Medicare‌ ‌Regulation,‌ ‌Documentation,‌ ‌and‌ ‌Finance

Written by Thomas Jorno

Nick Blonksi, UNM DPT ’21

Medicare is a federal health insurance program that contains four parts (A-D) and is accessible for individuals that are 65 years or older, younger individuals with disabilities, and people with end-stage renal disease, and ALS.1 Each part of Medicare’s insurance plan provides different types of coverage for members. Part A covers “hospital insurance” meaning inpatient hospital stays, care in skilled nursing facilities, hospice care, and home healthcare agencies.1-2 Part B covers “medical insurance” meaning it covers outpatient care, medical supplies, some doctor services, and preventative services.1 Part C and Part D are both optional programs for Medicare member. Part C is considered an advatage plan and works by having the patients covered through a different company that Medicare pays, regulations are still through Medicare still.2 Part D covers prescription drugs for the patient.2 During the 2018 calander year 18% of the population in the United States was covered by Medicare.3 With nearly a fifth of the population having Medicare and other private payers following Medicare rules and regulations it is important for all health care providers to be confident navigating the world of Medicare. 

Home Health care is covered by Medicare and Medicaid and falls under Part A of Medicare coverage. To be covered for Home Health Care criteria must be met to prove that the patient is homebound. The two criteria are that they must have an inability to leave the home and if they tried to leave the home it would require a lot of effort and be taxing to accomplish.4 On top of these criteria they also need to be under the care of a physician and the plan of care must be approved by the physician. As physical therapists many roles are expected in a home health care environment. Physical therapists use an outcome measure called the “OASIS” to assess the patient on the initial evaluation. This outcome measure looks at the patient’s overall health through a systemic approach, while also looking at the patient’s functional abilities.4 In January of 2020 Patient-Driven Grouping Model (PDGM) became the new payment model for home health and aims to use clinical characteristics and patient information to put the patients into 432 case mix payment groups.5 The PDGM utilizes 30 day periods and requires an updated OASIS at 60 days or when there is a significant change in the patient’s status. The PDGM only is used for payment in the patient has visits that are above Low-Utilization Payment Adjustments (LUPA) for the specific patient case-mix group. If the patients number of visits are below the LUPA the visits are billed per-visit.5 All home health agencies also participate in quality assurance performance improvement (QAPI) that provides insurance companies, the state, and the agency itself to compare the agency to national norms and know what they are doing well and what they need to improve on.4 Other measures that are used in home health agencies to monitor their effectiveness, and outcomes are the CASPER, 5 star, and PEPPER tools.4

In an acute care inpatient setting the Center for Medicare and Medicaid Services (CMS) lists rehabilitation as an option service. For inpatient acute care hospital settings that do provide rehabilitation and follow the CMS regulation that before treatment a plan of care needs to be put in place that includes diagnosis, type, amount, frequency, and duration of rehabilitation services. It is also required in the plan of care to have the anticipated goals for the patient. In acute care patients are put into Diagnosis Related Groups (DRG), based on what DRG the patient is in Medicare part A will put together a bundled payment plan that is given to the hospital.6 However DRG alone do not make up the reimbursment given to the hospital. Reimbursment is calculated by using a case mix index (CMI) that takes into account the DRG and severity of the illness, while also considered the patients co-morbidities and the resources that are required to treat the patient.2 A patient with a higher weighted CMI the reimbursment will be higher that is given to the hospital to cover the patients stay. If however the patient develops a hospital born secondary condition, such as a pressure ulcer, no new money will be provided and the hospital will have to eat the extra cost if it exceeds the reimbursment given through the DRG and CMI. With the reimbursment the hospital then can provide whatever care is needed to the patient, this includes all the follow-up care given to that patient. Through the bundle payment model PT alone does not generate money for the hospital from services provided, however as a valuable member of the treatment team can help patients discharge faster, decrease readmission through proper discharge, and increase patient satisfaction. It also important to remember that it matters where the patient is seen within the hospital as emergency rooms, and observational status patients are billed as outpatient and fall under Medicare Part B coverage.7 

Inpatient rehabilitation facilities (IRF) also follow along with acute care in having a predetermined payment amount through a bundle payment. This is determined by grouping patient cases into rehabilitation impairment categories, based off of diagnoses. Once in these groups patients are further grouped into cognition and functional groups and comorbidities are considered to place patients into four tiers.8 Based on what tier the patient is in the payment for that case increases or decreases. Other criteria considered for reimbursement is geographical wages, number of low income patients seen, and if there is resident training at the facility. IRFs also have to have 60% of their patients fall under 13 categories of diagnoses ranging from strokes and other significant neurological conditions to fractures of the femur.8 

In IRF the patient’s individualized plan of care must be completed by a physician with involvement from all team members that are part of the patients care team. The plan of care needs to be completed within 4 days of admission. IRF also requires the care team to have an initial team meeting within one week of admission and most meetings then occur weekly throughout the length of stay.8 Within IRF physicians are required to order all therapy services. For physical therapists the CARE tool is used to help support documentation and show the patient’s need for intensive rehabilitation by scoring the patient’s functional abilities on 17 functional activities. The Care Tool can be completed over a 3 day period at admission and at discharge for the patient.8 Group therapy services can be provided to the patient along with concurrent therapy when the therapist finds this appropriate. Regulations in IRF for group therapies are no more than 4 patients to 1 PT or 1 PTA at a time, and all the patients need to be doing the same exercises. Also patients should have no more than 25% of the patients therapy sessions can be group therapy.9

Outpatient physical therapy can fall under two different structural models. If the outpatient clinic is hospital affiliated it is considered a comprehensive outpatient rehabilitation facility (CORF) and requires a physician referral.9 The other model is a Private PT clinic that does not require a physician referral for Medicare. For both outpatient models Medicare pays through Part B and both require a certified POC.10 Outpatient clinics are paid by the services they provide through relative value units (RVUs) for the time spent on different current procedual codes (CPT) that outline different types of treatment interventions. Because of this outpatient clinics require the direct supervision of PTAs and eliminate the ability to bill for student lead services as they are not skilled.9 As an outpatient physical therapy clinic a plan of care must be written by the physical therapist and signed by a physician within 30 days of the initial evaluation to be certified with Medicare.10 The POC that is written must contain a PT diagnosis, long term treatment goals, type of treatment, amount, frequency and duration of PT services. The certified POC is valid for 90 days from evaluation unless the POC needs to be modified. Once either condition is met a new POC needs to be recertified.10 Within a POC a progress report is written to provide justification for treatment every 10th visit by the physical therapist. Lastly, Medicare requires a daily treatment note to be written to provide evidence of skilled treatment.10 For each patient a therapy cap of $2040 is alotted for the combination of PT and speech therapy services over a year. If a patient requires more service then is possible under $2040 justification is required from the therapist to show the medical necessity.

Overall physical therapy is typically covered through either Part A or Part B of Medicare. Home healthcare agencies, IRF, and skilled nursing facilities all fall under Part A of Medicare and are paid through a bundle payment that is based on the patients diagnosis, comorbidities, and functional impairments.9 This differs slightly from Inpatient Acute Care Hospitals, even though they fall under Part A, since only the diagnosis & comorbidities are considered for the bundle payment.9 CORF and Private PT Outpatient are covered by Part B of Medicare and are paided for by the services that are provided to the patient. Outpatient clinics have extra regulations to ensure that the services being provided are skilled. One is that supervision of PTAs needs to be direct instead of general like all other settings, and another is the inability to bill for services provided by PT techs and students.9-10 Medicare regulations, documentation, and billing are important to understand as they set the bar for insurances and account for nearly one fifth of insurance coverage in the United States.3

References:

1. “What’s Medicare?” Medicare, www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/whats-medicare. Retrieved 06/21/2020

2. Vallejo, Rose. “Insurance 101 & Introduction to Medicare.” PT 680-Administration and Supervision for Physical Therapists. PT 680-Administration and Supervision for Physical Therapists, 1 May 2020, Albuquerque, University of New Mexico Division of Physical Therapy.

3. “MDCR ENROLL AB 2 Total Medicare Enrollment: Total, Original Medicare, and Medicare Advantage and Other Health Plan Enrollment and Resident Population, by Area of Residence, Calendar Year 2018.” Centers for Medicare & Medicaid Services, www.cms.gov/files/document/2018-mdcr-enroll-ab-2.pdf. Retrieved 06/21/2020

4. Hastings, Lucas. “Home Health: Implications for the PT.” PT 680-Administration and Supervision for Physical Therapists. PT 680-Administration and Supervision for Physical Therapists, 9 June 2020, Albuquerque, University of New Mexico Division of Physical Therapy.

 5. “Centers for Medicare & Medicaid Services Patient-Driven Groupings Model.” Centers for Medicare & Medicaid Services, Abt Associates, www.cms.gov/Medicare/Medicare-Fee-for-Service-payment/HomeHealthPPS/Downloads/Overview-of-the-Patient-Driven-Groupings-Model.pdf. Retrieved 06/21/2020

6. “DRG Classifications and Software.” Centers for Medicare & Medicaid Services, 5 Nov. 2020, 6:09 PM, www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software. Retrieved 06/21/2020

7. Jarnagin, Forest. “Regulatory Issues in Acute Care and Supervision and Leadership .” PT 680-Administration and Supervision for Physical Therapists. PT 680-Administration and Supervision for Physical Therapists, 16 June 2020, Albuquerque, University of New Mexico Division of Physical Therapy.

8. Vallejo, Rose. “Inpatient Rehabilitation Facility (IRF) Medicare Regulation” PT 680-Administration and Supervision for Physical Therapists. PT 680-Administration and Supervision for Physical Therapists, 11 June 2020, Albuquerque, University of New Mexico Division of Physical Therapy.

9. Vallejo, Rose. “Outpatient Physical Therapy Private Practice Clinic Park B.” PT 680-Administration and Supervision for Physical Therapists. PT 680-Administration and Supervision for Physical Therapists, 18 June 2020, Albuquerque, University of New Mexico Division of Physical Therapy.

10. Vallejo, Rose. “Medicare – Part B Documentation.” PT 680-Administration and Supervision for Physical Therapists. PT 680-Administration and Supervision for Physical Therapists, 18 June 2020, Albuquerque, University of New Mexico Division of Physical Therapy.