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7/8/2011
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How Payment is Determined:
Outpatient Facility vs.
Physician Practice
Sandra Giangreco, CPC, CPC-H, CPC-I, COBGC,
CCS, PCS
Tammy Ree, RHIT, CCS-P, CHC, PCS
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Agenda for Today
• Definitions of payments
• RVUs
• RBRVS
• DRGs
• APCs
• Chargemasters
• Differences between physicians and hospitals being paid
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The Evolution of Health Care Payment
• Country Doctors – produce, chickens
• Cash payment
• Insurance Companies – % of Charge Payment
• Medicare DRG payment system
• Managed Care Systems
• Fee for Service Payment – Cost based payment
• HIPAA
• Healthcare Reform
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Definitions of Different
Payment Methods
• RVUs – Relative Value Units
• RBRVS – Resource-based Relative Value
Scale
• DRGs – Diagnostic Related Groups
• APCs – Ambulatory Payment
Classifications
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Relative Value Units (RVUs)
• National unit values which are assigned
for services that are determined on the
basis of the resources necessary to the
physician’s performance of such service
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RVU components
• Parts or components:
– Work – identified as the amount of time, intensity of effort and technical expertise required
– Overhead – component or practice expense identified as the allocation of costs assoc with physician’s practice – rent, staffing, etc.
– Malpractice – identified as cost of the medical malpractice insurance assoc with providing the services
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RBRVS
Resource cost components:
– physician work
– practice expense
– professional liability insurance
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RBRVS
• Physician work component
– 53 percent
– The factors used to determine physician work
include the time it takes to perform the
service:
• technical skill and physical effort
• required mental effort and judgment
• stress due to the potential risk to the patient
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RBRVS
• Practice expense component
– 44 percent
– Site of service
• Facility
• Non-facility
• Professional liability insurance (PLI)
– 4 percent
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RBRVS
– 2010 Non-Facility Pricing Amount[(Work RVU * Work GPCI) +
(Transitioned Non-Facility PE RVU * PE GPCI) +
(MP RVU * MP GPCI)] * Conversion Factor (CF)
– 2010 Facility Pricing Amount[(Work RVU * Work GPCI) +
(Transitioned Facility PE RVU * PE GPCI) +
(MP RVU * MP GPCI)] * CF
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99201 - Atlanta
0.48 Work RVU * Work GPCI
+ 0.57 Tr Non-Fac PE RVU * PE GPCI
+ 0.03 MP RVU * MP GPCI
= Total RVU
Total RVU x Conversion Factor (CF) = Fee
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99201 - Atlanta
0.48 Work RVU * 1.009 Work GPCI
+ 0.57 Tr Non-Fac PE RVU * 1.014 PE GPCI
+ 0.03 MP RVU * 0.836 MP GPCI
= Total RVU
Total RVU x Conversion Factor (CF) = Fee
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99201 - Atlanta
0.48 * 1.009 = 0.484
+ 0.57 * 1.014 = 0.578
+ 0.03 * 0.836 = 0.025
= Total RVU 1.087
Total RVU x Conversion Factor (CF) = Fee
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99201 - Atlanta
0.48 * 1.009 = 0.484
+ 0.57 * 1.014 = 0.578
+ 0.03 * 0.836 = 0.025
= Total RVU 1.087
Total RVU x Conversion Factor (CF) = Fee
1.087 x $36.8729 = $40.08
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Ambulatory Payment
Classifications (APC) - History
• Due to technological improvements resulting in an
increase in outpatient services and fewer and shorter
hospital inpatient stays, Congress proposed the
development and implementation of an outpatient
payment system in the Omnibus Budget Reconciliation
Act (OBRA) of 1986
• Balanced Budget Act of 1997 introduced the Outpatient
Perspective Payment System (OPPS)
• Balanced Budget Act revisions in 1999
• Implementation of APC program in 2000
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APC History
• Primary Reason for Change
– Congress wanted to encompass the full range
of ambulatory/outpatient hospital settings
across the patient population under one
unified payment system
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APC History
• Additional Reasons for Change• Significant increase in the utilization of outpatient
hospital services
• Financial incentives for facilities to be cost effective
• Improve the quality of patient care while managing
costs
• Decrease government spending on healthcare
fraud and waste through substantial reduction or
elimination of unbundling of facility charges
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Development of the APC
• Unlike MS-DRGs, where payment is based on
diagnostic ICD-9-CM categories, APCs are
based on procedural CPT® categories
– Significant procedures
– Ancillary services
• Also unlike MS-DRGs, outpatient facilities can
receive payment for multiple APCs verses a
single DRG payment
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Development of the APC
• Significant procedures – Grouping of
CPT® codes by system and subdivided
into categories that are clinically similar
– Surgical Procedures
– Medical Procedures
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Development of the APC
• Surgical Procedures
– Further broken down by site, extent, type,
method, etc.
• Medical Procedures
– Further broken down by complexity of the
diagnosis and overhead cost to treat that
diagnosis
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Development of the APC
• Ancillary Services
– Lab: Hematology, Microbiology, Histology
– X-Ray: General Radiology, Nuclear Medicine
– Cardio Testing: Electrocardiogram (ECGs)
– Pulmonary Function Tests (PFTs)
– Vascular Studies
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Packaging of Services
• Inclusion of certain ancillary services
within surgical and/or medical procedures
– Contrast materials/medications
– Routine surgical supplies
– Specialty supplies such as cardiac stents,
instrumentation, catheters
NOTE: CMS Claims Processing Manual, Chapter 4, § 10.4http://www.cms.gov/manuals/downloads/clm104c04.pdf
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Packaging ExampleLeft Heart Catheterization with Stent Placement - 2010
Procedure Physician
CPT Code
Physician
Payment
Outpatient
Hospital
CPT Code
APC Group Outpatient
Hospital
Payment
Left Heart
Catheterization
93510 $242.76 93510 0080 $2,683.43
Ventriculogram 93543 $15.41 93543 0080
Coronary Angiogram 93545 $21.76 93545 0080
S&I – Ventriculogram 93555 $43.17
S&I – Coronary Angio 93556 $44.26
Stent Placement 92820 $828.44 92820 0104 $5,714.50
Drug Eluding Stent C1874
Total Physician Payment $1,195.80 Total Outpatient Hospital
Payment
$8,397.93
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Packaging ExampleLeft Heart Catheterization with Stent Placement - 2011
Procedure Physician
CPT Code
Physician
Payment
Outpatient
Hospital
CPT Code
APC Group Outpatient
Hospital
Payment
Left Heart Catheterization 93458 $301.82 93458 0080 $2,726.85
Stent Placement 92820 $828.44 92820 0104 $5,655.53
Drug Eluding Stent C1874
Total Physician Payment $1,130.26 Total Outpatient Hospital
Payment
$8,382.38
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How are MS-DRG, APC and HCPCS/CPT®
Payment Systems Similar?
• All are fee-for-service payment systems
• All are means of categorizing or grouping
patient conditions for payment
• Payment is determined on a weighted
value methodology
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Weighted Value Systems
• MS-DRG – Grouped by ICD-9-CM code and assigned a
weighted value based on the severity of an inpatients
illness/procedure and resources needed to treat that condition
• APC – Grouped by CPT® code and assigned a weighted
value based on cost and resources utilized to diagnose or
treat a patient’s condition in the outpatient hospital setting
• HCPCS/CPT® – Each code is assigned a Relative Value Unit
(RVU) which combines operating cost, malpractice and
overall physician work effort required for each code
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Status Indicators
• CMS Claims Processing Manual, Chapter 4, §
10.1.1 – Payment Status Indicators
– Primary Indicators to be aware of
• N - Items and services packaged into APC rates
• Q - Packaged services
• S - Significant procedure not subject to multiple-
procedure discounting
• T- Significant procedure subject to multiple-procedure
discounting
http://www.cms.gov/manuals/downloads/clm104c04.pdf
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Outpatient Hospital Modifiers
• 2011 CPT® Professional Edition – Page 551-
553
– Similar Modifiers
• 25 - Separately Identifiable E/M Service by Same
Physician on Same Date of Services
• 50 – Bilateral Procedure
• 52 – Reduced Service
• 58 – Staged Procedure
• 76 & 77 – Repeat Procedure
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Outpatient Hospital Modifiers
• 2011 CPT® Professional Edition – Page 551-
553
– Different Modifiers
• 27 – Multiple Outpatient Hospital E/M Encounters on
the Same Date
• 73 – Discontinued Out-Patient Hospital/Ambulatory
Surgery Center Procedure prior to the Administration of
Anesthesia
• 74 – Discontinued Out-Patient Hospital/Ambulatory
Surgery Center Procedure after Administration of
Anesthesia
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More Modifiers
• RC – Right coronary artery
• LC – Left circumflex coronary artery
• LD – Left anterior descending artery
• Primarily used with heart catheterization
codes
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CPT® Code Assignment
• One to one relationship of CPT ® code
assignment.
– The CPT ® procedure code(s) assigned by the
physician should match the technical CPT ®
procedure code(s) assigned by the hospital or
ASC.
• Opportunity for joint medical facilities to audit for
appropriate code assignment and charge master
set up.
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Code Assignment Example
Procedure Physician
CPT® Code
Outpatient
Hospital CPT®
Code
Left Heart Catheterization 93458 93458
Stent Placement 92820 92820
Drug Eluding Stent C1874
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Code Assignment Exceptions
• Direct one-to-one CPT® code assignment
exceptions include;
– Professional Only codes
– Technical Only codes
– Packaged codes
– Evaluation and Management codes
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Code Assignment Exception Example -
Emergency Room Encounter
Procedure/Service Physician CPT®
Code
Outpatient Hospital
CPT® Code
Emergency Room
Visit
99282 99283
Simple Laceration
Repair, Face – 2.7 cm
12013 12013
X-Ray – Facial Bones 70140-26 70140
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Hospital Charge Masters
• Aka CDM (Charge Description Masters)
• Line items that are billed through the generating
departments of the hospital
• Revenue is then directed back to dept.
• Line items are charges that may contain
CPT®/HCPCS Level II codes to generate
charges
• Very important to keep up to date with new and
changed codes
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Charge Masters
• Line items are sometimes “soft coded”.
This allows facility coders to review the
medical record to appropriately code
individual line items (usually procedures)
• Other times when the code is 100% it is
“hard coded” in the system
– This also allows for data collection and
analysis
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Fields Always on the CDM
• All billable services and supplies
– Department Number
– Department Name
– Internal control or inventory number
• Also called the charge code
– Revenue Center Code
• Also know as UB-04/Revenue Code
– Description of Service
– Fee/Price for service or supply
• Thousands of lines of data
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Optional CDM Fields• Fields may be added to suit the needs of
the specific facility– HCPCS/CPT ® codes
• Applies to codes not coded by HIM
– May include modifiers
– RVU’s
– Annual Volume
– Units
– Multiple lines for the same service or supply
• E.g. when Medicare has a G code for a service
that also has a CPT ® code
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Revenue Codes
• 4 digit numbers which are associated with
different services provided OR
departments
– Ex: 0450 – Emergency Department
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Revenue Codes
• Example: Revenue Code 636 vs. 250
– Both codes are for drugs
– No real guidance on when to assign the drug
to code 636 and when to assign to code 250
• Use 636 for drugs with Status Indicator K
• Use 250 for all others
– Answer found at seminar in 2004
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Thank You!!!!!
Sandy Giangreco
Tammy Ree