from the beneficiary stating that he/she
is aware that the provider is billing above the 115% limit, however,
they feel strongly about using that provider and they are willing
to pay the additional money. The beneficiary shall be advised that
the provider still may be excluded from the TRICARE program, if he/she
is over billing other TRICARE beneficiaries and they object. The
waiver is controlled by the contractor, not by the provider. The
contractor is responsible for communicating the potential costs
to the beneficiary if the waiver statement is signed. A decision
by the contractor to waive or not to waive the limit shall not be
subject to the TRICARE appeals process.