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 Contractor
s
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 non-covered 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 contractor 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 the contractor are not normally reviewed
by DHA on a case-by-case basis. However, DHA will review allowable
charge determinations of the contractor 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 upon 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, the contractor 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 upon a conversion factor.
2.2.4.1 When the current allowance
based upon a conversion factor is less than the previous allowance
based upon an actual profile, the previous profile amount is to
be used.
2.2.4.2 When the current allowance
based upon an actual profile is less than the previous allowance
based upon 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 non-specialty 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 upon different profiles. However, reimbursement for
the actual surgery shall be based upon 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 upon conversion factors are estimates of actual (but
unknown) “average” charges, their reliability is only as good as
the known, but often limited, data. The contractor shall exercise
extreme care in developing conversion factors. When beneficiaries,
physicians, and suppliers inquire regarding reimbursement based upon the
use of a conversion factor, the contractor shall use its best judgment
based upon 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 upon 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 shall ensure 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) 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 non-covered services. Non-participating
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 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 canceled 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 2.
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 shall
communicate 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.