Will patients shift settings under outpatient PPS?
Under the outpatient prospective payment system (PPS), differences in payments to hospital outpatient surgery departments, ambulatory surgery centers, and office-based surgery programs could lead patients to shift from one setting to another, according to the Medicare Payment Advisory Commission (MedPAC) in Washington, DC, which advises Congress on payment issues.1
For example, a cataract procedure with an intra-ocular lens will pay $1,287 when it is performed in a hospital, according to the final hospital outpatient PPS rule published April 7, 2000. (For more information on the final hospital rule, see Same-Day Surgery, June 2000, p. 65, and May 2000, p. 49.) When that same procedure is performed in an ambulatory surgery center (ASC), the reimbursement is $934 under the traditional payment system. The final ambulatory surgery center PPS rule is expected to be published in November 2000 and take effect in April 2001. (For more information, see SDS, November 1998, p. 137.)
The differences in reimbursement for hospitals, surgery centers, and physician offices could be due to cost differences, such as staffing and case mix, MedPAC says. "Alternatively, they may be anachronistic differences due to the manner in which payment rates were set historically," MedPAC says in its report. "If the latter is true, differences in payment across settings could lead to shifting care among ambulatory settings for financial reasons rather than clinical reasons."
The differences in reimbursement also might give facilities incentives to upcode, states the report, citing the Health Care Financing Admini-stration’s (HCFA’s) own final hospital outpatient PPS rule.
"Analysis is needed to determine the magnitude of these differences, the extent to which they reflect underlying differences in the costs of providing services in each setting, and their impact on decisions regarding the site of care," the report states. (For a list of outpatient PPS educational resources, see story, p. 119.)
Health care associations are dismissing the likelihood of upcoding under the outpatient PPS system. Deborah Williams, senior associate director of policy at the American Hospital Association in Washington, DC, says the MedPAC suggestion on upcoding is based on no observable clinical analysis of ambulatory payment classifications (APCs), which are the basis for the outpatient PPS. "In fact, the APCs were designed to avoid upcoding and, in fact, will underrepresent the clinical complexity for institutions that provide highly specialized higher cost services in an APC," she says.
Kathy Bryant, JD, executive director of the Alexandria, VA-based Federated Ambulatory Surgery Association, says the fact that procedures are paid for differently in different settings doesn’t lead to upcoding. "But appropriate coding is important for all settings and will be even more important with the increase in the number of groups." Bryant points out that ASCs have been paid under a system that included only eight groups of procedures. The outpatient PPS system, in comparison, includes hundreds of groups. (For information on a resource that compares outpatient PPS payments for hospitals and surgery centers, see resource box, below.)
In another development, HCFA has updated its contingency plan. If the hospital outpatient PPS fails to work as intended, providers will receive payment at an 85% level of what the providers received in Part B outpatient payment last year, according to the AHA.
HCFA has posted a program memorandum (Transmittal A-00-44) that describes two contingency plans it might invoke if the system or claims aren’t working by Aug. 18. HCFA says the special payments are similar to accelerated payment, but the request and approval process is simpler, according to the association.
• If a fiscal intermediary (FI) can’t process claims by Aug. 18, HCFA says it should inform providers by Aug. 25. Payments are to be sent within 10 business days after the FI receives the provider’s initial request and biweekly from that time until the outpatient PPS is running.
• If a provider can’t process claims by Aug. 18, it must send a form letter to its FI. Up to four biweekly payments can be received. Once the outpatient PPS is operation, FIs will recover those special payment by withholding money from Part B claims until all the special payments have been recouped.
(HCFA’s complete contingency plan and program memorandum are posted on its Web site: www.hcfa. gov/medlearn/refopps.htm.)
Reference
1. Medicare Payment Advisory Commission. Report to Congress: Selected Medicare Issues. Washington, DC; June 2000.
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