Diminishing Rates
Below a number of scenarios regarding diminishing rates are described. Apart from common scenarios, some represent configuration ranging from slightly illogical to unlikely. The goal is to predict the outcome and explain why.
Scenario 1 Flat Rate Without Override
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, it represents a flat rate diminishing rate method with 3 blocks in 2012, extended to have 4 blocks in 2013 and onwards.
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Block 1
-
Sizes
-
2012, 4 units
-
2013 and onwards, 3 units
-
-
Amounts
-
2012 and onwards, $300
-
-
-
Block 2
-
Sizes
-
2012, 4 units
-
2013 and onwards, 3 units
-
-
Amounts
-
2012 and onwards, $400
-
-
-
Block 3
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Sizes
-
2013 and onwards, 3 units
-
-
Amounts
-
2012 and onwards, $500
-
-
-
Block 4
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Amounts
-
2013 and onwards, $600
-
-
This can also be shown in a tabular form like the one below.
| Block | Start Date | End Date | Size | Amount | PPC | Start Date PPC | End Date PPC |
|---|---|---|---|---|---|---|---|
1 |
2012-01-01 |
2012-12-31 |
4 |
||||
1 |
2013-01-01 |
3 |
|||||
1 |
2012-01-01 |
$300 |
|||||
2 |
2012-01-01 |
2012-12-31 |
4 |
||||
2 |
2013-01-01 |
3 |
|||||
2 |
2012-01-01 |
$400 |
|||||
3 |
2013-01-01 |
3 |
|||||
3 |
2012-01-01 |
$500 |
|||||
4 |
2013-01-01 |
$600 |
On the assumption that all dimensions (like procedure code) for selection are correct, what would the outcome be of calculating the diminishing rate of the following claim lines?
| Line | Procedure | Price Input Date | Price Input Number of Units | Allowed Amount |
|---|---|---|---|---|
1 |
10021 |
2012-09-10 |
4 |
$300 |
2 |
27651 |
2012-10-12 |
5 |
$400 |
3 |
23433 |
2012-11-16 |
9 |
$500 |
4 |
11721 |
2013-02-10 |
4 |
$400 |
5 |
17004 |
2013-03-11 |
8 |
$500 |
6 |
27002 |
2013-03-12 |
10 |
$600 |
Explanation
In Select and Apply Reimbursement Method and Pricing Rules an algorithm is described, both for flat rate (consisting of 7 steps) and for rate per unit (consisting of 8 steps). Where needed, these steps will be referenced, to show how the end results can be calculated step by step.
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Claim lines 1, 2 and 3 all see three blocks (steps 1 and 2). In steps 3 and 4 the block size of 4 for the first block is established. Claim line 1 only needs the amount for the first block, because the block size specifies the number of units up to and including and therefore goes straight to step 6. Claim line 2 and 3 need to iterate through step 5 to find that the price input number of units falls into block 2 and block 3 respectively.
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Claim lines 4, 5 and 6 all see four blocks (steps 1 and 2). In steps 3 and 4 the block size of 3 for the first block is established. All lines then need to iterate through step 5 to find that the price input number of units falls into block 2, block 3 and block 4 respectively.
Scenario 2 Flat Rate With Override
The default flat rates are the same as in scenario 1, but now an override on block size is specified for a provider pricing clause. In tabular form:
| Block | Start Date | End Date | Size | Amount | PPC | Start Date PPC | End Date PPC |
|---|---|---|---|---|---|---|---|
1 |
2012-01-01 |
2012-12-31 |
4 |
||||
1 |
2013-01-01 |
3 |
|||||
1 |
2012-01-01 |
$300 |
|||||
2 |
2012-01-01 |
2012-12-31 |
4 |
||||
2 |
2013-01-01 |
3 |
|||||
2 |
5 |
3244 |
2012-11-01 |
2013-03-01 |
|||
2 |
2012-01-01 |
$400 |
|||||
3 |
2013-01-01 |
3 |
|||||
3 |
2012-01-01 |
$500 |
|||||
4 |
2013-01-01 |
$600 |
On the assumption that all dimensions (like procedure code) for selection are correct and provider pricing clause 3244 is applicable to claim line 3 and 4, what would the outcome be of calculating the diminishing rate of the following claim lines?
| Line | Procedure | Price Input Date | Price Input Number of Units | Allowed Amount |
|---|---|---|---|---|
1 |
10021 |
2012-09-10 |
4 |
$300 |
2 |
27651 |
2012-10-12 |
5 |
$400 |
3 |
23433 |
2012-11-16 |
9 |
$400 |
4 |
11721 |
2013-02-10 |
4 |
$400 |
5 |
17004 |
2013-03-11 |
8 |
$500 |
6 |
27002 |
2013-03-12 |
10 |
$600 |
Explanation
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Claim line 3 will for step 2 (filter on time validity) now find the provider pricing clause override for block 2 - with size 5 - instead of the default - with size 4. Therefore, the 9 units stay in block 2.
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Claim line 4 now also finds the provider pricing clause override for block 2 but this has no effect on the final outcome.
Scenario 3 Flat Rate With Multiple Overrides
The default flat rates are the same as in scenario 1, but now both overrides on block sizes and block amounts are specified for several provider pricing clauses. In tabular form:.
| Block | Start Date | End Date | Size | Amount | PPC | Start Date PPC | End Date PPC |
|---|---|---|---|---|---|---|---|
1 |
2012-01-01 |
2012-12-31 |
4 |
||||
1 |
2013-01-01 |
3 |
|||||
1 |
2012-01-01 |
$300 |
|||||
2 |
2012-01-01 |
2012-12-31 |
4 |
||||
2 |
2013-01-01 |
3 |
|||||
2 |
6 |
3246 |
2012-10-01 |
2013-02-01 |
|||
2 |
7 |
4359 |
2013-01-10 |
||||
2 |
2012-01-01 |
$400 |
|||||
2 |
$450 |
3246 |
2012-10-01 |
2013-02-01 |
|||
2 |
$475 |
4359 |
2013-01-10 |
||||
3 |
2013-01-01 |
3 |
|||||
3 |
2012-01-01 |
$500 |
|||||
3 |
$550 |
3246 |
2012-10-01 |
2013-02-01 |
|||
3 |
$560 |
3775 |
2012-10-01 |
||||
3 |
$575 |
4359 |
2013-01-10 |
||||
4 |
2013-01-01 |
$600 |
|||||
4 |
$650 |
3246 |
2012-10-01 |
2013-02-01 |
|||
4 |
$660 |
3775 |
2012-10-01 |
||||
4 |
$675 |
4359 |
2013-01-10 |
On the assumption that all dimensions (like procedure code) for selection are correct and provider pricing clause 3246 is applicable to claim lines 2 and 3 but provider pricing clause 4359 is applicable to claim lines 4, 5 and 6, what would the outcome be of calculating the diminishing rate of the following claim lines?
| Line | Procedure | Price Input Date | Price Input Number of Units | Allowed Amount |
|---|---|---|---|---|
1 |
10021 |
2012-09-10 |
4 |
$300 |
2 |
27651 |
2012-10-12 |
5 |
$450 |
3 |
23433 |
2012-11-16 |
9 |
$450 |
4 |
11721 |
2013-02-10 |
4 |
$475 |
5 |
17004 |
2013-03-11 |
8 |
$475 |
6 |
27002 |
2013-03-12 |
12 |
$575 |
Explanation
-
Claim lines 2 and 3 will for step 2 (filter on time validity) now find the provider pricing clause 3246 override for block 2 - with size 6. Both claim lines will therefore remain in block 2. In step 6 they will find the provider pricing clause 3246 override for block 2 - with amount $450.
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Claim lines 4, 5 and 6 will for step 2 (filter on time validity) now find the provider pricing clause 4359 override for block 2 - with size 7. Claim line 4 and 5 will remain in block 2. In step 6 they will find the provider pricing clause 4359 override for block 2 - with amount $475. Claim line 6 will come into block 5 and will in step 6 find the provider pricing clause 4359 override with amount $575.
Scenario 4 Flat Rate With Specified Last Block
The default flat rates are the same as in scenario 1 except that the last block has a specified size. In tabular form:.
| Block | Start Date | End Date | Size | Amount | PPC | Start Date PPC | End Date PPC |
|---|---|---|---|---|---|---|---|
1 |
2012-01-01 |
2012-12-31 |
4 |
||||
1 |
2013-01-01 |
3 |
|||||
1 |
2012-01-01 |
$300 |
|||||
2 |
2012-01-01 |
2012-12-31 |
4 |
||||
2 |
2013-01-01 |
3 |
|||||
2 |
2012-01-01 |
$400 |
|||||
3 |
2013-01-01 |
3 |
|||||
3 |
2012-01-01 |
$500 |
|||||
4 |
2013-01-01 |
2 |
|||||
4 |
2013-01-01 |
$600 |
On the assumption that all dimensions (like procedure code) for selection are correct, what would the outcome be of calculating the diminishing rate of the following claim lines?
| Line | Procedure | Price Input Date | Price Input Number of Units | Allowed Amount |
|---|---|---|---|---|
1 |
10021 |
2012-09-10 |
4 |
$300 |
2 |
27651 |
2012-10-12 |
5 |
$400 |
3 |
23433 |
2012-11-16 |
9 |
$500 |
4 |
11721 |
2013-02-10 |
4 |
$400 |
5 |
17004 |
2013-03-11 |
8 |
$500 |
6 |
27002 |
2013-03-12 |
10 |
$600 |
7 |
25551 |
2013-03-13 |
12 |
$600 |
Explanation
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Claim line 7 will fall into block 4. Although the price input number of units (12) seems to outnumber the total of the specified block sizes (3+3+3+2), there can be no limit on the number of units for the last block - block 4. So the specified size for block 4 is ignored and translated into everything beyond 9.
Scenario 5 Rate Per Unit Without Override
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
This can also be shown in a tabular form like the one below.
| Block | Start Date | End Date | Size | Amount | PPC | Start Date PPC | End Date PPC |
|---|---|---|---|---|---|---|---|
1 |
2012-01-01 |
5 |
|||||
1 |
2012-01-01 |
$1000 |
|||||
2 |
2012-01-01 |
5 |
|||||
2 |
2012-01-01 |
$700 |
|||||
3 |
2012-01-01 |
$500 |
On the assumption that all dimensions (like procedure code) for selection are correct, what would the outcome be of calculating the diminishing rate of the following claim lines?
| Line | Procedure | Price Input Date | Price Input Number of Units | Allowed Amount |
|---|---|---|---|---|
1 |
56349 |
2012-09-12 |
6 |
$5700 |
2 |
20098 |
2012-10-19 |
11 |
$9000 |
Explanation
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Claim lines 1 and 2 follow steps 1 through 4 in the same way as described for a flat rate. In step 5, claim line 1 notes that the price input number of units is higher than the block size of block 1. So it multiples the amount ($1000) with the rate block size (5), the result being stored as a preliminary allowed amount ($5000). For the remaining number of units (1), block 2 provides the price ($700), which is added to the aggregated allowed amount. Similarly, claim line 2 notes that the remaining price input number of units after block 1 (6) is higher than the block size of block 2 (5). So it multiples the amount ($700) with the rate block size (5) and adds that to the previously aggregated allowed amount, resulting in $5000 + $3500. For the remaining unit, block 3 is visited with a unit price of $500.
Scenario 6 Rate Per Unit With Multiple Overrides
The default rates per unit are the same as in scenario 5, but now both overrides on block sizes and block amounts are specified for several provider pricing clauses. In tabular form:.
| Block | Start Date | End Date | Size | Amount | PPC | Start Date PPC | End Date PPC |
|---|---|---|---|---|---|---|---|
1 |
2012-01-01 |
5 |
|||||
1 |
2012-01-01 |
$1000 |
|||||
2 |
2012-01-01 |
5 |
|||||
2 |
4 |
8885 |
2012-10-01 |
2013-01-01 |
|||
2 |
3 |
9769 |
2013-01-10 |
||||
2 |
2012-01-01 |
$700 |
|||||
2 |
$680 |
8885 |
2012-10-01 |
2013-01-01 |
|||
2 |
$670 |
9769 |
2013-01-10 |
||||
3 |
2012-01-01 |
$500 |
|||||
3 |
$480 |
9769 |
2013-01-10 |
On the assumption that all dimensions (like procedure code) for selection are correct and provider pricing clause 8885 is applicable to claim line 2 but provider pricing clause 9769 is applicable to claim line 3, what would the outcome be of calculating the diminishing rate of the following claim lines?
| Line | Procedure | Price Input Date | Price Input Number of Units | Allowed Amount |
|---|---|---|---|---|
1 |
56349 |
2012-09-12 |
6 |
$5700 |
2 |
20098 |
2012-10-19 |
11 |
$8720 |
3 |
65630 |
2013-01-12 |
14 |
$9890 |
Explanation
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Claim line 2 will for step 2 (filter on time validity) now find the provider pricing clause 8885 override for block 2 - with size 4. In step 5, claim line 2 notes that the remaining price input number of units after block 1 (6) is higher than the block size of block 2 (4). Also, the amount for block 2 is the provider pricing clause override of $680. So it multiples the amount ($680) with the rate block size (4) and adds that to the previously aggregated allowed amount, resulting in $5000 + $2720. For the remaining two units, block 3 is visited with a unit price of $500 (note that there is no override amount here through provider pricing clause 8885).
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Claim line 3 will for step 2 (filter on time validity) now find the provider pricing clause 9769 override for block 2 - with size 3. In step 5, claim line 3 notes that the remaining price input number of units after block 1 (9) is higher than the block size of block 2 (3). Also, the amount for block 2 is the provider pricing clause override of $670. So it multiples the amount ($670) with the rate block size (3) and adds that to the previously aggregated allowed amount, resulting in $5000 + $2010. For the remaining units (6), block 3 is visited with a unit price of $480 (through the override amount for provider pricing clause 9769).