October 1, 2002
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attn: CMS-1206-P
P.O. Box 8018
Baltimore, MD 21244-8018
Dear Sirs:
The following comments and suggestions are made in relation to the Federal
Register entry dated August 9, 2002, relative to the CY2003 update for APCs or
the Hospital Outpatient Prospective Payment System. The comments,
suggestions and/or concerns are enumerated in the same sequence as they
were published in the Federal Register entry. General comments, which do not
fit into the outline provided, are at the end of this letter. Some background
information is provided about our firm and the work we perform with hospitals
across the country.
Abbey & Abbey, Consultants, Inc. – Background and Experience
Abbey & Abbey, Consultants, Inc. is a consulting firm specializing in health care
consulting in the area of coding, billing, reimbursement, payment systems and
associated compliance issues. Services are provided to hospitals and physicians
across the country. Extensive work is conducted with charge masters and
associated billing processes for hospitals. Our firm conducts numerous on-site
workshops and presents many Webinars and teleconferences in the above
areas.
Work with Outpatient Payment Reform commenced in the early 1990’s with the
study of AVGs (Ambulatory Visit Groups) and APGs. We started including APG
material in our workshops starting in 1992. Since our corporate offices are
located in Iowa, when Iowa Medicaid decided to implemented APGs, we became
involved in assisting hospitals in Iowa prepare for this new payment system. We
have continued our work with APGs and now APCs.
Dr. Abbey is the author of four books in this area:
a. Outpatient Services: Reviewing, Assessing & Revenue
Enhancement,
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
b. Charge Masters: Review Strategies For Improved Billing and
Reimbursement,
c. Ambulatory Patient Group Operations Manual,
d. Compliance for Coding, Billing & Reimbursement.
Dr. Abbey is currently working on his fifth book, Non-Physician Providers:
Utilization, Organization and Reimbursement.
Comments to August 9, 2002, APC Federal Register
Comparison of Proposed 2003 Payment Rates to 2002 Payment Rates
Devices Drugs –
I. Background
II. Proposed Changes to the Ambulatory Payment Classification
(APC) Groups and Relative Weights
A. Recommendations of the Advisory Panel on APC Groups
1. Establishment of the Advisory Panel
2. General Issues Considered By the Advisory Panel
a) Content for Future Presentations to the Panel
Comments: The requirements for presentation appear to be
appropriate.
b) Inpatient Only List
Comments: The ‘inpatient-only’ list is a genuine concern to
hospitals since this list has been developed on a statistical
basis as opposed to a clinical basis. Thus many, if not
most, hospitals have encountered situations in which
physicians do perform surgical procedures on an outpatient
basis and these surgical procedures are on the inpatientonly list. In most instances these surgical procedures have
been provided within the appropriate standards of care and
meet the various quality standards and also meet the
Conditions of Participation.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 2 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
The standard approach has been to counsel physicians to
be certain to perform these procedures only on an inpatient
basis. However, from the physician’s perspective, this is
unnecessary and actually increases the cost to the Medicare
program.
Physician’s should be allowed to use their judgment
(physicians of course assume the liability) as to whether a
given procedure should or should not be performed on an
outpatient basis.
While doing away with this list would certainly be a solution,
this would mean that all the surgical procedures on the
inpatient-only list would have to have APC weights
developed. Most of these procedures would never be
performed on an outpatient basis. Thus, the development of
weights would become a significant statistical challenge.
What is needed is a solution that allows the list to be
maintained, but a solution that will also allow hospitals to be
paid for inpatient-only procedures performed on an
outpatient basis at the discretion of physicians. This whole
situation is a part of the interface between APCs and DRGs.
The interface between APCs and DRGs should be a smooth
interface so that there is no financial incentive to perform a
given service on an inpatient or outpatient basis. Thus,
APCs and associated payments for those services that can
be appropriately provided in either setting should be close to,
but probably less than, the associated DRG payments. The
inpatient-only surgical procedures question is a part of this
overall interface issue.
Recommendation: A standard, default APC should be
developed that will provide a reasonable amount of payment
for in-patient only procedures that are performed on an
outpatient basis. The payment level should, on the average,
be close to what the hospital would be paid under DRGs for
that set of surgical procedures that could possibly fall within
this classification. If such an occurrence takes place, the
APC/Grouper-Pricer, i.e., the OCE, can go ahead and
process the claim with the default payment. The typical
standard of care issues or Conditions of Participation can be
addressed through QIO (previously PRO) audits and/or other
reviews. CMS should continue to remove and/or add
surgical procedures to and from the inpatient-only list.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 3 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
(Note: Philosophically, this is similar to taking a CPT code
that ends in “-99” and assigning a default APC with a
relatively minimal payment).
Note: The inpatient-only list interface to ED cases is
discussed later in these comments.
c) Multiple Bills
Comments: There is no question that the quality of the
APC calibration process is being crippled by the use of
singleton claims only. The suggestion to include claims on
which there are charges for each CPT/HCPCS code that
groups is certainly meritorious. However, great care must be
used! Some hospital billing systems have been set to insert
non-zero, dummy charges in certain cases. For instance,
there may be three surgical CPT/HCPCS, but only the first
has a meaningful charge while the second and third are set
to $1.00 each. There are other situations in which the
overall surgical charges are allocated among the three (to
continue the above example) codes, but this is not
performed in a way in which the charges correlate to the
resources utilized for the three different surgeries. If this
type of data is captured and used along with the singleton
claims, the data will be degraded even further.
Additional comments on solutions to the singleton claim
issues are discussed below.
d) Add-On Codes
Comments: Add-on codes should be grouped and paid
separately. The weights for the APCs to which these codes
group will have to be carefully checked for proper correlation
with any codes for which these codes serve as add-ons.
This process is routinely performed for RBRVS.
If such add-on codes are to be bundled without separate
payment, then the cost-outlier formula should be expanded
to include extra payments when multiple add-on codes or
multiple units of add-on codes are used.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 4 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
3. Recommendations of the Advisory Panel and Our
Responses
a) Nerve/Muscle Tests – APC 215 et seq.
b) Clinic/ED Visits – APC 600 et seq.
Comments are made later in this letter for this situation.
c) Eye Tests – APC 230 et seq.
d) Blood/Transfusions – APC 110 et seq.
e) Nerve Injections – APC 203 et seq.
f) Closed Fracture Treatment – APCs 43 & 44
Comments: The proposal to combine APCs 43 and 44 into
a single APC is absolutely inappropriate! The difference
in resource utilization within these two categories is quite
distinctive. These two categories have existed since the
very inception of APGs which were used as the basis for
APC development.
Take two examples within these two general categories:
 Fractured Toe  The typical closed treatment for a
fractured toe, after diagnosis, examination and x-ray
is to buddy tape the fractured toe with another toe.
There are a number of other examples such as closed
treatment of a fractured rib (tape, rib belt and/or pain
medication). The resource utilization for these types
of closed fracture care services is relatively low.
 Fractured Leg  Assuming that there is closed
reduction followed by casting, this can be an intensive
consumer of resources. Along with the diagnostic
services and the treatment of the fracture, fairly
significant resources (time, materials, nursing time,
and technician time) are consumed.
These two examples show that there is great variation
between APC 43 and APC 44.
Based upon the comments in the FR entry, it is fairly clear
that the data being used is of such a low quality that no
changes should be made based upon the data itself. In
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 5 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
actuality, there should have been no significant changes for
CY2002 from CY2001. It is logically clear that the current
payments for APC 43 and APC 44 are absolutely reversed!
APC 43 should be at a lower payment rate with APC 44 at a
higher payment rate.
The most probable reasons why the data is so poor are the
following:

Fracture care is often provided with other types of
care such as laceration repairs. Thus the number of
singleton claims being used is probably quite low.

There are significant coding problems in this area.
Based upon our experiences with direct consulting to
hospitals and also with educational programs and
workshops, it is fairly evident that many of the cases
involving closed fracture care of finger/toe/trunk are
not being coded at all. These charges are being
subsumed into the E/M levels. For codes in this area,
it is only the most unusually expensive cases that are
being coded. This logically extrapolates to why the
data shows APC 43 to be more costly than APC 44.
Recommendation: Coding guidance and education should
be immediately provided so that all hospitals are coding
closed fracture care as consistently as possible. The APC
weights for APC 43 and APC 44 should be manually
adjusted for CY2003 so that they are logically consistent with
the types and levels of services provided within these two
categories. These two categories should definitely be
continued. If the training and guidance is provided on a
timely basis (late 2002 and early 2003) then data samples
can be taken to better determine the correct payment rates
for CY2004.
g) Strapping/Cast Application – APCs 58 & 59
Comments: Absolutely no substantive changes should be
made in this area. The poor quality of data in this area was
recognized early in 2001 with the APC Advisory Panel. In
the November 30, 2001 Federal Register entry, Page 59680.
Column 1, CMS indicated that appropriate training and
guidance to hospitals would be provided regarding
appropriate use and billing of codes in this area. To my
knowledge there has been no such training and/or guidance.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 6 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
If such training and guidance were provided, then the quality
of data could be improved and appropriate data analysis
could take place.
Recommendation: No substantive changes should be
made to these two APCs until such time that the training and
guidance promised in 2001 is provided and better data can
be accumulated. For this reason, these two APCs should
not be combined.
h) Angiography – APCs 279 & 280
i) Cannula/Access Device – APC 115
j) GI Endosocopy/Anoscopy – APC 93/140 et seq.
Comments: The proposed changes in APC mappings in
this area appear to be logically appropriate. As noted in this
Federal Register entry, the data in this area is aberrant. This
is probably occurring for two reasons:
 These services are often performed in conjunction
with other services and thus there are relatively few
singleton claims going into the data pool.
 There is definitely confusion on correct coding in this
area.
In the November 30, 2001, Federal Register, Page 59861,
Column 3, CMS indicated that information and guidance
would be provided to assist hospitals in understanding how
to bill for services in these APC categories.
Recommendation: The changes proposed are logical and
consistent. However, the proper solution to this situation is
to obtain appropriate billing data. This can be accomplished
only if hospitals across the country are consistently coding
and billing for these services. Proper training and guidance
should be provided immediately so that appropriate data can
be generated starting in 2003.
k) Otorhinolaryngologic Function Tests – APC 363
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 7 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
l) Non-Invasive Ultrasound/Diagnostic Ultrasound – APC
96/265 et seq.
m) Diagnostic Nuclear Medicine – APCs 291 & 292
n) Myleography/Excision/Biopsy – APC 19 et seq
o) Skin Repairs – APC 24 et seq
p) Pulmonary/ENT Procedures – APC 77/251 et seq
B. Other Changes Affecting the APCs
1. Limit on Variation of Costs of Services Classified Within a
Group
2. Procedures Moved From New Technology APCs to
Clinically Appropriate APCs
HCPCS=0168 is being moved from a New Technology
classification to APC=0340, Minor Ancillary Procedure. This code
has a description that indicates that it is a procedure using a ‘new
technology’, in this case skin adhesives, often Dermabond.
CY2002 payment for this code was $25.00 and now the payment is
being increased to $34.33. Does this alter the way in which this
code should be used?
There appears to be some confusion relative to the description.
This code was developed, apparently to bill for laceration repairs
using skin adhesives only. This was prior to the time that the CPT
Manual allowed the use of laceration codes for repairs including
skin adhesive either singly or in combination with other methods.
Now that skin adhesives are included in CPT it appears that this
code provides for additional payment for the skin adhesive, but the
description relates to a procedure not a special supply. The OCE
instructions also appear to specifically remove HCPCS=G0168
from the CCI edits so that there is no edit invoked when G0168 is
used with the laceration codes.
With this change in APC grouping, the proper use of this code
should be stated and/or restated.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 8 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
3. APC Assignment for New Codes Created During 2002
a) HCPCS Codes Created During CY2002
b) HCPCS Codes Proposed in This Rule for January 1,
2003
c) Drug-Eluting Stents
4. Recalibration of APC Weights for 2003
a) Data Issues
(1) Treatment of “Multiple Procedure” Claims
Comments: The discussions in this section of the FR
entry are very much on point. The use of singleton
claims (i.e., claims that have only one CPT/HCPCS
that groups) is skewing the development of the APC
weights. Even using the suggestion, addressed
earlier in this FR entry, to also use claims in which
several codes can be broken out as singleton claims
may help only a little because the charges provided
on these claims may not be meaningful. The ability to
alter this situation will involve making major changes
to either the APC system itself or to the way in which
hospitals file claims and the type of detail provided.
You have solicited comment on four points:




Methods for apportioning total charges to
individual CPT/HCPCS
Current/possible studies that correlate resource
inputs (i.e., charges) to CPT/HCPCS for possible
relative value development
Feasibility of hospitals to provide information for
apportioning charges to CPT/HCPCS
Multiple service efficiencies relative to discounting
amounts
We will comment to all four issues although our
greatest involvement is with the third issue, that is, the
feasibility of hospitals to apportion charges to
CPT/HCPCS that then group under APCs. This third
issue is addressed first.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 9 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
Apportioning Charges To CPT/HCPCS – Let us first
delimit our consideration to just surgical cases,
specifically multiple surgeries. As is noted in the FR
entry, hospitals are not currently required to delineate
charges for each surgery CPT/HCPCS. Many
hospitals develop charges through the Chargemaster
for surgeries by billing through time units or a base
charge plus time units. Thus when several surgeries
are performed, a single charge is generated. The
charge generated is associated with the first surgery,
and then on the claims form, the other surgeries are
listed with a zero charge (or possible a dummy charge
of $1.00).
Taking just this one issue, which is a subset of the
overall issue, the ability of hospitals to alter this billing
pattern will cause great expense! There are at least
two different approaches that can be taken.
First approach would be to develop a fixed charge
for each surgical CPT/HCPCS and place all of these
as line items in the Chargemaster. Charge entry
through the Chargemaster would then have to be
accomplished by someone, most likely coding staff
members who are reviewing the medical records,
operative notes and the like. This approach is
certainly feasible but will require significant work just
to get all the line items into the Chargemaster and
then to also work up charges, for each line item, that
is consistent and based upon costs (as required by
Medicare).
A second approach would be to continue developing
the surgical charges using a time-unit approach. The
billing system could then take all of the surgical codes
(assuming there is more than one) and allocate the
single charge developed among the various codes.
Of course, someone will have to develop an algorithm
to do this! One such algorithm is to simply allocate
the charges based upon the APC weights generated
from grouping the CPT/HCPCS codes. This would, of
course, put us into a never ending loop since the
charges would then correlate to the current APC
weights which would in turn be developed from costs
derived from the charges already based upon current
APC weights.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 10 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
In some cases a simpler algorithm may be used such
as allocating the single charge equally among the
multiple surgical codes.
Whatever algorithm is used, it is highly doubtful that
the process will meet the directive that the charges
must be consistent and based upon costs.
The bottom-line for multiple surgeries is that the
Chargemaster will most likely have to be set up with a
line item for each surgical CPT/HCPCS. This does
not address the issue of attaching appropriate
modifiers.
If we then expand the discussion to bundled
revenue center codes (RCCs) and Status=’N’ codes,
the logical process is to not include these on claim
form, but to bundle all associated costs into the
charges for the surgical line items. This would include
anesthesia and recovery along with non-groupable
(not separately payable) pharmaceuticals and
supplies.
Not only will this require significant work on the part of
all hospital Chargemaster Coordinators; this process
will also require that CMS develop a very explicit
Global Surgical Package Definition. The
development of a GSP definition needs to be
accomplished for other purposes as well, for example
what evaluation and management services are
included in surgical care? This question is discussed
at the end of these comments.
This also raises a very fundamental philosophical
question about what APCs should really look like. If
we start bundling more and more into the underlying
procedure, e.g. a surgery, then APCs will look much
more like APGs which in turn are more closely (from a
bundling perspective anyway) with DRGs. On the
other hand, if hospitals must develop delineated
charges for each groupable CPT/HCPCS, then there
is little reason not have an APC weight developed for
each groupable code which means that APCs will
look much more like the RBRVS system.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 11 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
Note: When APCs were developed, the concept of
Significant Procedure Consolidation, as used in
APGs, was dropped. The bundling of closely related
surgical procedures is a way in which this type of
situation can be mitigated. Adoption of a process like
Significant Procedure Consolidation will require the
adoption of a philosophical approach that APCs are to
be more closely aligned to APG-type payment
systems.
Methods for apportioning total charges to
individual CPT/HCPCS – As discussed in the FR
entry, there is no really good way to allocate charges
for line items that do not map into an APC. The only
reasonable way is that which is used for the costoutlier calculation. This process is imperfect,
although it would be interesting to run a series of case
studies to see just how far off this calculation might be
for given types of cases. For example, a multiple
services claim in which all of the ‘other’ charges are
associated with a single surgery as opposed to any of
the other line items that group.
If there is to be any allocation that is more meaningful,
then either the billing process will have to be altered
and/or hospitals will have to provide additional
information to correlate the ‘other’ charges to those
line items that do map into an APC.
Current/possible studies that correlate resource
inputs (i.e., charges) to CPT/HCPCS for possible
relative value development – A relative value
system for hospital technical component coding would
indeed be a wonderful tool! As discussed in this FR
entry, we have also tried to use the physicians’
RBRVS system and its three component breakdown
for use on the hospital, technical component side.
The use of RBRVS in this fashion has limited
capabilities.
If a relative value system were to be developed, then
APCs would indeed look much more like RBRVS.
(See comments about the overall philosophy
underpinning for APCs.) Considering that RBRVS is
still in development and after more than 10-years of
work is still being modified, a similar situation would
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 12 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
most likely occur with any such relative value system
developed for hospital, outpatient coding and billing.
Logically, there should be a close correlation between
the overhead component of RBRVS and the APC
weights. For instance, if all the CPT codes that map
into a given APC are analyzed relative to the
statistical mean of the CPT’s overhead expense
relative values, there should be some sort of
correlation back to the APC weights.
Note: There should never be a situation in which the
Medicare site-of-service differential is greater than the
APC payment. However, in performing payment
analyses relative to provider-based status clinics, we
have encountered this situation on several occasions.
Consider HCPCS=G0168, Wound closure utilizing
tissue adhesive(s) only. The classification of G0168
is to be changed for CY2003 so that it is Status=”X”
and it will map into APC=00340, Minor Ancillary
Procedure. National payment will be $34.33 with an
unadjusted co-payment of $6.87. The proposed
payment (see June 28, 2002, Federal Register) to the
physician performing such a service shows a Facility
to Non-Facility RVU difference of 2.20. Using even a
conservative conversion factor of $35.00, this means
that there is a site-of-service differential of about
$77.00. This means that if such a procedure is
performed in a provider based clinic, there will be an
overall loss of about $42.00.
Again, the APC payment should always be greater
than the associated site-of-service differential.
Recommendation: A statistical study should be
performed to verify that for any given CPT/HCPCS,
the APC payment is greater than the associated siteof-service differential under RBRVS. In actuality,
there should be some formula that is developed to
ensure that the APC payment is 10% to 20% higher
than the site-of-service differential.
Note: In our workshops and Webinars, this issue is
categorized as the interface between RBRVS and
APCs. See also the payment interface between
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 13 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
APCs and DRGs. Both interfaces should be smooth,
that is, not highly disparate. See further comments at
the end of this letter.
Multiple service efficiencies relative to
discounting amounts – This is a refinement in APCs
whose time has not yet come. Obviously, special
statistical studies would need to be performed to
develop different classes for discounting.
If a relative value system is developed for APCs for all
CPT/HCPCS, then a system similar to series of
services (e.g., GI endoscopic procedure series) used
in RBRVS could be instituted. If two services are
provided within the series, one is paid at the full
relative value and the second (and third, etc.) are paid
at their relative value minus the base relative value for
the series of codes.
(2) Calendar Year 2002 Charge Data for PassThrough Device Categories
(3) Description of How Weights Were Calculated for
2003
5. Procedures That Will Be Paid Only As Inpatient Procedures
See comments elsewhere in this letter.
C. Partial Hospitalization
1. Payment Methodology
2. Treatment of Professional Services under PHP
Comments: The changes proposed and methodologies for rate
setting in this area appear to be appropriate.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 14 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
III. Transitional Pass-Through and Related Payment Issues
A. Background
B. Discussion of Pro Rata Reduction
C. Expiration of Transitional Pass-Through Payments in
Calendar Year 2003
1. Devices
2. Drugs and Biologicals (Including Radiopharmaceuticals,
Blood, and Blood Products)
a) Packaged Payment
b) Separate APCs for Drugs Not Eligible for Transitional
Pass-Through Payment
c) Transitional Pass-Through Payment for Eligible Drugs
and Biologicals
d) Orphan Drugs
e) Blood and Blood Products
Comments: The decision to pay for blood and blood
products separately from transfusion services is appropriate.
While it is appreciated that APCs, as with APGs, would
typically bundle the blood and blood products with the
transfusion services, there is such a high degree of
variability (that is, costs) with the number of units and the
different types of blood products, that separate payment is
appropriate.
A concern that has been expressed by a number of our
clients is that the payment rates for blood and blood
products if often lower than that being charged by blood
banks such as the Red Cross. Care should be taken to
ensure that hospitals do not suffer any losses relative to
acquiring blood and blood products from outside sources
such as the Red Cross.
Recommendation: CMS should conduct periodic studies to
ensure that APC reimbursement levels for blood and blood
products is at least a high as that which is being charged by
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 15 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
blood bank operations to hospitals for acquisition of such
materials.
f) Vaccines Covered Under a Benefit Other Than OPPS
g) Higher Cost Drugs
3. Brachytherapy
The questions raised in this FR section are appropriate. The
variability in costs for the seeds is significant. This is a service that
is worthy of having the payment for the seeds be distinct and
separate from the service itself. While the number of instances in
which the supply items should not be included in the underlying or
associated APC should be kept to a minimum, this area is worthy of
such consideration.
Recommendation: The payment for the various seeds used in
brachytherapy should be separately reimbursed due to the high
degree of variability relative to the number, types and thus costs of
these items.
D. Criteria for New Device Categories
E. Payment for Transitional Pass-Through Drugs and
Biologicals for Calendar Year 2003
IV. Wage Index Changes for Calendar Year 2003
V. Copayment for Calendar Year 2003
VI. Conversion Factor Update for Calendar Year 2003
VII.
Outlier Policy for Calendar Year 2003
Comments: Very few of our clients and very few participants in our
workshops have indicated that there are any outlier payments at all. CMS
should issue a report each year indicating how close the outlier payments
were to the 2.5% national cap.
The brief scenario simulations that we calculated relative to the 3.5 times
threshold and the 50% marginal rate indicated that it is difficult for hospital
to gain cost outliers. The reduction of the cost-threshold to 2.75 is indeed
welcome. However, the statistics need to support that the cost threshold
and marginal payment rate do at least produce a national payment rate of
someplace between 2.0% and 2.5%. The cost outlier is a key process to
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 16 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
help insure that hospitals that do have high cost cases are not unduly
subjected to losses. This is an important mechanism that should receive
very careful attention each year to make certain that cost outlier payments
are indeed being made. (See related Corridor Payment comments).
Recommendation: CMS should take great care to ensure that outlier
payments are being made in the range of 2% to 2.5% nationally. The cost
outlier payments provide an important role for hospitals to make certain
that unusually expensive procedures do receive additional reimbursement.
The process thus provides both protection for hospitals that perform
unusually expensive procedures and also introduces a statistically
smoothing process for reducing variations between payments and overall
costs to hospitals.
VIII. Other Policy Decisions and Proposed Changes
A. Hospital Coding for Evaluation and Management (E/M)
Services
Comments: E/M facility coding is certainly significantly different from E/M
professional coding. This is very clear from our work with hospitals and
coding staff. The concept of using a CPT E/M code to describe resource
utilization as opposed to what the physician is performing is indeed a
challenge.
The development of two new sets of HCPCS codes GXXX1-GXXX5 for
the ED and GXXX6-GXXX10 is certainly welcome! This will help to
differentiate the physician E/M codes from the facility E/M codes and will
in and of itself force coding staff to refocus on the differences in the basis
of coding, that is, physician activities versus resource utilization. If
possible, these codes should be incorporated into the regular CPT
Manual.
However, it is imperative that national guidelines for technical
component E/M coding for both emergency departments and
provider-based clinic situations be developed. Without these national
guidelines, hospital will be subjected to a quagmire of compliance issues.
An auditor could review a system developed by the hospital and take
issue with the system indicating that it promotes upcoding. At other
hospitals, a highly conservative approach may be taken in order to avoid
any potential compliance concerns. At these hospitals, downcoding would
then occur.
Without national guidelines there will be no uniformity or consistency
across the country. It is noted on page 52131, third column, bottom:
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 17 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
“We would add one other requirement to these principles: The
distribution of codes should result in a normal curve.
Documentation guidelines should facilitate this result.”
While this is an admirable goal, at any given emergency department or
clinic there most likely will not be a normal curve. The statistical
distribution of cases will depend entirely on the type of clinic and/or the
types of patients that present to the ED.
For example, small to middle sized hospitals in non-urban areas see a
high frequency of non-emergency patients in the ED. At these hospitals,
the statistical frequency of cases will be skewed toward the lower E/M
levels. In an urban area hospital in which more trauma cases are seen,
the statistical frequency will be skewed toward the higher end of the scale.
This same situation occurs in clinics, particularly specialty clinics. At a
family practice clinic the statistical distribution will tend to be at the lower
end since more routine cases are seen. At a specialty clinic such as an
oncology clinic the statistical frequency for E/M level will be at the higher
end since sicker patients are seen who require more time and effort.
Thus, if the intent of having hospitals develop their own E/M coding
guidelines (with some very general guidance) and to then check to make
certain that these guidelines are appropriate by checking for statistically
normal curves, then this process is illogical and will not work. If this
process is to be pursued, then auditors will need to have statistical curves
for the type, size and geographical location of the given ED and/or clinic.
Developing such auditing statistical aids is probably as formidable as
developing the needed national guidelines.
For technical component E/M coding, most of the discussions have been
made relative to the ED. It is quite true that in the ED the difference
between the physician(s) efforts and the staff efforts can be highly
disparate. Thus, very distinctive coding processes are needed. In the
clinic setting the degree of disparity is not nearly as high. The resources
consumed (supplies, space, nursing time) correlate very nicely with the
physician’s activities. In other words, in the clinic setting the nursing staff
works directly with the physician whereas in the ED there are multiple staff
members that may be performing different and somewhat independent
activities. Thus the need to have totally separate coding guidelines in the
clinic setting is much less critical than it is in the ED setting.
As discussed later in these comments, an associated issue that is needed
is the development of a formal Global Surgical Package (GSP) definition.
Great care must be taken so that the E/M level does not include any
services that are a part of a surgical or medical procedure. The only way
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 18 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
in which this can be accomplished is to define just what E/M services are
parts of a surgical/medical procedure and what are not.
For instance, in the ED a patient may present with a laceration on the arm.
A medical screening examination (MSE) is performed by the physician (or
possibly the triage nurse under the new EMTALA guidance) and then the
laceration is examined and repaired. Obviously, the physician will note as
a part of the MSE the laceration, but the careful examination of the
laceration is probably a part of the laceration repair itself and should not
be counted into the general E/M level development. However, those E/M
services that are a part of the laceration repair must be carefully defined
so that they can be omitted from the E/M level development. This can be
accomplished by providing a GSP definition.
Recommendations:




The development of two new series of five levels for the ED and
clinic is appropriate and should go forth. If possible, these new
codes should be placed in the CPT Manual (i.e., Level I
HCPCS).
It is imperative that national E/M documentation guidelines
be developed for technical component E/M coding. In order
to have any chance of meeting the principles set forth in the
discussion of technical component E/M coding, these national
guidelines are necessary.
On the clinic side, hospitals should be given the option of using
the same level of E/M code as that used by the physician. In
cases in which the services provided are by nursing or other
non-physician staff without a physician service, the first or
second level can be used.
A Global Surgical Package (GSP) definition should be
developed so that hospitals can differentiate between the E/M
level services and any E/M services that are a part of the
surgical or medical procedure.
Note: National technical component E/M coding will also assist
hospitals that have multiple clinics in different specialties. One of
the concerns with E/M coding is to have a uniform and consistent
process across the organization. National guidelines will allow this
to happen automatically. Thus, the guidelines need to take into
account clinic settings that can be quite different.
B. Observation Services
1. Coding and Billing Instructions
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 19 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
Comments: As is currently known, the CMS APC grouper/pricer
software is incorrectly paying for the special observation situations.
Payment is being made by the hour at the full rate of approximately
$350.00 per hour. While this error will be corrected, this situation
does highlight the propriety of paying for observation services by
the hour. An appropriate hourly payment should be developed.
There are significant differences in resource consumption between
8 hour (the minimum) and 24 hours (the maximum). These
differences should be recognized in stratified payments which can
be accomplished through an hourly payment process.
Recommendation: Observation services, at least those that are to
be separately paid, should be paid on an hourly basis. This will
bring APCs into closer alignment with most APG type payment
systems that pay observation services on an hourly basis.
2. Direct Admission to Observation
Comments: The development of G0LLL and G0MMM will certainly
alleviate any concerns in this area. However, is it really necessary
to develop two new codes? Cannot the regular E/M set of codes
(or the proposed replacement) handle the technical component
coding in this area? The level of E/M code developed will be based
upon resources utilized. If there are any major differences between
the circumstances for developing these two new codes, different
E/M levels may well be able to provide the needed flexibility.
If HCPCS=G0LLL is developed, it most certainly should not be
classified as Status=”N”. Resources are expended with the extra
nursing assessments that are required in cases like this. If there is
to be no payment, then hospitals may well react by requiring all
such direct admissions to first go through the ED which will further
increase costs.
Recommendation: Development of HCPCS=G0MMM and G0LLL
are unnecessary. The regular technical component E/M levels
should be used for these services. Such services should be fully
and separately payable under APCs. There should be no
restriction on the levels that are available; the E/M technical
component guidelines (yet to be developed) should be followed for
these services as they would be for other E/M services.
3. Billing Intravenous Infusions with Observation
Comments: The development of HCPCS=GOEEE is welcome.
The services provided under Q0083 (or Q0084 or Q0085) are
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 20 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
somewhat unexpected. Q0081 would appear to be the more
frequent form of infusion therapy for patients in observation. While
chemotherapy could be provided, the limited period of time that a
patient is in observation would seem to logically indicate that
chemotherapy administration could be delayed.
The development of HCPCS=G0EEE appears to be in response to
an underlying payment decision that is in error. There really is no
need to develop a special HCPCS code in this area. The problem
is with the payment policy concerning Status=”T” services obviating
payment for observation services. This payment policy is not
reflective of medically necessary services (such as infusion
therapy) being performed during observation stays. This payment
policy should be changed so that any medically necessary services
that are provided (regardless of their Status) along with observation
services are appropriately paid. Payment policies should not
infringe upon the proper performance and associated payment for
medically necessary services that may require significant resource
utilization.
Note: This discussion begs the very real question of the
development of a Global Surgical Package definition for
observation services. The non-payment for observation services
when performed with Status=”T” services (day before, day of and
day after) is a de facto global surgical package definition. Such a
GSP should be explicitly developed and the rules provided for
public comment. This should not only be accomplished for
observation services, the process should take place for surgical
services as well. (See additional comments elsewhere in these
comments).
Recommendation: The development of HCPCS=G0EEE is
unnecessary. The payment policy of not paying for observation
services performed in connection with Status=”T” services should
be changed. All medically necessary services performed with
observation services should be appropriately paid through the
normal grouping process.
4. Additional Comments Relative to Observation Services
Comments: There should be additional categories of services for
which separate observation payments are to be made. There is no
mention of additional service areas and/or critical pathways that will
provide additional payment. For instance, abdominal pain or
pneumonia are areas in which many hospital Emergency
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 21 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
Departments have developed formal care paths. Each year
additional services areas should be analyzed and added to the list
of conditions for which separate observation service payments are
to be made.
Recommendation: Each year, new service areas should be
developed for separate observation services payment. This is
particularly important to help stabilize appropriate payments under
the APC payment system.
C. Payment Policy When a Surgical Procedure on the Inpatient
List Is Performed on an Emergency Basis
Comments: This Federal Register entry provides an excellent discussion
of this problem! A solution to this situation needs to be identified and
implemented. If there is any possible way, the solution implemented
should be retrospective back to the beginning of the APC program.
We have encountered many hospitals that have lost significant amounts of
reimbursement that is legitimately due to them.
In our consulting work we have encountered all three of the scenarios
described. A fourth scenario that we have encountered is a slight
modification of Scenario B on page 52137. A surgical procedure can be
commenced and once the operative site is gained, the physician may
determine that a slightly different procedures needs to be performed. It is
possible that the alternative procedure is an inpatient-only procedure. In
one case this occurred and the patient was placed in observation
overnight and the services still remained as outpatient.
The difficulty for hospitals for elective cases involves two situations:


There is no meaningful way to education physicians as to when
they are (suddenly) performing an in-patient only procedures, and
It is not possible for hospital coding/billing personnel to monitor
such activities on a real-time basis.
There appear to be two different ways to approach a solution:


In these cases, allow the hospital to retroactively admit the patient
to inpatient status (assuming that the circumstances allow for an
admission), or
Find a way to make some sort of payment for the inpatient-only
procedure under APCs.
Allowing for retrospective admission of a patient has a number of inherit
dangers as alluded to in the Federal Register entry. The admission
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 22 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
process is one in which the physician decision making drives the process
and this decision making needs to be performed at the beginning of the
process. Significant changes in policy will have to be made if
retrospective admission is to be allowed.
Earlier in these comments it was recommended that a default, inpatientonly APC be established. All surgical procedure(s) performed in an
outpatient setting that are on the inpatient-only list can be paid through
this default APC. The payment rate for this default, new APC should be at
such a level that it does indemnify hospitals for these types of situations,
but still gives incentives to avoid these types of situations.
D. Status Indicators
E. Other Policy Issues Relating To Pass-Through Device
Categories
F. Outpatient Billing For Dialysis
Comments: The ability of hospitals to bill for dialysis in the ED and/or
other outpatient services areas for those rare instances in which such
services need to be provided is sorely lacking. The development of the
new HCPCS=G0GGG is fully appropriate both from a payment
perspective as well as assuring proper treatment.
IX. Summary of and Responses to MedPAC Recommendations
X. General & Additional Comments
The proposed APC payments for CY2003 provide a very real challenge relative
to analysis and the development of meaningful recommendations. Without the
availability of the data used to develop these proposed rates and/or the time and
resources to further analyze the data, general comments relative to the variability
and/or appropriateness of payments must be addressed on a more general
plane.
Need For Logical, Reasonableness Testing Relative to APC
Weights/Payments
Among other activities in my career, I have had the opportunity to teach
mathematics. One of the key principles to teach students (of all ages) in
mathematics is that once you have completed a complex calculation, it is critical
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 23 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
to ask if the answer is reasonable and logical for the given problem. The
development of APC weights is such a mathematical (statistical in this case)
process.
Some sort of a final check needs to be put into place to simply ask, “For this
CPT/HCPCS code and the APC into which it maps, is the payment reasonable
for the type of service being provided?”. In other words, for the given service,
does the payment level logically reflect the typical resources being utilized?
While there are numerous examples, two will be used to illustrate this concept.
1. For CY2002, APC=0043, Closed Fracture Care Finger, Toe, Trunk, was
assigned a payment of $206.16. This APC represents fracture care for
conditions such as fractured finger, fractured toe, and fractured rib. In some
cases the standard of care (such as for a fractured rib) is to provide pain
medication. On the surface, this payment level is quite excessive. Add to this
that the APC for more extensive fracture care, APC=0044, pays only at $128.28
and again this whole situation defies any reasonable logical analysis.
2. For CY2003, the proposed payment level for CPT=86890 is $ 9.88 through
APC=0345. This service is for autologous blood collection, processing and
storage intraoperative or postoperative. The costs associated with the
equipment, supplies and personnel time in performing this service are vastly
greater than $ 9.88. Again, this is an example in which the payment level is not
consistent with the resources utilized in providing such a service.
As discussed in the Federal Register entry, there are some very significant
problems with the underlying cost data including improper coding and the
number of cases that can be used for the statistical analysis (i.e., the singleton
claim issue). While a formal, systematic process is definitely needed for APCs,
there must also be a reasonableness test for all the codes and associated APCs.
This will require stepping back from the statistical analysis and making a
reasonable judgment as to the appropriateness of the payment for a given code
and/or APC.
Need For Limits On Year-to-Year Variability
While the need for reducing variability of costs within a given APC group is of
importance (and is addressed), there is also a very real need to limit the
variability of a given APC group over time, that is, from year to year. It is
suggested that some sort of process be put into place so that if the change in
payment (increase or decrease) for a given CPT/HCPCS and thus APC is more
than a given percentage, then an explanation must be given or the change is
limited to the given percentage.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 24 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
For instance, for CY2003, a number of the Transitional Pass-Through Items are
being phased out. The payment for these items is being integrated back into the
underlying procedures. Thus the payment for these underlying procedures will
show significant changes in payment. This is logical and fully justified.
On the other hand, as an example, the payment for CPT=97099, Injection of
Antibiotic, is schedule to drop from $20.87 to $7.28 for CY2003. This is a 65%
reduction! Without some unusual circumstance for this code and associated
APC, this type of variation is unacceptable.
Recommendation: The year-to-year variation in payments for
CPT/HCPCS codes should be limited to twenty percent (20%) unless
there is some specific reason such as a change in classification or
unusual payment system change. For these unusual cases, an
explanation should be given at the time the payment system is unpated.
Global Surgical Package Definition
As mentioned in several places in these comments, it is critical that a formal
definition of the Global Surgical Package be provided by CMS. With the extreme
difficulty in development of stable APC weights, and thus payments, hospitals
must have clear instructions on how to code and what costs (for charges made)
are included and/or not included in any given procedure: medical, surgical or
evaluation and management (E/M). The development of a global surgical
package(GSP) should address not only surgeries but all types of procedures as
discussed below.
Surgical Procedures – CMS has provided guidance that all Status=”N” CPT
codes, which represent bundled services, be coded and billed with appropriate
charges. Many, if not most, hospitals have been reticent to do this in all cases.
For instance, in the GI Laboratory or Catheterization Laboratory, conscious
sedation (CPT=99141/00142) is considered to be a routine and normal part of
the services. The fear is that separately charging for this service is double billing
since the underlying service itself already contains a charge for this routine
service. Also, although conscious sedation is apparently not an anesthesia
service (except for MAC which is administered by an MDA or CRNA), the fact
that anesthesia services are always bundled also lends credence to the fact that
conscious sedation should not be billed separately.
This same situation holds true with certain routine injections provided during
surgical (and certain medical) procedures. Hospitals are reluctant to code and
bill for these services since they are considered to be a routine part of the
procedure (i.e., these services are charged as a part of the given
surgical/medical procedure). This mind-set continues on into areas such as
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 25 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
recovery. In recovery, Pulse Oximetry (CPT=94760/94761/94762) is a standard
service that is typically considered to be a routine part of the recovery charges.
Medical Procedures – See comments for surgical procedures.
Evaluation & Management (EM) Services – Not withstanding the comments
above concerning the development of a coding subsystem and associated
coding documentation guidelines, the development of such a subsystem will still
be less than adequate unless there are clearly delineated definitions of what part
of E/M services are included in given surgical and/or medical procedures.
The proposed CY2003 payments for injections (CPT=90782-90799) have been
significantly reduced. This reduction in payments most likely results from
hospitals billing less for injections than the APC system pays for the injections.
The question continues to be moot as to the exact relationship between providing
injections and any sort of E/M services provided at the same time.
For example, in a provider-based clinic situation, a patient may be presenting
with a physician’s order to receive an injection on a scheduled basis. The nurse
will typically encounter the patient, perform an assessment (height, weight,
temperature, pulse rate, respiration rate, blood pressure, general appearance)
and obtain an interval history. After the assessment is performed and history is
taken, the nurse will then decide whether the patient should receive the injection
and/or if the physician should be contacted. Assuming that the patient is
appropriately ready to receive the injection, the nurse will provide the injection
and then observe the patient, as appropriate, for any adverse reactions. The
question that arises is whether or not the nursing assessment properly qualifies
for an E/M level with a “-25” modifier along with the coding of the given injection.
Under the proposed CY2003 payment schedule, the injection may be paid at
$43.17, $22.36 or $7.28. It is unclear as to whether this injection payment
includes any portion of the E/M services.
Without clear instructions in this specific circumstance and also more globally for
other similar types of services, hospitals will not consistently or accurately code
and bill for their services, which, in turn, will continue to lead to inconsistent
charge data, which, again in turn, will feed into the statistical process for APC
weight development cause the weights to be skewed and/or high degrees of
variability from year to year.
Recommendation: A carefully crafted Global Surgical Definition (GSP) needs to
be developed and implemented as quickly as possible. The GSP definition
developed should address both the surgical/medical cases as well as the surgery
interface to E/M coding. This definition and the attendant guidance will allow for
greater uniformity of coding and billing for hospital outpatient services.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 26 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
Multiple Medical Visits
Detailed guidance from CMS is needed for hospitals to appropriately code and
bill or not code and not bill for multiple medical visits occurring on the same dateof-service (that is, the de facto window-of-service for APCs). The phraseology
used is if the visits are “distinct and independent”. What little information there is
appears in the training material provided back in 2000. For example, a patient
may present to the ED at different times, say once in the morning and then again
in the afternoon. Both visits may be for the same reason, say abdominal pain.
Since the visits are for the same reason, it appears that they are “related” and
thus constitute an extended visit. The guidance presented thus far appears to
imply that since the visits are at different times, they are distinct although it is
difficult to say that they are independent (at least without a specific definition).
In the above example, the way in which the coding takes place can have a
dramatic effect on the payment to be gained. If the two encounters and coded
separately, say both at Level 2, then the total payment is (under the proposed
CY2003 payment rates) $154.98 (2 times $77.49). However, if an extended visit
is coded at say a Level 4, then the payment is $235.60. This is a significant
difference which could also occur in reverse.
Recommendation: Formal guidance should be provided on when two separate
E/M technical component codes should be developed versus a single elevated
E/M code in those situations in which a patient presents more than once on a
given date-of-service. Also, the use of “-27” modifier should be implemented
dropping the requirement for the “G0” condition code.
Payment System Interfaces
The APC Payment System interfaces to several other payment systems. The
most direct relationships are with:
a. DRGs – Inpatient PPS
b. RBRVS – Physician Payment System, and
c. The ASC Payment System.
As briefly mentioned in the above comments, there is an extreme need to make
certain that the interfaces of APCs to these three payment systems, let alone
other systems for home health, skilled nursing, etc., are very smooth. There
should be no undue economic incentive to perform any given service in a setting
that is chosen based upon the payment to be received.
The interface of APCs to RBRVS occurs in connection with RBRVS and the siteof-service differential. As noted previously in these comments, the APC payment
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 27 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
rates should be checked, code-by-code, to make certain that the RBRVS site-ofservice differential is always less than the APC payment. Conversely, the APC
payment should always be greater than the corresponding RBRVS site-of-service
differential. A formula should be set up whereby the APC payments are at least
twenty-five percent (25%) above the corresponding site-of-service differential. It
makes no sense what so ever for a physician to loose more money that the
facility will possibly be paid.
Recommendation: As one of the final checks for APC payments, for all
CPT/HCPCS that map into an APC category, the APC payment should be
checked to make certain that it is at least twenty-five percent (25%) above
the corresponding site-of-service differential and adjusted as necessary.
There are numerous surgical procedures that can be performed, due to medical
necessity concerns, either on an outpatient basis (APCs) or an inpatient basis
(DRGs). Not withstanding the current concerns over the ‘inpatient-only’ list, there
is a very real need to make certain that there is no undue economic advantage to
hospitals and/or physicians to perform services under one or the other of these
two payment systems. The APC payments should be analyzed for all those
surgical and medical procedures that could be performed either as outpatient or
as inpatients. Again, a formula or algorithm should be established to make
certain that the interface is smooth. For instance, using the same twenty-five
percent (25%) as used above, the APC payment for a given surgical/medical
procedure should not be any less than seventy-five percent (75%) of the
corresponding DRG payment. Since there are multiple CPT/HCPCS that map
into a given APC, it is possible that more than one DRG could be involved. In
this case, the rule should be not less than seventy-five percent (75%) of the
arithmetic mean of the DRG payments.
Recommendation: As one of the final checks for APC payments, for all
CPT/HCPCS surgical and medical procedures that could possibly be
performed on an inpatient basis, the APC payment rate for a given
surgical/medical procedure should not be any less than seventy-five
percent (75%) of the arithmetic mean of the associated DRG payments.
The ASC (Ambulatory Surgical Center) situation is in a state of change relative to
APC implementation for ASCs, and comments are deferred in this area. Again,
this is an area in which the interface between APCs for hospital outpatient
services and the APCs (yet to be implemented) for ASCs will need to be smooth
with no undue economic incentives.
The exact percentage amounts that need to be used will have to be determined
with appropriate analysis. The main point of these recommendations is that due
consideration must be given to these interfaces to make certain that economic
incentives are not in place that could possibly override medical decision making.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 28 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
Transitional Corridor Payments
With the extreme volatility of APCs provides more than enough justification to
continue the protection provided by the Transitional Corridor Payments. The
process of implementing APCs is such a state of flux that this protective
mechanism needs to stay in place for the indefinite future.
Blood-Transfusion Medicine Coding/Billing Guidance
Program Memorandum, PM A-01-50, appears to be one of the last pieces of
guidance on coding and billing for blood, blood processing and the general area
of transfusion medicine. In these instructions, permission was given to use either
RCC=38X for the blood product or RCC=390/399 for blood product processing,
but not to use both. Additionally, laboratory tests on the patient who is to receive
a transfusion and the transfusion itself (RCC=391) could be coded and billed.
These directions appear to have resulted from difficulties created in states in
which there are state laws prohibiting billing for blood or blood products. As a
result, in these states RCC=38X could not be used. These directions appear to
indicate that in these instances, RCC=390/399 can be used basically as a
substitute for the blood products.
In the packaging tables, specifically for surgery, RCC=390/399 are supposed to
be packaged. This means that if a surgical code is present, codes and charges
with these RCCs are to be packaged. Apparently, owing to the glitch mentioned
in the preceding paragraph, this packaging logic has been turned off.
The Transfusion Medicine section of the CPT Manual, CPT codes 96850-86999,
contain a number of blood processing services. For example, CPT=86985,
Splitting of blood or blood products, each unit, or CPT=86945, Irradiation of blood
product, each unit, are such a processing codes. These CPT codes do map into
payable APCs. Not only do they map, there appear to be no CCI edits that
delimit the use of these codes along with the blood product P-Codes and CCodes.
For example, CPT=86945, irradiation, can be billed along with HCPCS=P9032,
irradiated unit. There is no CCI edit that prevents this type of billing! There are
other examples within these codes and associated blood product codes. As
discussed above, the lack of edits probably resulted from the fact that
RCC=390/399 was intended to be packaged so that these services (at least
associated with surgery) would be bundled anyway, and thus there is no need to
have CCI edits in this area.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 29 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
CMS needs to provide clear, concise and definitive guidance in this area. It
appears from the guidance provided thus far that what should be billed are the
following:
a. The blood or blood products which include the various processing
charges,
b. The laboratory tests on the patient (potentially) receiving the
blood/blood products, and
c. The transfusion itself.
If these transfusion medicine codes are to be used, then there is a great deal of
guidance to be provided. Consider the following questions and comments.
1. CPT=86890 – Autologous blood or component, collection processing and
storage predeposited  Should this code be billed to the patient that is providing
the blood? If it is to be billed, when should it be billed? For instance, should it
not be at the time the blood is collected, since the blood may not be transfused?
2. CPT=86891 – Autologous blood or component, collection processing and
storage intra- or postoperative salvage  This is a legitimate code and charge.
However, the APC into which this code maps, namely APC=0345, pays at $9.88.
This is absolutely ridiculous. The cost of the resources utilized in the process is
significantly more expensive than $9.88!
3. Consider the following sequence of codes:
a. CPT=86927 – Fresh frozen plasma, thawing, each unit
b. CPT=86930 – Frozen blood, preparation for freezing, each unit
c. CPT=86931 – Frozen blood, preparation for freezing, each unit with
thawing
d. CPT=86932 – Frozen blood, preparation for freezing, each unit with
freezing and thawing
When, where and how are these codes to be used? They all map into APCs, but
the APC mappings and associated payments appear to be totally skewed!
4. CPT=86945 – Irradiation of blood product, each unit  When should this
code be used? Is not the payment for the irradiation process embedded in the
irradiated blood product code?
5. CPT=86965 – Pooling of platelets or other blood products  When should
this code be used? If two split units are available, is it appropriate to bill the
patient for pooling the two half-units even though this has nothing to do with the
patient?
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 30 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
6. CPT=86985 – Splitting of blood or blood products, each unit  What is the
relationship between this code and HCPCS=P9011? One appears to be
referring to processing whereas the HCPCS code appears to be referring to a
product. HCPCS=P0911 is not payable at this time. Was this HCPCS code
intended to be the replacement for CPT=86985?
Note again, that all of the CPT codes do map into payable APCs and that there
are very few CCI edits in this area.
Recommendation: Special comprehensive coding/billing guidelines need
to be issued in the area of blood, blood processing and transfusion
medicine and the proper use or non-use of the transfusion medicine codes
need to be made explicit. Additionally, CCI edits need to be developed in
this area.
Uniformity and Consistency of Policies Across Fiscal Intermediaries
In our work with hospitals in different parts of the country, we are seeing
significant variation in various policies including LMRP (Local Medical Review
Policies) and associated payment and coverage policies. These local FI (Fiscal
Intermediary) differences should be eliminated immediately. Every hospital in the
country should be under the same set of coding/payment policies relative to the
adjudication of claims by the FIs.
Great care should be taken to establish national LMRPs that must be adopted by
all FIs. In some instances the problems created by inconsistent LMRPs results
from the failure to keep the LMRPs up-to-date. One of the causative factors in
this area is APCs itself. For instance, many hospitals are establishing Pulmonary
Rehabilitation Programs (PRPs) and there are some LMRPs available. However,
not all of them has been updated for proper use under APCs (e.g., proper use of
CPT=99211 for assessments by RTs) and they are also inconsistent.
Additionally, great care must be taken to make certain that the LMRPs used by
the FIs are the same as those used by the Carriers for physician claim
adjudication in those areas in which there is an overlap. This is particularly true
in the laboratory area. Perhaps, the new national guidelines will remedy this
situation to some extent.
Chemotherapy Services
The APCs associated with HCPCS=Q0083, Q0084 and Q0085 appear to be
finally coming into some sort of reasonable alignment. In our reviews of
Chargemasters, coding and claims reviews, Q0084 and Q0085 are by far the
most common for hospitals. This main explain why the charges and thus the
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 31 -
Comments To CMS – August 9, 2002, Federal Register – CY2003 APC Update
APC payment for Q0083 is relatively low compared to the other codes. Also, the
interface of the hospital payments for chemotherapy services appears to fit much
better with the associated RBRVS payments for freestanding, physician-based
chemotherapy service units.
The one element that is needed to completely level the playing field is to allow
hospitals to code and bill an E/M level (technical) for nursing assessments
relative to chemotherapy administration in which the patient is not seen by a
physician or other provider that can bill professionally. This nursing assessment
is certainly medically justified and should be codeable and billable. Physicians in
the freestanding situation can and do bill for this nursing assessment on an
incident-to basis. Note that allowing the technical component nursing
assessment is also consistent with other outpatient services in which nursing
assessment are provided and medically necessary.
Recommendation: Nursing assessment for chemotherapy administration
should be codeable and billable on the hospital, technical component
when the patient is not seen by a physician.
Note: This recommendation is based upon the fact that there is no defined
Global Surgical (Procedure) Definition in place for chemotherapy services.
Based on current information, the chemotherapy administration is independent
from other services such as the nursing assessment, other injections and
associated services. If such a definition is provided in this service area as well
as other areas, then new data will have to be generated and analyzed in order to
provide appropriate payment.
Thank-you for your consideration of these comments, suggestions and
recommendations.
Yours very truly,
Duane C. Abbey, Ph.D., CFP
President, Abbey & Abbey, Consultants, Inc.
Abbey & Abbey, Consultants, Inc.
October 1, 2002
Page - 32 -