The days of the 80/20% split with a $500.00 deductible are gone. Nowadays, things are a bit more complicated when it comes to medical reimbursement.
The Reagan Administration came up with something called a DRG - Diagnostic Reimbursement Grouper for payment of Medicare inpatient hospital claims. That is how many, of not most hospital bills are paid now. Medicare, Medicare Advantage Plans, and most other government payers use this method. The problem with it is that it is extremely complicated and almost impossible to explain. But here goes:
Diagnoses are all grouped together into tables under the DRG program. There are also tables of procedures. When a medical bill gets submitted to Medicare, they cross-reference the diagnosis against the procedure and come up with a figure. This figure is known as the DRG (reimbursement). What this means in everyday terms is that you and I can go into the hospital for the same procedure, but because our diagnoses are different, they will be paid at two different rates. Also, we can go in with the exact same identical diagnosis, but if we have different procedures, the result will be the same - different reimbursement amounts.
Some private insurance companies will enter into contracts with their regular providers. Some will arrive on a per diem (per day) payment arrangement. This means that a set amount for each hospitalization day is agreed upon in advance.
Outpatient uses an APC - Ambulatory Payment Classification. Basically it is the same thing. It is a calculation based on the procedures and combinations of procedures. The only difference is that the diagnosis plays no part in reimbursement for outpatient.
It is well worth your time to explore these payment options in your billing career. You will be seeing them and using them a lot!
Until next time:
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Author, Medical Billing, Coding, and Reimbursement
A medical billing professional for over 30 years now, I have seen a lot of changes in this field, and there are a lot more on the horizon. Follow me as we see what they mean and for who.