5.4 Other Payment Methodologies
Key Takeaways
- Capitation pays a fixed per-member-per-month (PMPM) amount regardless of services used, often with a withhold or risk pool that depends on utilization performance.
- Per-diem reimbursement pays a flat amount for each inpatient day rather than per discharge or per service.
- Case-rate and global surgical packages bundle a procedure and its related care into one fee, with Medicare assigning 0, 10, or 90-day global periods.
- Post-acute settings use specialized prospective systems: home health uses PDGM, skilled nursing uses PDPM, and inpatient rehab and hospice use their own per-period or per-diem models.
- ASCs, durable medical equipment, and outpatient therapy each have dedicated Medicare fee schedules separate from the physician fee schedule.
Beyond RBRVS and Prospective Hospital Systems
The CPB exam tests whether you can match a setting and payer to the correct payment method. MPFS, IPPS, and OPPS cover physician services and acute hospital care, but several other methodologies govern managed care, surgery, equipment, and post-acute settings. Picking the wrong model means picking the wrong claim form, the wrong expected payment, and sometimes the wrong payer entirely.
Capitation
Capitation pays a provider a fixed per-member-per-month (PMPM) amount for each enrolled patient, regardless of how many services that patient uses. The provider profits when members stay healthy and loses money when utilization is high — the financial risk is inverted from fee-for-service. Many capitated arrangements include a withhold or risk pool: a portion of payment is held back and released only if utilization or quality targets are met. Capitation is common in Health Maintenance Organization (HMO) primary-care contracts and Medicare Advantage.
Per-Diem and Case-Rate Payment
- Per-diem — a flat amount paid for each inpatient day. Common in commercial inpatient and behavioral-health contracts; a 5-day stay pays five times the per-diem.
- Case rate (global package) — a single negotiated fee covering a defined episode such as a vaginal delivery or a total joint replacement, including pre- and post-service care.
Medicare Global Surgical Packages
Medicare assigns each surgical CPT code a global period of 0, 10, or 90 days. The global fee bundles the operation plus routine pre-operative and post-operative care:
| Global Period | Typical Procedure Type | Care Bundled |
|---|---|---|
| 000 (0-day) | Minor procedures, endoscopies | Same-day care only; no post-op days |
| 010 (10-day) | Other minor surgery | 10 days of routine follow-up |
| 090 (90-day) | Major surgery | 1 pre-op day plus 90 post-op days |
Routine follow-up within the global period is not separately billable. Modifiers identify care that falls outside the package: 24 (unrelated E/M during global), 25 (significant separate E/M same day as a procedure), 57 (decision for major surgery), 58 (staged/planned), 78 (return to OR for related complication), and 79 (unrelated procedure during global). Misusing these modifiers is a frequent denial source and a heavily tested topic.
Dedicated Fee Schedules
- Ambulatory Surgical Center (ASC) — paid from the ASC fee schedule, largely derived from OPPS APC relative weights but using its own conversion factor.
- Durable Medical Equipment (DME) — paid from the DMEPOS fee schedule; many items use competitive-bidding pricing and require the DME MAC, not the local Part B MAC.
- Outpatient therapy (PT/OT/SLP) — paid from the MPFS. The hard therapy cap is gone, but a KX modifier threshold still applies: for CY 2026 it is $2,480 for PT and SLP combined and $2,480 for OT. Above that, every claim needs the KX modifier to attest medical necessity. A separate targeted medical review threshold of $3,000 (frozen through 2028) may flag claims for review.
Post-Acute Patient-Driven Models
Post-acute care moved to patient-driven systems that pay on clinical characteristics rather than therapy minutes:
| Setting | Payment Model | Basis |
|---|---|---|
| Home Health | Patient-Driven Groupings Model (PDGM) | 30-day periods grouped by clinical/functional characteristics; replaced therapy-volume payment |
| Skilled Nursing Facility | Patient-Driven Payment Model (PDPM) | Per-diem driven by patient clinical characteristics, not therapy minutes |
| Hospice | Per-diem | Daily rate by level of care (routine, continuous home, inpatient respite, general inpatient) |
| Inpatient Rehabilitation | IRF PPS | Per-discharge case-mix group payment |
Knowing which model applies prevents billers from submitting a setting on the wrong claim form or expecting fee-for-service where a bundled or per-diem rate applies.
Matching Methodology to Setting — The Exam's Favorite Question Type
The CPB exam loves scenario stems that describe a setting and ask for the payment system. Use this crosswalk:
| Scenario clue | Correct methodology | Claim form |
|---|---|---|
| Physician office visit, Medicare Part B | MPFS / RBRVS | CMS-1500 |
| Acute hospital inpatient discharge | IPPS / MS-DRG | UB-04 |
| Hospital outpatient surgery or ED | OPPS / APC | UB-04 |
| HMO PMPM with withhold | Capitation | per contract |
| Freestanding surgery center | ASC fee schedule | CMS-1500/837P-style |
| Wheelchair, oxygen, hospital bed | DMEPOS fee schedule (DME MAC) | CMS-1500 |
| Home visits by nurse/therapist | PDGM (home health) | UB-04 |
| Skilled nursing facility stay | PDPM (SNF) | UB-04 |
| Terminal-illness daily care | Hospice per-diem | UB-04 |
Global Period Worked Scenario
A surgeon performs a major procedure with a 090 global period on June 1. On June 20 the patient returns with a wound infection requiring a return to the operating room. The biller appends modifier 78 (return to OR for a related procedure during the global period); Medicare pays only the intraoperative percentage of the second procedure, and the global clock does not restart. If instead the June 20 visit were for unrelated knee pain, modifier 79 would apply and the new procedure would be paid in full with its own global period. Choosing 78 versus 79 changes the payment substantially — a classic CPB exam distinction.
A routine suture check on June 10 with no separate problem is not billable at all, because routine post-op care is inside the global package.
A primary care group is paid $45 for each enrolled HMO member every month, whether or not the member is seen. A portion is held back and released only if referral utilization stays under target. Which payment methodology is this?
A patient is discharged from a skilled nursing facility (SNF). The biller needs the correct Medicare payment model for the SNF stay. Which model applies?