What is Pass-through?
Pass-through is a term commonly used in the healthcare revenue cycle management (RCM) industry. It refers to a billing arrangement where healthcare providers are reimbursed for the cost of acquiring specific medical devices, drugs, or services, in addition to the standard payment for the procedure or service provided. In other words, pass-through payments are additional payments made to healthcare providers to cover the cost of certain items or services that are not typically included in the standard reimbursement rates.
Pass-through payments are usually made by government payers, such as Medicare or Medicaid, to ensure that healthcare providers have access to new and innovative medical technologies or services. These additional payments help to offset the higher costs associated with using these specialized items or services, which may not be adequately covered by the standard reimbursement rates.
Difference between Pass-through and Add-on Payments
While pass-through payments and add-on payments are often used interchangeably, there is a subtle difference between the two terms. Pass-through payments specifically refer to additional payments made to cover the cost of acquiring specific medical devices, drugs, or services. On the other hand, add-on payments are additional payments made to healthcare providers for the provision of specific services or procedures that require additional resources or expertise.
In essence, pass-through payments are focused on covering the cost of acquiring specific items or services, while add-on payments are focused on compensating healthcare providers for the additional resources or expertise required to perform certain procedures or services.
Examples of Pass-through Payments
To better understand the concept of pass-through payments, let's consider a few examples:
1. Medical Device Pass-through Payments: Imagine a healthcare provider that wants to offer a new, advanced medical device to its patients. However, this device is not covered by the standard reimbursement rates. In such cases, the government payer, such as Medicare, may provide pass-through payments to the healthcare provider to cover the cost of acquiring and using the device. This ensures that patients have access to the latest medical technologies without burdening the healthcare provider with the full cost.
2. Drug Pass-through Payments: Pharmaceutical companies often develop new drugs that offer improved treatment options for specific conditions. However, these drugs may be more expensive than the standard medications covered by reimbursement rates. To encourage the use of these innovative drugs, government payers may provide pass-through payments to healthcare providers to cover the additional costs associated with using these medications. This ensures that patients have access to the most effective treatments available.
3. Service Pass-through Payments: Pass-through payments can also apply to specific services that are not typically covered by standard reimbursement rates. For example, if a healthcare provider offers a specialized service, such as genetic testing or telemedicine consultations, that is not adequately reimbursed, the government payer may provide pass-through payments to cover the additional costs associated with providing these services. This helps to ensure that patients have access to a wide range of healthcare services, even if they are not commonly covered by standard reimbursement rates.
Pass-through payments play a crucial role in healthcare revenue cycle management by providing additional reimbursement to healthcare providers for the cost of acquiring specific medical devices, drugs, or services. These payments help to ensure that patients have access to innovative technologies, medications, and services without burdening healthcare providers with the full cost. Understanding the concept of pass-through payments is essential for healthcare providers, as it allows them to navigate the complex reimbursement landscape and optimize their revenue cycle management strategies.