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This website is devoted to Ambulatory Payment Classifications (APCs), Ambulatory Patient Groups (APGs) and Related Hospital Outpatient Payment Topics.

This website was last updated on: January 25, 2016.

(PBR Information Toolkit Is Updated Separately)

Looking For Information on the Provider-Based Rule?

Click Here To Visit Our Provider-Based Information Toolkit.  Includes CMS supervisory Federal Register Entries.

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpg CY2016 - APC Update - Information and Analysis

·         APCs Now Moving Closer to the ‘Old’ APGs (Ambulatory Patient Groups)

Starting in CY2008 CMS has been increasing packaging for payment purposes.  In CY2015 the concept of a Comprehensive APC, that is, C-APC was introduced.  Note that the same acronym can be used for Consolidated APCs as well.  For this year observation services are being moved to a new C-APC, 8011, that is quite comprehensive.

The increase bundling is very reminiscent of the APG concept of ‘Significant Procedure Consolidation’ in which if there were multiple related surgeries, only the highest paying (i.e., the most significant) was paid; payment for the lesser related surgeries were packaged into the primary procedure.  While it may take 20 years, it appears that we going back to APGs.

·         APC Number Revisions

Many of our old favorite APCs have now been renumbered.  This makes it a little more difficult to track what is happening from year to year.  Given the changes that also occur relative to mapping of services into different APCs along with the increased payment packaging, care must be taken to develop models of services in order to assess financial impacts.

·         Observation C-APC

In a matter of several years, observation has gone from two levels, then to a composite APC with one level and now for CY2016 we are going to a C-APC that is even more encompassing.  The new C-APC 8011 will pay for observation that includes services such as ER and critical care.  Any level of ER services along with direct referrals can evoke this new C-APC.  Note that the word observation is being used as opposed to the old extended evaluation and management language.

One of the unspoken issues with the C-APCs is the precise definition of the word encounter.  APCs, like other outpatient services, are encounter driven particularly for payment purposes.  However, just what is an encounter?  A precise definition is much more difficult than you might first think.  Note that some of the steps that CMS is taking in the APC arena include bundling at a claims level.  The question then becomes, should you file a single claim for each date of service or should you file a claim that crosses dates of service?  The answer to this question can affect the way in which the APC Grouper processes the claim(s) for payment.

·         Hospital Clinic Visits

CMS appears adamant about using the single G0463 for all hospital clinic visits.  This single G-Code amalgamates the ten E/M CPT codes for established patients (CPT 99211-99215) and for new patients (CPT 99201-99205).  CMS maintains that payment for hospital clinic visits of all types should be paid at $102.12 nationally (i.e., not geographically adjusted).  Note that the APC category has been changed from APC 0634 to APC 5012.

Ask yourself if there is not a great deal of variation between hospital clinic visits that would normally use CPT 99211 and that which would use the new patient level 5 CPT code 99205.  With a little thought, you can probably envisage these two extremes and come to the conclusion that there should be significant differences in the costs.

So then, why does not this single G-Code that maps into APC 5012 violate the ‘two-times rule’?  The ‘two-times rule’ is a very liberal measure of variation when comparing the service with the highest cost versus the service with the lowest cost in the given APC category.  Again, with a little thought, you should realize that by definition the ‘two-times rule’ is not violated because there is a single code that maps into this APC.  Because there is a single code, there is only one service so that the highest cost service and the lowest cost service are the same!  Thus CMS can claim that there is no variation, while logically there should be a great deal of variation.

·         Status Indicator Codes

Addendum B lists all of the CPT/HCPCS codes and the way that they map, or in some cases don’t map, into the various APC categories.  The Status Indicator (SI) codes direct the way in which the APC Grouper groups cases for payment purposes.

·         Brachytherapy Sources

As usual there is a relatively long discussion (i.e., several pages in the Federal Register) concerning brachytherapy sources.  Each year CMS is careful to justify the use of a ‘mini-APC’ system to provide Congressional mandated separate payment for brachytherapy sources.  Given the wide variation in costs relative to brachytherapy sources, these should be paid separately on a cost pass-through basis, that is, for APCs Status Indicator “H”.

A very interesting statement was made in the November 13, 2015 Federal Register:

“Under the OPPS, it is the relativity of costs, not the absolute costs, that is important, and we believe that brachytherapy sources are appropriately paid according to the standard OPPS approach.” (80 FR 70324)

Thus, your hospital may not receive appropriate payment for brachytherapy sources, but on an averaged basis, nationwide the payments will all average out.

·         Supply Categorization Split

We are just about at the point in which finalized cost reports that were prepared with the split between Medical Supplies Charged to Patients and Implantable Devices Charge to Patients.  These two categories for the cost report have cost centers 71 and 72, respectively, and in the cost report they are reported on line 55 and 55.30, respectively.  These two cost centers were developed in order to address charge compression for supplies items.

There is also an interesting statement from the November 13, 2015 Federal Register:

“Supplies can be anything that is not equipment and include not only minor, inexpensive, or commodity-type items but also include a wide range of products used in the hospital outpatient setting, including certain implantable medical devices, drugs, biologicals, or radiopharmaceuticals …“ (80 FR 70346)

From a hospital chargemaster perspective, the proper categorization of supplies, including items that considered supplies for payment purposes, is a major challenge and represent a significant compliance concern.

·         ‘Over 2-Midnights Rule’

The ‘Over 2-Midnights Rule’ is a relatively controversial rule developed by CMS in response to some rather unfavorable decisions at the ALJ/OMHA level concerning inpatient status versus observation services.  One example, of many, occurred with the O’Conner Hospital Ruling in which the inpatient services were deemed not appropriate, but the ALJ did indicate that CMS should pay for the services as observation.  While CMS has stated that they acquiesced to these rulings, what CMS actually did was to write new rules including the ‘Over 2-Midnight Rule’.

In the November 13, 2015 Federal Register, CMS did make some changes.

§  The rare and unusual language was removed from the CFR relative to short inpatient stays that do not last over 2 midnights, and

§  The QIO is to become involved in reviewing inpatient admissions relative to the ‘Over 2-MidnightsRule’.

·         FB/FC Modifiers for Full and Partial Device Credits

For CY2016 the use of the FB and FC modifiers has been discontinued in lieu of using Value Code FD.

·         Proposed Rule for CY2016

·         Final Rule for CY2016

·         PowerPoints APC Update for CY2016

 

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpg CY2015 - APC Update - Information and Analysis

·         Increased Packaging Continues to Accelerate

·         Device Dependent APCs – Comprehensive APCs

One of the areas for increased packaging is with device-dependent APCs.  These are APCs in which the associated device (e.g., pacemaker) represents the major portion of the APC payment (e.g., placement of the pacemaker).  Given the great variability in costs of device like pacemakers, these devices should be paid on a cost pass-through basis, that is, they should have Status Indictor “H”.

·         Blood and Blood Products

Payment for blood and blood products slowly continues to improve.  Make certain that your cost report has a separate CCR (Cost-to-Charge Ratio) for blood and/or blood products.  This is cost center 62 and/or 63.  Most hospitals do not charge for the blood itself, everything goes into Revenue Code 39X so that the cost center generating the CCR will, most likely, be 63.

·         Brachytherapy Sources

Congress has mandated separate payment for brachytherapy sources.  CMS has established a ‘mini-APC’ system to categorize and pay for brachytherapy sources.  Given the extreme variability in cost per application, these sources should be paid on a cost pass-through basis and thus should have Status Indicator “H”.

·         Observation

Observation payment is made through Composite APC 8009, Extended Assessment and Management.  Note that the word ‘observation’ as such does not appear.

·         Proposed Rule for CY2015

·         Final Rule for CY2015

·         PowerPoints APC Update for CY2015

 

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpg CY2014 - APC Update - Information and Analysis

·         CMS Continues to Accelerate Packaging and Various Forms of Bundling

CMS has implemented several new initiatives for increased bundling for APCs.  Additionally, there are plans for CY2015 to implement more bundling.  CMS is indicating that they want APCs to reflect more comprehensive groupings that are characteristic of prospective payment systems (PPSs).

Basically, CMS is moving back to APGs – Ambulatory Patient Groups.  While the bundling rules are a little different, the focus on increased bundling is the same.  For instance, under APGs, there was significant procedure consolidation.

If a given procedure was performed and there were related less significant procedures performed, then the payment for subordinate procedures was bundled.  For example, if a complex laceration was performed, then any intermediate or simple laceration repairs were bundled.

Probably the single biggest change for CY2014 is the movement to a single Hospital Clinic Visit code.  The code is HCPCS G0643 with a national payment of $92.53.  Note that the copayment is $37.01 or a coinsurance percentage of 40%.  How CMS managed to develop this level of copayment is an interesting question!

·         Physician Supervision – Activity Slows Down

Starting in CY2008 CMS started making changes in the physician supervision rules.  Actually, CMS adamantly maintains that these are clarifications, not changes.  The reason CMS wants these as clarifications and not changes is that for compliance purposes clarifications can be applied retroactively.  Changes can only be applied going forward.

For the language from the Federal Registers, see the Provider-Based Information Toolkit referenced at the top of this page.

For CY2014, the main change is that CAHs and Small Rural Hospitals will no longer be exempted from the rules.

·         Proposed Rule for CY2014

·         Final Rule for CY2014

·         PowerPoints APC Update for CY2014

 

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgCY2013 - APC Update - Information and Analysis

·         Using the Geometric Mean for Recalibration of APC Categories

The move of CMS to use the Geometric Mean for recalibrating APCs comes a little surprise.  Statistically, the Geometric Mean generates a much more accurate mean when there is significant outlier data.  While not easily discernable, the question is whether or not this will skew any of the APC weights.

·         Hospital Visits and E/M Coding

o   CMS does not want to merge the New and Established Patient series of E/M codes (99201-99215).  There is too much difference in costs between the two series.

o   CMS continues to hint at CPT developing new hospital visit E/M codes.
In recent years CMS has moved from a stance whereby they, CMS, need to develop national guidelines to a stance where someone else needs to develop a solution to the facility E/M issue.  Note that CMS is using CPT codes in a non-standard way.  This use is in violation of the HIPAA TSC (Transaction Standard, Standard Code Set) Rule.

·         Transitional Care Management (TCM)

Interestingly, CMS is recognizing the TCM codes:

o   CPT 99495 APC 0605 - $73.68 (See Also MPFS)

§  Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge;

§  Medical decision-making of at least moderate complexity during the service period; and

§  Face-to-face visit, within 14 calendar days of discharge.

 

o   CPT 99496 APC 0606 - $96.96 (See Also MPFS)

§  Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge;

§  Medical decision-making of high complexity during the service period; and

§  Face-to-face visit, within 7 calendar days of discharge.

·         Ambulatory Surgical Centers (ASCs)

ASCs continue to use a combination of APCs and RBRVS.  However, the Conversion Factor is not at the 65% level.

·         New/Deleted APCs

o   New APCs:

§  APC 00059 – Level I Strapping

§  APC 00177 – Level I Echocardiogram with Contrast

§  APC00178 – Level II Echocardiogram with Contrast

 

o   Deleted APCs:

§  APC 00086 – Level III Electrophysiological Procedure

§  APC 00128 – Echocardiogram with Contrast

·         Functional G-Codes for Therapy Services

o   Besides the new codes, there is some discussion of ‘therapy-only’ codes.

·         CMS Has Dropped Several HCPCS Modifiers

o   “-QB”, “-QU”, “-AH”, “-AJ”

o   No Payment Differences Are Being Made

·         APCsUpdateVer14GenCY2013.ppt

·         Proposed Rule for CY2013

·         Final Rule for CY2013

 

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgCY2012 - APC Update - Information and Analysis

·         Proposed Rule CY2012

·         Final Rule CY2012

·         APCs Update Ver13Gen CY2012

 

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·         Proposed Rule CY2011

·         Final Rule CY2011

·         PowerPoint Presentation CY2011 APC Update

 

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·         Proposed Rule CY2010

 

·         Final Rule CY2010

·         PowerPoints From APC 2010 Update Workshop

 

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·         Proposed Rule CY2009

·         Final Rule CY2009

·         PowerPoints From APC 2009 Update Workshop

 

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgCY2008 - APC Update - Information and Analysis

  • CMS Makes A Significant Philosophical Change for APCs Starting In CY2008

CMS has decided to significantly increase the packaging in APCs.  Table 10, see link below, lists the set of codes that will be packaged starting in CY2008.  Note the use of the relatively new Status Indicator “Q” for conditional packaging.  This change is only the tip of the iceberg.  Clearly, CMS is moving more toward APGs (Ambulatory Patient Groups) in which there is significantly more bundling.  In APGs, E/M levels are bundled and there is also Significant Procedure Consolidation in which related surgeries are bundled.

  • Table10 – This is the rather lengthy table of procedures that are to be packaged either absolutely (Status Indicator “N”) or conditionally (Status Indicator “Q”).  Be certain to run sample cases through the 2008 APC grouper to understand just how this packaging is taking place.

 

 

 

  • Ambulatory Surgical Centers (ASCs) Move To APCs (Well, Sort Of!)

ASCs have moved to APCs starting January 1, 2008.  This movement to APCs is only a part of the new ASC payment system as developed by CMS.  Note the following:

ü  The ASC payment for a given surgical procedure is the lesser of:

o   65% of the APC payment OR

o   The Non-Facility Practice Expense (PE) RVU (Relative Value Unit) from the Medicare Physician Fee Schedule (MPFS), that is, RBRVS (Resource Based Relative Value System)

ü  Office-based procedures have now been added to the official ASC surgery list.  ASCs will receive payment for surgical procedures that are often performed in the physician’s office.

ü  Physician payment for services provided in an ASC will be based on RBRVS with the Site-of-Service (SOS) differential in place just as the physician payment is reduced in hospital provider-based situations.

ü  Thus ASC and/or hospital personnel will need to know and understand both APCs and RBRVS in order to understand how ASC payments are being calculated and made.

While these points are only a summarization, clearly the ASC payment system has become significantly more complicated.  Also, there are questions about how all the features of APCs are to translate over to ASCs.  Note that ASCs will generally be included in the APC update process from CMS.

·         PowerPoints From APC 2008 Update Workshop

 

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  • Total November 15, 2004, APC Federal Register This is the total Federal Register entry in one file. A single file is much easier to perform keyword searches in Adobe Acrobat. Enjoy!
  • Table 19 This is the listing of the correlation of C-Codes to associated procedure codes.
  • Table 20 This is the listing of the C-Codes that must be on the claim forms.

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Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgCY2003 - APC Update - Information and Analysis

  • Total November 1, 2002, APC Federal Register This is the total Federal Register entry in one file. A single file is much easier to perform keyword searches in Adobe Acrobat. Enjoy! Note that this is a large file - a slow connection is not recommended!

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgAugust, 2002, Update For Provider Based Status

  • Dr. Abbeys Comments For The August 9, 2002, Federal Register - Dr. Abbey's Comments For The August 9, 2002, Federal Register - Proposed CY2003 Update - MS Word Format - Note that comments must be to CMS by October 7, 2002. For those making comments, you may use our comments as a template or change them as you wish! Enjoy!

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgAugust, 2002, Update For Provider Based Status

  • August 1, 2002 Update For Provider-Based Status (PBS) Rules - This PDF file contains the pages from the August 1, 2002, Federal Register for PBS including the Preamble and Rule changes. This information was sort of 'hidden' in the DRG update Federal Register. See the August issue of our Medical Reimbursement Newsletter for a related article. See also the download below from the May 9, 2002 Federal Register for the proposed changes for which the August Federal Register provides the final changes. Enjoy!

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgCY2002 - APC Update - Information and Analysis

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgDownload the EMTALA and Provider-Based Status [proposed] rules from the Federal Register updates (May 9, 2002). This download includes both the preamble and CFR proposed changes.

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgThe APC Final Interim Rules were released in Federal Register Form on April 7, 2000. You can download this FR entry from any of the GPO (Government Printing Office) Gates. One of them is: http://www.gpo.ucop.edu

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgSearch with the keyword of ‘Medicare’ and put in the April 7th date. Note there are 8 separate sections. Be certain to download each of them! AACI has put the entire FR entry into a single PDF file. This file is approximately 2.2 MB. Having the complete file will allow you to search it by keyword using the Adobe Acrobat reader. Download here!

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgComplete April 7, 2000, APC Federal Register You can also download the pre-publication documents at the HCFA web site. Go to: http://www.hcfa.gov and look for a link on their opening page. Note that there are 25 files. Formats include PDF (Adobe Acrobat), WordPerfect, MS Excel and self-extracting “exe” files. Dr. Abbey’s summary and comments to this FR entry will appear at this web site in a few days. Enjoy reading the Federal Register!

Description: Description: C:\Users\James\Documents\WebSites\APCNowWebSite\bullet.jpgGo to the Corporate Web Site of Abbey & Abbey, Consultants, Inc., at:

www.aaciweb.com

If you are looking for the comments made by Dr. Abbey and the consultants at AACI for the August 24, 2001, Federal Register, they are available below for downloading. They are provided in both MS Word and PDF formats. Let us know if you have any comments!

August 24, 2001, Federal Register Comments This is an MS Word file - 31 Kb.
August 24, 2001, Federal Register Comments This is in PDF - 15 Kb.
Technical Component E/M Comments This is an MS Word document - 65 Kb.
Technical Component E/M Comments This is in PDF - 44Kb.

Bookmark this site and then come back after HCFA [now CMS] releases the Federal Register.

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