MA hospitals easing into using APGs for Medicaid

[Editor's note: Massachusetts hospitals recently began the first phase of using ambulatory patient groups (APGs) for the state's MassHealth (Medicaid) program. Maria Griffin, RRA, director of utilization information system for the Massachusetts Hospital Association, discusses how the program is working so far.]

Question: How is Massachusetts gearing up for APGs for Medicaid?

Griffin: We're already in phase one of implementation. We began Oct. 1 for significant procedures only. That applies to acute hospitals and hospital-licensed health centers that fall under the Massachusetts Division of Medical Assistance (DMA) guidelines for the MassHealth (Medicaid) program.

The next phase, phase two, which will include all other outpatient services, was scheduled to be implemented on April 1 but has been delayed. The implementation is yet to be determined, pending further data analysis, although we know it will be sometime in the remainder of this year.

Question: What are hospitals reporting back about phase one?

Griffin: There have been some processing issues, which have been relatively small in magnitude. Those have included claims which fall into a three-day window of service, bundled/packaged services, i.e. ancillaries, and pricing issues, e.g., ASC vs. the new APG rate. For the most part, it has been pretty smooth, and hospitals are starting to analyze how it has impacted their actual payment, as related to historical reimbursement for these procedures under the previous ASC [ambulatory surgery center] payment system.

There were some start-up issues early on in the first three runs of processing related to coding and covered services, but these are communicated back to the hospitals through a revised format remittance advice, which includes APG information. I'm not trying to say the system is without problems, but most were typical start-up issues of processing in phase one. Phase two, which will include all outpatient services, is sure to cause many more unanticipated issues to deal with.

Question: What's the next step?

Griffin: The development of phase two rates and weights is in the initial process of data analysis, and no information is available for release yet. The hospitals in Massachusetts and the DMA have a technical advisory group, composed of a representative group of hospitals, DMA and Massachusetts Hospital Association, that meets monthly. We started a year prior to implementation, and we've been meeting monthly since then. We review all the specifics of how the program is developing rates and weights; how the window is defined; how bundling works; how claims processing works; what the impact of the system on actual hospital data will be; and all the pieces going on. There's been a review process all along.

So we've had quite an impact on the way the whole process has been implemented, which other states may not have had the advantage in doing. This has been key to the success of this effort.

This group has also influenced the process and system modifications so that aspects that didn't work weren't even implemented. DMA was extremely accepting of all the input, and they continue to make changes based on analysis and input.

Question: What are some drawbacks to going this route?

Griffin: It's kind of hard to say because we don't have results on the actual impact or full implementation yet. It is still so early on for us with only three to four months of significant procedure claims available. We think the next phase will be the most difficult when you start dealing with all the ancillary services and medical visits.

But when we start dealing with all services and some of the issues of bundling, there is a lot of concern about how it will actually work out. The next phase, phase two, will encompass a much larger number of claims and have a significant impact on a broader base of services. We will have a clearer sense after we are well into phase two.

Question: What are the benefits to this system?

Griffin: The hospitals have seen some benefits in that they've seen a better way to group their procedural cases and their processing of their claims. I'd say that right now they believe phase one has been working as planned. There are certain cases that they say are falling a little short of where they'd like to see the reimbursement, but other cases balance it out. The new system is taking resources and time to gear up for it, and it's still so early it's hard to say what all the benefits will be. But nobody is saying it doesn't work at all. It is also giving our hospitals an opportunity to begin the data modeling, which will be necessary when HCFA [Health Care Financing Administration in Baltimore] implements their outpatient APC [ambulatory payment classification] payment system for Medicare. Further, some of the coding and coverage issues will also be addressed prior to the Medicare system's adoption of an outpatient PPS [prospective payment system] approach.

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