APC (Ambulatory Payment Classifications) FAQ APCs or “Ambulatory Payment Classifications” are the government’s method of paying facilities for outpatient services for the Medicare program. A part of the Federal Balanced Budget Act of 1997 required HCFA (now CMS) to create a new Medicare “Outpatient Prospective Payment System” (OPPS) for hospital outpatient services -analogous to the Medicare prospective payment system for hospital inpatients known as “Diagnosis Related Groups” or DRGs.
This OPPS was implemented on August 1, 2000. APCs are an outpatient prospective payment system applicable only to hospitals and have no impact on physician payments under the Medicare Physician Fee Schedule. APC payments are made only to hospitals when the Medicare outpatient is discharged from the ED or clinic or is transferred to another hospital (or other facility) which is not affiliated with the initial hospital where the patient received outpatient services.
If the patient is admitted from a hospital clinic or ED, then there is no APC payment, and Medicare will pay the hospital under inpatient DRG methodology. Each APC is composed of services which are similar in clinical intensity, resource utilization and cost.
- All services (identified by submission of CMS’ Healthcare Common Procedure Coding System (HCPCS) codes on the hospital’s UB 04 claim form) which are grouped under a specific APC result in an annually updated Medicare “prospective payment” for that particular APC.
- Many HCPCS codes are derived directly from the AMA CPT.) Since this payment is a prospective and “fixed” payment to the hospital, the hospital is at risk for potential “profit or loss” with each APC payment it receives.
The payments are calculated by multiplying the APCs relative weight by the OPPS conversion factor and then there is a minor adjustment for geographic location. The payment is divided into Medicare’s portion and patient co-pay. Co-pays vary between 20 and 40% of the APC payment rate.
- Eventually this percent will be capped at 20% of the payment rate.
- A status indicator is assigned to each code to identify how the service is priced for payment.
- For example, Status Indicator (SI) “F” – Corneal Tissue Acquisition; Certain CRNA Services and Hepatitis B Vaccines, is not paid under OPPS but is paid on reasonable cost basis.
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. By transferring financial risk to hospitals, APCs incentivize hospitals to provide outpatient services economically, efficiently and profitably.
- In 2016, CMS revised the instructions and APC for Comprehensive Observation Services (COS). In 2019, for Observation (APC 8011), a clinic or ED visit is identified through alphanumeric codes:
- 99281 (ED Level 1)99282 (ED Level 2)99283 (ED Level 3)99284 (ED Level 4)99285 (ED Level 5)G0380 (Type B emergency department visit, Level 1)G0381 (Type B emergency department visit, Level 2)G0382 (Type B emergency department visit, Level 3)G0383 (Type B emergency department visit, Level 4)G0384 (Type B emergency department visit, Level 5)99291 (Critical Care)
G0463 (Hospital outpatient clinic visit for assessment and mgmt. of a patient). The following services are included in the Observation Comprehensive APC (C-APC) 8011:
- Any procedure that is assigned Status Indicator “T” (Paid under OPPS; separate APC payment);
- Any claim containing 8 or more units of services described by HCPCS code G0378 (Observation services, per hour);
- Claims that contain services provided on the same date of service or 1 day before the date of service for HCPCS code G0378 and described by one of the following codes:
- G0379 (Direct referral of patient for hospital observation care) on the same date of service as one of the following:
- HCPCS code G0378;
- 99281 (ED Level 1)99282 (ED Level 2)99283 (ED Level 3)99284 (ED Level 4)99285 (ED Level 5)G0380 (Type B emergency department visit, Level 1)G0381 (Type B emergency department visit, Level 2)G0382 (Type B emergency department visit, Level 3)G0383 (Type B emergency department visit, Level 4)G0384 (Type B emergency department visit, Level 5)99291 (Critical Care)G0463 (Hospital outpatient clinic visit for assessment and mgmt. of a patient)
- Claims that do not contain a service that is described by a HCPCS code to which status indicator “J1” has been assigned (J1- Paid under OPPS; all covered Part B services on the claim are packaged with the primary “J1” service for the claim, except serv
- See the Observation FAQ for additional information on any OPPS changes for Observation services.
Yes, but bundling of services into one payment continues to be an overarching theme in 2020. Durable Medical Equipment is paid through non-APC methodology. However, most, if not all of the lab tests we order in the ED will now be bundled. Tests that are not bundled include diagnostic radiology studies, bedside ultrasounds, and EKG’s.
Add-ons that are not bundled include IV infusions and IV push dose medications. In 2017, the OPPS bundles a lot of additional services that were paid separately prior to 2015 such as minor ancillary services with a geometric mean cost of less than or equal to $100 and assigned Status Indicator Q1 ( Paid under OPPS; Addendum B displays APC assignments when services are separately payable: (1) Packaged APC payment if billed on the same claim as a HCPCS code assigned status indicator “S,” “T,” or “V.” (2) Composite APC payment if billed with specific combinations of services based on OPPS composite-specific payment criteria.
Payment is packaged into a single payment for specific combinations of services. (3) In other circumstances, payment is made through a separate APC payment. These include clinical laboratory services provided with other outpatient services and many add-on codes as well as new device-intensive comprehensive APCs.
These ancillaries will be paid separately when they are the only service provided, e.g., X-rays, EKGs, laboratory blood bank and pathology services and certain respiratory tests and treatments. Most drugs and supplies have their costs included in the payment for specific visit level or procedure APCs.
This is generally applicable to drugs and supplies which cost less than $60 per day. For many drug or supply items which cost $60 or more, there is separate payment under unique APCs. Drug administration services such as IVs and IM injections are paid separately.
|Addendum A.-Final OPPS APCs for CY 2022|
|APC||CPT||Group Title||SI||Relative Weight||Payment Rate|
|5021||99281||Level 1 Type A ED Visits||V||0.8801||$74.08|
|5022||99282||Level 2 Type A ED Visits||V||1.5937||$134.15|
|5023||99283||Level 3 Type A ED Visits||V||2.8078||$236.35|
|5024||99284||Level 4 Type A ED Visits||V||4.4136||$371.52|
|5025||99285||Level 5 Type A ED Visits||V||6.3351||$533.27|
|5031||G0380||Level 1 Type B ED Visits||V||0.8570||$72.14|
|5032||G0381||Level 2 Type B ED Visits||V||1.1612||$97.75|
|5033||G0382||Level 3 Type B ED Visits||V||2.1961||$184.86|
|5034||G0383||Level 4 Type B ED Visits||V||2.7745||$233.55|
|5035||G0384||Level 5 Type B ED Visits||V||3.8665||$325.47|
Other common APCs in the ED
|APC||HCPCS Code||Short Descriptor||SI||Relative Weight 2022||Payment 2022|
|5051||12001||Simple repair, 2.5 cm||T||2.1788||$183.40|
|5052||12031||Intermediate repair 2.5 cm||T||4.1936||$353.00|
|5051||10060||Drainage of skin abscess||T||2.1788||$183.40|
|5161||31500||Insert emergency airway||T||2.5668||$216.07|
|5722||92950||Heart/lung resuscitation CPR||S||3.2110||$270.29|
|5692||96372||Ther/proph/diag inj sc/im||S||0.7522||$63.32|
|5693||96374||Ther/proph/diag inj iv push||S||2.4820||$208.93|
|5693||96365||Ther/proph/diag iv inf init||S||2.4820||$208.93|
|5691||96366||Ther/proph/diag iv inf addon||S||0.4855||$40.87|
|5521||70350||X-ray head for orthodontia||S||0.9814||$82.61|
|5521||71046||X-ray exam chest 2 views||S||0.9814||$82.61|
APC payments are determined by multiplying an annually updated “relative weight” for a given service by an annually updated “Conversion Factor”. CMS publishes the annual updates to “relative weights” and the “conversion factor” in the November “Federal Register”.
The APC “conversion factor” for 2022 is $84.177. For example, to calculate the APC payment for APC 5051 (includes I & D of simple abscess—CPT 10060): Relative Weight for APC 5051 =2.1788, the Conversion Factor for 2022 = $84.177. Multiply RW 2.1788 x CF $84.177 = $183.40 payment for APC 5051 for year 2022 (for the “average US hospital”).
There is further modification of the APC payment according to adjustments for “Local Wage Indices.” Medicare determined that 60% of the APC payment is due to employee wage costs. Since different areas of the country have widely divergent local wage scales, 60% of each APC payment is adjusted according to specific geographic locality.
- The 2022 OPPS rule increases reimbursement under the Medicare program by 2% for hospitals that meet quality reporting requirements.
- Concurrently, CMS will increase penalties for noncompliance with hospital price transparency requirements.
- For 2022, Medicare still has not published “national standards” for hospital assignment of E/M code levels for outpatient services in clinics and the ED.
CMS did, however, in 2014 collapse clinic, outpatient and office visit levels of service into one payment which combines new and established patient visits into one payment. Emergency medicine remained exempt from the collapse of the E/M levels for 2020.
CMS has stated that each hospital may utilize its own unique system for assignment of E/M levels, provided that the services are medically necessary, the coding methodology is accurate, consistently reproducible, and correlates with institutional resources utilized to provide a given level of service.
CMS continues to monitor the E/M levels coded on a national basis and indicated that 2010 claims data used for the 2013 review indicates normal and relatively stable distribution of clinic and emergency department visit levels compared to 2009 data. CMS has noted a slight shift toward higher numbers of level 4 and 5 visits relative to lower level visits for Type A emergency department visit levels.
CMS will continue to monitor this trend through claims volume data. (NOTE: Only the distribution of the Medicare patients discharged from the ED is counted, because ED services for those patients admitted as inpatients are bundled into the facility DRG). In 2007, CMS established a lower level of ED called a Type B ED for services offered in a facility-based ED that was not open 24/7.
See the November 27, 2007 Federal Register for further discussion on Type A and B ED’s. While there are no specific CMS national guidelines CMS has given providers direction in the form of general guidelines including the following:
- The coding guidelines should follow the intent of the associated CPT code descriptor in that the guidelines should be designed to reasonably relate the intensity of hospital resources to the different levels of effort represented by the code.
- 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 meet the HIPAA requirements.
- 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
No. CMS has stated that Medicare does not expect a “high degree of correlation” of the HCPCS codes submitted by hospitals vs. those submitted by physicians. CPT codes were developed by the AMA to capture physician cognitive and procedural services and were never intended for capturing the utilization of hospital resources, Medicare recognizes there may be significant differences in coding between the hospitals and physicians-even though the patient received services from both entities during the same outpatient encounter.
Consider this scenario, the ED resources include support of the ED physician and any consultant who comes to the emergency department. As the facility HCPCS reflects the support and assistance provided to both physicians, you could expect to see a higher level of care for the facility than for the emergency physician.
Conversely, the physician level of service may exceed the E/M coded by the facility. The key concept is that facility and professional coding and billing are two distinct systems. In 2011 OPPS, CMS restated its position on “Triage-only” visits confirming that it does not specify the type of staff who may provide services.
“A hospital may bill a visit code based on the hospital’s own coding guidelines which must reasonably relate the intensity of hospital resources to different levels of HCPCS codes. Services furnished must be medically necessary and documented.” However, in a 2012 CMS indicated in a Facility FAQ, that Hospital outpatient therapeutic services and supplies (including visits) must be furnished incident to a physician’s service and under the order of a physician or other qualified practitioner.
CMS stated that an ED visit would not be paid if the patient encounter did not meet the incident to requirement (the patient would need to be seen by an ED physician or non-physician practitioner). Services provided by a nurse in response to a standing order also do not satisfy this requirement.
- Since diagnostic services do not need to meet the requirements for incident to services, they may be coded even if the patient were to leave without being seen by the physician.
- No, ICD-10 codes do not determine ED facility reimbursement and since 2007 they are no longer required for observation coding.
ICD-10 codes can establish medical necessity for the level of services or procedures billed and Medicare’s edit system thus looks for certain ICD-10 codes for some services. These ICD-10s can be identified by looking up CMS’s local and national coverage decision (LCDs and NCDs) documents for each procedure.
On October 1, 2015, the ICD-9 diagnosis coding methodology was replaced by the ICD-10 system. Prior to Aug.1, 2000, hospitals were reimbursed by Medicare for outpatient services on a “cost-basis”. CPT codes were not required on the UB-92 claim forms and hospitals received reimbursement based on their reported “costs” for drugs, supplies, E&M services (such as ED visits), etc.
Under OPPS, it is essential to document and capture all services provided by the hospital, since the efficiency and resource utilization of the hospital will determine whether the hospital incurs a “profit or loss” on each Medicare outpatient encounter.
- Thus, it is imperative that hospital staff accurately and completely document all services provided to Medicare beneficiaries in the outpatient areas.
- Physicians can greatly assist their hospitals by being as diligent as possible in their documentation efforts.
- For example, physician documentation of such services as insertion of a CV line (CPT 36556 (APC 5183) and 36557 (APC5184) will assist the hospital coders in assignment of these codes—with ultimate payment in 2022 by Medicare of 5183 ($2,923.63) and APC 5184 ($4,870.25) to the “average US hospital”).
Increasing cooperation between physicians and hospitals in medical records documentation is critical to the economic survival of both members of the “healthcare team.” Evaluation and Management Services and other procedures are distinct and separately billable services.
- By billing a surgical procedure code that describes the service, the facility is paid for the resources used to support the performance of the procedure.
- Facility charges include support for all providers; emergency physician, mid-level provider or consultant who provided services in the emergency department for a patient.
Most supplies and medications associated with the procedure will be paid as a combined payment for the surgical service. The E/M service is billed separately and includes the services related to the Evaluation and Management service. It is permissible for hospitals to reference surgical procedures in their E/M criteria as a proxy for the acuity and resources for the Evaluation and Management services prior to and following the procedure.
In the 2008 OPPS final rule, CMS clarified “In the absence of national visit guidelines, hospitals have the flexibility to determine whether or not to include separately payable services as a proxy to measure hospital resource use that is not associated with those separately payable services.” Hospitals must be able to substantiate any decision to include otherwise separately payable services as a determining factor in the ED level assignment and be able to clearly articulate why those services reflect a proxy for additional hospital resource consumption.
Although CMS instructs hospitals to follow the content of the CPT Critical Care descriptors, there is one significant difference when billing facility Critical Care services. Physician billing of Critical Care time allows the counting of non-face-to-face time spent working on the patient’s behalf, APC facility billing does not.
- All time billed for Critical Care by hospitals under APCs must account for patient face-to-face time and cannot duplicate time spent by more than one individual simultaneously at the bedside.
- Thus, hospitals need to be aware that Critical Care time for the facility is counted differently than physician time and should address separate documentation of this service.
CMS defines a comprehensive APC as a classification for the provision of a primary service and all adjunct services provided to support the delivery of the primary service. They have determined that the adjunct costs are relatively small for these APCs.
The comprehensive APC would treat all individually reported codes as representing components of the comprehensive service, resulting in a single prospective payment based on the cost of all individually reported codes on the claim that represent the delivery of a primary service as well as all adjunct services provided to support that delivery.
CMS defines “adjunctive services,” as any service that is integral, ancillary, supportive, and/or dependent to the primary service. These services are assigned Status Indicator J1. For example, HCPCS Code 93618, Heart rhythm pacing, assigned Status Indicator J1 as a Comprehensive APC under APC 5211 has a 2022 relative weight of 13.5134 for a total payment of $1,137.52.
Thus, the APC payment for heart rhythm pacing would include any additional service associated with the pacing in the payment for the pacing service. As defined by Status Indictor J1, all covered Part B services on the claim are packaged with the primary “J1” service except for services with OPPS status indicators F, G, H, L and U as well as ambulance services, diagnostic and screening mammography and all preventive services.
Additional Reading: https://www.govinfo.gov/content/pkg/FR-2021-11-16/pdf/2021-24011.pdf : APC (Ambulatory Payment Classifications) FAQ
What are APC codes?
APC Codes – Ambulatory Payment Classification Codes – Medical Codes APCs or Ambulatory Payment Classifications are the United States government’s method of paying for facility outpatient services for the Medicare (United States) program. A part of the Federal Balanced Budget Act of 1997 made the Centers for Medicare and Medicaid Services create a new Medicare “Outpatient Prospective Payment System” (OPPS) for hospital outpatient services -analogous to the Medicare prospective payment system for hospital inpatients known as Diagnosis-related group or DRGs.
This OPPS, was implemented on August 1, 2000. APCs are an outpatient prospective payment system applicable only to hospitals. Physicians are reimbursed via other methodologies for payment in the United States, such as Current Procedural Terminology or CPTs. APC payments are made to hospitals when the Medicare outpatient is discharged from the Emergency Department or clinic or is transferred to another hospital (or other facility) which is not affiliated with the initial hospital where the patient received outpatient services.
Although APCs began through the federal system of Medicare, they have also been considered for adoption by state programs, such as Medicaid, and other third-party private health insurers. If the patient is admitted from a hospital clinic or Emergency Department, then there is no APC payment, and Medicare will pay the hospital under inpatient Diagnosis-related group DRG methodology.
What is the APC payment method?
|This article includes a list of references, related reading, or external links, but its sources remain unclear because it lacks inline citations, Please help to improve this article by introducing more precise citations. ( April 2018 ) ( Learn how and when to remove this template message )|
APCs or Ambulatory Payment Classifications are the United States government’s method of paying for facility outpatient services for the Medicare (United States) program. A part of the Federal Balanced Budget Act of 1997 made the Centers for Medicare and Medicaid Services create a new Medicare “Outpatient Prospective Payment System ” (OPPS) for hospital outpatient services -analogous to the Medicare prospective payment system for hospital inpatients known as Diagnosis-related group or DRGs.
- This OPPS, was implemented on August 1, 2000.
- APCs are an outpatient prospective payment system applicable only to hospitals.
- Physicians are reimbursed via other methodologies for payment in the United States, such as Current Procedural Terminology or CPTs.
- APC payments are made to hospitals when the Medicare outpatient is discharged from the Emergency Department or clinic or is transferred to another hospital (or other facility) which is not affiliated with the initial hospital where the patient received outpatient services.
Although APCs began through the federal system of Medicare, they have also been considered for adoption by state programs, such as Medicaid, and other third-party private health insurers. If the patient is admitted from a hospital clinic or Emergency Department, then there is no APC payment, and Medicare will pay the hospital under inpatient Diagnosis-related group DRG methodology.
What is the key difference between APCs and DRGs?
APC Survival Strategies
The purpose of this article is to give a brief history of Medicare reimbursement and how outpatient services are currently reimbursed.? The article then gives an overview of the 2003 APC regulations focusing on radiology. Finally, the article talks about what corrections need to take place to stay financially viable under the current outpatient reimbursement system.
- BACKGROUND Medicare has gone through many changes since the inception of the Medicare program in 1965 in regard to how hospitals are reimbursed.
- From 1965 to 1983, hospitals have been paid on a reasonable cost basis for provider services.
- Under the Medicare system, cost reimbursement is the best payment and fee schedule reimbursement is the worst.
The reason why fee schedule reimbursement is poor is the fact that a hospital is getting paid for services without any consideration for the cost of the services provided. Because hospitals were paid reasonable cost for providing services, there was no incentive to control costs.
For example, if Hospital A’s management controlled costs and Hospital B’s management did not, both hospitals would get reimbursed the same amount for the same service provided. The government recognized this disparity and the fact that Medicare expenditures were increasing every year. In 1983 Medicare developed an inpatient payment system called Diagnosis Related Groups (DRGs).
The DRG system works to control costs by paying for inpatient services on a prospective basis (fee schedule) for a limited range of services. The Medicare program realized savings from the prospective payment system by setting a fixed payment schedule for services, as opposed to paying providers’ cost or charges and bundling together services, such as medical supplies and drugs, that are associated with a procedure or medical treatment.
- In 1984, Medicare started reimbursing outpatient laboratory services based on a fee schedule.
- This was the first time that hospitals experienced a prospective payment in the outpatient arena.
- In 1987, outpatient surgical procedures were paid under a group payment system.
- In 1988, radiology procedures were paid based on Health Care Financing Administration common procedural codes (HCPCS) and cost.
In other words it blended cost and fee schedule. Finally, in 1991, all other diagnostic services required HCPCS coding and were subject to a blended amount of cost and fee schedule. In the 1990s, hospitals were reimbursed for outpatient services under many different reimbursement methodologies.
For example, laboratory services and durable medical equipment were paid under a fixed fee schedule, while composite rate payments were used for end-stage renal disease patients, and finally outpatient surgery, radiology, and other diagnostic procedures were paid under different blended rates of cost and fee schedule.
Two major problems stymied government efforts in the ’80s to control costs with DRGs:
- Hospital could increase outpatient charges to offset inpatient losses.
- Outpatient costs are more difficult to monitor than inpatient costs.
With lengthening life spans continuing to increase the number of Medicare beneficiaries in addition to the problems explained above, the government had to put a new system in place to reduce Medicare expenditures that were increasing at an alarming rate.
- Under the Balanced Budget Act of 1997, the Health Care Financing Administration (HCFA) had to implement an Outpatient Prospective Payment System (OPPS).
- On August 1, 2000, HCFA initiated the new reimbursement system called the Ambulatory Payment Classifications (APCs).
- OVERVIEW OF APCs Unlike DRGs, the APC system affects all hospital departments and requires that many individuals be aware of new billing and coding rules.
The new requirement under the APCs that identifies all services, supplies, and pharmaceuticals with HCPCS codes significantly raises the level of complexity for billing outpatient services. APCs are composed of groups of procedures that are comparable clinically and by resource costs.
Each APC group is reimbursed at a fixed rate. Payment rates are based on HCPCS codes defined in each group. For example, APC group 0260 contains 89 diagnostic x-ray examinations that are reimbursed at $39.92. A hospital would be reimbursed $39.92 no matter if a single view chest x-ray (HCPCS code 71010) or a two-view chest x-ray (HCPCS code 71020) was performed.
APCs apply to services provided in hospital outpatient departments, including: radiology, chemotherapy, surgical procedures, clinic visits, emergency department visits, diagnostic services, partial hospitalization, and surgical pathology. Services not covered under the APCs are those already paid under a prospective payment system (fee schedule) such as laboratory, outpatient therapies, ambulance services, and physician services.
A major difference between DRGs and APCs is that in the DRG system a patient is assigned a single DRG for payment, but under APCs every service provided needs to be coded, because each code could trigger an APC payment. Also, hospitals can receive multiple payments for the same APC and separate payments are made for certain new drugs and devices.
Instead of paying for services based on the actual individual cost of treating a particular patient, this new prospective payment reimbursement is based on national median cost data adjusted for inflation. This median is then multiplied by a geographic conversion factor to arrive at the APC payment.? In addition to receiving an APC group payment for a service provided, a hospital can also receive supplemental payments.
- Outlier payments: Special payments provision that compensates hospitals for cases that are especially costly compared to the average cost of the same type cases. In 2003, an outlier payment will be made if the cost of providing a service exceeds 2.75 times the APC payment for the service, and the amount of the outlier payment will be 45% of the amount by which the provider’s cost exceeds 2.75 times the APC payment.
- Transitional corridor payments: Special payment provision in effect through 2003, designed to limit the decline in hospital payments under APCs. Additional payments depend on the difference between the hospital’s payments under APCs and the hospital’s Medicare payments in 1996. It is important to note that beginning in 2004 this provision will no longer exist.
APCs are effective because they control costs using the following three methods:
- Bundling of related procedures or incidental services. For example, when HCPCS code 73615 (radiologic examination, ankle, arthrography) is performed, HCPCS code 27648 (injection procedure for ankle arthrography) is also performed. Both HCPCS codes are billed but only HCPCS 73615 is reimbursed. HCPCS code 27648 is a related procedure and is bundled into the reimbursement of HCPCS 73615.
- Ancillary packaging. For example, the cost of drugs, pharmaceuticals, biologicals, and supplies is packaged into the APC payment rate for the primary procedure or treatment. Additional payment will be made for expensive drugs and supplies when appropriate.
- Discounting. This is a Medicare policy of paying a reduced amount for multiple surgical services conducted during the same operative session or when a procedure is terminated prior to completion. Currently, there are more than 3,000 services subject to discounting.
The methods used above are powerful tools in controlling costs under APCs. PASS-THROUGH PAYMENTS In order to develop a correct APC- weighted payment for a procedure, the cost must be calculated for the hospital to perform a certain procedure; this includes the cost of drugs, medical devices, and biologicals that may be used in the respective procedures.
- Transitional pass-through payments for devices are based on categories of devices. The additional payment for devices is the difference between the amount attributed to the device in the APC payment rate for the procedure and the hospital’s cost for the device.
- Transitional pass-through payments for drugs are paid for each qualifying drug separately. The additional payment for drugs is the difference between the estimated acquisition price for the drug and 95% of the average wholesale price of the drug.
The items specified by law are the following:
- Current orphan drugs
- Current drugs, biologic agents, and brachytherapy devices used for the treatment of cancer
- Current radiopharmaceutical drugs and biological products
- New medical devices, drugs, and biologic agents
The term “current” refers to items for which Medicare was paying hospital-based outpatient departments at the time the prospective payment system was implemented. “New” items are those that were first paid for after the start of the system. The Center for Medicare & Medicaid Services (CMS) accepts applications for transitional pass-through status for new items on a quarterly basis.
To qualify, an item must be new, make a substantial medical improvement, and have costs that are “not insignificant” compared with payments that would otherwise be made. Specific items qualify for transitional pass-through for only a limited period of time. By law, items may receive pass-through payments for between 2 and 3 years.
Once an item no longer qualifies for pass-through payments, CMS incorporates the payment for that item into the APC payment for the procedure for which it is associated.2003 APC REGULATIONS By law the APC regulations and reimbursement change every year.
- The 2003 rates will be based on approximately 50 million claims for services paid under the OPPS and provided from January 1, 2001, through December 31, 2001.
- This year will be the first time that CMS will use claims submitted after the implementation of the OPPS to revise rates.
- Overall in 2002, total estimated Hospital Outpatient Prospective Payment System (HOPPS) expenditures were $17.7 billion.
Estimated expenditures for 2003 are expected to be more than $18.7 billion. Overall payments will increase by 3.7% in 2003. For 2003, there will be 569 APC groups in the OPPS. One of the biggest changes for 2003 is the expiration of pass-through payments for drugs and medical devices; 95 of 97 device categories will be removed from pass-through status in 2003.
- CMS is not granting any grace period on the 89 pass-through item C-codes (C1713-C2631) that will be deleted January 1, 2003.
- If these items are billed, the claim will be returned unpaid.
- The costs for devices will be packaged into the APCs for which they are used.
- Approximately 233 drugs and biologicals that received transitional pass-through payments in 2001 and 2002 are losing eligibility for pass-through payments in 2003.
The break-down is as follows:
- 118 of these products will be rolled into the APC payment for the procedures in which they are used.
- 115 drugs that have costs greater than $150 per encounter will be paid in separate APCs.
All expiring pass-through drugs, multi-indication orphan drugs, and single source drugs that are not new will be included in one of these two categories for 2003. Here are some of the highlights for 2003 for radiology:
- It is necessary to bill HCPCS code G0236 (digital film converted to digital images for diagnostic mammography) when standard film images are converted to digital images. CMS has expanded the code’s definition to include both standard film and digital film. Also HCPCS code 76085 (digitization of film radiographic images with computer analysis for lesion detection) needs to be billed in conjunction with HCPCS code G0236 even though HCPCS 76085 is not separately payable.
- CMS will start returning claims if add-on procedures and radiologic guidance procedures are billed without the HCPCS code associated with the procedure. An example would be a claim for ultrasound guidance for a biopsy without the code for the biopsy procedure.
- HCPCS codes 76930 through 76965 (ultrasound guidance procedures) were reimbursed in 2001. In 2002, CMS packaged these codes and they were no longer reimbursed. For 2003, these 10 codes are back and will be reimbursed under APC group 268.
- Reimbursement increase will take place on five intravascular and intracardiac echocardiography codes. The codes are 37250, 37251, 92978, 92979, and 93662.
- Another increase takes place for codes 76101 (complex motion body section, other than with urography, unilateral), 70390 (sialography), and 71060 (bronchography, bilateral). They move from APC group 0267 ($82.46) to APC group 0264 ($147.05).
- HCPCS code 75774 (angiography, selective, each additional vessel) moves from APC group 0279 ($395.52) to new APC group 668 ($538.68). This represents an increase of more than 36%. HCPCS code 75978 (transluminal balloon angioplasty, venous) moves from APC group 0280 ($693.82) to new APC group 668 ($538.68); this is a decrease of almost 29%.
- Additional decreases in reimbursement for 2003 will be the following: 1. HCPCS code 75980 (percutaneous transhepatic biliary drainage with contrast) decreases by 52% as it move from APC group 0297 ($361.93) to APC group 0296 ($173.58).2. HCPCS code 75984 (change of percutaneous tube or drainage catheter) drops more than $26 in reimbursement as it moves from APC group 0296 ($173.58) to APC group 0264 ($147.05).3. Reimbursement falls for echocardiography codes 76827, 76825, and 93320, as they move from APC group 0269 ($197) to new APC group 0671($123.30).4. Intracranial study code 93880 will be paid $83.38 (APC group 0266), less than the 2002 reimbursement of $119.12 (APC group 0267).
- Nuclear medicine HCPCS codes (78000-78999) went through a major overhaul; more than 120 codes got reshuffled into APC groups 0290 through 0292. Reimbursement for all three groups are increased? for 2003.
- Finally HCPCS code 75954 (endovascular repair of iliac artery aneurysm) is an inpatient-only procedure for 2003; this code joins HCPCS codes 75900, 75952, and 75953 and are not payable under OPPS.
Also for January 1, 2003, low osmolar contrast material (LOCM) HCPCS codes A4644, A4645, and A4646 are no longer billable codes. LOCM is considered a packaged service under the HOPPS and payment for LOCM is included in the APC for the respective diagnostic procedure(s).
HOW TO SURVIVE APCs We are now entering into our third full year of APCs. Hospitals across the country are still experiencing problems dealing with this new payment system. One of the biggest reasons for this difficulty is the fact that prior to APCs, outpatient reimbursement was driven by charges. In other words, if a hospital did not provide all of the necessary HCPCS codes for the services performed, a reduction in reimbursement usually did not occur because the charges billed were substantive for the services performed.
Now, under APCs all services provided must be billed. If a facility does not bill for every service performed, then a reduction in reimbursement will result. Another fact is that hospitals are not reporting all billable charges. One frequent question from clients is whether it is necessary to bill for items that are packaged or incidental to the procedure.
- Total charges submitted by hospitals for each service will be used to set future APC payment rates. As discussed above, by law, CMS has to review prior year data to make adjustments to APC rates. That is why at the beginning of every year we see major changes to the OPPS system in the way of rate increases, decreases, added APC groups, and APC group adjustments. Whether we like it or not, all hospitals are in this together.
- If hospitals do not submit all covered charges for their outpatient services, it could affect whether they receive an outlier payment.
- Lastly, the transitional corridor payments can be affected if all charges are not submitted. Note this benefit expires at the end of 2003.
ACTION PLAN What do we do now? To survive under APCs, the whole hospital has to be involved to assure that all services are being billed and paid properly. The following action plan can be useful in surviving APCs
- Charge master review
- Medical necessity
- Cost review
EDUCATION The first step in the action plan is to make sure that all departments of the hospital are aware of what APCs are and the impact of this new reimbursement system. Continually educating the appropriate hospital staff about APCs is a must for hospitals to survive.
Education needs to be offered to each department of the hospital and this is usually done best by offering small group interactive sessions. The training offered should be as understandable as possible, the simpler the better. If possible, separate training and education should be offered to physicians so that they understand the complexity of APCs and the financial consequences that APCs can have on a hospital.
To be successful under APCs, it is important that everyone has at least a basic understanding of APCs and that the managers of the departments have detailed understanding. Training should occur on an annual basis to coincide with annual APC updates and smaller, more-detailed training sessions should be offered to billing and coding personnel on a regular basis.
CHARGE MASTER REVIEW A charge master is a price list of all services, supplies, devices, and medications charged for inpatient or outpatient services by a hospital. The primary function of a charge master is to assist a hospital to accurately and efficiently bill for services rendered to the patient.
Charge masters can include more than 25,000 or more line items depending on the type of facility. It is critical that the charge master is reviewed at least on an annual basis, but a quarterly review is preferred. Questions to ask to determine if the charge master has been updated and if a process exists to maintain the charge master include:
- Is the charge master current? Simple question, but based on my experience this is not always true in most facilities.
- Have HCPCS codes been reviewed and updated when codes are added, revised, and deleted? HCPCS coding changes are made multiple times throughout the year by CMS.
- Are clinical department staff and management aware of the specific codes appended to the services or charges they generate? It is critical that clinical personnel are involved in the charge master review process. They bring the expertise on what and how the services are performed in their departments.
- Are all billable services being captured and maintained on the charge master? It is common to find that a facility may be performing a service that does not exist on the charge master.
- Are unused charge items housed and maintained unnecessarily in the charge master? It is important to remove charge items that are no longer used by the facility. By maintaining unnecessary items, they can be billed by mistake.
A 100% line-by-line charge master should be reviewed, and the review should examine the following:
- Identify whether HCPCS codes comply with third-party payor regulations.
- Identify services provided but not billed.
- Identify appropriate revenue codes (UB-92).
- Identify appropriate modifiers.
- Review all charge tickets for accuracy
- Identify correct HCPCS code description.
- Identify services provided that require additional HCPCS codes for billing.
- Identify invalid and unused services.
- Identify nonbillable HCPCS codes under the Medicare Prospective Payment System/Ambulatory Payment Classifications.
A good approach to reviewing the charge master internally is to assemble a cross-functional team made up of the chief financial officer (CFO), finance department, billing department, a management representative from each ancillary department, medical records department, information systems, and compliance officer.
This is not an all-inclusive list, as others can be added or subtracted as warranted. It is important to have the CFO or similar officer introduce the project across the institution to gain cooperation and support. This will also set the tone for the project and its importance, from both a revenue integrity and compliance perspective.
By taking this step, it will be easier to maintain the charge master going forward. It will also give the hospital an opportunity to clean up the charge master and remove any items that are no longer used or appropriate. For the project to be successful, it is important to have one person manage the process.
- Schedule interviews with ancillary departments.
- Provide project updates to all team members.
- Coordinate the implementation of the charge master changes.
After the project is complete, the charge master coordinator would have the following responsibilities:
- On-site resource for coding and charging issues as they relate to the charge master.
- A liaison between departments to further communications and solve problems.
- Responsible for revenue-capture process review.
- Responsible for ongoing updates to the charge master.
- Performing APC audits and reviews.
The first step in billing appropriately for APCs is to have a charge master that is up-to-date and contains accurate coding information for services, supplies, and drugs. RADIOLOGY MODIFIERS Billing for modifiers in radiology has been a major problem for hospitals to handle.
- A service or procedure has been increased or reduced.
- Only part of a service was performed.
- An adjunctive service was performed.
- A bilateral procedure was performed.
- A service or procedure was provided more than once.
- Unusual events occurred.
The root of the confusion with radiology modifiers is the fact that hospitals generally have a noncoder checking off on a charge ticket or entering an order into a charge entry system using some internal hospital code. The noncoder usually does not see the actual HCPCS code that is being assigned.
Listed below are four methods for handling radiology modifiers: 1. Adding line items in charge master for modifiers. For example, additional line items would have to be entered into the charge master for all radiology procedures that can be performed bilaterally with a modifier50. The advantage of this method is that no manual intervention has to be made since a charge code is already established for all bilateral procedures.
The disadvantage of this method is that it works only with certain modifiers. Adding all possible modifiers would increase the charge master tenfold.2. Adding dedicated coders to append modifiers based on what radiology service is performed. The advantage of this is that the dedicated coder would have a good technical knowledge of the radiology procedures performed.
The disadvantage is the cost of having dedicated coders performing this service.3. Customized software. Some information technology savvy hospitals have built logic into their charge entry or order entry software that would query the user as to whether a modifier was required after entering certain radiology codes.
Computer prompts would guide the technician as to whether certain modifiers should be used. The advantage of this is that the radiology technologists are physically located at the point-of-service, they know what tests were rendered, and they are closer to the actual event.
The technologists are queried about modifiers almost immediately after the procedure or test was performed. This process is almost real-time, less intensive, and almost fully automated. The disadvantage is that the radiology manager believes that the additional modifier coding duties take the radiology technologist’s time away from patient care services.
Another disadvantage is cost.4. Retrospective modifier assignment, A radiology report is downloaded each night with all of the radiology transactions charged during the day that are likely to require a modifier. The next day the reports are reviewed and modifiers are appended as needed.
- The advantage of this method is that clinical staff patient care duties are not disrupted, and yet there is someone responsible for working those transactions the next day.
- In addition, there is still some automated logic built into the system to identify transactions where it is likely that a modifier would be needed.
The disadvantages of this method are cost and time. The misuse of radiology modifiers can cause a delay in reimbursement, denied claims, and a loss of revenue. MEDICAL NECESSITY Medicare does not cover items and services that are not reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body member.
Currently, medical necessity relates primarily to laboratory, radiology, and other ancillary services. Even though the number of denied claims relating to laboratory tests may be higher than those relating to radiology tests, the radiology department’s revenue loss is greater because its tests are paid at a much higher rate.
Based on my experience, some hospital radiology departments are losing on average $20,000 to $80,000 per month because of medical necessity denial. Medicare uses local medical review policies (LMRP) to determine medical necessity. LMRPs are an objective listing of HCPCS codes paired with ICD-9-CM diagnosis codes.
- The listing states that for certain ICD-9-CM diagnosis codes, specific HCPCS procedures are not medically necessary.
- LMRPs can differ by location.
- For example, a LMRP for a chest radiograph in Pennsylvania could be different from an LMRP in California.
- To find more information specific to your state concerning LMRPs, use the following web site:,
The only way a hospital can bill a Medicare beneficiary for a service that is not medically necessary is to obtain an advance beneficiary notice (ABN). An ABN is a document that informs the patient that he or she must assume responsibility for paying the ordered test or procedure because it is not likely to be covered by Medicare.
- Must clearly identify the service.
- Must state that the provider believes Medicare is likely to deny payment.
- Must give the basis for that provider belief.
- Must tell the beneficiary why there is a predication of denial.
In a worst case scenario, noncompliance could cause a potential violation of the civil monetary penalties law. This law prohibits providers from offering inducements, which are services where no payment is required to Medicare beneficiaries if the hospital or provider knows or should know that it will influence the patient to order other items or services from that provider.
- In other words, hospitals cannot induce Medicare patients to use their facilities.
- Examples of an appropriate ABN form can be obtained on the following web site:,
- Two forms are available: form CMS-R-131G is for general use such as radiology, and form CMS-R-131L for laboratory use.
- Hospitals need to conduct an audit to determine where problems exist as they relate to medical necessity.
Identifying patterns relating to claims denials will help the hospital develop strategies for improvement. Physicians are the key to resolving this problem. The audit should focus on physicians that are high-end users; the results of this audit will determine which physicians are ignoring the medical necessity process.
- The physician ordered a medically unnecessary test.
- The patient will have to sign an ABN.
Another useful tool is to provide patients with an ABN brochure. The brochure should address the following questions:
- What is an ABN?
- Why do you want me to sign the ABN?
- Why do you not think Medicare will pay for the service?
- If Medicare says the service is not medically necessary, then why perform it?
- Must I sign the ABN?
- Will I be billed automatically?
- Is Medicare more or less likely to pay if I sign?
- How much must I pay for the service?
- Will supplemental insurance pay for the service if Medicare does not?
- Must I sign an ABN every time a new service is done?
- I have never had to pay for a radiology service before, is this something new?
- I have never been asked to sign an ABN before. Why must I sign one today?
- The advantage of using an ABN brochure is that it can soothe the patient’s fears, cuts refusals to sign, and saves staff time.
- Meeting Medicare’s medical necessity requirements is very difficult, but hospitals that are proactive in managing medical necessity requirements will cut denials and increase their bottom line.
- AUDITING OUTPATIENT CLAIMS
The best way to determine if a hospital is receiving correct payments is to conduct an outpatient audit. After your charge master has been updated, it is time to conduct an audit to determine billing accuracy and payment. For the radiology department, the hospital should pick 50 random outpatient radiology claims. For each claim you will need the following information:
- UB-92 billing claim form. This form is used to bill Medicare beneficiaries and contains all of the patient’s demographic data as well as the billing data (eg, HCPCS codes, modifiers, charges)
- Doctor’s orders. This is important because you need to compare what was ordered to what was performed and billed.
- Test results. Test results show what actually was performed.
- Remittance advice (RA). The RA shows what Medicare pays for the services that you provided. It also identifies any rejected services.
The reviewer should compare what tests the physician ordered to be performed to what was actually billed on the UB-92 claim form. The final step is to review the RA to determine if we received the correct APC payment for the services billed and if any services were denied. The audit will help you identify the following:
- What tests were ordered and performed. Performing an audit will identify if services were performed or items used but not billed, such as medical devices or drugs.
- Are we using the appropriate modifiers?
- Are we billing for the correct units of services?
- What is the nature of the claim denials?
- Does the HCPCS code from the charge master match up with what was billed?
An audit will answer these questions and also give you an idea of what is being done properly in regard to billing and what kind of correct action is needed. These audits should be done on a month-to-month basis. COST REVIEW If hospitals follow all of the guidelines set forth under OPPS, and bill for all covered services, and collect every dime that is due, they could still lose money under APCs.
- Large individual differences between your hospital and hospital costs nationally should be a reason for concern.
- Wide variations between costs and APC reimbursement would signal procedural problems in charging and/or billing. It will also identify areas where costs could be contained internally.
For example, a radiology department could review 20% of its procedures that make up 80% of the total revenue. The radiology department would develop the following chart:
- The APC fee amount can be found in the Federal Register, Vol.67, No.212, November 1, 2002, Addendum B.
- This number is the hospital’s ratio-of-cost-to-charge, which is found on the cost report worksheet D, part V.
- The national hospital cost median is the data that CMS uses to develop the APC rates. This data can be obtained at
The displays the following information:
- The national hospital cost median is the data that CMS uses to develop an APC rate.
- HCPCS code 72100 (lumbar spine, two/three views) shows that the difference in hospital cost compared to the national median cost is ($1.69). In this example the hospital’s cost is ($1.69) below the national median for all hospitals. Also the difference in the hospital cost compared to the APC fee amount is $6.91. The hospital’s cost in this example is below the national median for this procedure, but it is still losing money because its cost is $6.91 above the APC fee amount.
- HCPCS code 73510 (hip, complete, minimum of two views) shows that the difference in hospital cost compared to the national median cost is ($6.65). In this example the hospital’s cost is ($6.65) below the national median for all hospitals. Also the difference in the hospital cost compared to the APC fee amount is ($4.54). The hospital’s cost in this example is below the national median for this procedure and below the APC fee amount; the hospital is profiting from this procedure.
By creating this chart, the hospital will now have a tool to compare its cost with the national median to determine what procedures it is profiting from and what procedures are being performed at a loss. This tool gives the hospital an opportunity to analyze costs and the opportunity to try to cut costs internally on procedures that are creating a loss.
- The table below has a column called internal hospital cost data that is left blank.
- This column can be used by hospitals that have already performed a cost analysis for certain procedures.
- The cost data used in this chart come from the hospital’s Medicare cost report and give a snapshot of what the internal cost is for a procedure.
The better method would be for the hospital to perform a cost analysis on a procedure-by-procedure basis. Another way of monitoring reimbursement is to create a case-mix index (CMI). Each APC is assigned a relative weight that reflects the resources used in treating a patient.
- For example, the relative weight for a two-view chest x-ray (71020) is,7655, and the relative weight for a MRI of the brain without contrast (70551) is 6.5987.
- The MRI is more resource intensive than the chest x-ray, thus it has a higher relative weight.
- A case-mix index is computed by averaging the APC weight for all patients.
The formula is: Case-Mix = Sum of all APC weights / The number of cases Monthly monitoring of the CMI is recommended to track patterns of increases and decreases. A low or declining case-mix may indicate inappropriate APC code assignments that do not reflect the actual resources used to treat a patient.
Remember even small increases in case-mix mean substantial gains in payment. CONCLUSION The reality of APCs is that it is a very complex payment system that involves all departments of a facility. Inpatient and outpatient spending now can be controlled by DRGs and APCs. The government now has the ability to reduce expenditures in both areas, and, if you couple this with the decline in commercial and charge payors, there is no other place for a facility to make up any differences that are lost from treating Medicare beneficiaries.
To survive, a facility needs to take the following steps:
- Establish budgets based on anticipated reimbursement.
- Control costs.
- Develop an effective process to deal with the LMRPs and ABN issues.
- Thoroughly report all HCPCS codes.
- Ensure that documentation supports the coding.
- Develop a process for failed claims review.
- Establish an effective APC/charge master team.
By following the steps above, a facility will be able to stay financially viable under APCs. Andrei M. Costantino, Costantino & Assoc, Harrisburg, Pa, has 15 years of experience specializing in third-party reimbursement, compliance issues, APCs, financial feasibility studies, and Medicare and Medicaid fraud defense work, and is recognized nationally for his expertise in the outpatient HCPCS coding arena dealing with reimbursement, coding, compliance, and proactive billing controls, (717) 651-1217, : APC Survival Strategies
What does APC mean in training?
ELECTIVE PHYSICAL EDUCATION – ADVANCED PHYSICAL CONDITIONING (APC): Advanced Physical Conditioning is designed to enhance student fitness and athletic performance, reduce the risk of sports related injury, and provide the framework for lifelong understanding of strength and conditioning concepts.
What is APC code 8011?
Observation hours must be billed together with an outpatient visit to qualify for reimbursement under OPPS APC 8011 – Comprehensive Observation Services. Typically a patient is referred to observation following a hospital emergency department visit.
What is APC code 5376?
“TABLE 4: SUMMARY OF PRODUCTS MEETING CMS’S CRITERIA FOR SEPARATE PAYMENT IN THE ASC SETTING UNDER THE NON-OPIOID PAIN MANAGEMENT DRUGS THAT FUNCTION AS A SURGICAL SUPPLY PACKAGING POLICY.” – 4. On page 63543, third column, second full paragraph, the text “We believe that APC 1526 (New Technology—Level 26 ($4001-$4500)), with a payment rate of $4,250.50, most accurately accounts for the resources associated with furnishing MIGS” is corrected to read “We believe that APC 1563 (New Technology—Level 26 ($4001-$4500)), with a payment rate of $4,250.50, most accurately accounts for the resources associated with furnishing MIGS.” 5.
On page 63544, first column, second paragraph, the sentence “In summary, after consideration of the public comments, we are finalizing the reassignment of CPT codes 66989 and 66991 to APC 1526 and assignment of CPT code 0671T to APC 5491” is corrected to read “In summary, after consideration of the public comments, we are finalizing the reassignment of CPT codes 66989 and 66991 to APC 1563 and assignment of CPT code 0671T to APC 5491.” 6.
On page 63548, second column, in the section titled “6. Calculus Aspiration With Lithotripsy Procedure (APC 5376),” the long descriptor for HCPCS code C9761, “Cystourethroscopy, with ureteroscopy and/or pyeloscopy, with lithotripsy (ureteral catheterization is included) and vacuum aspiration of the kidney, collecting system and urethra if applicable,” is corrected to read “Cystourethroscopy, with ureteroscopy and/or pyeloscopy, with lithotripsy, and ureteral catheterization for steerable vacuum aspiration of the kidney, collecting system, ureter, bladder, and urethra if applicable.” 7.
On page 63549, in “Table 23: Final SI And APC Assignment For HCPCS Code C9761,” the long descriptor for HCPCS C9761 is corrected to read “Cystourethroscopy, with ureteroscopy and/or pyeloscopy, with lithotripsy, and ureteral catheterization for steerable vacuum aspiration of the kidney, collecting system, ureter, bladder, and urethra if applicable”.8.
On page 63565, third column, before the first full paragraph that reads “In summary, after careful consideration of the public comments” add the following text: “In addition, at the August 23, 2021 HOP Panel Meeting, a presenter requested that we reassign CPT code 55880 to APC 5376.
- Based on the information presented, the HOP Panel recommended that CMS reassign CPT code 55880 to APC 5376 for CY 2022.
- However, as stated above, based on our analysis of the claims for this CY 2022 OPPS/ASC final rule with comment period, our data shows a geometric mean cost of approximately $5,708 for predecessor HCPCS code C9747 based on 279 single claims, which is more comparable to the geometric mean cost of about $4,299 for APC 5375, rather than the geometric mean cost of approximately $8,042 for APC 5376.
Consequently, we are not accepting the APC Panel’s recommendation to reassign CPT code 55880 to APC 5376.” 9. On page 63569, second column, after the first partial paragraph and before “IV. OPPS Payment for Devices,” add the following text: “38. Other Procedures/Services For CY 2022, we proposed to continue to assign the transnasal esophagogastroduodenoscopy (EGD) CPT codes 0652T (Esophagogastroduodenoscopy, flexible, transnasal; diagnostic, including collection of specimen(s) by brushing or washing, when performed (separate procedure)) and 0653T (Esophagogastroduodenoscopy, flexible, transnasal; with biopsy, single or multiple) to APC 5301 (Level 1 Upper GI Procedures) with a payment rate of $830.39.
- In addition, we proposed to assign CPT code 0654T (Esophagogastroduodenoscopy, flexible, transnasal; with insertion of intraluminal tube or catheter) to APC 5302 (Level 2 Upper GI Procedures) with a payment rate of $1,666.59.
- Comment: Some commenters requested the reassignment of the transnasal EGD procedures to the next higher-level APCs within the Upper GI series.
They stated that the costs for the surgical procedures are significantly different than the costs associated with the analogous transoral EGD CPT codes 43235, 43239, and 43241, which are assigned to the same corresponding APCs. Specifically, the commenters requested the reassignment of CPT codes 0652T and 0653T to APC 5302 (Level 2 Upper GI Procedures) with a payment rate of $1,666.59, and CPT code 0654T to APC 5303 (Level 3 Upper GI Procedures), with a payment rate of $3,160.76.
- The commenters explained that the surgical procedure associated with CPT codes 0652T through 0654T utilize a new transnasal single-use endoscopy system known as EvoEndo Model LE Single-Use Gastroscope, which has an estimated cost of about $1,500.
- They stated that the EvoEndo device is not paid separately as a transitional pass-through device because it is not described by HCPCS C1748 (Endoscope, single-use ( i.e., disposable), upper gi, imaging/illumination device (insertable)).
The commenters stated that HCPCS C1748 was created for the EXALT Model D Single-Use Duodenoscope, which is used during endoscopic retrograde cholangiopancreatography (ERCP) procedures. In addition, based on the cost of the EvoEndo device that is used in the procedure, the commenters agreed with the device-intensive assignment for the codes under the ASC payment system.
- Response: Because the codes are new for CY 2021 and we have no claims data available for OPPS ratesetting, we believe that we should maintain the APC assignments for CPT codes 0652T and 0653T to APC 5301, and 0654T to APC 5302.
- However, once we have claims data, we will review the APC assignments and determine whether a change is necessary.
We note that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS. In addition, we thank the commenters for their input on the device-intensive status for the codes under the ASC payment system. In summary, after consideration of the public comments, we are finalizing our proposal, without modifications.
- Specifically, we are assigning CPT codes 0652T and 0653T to APC 5301, and CPT code 0654T to APC 5302 for CY 2022.
- In addition, we are finalizing the device-intensive status for the codes for CY 2022.
- The final CY 2022 payment rates for the codes can be found in Addendum B to the CY 2022 OPPS/ASC final rule with comment period.
We refer readers to Addendum D1 of this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Both Addendum B and D1 are available via the internet on the CMS website. Finally, for the final ASC Device Offset Percentages for CY 2022, we refer readers to ASC Addendum FF of this final rule with comment period.” 10.
On page 63633, “Table 39: Drugs and Biologicals with Pass-Through Payment Status Expiring after CY 2022,” fourth row, third column titled “Long Descriptor,” the figure “100 mg” is corrected to read “10 mg”.11. On Page 63634, in “Table 39: Drugs and Biologicals with Pass-Through Payment Status Expiring after CY 2022,” at the end of the table, add the following row to read as follows: Start Printed Page 2063 12.
On page 63812, the last sentence of the second column is corrected to read, “Based on updated data for this final rule with comment period, the final CY 2022 ASC weight scalar is 0.8546.” 13. On page 63845, first column; under section “b. OP-31: Cataracts,” in lines 4-6, “CY 2023 Reporting Period/CY 2025 Payment Determination” is corrected to read “CY 2025 Reporting Period/CY 2027 Payment Determination.” 14.
On page 63847, Table 63, in the second footnote, the text “CY 2023 reporting period/CY 2025 payment determination” is corrected to read “CY 2025 reporting period/CY 2027 payment determination”.15. On page 63849, Table 65, add the footnote “*** OP-31 measure is voluntarily collected as set forth in the CY 2015 OPPS/ASC final rule with comment period ( through ).” 16.
On page 63892, Table 69, remove the footnote “** We note that, if adoption finalized, an ASC/measure number will be assigned for this measure in the final rule.” 17. On page 63894, Table 71 is revised to read as follows: Start Printed Page 2064 Start Printed Page 2065 17.
On page 63917, second column, first full paragraph, a. In lines 4-5, the word “be” is inserted between “will” and “included”.b. In line 18, the first instance of the word “of” is corrected to read “at”.18. On page 63937, first column, second partial paragraph, in line 23, remove the term “RO” between the words “that” and “if”.19.
On page 63940, second column, first full paragraph, in line 12, insert a period between the words “expires” and “CMS”.
20. On page 63978, in Table 84, “Estimated Impact of the CY 2022 Changes for the Hospital Outpatient Prospective Payment System,” the row for “CMHCs” is revised to read as follows:21. On page 63979,a. First column,
1. First paragraph, in line 18, “1.1 percent” is corrected to read “1.6 percent”.2. Second paragraph, a. In line 4, “1.0 percent” is corrected to read “0.5 percent”.b. In line 9, “1.4 percent” is corrected to read “1.9 percent”.c. In line 12, “1.1 percent” is corrected to read “1.6 percent”.22.
- On page 63980, first column, first paragraph, in line 10, “0.8552” is corrected to read “0.8546”.23.
- On page 63987, Table 91, “Estimates of Medicare Program Savings (Millions $) for Radiation Oncology Model (Starting January 1, 2022),” in the “Total” column, “Part B Premium Revenue Offset” line, the figure “50” is corrected to read “40”.
Start Signature Karuna Seshasai, Executive Secretary to the Department, Department of Health and Human Services. End Signature End Supplemental Information : Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Price Transparency of Hospital Standard Charges; Radiation Oncology Model; Correction
What is APC code 5522?
APC Code Details – 5522 Level 2 Imaging without Contrast.
Who pays APC?
Article Processing Charges (APCs): APCs are paid by authors (often through grant funding). They are used by open access journals in lieu of subscription fees to support the cost of publishing and may generate revenue for the publisher. Green Open Access : An author publishes their article in a pay-to-access journal, and then is able to self-archive a version of their work in an open access repository or author website.
- Gold Open Access : An author publishes their article in an open access journal, where anyone can access all the articles in the journal for free.
- Diamond or Platinum Open Access: Open access journal supported by sponsors.
- Neither authors nor subscribers pay for journal publishing.
- Embargo : A period of time set by the publisher in which an academic article cannot be deposited into an institutional or other open access repository.
Hybrid Open Access : A journal or publisher that is primarily pay-to-access, but offers authors the option to pay to publish their individual articles as open access. Predatory Publishers : Predatory publishing is an exploitative academic publishing business model that involves charging publication fees to authors without providing the editorial and publishing services associated with legitimate journals.
- Publisher Policy : Publishing companies often have policies related to where and when authors can share versions of their articles.
- Paywall : A paywall is a virtual “wall” behind which journal articles exist that someone must pay a fee to access.
- For researchers affiliated with an academic or research institution, this fee is often paid for by the institution in a subscription-based model.
Pre-Print : A draft of an academic article before being submitted for peer review. Typically, the version first submitted to a journal. Post-Print : The final draft of an academic article after peer review but before copy-editing. Publisher Version/PDF : The version of an academic article that is formatted for publication in a journal and/or online.
How are APCs assigned?
DRG Coding Advisor-Do you know the difference between APCs and DRGs? Ambulatory payment classifications (APCs) are a classification system for outpatient services. APCs are similar to DRGs. Both APCs and DRGs cover only the hospital fees, and not the professional fees, associated with a hospital outpatient visit or inpatient stay.
DRGs have 497 groups, and APCs have 346 groups. APCs use only ICD-9-CM diagnoses and CPT-4 procedures. Payments for both are based on a weight for each DRG/APC and a rate for the facility. The unit of classification for DRGs is an admission while APCs utilize a visit. The initial variable used in the classification process is the diagnosis for DRGs and the procedure for APCs.
Only one DRG is assigned per admission, while APCs assign one or more APCs per visit. The DRG payment calculation multiplies the facility rate times the DRG weight, while the payment calculation for each APC multiplies the facility rate times the APC weight times a discount factor (if multiple surgical APCs are performed during the same visit).
- Total payment for the visit is the sum of the payments for all APCs.
- Medicare’s outpatient prospective payment system (PPS) includes hospital outpatient services designated by the secretary of Health and Human Services.
- This includes most outpatient services, hospital outpatient department services not part of the consolidated billing for skilled nursing facility (SNF) residents, supplies also on the durable medical equipment point of series fee schedule, certain preventative services, Medicare Part B covered inpatient services if Part A coverage is exhausted, and partial hospitalization services in Community Mental Health Centers.
Medicare’s PPS excludes services provided by critical access hospitals and prospectively paid services including ambulance; clinical laboratory; physical, occupational, and speech therapy; end-stage renal disease; and screening mammography services as well as durable medical equipment, orthotics, and prosthetics.
- Also excluded are outpatient services covered by the SNF prospective payment system, and services that require inpatient hospitalization.
- The APC classification system is designed to explain the amount and type of resources utilized in an outpatient visit.
- Each APC consists of patients with similar clinical characteristics and resource usage.
APCs include only the facility component of the visit; medical professionals will continue to be paid from a fee schedule based on CPT-4 procedure codes and modifiers. The system encompasses all provider-based ambulatory settings including same day surgery centers (ASCs), emergency departments (ED), and clinics, but excludes home visits, nursing home or inpatient admissions.
APCs were based on Version 2.0 of the Ambulatory Patient Groups (APGs). APCs added more groups for procedures performed in freestanding ASCs, which will utilize a subset of the APCs. The four types of APCS are: • Surgical procedure APCs are surgical procedures for which payment is allowed under PPS. Only surgical APCs are subject to a payment reduction when multiple surgical procedures are performed during the same visit.
Examples of surgical APCs include cataract removal, endoscopies, and biopsies. • Significant procedure APCs are nonsurgical procedures that often are the main reason for the visit and account for the majority of the time and resources used during the visit.
Examples of significant procedure APCs are psychotherapy, CT and MRI scans, radiation therapy, chemotherapy administration, and partial hospitalization. • Medical APCs consist of encounters with a health care professional for evaluation and management services. The medical APC is determined based on the site of service (clinic or emergency department) and the level of the evaluation and management service (low, mid, or high), as indicated by the evaluation and management CPT-4 code and the diagnosis.
An E&M code with a fifth digit of 1 or 2 is considered a low-level visit, a 3 is a mid-level visit, and a 4 or 5 is a high-level visit. The diagnosis is assigned to one of twenty major diagnostic categories. Low-level clinic visit for respiratory diseases, high-level ED visit for cardiovascular diseases, and critical care are examples of medical APCs.
- A medical APC is assigned in conjunction with a surgical APC only if the surgical procedure is a direct result of the evaluation and management service.
- Ancillary APCs include diagnostic tests or treatments that are not considered to be significant procedure APCs.
- Examples of ancillary APCs are plain film X-rays, electrocardiogram, and cardiac rehabilitation.
An ancillary APC may be performed in conjunction with a medical APC, a significant procedure APC, a surgical APC, or independently if the ancillary procedure is the only reason for the visit. The 346 APCs consist of 134 surgical APCs, 46 significant APCs, 122 medical APCs, and 44 ancillary APCs.
What are DRG codes?
MS-DRG Codes – Diagnosis Related Group Codes – Medical Codes Diagnosis-related group (DRG) is a system which classifies hospital cases according to certain groups,also referred to as DRGs, which are expected to have similar hospital resource use (cost).
- They have been used in the United States since 1983.
- There is more than one DRG system being used in the United States, but only the MS-DRG (CMS-DRG) system is used by Medicare.
- A variety of other payers have adapted elements of the MS-DRG system including some Medicaid programs, workers compensation, and even some private payers.
FindACode uses the MS-DRG system as it relates to the Medicare Inpatient Prospective Payment System (IPPS).
What is a composite APC?
The three procedures are in three different composite Families, so composite payment is not made. Each procedure is reimbursed separately.
The bundling is being accomplished through a Composite APC. A Composite APC pays a fixed amount when certain procedures are performed together. Within imaging, a single payment will be made when two or more imaging procedures are performed using the same modality.
The term “Family” is used by CMS to define the procedures subject to bundling. Each Family is treated individually for bundling. The bundling does not cross Families. The composite APC payment methodology is identified and controlled by the assignment of Status Indicator Q3 to the procedures included. Status Indicator Q3 triggers the Outpatient Code Editor (OCE) to screen for other procedures performed in the same Family before assigning payment.
If only one procedure in a Family is found, the OCE converts the Status Indicator of that procedure to a secondary Status Indicator and makes payment at the secondary APC payment amount. If the OCE finds one or more additional procedures from the same Family, a Composite APC is paid for all procedures performed in that Family.
- The Family for ultrasound procedures includes only 10 procedures (76604, 76700–76776, and 76831-76870).
- The CT and MRI Families include all Medicare-covered CT and MRI procedures with the exception of guidance procedures (which are unconditionally bundled with the intervention performed); CT limited or follow-up study (76380); and functional MRI procedures (70555–70559).
In CT and MRI, there are Composite APCs for noncontrast and contrast studies. If both noncontrast and with-contrast procedures are performed in a Family, the with-contrast Composite APC is paid. In the examples above, the national Medicare payment amount in 2008 is compared to 2009 for the same services.
- Composite payment is based on service date.
- All procedures on the same date of service are included, even if performed at different sessions.
- In 2009, when two procedures from one Family are performed on a Medicare outpatient, the effect on hospital technical payment is minimal and, in most instances, is higher than the payment received for the same two procedures in 2008.
It is when more than two procedures are performed that a significant loss of reimbursement occurs. The frequency of this happening at your facility is important to know when projecting your financial impact in 2009. As physician payment is not impacted by these new guidelines, discussing these changes with the interpreting physicians and educating referring physicians should be a priority in 2009.
How is APC outlier calculated?
Hospitals: Have You Checked Your Potential Outlier Payments Under the Hospital Outpatient Prospective Payment System? The hospital outpatient prospective payment system (“HOPPS”) provides for outlier payments to protect hospitals against significant losses if the Ambulatory Payment Classification (“APC”) payment for a particular patient is much less (see below for how much less) than the cost incurred by the hospital in providing care to that patient.
- If you have not yet checked the outlier status of the patients in your high cost outpatient service areas, you may be in for a pleasant surprise.
- The key to the pleasant surprise is that the outlier payment system is a throwback to the pre-HOPPS, pre-blended rate, pre-fee schedule, cost-reimbursement system.
Here is how it works – remember the calculation is done for each patient (yes, on a case-by-case basis): Step 1 First you determine the APC(s) into which the patient’s charges belong. Then you determine the APC(s) payment for your hospital by taking the national weight(s) adjusted for the geographic factor for your hospital.
- Step 2 In order to determine the outlier payment threshold, you multiply the APC amount payable to your hospital for that patient (see Step 1 above) by 2.5.
- Why a factor of 2.5, I know you are asking? Well, that is one of the two numbers HCFA came up with to set the outliers at 2.5% of total HOPPS payments as Congress instructed – the other is presented in Step 5 below).
The resulting amount is your outlier threshold for the cost of the care provided to the particular patient whose claim you are reviewing. Step 3 3.A. Next you add up all of the charges on that patient’s claim to determine the grand total of charges.3.B.
- Now you have to estimate the costs that those gross charges represent,
- You multiply the gross charges on the claim by your hospital’s ratio of costs to charges.
- That gives you the calculated costs of providing the care to that particular patient.
- Now, how do you know if you have an outlier case? Step 4 If your adjusted cost for the care of that patient (the Step 3 amount) is greater than your APC outlier threshold amount (the APC payment multiplied by 2.5.
– see Step 2), then you are entitled to an outlier payment. How much, how much? I hear you ask. Step 5 Surely you did not think your calculating was over yet! 5.A. First, subtract the outlier threshold amount (2.5 x APC; see Step 2) from your calculated cost for the patient involved (the Step 3 amount) to establish the “excess cost.” 5.B.
- HCFA will pay the hospital 75% of the excess cost in addition to your APC payment amount.
- Why 75%? Because that is the second number HCFA came up with to meet the Congressional requirement that outlier payments should be 2.5% of total HOPPS payments).
- Well, this is all very well, you say, but why should I care? Let’s give you a real life example from the cardiac catheterization laboratory of a real hospital.
A Real Life Cardiac Catheterization Laboratory Example Patient receives a diagnostic cardiac catheterization with no additional items or services.
HOPPS payment for APC 080 = $1,249.51 (Includes transitional pass through amount for drugs, biologicals, and/or devices, plus any other separately billable charges.)Outlier Threshold: $1,249.51(Step 1 amount) x 2.5 = $3,123.78Calculate Costs: 3.A. Total charges for diagnostic cardiac catheterization = $13,625.90 (Includes charges for every relevant item from the hospital’s chargemaster.) 3.B. Cost to charge ratio for hospital =0.37 Calculated costs for patient care, $13,625.90 x 0.37 = $5,041.58 Is the hospital entitled to an outlier payment? Calculated cost: $5,041.58 (see 3) is greater than the outlier threshold: $3,123.78 (see 2). Therefore the hospital is entitled to an outlier payment.How much is the additional payment for this particular outlier case? 5.A. Amount of costs over outlier threshold (3 minus 2) = $1,917.81 5.B. Additional payment for outlier: $1,917.81 x 0.75 = $1,438.36
* Total outlier payment is: APC payment ($1,249.51) plus additional outlier payment ($1,438.36), for a total of $2,687.87. HCFA will calculate the outlier payments automatically. You do not have to do anything other than file a correct patient claim including all the relevant charges.
That does mean that you want to be sure every medically necessary item and service for which you can render a line item bill on the claim is on the chargemaster so that it will be reported to HCFA. At the time of going to print, HCFA still expects to initiate HOPPS on August 1, 2000. For further information or assistance, please contact John B.
Reiss. The Health Law Department consists of 14 lawyers who represent a wide diversity of healthcare providers, including general and specialty hospitals and hospital chains, a variety of outpatient facilities, managed care providers, entrepreneurial companies, physicians and physician groups in all types of specialties, a very large physician clinic, and numerous physician joint ventures.
Don’t forget that if there is more than one APC on the claim, the one with the highest APC payment will be paid at 100% of the APC payment and any additional ones at 50% of the APC payment. You also must add in any HOPPS pass-through or new technology payments.If you don’t know your hospital’s cost to charge ratio, the Health Care Financing Administration (“HCFA”) has provided a complete listing on its web site – www.hcfa.gov.Congress required this amount be 3% for 2004 and in all years subsequent to FY 2004.The actual amount paid by HCFA to the hospital depends upon the Medicare Part B coinsurance payment owed by the patient, as well as the patient’s deductible.Thanks to Leonard Womack (lwom[email protected]) for his assistance with the above calculations.
: Hospitals: Have You Checked Your Potential Outlier Payments Under the Hospital Outpatient Prospective Payment System?
What does CMS relative weight mean?
This variable is contained in the following files: The relative weight for the DRG on the claim. Each year CMS assigns a relative weight to each DRG. These weights indicate the relative costs for treating patients during the prior year. The national average charge for each DRG is compared to the overall average.
- Comments This ratio is published annually in the Federal Register for each DRG.
- A DRG with a weight of 2.0000 means that charges were historically twice the average; a DRG with a weight of 0.5000 was half the average.
- Note that the DRG_CD is not always a CMS DRG.
- Refer to the DRG Code System/Nomenclature variable (called DRG_CD_SYS).
SOURCE: T-MSIS Analytic File (TAF) Claims
|Null/missing||source value is missing or unknown|
What is APC code 5431?
APC Codes: 5431: Level 1 Nerve Procedures, 5442: Level 2 Nerve Injections Diagnostic Procedures are often required prior to coverage for the therapeutic procedures above. The provider is responsible for verifying payer policy as to the appropriate code used for each procedure.
What is APC code 5521?
APC Code Details – 5521 Level 1 Imaging without Contrast.
What is APC status code Q4?
Status indicator Q4, will allow the claims processing system to pay for laboratory tests when a ‘lab only’ claim is submitted.
What is APC code 5072?
APC Code Details – 5072 Level 2 Excision/ Biopsy/ Incision and Drainage.