Will new APC system hinder some practices?
Will new APC system hinder some practices?
Finances could conflict with good medicine
Some reimbursement experts speculate that Medicare’s new hospital outpatient prospective payment system (OPPS), which went into place in August, could have an unintended boomerang affect on office-based physicians as hospitals adjust how they manage both outpatients and inpatients.
This new payment methodology does not directly change Medicare payments to physicians. However, the Health Care Financing Administration (HCFA) says it wants to maintain consistent payments across both physicians’ offices and hospital outpatient departments.
The system bundles some 8,000 outpatient services into 451 ambulatory payment classifications (APCs). Each APC has its own payment rate and contains services with similar clinical and resource uses. However, the actual cost incurred by hospitals for providing the various services included in each APC varies.
In the worst scenario, OPPS could be "catastrophic" to physician offices, the Chicago-based American Medical Association (AMA) has told HCFA.
"Physicians are even less likely than [hospital outpatient departments] to perform a mix of both high- and low-cost services within the payment group and, thus, many physicians would always be vastly underpaid," said the AMA.
Several physician specialties are especially concerned about how some outpatient services have been grouped under the APCs. The American Society for Therapeutic Radiology and Oncology (ASTRO) in Fairfax, VA, for instance, is worried about how brachytherapy services have been bundled. One APC group, for example, contains five brachytherapy services. If there is a major difference between the actual cost of providing the most and the least complex services, that means the related APCs’ set reimbursement rate will result in a $700 loss every time the high-end service is performed, and a $280 gain for the low-end service, ASTRO estimates.
Avoiding loss
Besides violating a congressional mandate that the APC system limit the difference between high- and low-cost services, such swings create worries among specialists that hospitals may start shifting resources away from some complex services to avoid financial losses under the APCs.
"The hospital could dictate and tell the physician that you can’t do procedure X anymore because we lose money, so you need to do this other procedure," notes Wendy Smith Fuss, ASTRO’s director of health care policy.
Physician organizations are also concerned about possible problems with the data and methods used to calculate payments for the individual payment groups. The American College of Radiology in Chicago, for instance, points to the $33.94 APC payment rate for a diagnostic mammogram. This rate is less than the congressionally set payment of $46.12 for a screening mammogram, even though the diagnostic procedure requires two to five more times the clinical labor, supplies, and equipment than a screening mammogram, says the college.
As a result of those differences, radiologists say payments for diagnostic mammograms have been set at a "dangerously low" level.
Emergency care
Under the OPPS, rather than reimbursing separately for observation care, payments for observation services in the emergency department are spread across all APCs for emergency services.
"This raises concerns that HCFA’s policy removes any incentive for observation," notes emergency medicine physician Peter Sawchuk, MD, an AMA spokesman. This not only inhibits the best method for correctly making a difficult diagnosis — observation — but also increases the tendency for hospitals to simply admit more ER walk-ins as inpatients, some say.
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