Is this the calm before the APC storm?
By Stephen W. Earnhart, MS
President and CEO
Earnhart and Associates, Dallas
I have been besieged with e-mails and phone calls recently about the upcoming ambulatory payment classifications (APCs). The biggest question is, "How much?" I wish I had the answers to those questions, but I don't.
There are so many rumors out there it reminds me of when I was in the military. The military (at least the enlisted side) runs on rumors. That's what's going on with us right now. In reviewing what we know, which isn't much, we can assume, for the most part, that APCs are not going to enhance our lifestyle. The odds are pretty good that reimbursement will not be going up for all procedures or down for all. We just don't know at this time.
We do know that the system sounds cumbersome and that "coders" probably will be worth their weight in gold. It sounds like we're going to have to spend some money upgrading our hardware to run some pretty sophisticated software, and the software is not going to be cheap. I've heard it will cost as much as $10,000 for all the modules. Ouch.
We've all heard the rumors that the four groups that are supposed to be hit hardest are:
· hospital ambulatory surgery centers (ASCs) operating under a hospital provider number;
· ophthalmology;
· urology;
· gastrointestinal single specialty centers.
Is it true? No one knows for sure - maybe not even the Health Care Financing Adminis tration at this point. I also heard this week that endos copy reimbursement actually may be going up!
Again, all rumors. But just think about this. Pretend for a moment you're a managed care company CEO (shudder) and you want to control your costs (us!). What's the best way? Decrease the amount you pay us, right? Well, partially.
Freestanding ASCs that are independent with their own Medicare provider numbers - not tied to a hospital - have been living under a pseudo APG system for years. For the most part, they charge a flat fee per procedure. Charges at hospital-based facilities, however, are mainly time- and supply-based, even though they may receive payment based only on Medicare groups.
Medicare, in a galaxy long ago and far away, started paying hospitals a "bonus," if you will, to cover their high overhead passed on to ambulatory surgery performed in the hospital. To be honest, that really wasn't a bad idea and probably was fair. (No hate mail please - I'm being objective here!) The payment was intended to cover their cost for intensive care units, emergency departments, etc., and was called a prospective payment system, or PPS for short.
However, so much of surgery is now ambulatory, and there is so much competition from the corporate chains and independents, that the ambulatory market can be serviced, in many areas, without a hospital! Ergo, why pay a bonus to hospitals anymore? Managed care execs now can drive cases to the freestanding market and not pay that "premium," which is exactly what they are doing. And now Medicare is going to do the same thing.
Therefore, I think - not know, but think - that situation is the major drive behind APCs at this point. Once hospitals have changed their status or built their own ASCs (different provider numbers) and are paid at a lower or equal rate as a freestanding ASC, and when the shift is made down the years, then we will see a further ratcheting down of APGs. But I believe the initial goal at this point is to drive cases out of the hospitals into the more competitive freestanding market. While they are doing that, I think they are going to lower payments for certain high-volume procedures.
What can you do? Something most of you already are doing: Prepare for the worst. Get your costs back in line for personnel, supply, etc. At the end of the day, APCs are not going to eliminate ambulatory surgery, only those inefficient at providing the service. Remember, in the managed care offices, no one can hear you scream!
(Editor's note: Earnhart can be reached at Earnhart and Associates, 5905 Tree Shadow Place, Suite 1200, Dallas, TX 75252. E-mail: [email protected]. World Wide Web: http://www.earnhart.com.)
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