There is also a proposal to modify the UB to identify diagnoses by number and link them to the individual line item being billed, similar to the HCFA Claims will also be edited for "unbundling" prior to the assignment of an APC. The outpatient claims editor will be expanded to include a subset of the CCI edits. Unbundled codes will be eliminated from the claim prior to APC assignment and payment. Packaging of services under the PPS will eliminate separate payment for operating room, recovery room, treatment room, and observation room charges.
Anesthesia, medical, and surgical supplies, drugs except chemotherapy , blood, IOLs, casts, splints, and donor tissue will also be packaged into the APC. This does not mean that you should stop billing for these services!
These services should continued to be reported so that when the weights are recalculated, the data utilized by HCFA will include all of the appropriate costs. Discounting of payments will occur under PPS for some services.
However, significant procedure, medical and ancillary APCs will not be subject to discounting. Weights and rates for APCs were based on Medicare claims and the most recent settled cost report for each facility.
The departmental ratio of cost to charges was utilized to estimate operating and capital costs. The median cost for each APC was calculated after standardizing costs for wage variations. A mid-level clinic visit for cardiology services was assigned a weight of one. The national payment rate was based on projected fiscal year payments for under the current payment system with the elimination of the formula driven overpayment and extension of the 5. However, the proposed system does not provide adjustments for outliers or teaching, rural, disproportionate share, TEFRA or specialty hospitals.
Beneficiary copayments will be determined for each APC. Annual updates to the APC payment will increase the Medicare payment percentage. Hospitals will be allowed to discount their copayment amount in an effort to generate competition between providers.
Hospitals can discount copayments for individual APCs and advertise those discounts. However, this decision must be made prior to the start of the year and cannot be changed during the year. A volume control method is mandated by the Balanced Budget Act to control unnecessary volume increases. HCFA expects hospitals to improve their coding for outpatient services, just as they did for inpatient services when DRGs were implemented. If the CY actual payments exceed the CY target, the CY update factor will be adjusted downward by the same percentage to compensate for that increase.
Total payment for a visit equals the sum of the payments for the individual APC s. PPS will have a significant impact on hospital finances and operations. Hospitals will experience increased financial risk due to the lack of a phase-in, very limited payment adjustments, and volume control induced reductions to future rates.
PPS will also affect hospital operations, particularly the registration, coding, and billing processes and the information systems that support them. Unfortunately, preparing for PPS will be hampered by several factors.
Outpatient data access, availability, and quality is problematic for many hospitals due to the volume of visits and information systems limitations. Outpatient coding is more complex since a visit may contain codes assigned by clinic staff and the charge description master CDM as well as medical records staff. Information systems will need to be modified to support the operational requirements of PPS. Additionally, management and reporting processes based on APCs will need to be developed.
Multiple APCs for a visit will complicate these processes. Hospitals can bill for everything from lab and diagnostic testing, durable medical equipment, pharmacy, surgery, anesthesiology, ambulance service, and emergency and ICU care, and more. Additional information can be found on Centers for Medicare and Medicaid Services website.
Remember Me. Lost your password? Username or E-mail:. Can hospitals bill Medicare for the lowest level ED visit for patients who check into the ED and are "triaged" through a limited evaluation by a nurse but leave the ED before seeing a physician? How have APCs affected hospital outpatient coding? How do APCs work? What areas of hospital outpatient services are paid under the APC methodology? Are drugs and supplies paid for under APCs?
How are APC payments calculated? Is there a requirement that the HCPCS codes submitted for payment to Medicare by the hospital and by a treating physician in the ED be identical, or "match"? What is a Comprehensive APC? Recommendations Answer APCs or "Ambulatory Payment Classifications" are the government's method of paying facilities for outpatient services for the Medicare program.
Answer APCs or "Ambulatory Payment Classifications" are the government's method of paying facilities for outpatient services for the Medicare program. Recommendations Answer Each APC is composed of services which are similar in clinical intensity, resource utilization and cost.
Answer Each APC is composed of services which are similar in clinical intensity, resource utilization and cost. Recommendations Answer APCs were created to transfer some of the financial risk for provision of outpatient services from the Federal government to the individual hospitals, thereby achieving potential cost-savings for the Medicare program.
Answer APCs were created to transfer some of the financial risk for provision of outpatient services from the Federal government to the individual hospitals, thereby achieving potential cost-savings for the Medicare program.
Recommendations Answer APC payments apply to outpatient surgery, outpatient clinics, emergency department services, and observation services. Answer APC payments apply to outpatient surgery, outpatient clinics, emergency department services, and observation services.
Recommendations Answer Yes, but bundling of services into one payment continues to be an overarching theme in Answer Yes, but bundling of services into one payment continues to be an overarching theme in Recommendations Answer Most drugs and supplies have their costs included in the payment for specific visit level or procedure APCs.
Answer Most drugs and supplies have their costs included in the payment for specific visit level or procedure APCs. Addendum A. Recommendations Answer APC payments are determined by multiplying an annually updated "relative weight" for a given service by an annually updated "Conversion Factor". Answer APC payments are determined by multiplying an annually updated "relative weight" for a given service by an annually updated "Conversion Factor".
The coding guidelines should be based on hospital facility resources. The guidelines should not be based on physician resources. The coding guidelines should be clear to facilitate accurate payments and be usable for compliance purposes and audits. The coding guidelines should only require documentation that is clinically necessary for patient care.
The coding guidelines should not facilitate upcoding or gaming. The coding guidelines should be written. The coding guidelines should be applied consistently across patients in the clinic or emergency department to which they apply. The coding guidelines should not change with great frequency. The coding guidelines should be readily available for fiscal intermediary or, if applicable, MAC review.
The coding guidelines should result in coding decisions that could be verified. Recommendations Answer No. Answer No. Recommendations Answer No, ICD codes do not determine ED facility reimbursement and since they are no longer required for observation coding.
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