1st Edition

Prospective Payment Systems

ISBN 9781439873014
Published February 15, 2012 by Productivity Press
219 Pages 4 B/W Illustrations

USD $74.95

Prices & shipping based on shipping country


Book Description

The third book in the Healthcare Payment Systems series, Prospective Payment Systems examines the various types of prospective payment systems (PPS) used by healthcare providers and third-party payers. Emphasizing the basic elements of PPS, it considers the many variations of payment for hospital inpatient and outpatient services, skilled nursing facilities, home health agencies, long-term hospital care, and rehabilitation facilities along with other providers.

The book describes the anatomy of PPS, including cost reports, adjudication features and processes, relative weights, and payment processes. It outlines the features and documentation requirements for Medicare Severity Diagnosis Related Groups (MS-DRGs), the Medicare Ambulatory Payment Classifications (APCs), Medicare HHPPS, Medicare Skilled Nursing Resource Utilization Groups (RUGs), and private third-party payers.

  • Provides a framework for understanding and analyzing the characteristics of any PPS
  • Discusses Medicare prospective payment systems and approaches
  • Includes specific references to helpful resources, both online and in print
  • Facilitates a clear understanding of the complexities related to PPS—covering specific topics at a high level and revisiting similar topics to reinforce understanding

Complete with a detailed listing of the acronyms most-commonly used in healthcare coding, billing, and reimbursement, the book includes a series of case studies that illustrate key concepts. It concludes with a discussion of the challenges with PPS—including compliance and overpayment issues—to provide you with the real-world understanding needed to make sense of any PPS.

Table of Contents

Introduction to Prospective Payment Systems
Preliminary Comments
Overview of Healthcare Payment Systems
Claims Filing and Payment
Deductibles and Copayments
Overview of Medicare Prospective Payment Systems
Private Third-Party Payer and Prospective Payment Systems
Payment System Interfaces
Healthcare Provider Use of Prospective Payment Systems to Set Charges
Summary and Conclusion

Healthcare Provider Concepts
          Non-Physician Practitioners and Providers
Special Hospitals with Specialized Prospective Payment Systems
Hospitals and Integrated Delivery Systems
Special Provider Organizations
     DME Suppliers
     Skilled Nursing Facilities
     Home Health Agencies
     Independent Diagnostic Testing Facilities
     Comprehensive Outpatient Rehabilitation Facilities
     Clinical Laboratories
     Ambulatory Surgical Centers
Summary and Conclusion

Anatomy of a Prospective Payment System
Necessary Elements
     PPS Coverage
     PPS Unit of Service
     PPS Classification Systems
     Developing Categories or Groups
     Determining Payment Amounts
     Unusual Circumstances for Additional Payments
     Special Incentives/Constraints
Coding for PPSs
Cost Reports
Hospital Chargemasters
Relative Weights
Conversion Factor
Chapter Summary

Medicare Severity Diagnosis Related Groups (MS-DRGs)
Historical Background
MS-DRG Design Features
     Unit of Service
     Classification System
     MS-DRG Categories
     MS-DRG Grouping
     MS-DRG Relative Weights
          Case-Mix Index (CMI)
          ICD-10 Coding: The Key for Optimizing MS-DRG Reimbursement
Conversion of M-DRGs to MS-DRGs
Payment Process
     Cost Outliers
     Special Types and Designations of Hospitals
Documentation Features
Additional Features for MS-DRGs
     3-Day Preadmission Window
     Post-Acute Care Transfer
     Present on Admission (POA)
Updating Process for MS-DRGs
Variations of DRGs
Compliance Considerations
Quality Initiatives and Electronic Health Records
Summary and Conclusion

Ambulatory Payment Classifications (APCs)
Historical Background
Challenges for Hospital Outpatient Prospective Payment
Ambulatory Patient Groups (APGs)
     Three-Day Window of Service
     Significant Procedure Consolidation
     E/M Service Bundling
APC Design and Implementation Parameters
     Medicare APC Coverage
     Encounter Driven
     APC Classification Systems: CPT and HCPCS
          CPT Codes and Modifiers
          HCPCS Codes and Modifiers
          National Correct Coding Initiative (NCCI) Edits
     APC Status Indicators (Sis)
          Composite APCs
          Global Surgical Package (GSP)
     Payment under APCs
     Special Payment Considerations
     APC Grouper/Pricer
     Deductibles and Copayments
The Provider-Based Rule
     Provider-Based Clinics
          Split Billing: 1500 plus UB-04
          Establishing Fee Schedules
          Billing Privileges
          Special Situations
Ambulatory Surgical Centers
Payment System Interfaces for APCs
APCs and the Federal Register Process
Quality Reporting and Compliance for APCs
Summary and Conclusion

Other Prospective Payment Systems
Skilled Nursing Facilities (SNFs)
     Classification and Grouping
     SNF Payment
     SNF Issues
Home Health
     Unit of Service/Unit of Payment
     Home Health Payment
Long-Term Care Hospitals (LTCHs)
     Classification and Grouping for LTCHs
     MS-LTC-DRG Pricer
     Other Features for the LTCH-PPS
Inpatient Rehabilitation Facilities
Inpatient Psychiatric Facilities (IPFs)
End-Stage Renal Dialysis (ESRD)
Private Third-Party Payer Utilization of PPSs
Summary and Conclusion

Conclusion and Endnote

Appendix A: Case Studies
     Chapter 1 Case Studies
     Chapter 2 Case Studies
     Chapter 3 Case Studies
     Chapter 4 Case Studies
     Chapter 5 Case Studies
     Chapter 6 Case Studies

Appendix B: Acronyms

View More



Duane C. Abbey, Ph.D., is a management consultant and president of Abbey & Abbey Consultants Incorporated. Based in Ames, Iowa, Abbey & Abbey specializes in healthcare consulting and related areas. His work in healthcare now spans more than 25 years, earned his graduate degrees at the University of Notre Dame and Iowa State University. Today he spends about half his time developing and teaching workshops (for students who affectionately quip that the Federal Register is his favorite reading material) and making presentations to professional organizations. He devotes the other half to consulting work that involves performing chargemaster reviews and compliance reviews, providing litigation support, and conducting reimbursement studies.

Dr. Abbey also uses his mathematical and financial background to perform assessments, develop complex financial models, and conduct various types of statistical work. His studies in the field of neurolinguistic programming have enhanced his ability to provide organizational communication facilitation services for healthcare organizations. He also provides litigation support services for attorneys representing healthcare providers in legal proceedings.

Dr. Abbey can be contacted by e-mail at [email protected]