Prospective payment: How does it work?

Prospective payment will be based on a fee schedule very similar to that applied to physician services, with payment linked to services provided, says Mason Smith, MD, FACEP, president and CEO of Lynx Medical Systems, a Bellevue, WA-based consulting firm specializing in coding and reimbursement for emergency medicine.

The major difference between the physician fee schedule and the proposed facility payment fee schedule is that for facility payment. The Health Care Financing Administration (HCFA) has elected to group multiple services into single payment groups instead of establishing a separate payment for every listed code. The payment groups are called ambulatory payment classifications (APCs)

HCFA has created three groups of visit codes for services provided in the ED: APCs 951, 953, and 955. "HCFA has combined the two lowest and two highest levels of service into single groups," Smith notes. The APC groups are defined as:

• APC 951: includes current procedural terminology (CPT) codes 99281 and 99282;

• APC 953: includes only CPT code 99283;

• APC 955: includes CPT codes 99284 and 99285.

This grouping presents two potential problems, argues Smith. "First, separating CPT code 99282 and CPT code 99283 will be problematic because these two visit levels have very similar documentation requirements," he says. "They share the same history and examination requirements: expanded problem-focused history and examination. They are separated only by the complexity of physician decision-making required to manage the case."

Second, combining 99284 and 99285, level four and five, is problematic because of the inherent differences in the two visit levels, Smith says. "Level 5 services often include prolonged evaluation in the ED and may lead to a period of observation. The decision to combine these two levels of service will limit the reimbursement available to hospitals that manage their Medicare patients as outpatients instead of admitting them to the hospital.

This payment structure will provide an incentive for EDs to admit patients quickly rather than try to manage them as outpatients, he says. "Elimination of separate payment for observation will further strengthen the ED’s incentive to admit quickly."