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.