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Medicare (and other third party providers) reimburses providers a base amount for each
service/CPT Code in addition to an incremental amount for the amount of time used to
deliver the service. CMS has found that States do not necessarily measure time in the
same way that Medicare does, which is by 15-minute unit. Additionally, if the State
included services of CRNA’s (certified registered nurse anesthetists) or other non-
physicians rendering anesthesia, those services will be denoted by CPT Codes with
modifier “QX” and are usually reimbursed by both commercial payers and Medicaid at
a percentage of the fee paid to physicians.
IV. Steps in Calculating Payment Ceiling using the ACR
The average commercial rate (ACR) is used to establish a payment ceiling for supplemental payments
to qualified, enrolled Medicaid practitioners. In order for CMS to evaluate if these payments comport
with section 1902(a)(30(A) of the Act, which specifies that payments must be efficient and economic,
states should submit, in spreadsheet form, a detailed calculation of the average commercial rate (ACR)
or the Medicare equivalent of the ACR for all procedure codes eligible for payment to demonstrate
how the upper limit of payment was established for practitioner supplemental payments. In addition,
states should submit a copy of the invoice which accompanies payment from one of the top
commercial payers to document how it identified the allowed amount for at least one code included in
the demonstration. The names of the commercial payer(s) on the invoice as well as the spreadsheet
detailing the commercial payments can be masked to hide the identity of the payers. States must,
however, disclose the names of the commercial payers included in the calculation of the ACR.
The steps below describe the methodology that states can use to calculate the ACR to establish an
upper payment ceiling for practitioner supplemental payments.
1) Compute the Average Commercial Rate
Calculate the average commercial rate per procedure code from the allowed payment amount
from each eligible provider’s billing system for the top (generally five), or for all, commercial
third party payers (TPP) for the base period. Please see the narrative for further explanation
and instructions in calculating the ACR per procedure. Please indicate in the text box below
the name of the spreadsheet submitted to document the detailed calculation of the ACR.
2) Calculate the Payment Ceiling
a) Multiply the average commercial rate as determined in Step 1 by the number of claims
recorded in MMIS for each procedure code that was rendered to Medicaid beneficiaries by
eligible practitioners during the base period used for Step 1.