HCFA details several changes in APC regulation — final rule expected any day
July 1 implementation date still on track
Even if the Health Care Financing Administration (HCFA) in Baltimore doesn’t provide a whole rule, at least it sometimes hands out a few hints. Providers received several new details in March about the prospective payment system (PPS) that will use ambulatory payment classifications (APCs) to reimburse hospital-based outpatient services. The proposed rule was published in the Sept. 8, 1998, Federal Register, and the final rule is expected any day.
HCFA’s Program Memorandum Transmittal A-00-09, written as instructions to fiscal intermediaries, revealed several changes made to the proposed rule as a result of the Balanced Budget Refinement Act of 1999 (BBRA), which President Clinton signed last November. Don’t expect these changes to push back implementation of the final rule, however.
"One of the most significant things about the Program Memorandum is that it reiterates the scheduled date for implementation — July 1, 2000," says Laura Frazier, RHIT, manager of APC solutions for QuadraMed Corp. in San Rafael, CA. Frazier says she expected HCFA to use the changes as a reason for delaying implementation. "Instead, [HCFA] says, Full steam ahead. Fiscal intermediaries, here are your instructions.’"
Some of the changes outlined in the memorandum are going to mitigate the financial impact to facilities, but not as much as people predict, she says. Some of these changes would:
• Extend the 5.8% reduction in operating costs and 10% reduction in capital costs (which was due to sunset on Dec. 31, 1999) through the first date the PPS is implemented.
"The ability to ameliorate some of the financial impacts for the first half of the calendar year is going to be extended," Frazier says. "However, it will sunset, obviously, when the prospective payment system is implemented. I believe that will be July 1. After that, there will be a reduction in the capital costs that will be billable."
• Require annual updating of the PPS payment weights, rates, payment adjustments, and groups.
"In the initial proposed rules, HCFA says, We will update them but we haven’t determined in what time frame.’ This provision says it will definitely happen annually," she says.
• Require annual consultation with an expert provider advisory panel in the review and updating of payment groups.
According to this provision in the BBRA, there is going to be an interceding process that will help mitigate any of the changes HCFA might put in place "willy-nilly," Frazier says.
• Establish budget-neutral outlier adjustments based on the charges, adjusted to costs, for all services included on the submitted outpatient bill for services furnished before Jan. 1, 2002, and thereafter based on the individual services billed using the appropriate department-specific cost-charge ratio for each services.
• Provide transitional pass-throughs for the additional costs of new and current medical services, drugs, and biologicals for at least two years but not more than three years.
There are several types of drugs and services not reimbursed under the Medicare program that will be covered under PPS during the transition process, Frazier says. These might include experimental drugs that the U.S. Food and Drug Administration (FDA) in Rockville, MD, has not approved but that have been clinically shown to significantly reduce problems with diseases. Therefore, caregivers may decide to continue administering those drugs to patients even though they are still pending FDA approval and won’t be covered under Medicare unless they are approved, she explains.
The PPS proposed rule stated that it would not cover any drugs or biologicals, other than chemotherapeutic agents that treat cancer.
Frazier says the new provision is the result of an effort on the part of pharmaceutical companies and cancer treatment specialists who lobbied HCFA for reimbursement.
A comprehensive list could be forthcoming
She says HCFA could release a list of exactly which services and drugs will be covered very soon, including the J codes that identify particular drugs.
• Include under the PPS payment for implant-able devices durable medical equipment, prosthetics, and items used in diagnostic testing.
That is another example of additional services being included that were not considered eligible for reimbursement under the proposed PPS rule, Frazier says.
• Establish transitional payments to limit hospitals’ losses under the PPS; the additional payments are three years for most hospitals and low-volume rural hospitals (100 beds or less) and are permanent for the 10 cancer hospitals exempt from the inpatient PPS.
• Limit beneficiary copays for services paid under PPS to the inpatient hospital deductible.
Another significant provision in the memorandum is this statement: "Acute dialysis, e.g., for poisoning, will be paid under the PPS," Frazier says. In the proposed rule, HCFA had thought it was effectively providing cost control under the composite rate paid for dialysis patients in end-stage renal disease.
The BBRA, however, differentiated between chronic dialysis, which will be paid under the composite rate, and acute dialysis, which will be paid under the prospective payment system. "That’s another change in what is considered to be an eligible service under the system," she says.
(In response to a lawsuit filed to force HCFA to release the final PPS rule, HCFA affirmed in March 17 court documents that the final rule would not be delayed beyond July 1.)
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