Healthcare Reimbursement History Timeline
Congress establishes the U.S. Marine Hospital Service. The service was funded by compulsory contributions from seamen's wages.
First “sickness” clause inserted in insurance documented. The Massachusetts Health Insurance Company of Boston becomes the first insurer to issue sickness insurance.
1849
New York passes the first general insurance law.
Franklin Health Assurance Company of Massachusetts became the first commercial insurance company in the United States to provide private healthcare coverage for injuries that did not result in death.
1910
Montgomery Ward & Co. enters into one of the earliest group insurance contracts.
The American Association of Labor Legislation’s (AALL) committee on social welfare drafted model health insurance legislation. Coverage was intended for those earning less than $1200 a year and their dependents. Despite support from the American Medical Association (AMA), the proposed legislation did not pass.
The Federal Employees’ Compensation Act (FECA) ensures civilian employees of the federal government are provided medical, death, and income benefits for work-related injuries and illnesses. FECA is administered by the Office of Workers’ Compensation Program (OWCP), a division of the Department of Labor.
The Snyder Act of 1921 authorized federal funds for provision of healthcare services for members of federally recognized tribes through Indian Health Services (IHS), an agency within the Department of Health and Human Services.
Justin Ford Kimball, an official at Baylor University Hospital in Dallas, Texas agreed to provide room, board, and specified services at a predetermined monthly cost to a group of school teachers. This plan is considered to be the first Blue Cross plan.
The Committee on the Cost of Medical Care (CCMC) was formed to address concerns about the cost and delivery of health care and recommended allocation of national resources for healthcare services and provision of voluntary health insurance. The initiative failed.
Patterned after the lumber and miner camps in the Pacific Northwest, the California Physicians’ Service was formed in Palo Alto, California to cover physician fees for medical services. This company was a founder of the Blue Shield organization.
The Wagner Act proposed a federally funded national health program with compulsory health insurance. Congress did not pass the law.
The Hill-Burton Act (formerly Hospital Survey and Construction Act) provided federal grants to modernize hospitals which had become obsolete due to lack of capital investment throughout the period of the Great Depression and World War II (1929 to 1945). In return, Hill-Burton hospitals were required to provide uncompensated services for those unable to pay.
The World Health Organization (WHO) developed the International Classification of Disease (ICD) to code and classify mortality data.
Amendments to the Dependents’ Medical Care Act of 1956 created the Civilian Health and Medical Program – Uniform Services (CHAMPUS) to provide healthcare benefits for dependents of personnel serving in the armed forces.
The Health Insurance Association of America (HIAA) and the American Medical Association (AMA) created a standardized insurance claim form called the Attending Physician Statement (APS). It was not accepted by all third party payers.
The Medicare program was created by Title XVIII of the Social Security Act to provide health care services to individuals over 65 years of age.
Medicaid was created by Title XIX of the Social Security Act as a cost sharing program between federal and state governments to provide healthcare services to low-income individuals.
Professional Standards Review Organizations (PSROs) were created under Title XI of the Social Security Act of 1972. These organizations were contracted to perform quality review, utilization review, and review of medical necessity.
Health Maintenance Organization (HMO) Act of 1973 established benefit, administrative, financial, and contractual requirements for entities seeking designation as federally qualified HMOs. The act also required most employers who offer an HMO to offer a federally qualified HMO.
Employee Retirement Income Security Act of 1974 (ERISA) establishes uniform standards that employee benefit plans must follow to obtain and maintain their tax-favored status. ERISA supersedes or preempts all state law otherwise applicable to pension and welfare plans covered by ERISA. ERISA still recognizes the states' role in regulating insurance.
The Uniform Claim Form Task Force cochaired by the American Medical Association (AMA) and the Centers for Medicare and Medicaid Services (CMS) approved an universal claim form. This form, now known as the CMS-1500, was used to bill third payers for provider services.
The Health Care Financing Administration (HCFA) was created within the Department of Health and Human Services (HHS). Administration of the Medicare and Medicaid programs was transferred to this newly created agency.
The International Classification of Diseases, Ninth Revision (ICD-9) was modified by the National Center for Health Statistics (NCHS) to create the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) to report morbidity data.
Professional Standards Review Organizations (PSROs) were replaced with Peer Review
Organizations (PROs) under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). These organizations were contracted to perform quality review, utilization review, and review of medical necessity.
The National Uniform Billing Committee voted to accept the uniform billing form 82 (UB-82 or CMS 1450) and its associated data manual for implementation as a national uniform billing claim form. The form is used for bill third party payers for institutional services.
Separate associations for Blue Cross and Blue Shield Plans merged to form the Blue Cross and Blue Shield Association (BSBSA).
The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) replaced retrospective reimbursement for inpatient Medicare services with a prospective payment system (PPS). Diagnosis-related groups (DRGs) reimburse a predetermined rate for each hospital discharge.
Medicare introduced the HCFA Common Procedure Coding System (HCPCS) to report supplies and services not included in CPT.
The Federal False Claims Act was amended to include provisions that eliminated the requirement of proving specific intent to defraud. This became the basis for prosecuting healthcare providers knowingly filing a false claim for payment to the government.
The Health Care Financing Administration released a new version of the HCFA 1500 printed in red ink to meet optical scanning guidelines.
The International Classification of Diseases and Related Health Problem, Tenth Revision (ICD10) was endorsed by the Forty-third World Health Assembly of the World Health Organization (WHO) in May.
A major revision by the American Medical Association (AMA) and the Health Care Financing
Administration (HCFA) of Current Procedural Terminology (CPT) introduced a new section called Evaluation and Management (E/M) codes. E/M codes described patient encounters with health care providers and replaced the office visit codes previously in the Medicine section of CPT.
The Centers for Medicare and Medicaid Services (CMS) implemented a Resource-Based Relative Value Scale System (RBRVS) for physician’s services under Medicare Part B. This system reimbursed on a fee schedule of predetermined rates.
A three month phase in of the uniform billing form 92 (UB 92 or CMS 1450) began October 1st.
After December 31, 1993, the UB 82 was no longer be accepted. The UB 82 was revised to the UB 92 after numerous state surveys by the National Uniform Billing Committee. The form continued to be used for bill third party payers for institutional services.
TRICARE replaced the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) program.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandated regulations governing privacy, security, and electronic transactions standards for healthcare information.
The Correct Coding Initiative (CCI) was developed by the Centers for Medicare and Medicaid Services (CMS) to reduce Medicare expenditures by detecting inappropriate codes on claims and denying payment on these claims.
The Workgroup on Electronic Data Interchange (WEDI) was created to reduce administrative costs through implementation of electronic data interchange (EDI).
The Children's Health Insurance Program (SCHIP), a new state children's health program, was created.
The Payment Error Prevention Program (PEPP) was initiated by the Department of Health and Human Services to identify and reduce improper Medicare payments.
The National Center for Health Statistics (NCHS) released the International Classification of
Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) for a comment period from December 1997 to February 1998. ICD-10-CM is the planned replacement for ICD-9-CM, volumes 1 and 2.
The Balanced Budget Act mandated implementation of a skilled nursing facility prospective payment system (SNF PPS) using Resource Utilization Groups (RUGs).
The ICD-10-PCS was developed by 3M Health Information Systems as a replacement for ICD-9CM) volume 3, Procedures. A final draft of the system was completed and submitted HCFA in March with a final report submitted in December 1998.
The OPPS which utilizes APCs to calculate reimbursement is implemented for billing of hospital based outpatient claims.
As a result of the Balanced Budget Act, a home health prospective payment system (HH PPS) for reimbursement of services provided to Medicare beneficiaries.
The HIPAA transaction regulation is published adopting nine X12 transactions for the health care industry. The Accredited Standards Committee X12 (ASC X12) is contracted by HHS, SDOs and DCCs to manage the EDI standards adopted under HIPAA.
On June 14, 2001 the Health Care Financing Administration (HCFA) changed its name to the Centers for Medicare and Medicaid Services (CMS). The name of the HCFA Common Procedure Coding System (HCPCS) was also changed to Healthcare Common Procedure Coding System.
The Inpatient Rehabilitation Facilities Prospective Payment System (IRF PPS) was implemented as a result of the Balanced Budget Act (BBA). A new Medicare payment system for medically necessary ambulance transports was also implemented. A five year transition of a long-term care hospital prospective payment system was mandated.
The Centers for Medicare and Medicaid Services (CMS) announced that peer review organizations (PROs) will be known as quality improvement organizations (QIOs). QIOs continued to perform utilization and quality review of Medicare patient health care services.
The Medicare Prescription Drug Improvement and Modernization Act of 2003 amended Title XVIII of the Social Security Act to provide seniors and persons with disabilities a prescription drug benefit. This provision is commonly referred to as Medicare Part D.
Based upon a field test conducted by the American Hospital Association (AHA) and the American Health Information Management Association (AHIMA) and suggestions from the open comment period, additional modifications to the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) were made.
An Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) mandated by the Balanced Budget Refinement Act (BBRA) was implemented.
The National Provider Identifier (NPI) is implemented. Providers apply beginning May 23rd for reporting on electronic claims by May 23, 2007.
The UB-92 was replaced with the UB-04 during a transitional implementation period from March 1st through May 23rd.
The Centers for Medicare and Medicaid Services (CMS) implemented the revised CMS 1500 which accommodates reporting of the National Provider Identifier (NPI) during the transition period beginning January 1st and ending April 2nd.
A Present on Admission (POA) indicator must be reported for every acute care inpatient claim.
Beginning October 1st through September 30, 2008, reimbursement became a 50/50 blend of Medicare Severity Diagnosis Related Groups (MS-DRGs) and the previous DRG system
The National Center for Health Statistics (NCHS) released the updated July 2007 ICD-10-CM for public viewing representing ICD-9-CM modifications from 2003-2007 and ICD-10 modifications from 2002-2006.