Introduction to APCs

1. Presented by: Kristi stanton, rhit, ccs, cpc Senior consultant, training & Education NCHIMA Spring Meeting April 9, 2010 Introduction to APCs

2. Objectives Briefly describe the evolution of prospective payment in hospitals Discuss common elements between DRGs and APCs Explain how CPT has been adapted for hospital reporting Describe how CPT codes from clinical departments and HIM converge Describe the contents of the Federal Register�s Final Rule for OPPS List the main OPPS addenda and their contents Explain how status indicators are used in OPPS Discuss OCE, NCCI, and unbundling Explain how device edits are applied Define packaging and discuss the various types Explain the concept of composite APCs List the steps for calculating APC reimbursement

3. History of Prospective Payment Systems Concept A payment system based on average cost to treat patients with similar conditions and resource consumption First prospective payment system (PPS) Based on diagnosis-related groups (DRGs) Implemented in 1983 Used first by Medicare for payment of hospital inpatient claims Now referred to as inpatient prospective payment system (IPPS)

4. PPS Catches On� Home health Hospice Hospital outpatient Inpatient psychiatric Inpatient rehabilitation Long-term care Skilled nursing facilities

5. Outpatient Prospective Payment System (OPPS) Implemented August 1, 2000 by Centers for Medicare and Medicaid Services (CMS) Establishes Medicare payment policy for certain hospital outpatient services Surgical procedures ER and hospital-based clinic visits Ancillary services Pathology Emergency dialysis Drugs and biologicals Partial hospitalization programs (PHP)

6. OPPS (cont.) Some hospital outpatient services are not paid under OPPS Routine dialysis for end stage renal disease (ESRD) Clinical diagnostic lab services Ambulatory services Erythropoietin (EPO) for ESRD Physical, occupational, and speech therapy Diagnostic and screening mammography Flu and pneumonia vaccinations Non-implantable durable medical equipment (DME)

7. OPPS (cont.) Unit of payment under OPPS is the ambulatory payment classification (APC) Based on CPT/HCPCS Level II codes Example (from Addendum B, Final Rule)

8. Common Elements Among DRGs and APCs Payment is based on average resources to treat clinically similar patients Each payment unit (i.e., DRG, APC) is assigned a relative weight (RW) Payment rates are adjusted based on hospital�s wage index

9. DRGs vs. APCs

10. Hospital Outpatient Code Sets Healthcare Common Procedural Coding System (HCPCS) Level I � Current Procedural Terminology Generally referred to as CPT Includes codes for most outpatient procedures and services Level II � national codes Generally referred to as HCPCS Includes codes for supplies Includes codes for outpatient procedures and services not defined by CPT Level III � local codes Developed at local payer level Not paid under OPPS

11. About CPT/HCPCS Codes in the Facility Think of codes as charges CPT/HCPCS codes should be linked to charges on the patient bill Example 93510, retrograde left heart catheterization $5,402 93545, coronary artery injection $2,340 93543, left ventriculogram $2,340 93555, supervision & interpretation $1,509 93556, supervision & interpretation $1,509 C1769, guide wire $246 C1887, guiding catheter $576

12. About CPT/HCPCS Codes in the Facility (cont.) Evaluation and management (E/M) codes are different for hospitals than for physicians Only certain E/M codes are applicable to facilities Clinic visits (new and established) Emergency department Critical care Used to report facility resources not otherwise covered by CPT/HCPCS codes Nursing care Discharge planning

13. About CPT/HCPCS Codes in the Facility (cont.) 95/97 E/M guidelines do not apply in hospital setting Hospitals create their own E/M guidelines Guidelines must be in writing Not all modifiers are applicable in hospital setting Appendix A in CPT lists hospital-approved CPT and HCPCS modifiers Some modifiers have different meanings in hospital setting 52 � reduced services Discontinued procedure without (local, regional, general, IV sedation) anesthesia

14. Hospital Outpatient Code Sets (cont.) ICD-9-CM diagnosis codes Not attached to charges Not directly linked to APC payment May indirectly impact payment if medical necessity for procedures and services is not met

15. Factors in Outpatient Medicare Payment

16. Challenges in Managing APC Revenue Codes come from multiple sources Charge description master (CDM) codes come from every clinical department in which the patient was seen Examples Emergency department Lab Radiology HIM (soft) codes Less transparent than DRGs HIM coders typically don�t see CDM codes Application of grouper and edits usually first occurs in billing

17. Convergence of Codes From Multiple Departments

18. Example A 76-year-old male came to the ER complaining of a laceration to the right hand after closing it in a car door. Hand x-rays were negative for fracture. The wound was cleaned and a 1.5 cm stellate laceration was closed using 4-0 Vicryl. The patient was found to be dehydrated as well as was given IV fluids for 1 hour.

19. Example Diagnosis Codes

20. Example Codes & APCs

21. Example Codes & APCs (cont.)

22. Major updates annually Published in Federal Register Recalibration of APC weights Allocation of new CPT codes into APC groups Regrouping of some CPT codes into other APC groups Development/expansion of composite APCs Other updates quarterly Published as program transmittals by CMS Addenda include important information about APC payment rates OPPS Updates

23. The Federal Register � What�s in There? What is the Federal Register? Government publication published daily Explains federal government activity CMS regulations represent a small portion of Federal Register publications Proposed rule Intended changes to OPPS Usually released in August Open to public comment Final rule Finalized changes to OPPS Usually released in November Describes all public comments to proposed rule and CMS� final decision

24. The Final Rule � What�s in There? (cont.) Background information on OPPS Description of changes to OPPS for the coming calendar year (CY) Major changes to OPPS are effective January 1 Description of changes to OPPS for coming year Changes in APC payment rates Changes in packaging rules Reassignment of procedures Update of conversion factor Description of changes to ambulatory surgical center (ASC) groups for free-standing outpatient surgical centers

25. The Final Rule � What�s in There? (cont.) Tables specific to OPPS Addendum A � all APCs with payment information Addendum B �all CPT/HCPCS codes with APC and payment information Addendum D1 � APC status indicators Addendum D2 � APC comment indicators Addendum E � inpatient only procedures Addendum M � composite APC payment information Tables specific to ambulatory surgery classifications (ASC)* Addendum AA � ASC covered surgical procedures Addendum BB �ASC covered ancillary services integral to surgical procedures Addendum DD1 � ASC payment indicators Addendum DD2 � ASC comment indicators *ASC reimbursement is not discussed in detail in this presentation

26. Elements of APC Line Items � Addendum A APC number 0001-9230 APC description Status indicator (SI) Indicates how procedure/service is to be paid e.g., procedure receives full APC payment e.g., procedure not paid under APCs e.g., inpatient only procedure

27. Elements of APC Line Items � Addendum A (cont.) Relative weight Average resources required to treat a patient within the APC Expressed as a number with 1 being average Payment rate National payment rate Not adjusted for individual facilities National unadjusted copayment Represents maximum copay charged to patient Gradually being reduced to 20% each year Minimum unadjusted copayment Represents minimum copay charged to patient 20% of payment rate

28. Elements of APC Line Items � Addendum B Many elements are the same as those in Addendum A CPT/HCPCS code Code�s short descriptor Comment indicator (CI) Status indicator (SI) APC Relative weight Payment rate National unadjusted copayment Minimum unadjusted copayment

29. Status Indicators

30. Status Indicators (cont.)

31. Status Indicators (cont.)

32. Outpatient Code Editor (OCE) System of edits in Medicare�s outpatient grouper that screens claims for errors OCE edits are part of many hospital systems Encoders Billing scrubbers OCE edits are updated quarterly Includes National Correct Coding Initiative (NCCI) edits OCE and NCCI

33. NCCI System of edits adopted by CMS to prevent providers from unbundling services Bundling � the act of reporting a single code for a procedure and all of its components Example 1: suturing the skin is considered part of an appendectomy and isn�t coded separately Example 2: in order to perform a retrograde left heart catheterization, the aorta must first be catheterized and no code is assigned for aortic catheterization

34. NCCI (cont.) Applies to physician and hospital outpatient billing Updated quarterly Hospital NCCI version is 1 quarter behind physician In some instances, procedures may be coded separately with a modifier Procedures performed on opposite sides Procedures performed during different sessions Procedures performed through different incisions Two types of edits Column 1/Column 2 Mutually exclusive

35. NCCI Edit Manual Format First column � comprehensive code Second column � component code Third column � Fourth column � effective date Fifth column � deletion date Sixth column � indicates if modifier can be used to satisfy edit 0 = not allowed 1 = allowed 9 = not applicable

36. NCCI Edits � Column 1/Column 2

37. NCCI Edits � Mutually Exclusive

38. Unbundling Act of erroneously coding component procedures separate from comprehensive procedure Considered a form of health care fraud Beware of the �magic� modifier Modifier 59 satisfies many NCCI edits OIG target

39. Example: Diagnostic left knee arthroscopy with left medial meniscectomy Unbundling (incorrect) 29870 � diagnostic knee arthroscopy 29881 � surgical knee arthroscopy with medial or lateral meniscectomy Correct reporting 29881-LT � surgical knee arthroscopy with medial or lateral meniscectomy

40. Example: Colonoscopy with biopsy of sigmoid and snare polypectomy in cecum Unbundling (incorrect) 43580 � colonoscopy with biopsy 43585 � colonoscopy with snare polypectomy Correct reporting 43580-59 � colonoscopy with biopsy 43585 � colonoscopy with snare polypectomy

41. Type of OCE edit that prevents payment of certain CPT codes if accompanying device C code is not on bill Two types Procedure-to-device Device-to-procedure Examples Vascular stent placement code must have a corresponding C code for the device C code for a pacemaker device must have a corresponding CPT code for the insertion of the device Device Edits

42. Procedure-to-Device Edits

43. Device-to-Procedure Edits

44. Medically Unlikely Edits (MUEs) Incorporated into NCCI January 1, 2007 Assesses maximum number of units of service for procedures Some MUEs are published: http://www.cms.hhs.gov/NationalCorrectCodInitEd/08_MUE.asp#TopOfPage Some MUEs are not published

45. MUEs (cont.) Elements considered for MUEs Reasonable units of service based on anatomical site CPT code descriptors/guidelines limiting units of service Edits based on CMS policies limiting units of service Nature of laboratory services limiting units of service Nature of procedure/service Nature of equipment Clinical judgment considerations based on input from physicians and certified coders Submitted claims data from a six month period Reasonable units of service based on anatomical site CPT code descriptors or coding guidelines limiting units of service Edits based on CMS policies limiting units of service Nature of an laboratory services limiting units of service Nature of a procedure or service may limit units of service and is in general determined by the amount of time required to perform it Nature of equipment may limit units of service and is in general determined by the number of items of equipment that would be utilized Clinical judgment considerations based on input from physicians and certified coders Submitted claims data from a six month period Reasonable units of service based on anatomical site CPT code descriptors or coding guidelines limiting units of service Edits based on CMS policies limiting units of service Nature of an laboratory services limiting units of service Nature of a procedure or service may limit units of service and is in general determined by the amount of time required to perform it Nature of equipment may limit units of service and is in general determined by the number of items of equipment that would be utilized Clinical judgment considerations based on input from physicians and certified coders Submitted claims data from a six month period

46. Packaging Not synonymous with bundling Refers to the combined payment for services commonly performed together Two types Unconditionally packaged � payment always combined Conditionally packaged � payment combined under certain circumstances

47. Packaging (cont.) Unconditionally packaged services Identified by status indicator N Always provided with other services upon which they are dependent Conditionally packaged services Identified by status indicators Q1, Q2, and Q3 Often provided with other services, but may also be performed independently

48. Status Indicator N Packaging Example 93510, left heart catheterization SI = T APC = 0080 Unadjusted payment rate = $2,683.43 93545, coronary angiography SI = N APC = N/A Payment packaged into APC 0080 93556, supervision & interpretation SI = N APC = N/A Payment packaged into APC 0080

49. Status Indicator Q1 � STVX-Packaged Payment is combined if another code with a SI of S, T, V, or X is present on the claim Example 76000, fluoroscopic examination SI = Q1 APC = 0272 Payment = $85.56 If another code is present on claim with SI S, T, V, or X, APC payment for CPT code 76000= $0 (payment packaged into STVX code payment)

50. Status Indicator Q2 � T-Packaged Payment is combined if another code with a SI T is present on the claim All T-packaged codes are radiology codes Example 75710, unilateral extremity angiography SI = Q2 APC = 0279 Payment = $$1,962.36 If another code is present on claim with SI T, APC payment for CPT code 75710 = $0 (payment packaged into T code payment)

51. Status Indicator Q3 � Composite APCs Composite APC = �mini-DRG� Single APC for two or more procedures performed during the same episode

52. Current Composite APCs E/M with observation Level 1 (composite APC 8002) Level 5 clinic (99205, 99215) or direct admit to observation (G0379) AND Observation (G0378) with 8 or more units (hours) Level 2 (composite APC 8003) Level 4 or 5 ER (99284, 99285, G0384) or Critical care (99291) AND Observation (G0378) with 8 or more units (hours)

53. Current Composite APCs (cont.) Partial hospitalization (composite APC 0034) Electrophysiology (composite APC 8000) Diagnostic study (93619, 93620) AND Arrhythmia ablation (93650, 93651, 93652) Prostate brachytherapy (composite APC 8001) Placement of needles (55875) AND Placement of radioactive seeds (77778)

54. Current Composite APCs (cont.) Multiple radiology procedures Composite APCs Ultrasound: 8004 CT and CTA without contrast: 8005 CT and CTA with contrast: 8006 MRI and MRA without contrast: 8007 MRI and MRA with contrast: 8008

55. Composite APC Example � EP

56. Important Points About Packaging Packaged codes should be reported on claim even though they receive no additional payment Missing codes = missing charges Future hospital payments are based on hospital-reported charges

57. APC Reimbursement Calculation

58. APC Reimbursement Calculation (cont.)

59. Additional Payment Considerations Transitional pass through payments Drugs, biologicals, radiopharmaceuticals Orphan drugs as designated by FDA Current drugs and biological agents and brachytherapy sources used for the treatment of cancer; and current radiopharmaceutical drugs Biological products New drugs and biologicals Paid for 2-3 years after first payment under OPPS Outliers An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease. (Wikipedia)An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease. (Wikipedia)

60. Thank You! Kristi Stanton, RHIT, CCS, CPC Senior Consultant, Training & Education The Wilshire Group Associates, LLC and Facilitator of The Coder Coach www.codercoach.blogspot.com codercoach@gmail.com

61. References Federal Register, November 20, 2009: Changes to the Hospital Outpatient Prospective Payment System and CY 2010 Payment Rates: http://edocket.access.gpo.gov/2009/pdf/E9-26499.pdf �CY10 CMS OPPS Updates,� AHIMA audio seminar, 12/10/09: http://campus.ahima.org/audio/2009seminars.html National Correct Coding Initiative for OPPS: http://www.cms.hhs.gov/NationalCorrectCodInitEd/NCCIEHOPPS/list.asp#TopOfPage AHA/AHIMA Draft Facility E/M guidelines: http://www.cms.hhs.gov/HospitalOutpatientPPS/Downloads/CMS1506P_Draft_AHA_AHIMA_Guidelines.pdf