HCFA gives lowdown on proposed rules, APCs
HCFA gives lowdown on proposed rules, APCs
(Editor's note: Outpatient Reimbursement Management asked an official with the Baltimore-based Health Care Financing Administration to discuss some details about the proposed rules for ambulatory surgery centers [ASCs] and the proposed prospective payment system rules for hospital outpatient services. The ASC proposed rules were published in the Federal Register on June 12. A 60-day comment period for the ASC proposal will continue through Aug. 11, and implementation is proposed for Oct. 1, 1998. The hospital outpatient prospective payment system is supposed to be implemented in 1999.
The HCFA official has worked closely with these proposals. Under HCFA policy, she agreed to discuss the rules and the new ambulatory patient classification [APC] system on the condition that she not be identified.)
ORM: How do the ASC rules differ from the proposed rules for hospital-based outpatient centers?
HCFA: Congress set up specific statutory requirements, and we're obliged to follow through on those requirements. We're making distinctions between Medicare-approved ambulatory surgery center payments and hospital-based outpatient payments. The June 12 proposal applies only to procedures on the ASC list. The secretary of the Department of Health and Human Services (HHS) is obliged by law to specify which procedures can be safely and appropriately performed in ambulatory surgery center settings. If it's not on the ASC list, then Medicare doesn't pay an ASC facility for the procedure.
The Balanced Budget Act of 1997 requires the [HHS] secretary to implement in 1999 a prospective payment system for hospital outpatient services, and that's the whole range, including clinic visits, diagnostic procedures, radiology, as well as surgery. It will be a much broader scope of services than ASCs. ASCs are limited to furnishing services in connection with surgical procedures. Hospital outpatient services include surgery, but other services as well.
ORM: Please explain HCFA's APC system.
HCFA: We coined the term "ambulatory payment classification" to designate the system or groups that are the basis for setting Medicare payments for ASCs and for hospital outpatient services. People will shorten that to APCs. It's a classification system based on grouping procedures with similar clinical characteristics as well as similar costs or resource inputs. Currently eight ASC groups or payment rates exist, and we have proposed expanding that number of groups for surgical procedures to more than 100.
Previously, we grouped surgical procedures together based on similar resource costs. We are proposing to use the same APC grouping system to set rates for both ASCs and for hospital outpatient surgical services. But this does not mean - and I cannot emphasize this enough - that the rates will necessarily be the same. APCs are just a way of grouping procedures to set a rate for that group of procedures. The Balanced Budget Act spells out specifically the factors to be taken into account to set rates for hospital outpatient services. So we arrive at actual payment amounts by different routes because we have to conform with statutory requirements for setting rates for hospital outpatient services and for ASCs, and they're different.
ORM: Some people predict that hospital-based surgery centers will experience more drastic cuts in their rates than will ASCs. Is this the case?
HCFA: That's a misunderstanding of how the system is set up. We're trying to move toward a more level playing field, and we're trying to move away from a system that may encourage providers to use payment rates as a determinant of site of service. But our first step in that direction is to at least have the same grouping system for both settings.
The common factor between ASCs and hospital-based surgery centers will be that the groups of codes will be the same. In some cases the rates may be the same, but in other cases they will differ for each group of procedures because the basis for setting those rates is going to be different for hospitals than for ASCs, and that's a function of the law.
I don't know if the outpatient prospective payment system will result in lower payments to hospitals. It really would be premature to speculate how this will translate into an impact on revenues in hospitals.
Under current law, when a patient has a procedure performed in a hospital outpatient surgery department, the beneficiary pays 20% of the hospital's charges, whatever they may be, and the charges may be different from patient to patient. Medicare pays after the fact through a cost report, and Medicare makes a payment to the hospital for procedures on the ASC list. That is based on a blended payment, which takes into account coinsurance payments, hospital costs, and what ASCs would have been paid for the same services. It's a more complex payment method. Under a prospective payment system for hospital outpatient services, the hospital will know up front what the Medicare payment will be, and the beneficiary will know up front what the copayment liability will be, and every beneficiary who goes to a particular hospital for a certain procedure will pay the same copayment amount for the procedure.
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