APC Update for CY2008
Sponsored By:
APCNow Web Site
www.APCNow.com
Presented By:
Duane C. Abbey, Ph.D., CFP
Abbey & Abbey, Consultants, Inc.
Duane@aaciweb.com
http://www.aaciweb.com
http://www.APCNow.com http://www.HIPAAMaster.com
Version 9.0 - Generic
Notes © 1994-2007, Abbey & Abbey, Consultants, Inc.
CPT® Codes – © 2005-2006 AMA
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 1
Presentation Faculty
Duane C. Abbey, Ph.D., CFP – Dr. Abbey is a health
care consultant and educator with over 20 years of experience. He has worked with
hospitals, clinics, physicians in various specialties, home health agencies
and other health care providers.
His primary work is with optimizing reimbursement under various Prospective
Payment Systems. He also works extensively with various compliance issues and
performs chargemaster reviews along with coding and billing audits.
Dr. Abbey is the President of Abbey & Abbey, Consultants, Inc. and the co-founder of
the HealthCare Consulting Group, L.C. These firms provide a wide range of
consulting services across the country including charge master reviews, APC
compliance reviews, in-service training, physician training, and coding and
billing reviews.
Dr. Abbey is the author of seven books on health care including:
“Non-Physician Providers: Guide to Coding,
Billing, and Reimbursement”
“Emergency Department: Coding, Billing and
Reimbursement”, and
“Chargemasters: Strategies to Ensure Accurate
Reimbursement and Compliance”.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 2
Disclaimer
This workshop and other material provided are designed to provide accurate and
authoritative information. The authors, presenters and sponsors have made every
reasonable effort to ensure the accuracy of the information provided in this
workshop material. However, all appropriate sources should be verified for the
correct ICD-9-CM Codes, ICD-10-CM Diagnosis Codes, ICD-10-PCS Procedure
Codes, CPT/HCPCS Codes and Revenue Center Codes. The user is ultimately
responsible for correct coding and billing.
The author and presenters are not liable and make no guarantee or warranty;
either expressed or implied, that the information compiled or presented is errorfree. All users need to verify information with the Fiscal Intermediary, Carriers,
other third party payers, and the various directives and memorandums issued by
CMS, DOJ, OIG and associated state and federal governmental agencies. The
user assumes all risk and liability with the use and/or misuse of this information.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 3
APC Update for CY2008
Objectives
 To review the proposed and final Medicare APC payment system and
changes for CY2008.
 To review various APC weight changes and updates.
 To understand key issues within APCs and the proposed changes.
 To discuss increased packaging and bundling within APCs.
 To appreciate the need for hospitals to assess changes and make
suggestions and comments to CMS.
 To review the various data files that CMS provides with APCs.
 To appreciate technical component E/M coding for the ED and providerbased clinics.
 To discuss the different CMS changes including supplies, drugs and
devices.
 To review changes for ASCs relative to APCs.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 4
APC Update for CY2008
Acronyms/Terminology
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APCs – Ambulatory Payment Classifications
APGs – Ambulatory Patient Groups
ASC – Ambulatory Surgical Center
CAH – Critical Access Hospital
CCRs – Cost-to-Charge Ratios
CPT – Current Procedural Terminology
E/M – Evaluation and Management
FFS – Fee-for-Service
HCPCS – Healthcare Common Procedure Coding System
ICD-9-CM – International Classification of Diseases, Ninth Edition, Clinical
MAC – Medicare Administrative Contractor
MedPAC – Medicare Advisory Commission
MPFS – Medicare Physician Fee Schedule
NCCI – National Correct Coding Initiative
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 5
APC Update for CY2008
Acronyms/Terminology
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NCD/LCD – National/Local Coverage Decision
NTIOL –New Technology Intraocular Lens
OCE – Outpatient Code Editor
OPD – [Hospital] Outpatient Department
OPPS – [Hospital] Outpatient Prospective Payment System
PHP – Partial Hospitalization Program
PM – Program Memorandum
PPS – Prospective Payment System
QIO – Quality Improvement Organization
SI – Status Indicator
ASC – Ambulatory Surgical Center
RBRVS – Resource Based Relative Value System
MPFS – Medicare Physician Fee Schedule  Developed through RBRVS
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 6
APC Update for CY2008
APC Background Information
 APC Fundamentals
 Encounter Driven System
• Some Exceptions – Example: Two separate blood transfusions on
the same day.
 CPT/HCPCS Code Driven
• If the service is not coded with a CPT or HCPCS (and/or proper
modifiers), then there will be absolutely no payment!
 APC Grouper  Multiple APCs from Given Claim
 Inpatient-Only Procedures
• Surgery, if performed outpatient, will not be paid at all! (Patient
Liability?)
• How is this list determined?
 Covered, Non-Covered and Payment System Interfaces
• Example: Self-Administrable Drugs
 Pass-Through Payments – Directly Based on Charges Made – Covert
Charges to Costs How?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 7
APC Update for CY2008
APC Background Information
 APC Weight, and Thus Payment, Determination
 Hospital Charges Converted to Costs
• How is this done?
• Do we charge for everything?
• Do we charge correctly for everything?
 Statistical Process Using the Costs
• Geometric Mean
• Mean Cost for Given APC/Mean Cost for All APCs = the APC Weight
 Variation of Costs Within a Given APC Category
• 2 Times Rule – If highest cost is more than twice the lowest cost
then violation.
• 2 Times Rule Exception List
 Examples:
o APC=0043 – Clsd Fx Tx (FTT)
o APC=0438 – Level III Drug Admin
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 8
APC Update for CY2008
APC Background Information
 Use of Claims to Statistically Develop the APC Weights
 Because outpatient encounters often involve multiple services, the APC
grouping process often (if not a majority of the time) generates multiple
APCs.
 CMS can use only pure claims, that is, claims that group to a single
APC. These are called ‘singleton’ claims.
 CMS is trying very hard to get around this situation because most of
the claims filed by hospitals never get considered when the actual APC
weights are determined.
• Small Example: CPT=86891 – Intra- or Post-Operative Blood
Salvage
 A device is used to save blood, reprocess the blood and
generally re-infuse.
 Is it possible to have ONLY 86891 on a claim?
 What kind of payment do we have for 86891?
 What are the costs involved?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 9
APC Update for CY2008
APC Background Information
 APC Cost Outliers
 Complicated Two-Tiered Formula
 Based on Excessive Costs - How are costs determined?
 Nationally, does CMS make full outlier payments?
 Provider-Based Rule (42 CFR §413.65)
 Provider-Based Clinics
 Provider-Based Clinical Services
 Potentially, two claim forms filed – CMS-1450 (UB-04) for technical
component and CMS-1500 (1500) for professional component.
 Reduction in payment for professional component
• Site-of-Service Differential in RBRVS (MPFS)
• Place-of-Service (POS) driven on CMS-1500
 Series of Criteria to Meet If to be Provider-Based
• On-Campus versus Off-Campus
• See Physician Supervision Developments
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 10
APC Update for CY2008
APC Background Information
 ASCs – Ambulatory Surgical Centers
 Going to a hybrid of APCs and RBRVS for CY2008
 FR entries for APCs will now also be for ASCs
 ASC Surgery List
• Regular ASC Surgeries
• Office-Based Surgeries  New
 Payment Formula
• ASC Surgery  65% of APC
• Office-Based Surgeries – Lesser of:
 65% of APC or
 Non-Facility PE RVU from MPFS
• Physician Paid Facility MPFS (As With Hospitals)
 Separate Payment for Certain Ancillary Services
 Did all the features of APCs translate over?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 11
APC Update for CY2008
CPT/HCPCS Changes
 Between CPT and HCPCS there are more than 400 new codes, 12 new
HCPCS modifiers and then a number of changes for existing
codes/modifiers.
 Note that we have a new modifier “-FC”, Partial Credit Received for
Replaced Device, along with the current “-FB” modifiers. Also, there are
three new modifiers, “-EA”, “-EB”, “-EC” for use with Erythopoetic
Stimulating Agent ESA.
 Categories of Changes
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Cardiac MRI
Gastrostomy Tubes
Subcutaneous Infusions
Laparoscopic Hysterectomy
Smoking & Tobacco Cessation
Alcohol and/or Substance Abuse Screening
Telephone-Based E/M
Online E/M
Team Conferences
Specimen Collection
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 12
APC Update for CY2008
CPT/HCPCS Changes
 New CPT/HCPCS
 Injections
• 90769 Sc ther infusion, up to 1 hr, SI="S" - APC=0440
$114.64
• 90770 Sc ther infusion, addl hr,
$ 25.13
SI="S" - APC=0437
• 90771 Sc ther infusion, reset pump, SI="S" - APC=0438
$ 51.22
• 90776 Tx/pro/dx inj same drug adon, SI="N“
 New APC Series  Coding Implications?
 0133 Level I Skin Repair SI=“T” 1.3340 $4,437.26
 0134 Level II Skin Repair SI=“T” 2.1114 $81.48
 0135 Level III Skin Repair SI=“T” 4.6816 $134.08
 0136 Level IV Skin Repair SI=“T” 15.4399 $288.30
 0137 Level V Skin Repair SI=“T” 20.9338 $958.33
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 13
APC Update for CY2008
Increased Bundling
 CMS Proposed Significantly Increased Bundling
 Long Federal Register Discussion
• From Page 42667, August 2, 2007 –
“Packaging costs into a single aggregate payment for a service,
encounter, or episode of care is a fundamental principle that
distinguishes a prospective payment system from a fee
schedule. In general, packaging the costs of supportive items
and services into the payment for the independent procedure
or service with which they are associated encourage hospital
efficiencies and also enables hospitals to manage their
resources with maximum flexibility.”
 From a hospital’s perspective, is the above statement at all
true?
 What are “supportive” items/services?
 What are “independent” procedures?
 How does this relate to ‘Separate Procedure Consolidation’
under APGs?
Slide # 14
© 1999-2008 Abbey & Abbey, Consultants, Inc.
APC Update for CY2008
Increased Bundling
 CMS Proposed Significantly Increased Bundling
 CMS want to increase bundling to have APCs be more of a Prospective
Payment System (PPS)
• Look more like DRGs?
• Look less than RBRVS?
 Comment: For those familiar with APGs, Ambulatory Patient
Groups, CMS purposefully moved APCs away from all the
bundling in APGs. Now CMS is moving back toward the
bundling in APGs. Why the change? (Hint: Think money!)
o See APG concept of significant procedure consolidation.
 For the past several years, new interventional radiology codes have
bundled the radiological component into the surgical component even
at the CPT level.
 This is a major change. The discussions in the current APC Federal
Register appear to be only the beginning. Also, movement from SI=“S”
to SI=“T”. Why?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 15
APC Update for CY2008
Increased Bundling
 Special Packaging Subcommittee
 Current Areas for Increased Packaging Consideration
 Guidance Services
• OK, CMS has never liked fluoroscopic guidance, ultrasonic
guidance, etc.
• This is not a surprising move, but what kind of impact will result?
 Image Processing Services
 Intraoperative Services
• Wonderful new terminology –
 ‘Supportive dependent procedures’ provided with ‘independent
procedures’.
• About 40 codes on the list.
 G0275 and G0278 are on the list! Does this make any sense??
• What about pre- and post-surgical injections such as antibiotic
injections that are not an ‘integral part’?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 16
APC Update for CY2008
Increased Bundling
 What was CMS’s final decision on bundling?
 See November 27, 2007 Federal Register
 No Surprise!
• See Table 10 for all the new packaged codes.
 Study this table with great care!
• Be sure to distinguish SI=“N” from SI=“Q”
• SI=“Q” is conditional packaging
• T-Packaging
• STVX-Packaging
• Note the remapping of certain packaged codes.
 What is the potential financial impact of this type of change?
• How can we calculate the financial impact?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 17
APC Update for CY2008
Increased Bundling
 Table 10 Packaging
 In conclusion, we are finalizing our proposed packaging approach with
the modifications discussed above for the CY 2008 OPPS. Table 10 in
this final rule with comment period displays the list of packaged
services in the categories of guidance, image processing,
intraoperative services, radiopharmaceuticals, contrast media, imaging
supervision and interpretation, and observation services. Codes in
composite APCs, including the two extended assessment and
management APCs, are displayed in Addendum M. In Table 10, HCPCS
codes with status indicator “N” are always packaged. HCPCS codes
with status indicator “Q” are conditionally packaged. Codes with status
indicator “Q” that are for imaging supervision and interpretation are
packaged only when reported on the same claim on the same day as a
procedure with status indicator “T” and are identified as “T-packaged”
in the sixth column. Codes that are packaged when they are reported
on the same claim with a code with status indicator “S,” “T,” “V,” or
“X” on the same day are identified as “STVX-packaged” in the sixth
column.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 18
APC Update for CY2008
Increased Bundling
 Imaging Supervision and Interpretation Services
 Example 1: CPT=76940, Ultrasonic Guidance Tissue Ablation which
goes with CPT=47382, Ablation Liver Tumor(s).
CPT Code
2007 Payment
2008 Payment
76940
$73.04
$0.00
47382
$2,296.47
$2,738.71
Total Payment
$2,369.51
$2,738.71
 Example 2: CPT=74327, Biliary Duct S&I and CPT=47630, Biliary Duct
Stone Extraction.
CPT Code
2007 Payment
2008 Payment
74327
$164.75
$0.00
47630
$1,245.85
$1,827.28
Total Payment
$1,410.60
$1,827.28
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 19
APC Update for CY2008
Increased Bundling
 Imaging Supervision and Interpretation Services
 Example 3: Through a left femoral puncture, a physician advances the catheter
into the aorta and performs an aortogram with bilateral runoffs. The physician
then manipulates the catheter to the right popliteal artery and successfully
perform a balloon angioplasty. The catheter is withdrawn.
CPT Code
36200
75630
2007 Payment
36247
35474
75962
Total Payment
2008 Payment
$0.00
$1,279.92
$0.00
$0.00
$0.00
$2,639.19
$383.95
$4,303.06
$0.00
$2,890.72
$0.00
$2,890.72
 Note: CPT 75962 is SI=“Q”, is “T-Packaged”, and now maps to APC=0083, the
same as 35474. But 35474 is SI=“T” which causes 75962 to be packaged.
• Any comments/concerns?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 20
APC Update for CY2008
Increased Bundling
 Diagnostic Radiopharmaceuticals
 Just as soon as we finally figure out the A9500 sequence of codes
which are paid on a pass-through basis, CMS wants to bundle them all!
 Contrast Agents
 LOCMS/HOCMS could serve as the basis of a novel!
 A-Codes for which there is no payment.
 Then Q-Codes for which there is separate payment.
 Now Q-Codes which are packaged.
• Why even have the Q-Codes?
 Note: See also the general $60.00 packaging threshold methodology.
 See a similar concept used in chargemaster maintenance.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 21
APC Update for CY2008
Increased Bundling
 Development of Composite APCs
 LDR Prostate Brachytherapy
• 55859 - $2,328.56
• 77778 - $ 969.73
$3,298.29
• New Composite Payment - $3,432.71
• Group only when both codes present?
• Status Indicator “T” – Discounting Applies
 EP Studies
• Various Groupings of Services
• Group A versus Group B
• Composite Payment of $8,542.57
 Note: This bundling process is taking highly variable situations
and then averaging to a great degree. Physicians and hospitals
may perform significantly different combinations of services.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 22
APC Update for CY2008
Increased Bundling
 Service Specific Packaging
 Basically a number of miscellaneous services which are analyzed by
the APC Packaging Subcommittee.
 CMS Philosophical Thrust
 If you read the Federal Register carefully, there is a common thread in
this area. CMS seems to be taking the approach that if a given CPT
code or service is almost always being reported with other
codes/services, then the given service should be packaged for
payment.
• Note: We are addressing the packaging of payments, NOT
necessarily the bundling of charges. We must charge (and code)
for everything we do.
• This whole approach seems to be a turbocharged version of the
concept of ‘integral part’.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 23
APC Update for CY2008
Observation Services
 Observation Services Represent A Very Real Challenge for Almost All
Hospitals
 The main challenge is compliance in terms of a physician order and
supporting documentation (medical necessity).
 CMS has never really given us factual information on why they, CMS,
do not want to pay separately for observation services. This is a highly
valuable, and sometimes costly, service that helps to reduce higher
costs with an inpatient admission.
 Condition Code 44 is also a mess.
• NUBC Definition vs. CMS Definition
 Who is the ‘Official Code Set Maintainer’?
 Now CMS wants to package all observation payments.
• What are these observation services packaged into?
 G0379 or 99285 (Did Payment Go Up?)
• What about ancillary services in observation?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 24
APC Update for CY2008
Observation Services
 We thought CMS was simply going to package observations services.
Instead, CMS has decided to create two new composite APC categories,
8002 and 8003.
 “APC 8002 will be assigned when 8 or more units of HCPCS code G0378
(Hospital observation service, per hour) are billed- On the same day as HCPCS code G0379 (Direct admission of patient for
hospital observation care); or
 On the same day or the day after—
• ++ CPT code 99205 (Office or other outpatient visit for the
evaluation and management of a new patient (Level 5)); or
• ++CPT code 99215 (Office or other outpatient visit for the evaluation
and management of an established patient (Level 5)).”
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 25
APC Update for CY2008
Observation Services
 Observation Composite APCs
 “APC 8003 will be assigned when eight or more units of HCPCS code
G0378 (Hospital observation service, per hour) are billed on the same
day or the day after CPT code 99284 (Emergency department visit for
the evaluation and management of a patient (Level 4)), 99285
(Emergency department visit for the evaluation and management of a
patient (Level 5)); or 99291 (Critical care, evaluation and management of
the critically ill or critically injured patient; first 30-74 minutes).”
 Payment for these two APCs for 2008 is:
 APC=8002  $351.04, and
 APC=8003  $638.66.
 Diagnosis Requirements Dropped
 All Direct Admissions Paid (?)
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 26
APC Update for CY2008
Observation Services
 Observation Composite APCs
 Questions
• Can you think of a situation in which the hospital would use 99205
or 99215?
• Is the 99205 or 99215 a technical component code or a professional
component code?
• Do hospitals always perform a nursing assessment (i.e., G0379)
when a patient is directly admitted?
• Will this process provide an incentive to perform E/M services in
order to insure observation payment?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 27
APC Update for CY2008
Technical Component E/M Coding
 Extensive Discussion in the Federal Register
 Coding Documentation Guidelines
• No, hospitals are to continue developing their own coding
guidelines and use them as directed in the April 7, 2000 Federal
Register.
• This means that virtually every hospital across the country could
have different guidelines and develop different codes for different
levels of services.
• There seems to be no meaningful indication from CMS as to when
we will have any guidelines and/or the nature of the guidelines.
 Note: Considering CMS’s sudden interest in increasing
packaging, someone at CMS may realize that under APGs, the
E/M visits were bundled if there was any other service provided.
E/M services were separately paid only if provided by
themselves.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 28
APC Update for CY2008
Technical Component E/M Coding
 E/M Code Grouping
 Even though the fundamental charge/cost data associated with E/M
code is flawed (every hospital is using a potentially different mapping),
CMS discusses some rather interesting statistical findings and the
mapping of the E/M codes to E/M payment APCs is being adjusted.
• What is the difference between a ‘new’ patient and an ‘established’
patient?
 The five-level E/M payment payments will continued.
New Visits
APC Pay
Est. Visits
99201
99202
99203
99204
99205
Level 1
Level 2
Level 3
Level 4
Level 5
99211
99212
99213
99214
99215
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 29
APC Update for CY2008
Technical Component E/M Coding
 CMS Is Not Yet Ready To Issue Technical Component E/M Guidelines
 At this rate, we will lucky to have anything by 2010.
 HOWEVER, CMS did pull together various Federal Register discussions
about E/M levels in the form of eleven principles.
 Hospital are thus given notice that the individually developed E/M
mappings must meet certain criteria.
 E/M Coding Principles
• The coding guidelines should follow the intent of the CPT code
descriptor in that the guidelines should be designed to reasonably
relate the intensity of hospital resources to the different levels of
effort represented by the code (65 FR 18451).
• The coding guidelines should be based on hospital facility
resources. The guidelines should not be based on physician
resources (67 FR 66792).
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 30
APC Update for CY2008
Technical Component E/M Coding
 Technical Component E/M Coding
 E/M Coding Principles
• The coding guidelines should be clear to facilitate accurate
payments and be usable for compliance purposes and audits (67 FR
66792).
• The coding guidelines should meet the HIPAA requirements (67 FR
66792).
• The coding guidelines should only require documentation that is
clinically necessary for patient care (67 FR 66792).
• The coding guidelines should not facilitate upcoding or gaming (67
FR 66792).
• The coding guidelines should be written or recorded, welldocumented, and provide the basis for selection of a specific code.
• The coding guidelines should be applied consistently across
patients in the clinic or emergency department to which they apply.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 31
APC Update for CY2008
Technical Component E/M Coding
 Technical Component E/M Coding
 E/M Coding Principles
• The coding guidelines should not change with great frequency.
• The coding guidelines should be readily available for fiscal
intermediary (or, if applicable, MAC) review.
• The coding guidelines should result in coding decisions that could
be verified by other hospital staff, as well as outside sources.
 Other Changes
• Hospitals are to distinguish between ‘new’ vs. ‘established’ even
though the definitions for physicians and hospitals is quite
different.
• CPT 99211 maps into Level I, 99212 and 99213 map into the Level II
Clinic APC, 99214 into Level III, and 99215 into Level IV. The new
patient E/M codes (99201-99205) will continue as in CY2007, that is,
Level I through Level V.
• The consultations codes are being dropped from APCs.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 32
APC Update for CY2008
Technical Component E/M Coding
 Exercise – The Apex Medical Center has established a series of providerbased clinics within a 25-mile radius. There are a number of primary care
clinics along with several specialty clinics. AMC codes and bills for both
the physicians (professional) and hospital (technical) components. A
decision has been made to set the technical component E/M level to be the
same as the physicians.
 Is this a reasonable mapping?
 How does this affect ‘new’ versus ‘established’ patient coding?
 What about consultation codes?
 Any differences between the primary care and specialty E/M coding?
• Note: Keep in mind the physician coding is for services performed
and hospital coding is for resources utilized.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 33
APC Update for CY2008
Device Dependent APCs
 Device Dependent APCs
 These are APCs (similar concept for DRGs) in which the major portion
of the APC payment relates to the device being implanted.
 Many of these services involve multiple codes and thus multiple APCs.
However, CMS can only use singleton claims.
 CMS used three different sets of claims to try to calculate accurate
payments in this area.
 Hospitals also contribute to this situation by not correctly charging for
these devices.
• What does this mean?
 Exercise – The Apex Medical Center has acquired a $5,000.00
(acquisition cost) pacemaker. The markup formula is to mark this
device up by 10%. AMC’s outpatient CCR is 0.50. How much does CMS
think this pacemaker cost AMC?
 Review Table 24 From Federal Register
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 34
APC Update for CY2008
Payment for Devices
 Full or Partial Credit For Devices
 After consideration of the public comments received, we are finalizing a
modified policy for certain procedures involving partial credit for a
replacement device. Specifically, we will reduce the payment for an
implantation procedure assigned to APCs listed in Table 25, below, by
one half of the device offset that would be applied if a replacement
device were provided at no cost or with full credit, if the credit is 50
percent or more of the replacement device cost. We will recognize the
new modifier “FC” for reporting these cases, and we are not adopting
the recommendation of the APC Panel to utilize a modifier that
specifically reflects the amount of a partial credit for a device as a
percentage of the cost of the replacement device. Accordingly, we are
implementing the proposed changes to §§419.45(a) and (b) with
modification to reflect the 50 percent partial device credit threshold to
which the policy will apply. Beneficiary copayment will be based on the
reduced payment amount.
 See “-FB” and “-FC” Modifiers
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 35
APC Update for CY2008
Payment for Devices
 Table 25 Devices  “-FB” and “-FC” Modifiers

















C1721 AICD, dual chamber
C1722 AICD, single chamber
C1764 Event recorder, cardiac
C1767 Generator, neurostim, imp
C1771 Rep dev, urinary, w/sling
C1772 Infusion pump, programmable
C1776 Joint device (implantable
C1777 Lead, AICD, endo single coil
C1778 Lead, neurostimulator
C1779 Lead, pmkr, transvenous VDD
C1785 Pmkr, dual, rate-resp
C1786 Pmkr, single, rate-resp
C1813 Prosthesis, penile, inflatab
C1815 Pros, urinary sph, imp
C1820 Generator, neuro rechg bat sys
C1881 Dialysis access system
C1882 AICD, other than sing/dual
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 36
APC Update for CY2008
Payment for Devices
 Table 25 Devices  “-FB” and “-FC” Modifiers














C1891 Infusion pump, non-prog, perm
C1895 Lead, AICD, endo dual coil
C1896 Lead, AICD, non sing/dual
C1897 Lead, neurostim, test kit
C1898 Lead, pmkr, other than trans
C1899 Lead, pmkr/AICD combination
C1900 Lead coronary venous
C2619 Pmkr, dual, non rate-resp
C2620 Pmkr, single, non rate-resp
C2621 Pmkr, other than sing/dual
C2622 Prosthesis, penile, non-inf
C2626 Infusion pump, non-prog, temp
C2631 Rep dev, urinary, w/o sling
L8614 Cochlear device/system
 See Also ASC Discussion for Device Dependent Payment and the
Application of the 65% Amount
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 37
APC Update for CY2008
Payment for Devices
 What is happening to the mandatory C-Codes?
 Why do we have to code for these C-Codes?
 Does this have anything to do with capturing costs?
 Pass-Through Payment Offsets
 When an item moves from being separately payable under APCs to
being bundled into the associated APC payment, then CMS must make
appropriate adjustments to the APC payment.
 Drugs, Biologicals & Radiopharmaceuticals
 See SI=“G” and $60.00 Threshold Amount for Packaging
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 38
APC Update for CY2008
Blood, Blood Products, Transfusions
 Blood and Blood Products Grossly Underpaid in Early Years of APCs
 It took CMS several years to investigate and determine that blood and
blood products were being grossly underpaid to hospitals during the
early years of APCs.
 The problem involved using incorrect CCRs which, of course, were not
correctly reported by hospitals through the cost reporting process.
 In CY2005 CMS finally issued the badly needed guidance on coding and
billing for blood, blood products and transfusions.
 The P-Codes are generally up for CY2008.
• P9010 – Up 93% - Whole Blood
• P9016 – Up 5% - RBC Reduced
• P9021 – Up 0.1% - RBCs
 How is your hospital doing? Do these APC payments actually cover
the cost of your blood products?
 Any problems with coding?
 What should you be doing?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 39
APC Update for CY2008
Blood, Blood Products, Transfusions
 Blood Transfusion Payments
 CMS provides very mixed language in this area.
 CMS maintains payment is made on an ‘encounter basis’ but then uses
a payment mechanism of ‘per day’.
• There are often cases in which a patient may present in the morning
and then again in the afternoon.
 The APC Panel and commenters recommended that payment for 36430
be moved to either a true ‘encounter’ basis or should be paid on per
unit transfused.
• CMS rejected all the recommendations.
 This means that proper payment for transfusions depends on charge
capture and proper pricing in the chargemaster.
• Individual Charge Development Per Unit or
• Overall Average Charge Development
 The key issue to base charges on costs.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 40
APC Update for CY2008
Inpatient-Only Services
 CMS continues to be adamant about keeping the ‘inpatient-only’ surgery
list.
 The reason for keeping the list is that CMS does not have to map every
possible outpatient surgery to various APCs.
 Unfortunately, the inpatient-only list is statistically determined, not
clinically determined.
 If, for some reason, a surgeon starts out performing a regular outpatient
surgery, this surgery turns into an ‘inpatient-only’ surgery, the patient is
kept overnight in observation and is discharged home the next day, the
hospital receive no payment at all!
 We can use the “-CA” modifier for cases entering through the ED in which
the patient expires. A blanket payment is made regardless of the specific
surgery.
 2007 - $3,569.94 – 2008 - $5,006.13 (APC=0375)
 Payment has steadily increased as hospital report more cases.
 Why doesn’t CMS just use the “-CA” modifier for all cases in which an
inpatient-only procedure is provided on an outpatient basis?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 41
APC Update for CY2008
Inpatient-Only Services
 What can a hospital do when an inpatient-only procedure is inadvertently
provided on an outpatient basis?
 Here is an interesting comments from the ASC portion of the APC/ASC
update FR entry.
• Consistent with the current OPPS payment policy that prohibits
facility payments to the hospital for noncovered services (such as
those surgical procedures on the OPPS inpatient list) and makes
the beneficiary liable for those charges, this proposed policy would
make beneficiaries responsible for the ASC charges for noncovered
services furnished to them in ASCs.
 Page 1040 Examination Copy November 27, 2007 Federal
Register
 Clearly CMS views these inpatient-only procedures performed on an
outpatient basis as ‘non-covered’.
 Do you think you would get very far trying to bill the Medicare
beneficiary for inpatient-only surgeries performed on an outpatient
basis?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 42
APC Update for CY2008
Brachytherapy Sources
 CMS Is Very Sensitive to Brachytherapy Source Payment
 Supposed to be pass-through items
 Some new bundling – LDR Brachytherapy
 CMS developed a mini-APC system for brachytherapy sources
 Multiple Uses of a Given Source
 Long Discussion in the Federal Register
 New HCPCS
 New APCs
 See Table 37 For Listing
 CMS Will Pay Prospectively Based On Claims Data
• Again, this becomes a chargemaster, charge capture and charging
issue in order to drive the statistical process used by CMS.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 43
APC Update for CY2008
Brachytherapy Sources
 Brachytherapy Codes, Mappings – All SI=-”K”
 A9527 - Iodine I-125, sodium iodide solution, therapeutic, per millicurie
APC=2632 $27
 C1716 - Brachytherapy source, non-stranded, Gold-198, per source 1716
$33
 C1717 - Brachytherapy source, non-stranded, High Dose Rate Iridium-192,
per source 1717 $173
 C1719 - Brachytherapy source, non-stranded, Non-High Dose Rate Iridium192, per source 1719 $64
 C2616 - Brachytherapy source, non-stranded, Yttrium-90, per source 2616
$11,621
 C2634 - Brachytherapy source, non-stranded, High Activity, Iodine-125,
greater than 1.01 mCi (NIST), per source 2634 $31
 C2635 - Brachytherapy source, non-stranded, High Activity, Palladium-103,
greater than 2.2 mCi(NIST), per source 2635 $46
 C2636 - Brachytherapy linear source, non-stranded, Palladium-103, per
1MM 2636 $42
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 44
APC Update for CY2008
Brachytherapy Sources
 Brachytherapy Codes, Mappings – All SI=-”K”
 C2637 - Brachytherapy source, non-stranded, Ytterbium-169, per source
2637 N/A
 C2638 - Brachytherapy source, stranded, Iodine-125, per source 2638 $45
 C2639 - Brachytherapy source, non-stranded, Iodine-125, per source 2639
$32
 C2640 - Brachytherapy source, stranded, Palladium-103, per source 2640
$65
 C2641 - Brachytherapy source, non-stranded, Palladium-103, per source
2641 $51
 C2642 - Brachytherapy source, stranded, Cesium-131, per source 2642 $97
 C2643 - Brachytherapy source, non-stranded, Cesium-131, per source 2643
$63
 C2698 - Brachytherapy source, stranded, not otherwise specified, per
source 2698 $45
 C2699 - Brachytherapy source, non-stranded, not otherwise specified, per
source 2699 $31
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 45
APC Update for CY2008
APCs for ASCs
 ASCs Are Finally Going to APCs, Well, Sort Of
 Originally, ASCs were supposed to go to APCs before hospitals.
 ASCs will be paid only a percentage of the APC payment amount.
• However, various rules and grouping processes under APCs will
now have to be followed.
 There are also some complicating factors in that minor procedures,
which are typically performed in physician’s office, may be performed
in the ASC. How should these services be paid?
 Also, there are questions about hospitals that are related to ASCs and
also ASCs that are owned by physician (and/or joint ventures).
 Must fully understand APCs and RBRVS to comprehend all of the
intertwined concepts that CMS is addressing.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 46
APC Update for CY2008
APCs for ASCs
 ASCs Are Finally Going to APCs, Well, Sort Of
 “In this CY 2008 OPPS/ASC proposed rule, we are proposing to update
the revised ASC payment system for CY 2008, along with the OPPS. We
are also proposing to revise the regulations to make practice expense
payment to physicians who perform noncovered ASC procedures in
ASCs based on the facility practice expense (PE) relative value units
(RVUs) and to exclude covered ancillary radiology services and
covered ancillary drugs and biologicals from the categories of
designated health services (DHS) that are subject to the physician selfreferral prohibition.” Page 42778
 “Under the revised ASC payment system, we cap payment for officebased surgical procedures for which ASC payment would first be
allowed beginning in CY 2008 or later years at the lesser of the MPFS
nonfacility practice PE RVU amount or the ASC rate developed
according to the standard methodology of the revised ASC payment
system.” Page 42779
• Note: A full discussion of all these concepts requires a separate
workshop.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 47
APC Update for CY2008
APCs for ASCs
 CMS is completely altering the ASC (Ambulatory Surgical Center) payment
system. There are two Federal Register entries of interest:
 August 2, 2007 Federal Register – Final For Payment Process
 November 27, 2007 Federal Register – Final For Payment Rates
 Differentiating between the process and the rates is a bit tricky. CMS could
not finalize the CY2008 ASC payments until both the APC and RBRVS
payment rates were determined for CY2008.
 The basic approach CMS is taking is to simply pay ASCs 65% of the
hospital APC payment rate. While this is a simple approach, CMS has made
some significant modifications. Also, given that APCs are undergoing
rather dramatic changes, these changes will translate over to the ASCs as
well.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 48
APC Update for CY2008
APCs for ASCs
 One of the first major changes CMS made for ASCs was to define which
surgeries are considered to be ‘ASC Surgeries’, that is, surgical
procedures that can be safely and appropriate performed at an ASC. Along
with this process, CMS also decided to include on the ASC list minor
surgical procedures that can be performed in a physician’s office or clinic.
These are referred to as ‘office-based surgeries’. In the past this
classification of procedures was not on the ASC list.
 From the ASC point-of-view, there are:
 Office-Based Surgeries,
 ASC Surgeries
 Surgeries Performed At A Hospital, Outpatient or Inpatient
 Thus, APCs covers the office-based surgeries, ASC surgeries and then
some outpatient procedures that are not approved for ASCs under the
Medicare program. Thus, the determination of what is on the list and how a
given surgery is classified is important.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 49
APC Update for CY2008
APCs for ASCs
 Prior to CY2008, the office-based procedures generated no payment to
ASCs. The physician performing these services was paid the full RBRVS
amount. Any payment to the ASC had to be by arrangement between the
physician and the ASC.
 Now that the office-based procedures are on the ASC list, CMS had to
make decisions as to how they are to be paid. CMS could simply pay at
65% of the APC payment. However, even a cursory look at APC payments
result in the conclusion that rather significant payments are made in some
cases.
 Let us consider three CPT codes:
 10080 - I&D Pilonidal Cyst, Simple
 10081 - I&D Pilonidal Cyst, Complicated
 11044 - Debridement skin, subcutaneous tissue, muscle and bone
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 50
APC Update for CY2008
APCs for ASCs
 APC Payments For Sample Codes
CPT
APC
SI
Payment
Copay1
10080
0006
T
$ 89.59
$ 17.92
10081
0007
T
$736.26
$147.25
11044
0682
T
$438.32
$158.65
Copay2
$ 87.66
Note that for APCs there is a vast payment difference between 10080 and
10081. Also, both of these procedures can be office-based. Thus, CMS
decided that the payment formula should be:
 ASC payment is the lesser of:
 65% of the APC payment OR
 Non-Facility PE RVU payment.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 51
APC Update for CY2008
APCs for ASCs
 RBRVS for Sample Codes
CPT
10080
10081
11044
Work
1.19
2.47
4.11
NonFacPE
2.89
3.77
4.64
FacPE
1.10
1.47
3.66
MM
0.11
0.24
0.43
 The conversion factor (CF) for CY2008 is $34.0682. Both 10080 and 10081
are classified as ‘office-based’ procedures. In order to apply the formula,
we must calculate the Non-Facility PE RVU:
 10080 – 2.89 * $34.0682 = $ 98.46
 10081 – 3.77 * $34.0682 = $ 128.44
 Applying the Formula – ASC Payment
 10080 - $ 89.59
 10081 - $ 128.44.
 For Regular ASC Surgery – 65% of APC
 For 11044 - 65% * $438.32 = $284.91.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 52
APC Update for CY2008
APCs for ASCs
 New Organizational Model
 Have hospital contract with ASC for outpatient surgeries and then have
hospital paid 100% of the APC payment versus 65% for the ASC.
• Thoughts??
 ASC Changes – Physician Impact
 For office-based procedures physicians will now be paid as if they
performed the services in the hospital setting, that is, provider-based
setting.
 Basically the same economic incentive is available as with hospitals
and provider-based clinics.
 Only surgeries are considered as opposed to the more frequent E/M
services.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 53
APC Update for CY2008
Injection, IV Therapy, Chemotherapy
 For CY2007 the implementation of the new hydration, infusion, IV injections
and chemotherapy codes was probably (and still is) one of the greatest
APC related challenges.
 New Coding Logic
 Encounter Driven
• What do we do about observation?
 Must Determine Primary/Initial Service
• IM/SQ/IA Injections Do Not Participate In This Logic
 Hierarchy of Services to Guide Coding (Policy?)
• IV Infusion Chemotherapy
• IV Push Chemotherapy
• IV Infusion Non-Chemotherapy
• IV Push Non-Chemotherapy
• Hydration
 Application of Coding Logic Can Be a Challenge
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 54
APC Update for CY2008
Injection, IV Therapy, Chemotherapy
 New Coding Logic
 Coding May Be Through the Chargemaster By Nursing Personnel
• Develop Cheat Sheet or Coding Template
• Adjust Chargemaster Entries
 May be in distributed service areas.
 Revenue code choices?
 Extensive Policies and Procedures Should Be Developed
 Extensive, On-Going Training Must Be Conducted
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 55
APC Update for CY2008
Injection, IV Therapy, Chemotherapy
 APC Payment for Injections and Infusions
APC
Drug Admin
CY2008 Pay
CY2007 Pay
Level I
$16.21
$14.02
Level II
$25.13
$25.71
Level III
$51.22
$52.93
Level IV
$105.38
$109.25
Level V
$114.64
$116.62
Level VI
$149.34
$155.27
 Payment is generally holding steady. CMS is paying more for infusions and
injections than they have in the past.
• How do APGs treat injections?
• Is there any possibility that CMS will want to package
injections/infusions unless they are the only service provided?
 See New Injection Codes
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 56
APC Update for CY2008
Injection, IV Therapy, Chemotherapy
 Exercise – Compare payment from CY2006 through CY2008 for:
• Two hours of hydration
• Four hours of IV therapy
• Nine hours of IV therapy
• Two hours IV infusion chemotherapy followed by two IV push
chemotherapy
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 57
APC Update for CY2008
Injection, IV Therapy, Chemotherapy
 There is a long list of P&P issues surrounding Hydration, Injections and
Infusion Therapy
 Multiple Sites
 Vein Failure
 Separate Encounters
 Discontinue/Re-Establish
 Routine, Integral Part  See Hospital Wide General Policy
 Multiple Injections, Same Drug
 General Injection, Hydration, Infusion Therapy Logic
•
•
•
•
Primary/Initial vs. Secondary/Subsequent
Concurrent
Add-On Code Utilization
CPT Guidance
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 58
APC Update for CY2008
Injection, IV Therapy, Chemotherapy
 Chemotherapy
 With the adoption of the new infusion, injection and chemotherapy
codes, the long roller coaster ride for chemotherapy is coming to an
end.
 Unless CMS decides to make some major change, which wouldn’t be
that unusual, chemotherapy operations should become financial stable.
 Previous guidance from CMS supports the coding and billing of
additional non-chemotherapy infusions and injections along with the
chemotherapy as primary, of course.
 Questions surrounding nursing evaluation in the chemotherapy area
continues to be somewhat problematic. CMS seems to indicate that
these types of services are just a part of the chemotherapy services.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 59
APC Update for CY2008
Closed Fracture Care/Strapping
 This area is a major mess for APCs
 When APCs were developed, as with APGs, there were two categories
within the closed fracture care and/or splinting:
 Low Level APC for Fingers, Toes, Trunk
• Relatively inexpensive services for addressing fractured ribs,
fingers, toes, etc. and/or strapping sprained/dislocated ribs, fingers,
toes, etc.
 High Level APC for Everything Else
• Relatively expensive services for arms, legs and other
fracture/sprains, dislocations of other than finger, toe trunk
 What happened?
 We have only one APC for Closed Fracture Treatment
 We have only one APC for Strapping and Casting
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 60
APC Update for CY2008
Closed Fracture Care/Strapping
 Exercise – Sam present to ED after falling off horse. Complains of upper
right chest pain. X-ray indicates a single, uncomplicated, non-displaced
fracture of a rib. Nurse counsels patient on delimiting activities, proper
breathing and the like. Patient discharged home with prescription for
Tylenol #3.
 How to code and bill?
 Exercise – Stanley present to the ED with an injured right index finger. Xray indicates no fracture. Diagnosis is sprained finger. Physician orders
nurse to apply a finger splint. A mild pain medication is prescribed.
 How to code and bill?
 Exercise – Susan presents to the ED with an injured toe. X-ray indicates a
non-displaced fracture. Physician orders the toe to be ‘buddy-taped’.
Susan is instructed to use acetaminophen as an analgesic.
 How to code and bill?
• What should hospital be doing in this area?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 61
APC Update for CY2008
Wound Care
 Wound Care
 Therapy-Only Codes
• “-GP”, “-GO”, “-GN”
• Therapy Plan of Care
 When hospital outpatients receive wound care services by individuals
outside of a certified therapy plan of care, the hospital reports the
appropriate CPT code and nontherapy revenue code and is paid under
the OPPS. When these services are provided to hospital outpatients by
a qualified therapist under a therapy plan of care and reported using
either one of the appropriate therapy modifiers, the therapy revenue
code series (42X, 43X, or 44X), or both, hospitals are paid based on the
MPFS.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 62
APC Update for CY2008
Hyperbaric Oxygen
 Hyperbaric Oxygen Therapy
 C1300 reimbursement has created significant discussion over the past
several years.
 CMS Maintains Everything Is Appropriate
• As stated in the proposed rule (72 FR 42706), we believe that this
adjustment through use of the hospitals' overall CCRs is all that is
necessary to yield a valid median cost for establishing a scaled
weight for HBOT services. Therefore, for CY 2008, we proposed to
continue to use the same methodology that we have used since CY
2005 to estimate payment for HBOT.
 Page 590 Examination Copy November 27, 2007 Federal
Register
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 63
APC Update for CY2008
2 Times Rule














0033 - Partial Hospitalization
0043 - Closed Treatment Fracture Finger/ Toe/Trunk
0060 - Manipulation Therapy
0080 - Diagnostic Cardiac Catheterization
0093 - Vascular Reconstruction/Fistula Repair without Device
0105 - Repair/Revision/Removal of Pacemakers, AICDs, or Vascular
Devices
0106 - Insertion/Replacement of Pacemaker Leads and/or Electrodes
0109 - Removal/Repair of Implanted Devices
0235 - Level I Posterior Segment Eye Procedures
0251 - Level I ENT Procedures
0260 - Level I Plain Film Except Teeth
0278 - Diagnostic Urography
0282 - Miscellaneous Computed Axial Tomography
0303 - Treatment Device Construction
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 64
APC Update for CY2008
2 Times Rule











0323 - Extended Individual Psychotherapy
0330 - Dental Procedures
0340 - Minor Ancillary Procedures
0368 - Level II Pulmonary Tests
0381 - Single Allergy Tests
0409 - Red Blood Cell Tests
0432 - Health and Behavior Services
0438 - Level III Drug Administration
0604 - Level 1 Hospital Clinic Visits
0664 - Level I Proton Beam Radiation Therapy
0688 - Revision/Removal of Neurostimulator Pulse Generator Receiver
 Question: For how many years can an APC be on this list?
• This is supposed to be an exceptional process, that is, exempting
an APC from being divided into several parts in order to reduce the
variation.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 65
APC Update for CY2008
Chargemaster Related Issues
 Establishing Hospital Charges
 Cost-to-Charge Ratios (CCRs)
 Cost Report Development Interface
 Charge-Compression
• Tiered Supply Charge Formulas
• Tiered Drug Charge Formulas
 This has become a major issue for DRGs because the formula
for calculating the DRG weights is being changes to the same
formula that is used for APCs.
 Major Issue for Hospitals
• Transparent Pricing
• Strategic Pricing
• Comparative Pricing
• Rational Pricing
 What impact does all of this have on APCs?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 66
APC Update for CY2008
Chargemaster Related Issues
 Bundling Charges
 CMS and CPT Guidance  Fitting the Pieces Together
• Distinguish Between:
 Charging
 Separately Charging
 Separately Billing
 Separately Reporting
• Examples:
 CPT Guidance – Infusions & Injections
o IV Infusion Supplies Not To Be Reported Separately
 CPT Guidance – Conscious Sedation
o Procedures Annotated with “ʘ” Should Not Report
Conscious Sedation Separately
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 67
APC Update for CY2008
Chargemaster Related Issues
 Bundling Charges
 CMS and CPT Guidance  Fitting the Pieces Together
• Supply Categorization
 Ancillary vs. Non-Ancillary Supply Items
 Stock Items  IV Solutions
 Supply Categorization Issues
o See Position Paper from AACI which is in its 10th version.
• Status Indicator = “N” Items
 To Bill or Not To Bill
 Charge Development
 Examples:
o Subsequent Hours of Critical Care
o Concurrent Infusions
 Number of SI=“N” Services Will Increase In Future
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 68
APC Update for CY2008
Policy Issues
 Outpatient Hospital Services and Supplies Incident to a Physician Service
 Changes to 42 CFR §§ 410.27(a)(1)(iii) and (f)
• Language relating to designation of provider-based status.
 “This proposed deletion of the reference in §§ 410.27(a)(1)(iii)
and (f) to CMS ‘‘designating’’ a department of a provider under
§ 413.65 would make those sections consistent with the 2002
amendments to the provider-based rules, in that under the
amended provider-based rules, a main provider is no longer
required to ask CMS to make a determination that a facility or
organization is provider-based before the main provider can bill
for services of the facility as if the facility were provider-based,
or before the main provider can include the costs of those
services in its cost report.” Page 42771
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 69
APC Update for CY2008
Policy Issues
 Outpatient Hospital Services and Supplies Incident to a Physician Service
 Changes to 42 CFR §§ 410.27(a)(1)(iii) and (f)
• “Section 410.27(a)(1) currently states that Medicare Part B pays for
hospital services and supplies furnished incident to a physician
service to outpatients, including drugs and biologicals that cannot
be self-administered, if they are furnished by or under
arrangements made by a participating hospital, except in the case
of a resident of a skilled nursing facility as provided in § 411.15(p);
as an integral though incidental part of a physician’s services; and
in the hospital or at a location (other than a rural health clinic or a
Federally qualified health center) that CMS designates as a
department of a provider under § 413.65.” Page 42772
 Hospitals establishing relationships with ASC relative to incident-to
services may not qualify under the provider-based rule.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 70
APC Update for CY2008
Policy Issues
 Outpatient Hospital Services and Supplies Incident to a Physician Service
 Changes to 42 CFR §§ 410.27(a)(1)(iii) and (f)
• “With regard to potential for ASCs to provide ‘‘incident to’’ services
under arrangements with HOPDs, we note that the provider-based
rules set forth at § 413.65 do not apply to ASCs. In addition, our
longstanding policy codified at § 416.30(f) for ASCs operated by
hospitals requires that ‘‘the ASC participates and is paid only as an
ASC, without the option of converting to or being paid as a hospital
outpatient department, unless CMS determines there is good cause
to do otherwise.’’ We do not believe good cause exists such that a
Medicare-certified ASC would be able to provide ‘‘incident to’’
services under arrangement to hospital outpatients under § 410.27.”
 What is going on here?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 71
APC Update for CY2008
Policy Issues
 Interrupted Procedures - 42 CFR §419.44
 “Currently, when a procedure is interrupted after its initiation or the
administration of anesthesia, hospitals append modifier 74
(Discontinued outpatient procedure after anesthesia administration) to
the interrupted procedure, and the full OPPS payment for the procedure
is made. In addition, when a procedure requiring anesthesia is
discontinued after the beneficiary is prepared for the procedure and
taken to the room where the procedure is to be performed, but before
the administration of anesthesia, hospitals currently append modifier
73 (Discontinued outpatient procedure prior to anesthesia
administration) to the discontinued procedure and receive 50 percent of
the OPPS payment for the planned procedure. Hospitals also report
modifier 52 to signify that a service that did not require anesthesia was
partially reduced or discontinued at the physician’s discretion. Modifier
52 is reported under the OPPS for a variety of types of interrupted
services, such as radiology services. Under the OPPS, we apply a 50percent reduction to the facility payment for interrupted procedures
and services reported with modifier 52.” Page 42772 Proposed FR Entry
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 72
APC Update for CY2008
Policy Issues
 Reporting Wound Care Services
 “For CY 2008, we are proposing to revise the list of therapy revenue
codes that may be reported with CPT codes 97597, 97598, 97602, 97605,
and 97606 to designate them as services that are performed by a
qualified therapist under a certified therapy plan of care, and thus
payable under the MPFS, to be consistent with the current billing
practices of hospitals and to ensure that we are making separate
payment under the OPPS only in appropriate situations.” Page 42773
• What is going on here?
 Cardiac Rehabilitation
 Status Indicator Change  G-Codes
 Bone Marrow Stem Cell
 Technical Coding/Grouping Changes
 Sole Community Hospitals
 7.1% Bonus (?)
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 73
APC Update for CY2008
Odds and Ends
 Exercise – Stephanie, a physical therapist at the Apex Medical Center, has
been called to the ED to fabricate and apply a splint. This is for a badly
sprained leg.
 Discuss how this service should be coded and billed.
• Will this service be paid under APCs or under the Rehabilitation Fee
Schedule (MPFS)?
 What is happening with the APC coinsurance percentage.
 Supposed to be 20%.
 Where are we? How soon will we get there?
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 74
APC Update for CY2008
Summary and Conclusions
 APCs Represent CMS’s Most Complex Prospective Payment System
 As We Enter the Ninth Year of APCs –
 The variation in payments continues to be a roller coaster
 Significant policy changes continue to be developed, specifically
increased packaging
 Hospital charging structures are now in the limelight both from the
public as well as how they impact APC weight development
 Proper chargemaster construction along with proper coding interfaces
and charge capture are of great importance
 Correct CPT/HCPCS coding along with proper use of modifiers
continues to paramount
 Significant, additional guidance from CMS is needed in a number of
difficult areas
 Hospitals should anticipate that APCs will continue to change at a rapid
pace during the coming years.
© 1999-2008 Abbey & Abbey, Consultants, Inc.
Slide # 75