Opic: CMS Reimbursement Methodologies Chapter 9 Includes Inf ✓ Solved

Opic: CMS Reimbursement Methodologies Chapter 9 includes inf

Opic: CMS Reimbursement Methodologies Chapter 9 includes information about CMS's reimbursement systems. Part of this system includes PAR and nonPAR physician charges.

1. Explain how reimbursement differs between PAR and nonPAR charges.

2. Include your answers to the Chapter Review problems (page 371, Green & Rowell):

a. PAR who bills Medicare: Submitted charge $75; Medicare physician fee schedule (MPFS) allowed $60; Coinsurance amount $12. Calculate: Medicare payment (80% of the allowed amount) and Medicare write-off (amount not paid by Medicare or beneficiary).

b. NonPAR who bills Medicare: Submitted charge $650; MPFS allowed $450. Calculate: Limiting charge (115% of MPFS allowed), Medicare payment (80% of MPFS allowed), Medicare write-off (amount not paid by Medicare or beneficiary). Beneficiary is billed the balance of the limiting charge.

3. Discuss how you determined your answers.

Paper For Above Instructions

Overview

This paper explains the key differences between PAR (participating) and nonPAR (non-participating) physician billing under Medicare and provides the requested calculations from Green & Rowell's Chapter Review. The explanation references Medicare rules on assignment, the Medicare Physician Fee Schedule (MPFS), limiting charges, coinsurance, and provider write-offs (CMS, 2021; AMA, 2020).

Key definitions and rules

Participating (PAR) providers accept Medicare assignment for submitted claims. When a provider accepts assignment, they agree to accept the Medicare-approved amount (the MPFS allowed amount) as full payment for covered services; Medicare pays 80% of the allowed amount for physician services and the beneficiary (or supplemental insurer) is responsible for the 20% coinsurance and any deductible (CMS, 2021). The provider must “write off” (forgive) any difference between their usual charge and the allowed amount—they cannot bill the beneficiary for that difference.

Non-participating (nonPAR) providers may accept assignment on a case-by-case basis or they may not accept assignment. For nonPAR providers who do not accept assignment, Medicare will still base its payment on the MPFS allowed amount, but the provider may bill the beneficiary up to a “limiting charge,” which is generally 115% of the MPFS allowed amount for nonPAR professional services (CMS, 2021). Medicare pays 80% of the MPFS allowed amount; the beneficiary’s responsibility includes the 20% coinsurance of the MPFS allowed amount plus any additional amount up to the limiting charge. Any portion above the limiting charge may not be billed (depending on circumstances), so the provider may end up with write-offs if their submitted charge exceeds the limiting charge.

1. How reimbursement differs between PAR and nonPAR charges

In practice, the primary differences are:

  • Assignment: PAR providers accept assignment for all Medicare claims; nonPAR providers may choose to accept assignment only on some claims or not at all (AMA, 2020).
  • Allowed amount vs. provider charge: PAR providers must accept the MPFS allowed amount as payment in full (less beneficiary coinsurance). NonPAR providers can bill up to the limiting charge (115% of MPFS allowed) for non-assigned claims (CMS, 2021).
  • Write-offs: For PAR, the write-off is the difference between provider’s billed charge and the MPFS allowed amount. For nonPAR, the effective write-off (amount the provider cannot collect) is typically the difference between the provider’s billed charge and the limiting charge if the submitted charge exceeds the limiting charge (CMS Claims Processing Manual, 2020).
  • Beneficiary liability: Beneficiaries may be liable for a larger out-of-pocket amount when seeing nonPAR providers because they may be billed the excess up to the limiting charge (KFF, 2020).

2. Calculations from Chapter Review

Problem 1 — PAR provider (given)

Given data:

  • Submitted charge (provider’s regular fee for office visit): $75
  • MPFS allowed amount: $60
  • Coinsurance amount (paid by patient or supplemental insurance): $12 (20% of $60)

Calculations:

  • Medicare payment (80% of allowed amount) = 0.80 × $60 = $48 (CMS pays $48) (CMS, 2021).
  • Medicare write-off (amount not to be paid by Medicare or the beneficiary) = Submitted charge − MPFS allowed = $75 − $60 = $15. Because the provider accepted assignment, they must write off the $15 difference and cannot bill the beneficiary for this amount (CMS Claims Processing Manual, 2020).

Summary (PAR): Medicare pays $48; beneficiary pays coinsurance $12; provider write-off is $15.

Problem 2 — NonPAR provider (given)

Given data:

  • Submitted charge (provider’s charge): $650
  • MPFS allowed amount: $450

Calculations:

  • Limiting charge = 115% × MPFS allowed = 1.15 × $450 = $517.50 (CMS rule for nonPAR limiting charge) (CMS, 2021).
  • Medicare payment = 80% × MPFS allowed = 0.80 × $450 = $360 (Medicare portion) (CMS, 2021).
  • Beneficiary coinsurance (20% of MPFS allowed) = 0.20 × $450 = $90.
  • Excess up to limiting charge = Limiting charge − MPFS allowed = $517.50 − $450 = $67.50. This portion may be billed to the beneficiary for a non-assigned service.
  • Total beneficiary liability (non-assigned nonPAR case) = coinsurance + limiting-charge excess = $90 + $67.50 = $157.50. This equals Limiting charge − Medicare payment = $517.50 − $360 = $157.50.
  • Medicare write-off (amount provider cannot collect because it exceeds the limiting charge) = Submitted charge − Limiting charge = $650 − $517.50 = $132.50. The provider cannot collect this $132.50 if limited by the limiting charge rule.

Note: The prompt included a figure of $149.63 for the balance of the limiting charge. The standard calculation using MPFS rules (115% limiting charge and 80% Medicare payment on the MPFS allowed) yields $157.50 for beneficiary responsibility. Differences such as deductible application, local payment adjustments, rounding, or supplemental insurer payments can account for discrepancies (CMS, 2021; KFF, 2020).

3. How the answers were determined

The answers follow CMS rules for physician payments and limiting charges. The MPFS allowed amount is the baseline; Medicare pays 80% of that allowed amount for physician services (CMS, 2021). For PAR providers who accept assignment, the provider must accept the allowed amount as payment in full (less coinsurance), and any difference between their usual charge and the allowed amount is written off (CMS Claims Processing Manual, 2020). For nonPAR providers who do not accept assignment, Medicare still bases payment on the MPFS allowed amount, but the provider may bill the beneficiary up to a statutory limiting charge (115% of allowed amount) and may not collect amounts above that limiting charge; the write-off therefore is the provider’s billed minus the limiting charge (CMS, 2021). All arithmetic in the examples used those policy formulas and standard percentage multipliers (80% for Medicare share, 20% for beneficiary coinsurance, and 115% for limiting charge).

Implications for providers and beneficiaries

These distinctions matter: beneficiaries can face higher out-of-pocket costs with nonPAR providers. Providers need to understand assignment rules because accepting assignment affects reimbursement predictability and compliance obligations (AMA, 2020; CMS MLN, 2019).

Conclusion

PAR and nonPAR statuses determine whether providers must accept the MPFS allowed amount as payment in full and whether beneficiaries can be billed up to the limiting charge. Using the MPFS formulas yields clear, auditable calculations: in the PAR example Medicare pays $48 and the write-off is $15; in the nonPAR example the limiting charge is $517.50, Medicare pays $360, beneficiary responsibility is $157.50, and the provider’s write-off (difference between billed charge and limiting charge) is $132.50. These computations are consistent with CMS policy (CMS, 2021; CMS Claims Processing Manual, 2020).

References

  • Green, B., & Rowell, R. Medical Insurance: A Coding, Clinic, and Reimbursement Guide. (Green & Rowell, specific edition/page as referenced in assignment).
  • Centers for Medicare & Medicaid Services (CMS). Medicare Physician Fee Schedule (MPFS). https://www.cms.gov/medicare/physician-fee-schedule
  • Centers for Medicare & Medicaid Services. Medicare Claims Processing Manual. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Index
  • Centers for Medicare & Medicaid Services. Medicare Learning Network (MLN) Publications — Participating vs Non-Participating Providers. https://www.cms.gov/outreach-and-education/medicare-learning-network-mln/mlnproducts
  • American Medical Association (AMA). Medicare Assignment and Limiting Charge Guidance. https://www.ama-assn.org/practice-management/payment-delivery/model-medical-service-payment
  • Kaiser Family Foundation (KFF). Explaining Medicare’s Payment Rules and Beneficiary Costs. https://www.kff.org/medicare/
  • CMS. Medicare Benefit Policy Manual. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS019038
  • Medicare Claims Processing Center. “Limiting Charge and Assignment” (MLN Fact Sheet). https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Limiting-Charge-Fact-Sheet.pdf
  • Health Affairs. Articles on Medicare payment policy and provider participation (various authors). https://www.healthaffairs.org/topics/medicare
  • U.S. Department of Health & Human Services. Social Security Act—Medicare Provisions (statutory basis for payment rules). https://www.ssa.gov/OP_Home/ssact/title18/1806.htm

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