Inpatient-only list, copays are hot topics of PPS regs

Some industry analysts are pleased

The inpatient-only procedures list and the limit in beneficiary copayments are two primary topics of debate regarding the final outpatient prospective payment system (PPS) regulation.

In the proposed regulations, the Health Care Financing Administration (HCFA) had a list of 1998 procedures that would be paid only if they were performed on an inpatient basis. Those procedures were chosen because of their invasive nature, the need for postoperative care, or the underlying physical condition of the patient requiring the surgery.

In the final rule, 195 of those procedures were moved into the outpatient category, where they would be covered under ambulatory payment classifications (APCs). The procedures that were moved to the outpatient setting include laparoscopic cholecystectomy, partial mastectomy, and coronary and noncoronary angioplasties.

Hospitals will need to be aware of which APCs will be paid on an outpatient basis and which will be paid on an inpatient basis, says Darice Grzybowski, RHIA, national manager of HIM industry relations with 3M HIS in Salt Lake City. "Certain patients, based on medical necessity, better meet inpatient criteria, and some may better meet outpatient criteria. Insurance companies and HCFA may have different guidelines on what status patients should be in to meet insurance payment criteria, but this is different than medical necessity criteria.

"The bottom line is that the physician’s order and hospital criteria for admission must indicate what status a patient is directed to, and payment is based on that documentation in the medical record," she adds.

Other industry analysts were pleased that HCFA took some of the procedures off the inpatient-only list. "Technology and the settings regarding how things are done are changing all the time and certainly at a much faster rate than HCFA’s policies could ever keep pace," says Sue Prophet, RHIA, CCS, director for coding policy and compliance at the American Health Information Management Association in Chicago. "My concern is that the inpatient-only list might actually hold back some of those technological changes."

For example, a technique for doing a particular procedure may be developed that could be done on an outpatient basis. If hospitals were only going to get paid if they performed the procedure on an inpatient basis, they would continue admitting those patients, Prophet says.

"A medical review of medical necessity on an after-the-fact audit basis would be a better method of making sure that hospitals were performing procedures in the setting that is the safest and most appropriate for that type of procedure rather than just making a blanket statement that this procedure has to be done on an inpatient basis until we say otherwise," she says. "I think more of that should be left to the clinical judgments of the providers."

HCFA’s decision to move some of the procedures back to the outpatient list was a response to some of those concerns, Grzybowski says. "I feel HCFA listened to the comments about that and responded appropriately."

Software can save the day

Now that the final regulations have listed the procedures that must be done on an inpatient-only basis, hospitals need to get their software in place, Grzybowski says, "You need to make sure you have a list available or software that screens patients at registration that says, This procedure is inpatient only.’"

HCFA also has used the final rule to limit what Medicare beneficiaries pay in copayments. "HCFA has recognized that Medicare patients have been paying an inappropriate share of co-insurance or copayment to the hospitals," Grzybowski says. Current rules stipulate that Medicare beneficiaries pay 20% of billed charges.

When HCFA pays a reduced rate to insurance companies, though, the remaining balance isn’t based on the reduced rate but is prorated from the initial charges. That means beneficiaries could spend 50% or more on copayments for certain procedures. HCFA, therefore, decided to set a cap or a limit as to what beneficiaries would pay for a copayment so they would not end up paying the disproportionate amount.

The final rule includes a provision designed to transition the copayment eventually to the desired 20%. Hospitals have the option of discounting the total price of the copayment before HCFA does and using that discount as a marketing tool to attract more patients. With reimbursement being reduced in so many areas, however, Grzybowski doesn’t expect many hospitals to offer the discount. Nor does she expect that patients would switch hospitals just for that reason. "Patients are loyal to their doctors," she says.

As with the inpatient-only procedure list, hospitals need to ensure their software can handle the new calculations of the copayments, she says. "That’s something hospitals are going to have to get used to [evaluating]."