Medicare Part A and Part B - Essay Example

A 69-year-old woman was admitted to hospital following an incident involving nasal trauma. She spent 70 days in hospital, which was followed by 30 days in a skilled nursing facility. She was treated at a large hospital, General Hospital, in the San Francisco area. This patient held Medicare insurance, and as a result, calculations needed to be made as to the costs incurred in the treatment so the correct bills could be sent to Medicare to ensure that all the parties involved could receive payment.

The fact that the patient here lives in a large urban area will have a significant effect on the Medicare patient and the cost of the treatment to the hospital. To reflect this fact, all the calculations found below will have to incorporate a value (the national large urban standardized amount and the labor related large urban standardized amount, for example) to correctly calculate the claims. There is also a geographic cost adjustment factor, which in this case needs to be relevant to San Francisco, which needs to be incorporated into calculations to ensure that the costs incurred by Medicare are relevant to the treatment area in which the patient lives.

Of course, the wages received in this area will be different to in other areas of the US and these are also incorporated into the federal operating payment incurred. The skilled nursing facility is also in this area and thus will be subject to the same kind of geographic adjustment as the General Hospital claim. In this case, San Francisco is one of the more expensive areas of the US in which to be treated (Medicare, 2010) and as such the costs will reflect this fact and may seem excessive to someone receiving the same treatment in a rural area in a smaller hospital.

Firstly, the federal operating payment with IME and DSH needed to be calculated. To calculate this, several values need to be found and incorporated; DRG relative weight, labor related large urban standardized amount, San Francisco CBSA wage index, nonlabor related national large urban standardized amount, cost of living adjustment and the IME and DSH values (Medicare, 2010). These can all be found on the Medicare website (Medicare, 2010) and change on a regular basis, meaning that all the values need to be checked relative to the time in which the incident occurred.

After this value was found, the federal capital payment with IME and DSH needs to be calculated, which similarly relies on several values which are likely to change. These values are DRG relative weight, federal capital weight, large urban add-on, geographic cost adjustment factor, COLA and IME and DSH (U.S. Department of Health & Human Services (2010)). After this, operating and capital costs can be calculated by finding out the ratio of billed charges and operating costs. Following these calculations, the operating and capital outlier threshold can be found (Centers for Medicare and Medicaid Services,2010).

This value relies on the CCR (capital cost ratio), which evaluates the appropriate rate and success of the managed care contracting. The CCR is found by dividing the net revenue from a plan by the expenses from delivering care (in this case, the hospital stay and skilled nursing facility stay following nasal trauma in our patient). In most hospitals, the CCR for Medicare patients is 70-80% (U.S. Department of Health & Human Services, 2010), and they only comprise around 50% of the revenue for the hospital.

This means that the cost of providing care to these patients is somewhere between 20-30% more than the amount received from Medicare (Wilk & Phillips 2008). Due to this factor, hospitals should ensure that privately paying customers are charged for this amount to avoid extra costs from Medicare patients who may not be able to cover the excess. The skilled nursing facility has different CCR values and will thus require an entirely different calculation to ensure that all costs are covered by Medicare and the patient in this example.

The above calculations all need to be repeated for the above patient. However, the physician reimbursement calculations do not need to be calculated for this facility (U.S. Department of Health & Human Services, 2010). The values above give values for which the facilities will receive from Medicare. The next step in determining health care costs and reimbursements is to calculate how much the involved physicians will require by way of payment (Medicare, 2010). There are various different values for the work provided by the physician.

Work has an RVU of 27.45, Practice Experience has an RVU of 43.05, and Malpractice has an RVU of 10.32. These are related to three different types of physician; the participating physician, the non-participating physician who accepts assignments on a case-by-case basis, and the non-participating physician that does not accept assignment. In this case, we are not given details on which physician is relevant in the case of our patient, and thus costs for the reimbursement of all three types of physician need to be calculated to give an accurate picture of the situation.

To conclude, there are several different calculations involved in knowing exactly how to claim from Medicare for a patient, and in this case there are two facilities requiring payment from Medicare (and the patient, in the case of excess charges needing to be paid by the patient) and so the process is fairly lengthy. Additionally, there are factors such as the physician reimbursement which need to be calculated also, relevant to which type of physician was involved in the case. All of these are reliant on several different factors; geographic, hospital-based, care given, type of facility, and many more which can all be found on the Medicare website.

Works Cited & Bibliography Wilk, S., Phillips, R. Jr., (2008). Medicare's (Un)sustainable Growth Rate. Family Practice Management, 15 (5); pg. 9. Retrieved on July 26, 2010 from Proquest. Coulam, R. F. and Gaumer, G. L. (1991). Medicare's Prospective Payment System: A Critical Appraisal. Health Care Financing Review, pg. 45, 33 pgs. Retrieved on July 26, 2010 from Proquest. Fisher, C. R. (1992). Trends in total hospital financial performance under the prospective payment system. Health Care Financing Review, 13 (3), pg. 1. Retrieved on July 26, 2010 from Proquest.

Centers for Medicare and Medicaid Services (2010). Medicare Information resource. Retrieved on July 26, 2010 from http://www.cms.hhs.gov/ Centers for Medicare and Medicaid Services (2010). Acute Inpatient Prospective Payment System Outlier Payments Retrieved on July 26, 2010 from http://www.cms.hhs.gov/AcuteInpatientPPS/04_outlier.asp#TopOfPage U.S. Department of Health & Human Services (2010), Medicare premiums and coinsurance rates for 2010 Retrieved on July 26, 2010 from http://questions.medicare.

gov/cgi-bin/medicare.cfg/php/enduser/std_adp.php?p_faqid=2260 Medicare (2010). Your Medicare Benefits. Retrieved on July 26, 2010 from http://www.medicare.gov/Publications/Pubs/pdf/10116.pdf.