1、APGs & APCs,Ambulatory Patient Groups & Ambulatory Patient Classifications,What are APCs,Method used to pay hospitals & ambulatory surgery centers for outpatient services using a prospective payment system (PPS) Providers receive fixed payments for individual services Services assigned to various AP
2、C categories,What are APCs,APCs developed from Ambulatory Patient Groups (APGs) Amount & type of resources used in an outpatient visit are grouped in APC categories Services in each APC have similar clinical characteristics, resource use, & cost,What are APCs,Each APC group assigned a weight value a
3、pplied to a conversion factor to yield a hospital payment Conversion factor for 1999 = $51.42 Based on 1996 data from claims paid & cost data,Why APGs Were Developed,To encompass the full range of ambulatory settings i.e. same day surgery units, hospital emergency rooms, outpatient clinics To repres
4、ent ambulatory patients across the entire patient population To differentiate facility & control costs Variation from RBRVS To focus on primacy of hospital care,Current vs. Proposed System,Example: current system Total charges = $5,963 Copay (20%) = $1,193 Total MC allowable = $3,578 MC payment (80%
5、) = $2,862 Example: proposed system with outpatient PPS Total charges = $5,963 Copay (20%) = $1,193 Total MC allowable = $3,578 Actual copay (33%) = ($1193) Total MC payment = $2,385,Current vs. Proposed System,Variance between systems Difference = Proposed (outpatient PPS) - Current= $2,385 - $2,86
6、2= ($477) Increased cost control with proposed system of outpatient PPS,Cost Reductions With Outpatient PPS,Congressionally mandated 5.8% reduction in amounts payable for hospital operating costs 10% reduction in amounts payable for hospital capital costs Scheduled sunset 9/30/98 Extended through 12
7、/31/99,Steps in Developing APGs,Choosing initial classification variable DRGs used major diagnostic categories APCs use procedure categories Partition procedures into set of mutually exclusive procedure groups Inpatient only vs. outpatient,Steps in Developing APGs,Procedures done on ambulatory basis
8、 then assigned to a class Significant procedure Constitutes reason for visit Ancillary service procedure Ordered to assist in diagnosis & treatment,Steps in Developing APGs,Significant Procedure APGs then divided into groups of CPT-4 codes based upon body system associated with the procedure Integum
9、entary system Musculoskeletal system Respiratory system Cardiovascular system Hematologic, lymphatic, & endocrine system,Steps in Developing APGs,APGs divided based upon body system (cont.) Digestive system Urinary system Male & female genital system Nervous system Eye & ocular adnexa (accessory par
10、ts) Facial, ear, nose, mouth, & throat,Steps in Developing APGs,APGs divided based upon body system (cont.) Therapeutic & other significant radiology procedures Physical medicine & rehabilitation Mental illness & substance abuse therapies,Steps in Developing APGs,Each significant procedure then assi
11、gned to a body system & subdivided into clinically similar classes Example: classes of surgical procedures Example: classes of medical procedures Signs, symptoms, & findings + underlying disease provides indication extensiveness of condition,Steps in Developing APGs,Example: Classes of Surgical Proc
12、edures Variable Example_ Site Face, hand, etc. Extent Excision size 2 cm x 20 cm Purpose Diagnostic or therapeutic Type Incision, excision, or repair Method Surgical, endoscopic, etc. Device Insertion or removal Medical Specialty Urology, gynecology, etc.,Steps in Developing APGs,Example: Classes of
13、 Surgical Procedures Method = primary classification variable Extent of procedure also important Medical specialty, although classified as a variable, not important Procedures performed by different medical specialties are placed in different APCs,Steps in Developing APGs,Example: Classes of Medical
14、 Procedures Variable Example_ Etiology Trauma, malignancy, etc. Body system Respiratory, digestive, etc. Type of disease Acute, chronic Medical specialty Internal medicine, pediatrics Patient age Pediatric, adult Patient type New, old Complexity Time required, treatment,Steps in Developing APGs,Exam
15、ple: Classes of Medical Procedures Primary variable forming medical APC is diagnosis coded as reason for visit-etiology Visit complexity also important because it influences number of visits + overhead costs,Steps in Developing APGs,Development of ancillary service APGs Laboratory APGs assigned as a
16、 function of different lab departments i.e. hematology, microbiology, toxicology Testing method also used Different methods for performing same test assigned to same APC Also differentiated based on test complexity,Steps in Developing APGs,Ancillary service APGs (cont.) Radiology APCs assigned as a
17、function of equipment used i.e. MRI, CAT, plain film Nuclear medicine separated into diagnostic & therapeutic groups Five radiologic procedures are considered significant procedures because they are interventional & meet definition of Significant Procedure,Steps in Developing APGs,Ancillary service
18、APGs (cont.) Pathology divided into two APGs as a function of complexity PAP Smears assigned separate APG Anesthesia assigned to single APG,Steps in Developing APGs,Ancillary service APGs (cont.) Chemotherapy divided into two significant procedures as a function of route of administration Intravenou
19、s Continuous infusion Five additional chemotherapy APGs formed as a function of cost of chemotherapy drugs,Steps in Developing APGs,Ancillary service APGs (cont.) Other ancillary tests & procedures EKGs Pulmonary function tests Vascular tests,Steps in Developing APGs,Ancillary service APGs (cont.) A
20、ncillary APGs performed as part of medical visit & add to cost of visit Immunizations Biofeedback Tube changes Minor reproductive procedures Needle or catheter introduction Minor ophthalmological procedures,Components of APC-Based Outpatient PPS,Basis of payment weights Charges or costs Higher if co
21、mputed from historical charges Therefore, historical cost basis more likely,Components of APC-Based Outpatient PPS,Ancillary packaging Inclusion of certain ancillary services into APC rate for significant procedure or medical visit Full packaging of all routine low cost procedures is likely,Componen
22、ts of APC-Based Outpatient PPS,Outlier policy Covers atypical cases having higher costs than APC payment amount A stop loss provision Likely to be minimized,Components of APC-Based Outpatient PPS,Discounting When multiple significant procedures are performed or when same ancillary procedure performe
23、d multiple times Window of time for ancillary packaging Can be expanded well beyond the day of a visit,APC Payment System,Patient is described by list of APCs corresponding to each service provided to that patient Contrast to DRGs Multiple APCs can be assigned to a single patient whereas DRGs form a
24、 hierarchy Example: Patient has two procedures performed + chest x-ray + blood test Four APCs are assigned,APC Payment System,Incentives to encourage efficiency & to stanch upcoding are built into system Ancillary packaging Services that contribute to the cost of services in an APC but which are not
25、 paid for separately i.e. chest x-ray packaged with patient pneumonia visit,APC Payment System,Incentives (cont.) Ancillary discounting Multiple procedures 100% of APC with highest payment rate & 50% for all other APCs i.e. multiple significant procedures performed or same procedure performed multip
26、le times Two surgical procedures performed at same time but the cost of prep & use of procedure room is shared by procedures Therefore a discount is applied Terminated procedures,APC Payment System,Use of beneficiary copayment National unadjusted copayment using 1996 median charges + 135 for 1999 Mu
27、ltiplied by 20% Minimum copayment Payment rate x 20%,APC Payment System,Medicare payments Wage adjusted APC payment Pay the lesser of the program percentage determined for each APC or 80%,Example: APC Payment,Breast biopsy: APC 197 Relative weight (RW): 11.94 Conversion factor (CF): $51.42Proposed P
28、ayment Rate = RW x CF= 11.94 x $51.42= $613.95Total Payment = $613.94 + patient copay,Number of APCs,APC Type_# of APCs Significant procedure 47 Procedure 133 Ancillary services 44 Visits to clinic & ER 120 Partial hospitalization services_ 1_TOTAL 345Update:10/3/99,Outpatient Services Grouped into
29、APCs,Partial hospitalization services furnished in community mental health centers & hospitals Surgical procedures Designated only Radiological procedures Includes radiation therapy Diagnostic services & tests,Outpatient Services Grouped into APCs,Screening tests that are covered i.e. colorectal scr
30、eening Medical services & covered vaccines when furnished by a provider of services Medical services include antigens, splints, casts, etc. Vaccines include pneumococcal, influenza, hepatitis B, etc.,Outpatient Services Grouped into APCs,Clinic visits Emergency Department visits Chemotherapy for can
31、cer Surgical pathology Supplies i.e. surgical dressings,Outpatient Services Grouped into APCs,Services furnished to SNF inpatients exempt from consolidated billing i.e. MRI, CT scans, cardiac catheterization, ambulatory surgery, ER visits, angiography, lymphatic & venous procedures, radiation therap
32、y, etc. Services furnished to inpatients who have exhausted Part A benefits or otherwise not covered under Part A,Advantages of APCs,Advantages of a Visit-Based APC PPS,Many similar services are aggregated thereby reducing the number of service units Need to establish separate payment rates for mino
33、r differences in the unit of service is eliminated i.e. 99211 vs. 99212,Advantages of a Visit-Based APC PPS,Opportunity for unbundling units of service is greatly reduced Financial incentives as used package ancillary services efficiently Multiple procedures during a single visit reasonably compensa
34、ted but not excessively rewarded,Advantages of a Visit-Based APC PPS,Payment of medical visits a function of type of patient treated, not level of effort reported by physician Ultimately, greater control of costs Expected that other third party payers will follow HCFAs lead in using APCs for outpati
35、ent reimbursement i.e. DRGs, RBRVS,Implementation of APCs,Implementation Issues to be Addressed,Volume of visits Must work to minimize incentives to increase visits for certain services Upcoding & fragmentation of procedure codes New compliance issues for providers,Implementation Issues to be Addres
36、sed,Identification of visits Clear rules needed on reporting dates of service, what revenue trailers are to be permitted or prohibited, & how how batched bills are to be submitted Shift of ancillaries to non-hospital settings due to ancillary packaging Must be able to identify hospital-ordered proce
37、dures performed in non-hospital setting,Implementation Issues to be Addressed,Payment of ancillaries ordered outside of hospital Must be mindful of incentives to shop for most advantageous price to the provider Applicability Will PPS be applicable to non-hospital entity providing similar services,Im
38、plementation Issues to be Addressed,Consistency with inpatient payment levels Must be mindful for financial incentives to move patient services,Implementation Issues to be Addressed,Computation of prospective APC payment rates Must watch to see if a practices historical cost structure has been too h
39、igh This will peg APC too high,Implementation Issues to be Addressed,Hospital specific payment adjustments Need to be careful regarding inclusion of adjustments for labor costs & outliers Can render APCs at too high a level Can occur when single procedure reported using multiple procedure codes,Impl
40、ementation of APCs,APC implementation projected to occur between July 1, 2000 and January 1, 2001,Preparing for APCs,Activities to Prepare for APCs,Budgeting & planning Estimate expected revenues Focus activities Categorizing services appropriately Training for physicians Accurate coding Develop bas
41、eline to evaluate progress Goals to decrease errors & increase reimbursement,Provider Responsibilities,Accurate & complete coding for services Adequate documentation in medical records to support APC category assignments,Importance of Data Quality,Quality of data recorded on claims will directly aff
42、ect reimbursement Providers will either undercode or overcode Quality of providers historical claims data will affect ability to evaluate potential impact of APCs,Balanced Budget Act,Balanced Budget Act of 1997,BBA of 1997,Enacted August 5, 1997 Required HCFA to adopt an outpatient PPS by January 1,
43、 1999 Delayed due to Y2K issues,Balanced Budget Act,Revisions Balance Budget Refinement Act 1999,Key Changes to BBA,Reverse 5.7% payment reduction in the conversion factor System is supposed to be budget neutral Conversion factor should be calculated so that fee schedule amounts under PPS would equa
44、l the total amounts estimated by DHHS to be paid for outpatient services,Key Changes to BBA,Transition to outpatient PPS 3 year transition to protect against significant payment reductions Affects hospitals & ambulatory surgery centers,Key Changes to BBA,Delay PPS implementation for rural hospitals
45、3 year cost-based reimbursement option Must have less than 100 beds,Key Changes to BBA,Outlier adjustment for high cost cases & transitional pass-through payments for new drugs & medical devices 2-3 year transitional pass-through for additional costs of innovative devices & drugs Payments must be bu
46、dget neutral & cannot exceed portion of all outpatient payments Due to underpayment & potential prevention of the introduction of new drugs & devices,Key Changes to BBA,Limitation on outpatient hospital copay for a procedure to the inpatient hospital deductible amount Copay cannot exceed inpatient d
47、eductible Medicare will increase payment to hospital to reflect copay reduction,Key Changes to BBA,Therapy caps moratorium Will not apply until implementation of consolidated billing Recommend to include appropriate utilization & functional status in payment modifications,Key Changes to BBA,Secretar
48、y required to review outpatient payment group rates annually & update when necessary Payment for implantable devices made through outpatient PPS,Administrative Changes,More homogenous APC groups Will also create new APCs where needed to provide accurate payments for services provided Will prevent pa
49、yment redistributions,Administrative Changes,Unbundling of supportive therapies Separate APCs for supportive & adjunctive therapies for cancer patients Originally had reimbursement bundled with other APC groups,Administrative Changes,Unbundling of blood products Separate APCs for blood, blood products, & anti-hemophilic factors Originally had reimbursement bundled with surgical procedures & transfusions,Administrative Changes,Cost-based payment for corneal tissue Cover actual costs to prevent both underpayment & overpayment Originally bundled with corneal transplant surgery,
