The federal government is rewriting the rules on how providers can bill Medicare for outpatient procedures. And those who don't follow the new coding will not only forgo reimbursement, they could face penalties for submitting false claims.
Although the rules are slated to take effect in July, the actual implementation date for the codes, known as Ambulatory Payment Classifications, or APCs, is still uncertain. The date already has been pushed back once, from January 1999, because HCFA was preparing its computers for the year 2000.
The interim final order is expected to be published in the Federal Register this month.
The biggest impact of APCs will fall on hospitals and elder-care facilities. But physicians with investments in ambulatory surgery centers and those who perform procedures in their offices also will have to become more stringent in their documentation and billing to Medicare.
"In real estate it's location, location, location," says Jeffrey Scribner, a director with ZA Consulting's hospital physician compliance group in Philadelphia. "This is documentation, documentation, documentation. Under APCs, it's going to be easier for (HCFA) to monitor."
And it will be easier for the government to prosecute under the False Claims Act. The government hasn't given an indication about how fiercely it will pursue false claims. However, at the minimum, payment will be denied for claims that aren't filed according to the new regulations. False claims penalties can range from a $5,000 fine to a 10-year prison term. Some of those penalties can be tripled depending on the violation.
The creation of APCs, which was required by the Balanced Budget Act of 1997, will introduce a system for classifying and reimbursing outpatient visits. The new regulations call for 345 APCs with distinct categories for surgical procedures, medical visits and other services.
HCFA is looking for ways to curb costs, Scribner says. And coding, he explains, is where costs can be hidden.
According to HCFA, services bundled in each APC are similar clinically and in terms of the resources they require. A payment rate is established for each APC.
The bundles are similar to DRGs, and this change is considered to be the biggest HCFA has pursued since adopting DRGs in the early 1980s.
The APCs bundle procedures into one classification so providers can't bill for every step. For example, the preparation for using anesthesia, the use of anesthesia and the recovery of a patient will be billed under one code, and providers will be reimbursed for one procedure rather than several as they are now.
The new APC codes include modifiers that allow providers to give additional information to account for twists and turns often taken during procedures and surgeries. For example, modifiers would explain circumstances such as doing two procedures at once or canceling a procedure at the last minute. Those not using the modifiers risk denial of claims or government attempts to recoup overpayment.
The objective is to curb growth in hospital outpatient volume, says Diane Millman, partner with McDermott, Will & Emery in the health law firm's Washington office. Whether it will do that is unclear, she says.
Hospital outpatient volume has grown quickly since HCFA began limiting inpatient charges to reduce costs. The move will push many of those procedures from hospital outpatient to free-standing ambulatory surgery centers and physician offices, Millman says. And that's where the APC codes come in.
Scribner says it's not known how much money this will cost physicians in either staff training or lower reimbursement rates.
The change likely will mean additional costs in staff resources, Scribner says.
"A lot of physicians don't understand the coding," he says. "The (staffer) doing the coding did not receive the best training. They're underpaid and overworked. It's very difficult to learn."