Know difference between APC coding systems

By Marty Karpiel, FACHE, FHFMA

Ambulatory Care Consultant

Karpiel Consulting Group

Long Beach, CA

With the Health Care Financing Administration’s (HCFA) switch to ambulatory payment classifications (APCs) for outpatient services, hospitals will need to revise their chargemasters to include all of the evaluation and management (E&M) CPT codes for emergency and clinic technical services. Physician- and hospital-generated CPT codes present different challenges.

If the hospital chooses to use the physician CPT codes, keep these points in mind: First, the physician CPT coding should never be performed on the higher-level visits without complete documentation of those higher-level visits such as 99284 or 99285. Therefore, the individual responsible for coding should wait until the dictation is transcribed before assigning an E&M CPT code.

That might delay the coding and billing function by days or weeks at some hospitals due to lengthy transcription turnaround times. Formatted clinical charts and information systems with documentation modules eliminate the need for dictation and provide a form of documentation that can be immediately available for coding. The physician relationship with the hospital will influence the physician coding. Emergency and clinic physicians usually are employed by an independent group, large physician contracting group, or the hospital. Physicians who are employees or owners in an independent or large contracting group generally have a significantly different CPT coding profile than those physicians who are hospital employees. The nonhospital employee physicians are compensated based on the services provided and the complete documentation of those services. Therefore, the nonhospital employed physician generally will optimize documentation.

Walking a fine line

Nonhospital employee physician groups tend to contract with large billing services experienced in billing, often exclusively for emergency and/or clinic visits. Those billing companies provide extensive training to their coding staff on optimum coding based on the documentation provided by the physician. Due to the recent HCFA and Office of the Inspector General fraud and abuse cases, the billing companies have learned how to walk the fine line between coding optimization and overcoding.

Hospital-employed physicians are rarely rewarded or penalized for their documentation of services provided. Therefore, their documentation may include the clinically pertinent information, but it often does not meet the CPT coding guidelines based on the chief complaint. Most commonly, their documentation may not include a complete review of systems, complete physical examination, or adequate medical decision making to support a higher CPT code, even though the clinical care would have warranted the higher CPT code assignment. The incomplete documentation is then coded by hospital coders who likewise are not incentivized to optimize the physician coding.

Using hospital CPT codes

If the hospital decides to rely on its own coding, then it faces other complex challenges. First, there are no requirements for standardization of ED and clinic visits for the technical side as there are for the professional side. Hospitals have one to 12 ED visit levels, and as many clinic levels. Only a chargemaster with five or six visit levels (critical care being the sixth) will map to the E&M CPT codes, which in turn map to the APCs for medical visits. Therefore, hospitals will need to revamp their ED and clinic chargemasters.

Secondly, how will the hospital ensure there is consistent and appropriate application of hospital visit charge level and CPT code? For physician services, the CPT coding guidelines clearly indicate which CPT code to use, based on the documentation, including the medical decision making. No such guidelines are mandated or standardized for facility visit levels. Hospital financial managers should be concerned that they develop a visit charge level system to meet HCFA compliance guidelines. While there are no specific guidelines, two types of systems should withstand a compliance audit if appropriately implemented: Those patient classification systems (PCS) are a detailed descriptive level system and a quantitative level system.

A descriptive PCS is often based on nursing resources required to provide care to patients. Because nursing costs are the largest part of an ED’s direct costs, it stands to reason that all other departmental costs will follow in the use of nursing resources. Higher acuity patients require more nursing time, spend more time in the department, and consume more supplies and other resources. The descriptive model uses broad explanatory terms to organize patients into specific groups on the basis of symptoms and/or diagnoses that use similar levels of resources. Using diagnosis exclusively does not accurately portray the intensity of the visit.

The quantified PCS model lists specific nursing tasks and other patient care activities and assigns a point value to each one. The sum of the points then determines the ED charge level. For a PCS to serve as an ideal ED information tool, it needs to allocate an average number of nursing minutes to each level of care. This system permits the PCS to not only serve as a charging system, but also as a costing and productivity measurement tool.

(Editor’s note: Karpiel Consulting Group works with EDs nationwide on process improvement and financial reimbursement.)

Marty Karpiel, MPA, Karpiel Consulting Group, 6475 Pacific Coast Highway, Suite 402, Long Beach, CA 90803. Telephone: (562) 597-1108. E-mail: