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.
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.