American Journal of Nursing 2000 June Volume 100, Issue 6

Why Care about Medicare Reimbursement?

Reexamining the payment boundaries.

So you think the idea of billing for registered nursing services sounds far-fetched? If so, think again. Accord- ing to the January issue of Ohio Nurses Review, registered nurses in the early 20th century negotiated their daily fee directly with patients. More recently, the passage of the landmark Omnibus Reconciliation Act of 1989 and the Balanced Budget Act of 1997 signaled a victory for advanced practice nurses (APNs), allowing them to receive direct reimbursement for services provided to Medicare enrollees.

DEMONSTRATING VALUE

These legislative victories have led to far more than the obvious economic benefits for nurses and health benefits for patients. Now each time an APN uses a current procedural terminology (CPT) code - a five-digit number that describes the service or procedure and the resources used to provide the care - on a patient's billing sheet, a database could, ideally, amass information that would demonstrate the added value of APN practice.

“Until they were able to directly bill for services, APNs were invisible providers,” said Eileen Sullivan-Marx, PhD, RN, FAAN, a Pennsylvania State Nurses Association member. “Now, as the competitive field within the health care industry narrows, they must provide supportive data to secure their profession's future.”

Gaining recognition and gathering supporting documentation is not an easy task in a system that still recognizes physicians as the primary providers of care. For example, a managed care plan tracking children with asthma may reveal that a group of patients—such as those with initial visits coded to include patient education and family counseling—have records that show better treatment compliance, fewer acute care visits, and lower rates of hospitalization than those who didn't receive those supplemental services. During subsequent visits, additional education may have been provided, and social assessments and evaluations of patients' responses to medication made. The managed care company may assume that the physician is responsible for the provision of care and improved outcomes; yet the care may actually have been provided by a nurse practitioner. The APN's services, however, cannot be recognized unless the managed care plan allows APNs direct billing privileges and the opportunity to document their services.

“The ability to directly bill is of benefit to APNs and their patients,” said Michigan Nurses Association member Candia Laughlin. “Corporate decisions that determine who provides care will be based on quantitative data demonstrating best outcomes. With fierce competition for health care dollars, the provider group with the best record will win.”

This also applies to RNs. Institutions and ambulatory care facilities that employ RNs determine the value of nursing services. However, they're facing mounting revenue losses because of the slashed reimbursement rates imposed by the Balanced Budget Act. While these facilities search desperately for economic balance, they rarely include nurses in the redesign process. As a result, decisions to reduce nurse staffing for inpatient and ambulatory services are based on financial data and bottom lines that don't reflect the value or opinions of professional RNs. It's crucial that RNs, like APNs, be able to demonstrate the value of their professional practice, to both employers and the federal government.

THE MEDICARE SYSTEM

Created in 1965, Medicare is composed of two programs: Part A, which covers inpatient and some other institutional services, home health care, and hospice; and Part B, which covers the professional services of physicians, APNs, and other Medicare health care providers. Medicare Part B services are provided in various settings, including the office, in- and outpatient hospitals, rural health clinics, and ambulatory surgical centers. Part B also covers clinical laboratory and diagnostic services as well as durable medical equipment.

Traditionally, Part A and Part B reimbursed based on the usual and customary charges for the services provided. In 1983, escalating health care costs prompted Congress to demand dramatic reform, which led to the restructuring of Medicare Part A and the creation of diagnostic-related groups (DRGs). Whereas this system's ability to contain costs continues to be debated, documented outcomes from the DRG system include shorter hospital stays and the movement of many inpatient services to outpatient settings.

In 1992, the Health Care Financing Administration (HCFA) implemented a resource-based relative value reimbursement system for Part B services; services that are more difficult to perform or more time-consuming typically have higher relative values. Each time a Medicare provider performs a Part B service, the CPT code is used for reporting and billing. More than 7,000 CPT codes are currently in use.

A fee for each CPT code is established by the HCFA using a resource-based relative value scale, which factors in the professional work, practice expenses, and malpractice insurance associated with the service or procedure. The relative work value for each CPT code is determined by the HCFA, the American Medical Association's Relative Value Update Committee (RVUC), and public comment. The ANA has representatives on the advisory committee to the RVUC and the CPT editorial panel; both groups update the CPT list by developing new codes and refining existing ones as practice and delivery systems change. Payments are computed by multiplying a CPT code's relative value by a constant dollar amount, called the conversion factor. For example, if a procedure has a relative value of 10 and the conversion factor is $30, the fee for the service would be $300.

MAKING IT WORK FOR YOU

The RVUC is currently reevaluating the practice expense component of CPT codes. The outcome of this refinement process will directly affect the employment and use of RNs working in practice sites or ambulatory care settings in which Part B professional services are delivered. Wrapped into the practice expense component of the CPT code is “clinical labor,” which explicitly identifies the value of the nursing component (that is, the amount of time spent in each service or procedure).

“Registered nurses represent about $12 billion annually in the practice expense component of the Medicare fee schedule,” said Sullivan-Marx, who represents the ANA on the RVUC advisory committee. “We urgently need to identify the work that RNs do for Medicare beneficiaries.”

Unless the contributions of RNs to Medicare beneficiaries can be accurately quantified, the repercussions are grave for both the profession and patient care. Specifically, inaccurate identification of the types of clinical labor and lengths of time involved cause some codes in the CPT formula to be assigned lower reimbursement rates, therefore reducing their payment fees. Further, RNs are being replaced by unlicensed staff in some practice settings because the appropriate clinical providers (nurses) have not been identified.

“Each proposed edit to practice expense is carefully scrutinized, and our physician colleagues want to assure us that no medical specialty receives more favorable reimbursement than another,” said Laughlin, who is the only nurse on the AMA Practice Expense Advisory Committee. “Nursing has an exciting opportunity to describe what work professional nurses do in each procedure, but we need credible data from nurse experts in a variety of practice settings.”

The ANA will be working with other professional organizations to determine accurate practice expenses for a number of codes during the ongoing evaluation of the clinical labor component. To learn more about this and how you can participate, contact Sheila Abood at (202) 651-7093

Also, don’t miss the ANA’s new publication on Medicare reimbursement, scheduled to
be released this summer. For more information, go to www.nursebooks.org or call (800) 637-0323 after July 1, 2000.

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