Payment strategies: Understanding the payment system for hospital-owned wound care clinics

Advances in Skin & Wound Care, Jan/Feb 2001 by Schaum, Kathleen D

The Balanced Budget Act of 1997 mandated that hospital outpatient departments shift from a cost-based reimbursement system to a capitated per-visit payment system. That system paid for the facility or treatment room use, sterile supplies (such as surgical dressings), and procedures. The main goal of the new payment system is to eliminate the inappropriate high copayment charges to Medicare beneficiaries. Beneficiary copayments were billed based on 20% of the hospital-determined charges. Under the new payment system, the amount paid by the beneficiaries is frozen until the total copayment by the beneficiaries equals no more than 20% of the median national charge for covered services.

On August 1, 2000, the new hospital outpatient payment system was implemented. Hospital-owned wound care clinicians are required to learn an entirely new way of documentation, coding, and billing. This is an enormous task for clinicians who have not been trained to use CPT codes, modifiers, and accompanying documentation rules and who have not been required to track cost of care and actual revenue collected.

The following table provides an overview of the work that wound care clinicians must perform to implement the new prospective payment system in their respective clinics. The lefthand column of the table describes the major components of Medicare's Hospital Outpatient Department Prospective Payment System that affect the wound care clinic. The right-hand column suggests practical strategies clinicians should employ to ensure the financial success of the wound care clinic.

All Current Procedural Terminology (CPI) 5-digit numeric codes, descriptions, numeric modifiers, instructions, guidelines, and other material are @2001, American Medical Association.

Kathleen D. Schaum, MS

Kathleen D. Schaum, MS, is Director of Strategic Business Development, Wound Care Strategies, Harrisburg, PA. Ms Schaum can be reached through her E-mail address: kdschaum@wound carestrategies.com. Information on reimbursement is provided as a service to our readers but does not constitute, guarantee, or warranty that payments will be provided. Providers are responsible for case-by-case management of qualifications for reimbursement.

Editor's note: When the Balanced Budget Act of 1997 was signed, reimbursement specialist Kathleen D. Schaum, MS, discussed the impact on skin and wound care in an article entitled "From 'Reimbursement' to 'Wound Care Management'." At the time, few wound care clinicians believed that they would be affected. As 2001 begins, however most health care providers are affected-the Medicare program has switched them from a cost-reimbursed system to some form of prospective payment system. Skin and wound care providers, therefore, must be proactive in developing strategies to achieve the clinical and economic outcomes expected by patients and payers.

In this new column, Ms Schaum will assist skin and wound care providers by covering payment strategies for wound management throughout the continuum of care. She will also answer frequently asked questions about payment issues. Submit your questions in writing or by calling: Kathleen D. Schaum, MS, 6491 Rock Creek Dr, Lake Worth, FL 33467; phone: 561-963-7092.