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Speak the Language: Know Common Medicare Reimbursement Terms

The healthcare field is overrun with industry-speak, jargon and acronyms. Navigating the constantly evolving area of Medicare reimbursement is challenging enough; specialized vocabulary only add to the complexity. Build your familiarity with these common terms.

Note: you will notice that these terms are not listed alphabetically; this is because each requires knowledge of other terms. We’ve presented them in order to build your knowledge.

CMS: The Centers for Medicare & Medicaid Services is a federal agency under the umbrella of the US Department of Health and Human Services. One of the  CMS’s most pressing functions is to administer the Medicare program.

PPS: The prospective payment system provides payment to hospitals that deliver services for Medicare  patients. The payment amount is based on a national average. One factor that influences the amount is the patient’s condition and treatment strategy. Another is the market conditions (more on that below).

IPPS: The in-patient prospective payment system is designed to reimburse short-term acute-care hospitals that provide in-patient care for Medicare recipients.

Medicare Wage Index: Specific market conditions factor into PPS as well. Under the Social Security Act, standardized amounts for Medicare payments must be adjusted to account for differences in wage levels relative to the geographic area in which a hospital operates. This may also be known as the Area Wage Index, or AWI.

DRG: Diagnosis-related group refers to a system of classifying in-patient stays based on diagnoses to ensure appropriate payment. The DRG payment factors in the diagnosis and hospital resources necessary to treat the patient.

CBSA: Core-based statistical areas are used to ensure Medicare claims are filed accurately. CBSAs also use the patient’s zip code to verify applicable incentives (e.g. Medicare Home Health Rural Add-On).

DSH: Disproportionate Share Hospital programs enable hospitals to recoup at least partial compensation for treating indigent patients.

Form S-10: Hospitals file data on uncompensated and indigent care on Form S-10.

There are, of course, many more acronyms and terms to learn. If you need assistance, do not hesitate to enlist the help of R-C Healthcare Management.


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