Payment and Coverage in O&P

Where does money in an O&P clinic come from?

1. customer

2. payer

Customer

• customers have the ability to negotiate services/fees with partners such as O&P businesses

• entity that orders care for a patient and pays for the services/device provided

• terms of payment agreed upon in negotiated contract between O&P practice and customer

Who is the Customer?

hospital, SNF, worker’s compensation, VA

Payer

• entity with a set code/fee schedule for services/products

• entity who pays for patient services but is not the ordering provider

• reimbursement is determined by a fixed fee schedule and compliance with coverage policies

Who is the Payer?

Medicare, Medicaid, TRICARE, Commercial insurance, and other healthcare insurances

Public Payers

government programs like: Medicare, Medicaid, or Veterans Health Administration

Private Payers

Commercial like: United Healthcare, Anthem, Aetna, Cigna, Humana, BCBS, etc.

What are the key differences between public and private insurance?

• funding

• eligibility

• provider choice

• cost-sharing

Medicare Facts

Federal health insurance program for people age 65+ OR with certain disabilities.

• added to the Social Security Program in 1965

• consists of several different parts

• complex and controversial program

• funded by payroll taxes

• beneficiaries pay for some basic coverage, deductibles and gaps in coverage but generally low cost

Medicare Eligibility

• US citizen or 5 year permanent resident

• 65 yrs or older

• under 65 with disabilities or people of any age with End-Stage Renal Disease

Medicare Enrollment

• 3 months before your birth month (when you turn 65) to 3 months after it

Medicare Part A

Hospital Insurance

• original Medicare through the federal government

Medicare Part B

Medical Insurance

• original Medicare through the federal government

Medicare Part C

Medicare Advantage/Replacement

• bundled plans that include part A, part B, and usually part D from a private insurance company

Medicare Part D

Prescription Drug Coverage

• from a private insurance company

Medicare Supplement Plan

Medigap

• will help fill some of the gaps that Original Medicare doesn’t cover

• additional insurance that you can buy from a private company

• helps pay your share of (out of pocket) costs

O&P services are billed under Medicare Part ____.

B

Medicare Part A: Hospital Insurance

• Medicare pays the facility

• often single bundled payment using a Prospective Payment System (PPS)

• most O&P services are often considered part of the bundled payment

• SNF/hospital becomes the customer with payment and coverage dictated by contract negotiated between parties (i.e. O&P business and facility)

Three parts of Medicare Part A: Hospital Insurance

1. Inpatient Hospital Care

• inpatient stay classified into diagnosis related groups (DRGs)

• DRG determines how much hospital is paid for entire stay

• all O&P devices consolidated into payment, no carve out

2. Skilled Nursing Facility Care

• only “Step Down Care” (Sub Acute Hospital Care)

• specific eligibility

  • requires 3 day hospital stay prior to SNF care and subject to 100 days of coverage

    • per day payments

• PPS called the Patient Driven Payment Model (PDPM) based on clinical presentation

• custom prostheses are not subject to SNF consolidated billing

3. Hospice

Medicaid

joint federal and state public program

Medicaid Eligibility

• people with significant needs including pregnant women; children, especially those with special needs; disabled people; and elderly people, including those who need long term care services and support

• income below the federal poverty level

  • $15,060 for individual (2024)

Private or Commercial Insurance

Offered in both individual and group plans

• individual plans purchased directly from insurance company or through the Health Insurance Marketplace

• group plans provided through employer

Higher patient cost sharing, broader access to service and providers.

• deductible

• co-insurance

• annual out of pocket limits

Deductible

an amount an individual policyholder must pay before the insurance company will pay on their behalf

Co-insurance

percentage of costs of a covered health care service policyholder pays after the deductible is paid

Annual Out of Pocket Limits

highest amount an individual or family must pay in a plan year before the insurance plan pays 100% of the costs

Veterans Health Administration (VA)

All veterans enrolled in the VA health care system are eligible for O&P devices.

O&P provided directly by VA-employed CPOs OR indirectly through contracted O&P clinics.

Service members, active or retired, can have both VA benefits and TRICARE.

VA

healthcare system and payer for veterans

TRICARE

public health insurance for active or retired members of service and their families

Worker’s Compensation

• state mandated insurance program providing benefits to employees who have suffered a job-related injury or illness

• often managed by 3rd party organizations serving as intermediary (ex. One Call Care Management, CorVel)

SNF and Hospitals

• facilities can become pay sources

  • patients are on Medicare Part A stay or when payers using similar bundled payment system

• financial responsibility and billing can be complex and misunderstood

  • 2 day rule

  • codes not subject to SNF consolidated billing

• billing and reimbursement dictated by contract between facility and O&P business

What is the 2 day rule?

allows O&P to bill Medicare Part B while on a Part A stay as long as the pt is discharged in 2 days to HOME not a SNF

Individual patient

Non covered services

• Advanced Beneficiary Notice (ABN) required to collect money from Medicare beneficiary

• common for other payer policies to mandate similar waivers prior to collecting money directly from a beneficiary

• responsibility of provider (O&P business) not beneficiary (patient) to know the insurance policy and covered services

Deductibles or co-insurance

Coverage

How and when will an item or device be covered by a pay source?

It usually start with Medicare

• many insurers follow Medicare policy to set own

  • recognized as benchmark for industry

  • highly regulated Federal program

  • evidence based policy

• clinicians must be informed on policy to properly code

Social Security Act (SSA)

• passed in 1935, establishing Social Security

• Medicare added in 1965

• sets the groundwork for coverage

• coverage can be vague

National Coverage Determination (NCD)

• policies created by CMS that grant, limit, or exclude coverage

• more specific than the SSA

• apply nationally

• developed and published by CMS through evidence based processes

• few NCDs relevant to O&P

Medicare Coverage Partners

DME MAC - Durable Medical Equipment Medicare Administrative Contract

• private insurance company contracted by Medicare to process Durable Medical Equipment, Orthotics, and Prosthetics (DMEPOS) claims and develop policy

Local Coverage Determinations (LCDs): what is medically necessary? what is the coverage criteria?

• difficult to change requiring public meetings and comments

Policy Articles: provides statutory limitations on coverage and coding guidelines

• more readily updated and changed - do not require public comment

DME MACs

• organized by geographic region (A, B, C, and D)

• LCDs are effective only within the issuing region

Non-Medicare Coverage

• policy documents exist for most payers

• follow the guideline outlined in the specific pay source policy you are working with

• when policy is non-specific or silent, follow Medicare rules