Refreshingly Simple – Texas Hospital Offers Contract to Local Employer

mollyBy Molly Mulebriar

We like the simplicity of the offer. It’s refreshing and a good starting point……………..But a 50% discount off an inflated number can be anything you want it to be and 315% of Medicare seems a little outrageous……………..

Below is a contract offer made recently by a Texas hospital for a local employer group we work with. The inpatient portion is tied to Medicare reimbursement while the outpatient portion is tied to egregious “sticker prices” that have no relationship with costs, are hidden and secretive numbers that can change with the wind, 24/7.

A 50% discount off an inflated number can be  anything you want it to be…………This particular hospital’s outpatient charges equate to 636% of Medicare (Source: CMS ) so a 50% discount means the plan sponsor will pay about 315% of Medicare for outpatient services, or twice as much as inpatient services.

We like the simplicity of the offer. It’s refreshing and a good starting point.

Contract Offer:

Inpatient:

150% of MS DRG using MS DRG* Reimbursement Methodology

Outpatient:

50% discount from Hospital’s Billed Charges

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* MS DRG Reimbursement Methodology (applicable to Inpatient Services): These payments are intended to mirror the payment mechanism that Medicare would pay to the hospital multiplied by the factor/percentage stated above (The Medicare payment includes without limitation, DRG, outlier payments, GME, IME, Disproportionate Share Hospital, Capital Pass Through and any other compensation made by Medicare).

Exclusions (Applicable to Inpatient and Outpatient Services):

Excluded items will be recognized from the following revenue codes and reimbursed per the following:

Surgical implants, prosthetics and orthotics properly billed in accordance with nationally recognized billing standards under revenue code:

  • 274 (prosthetic/orthotic devices),
  • 275 (pacemakers),
  • 276 (intraocular lens),
  • 278 (other implants) or
  • 279 (Other supplies/devices)

(collectively “Implant”) shall be reimbursed as follows:

Within each revenue code identified above, Hospital shall be reimbursed for the Implants billed under that revenue code at sixty percent (60%) discount from Hospital’s Billed Charges.

Exclusions (Applicable to Inpatient and Outpatient Services):

Drugs properly billed in accordance with nationally recognized billing standards under revenue code

  • 634 (Erythropoietin (EPO) <10,000 units),
  • 635 (Erythropoietin (EPO) >10,000 or more units), or
  • 636 (drugs requiring detailed coding) when billed with revenue code 331, 332,

or 335

 Applicable J Codes are: J9000-J9999; J7190-J7195 and J2505

(collectively “High Cost Drugs”) shall be reimbursed as follows:

Within each revenue code identified above, Hospital shall be reimbursed for the High Cost Drugs billed under that revenue code at sixty percent (60%) discount from Hospital’s Billed Charges.