EDs may come out ahead

Although the overall impact on hospitals will be negative, it’s possible that EDs may benefit from the change financially as individual departments, says Smith. "The EDs are actually going to come out ahead rather than behind, because in general they do less-complicated cases, compared to the rest of the hospital," he explains. "EDs do have very complicated medical cases, but there is a built-in filter so we don’t get the worst surgical cases."

The change will directly increase the revenues attributed to the ED. "The ED will become a revenue center instead of a loss center," he predicts. "For example, for an IV administered, right now the only payment the average ED gets is whatever is included in that visit level."

When the new regulations take effect, EDs will get credit for both the visit and the procedure. "If that IV is billed under a revenue code for the pharmacy, then the charge will be denied because it’s bundled into the visit service," Smith says. "The $100 paid for that IV needs to be billed by the ED revenue code, not under the pharmacy code."

The ED then gets credit for the payment, Smith explains. "So the pharmacy becomes a supplier of material to the ED. The gross revenue of the ED will go up, and dramatically down for the pharmacy," he says.

If HCFA decides to make its payment decisions based on the patient’s symptoms and services received instead of the eventual diagnosis, that could be a positive change for emergency medicine and patients, Yeh says. "We will finally have some policy recognition that a diagnosis is not what drives emergency care," she explains.

If the fee schedule allows for payment for services required under EMTALA, including medical screening exams and stabilization, that would be another plus, says Yeh. "There should be some payment recognition for EMTALA-mandated services, which we have an obligation to provide," she stresses.

The commentary process provided an opportunity for ACEP to collaborate with the AHA, she reports. "We have continued to build a working relationship so we can improve the consistency of our comments. In the draft version, AHA deferred to ACEP’s point of view on several issues, which highlighted that we are working together toward a common goal."

Here are the two major changes that EDs are expected to make in response to the regulations:

1. The existing cost-based reimbursement will be replaced with a prospective payment system. Hospitals will be required to report outpatient service charges using a standardized coding system. ED charges will be submitted based on the APC coding system for procedures. "HCFA’s reporting structure is the same one currently in place for physician services," Smith explains.

Currently, Medicare pays emergency departments for supplies and medications used in a procedure, not the procedure itself, notes Smith. "Now Medicare will pay for the service of injecting a drug, instead of paying for the drug or supplies consumed in a procedure," he explains.

Hospitals are paid based on costs, but they will now be paid based on the APC fee schedule. "The amount that will be paid for a particular CPT code will be grouped with other services," he says.