APC expert answers common questions

Here are the most frequently asked questions regarding the ambulatory payment classifications (APCs) of the new prospective payment system (PPS) for outpatients, with answers provided by Laura Frazier, RHIT, manager of APC solutions for San Rafael, CA-based QuadraMed Corp.

1. Will there be a delay in implementation? There is a legislative mandate requiring implementation of the outpatient PPS. July 1, 2000, will be the effective date for PPS. No justification for a delay has been identified.

2. When were the final rules published? The Health Care Financing Administration (HCFA) made the final rules available for public inspection March 31, 2000. The Federal Register published the final rules April 7, 2000.

3. Were there significant changes in the final rules? Yes, there were major changes. The entire APC list was reorganized, including the descriptions of each APC and the organization of HCPCS codes into each APC. The three-digit APC was replaced with a four-digit number for each APC. There are now 451 APCs and four new payment status indicators, for a total of 12. The annual conversion factor for the year 2000 was published, and the relative weights for each APC went through an adjustment as well.

Many of the newly incorporated and covered services listed in the final rule are an addition to the outpatient PPS as a direct result of the Medicare Balanced Budget Refinement Act of 1999, which mitigates much of the negative financial impact for most health care organizations. Other changes were made in response to the 10,500 comments received by HCFA after release of the proposed rules.

4. Will observation services be covered? Observation services will be packaged into the reimbursement for covered outpatient services when provided in conjunction with an APC. There are no provisions in the final rules for observation services to receive distinct payment.

5. Will the codes on the hospital’s claim and the physician’s codes have to match? In the final rules, HCFA has clarified that the assignment of an appropriate level of service to reflect the hospital’s resource use will be based on each individual facility’s policy. HCFA states that each facility will be held responsible for following its own system for assigning different levels of HCPCS codes, based on documentation and medical necessity. Furthermore, HCFA states that it does not expect to see a high correlation between the codes reported by the hospital and the physician.

6. Will the compliance program and plan be affected by the advent of APCs? Absolutely. A compliance program and plan are evidence of an organization’s commitment to uphold the laws that govern it. A compliance officer’s responsibility is one of ongoing education and updating to manifest that commitment. The updates required for implementation of the outpatient PPS are a significant and important part of that effort.

7. What is the most important priority in preparing for the outpatient PPS? Improving operational efficiency requires the participation of all departments that have anything to do with outpatient services. Facilitywide awareness and education is the most important first step.

[For a complete look at the final rule, go to HCFA’s Web site at www.hcfa.gov/regs/hopps/ default.htm. For more on QuadraMed, call (800) 393-0278 or visit the company’s Web site at www.quadramed.com.]