Medicare Coverage Policies for Chronic and Acute Pain

Medicare Coverage Policies for Chronic and Acute Pain

Medicare under title XVIII of the Social Security Act, includes ‘traditional’ or ‘original’ Medicare benefits administered in Part A (hospital and other inpatient facility services) and Part B (physician and other outpatient facility services, and certain drugs); Part C (Medicare Advantage), and the optional prescription drug benefit administered by private plans under Part D. In this article we focussed on Part A and B Medicare coverage policies for chronic and acute pain.

Inpatient and Outpatient Prospective Payment Systems

Medicare generally pays under Part A for covered inpatient hospital services furnished during an inpatient hospital stay based on payment rates set under the inpatient prospective payment system (IPPS). Under the IPPS, CMS sets bundled payment rates to reflect average costs incurred by hospitals in providing care, generally comprising all items and services supplied by the hospital during the inpatient stay, including any drugs or other therapies provided for the purpose of managing pain. Under the IPPS, CMS annually reviews and assigns discharges to Medicare severity-diagnosis related groups (MS-DRGs), which associate patients with similar clinical conditions who are expected to require similar amounts of hospital resources.

Medicare generally pays under Part B for covered outpatient department services furnished to beneficiaries in hospital outpatient departments at amounts set under the outpatient prospective payment system (OPPS). Under the OPPS, CMS annually classifies services into ambulatory payment classifications (APCs) on the basis of clinical and cost similarity. All services included in an APC have the same payment rate. Under the OPPS, certain drugs and biologicals are packaged into APCs if their per-day cost is below a certain threshold or if they fit into one of the categories of drugs that are packaged (such as drugs that function as supplies in surgical or diagnostic procedures). Drugs and biologicals are also packaged if they are billed with a comprehensive APC service. Drugs that are not packaged under the OPPS drug packaging policies are paid separately, generally at average sales price (ASP) +6%.

Physician Fee Schedule

The Medicare Physician Fee Schedule (PFS) governs payment for physician and non-physician practitioner services under Part B. Payments under the PFS are based on national uniform relative value units (RVUs) that account for the relative resources used in furnishing a service and fall into three categories of resources: work, practice expense, and malpractice expense. CMS also annually incorporates geographic adjustments to reflect variations in the costs of furnishing services in different geographic areas. The conversion factor is a national dollar amount that is multiplied by the total geographically adjusted RVU to determine the Medicare-allowed payment amount for a specific physician service. Some non-drug therapies for pain management are covered as clinician services under the PFS. These therapies can be considered singularly or combined with other therapies as part of a multimodal approach to the management of chronic and acute pain, based on individual needs.

Restorative Therapies

Medicare Part B covers outpatient physical and occupational therapy at 80 percent of the Medicare approved amount, which for some beneficiaries may create a disincentive due to higher out-of-pocket costs for the patient as compared to drug costs. Previously, the Medicare statute-limited the amount of coverage for outpatient therapy available to beneficiaries in a calendar year, but that cap was removed beginning in 2019. Although determining the efficacy of some forms of restorative therapy requires additional study, the Pain Management Best Practices Inter-Agency Task Force (PMTF) report recommends that there should be minimal barriers to accessing modalities for which clear indications of benefits in the treatment of chronic pain exist as part of a recommended multidisciplinary approach.

Legion Health Care Solutions is a leading medical billing company providing complete billing and coding services. For detailed understanding of Medicare coverage policies for chronic and acute pain we referred ‘MS Action Plan to Enhance Prevention and Treatment for Opioid Use Disorder’, you can visit link for detailed understanding. For any assistance in pain management medical billing, contact us at 727-475-1834 or email us at

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