APCs won’t pay for ED observation
Units might close, expert predicts
With the new ambulatory payment classification (APC) system for billing of outpatient services, the Baltimore-based Health Care Financing Administration (HCFA) has struck a blow to ED observation services, according to experts interviewed by ED Management. The just-published regulation states that observation services will not be given their own APC codes, which means no additional payment will be made for those services.
Instead of having their own APCs, the values are bundled into the other outpatient APCs, says Jeffrey Bettinger, MD, FACEP, a member of the Dallas-based American College of Emergency Physicians’ reimbursement committee and co-chair of the Florida College of Emergency Physicians’ medical economics committee.
"Lack of a separate APC for outpatient observation services may have a chilling effect on the ability of existing observation units to remain operational," Bettinger stresses.
HCFA does not understand’
An incorrect statement appears in the HCFA regulations, asserts David Chauvin, DO, FACEP, chairman of compliance for Premier Health Care Services, an ED physician group in Dayton, OH. The statement reads, "We assume that chest pain patients, such as those described by the commenters, are sent to the CCU or ICU for observation. We believe that, in general, if a patient needs to be monitored in the ICU or CCU for any length of time, then that patient should be admitted as an inpatient."
Chest pain patients who are placed in observation units do not need to be in the ICU or CCU, Chauvin says. "Clearly, HCFA does not understand how a chest pain observation unit is used," he says.
The regulations will cause ED observation units to close, which will increase inpatient admissions, Bettinger predicts. "The lack of assignment of an APC value for observation services is a big mistake by HCFA," he says. "HCFA’s comments showed a lack of understanding on how medical observation units function. Hopefully, this error will be rectified in future modifications."
In November 1996, HCFA issued instructions limiting payment for observation to no more than 48 hours except in exceptional circumstances, notes Caral Edelberg, CPC, CCS-P, president of Medical Management Resources, a Jacksonville, FL, emergency medicine coding and consulting firm specializing in financial reimbursement. HCFA will continue to monitor use of observation for future consideration of a separate APC, she says.
"Hospitals are requested to continue billing for observation services under the ED under revenue center code 762, which will allow HCFA to continue monitoring this service," she explains
The regulations caution that observation must represent some level of active monitoring by medical personnel, she warns.
Not a major cost?
Some experts insist that packaging observation services with ED level 4 and 5 will not be a major cost to hospitals. Hospitals still will be paid the ED visit APC, and all nursing services provided during observation also will paid, according to Mason Smith, MD, FACEP, president and CEO of Lynx Medical Systems, a Bellevue, WA-based consulting firm specializing in coding and reimbursement for emergency medicine.
Present ED billing practices rarely unbundle nursing services from the visit-level services, notes Smith. "To bill under APCs, EDs will need to unbundle many of the services they presently include in a single-visit service charge."
Observation services will include additional nursing services, ancillary tests, and procedures, he says. "If all these payments are added up, the net impact on the emergency department will be minimal."
Still, hospitals are likely to favor a decision to admit the patient and might elect to convert the observation unit to an inpatient service, Smith acknowledges. "But by doing this, we may be able to have the best of both worlds. When the dust settles, I believe the hospitals and physicians will find a way to make observation services work."
For more on APCs and observation services, contact:
• David Chauvin, DO, FACEP, Chairman of Compliance, Premier Health Care Services, 8111 Timberlodge Trail, Dayton, OH 45458. Telephone: (800) 726-3627, ext. 117, or (937) 435-1072. Fax: (937) 440-9031. E-mail: [email protected].
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