Think you’re ready for APG system? Watch out for the pitfalls
An APG survivor points out the trouble areas
You’ve known for some time that the APG coding system for outpatient reimbursement was coming. You’ve planned and prepped, and you’re totally ready for it, right?
Probably not, says Jeff Feasel, who has gone through the process as director of patient accounts for the Medical College of Ohio in Toledo.
One of the great, unexpected differences from the current system, he says, is that your reimbursements will drop dramatically.
"Even assuming that we are able to collect deductibles and copayments from beneficiaries, our reimbursement under APGs is about 10 percentage points lower than under alternative outpatient payment methods based on discounted fee for service," Feasel reports. (For recommendations on accommodating this drop, see story on p. 4.)
While Blue Cross outpatient payments represent only 3% of the college’s total institutional revenues, college administrators are concerned about how APGs eventually will affect the 12% to 15% share generated by Medicare patients. The experience has left the college much better prepared for the eventual arrival of Medicare APGs, administrators say.
Feasel says he thought the college was ahead of the game when it began to prepare early in 1995 for the advent of APGs. Consultants were hired to review the processes, including the Chargemaster, outpatient coding, and overall operations. The consultants made a number of suggestions.
"We didn’t respond to them as well as we could have done, due to lack of knowledge and not really understanding the impact of APGs," Feasel admits.
The Medical College, like other health care providers, initially believed the APG system would be handed to them by the Health Care Financing Administration (HCFA). But HCFA elected at the last moment to delay APG implementation. The decision followed skepticism from experts about whether APGs would accomplish the goal of restraining the rate of growth in Medicare outpatient expenditures.
Others, however, have taken the ball and run. In Iowa, the state’s Medicaid program pioneered the use of APGs for outpatient reimbursement beginning in 1994. And Blue Cross/Blue Shield of Ohio adopted them in 1996 for its commercial health plans. Blue Cross/Blue Shield of Utah plans to follow suit in 1997.
Getting ready
When the Medical College of Ohio began planning for APGs in 1995, its consultant recommended that it:
• centralize the coding process and upgrade the education of coders;
• improve CPT coding by updating the Chargemaster;
• identify the items that should not be coded under the Chargemaster.
While the Chargemaster is universally accepted, the college did not heed the warnings of health information managers in Iowa who have strongly recommended that an APG grouper software program be acquired. (For more information see Hospital Payment & Information Management, December 1995, p. 145.)
Feasel says he also found that registration is one area in which the impact of APGs has been most significant and where the need to centralize operations has been felt most.
"If a patient has multiple visits on the same date of service for unrelated problems, and you don’t create separate registrations for those visits, then your APG payments could be discounted. For example, a patient may have physiotherapy for a knee injury in the morning and a lab test for a diabetic condition in the afternoon. By doing separate registrations, you create separate billings that enable you to receive the full APG payment for each service instead of a discounted payment for the second," Feasel says.
Getting registration sorted out does not require an investment in software as much as it requires getting proper policies and procedures in place, he notes.
But training registration personnel to understand APG implications may not be easy in hospital systems with many registration points, such as clinics or physician offices. The Medical College of Ohio has about 200 physicians in its affiliated physician practice, and it is not unusual for patients to receive more than one service on the same date, Feasel points out.
"What we have done is try to cut down on the number of people involved by centralizing registration and doing more pre-registration and being more proactive," Feasel explains. "That way, if questions do arise, they can be clarified prior to registration."
Defining the window’
Hospitals in Cleveland have reported problems in identifying the "window" of time for which related services must be bundled. In the contracts negotiated with Blue Cross, the period is often unclear or undefined, administrators say. As a result, the bundling requirement could apply for a week or 10 days or a month. Some hospitals there have also complained that they lack the computer software to internally monitor their charge description master, and ancillary and utilization data.
Feasel says his hospital has overcome the problem of identifying a window by ignoring it. If a patient comes back for a service within the window of time, and a separate bill has been sent, the hospital has simply been leaving it up to Blue Cross to call it into question. So far that hasn’t happened.
For similar reasons, the college has also decided to centralize its coding processes. A lot of people weren’t trained in coding and were coding as their predecessors had taught them, often from outdated superbills, Feasel explains. But the college’s effort to hire more skilled coders has run into one stumbling block: a shortage. The facility is also trying to get buy-in from hospital unions to allow pay scales for coders to be raised.
Another problem the college ran into was the inability of Blue Cross’s grouper software to handle hospital programs for bundling organ and disease panels. "They asked us to unbundle them. This is at the same time that hospitals are being ordered by HCFA to improve the bundling of tests," Feasel says, referring to federal investigations of bundling procedures.
An additional difficulty arose because most mainframe computer applications don’t have functions that permit the storage of APG data for comparison and validation. As a result, says Feasel, there was no good way to validate that the payment received from Blue Cross was correct.
"We found a way around the problem by creating a spreadsheet application with all the Blue Cross outpatient remittance data grouped individually, and that’s how we are storing it," Feasel says. "It’s classified by date of service, voucher date, APG payment, APG assignment, the percentage of allowable charges, and by whether the APGs relate to significant procedures, medical, or ancillary services. We import that into a database application so we can generate reports."
Looking back over the experience, Feasel muses, "It’s good to prepare for APGs, but until you really experience them, you kind of need to go the school of hard knocks."
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