Trade groups can play big role in preparing for APGs
Trade groups can play big role in preparing for APGs
But they can’t be all things to all hospitals
An interview with Tracy Warner
Director of Policy and Issues Development
Association of Iowa Hospitals and Health Systems
Des Moines, IA
[Editor’s note: In 1994, Iowa launched a dramatic restructuring of the Medicaid outpatient payment system by converting to prospective payment. The basis for the new system is a patient classification system called ambulatory patient groups (APGs). Iowa hospitals were among the first in the nation to use APGs for outpatient reimbursement. This month, Tracy Warner discusses what kind of support you can expect from your state hospital association in making a transition to APGs.]
ORM: Should hospitals look to their state associations as a resource on APGs? If so, to what extent?
Warner: The circumstances will depend on conditions set by the payer. In Iowa, we’ve tried to be an information resource. Our priority is in representation and advocacy. But hospitals are likely to face a different situation from Medicaid when the Health Care Financing Administration (HCFA) implements its version of APGs in 1999. Providers will be dealing then primarily with HCFA officials on policy matters.
It isn’t the same as picking up the phone and contacting the local state Medicaid pro-gram office or local lawmaker regarding APGs. Nevertheless, state associations should be conducting educational seminars now on how the Medicare outpatient prospective payment system (PPS) will affect its member hospitals’ reimbursement when the program begins in 1999. They should provide guidance to their members as to what actions facility managers should take in getting prepared for Medicare and other payers.
In Iowa, we’ve already anticipated some of this by using APG payment rates in evaluating current reimbursements under commercial managed care contracts. The fact that you don’t have a payer presently using APGs doesn’t mean a state association shouldn’t be actively involved in using the system for other purposes.
APGs serve other purposes too
ORM: What other purposes would there be?
Warner: APGs don’t necessarily have to be used only for payment purposes. They are a patient classification system similar in objective to diagnosis-related groups (DRGs) used in acute-care inpatient settings. Our goal as hospital industry representatives should be to learn to apply APGs in learning about the outpatient business in the same manner that we have on the inpatient side. Because we’ve had DRGs for more than a decade, most hospitals have learned a great deal regarding how to control costs and how to survive under inpatient prospective payments.
With some exception, such as surgery, that has not been the case on the outpatient side. Therefore, APGs represent an exceptional opportunity for us to learn how to manage our costs and predict optimum payment levels in ambulatory care.
ORM: What specific resources should a state hospital association make available to its members in relation to APG implementation?
Warner: Based on our own experience with APGs, the resource that hospital associations are best suited to give to members is educational information. From the beginning of our experience with APGs, our association has placed an emphasis on education through meetings and seminars in which we explained the state’s Medicaid regulations. We also made available to members a number of documents, including the Medicare APG handbook, which was originally developed for the proposed Medicare program by 3M Health Information Systems in Murray, UT.
Of course, we were always available by telephone to address member inquiries. Whenever we faced a question we were not prepared to answer, we referred the caller to the proper source.
ORM: How much input and guidance did you receive from Iowa Medicaid in those days?
Warner: The Iowa Department of Human Services (DHS), which administers the state Medicaid program, did little in terms of provider education prior to the implementation of APGs. So we had to pick up the ball there. However, we carefully tried to avoid getting involved in matters of state policy regarding the APG systems.
We avoided supplying members with specific information about the state’s implementation decisions. We felt that information would better come from state officials who were the originators of the policy. Some of these issues had to do with how and why Iowa Medicaid arrived at the specific APG discounting formula and payment rates and the specific significant procedures that were identified for consolidation.
ORM: Why wasn’t the department helpful?
Warner: Part of the reason was that at the time, Iowa Medicaid had not yet reached a final conclusion on some of these aspects of the payment system. We were also aware that it would not be appropriate for state officials to delve into some matters involving proper coding. For example, we didn’t expect them to advise hospitals on where there would be opportunities to increase their reimbursements using APGs.
When the state got around to conducting its own educational sessions [within months of implementation], it did a better job of training the medical record and business office staff on details such as how to code and bill appropriately to ensure proper payment on each claim.
Education aimed at teaching basics
ORM: How did the association address these coding and billing issues with its members?
Warner: The goal was to provide our members with general information regarding the fundamental workings of APGs such as the groupings and actual APG assignments. At the time, we used guidelines that were intended by 3M for the Medicare program. We were fully aware, of course, that the state would address certain issues differently, such as the final numerical values of the relative weights and the packaging of certain ancillary services.
We did an educational series that was designed to teach hospitals the fundamentals of the system. Essentially, we ran two consecutive training programs: one geared toward medical records and the other aimed at finance and operations personnel. For example, the first session was dedicated to the types and numbers of APGs that were likely to be used in Iowa and what they are designed to do.
We also discussed the fundamentals of bundling and its function. We also covered payment rate calculations, the role of relative weights in determining payments and how claims should be submitted based on multiple surgeries. But we kept the discussion fairly general and omitted the reasons Iowa Medicaid had for establishing particular parameters such as the specific numerical weights.
[Editor’s note: For explanations of APG terms such as "packaging," refer to the following back issues of ORM; April 1997, p. 29; May 1997, p. 38; June 1997, p. 45; and August 1997, p. 62.]
ORM: Are training sessions something unusual for an association?
Warner: It depends on the particular association and the way it is structured. In Iowa, we’ve been aggressive for many years in representing our hospitals, dating back to the period when DRGs were introduced to the Medicare program. Most associations have the ability to influence policy through the state legislature due to their access to lawmakers.
We got involved in working with our state legislature, DHS, and our member hospitals in ensuring that the DRG system was appropriate and resulted in adequate payments. So, the representation we provided on the APG project wasn’t the first time we got involved in a government payment issue. And it is entirely appropriate for hospital associations to play this role.
Hospitals should cite global concerns
ORM: What should member hospitals not expect from their associations?
Warner: As a representative group, any time we are dealing with issues such as APGs, the problems have to be of global concerns. The issue can’t affect only a small number of hospitals. For example, we would not address a problem between a hospital and a particular payer. But depending on variables such as the structure and size of a state association and the available resources, state associations can actually be quite helpful in providing considerable financial analysis and supporting data on the impact of APGs.
We have staff in our information center who collect reams of data from member hospitals. But providing financial-impact information on individual hospitals would be beyond the purview of a state association.
ORM: Should member hospitals view their association as an APG hotline?
Warner: Early in the implementation stages, it may seem that way. But no, a hotline should not be the ongoing role of the association. For months, I personally worked full time on APG implementation questions. But at the time, that was the priority due to the amount of confusion swirling around APGs. Our members were in desperate need of answers.
But it is unrealistic to expect that an association will always have an answer for every hospital. It’s probably more realistic to say that an association staff will be happy to point a caller to a more appropriate resource.
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