7/8/2011

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How Payment is Determined:

Outpatient Facility vs.

Physician Practice

Sandra Giangreco, CPC, CPC-H, CPC-I, COBGC,

CCS, PCS

Tammy Ree, RHIT, CCS-P, CHC, PCS

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Agenda for Today

• Definitions of payments

• RVUs

• RBRVS

• DRGs

• APCs

• Chargemasters

• Differences between physicians and hospitals being paid

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The Evolution of Health Care Payment

• Country Doctors – produce, chickens

• Cash payment

• Insurance Companies – % of Charge Payment

• Medicare DRG payment system

• Managed Care Systems

• Fee for Service Payment – Cost based payment

• HIPAA

• Healthcare Reform

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Definitions of Different

Payment Methods

• RVUs – Relative Value Units

• RBRVS – Resource-based Relative Value

Scale

• DRGs – Diagnostic Related Groups

• APCs – Ambulatory Payment

Classifications

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Relative Value Units (RVUs)

• National unit values which are assigned

for services that are determined on the

basis of the resources necessary to the

physician’s performance of such service

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RVU components

• Parts or components:

– Work – identified as the amount of time, intensity of effort and technical expertise required

– Overhead – component or practice expense identified as the allocation of costs assoc with physician’s practice – rent, staffing, etc.

– Malpractice – identified as cost of the medical malpractice insurance assoc with providing the services

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RBRVS

Resource cost components:

– physician work

– practice expense

– professional liability insurance

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RBRVS

• Physician work component

– 53 percent

– The factors used to determine physician work

include the time it takes to perform the

service:

• technical skill and physical effort

• required mental effort and judgment

• stress due to the potential risk to the patient

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RBRVS

• Practice expense component

– 44 percent

– Site of service

• Facility

• Non-facility

• Professional liability insurance (PLI)

– 4 percent

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RBRVS

– 2010 Non-Facility Pricing Amount[(Work RVU * Work GPCI) +

(Transitioned Non-Facility PE RVU * PE GPCI) +

(MP RVU * MP GPCI)] * Conversion Factor (CF)

– 2010 Facility Pricing Amount[(Work RVU * Work GPCI) +

(Transitioned Facility PE RVU * PE GPCI) +

(MP RVU * MP GPCI)] * CF

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99201 - Atlanta

0.48 Work RVU * Work GPCI

+ 0.57 Tr Non-Fac PE RVU * PE GPCI

+ 0.03 MP RVU * MP GPCI

= Total RVU

Total RVU x Conversion Factor (CF) = Fee

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99201 - Atlanta

0.48 Work RVU * 1.009 Work GPCI

+ 0.57 Tr Non-Fac PE RVU * 1.014 PE GPCI

+ 0.03 MP RVU * 0.836 MP GPCI

= Total RVU

Total RVU x Conversion Factor (CF) = Fee

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99201 - Atlanta

0.48 * 1.009 = 0.484

+ 0.57 * 1.014 = 0.578

+ 0.03 * 0.836 = 0.025

= Total RVU 1.087

Total RVU x Conversion Factor (CF) = Fee

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99201 - Atlanta

0.48 * 1.009 = 0.484

+ 0.57 * 1.014 = 0.578

+ 0.03 * 0.836 = 0.025

= Total RVU 1.087

Total RVU x Conversion Factor (CF) = Fee

1.087 x $36.8729 = $40.08

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Ambulatory Payment

Classifications (APC) - History

• Due to technological improvements resulting in an

increase in outpatient services and fewer and shorter

hospital inpatient stays, Congress proposed the

development and implementation of an outpatient

payment system in the Omnibus Budget Reconciliation

Act (OBRA) of 1986

• Balanced Budget Act of 1997 introduced the Outpatient

Perspective Payment System (OPPS)

• Balanced Budget Act revisions in 1999

• Implementation of APC program in 2000

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APC History

• Primary Reason for Change

– Congress wanted to encompass the full range

of ambulatory/outpatient hospital settings

across the patient population under one

unified payment system

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APC History

• Additional Reasons for Change• Significant increase in the utilization of outpatient

hospital services

• Financial incentives for facilities to be cost effective

• Improve the quality of patient care while managing

costs

• Decrease government spending on healthcare

fraud and waste through substantial reduction or

elimination of unbundling of facility charges

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Development of the APC

• Unlike MS-DRGs, where payment is based on

diagnostic ICD-9-CM categories, APCs are

based on procedural CPT® categories

– Significant procedures

– Ancillary services

• Also unlike MS-DRGs, outpatient facilities can

receive payment for multiple APCs verses a

single DRG payment

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Development of the APC

• Significant procedures – Grouping of

CPT® codes by system and subdivided

into categories that are clinically similar

– Surgical Procedures

– Medical Procedures

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Development of the APC

• Surgical Procedures

– Further broken down by site, extent, type,

method, etc.

• Medical Procedures

– Further broken down by complexity of the

diagnosis and overhead cost to treat that

diagnosis

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Development of the APC

• Ancillary Services

– Lab: Hematology, Microbiology, Histology

– X-Ray: General Radiology, Nuclear Medicine

– Cardio Testing: Electrocardiogram (ECGs)

– Pulmonary Function Tests (PFTs)

– Vascular Studies

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Packaging of Services

• Inclusion of certain ancillary services

within surgical and/or medical procedures

– Contrast materials/medications

– Routine surgical supplies

– Specialty supplies such as cardiac stents,

instrumentation, catheters

NOTE: CMS Claims Processing Manual, Chapter 4, § 10.4http://www.cms.gov/manuals/downloads/clm104c04.pdf

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Packaging ExampleLeft Heart Catheterization with Stent Placement - 2010

Procedure Physician

CPT Code

Physician

Payment

Outpatient

Hospital

CPT Code

APC Group Outpatient

Hospital

Payment

Left Heart

Catheterization

93510 $242.76 93510 0080 $2,683.43

Ventriculogram 93543 $15.41 93543 0080

Coronary Angiogram 93545 $21.76 93545 0080

S&I – Ventriculogram 93555 $43.17

S&I – Coronary Angio 93556 $44.26

Stent Placement 92820 $828.44 92820 0104 $5,714.50

Drug Eluding Stent C1874

Total Physician Payment $1,195.80 Total Outpatient Hospital

Payment

$8,397.93

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Packaging ExampleLeft Heart Catheterization with Stent Placement - 2011

Procedure Physician

CPT Code

Physician

Payment

Outpatient

Hospital

CPT Code

APC Group Outpatient

Hospital

Payment

Left Heart Catheterization 93458 $301.82 93458 0080 $2,726.85

Stent Placement 92820 $828.44 92820 0104 $5,655.53

Drug Eluding Stent C1874

Total Physician Payment $1,130.26 Total Outpatient Hospital

Payment

$8,382.38

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How are MS-DRG, APC and HCPCS/CPT®

Payment Systems Similar?

• All are fee-for-service payment systems

• All are means of categorizing or grouping

patient conditions for payment

• Payment is determined on a weighted

value methodology

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Weighted Value Systems

• MS-DRG – Grouped by ICD-9-CM code and assigned a

weighted value based on the severity of an inpatients

illness/procedure and resources needed to treat that condition

• APC – Grouped by CPT® code and assigned a weighted

value based on cost and resources utilized to diagnose or

treat a patient’s condition in the outpatient hospital setting

• HCPCS/CPT® – Each code is assigned a Relative Value Unit

(RVU) which combines operating cost, malpractice and

overall physician work effort required for each code

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Status Indicators

• CMS Claims Processing Manual, Chapter 4, §

10.1.1 – Payment Status Indicators

– Primary Indicators to be aware of

• N - Items and services packaged into APC rates

• Q - Packaged services

• S - Significant procedure not subject to multiple-

procedure discounting

• T- Significant procedure subject to multiple-procedure

discounting

http://www.cms.gov/manuals/downloads/clm104c04.pdf

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Outpatient Hospital Modifiers

• 2011 CPT® Professional Edition – Page 551-

553

– Similar Modifiers

• 25 - Separately Identifiable E/M Service by Same

Physician on Same Date of Services

• 50 – Bilateral Procedure

• 52 – Reduced Service

• 58 – Staged Procedure

• 76 & 77 – Repeat Procedure

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Outpatient Hospital Modifiers

• 2011 CPT® Professional Edition – Page 551-

553

– Different Modifiers

• 27 – Multiple Outpatient Hospital E/M Encounters on

the Same Date

• 73 – Discontinued Out-Patient Hospital/Ambulatory

Surgery Center Procedure prior to the Administration of

Anesthesia

• 74 – Discontinued Out-Patient Hospital/Ambulatory

Surgery Center Procedure after Administration of

Anesthesia

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More Modifiers

• RC – Right coronary artery

• LC – Left circumflex coronary artery

• LD – Left anterior descending artery

• Primarily used with heart catheterization

codes

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CPT® Code Assignment

• One to one relationship of CPT ® code

assignment.

– The CPT ® procedure code(s) assigned by the

physician should match the technical CPT ®

procedure code(s) assigned by the hospital or

ASC.

• Opportunity for joint medical facilities to audit for

appropriate code assignment and charge master

set up.

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Code Assignment Example

Procedure Physician

CPT® Code

Outpatient

Hospital CPT®

Code

Left Heart Catheterization 93458 93458

Stent Placement 92820 92820

Drug Eluding Stent C1874

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Code Assignment Exceptions

• Direct one-to-one CPT® code assignment

exceptions include;

– Professional Only codes

– Technical Only codes

– Packaged codes

– Evaluation and Management codes

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Code Assignment Exception Example -

Emergency Room Encounter

Procedure/Service Physician CPT®

Code

Outpatient Hospital

CPT® Code

Emergency Room

Visit

99282 99283

Simple Laceration

Repair, Face – 2.7 cm

12013 12013

X-Ray – Facial Bones 70140-26 70140

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Hospital Charge Masters

• Aka CDM (Charge Description Masters)

• Line items that are billed through the generating

departments of the hospital

• Revenue is then directed back to dept.

• Line items are charges that may contain

CPT®/HCPCS Level II codes to generate

charges

• Very important to keep up to date with new and

changed codes

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Charge Masters

• Line items are sometimes “soft coded”.

This allows facility coders to review the

medical record to appropriately code

individual line items (usually procedures)

• Other times when the code is 100% it is

“hard coded” in the system

– This also allows for data collection and

analysis

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Fields Always on the CDM

• All billable services and supplies

– Department Number

– Department Name

– Internal control or inventory number

• Also called the charge code

– Revenue Center Code

• Also know as UB-04/Revenue Code

– Description of Service

– Fee/Price for service or supply

• Thousands of lines of data

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Optional CDM Fields• Fields may be added to suit the needs of

the specific facility– HCPCS/CPT ® codes

• Applies to codes not coded by HIM

– May include modifiers

– RVU’s

– Annual Volume

– Units

– Multiple lines for the same service or supply

• E.g. when Medicare has a G code for a service

that also has a CPT ® code

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Revenue Codes

• 4 digit numbers which are associated with

different services provided OR

departments

– Ex: 0450 – Emergency Department

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Revenue Codes

• Example: Revenue Code 636 vs. 250

– Both codes are for drugs

– No real guidance on when to assign the drug

to code 636 and when to assign to code 250

• Use 636 for drugs with Status Indicator K

• Use 250 for all others

– Answer found at seminar in 2004

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Thank You!!!!!

Sandy Giangreco

giangrecosandy@gmail.com

Tammy Ree

tammmj45@gmail.com