About thresholds
A threshold is a specific type of calculation that can be placed on either a clause or a term within a contract. Thresholds are used in situations where additional criteria, not just the code, is needed to qualify the service for reimbursement. For example, the payor may require that the Total Charges of the claim exceed a certain amount in order to qualify for additional reimbursement. Or, there may be different rates payable depending upon how many days a patient is in the hospital.
NOTE: Clauses and terms can have either rates or thresholds, but not both.
A threshold’s parameters are defined by a Thresh Basis. A Thresh Basis a type of measurement used to define the tiers or levels of reimbursement within a threshold calculation. It is used in conjunction with both a Lower Bound In a threshold, the lower bound represents the lowest value for your thresh basis trap. Anything greater than or equal to the lower bound, and less than or equal to the upper bound, is considered a match. and an Upper Bound In a threshold, the upper bound represents the highest value for your thresh basis trap. Anything greater than or equal to the lower bound, and less than or equal to the upper bound, is considered a match. to make a claim qualify for the clause/term. A Thresh Basis can be either claim-based (for example, Total Claim Days or Total Claim Charges), or line item-based (Total Line Charges/Units or Total Daily Line Charges/Units). Not all calculation bases allow thresholds. For example, Line Item ASC and Line Item MPR do not allow thresholds.
Using calculation bases, measures, and types in thresholds
The Calc Basis The calculation basis is one of the elements that defines how a claim pays on a clause or term. The calc basis is used in conjunction with the calculation type and measure to determine a specific reimbursement method. In normal contract building rules, the Calc Basis is used to determine if a claim qualifies for the clause or term., Calc Measure One of the elements that defines how a claim pays on a clause or term. The Calc Measure is used with the Calc Type to define how the claim is paid., and Calc Type One of the elements that defines how a claim pays on a clause or term. The Calc Type is used with the Calc Measure to define how the claim is paid. Calc types include: Dollar Rate, a % of Charge, or a % of Cost., selected based on standard contract modeling rules, define how the claim pays on the clause or term if the Thresh Basis Lower Bound and Upper Bound criteria are met. As in normal contract modeling rules, the Calc Basis is used to determine if a claim qualifies for the clause or term. The Calc Measure and Calc Type combined define how the claim is paid.
The following table provides a list of the possible combinations that can be used with Thresholds. Notice that the first four are claim level, while the remaining three are line item based. These three calculation options are used to apply a rate on the claim, but the rate will be held within the limits of the Apply to Start and Apply to End fields that are set in the Threshold form.
| Calc Basis | Calc Measure | Calc Type |
|---|---|---|
| DRG, CPT4, Rev Code, etc. | Dollar Rate | Per Diem |
| DRG, CPT4, Rev Code, etc. | Dollar Rate or % Charge | Per Claim |
| Any and All Services | Dollar Rate | Per Diem |
| Any and All Services | Dollar Rate or % Charge | Per Claim |
| CPT4 or Rev Code | Dollar Rate or % Charge | Per Date |
| CPT4 or Rev Code | Dollar Rate or % Charge | Per Line Item |
| CPT4 or Rev Code | Dollar Rate or % Charge | Per Line Item Qty |
Threshold examples
The following examples illustrate two situations for using thresholds.
NOTE: Regarding Lower Bounds – The Total Charges or Total Covered Days needs to fall within the bounds. On the second tier, you may repeat the Low Bound or you may use the given start for the next tier. The result will be the same as the Apply Start comes into consideration and will only apply the rate on the excess.
It is important for the first tier to have bounds that capture the full range from 1 to infinite, as that will ensure the lower tier is also calculated in these examples.
Charges
A payer might state that inpatient services are paid at 50% of charges but any inpatient claim that has charges in excess of $100k will pay “Tiered Reimbursement” for which there would be varying reimbursement rates depending upon the charges. In this example, you need to define a couple of key terms:
- The Thresh Basis is Total Charges because we are paid a different rate based on the charges on the claim (after we exceed $100k on a claim reimbursement changes)
- Two Rates need to be modeled. As an example:
- 50% for the all claims up to $100k
- 75% on all claims exceeding $100k
- The bounds capture the Total Charges from the claim. For the 50% Rate, the Lower Bound would be $1 and the Upper Bound would be infinite ($99,999,999). The next fields control the application of the rate. The Apply to Start would be $1 and the Apply to End would be $99,999k because we want the 50% to apply to all charges up to $100k.
- For the 75% Rate, the Lower Bound could again be $1 or change to $100k and the Upper Bound would be $99,999,999. Remember, the Total Charges need to fall within the bounds. However, the Apply to Start would now be $100k and the Apply to End would be $99,999,999 because we want the 75% to apply only to the charges over $100k.
Days
A popular example of Day Thresholds is Maternity Cases. Often Maternity pays a Case Rate for a set number of days and then adds reimbursement for days in excess.
- The Thresh Basis is Per Diem because we are paid a different rate based on the Covered Days on the claim
- Two Rates need to be modeled. As an example:
- The Case Rate for Days 1-3
- The Per Diem Rate for Days greater than 3
- The bounds capture the Total Covered Days from the claim. For the Case Rate, the Lower Bound would be 1 and the Upper Bound would be infinite (999). The next fields control the application of the rate. The Apply to Start would be 1 and the Apply to End would be 1, because we want the Case Rate to only calculate once. So we will have it calculate on the first day (eliminate claim variability).
- For the Per Diem Rate, the Lower Bound could again be 1 or it could be 4 and the Upper Bound 999. Remember, the Total Covered Days need to fall within the bounds, but the Apply columns control applying the rate. So the Apply to Start would be 4 and the Apply to End would be 999 because we want the Per Diem Rate to apply only to days exceeding the defined parameters of the case rate.
