Diminishing Rates
A diminishing rate is a reimbursement method sub type in which the allowed amount is calculated in a non-linear fashion, based on predefined blocks. The applicable block or blocks are determined based on the pricing input number of units field.
The following scenario describes the applicability of the diminishing rate reimbursement method.
The time a patient spent in an ER hospital bed is reimbursed at a flat rate, based on the number of hours. Between 0 and 2 hours spent is reimbursed at $500; over 2 and up until 4 hours spent is reimbursed at $700; everything over 4 hours is reimbursed at $800.
The time a patient spent in a care facility is reimbursed at a daily rate. The rate decreases with the number of days spent; the first 5 days are reimbursed at $300 per day; the next 5 days are reimbursed at $250 per day; all days above the 10th day are reimbursed at $200 per day.
Model
The following tables describe the diminishing rate model and its details.
Diminishing Rate
| Field | Description |
|---|---|
Code |
Identifier of this diminishing rate |
Description |
Description of this diminishing rate |
Type |
The diminishing rate type to which the diminishing rate belongs. |
Message |
The message that is attached to the claim line if the reimbursement method applies |
Currency |
The currency of the amounts in the diminishing rate (all amounts in the diminishing rate will have the same currency) |
Access Restriction |
Determines whether or not the access to the diminishing rate is restricted |
The following list specifies the placeholder values for the messages that is attached to the claim line upon applying a diminishing rates:
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0. The code of the diminishing rate
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1. The description of the diminishing rate
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2. The provider pricing clause quantifier
Each diminishing rate is built up out of zero, one or multiple rate blocks.
Diminishing Rate Block
| Field | Description |
|---|---|
Diminishing Rate |
|
Sequence |
Determines the order in which blocks are evaluated |
Each diminishing rate block has zero, one or more block sizes and block amounts.
Diminishing Rate Block Size
| Field | Description |
|---|---|
Diminishing Rate Block |
|
Provider Pricing Clause |
Optional reference. Signifies that the block size stored in this record is an override in context of that specific provider pricing clause. |
Size |
The size of the block expressed in units. Positive number. Allows six decimals. |
Start Date |
Start effective date of the amount |
End Date |
End effective date of the amount |
A rate block size without a reference to a provider pricing clause is referred to as a 'default' rate block size. A diminishing rate block can have multiple rate block sizes as long as there is no time overlap between the default rate block sizes. There can only be a single rate block size for any given provider pricing clause.
The number of units signifies the inclusive number of units counted towards that block. For example, if the first block specifies 5 units, that means that all units starting from 0 and up to and including 5 are considered to be in block one.
Diminishing Rate Block Amount
| Field | Description |
|---|---|
Diminishing Rate Block |
|
Provider Pricing Clause |
Optional reference. Signifies that the block allowed amount stored in this record is an override in context of that specific provider pricing clause. |
Amount |
The amount applied for this block (positive number) |
Currency |
The currency of the amount (it will automatically be set to the currency that is specified on the diminishing rate) |
Start Date |
Start effective date of the amount |
End Date |
End effective date of the amount |
A rate block amount without a reference to a provider pricing clause is referred to as a 'default' rate block amount. A diminishing rate block can have multiple rate block amounts as long as there is no time overlap between the default rate block amounts. There can only be a single rate block amount for any given provider pricing clause.
A diminishing rate type specifies how the amounts on diminishing rate blocks have to be applied (amount per unit or amount for all units). Pricing rules can also refer to diminishing rate types. If a diminishing rate type is specified on a pricing rule then the rule is only applied if a diminishing rate of that type has been applied (in combination with an 'In' usage) or has not been applied (in combination with a 'Not In' usage) to calculate the price on the claim line.
Diminishing Rate Type
| Field | Description |
|---|---|
Code |
The code of the diminishing rate type |
Description |
The description of the diminishing rate type |
Calculation type |
Specifies if the diminishing rate applies a flat rate or an amount per unit |
Configuration Notes
Although rate blocks are not time valid, their corresponding sizes are. This makes it possible to increase or reduce the number of rate blocks over time. Consider the following configuration (which returns in the Pricing Examples section of the Claim Flow Implementation Guide), it represents a diminishing rate method with 3 blocks in 2012, extended to have 4 blocks in 2013.
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Block 1
-
Sizes
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2012, 4 units
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2013, 3 units
-
-
Amounts
-
-
Block 2
-
Sizes
-
2012, 4 units
-
2013, 3 units
-
-
Amounts
-
-
Block 3
-
Sizes
-
2013, 3 units
-
-
Amounts
-
2012 and 2013, $300
-
-
-
Block 4
-
Amounts
-
2013, $200
-
-
The last rate block has no rate block size, as there can be no limit to the number of units fit in the last block. However, due to the effective dates of blocks sizes, the configuration model does not prevent a user from defining a block size on the last block. The calculation simply ignores the block size on the last rate block, no run time errors are thrown.
It is possible to override the amounts for all rate blocks and the size for all but the last rate block in context of a provider pricing clause. It is not required to override all sizes and amounts; it is possible to override just amounts or just sizes or even a single amount or size. Overriding rate block amounts and sizes always adopt the start and end date of the provider pricing clause.
| Adopting the provider pricing clause start and end date for overriding rate block sizes and amounts keeps the configuration transparent. However, it also allows for the configuration of the complex fringe scenario where the number of blocks increases or decreases during the time validity of a provider pricing clause that overrides the block sizes. There are no business rules that prevent this configuration, nor will it lead to run time errors. |
Scenarios
Scenario 1: Observation Bed, flat rate
Observation bed services are reimbursed at a flat rate. i.e. an amount for all units. The rate is determined using hour blocks. The blocks are defined as follows.
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anything below 0,1 pays $0
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0,1 up to, but not including, 8 units pays $2000
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8 up to, but not including 16 units pays $3000
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16 or more units pays $4000
The block sizes are configured as follow
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Rate block 1
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size 0.099999 units
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amount $0.00
-
-
Rate block 2
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size 7.9 units
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amount $2,000.00
-
-
Rate block 3
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size 8 units
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amount $3,000.00
-
-
Rate block 4
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amount $4,000.00
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A claim line with 6 units is priced at $2000. A claim line with 12 units is priced at $3000
Scenario 2: Per Diem, rate per unit
Inpatient days are reimbursed at a daily rate. The rate is reduced as the number of admitted days grows.
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Day 1 through 5 is paid at $1000 per day
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Day 6 through 10 is paid at $700 per day
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Day 11 and over is paid at $500 per day
The block sizes are configured as follow
-
Rate block 1
-
size 5 units
-
amount $1,000.00
-
-
Rate block 2
-
size 5 units
-
amount $700.00
-
-
Rate block 3
-
amount $500.00
-
A claim line with 6 days is priced at $5,700 (5*1,000 + 1*700). A claim line with 11 units is priced at $9,000 (5*1,000 + 5*700 + 1*500). This scenario also returns in the Pricing Examples section of the Claims Flow Implementation Guide.