COVID-19 Skews the Numbers

A colleague of mine called me recently. The reimbursement rates for PACE, or “Programs of All-inclusive Care for the Elderly” in Florida had dropped 20 percent suddenly. He asked if I knew why. 

To answer his question, let’s talk about “per member, per month” (PMPM) and prospective payments. In the 1980s, Medicare started paying for inpatient acute care based on the diagnosis of the patient. More importantly, the amount of payment for the coming fiscal period was fixed ahead of time. This concept replaced “cost reimbursement.” When hospitals were paid based on the costs they incurred, Medicare could end up paying more than they expected, and hospitals filed expensive and complicated appeals. 

Most of our individual insurance plans are prospective. They are also a rigid PMPM form of insurance. At the start of a plan year, you get a quote for your premium. If you like the rate and the coverage, you sign up. You pay your monthly premium. When the plan period is over, you can usually re-enroll at a slightly higher rate per month. If the rate goes up, you may shop around to find another insurance company. 

Medicare Advantage (MA) is a modified form of PMPM. As claims are submitted, rates are adjusted based on the diagnoses from the claims. Medicare allows “risk adjustments” that reflect a base cost and an adjustment factor based on the chronic diseases from which patients suffer.

COVID-19 has turned all this on its head. Patients either can’t or don’t get treatments that would normally drive costs. What my colleague saw in the PACE program was temporary falling utilization impacting the PMPM computations. Let’s make sure providers don’t get caught in the COVID-19 “doughnut hole.”

Programming Note:

Timothy Powell is a regular panelist on Talk Ten Tuesdays. Listen to his live reporting from the Talk Ten Tuesdays News Desk, Tuesdays at 10 a.m. EST.

  

Facebook
Twitter
LinkedIn

Timothy Powell, CPA, CHCP

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of the RACmonitor editorial board and a national correspondent for Monitor Mondays.

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

2026 IPPS Masterclass 3: Master MS-DRG Shifts and NTAPs

2026 IPPS Masterclass Day 3: MS-DRG Shifts and NTAPs

This third session in our 2026 IPPS Masterclass will feature a review of FY26 changes to the MS-DRG methodology and new technology add-on payments (NTAPs), presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 14, 2025
2026 IPPS Masterclass Day 2: Master ICD-10-PCS Changes

2026 IPPS Masterclass Day 2: Master ICD-10-PCS Changes

This second session in our 2026 IPPS Masterclass will feature a review the FY26 changes to ICD-10-PCS codes. This information will be presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 13, 2025
2026 IPPS Masterclass 1: Master ICD-10-CM Changes

2026 IPPS Masterclass Day 1: Master ICD-10-CM Changes

This first session in our 2026 IPPS Masterclass will feature an in-depth explanation of FY26 changes to ICD-10-CM codes and guidelines, CCs/MCCs, and revisions to the MCE, presented by presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 12, 2025

Trending News

Featured Webcasts

The Two-Midnight Rule: New Challenges, Proven Strategies

The Two-Midnight Rule: New Challenges, Proven Strategies

RACmonitor is proud to welcome back Dr. Ronald Hirsch, one of his most requested webcasts. In this highly anticipated session, Dr. Hirsch will break down the complex Two Midnight Rule Medicare regulations, translating them into clear, actionable guidance. He’ll walk you through the basics of the rule, offer expert interpretation, and apply the rule to real-world clinical scenarios—so you leave with greater clarity, confidence, and the tools to ensure compliance.

June 19, 2025
Open Door Forum Webcast Series

Open Door Forum Webcast Series

Bring your questions and join the conversation during this open forum series, live every Wednesday at 10 a.m. EST from June 11–July 30. Hosted by Chuck Buck, these fast-paced 30-minute sessions connect you directly with top healthcare experts tackling today’s most urgent compliance and policy issues.

June 11, 2025
Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Substance abuse is everywhere. It’s a complicated diagnosis with wide-ranging implications well beyond acute care. The face of addiction continues to change so it’s important to remember not just the addict but the spectrum of extended victims and the other social determinants and legal ramifications. Join John K. Hall, MD, JD, MBA, FCLM, FRCPC, for a critical Q&A on navigating substance abuse in 2025.  Register today and be a part of the conversation!

July 16, 2025

Trending News

Prepare for the 2025 CMS IPPS Final Rule with ICD10monitor’s IPPSPalooza! Click HERE to learn more

Get 15% OFF on all educational webcasts at ICD10monitor with code JULYFOURTH24 until July 4, 2024—start learning today!

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24