(Medicare Claims Processing Manual)

A. Adjusted APC payment rate: $300.  B. Subtract the applicable deductible: $300 -  $100 = $200.  C. Multiply the remainder by the program payment percentage to determine the prelimin ary  Medicare payment amount: 0.7 x $200 = $140.    D. Subtract the preliminary Medicare payment amount from the adjusted APC payment rate less any unmet deductible to determine the coinsurance amount, which cannot exceed the inpatient hospital deductible for the calendar year: $200 -  $140 = $60.   E. Calculate the final Medicare payment amount by adding the preliminary Medicare payment amount determined in step (C) to the amount that the coinsurance was reduced as a result of the inpatient hospital deductible  limitation.  $140 + $0 = $140.  In this case, the beneficiary pays a deductible of $100 and a $60 coinsurance, and the program pays $140, for a total payment to the provider of $300.  Applying the program payment percentage ensures that the program and the beneficiary pay the same proportion of payment that they would have paid if no deductible were taken.   If the annual Part B deductible has already been satisfied, the calculation is as follows:   A. Adjusted APC payment rate: $300.  B. Subtract the appl icable deductible: $300 -  0 = $300.  C. Multiply the remainder by the program payment percentage to determine the preliminary   Medicare payment amount: 0.7 x $300 = $210.   D. Subtract the preliminary Medicare payment amount from the adjusted APC payment ra te less deductible to determine the coinsurance amount.  The coinsurance amount cannot exceed the amount of the inpatient hospital deductible for the calendar year: $300 -  $210 = $90.   E. Calculate the final Medicare payment amount by adding the preliminar y Medicare payment amount determined in step (C) to the amount that the coinsurance was reduced as a result of the inpatient hospital deductible limitation: $210 + $0 = $210.  In this case, the beneficiary makes a $90 coinsurance payment and the program pa ys $210, for a total payment to the provider of $300.  EXAMPLE 2:   This example illustrates a case in which the inpatient hospital deductible limit on coinsurance amount applies.  Assume that the wage -adjusted payment rate for an APC is $2,000; the wage -adjusted coinsurance amount for the APC is $900; the program payment percentage is 55 percent; and the inpatient hospital deductible amount for the calendar year is $776.  The beneficiary has not yet satisfied any portion of his or her $100 Part B deductible .  A. Adjusted APC payment rate: $2,000.  B. Subtract the applicable deductible: $2,000 -  $100 = $1,900.  C. Multiply the remainder by the program payment percentage to determine the preliminary Medicare payment amount: 0.55 x $1,900 = $1,045.  D. Subtract  the preliminary Medicare payment amount from the adjusted APC payment rate less deductible to determine the coinsurance amount.  The coinsurance amount cannot exceed the inpatient hospital deductible amount of $776: $1,900 -  $1,045 = $855, but the coinsur ance is limited to $776.    E. Calculate the final Medicare payment amount by adding the preliminary Medicare payment amount determined in step (C) to the amount that the coinsurance was reduced as a result of the inpatient hospital deductible limitation ($8 55 - $776 = $79).  $1,045 + $79 = $1,124.  In this case, the beneficiary pays a deductible of $100 and a coinsurance that is limited to $776 and the program pays $1,124 (which includes the amount of the reduction in beneficiary coinsurance due to the inpatient hospital deductible limitation) for a total payment to the provider of $2,000.  For calendar year 2002, the national unadjusted copayment amount for an ambulatory payment classification (APC) is limited to 55 percent of the APC payment rate establishe d for a procedure or service.  In addition the wage -adjusted copayment amount for a procedure or service cannot exceed the inpatient hospital deductible amount for 2002 of $812.  These changes were implemented by changes to the OPPS Pricer effective for se rvices furnished on or after January 1, 2002.  40 - Outpatient Code Editor (OCE)  (Rev. 1107, Issued: 11- 09-06, Effective: 07-01-07, Implementation: 07-02-07)   The CMS incorporates new processing requirements in the Outpatient Code Editor (OCE) by releasing a new or updated version of the software each quarter.  The OCE instructions and specifications are utilized under:   The OPPS for hospital outpatient departments, Community Mental Health Centers (CMHCs) and for limited services provided in a Home Health Agency (HHA) not under the Home Health Prospective Payment System or to a hospice patient for the treatment of a non- terminal illness;   The non- OPPS for Indian Health Service Hospitals, Critical Access hospitals (CAHs), Maryland hospitals, hospitals located in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands.  In addition claims from Virgin Island hospitals with dates of service 1/1/02 and later, and hospitals that furnish only inpatient Part B services with dates of service 1/1/02 and later are edited in the non- OPPS OCE; and   All other outpatient institutional claims.   40.1 - Integrated OCE (July 2007 and Later)  (Rev. 1590, Issued: 09- 08-08, Effective: 10-01-08, Implementation: 10-06-08)  Effective for claims with dates of service July 1, 2007 and after, the non- Outpatient Prospective Payment System (OPPS) Outpatient Code Editor (OCE) will be integrated into the OPPS OCE.  This integration will result in the routing of all institutional outpatient claims, including non-OPPS hospital claims, through a single integrated OCE eliminating the need to update two separate OCE software packages on a quarterly basis.  The integrated OCE does not change the current logic that is applied to outpatient bill types that already pass through the OPPS OCE software.  It merely expands the software usage to include non- OPPS hospitals.  This new software product will be referred to as the Integrated OCE (I/OCE).   The I/OCE instructions and specifications are provided via Recurring Update Notifications.  They are also posted on the Web at the following address: http://www.cms.hhs.gov/OutpatientCodeEdit/02_OCEQtrReleaseSpecs.asp#TopOfPage  40.1.1 - Patient Status Code and Reason for Patient Visit for the Hospital OPPS  (Rev. 243, Issued 07-23-04, Effective: January 1, 2005/Implementation: January 3, 2005)  In order to ensure that OPPS claims are being submitted and processed to payment in accordance with OPPS payment policy, CMS must be able to monitor information reported by hospitals on Form CMS-1450 in Form Locators (FLs) 22 (Patient Status) and 76 (Reason for Patient Visit).  This instruction requires the  Shared Sys tem Maintainer to make changes to ensure that the information in FLs 22 and 76, from claims submitted on bill type 13x, is passed to the OPPS Outpatient Code Editor (OCE) and to the Common Working File (CWF).  This instruction also requires the Common Working File Maintainer to make changes to ensure that the information in FL 76, from claims submitted on bill type 13x, is passed to the National Claims History (NCH) files.   40.2 - Outpatient Prospective Payment System (OPPS) OCE (Prior to July 1, 2007)  (Rev . 1107, Issued: 11- 09-06, Effective: 07- 01-07, Implementation: 07- 02-07)  The OPPS OCE performs the following two major functions:    Edit claims data to identify errors and return a series of edit flags; and    Assign an ambulatory payment classification (APC) number for each service covered under OPPS and return information to be used as input to the Pricer program.   Effective January 5, 2003, Medicare contractors will be receiving subsequent quarterly updates t o these Outpatient Code Editor Specifications through a Recurring Update Notification.  40.2.1 - Patient Status Code and Reason for Patient Visit for the Hospital OPPS  (Rev. 1107, Issued: 11- 09-06, Effective: 07- 01-07, Implementation: 07- 02-07)  In order t o ensure that OPPS claims are being submitted and processed to payment in accordance with OPPS payment policy, CMS must be able to monitor information reported by hospitals on the claim including Patient Status and Reason for Patient Visit. This instructio n requires the Shared System Maintainer to make changes to ensure that the information from claims submitted on bill type 13x, is passed to the OPPS Outpatient Code Editor (OCE) and to the Common Working File (CWF).  This instruction also requires the Comm on Working File Maintainer to make changes to ensure that the information regarding Reason for Patient Visit is passed to the National Claims History (NCH) file.   40.3 - Non-OPPS OCE (Rejected Items and Processing Requirements Prior to 7/1/07  (Rev. 1107, I ssued: 11 -09-06, Effective: 07- 01-07, Implementation: 07- 02-07)  The following error types will be rejected or returned to the provider for development. (Numbers correspond to the Non - OPPS OCE documentation.)   1. Invalid Diagnosis or Procedure Code   The OCE checks each diagnosis code against a table of valid ICD -9-CM diagnosis codes and each procedure code against a table of valid HCPCS codes. If the reported code is not in these tables, the code is considered invalid.   For a list of all valid ICD -9-CM co des see International Classification of Diseases, 9th Revision, Clinical Modification (ICD -9-CM), Volume I (Diseases), The CMS approved ICD -9-CM addenda, and new codes are furnished by the A/B MAC (A) for each hospital.  For a list of valid HCPCS codes s ee Physicians Healthcare Current Procedural Terminology, 4th Edition, CPT and CMS Healthcare Common Procedure Coding System (HCPCS).  Providers should review the medical record and/or fact sheet and enter the correct diagnosis and procedure codes before returning the bill.   2. Invalid Fourth or Fifth Digit for Diagnosis Codes   The OCE identifies any diagnosis code that requires a fourth or fifth digit that is either missing or not valid for the code in question.   For a list of all valid fourth and fift h digit ICD -9-CM codes see International Classification of Diseases, 9th Revision, Clinical Modification (ICD -9-CM), Volume I (Diseases), CMS approved ICD -9-CM addenda, and new codes furnished by the A/B MAC (A).  Providers should review the medical record and/or fact sheet and enter the correct diagnosis before returning the bill.  3. E-Code as Principal Diagnosis   E codes describe the circumstances that caused an injury, not the nature of the injury, and therefore, are not used as a principal diagnosis.  E -codes are all ICD -9-CM diagnosis codes that begin with the letter E.  For a list of all E -codes, see International Classification of Disease, 9th Revision, Clinical Modification (ICD -9-CM), Volume I (Diseases).  Providers should review the medical re cord and/or fact sheet and enter the correct diagnosis before returning the bill.  4. Age Conflict   The OCE detects inconsistencies between a patients age and any diagnosis on the patients record.   5. Sex Conflict  The OCE detects inconsistencies between  a patients sex and a diagnosis or procedure on the patients bill.  6. Questionable Covered Procedures   These are procedures that may be covered, depending upon the medical circumstances.  For example, HCPCS code 19360 Breast reconstruction with muscle or myocutaneous flap is a condition that is not covered when performed for cosmetic purposes.  However, if this procedure is performed as a follow -up to a radical mastectomy, it is covered.   7. Noncovered Procedures   These are procedures that are not payable.  The A/B MAC (A) denies the bill.  8. Medicare as Secondary Payer -  MSP Alert (versions V1.0 and V1.1 only)   Diagnoses codes that identify situations that may involve automobile medical, no- fault or liability insurance.  The provider must determine the availability of other insurance coverage before billing Medicare.   9. Invalid Age   If the age reported is not between 0 years and 124 years, the OCE assumes the age is in error.   If the beneficiarys age is established at over 124, enter with 123.   10. Invalid Sex