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Classifications
APCs
Definition
APC stands for Ambulatory
Payment Classifications
System for reimbursing acute
care facilities for outpatient
services (e.g., Outpatient
Prospective Payment System
or OPPS)
Developed because of
success of DRGs
History of APCs
OBRA 1986
CMS directed to develop OPPS
3M won bid 1988
APGs developed by 1990 but not
implemented
BBA 1997
CMS to implement PPS by 1999
BBRA - 1999
APCs implemented 2000
Purpose of APCs
Cost control
Efficiency
Facilitate payment
Address beneficiary coinsurance
issues
Discounting
Multiple procedures provided during the same
patient encounter are provided at lower cost
than they would be if provided at separate
encounters
Applies to services with status indicator T
Status Indicators
Letters assigned to each HCPCS
code to indicate its payment status
Examples
C status indicator
Inpatient only list
A status indicator
Other (non-APC payment system)
T status indicator
Payment under APCs and subject to
multiple procedure discount
Outliers
Outlier Payments mandated by BBRA-1999
Outlier threshold
Multiply the total costs for services eligible for APC
payment by an outpatient cost to charge ratio
Costs must exceed 2.5 times more than the APC
payment
Less than 2.5 times more is considered standard
fluctuation in cost of care
Emergency Room
Emergency Department Services (99281 299285)
CMS on Documentation
Facilities that use documentation to
determine the level of E/M have little problem
supporting the codes.
If physicians, nurses, or clerical staff assign codes
without reference to documentation, routine
periodic audits should be performed to ensure that
documentation supports the level of service
Observation Care
Originally packaged item
Bundled into ER and Surgery APCs
Critical Care
Critical care is classified as a "significant
procedure" (APC 0620) under the OPPS.
Hospitals use code 99291 to report outpatient
critical care services
Used in place of a code for a medical visit or
emergency department service.
ASC List
ASC is Ambulatory Surgery Center
Free-standing outpatient surgery
center not associated with a hospital
Relative weight
Conversion factor
Wage adjustment factor
Copayment
APC groupings
Payment adjustments
Conversion factor
Payment weights
Changes in technology
Changes in CPT codes
Codes removed from Inpatient Only List
New procedures or services
2001 Changes
Revisions to APCs due to new or
deleted HCPCS codes
Procedures removed from Inpatient
Only list
APCs reconfigured for some devices
removed from pass-through list
New APCs for Radiology using contrast
2002 Changes
Outlier threshold and payment
percentage changed
Outlier payment computed per service
rather than per claim
Observation care payment allowed for
three diagnoses
Packaging changes
New guidelines for pass-through
payments
Exceptions to the 2-times rule
2003 Changes
Exceptions to the Inpatient Only list
were made for these services
performed in emergencies
Observation care payment based on
admitting diagnosis
Pass-through payments were updated
Codes developed for trial billing
2004 Changes
Outlier payments revised again
Payments for new technology
readdressed
Nuclear medicine payment system
revised
Standard system for choosing level
of E/M services were not
implemented but CMS
acknowledged need
E/M Standard
CMS received industry criticism for lack of a
standard E/M level methodology for all
providers.
CMS recognized that a national standard is
needed.
2002 OPPS proposed rule, CMS deferred comment on
establishing a standard.
Legislative Changes
Several changes have affected APCs
since implementation
Benefits Improvement and Protection
Act (BIPA)
Took effect in December 2000
Changes to APCs
Accelerate reductions in beneficiary
copayment amounts
Set up categories of devices for pass-through
payment
Identifies errors
Indicates actions needed
CDM Continued
Some claims are generated almost entirely
from the Chargemaster
Chemotherapy
Interventional radiology
Radiation therapy
Significant Abbreviations
APC
Ambulatory Payment
Classification
APG
Ambulatory Patient Group
ASC
Ambulatory Surgery Center
BBA
Balanced Budget Act
BBRA
Balanced Budget
Refinement Act
CDM
CMS
Center for Medicare and
Medicaid Services
DME
Durable Medical Equipment
DRG
Diagnosis Related Group
HCPCS
Healthcare Common
Procedure Coding System
OBRA
Omnibus Budget
Reconciliation Act
OPPS
Outpatient Prospective
Payment System