HI 225 Ch07 pp ts.hospice.ab202017

1. © 2018 American Health Information Management Association© 2018 American Health Information Management Association
Principles of Healthcare Reimbursement
Sixth Edition
Anne B. Casto, RHIA, CCS

2. © 2018 American Health Information Management Association
Chapter 7
Ambulatory and Other Medicare-Medicaid
Reimbursement Systems
• Learning Objective
– Explain the elements of the outpatient
prospective payment system
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Hospital Outpatient Prospective Payment
System (OPPS)
• Key Terms
– Ambulatory Payment Classification (APC)
– Packaging
– Bundling
– Payment status indicator (SI)
– Outpatient Code Editor (OCE)
– National unadjusted payment
– Discounting
– Pass-through
– Partial hospitalization
– Sole community hospital (SCH)
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OPPS
• Hospital outpatient services
– Clinic
– Emergency department
– Ambulatory surgery unit
• Same day surgery units attached to a hospital
– Have access to inpatient and ICU care
• Not free-standing ambulatory surgery centers (ASCs)
– Effective period
• January 1 to December 31
– Calendar year (CY)
• Updated yearly
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Reimbursement Methodologies
• Fee schedule
– Ambulance, physical therapy, durable medical
equipment
• Case rate, partially packaged
– Uses Ambulatory Payment Classification (APC)
system
• Most procedures, services and supplies
• Reasonable cost
– Acquisition of corneal tissue, hepatitis B vaccine
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APCs
• Classification system that groups together
like procedures with like resource
consumption
– Grouped based on procedure
– Diagnosis does not play a role in grouping
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Partially Packaged System
Packaging
Reimbursement for minor
ancillary services
associated with a
significant procedure are
combined into a single
payment
Extensive in OPPS
See Example 7.1 in text
Bundling
Payment for multiple
significant procedures or
multiple units of the same
procedure or service
related to an encounter are
combined into a single unit
of payment
Bundling is utilized, but not
as heavily as packaging
See Example 7.2 in text
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Partially Packaged System
1. Encourages hospitals to create incentive to provide
efficient care and manage resources with flexibility
2. Incentivize hospitals to choose the most cost-efficient
option when a variety of devices, drugs, items and
supplies could be utilized
3. Encourage hospitals to effectively negotiate with
manufactures and suppliers to reduce purchase price
for supplies and items
4. Influence hospitals to establish protocols to ensure
the necessary services are provided, but scrutinized
practitioner orders to maximize the efficient use of
hospital resources
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Payment Status Indicators
• Code that establishes how a service,
procedure or item is paid in OPPS
– Fee schedule
– APC
– Reasonable cost
– Not paid
• See table 7.14 in textbook
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Payment Status Indicators
• Interpreting SIs is the foundation of determining OPPS
reimbursement
– SIs are assigned to HCPCS codes
– Released each year in Addendum B of the OPPS final
rule; updated quarterly
• Multiple HCPCS codes are reported per encounter,
therefore, there are multiple SI per encounter
– Must critically examine all SI together to determine final
reimbursement for the encounter
– CMS uses logic within the Outpatient Code Editor (OCE)
and Pricer
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APC Components
• Each HCPCS code can be assigned to only one
APC
• Each APC has the same components
– See figure 7.11 in text
• Relative weight is a measure of resource
consumption
• National unadjusted payment amount is the total
reimbursement amount
– CMS portion plus beneficiary copayment portion
• Minimum copayment amount identifies the portion that the
beneficiary must pay
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Payment Status Indicator Categories
APC Payment
G – pass-through drugs and biologicals
K – Non-pass-through drugs and
nonimplantable biologicals
R – Blood and blood products
S – Significant procedures; no
multiple reduction
T – Surgical procedures; multiple
reduction applies
U – Brachytherapy services
V – Clinic and emergency department
visits
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Associated ancillary
and supportive
items are packaged
in APC Payment
See
Example
7.3 in
text
New technology APCs
Used to add new services
into the system quickly
Use SIs S and T

13. © 2018 American Health Information Management Association
Payment Status Indicator Categories
Per Diem APC Payment
Partial Hospitalization Program (PHP); SI P
APC 5853, partial hospitalization (3 or more
services) for CMHCs ($143.31)
APC 5863, partial hospitalization (3 or more
services) for hospital based PHPs ($208.23)
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Payment Status Indicator Categories
Comprehensive APC Payment (C-APC)
All Inclusive APC
• Primary
procedure
• Most other
procedures,
services and
supplies are
packaged into
the C-APC
• See figure 7.12
J1
• Comprehensive
APC
• I refer to this SI
as the King of
SIs
• Almost all other
services are
packaged
including other
J1 and J2
procedures
J2
• Services may be
paid through a
comprehensive
APC
• Packaged if
billed on the
same claim as a
J1
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Payment Status Indicator Categories
Conditional APC Payment
Q1
STV-packaged
See figure 7.13
If a Q1 service is on
a claim with a S, T or
V service, then the
Q1 service is
packaged
Q2
T-packaged
See Example 7.4 in
text
If a Q2 services is on
a claim with a T
services, then the Q2
service is packaged
Q4
Conditionally
packaged laboratory
tests
Packaged if on a
claim with J1, J2, S,
T, V Q1, Q2 or Q3
(aka almost always)
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Payment Status Indicator Categories
Composite APC Payment
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APC 5041
Critical care
APC 5045
Trauma response
with critical care
APC 8004
Ultrasound
APC 8005
CT and CTA
without Contrast
APC 8006
CT and CTA with
Contrast
APC 8007
MRI and MRA
without Contrast
APC 8008
MRI and MRA
with Contrast
APC 8010
Mental Health
Services
Bundle together
individual
components of
larger services
into one
payment
Eight composite
APCs
See table 7.16
for APC 8004
procedures
See figure 7.5
for composite
APC in action

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Payment Status Indicator Categories
Packaged Payment
• Services, procedures and supplies that are
always packaged have SI N
– See table 7.17 in the textbook for sample
– See Addendum B for full listing
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Payment Status Indicator Categories
Fee Schedule Payment
• Services paid under a CMS fee schedule
have SI A
– Physical therapy is paid under the MPFS
– Ambulance fee schedule
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Payment Status Indicator Categories
Reasonable Cost Payment
SI F
• Acquisition of
corneal tissue
• Certified
registered
nurse
anesthetist
services
• Hepatitis B
vaccine
SI H
• Pass-through
device
categories
• No cost-
sharing
SI L
• Influenza
immunization
• Pneumococcal
immunization
• No cost-
sharing
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Payment Status Indicator Categories
Not Reimbursed under OPPS
• Several supplies, services and procedures
not reimbursed under OPPS
– SI, B, C, D, E1, E2, M and Y
• SI C – Inpatient Only Procedures (IPO)
– Because CPT contains both inpatient and
outpatient procedures, CMS uses SI C to
identify all procedures that are not allowed for
the outpatient setting for Medicare
beneficiaries
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OPPS Provisions
Discounting
SI T procedures are
discounted when
multiple procedures are
performed during the
same encounter
1st procedure = 100%
All others = 50%
See figure 7.14 in text
Interrupted
Services
Modifier 73, surgery
discontinued for a patient who
has been prepared for surgery
and taken to the operating
room but before the
administration of anesthesia
50% payment rate
Modifier 74, surgery
discontinued after
administration of anesthesia or
initiation of the procedure
100% payment rate
Modifier 52, Reduced or
discontinued at physician's
discretion
50% payment rate
High-Cost
Outlier
Unusually high-cost
services
Based on the cost of
individual services rather
than the cost for the entire
encounter
May be multiple outlier
calculations per claim
When cost exceeds 1.75
times the APC payment
AND cost exceeds the APC
payment plus a fixed dollar
threshold and outlier add-on
payment is made
Add-on payment = 50% of
the cost that exceeds 1.75
times the APC payment
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OPPS Provisions
Rural
Hospital
Adjustment
Provided for Sole Community
Hospitals (including EACH)
7.1% increase
SCH – Hospitals that, by
reason of factors such as
isolated location, weather
conditions, travel conditions
or absence of other
hospitals is the sole source
of patient hospital services
reasonably available to
individuals in a geographic
area
Cancer
Hospital
Adjustment
11 IPPS-Exempt facilities
[Alliance of Dedicated
Cancer Centers (ADCC)]
Facility-specific adjustment
to help cancer hospitals
who have higher payment to
cost ratios than the average
facility
See table 7.18 in text
Pass-
throughs
Exception to Medicare PPS
High cost supplies
Excluded from packaging
under OPPS
Pass-through drugs and
biologicals (SI G)
Paid via APC based on
Average Sale Price (ASP)
Pass-through devices (SI H)
Paid via reasonable cost
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OPPS Provisions
• Hold Harmless
– Additional payment for IPPS-exempt cancer
centers (ADCC)
– Additional payment for Children’s hospitals
• These facilities need additional financial help
because they do not provide a full
complement of services like most outpatient
facilities
– Fewer profitable departments
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OPPS Payment
• See figure 7.16 for the foundation of
OPPS
• See figure 7.18 for an example of a simple
calculation of OPPS payment
• See figure 7.19 for an example of a
complex calculation of OPPS payment
– Notice how all SI must be assessed to
determine correct reimbursement amount
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