We are going to talk about the money maze. For clinicians, sometimes the whole concept of where money comes from is a bit removed from the fact that where the money comes from can determine what is on our paycheck. Whether you are a boss, a supervisor, a manager or a frontline clinician, in any healthcare setting, it is pretty important to understand how the money flows through the system. That, as I said, can have a direct impact on how we are paid.
My disclosures are that I received an honorarium for this presentation and I have published and presented numerous times on this topic.
Who Pays for SLP Services?
If we ask who pays for services, if we start at the bottom, the easiest is private pay. That is a clinic or a practice or an outpatient department where somebody is willing to write you a check or hand you a credit card or give you cash for the services that are rendered.
We will not spend any time on that, because there really are not any rules for that. You set your own fees, you determine how to collect the money, et cetera. I guess, in an ideal world, somebody might have a clinic that did nothing but private pay.
We are going to spend our time on the top three payers and those are Medicaid, Medicare and all of its parts, and private insurance. When you group all those together you call them “Third party payers.” I often wonder why they are not called second party payers, if the patient is the first party. But I think it is that the patient is the first party, the provider is the second party, and now you have a third party kind of in the room with you, even though they are not physically represented, and that is the person that is paying for the service. That is why we call them third party payers.
Let's start with the big two, Medicaid and Medicare as healthcare payment systems. I want to start at the top with how laws are passed and how that trickles down to regulations that directly impact us. Congress is the one that passes a law to establish and modify big programs like Medicaid and Medicare, but of course, even though the laws that they write are sometimes as thick as telephone books, they cannot have all of the detail that is needed in order to administer the program.
Therefore, somebody needs to write regulations (we would call them rules) about all the different ins and outs of the program. For Medicaid and Medicare, that is turned over to an entity called the Centers for Medicaid and Medicare Services, or CMS. It is a huge bureaucratic agency outside Baltimore, Maryland. I have had the chance to go there a couple of times for meetings. It is what you would picture: floor after floor of rooms around the outside, with windows where the managers sit. Then there is a huge room in the middle full of cubicle after cubicle. That is probably how you would picture a big bureaucracy that writes regulations, and you would be right.
Because it is probably really too much for CMS to totally administer these programs, they contract with insurance companies around the country that are called Medicare Administrative Contractors (MACs). These MACs then run the program, usually over a couple of states. Although they have to follow all the national rules that are written, they sometimes write different, additional rules. As a result, there are different services that are covered in the southwest, for example, versus the northeast. They also write documents called Local Coverage Determinations or LCDs. If you see a Medicare patients and you have not seen an LCD, find out who at your facility gets that LCD and how to get your hands on it, because those contain very specific interpretations that would help you know what is and is not covered.
Medicaid started back in 1965 as part of Title 19 of the Social Security Act. This is something that Congress passed. It was a partnership funded jointly between the states and the federal government. More than half is funded by the federal government. It is in every state in the union and it provides free or low cost care for individuals who qualify: low incomes, families and children, women who are pregnant, the elderly, and people with disabilities.
Federal law requires certain populations to be covered but then states can set individual eligibility criteria within those minimum standards; it give states flexibility to cover other optional eligibility groups. That is one of the things that makes it challenging in a course like this to talk about Medicaid in much detail, because I might share something about Kentucky Medicaid that would have nothing to do with Iowa Medicaid.
I am going to try to limit my comments about Medicaid to things that are standard across all the states. One of those is something called EPSDT or Early and Periodic Screening, Diagnosis and Treatment. This is the mandatory service that pays for most of the therapies that are provided to children with Medicaid that we see. I like to think of Medicaid as one great big bank account, but it has separate sub-accounts. There are sub-accounts where a certain amount of money would come to pay for something like therapies.
Other services are optional, like rehab and other different kinds of therapies. Each state’s Medicaid can decide if they are going to pay for those or not.