Getting started with APGs: Grade these key areas
By Peggy Wolf, RD
Manager of Outpatient Payment Services
Hyatt, Imler, Ott, and Blount, PC, Atlanta
Question: How do we get started using ambulatory patients groups (APGs)? What do we need to have in place?
Answer: Working with APGs involves four key areas that should be of concern to management: coding, information systems, utilization and cost review, and staff capability. Before you can effectively process claims and gauge whether your payments under APGs are correct, you need to assess how strong your facility is in these areas.
• Coding. If your coding is off, your claims will be off. Unless you carefully audit your claims regularly, you can’t be sure whether you are getting the reimbursement level to which you are entitled.
If you do not already have an internal quality control system in place, run a pre-APG audit of your ambulatory surgical claims for the past six months. Do the same for your ancillary services. In the future, audit these categories of claims every six months to a year. Also, run an inventory check of your Chargemaster to ensure that the codes there are current.
The coding assessment should not be limited to the coding alone but to the clinical information on which it is based. Determine where your coders are getting their information. One of the biggest problems many coders face is capturing the appropriate diagnosis code when there is insufficient information from the physician. The correct diagnosis code should be the one that is the most specific, accurate, and medically appropriate in describing the patient’s condition.
• Technology.
Evaluate your information systems. Ask your technology vendor how easily your existing technology can be adapted to interface effectively with APGs. Many large vendors are adapting their products to integrate with an APG grouper. But you still may have to make extensive modifications to your existing system, which could be quite expensive.
You may want to postpone making an investment in APG technology. Your APG-related business may be too small at the moment to warrant a hefty investment in technology, or you may not be able to afford the expenditure.
But in your assessment, consider what a postponement may cost you. In the long run, most hospitals will have to obtain the automated grouper. The software will enable you to process large volumes of claims quickly and meet each payer’s specifications to ensure proper payment.
• Utilization review. Managing utilization will be key to controlling costs. Because APGs impose a fixed prospective payment on outpatient visits, your ability to survive financially will depend greatly on effective utilization management.
Unless you already are receiving payments from a health plan under the 3M Health Information Systems, Version 2.0 of APGs, you aren’t likely to know what individual APGs pay for a specific set of CPT and ICD-9 codes. And each payer’s rates are likely to be different, so you won’t the rate structure until you review the contract.
Through cost accounting, you are likely to know what your facility typically incurs in expenses for each outpatient visit and procedure. You then can make some early judgments about future APG reimbursements.
Compare these costs with payments you are currently receiving from both Medicare and private payers. The payments may bear no relation to the eventual APG rates, but they can give you some idea of your current level of efficiency.
If your costs exceed the reimbursement, it could be related to several overprescribing physicians. Or it could be an indication that you should re-evaluate a certain line of business.
• Staff capability. Assessing your staff’s capabilities will be relatively simple at the outset. Virtually everyone starts out with a zero knowledge-level of APGs. How well your staff’s proficiency improves from there will depend on the quality of your training program.
Fortunately, there is now abundant information on APGs for setting up effective training programs. Hospital associations and commercial insurers have demonstrated a genuine interest in sharing their resources with providers, and consultants offer their own expertise.
But be aware that no one has all the answers. To date, each payer using APGs has tailored its system using its own set of standards and weights for determining payments. The Health Care Financing Administration in Baltimore, has left gaps in its own proposed system for prospectively paying outpatient providers.
In assessing training programs, keep in mind that APG skill levels should be relevant to job responsibilities. For example, medical records staff should know more about the coding aspects of APGs than the appeals process. Business office staff should thoroughly understand how the data presented on claims will affect payments. But everyone, including physicians and clinical managers, should understand the process.
Question: What about patients who require additional services during the same encounter? Do their claims need special handling under APGs?
Answer: Many ambulatory services fall under the category of elective rather than acute care. But those lines are blurring as more services shift from the inpatient to the outpatient sector. If a patient has to undergo a higher level of treatment, usually the CPT-4 Manual will make allowances by designating a higher-level CPT-4 code for the procedure. The significant procedure code assigned to the claim therefore should reflect that higher level of service. For example, if a patient who undergoes an exploratory laparotomy (CPT 49000) requires drainage of an abscess, the significant procedure would be coded at the higher CPT 49020.
The 3M Health Information Systems, Version 2.0 of APGs is designed to consider only what is regarded as a significant procedure or principal diagnosis in a visit. Unless a payer has provided for secondary, unrelated procedures during the same visit, it may not pay for additional services.
There may be time frame issues that alter these situations. A patient encounter may be defined as limited to one day by one payer or three days by another. Conceivably, two procedures can be performed on two consecutive days and billed separately in the first scenario but not in the second.
Therefore, when negotiating an APG contract, determine whether the health plan has special provisions for secondary diagnoses or separate procedures. It may be that these cases can be assigned additional APGs, which would mean a higher total payment. Or the payer may have a carveout provision set aside, which may pay separate rates for the additional services.
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