APCs Are Expected to Get Medicaid Payment

Now that Medicare has done the research, produced the necessary outpatient code editor (OCE) software and started requiring facilities to code and bill under the ambulatory payment classifications (APCs), other organizations are looking on with interest.

It was always assumed that once Medicare started this, it would go on to other payers, says Susan B. Willner, principal of Triana, a healthcare consulting company in Oakland, Calif. Diagnosis-related groups [DRGs] were like that. They started with Medicare.

State Medicaids in particular are expected to adopt APCs, and one state, Washington, already has announced its intention to do so. Suzanne Powers, director of member policy for the Washington State Hospital Association, a facility advocacy group in Seattle that was part of the APC planning process, says they should work well for Medicaid. Washingtons Medicaid, Health Care Authority and Department of Labor and Industries plan to switch over to APCs sometime next year.

Many state Medicaids use a version of ambulatory payment groups (APGs) that were built in 1985, Powers says. Theyre likely to switch because they can save more money with ambulatory payment classifications (APCs), according to Lolita Jones, RHIA, CCS, an independent healthcare consultant in Fort Washington, Md. APG payments are higher, particularly for the ED and outpatient clinic. If youre a Medicaid payer, youre exploring your options. Youre going to quickly pick up on the fact that youre paying more under APGs.

Administrative Nightmare

Jones completed an operational analysis for the Washington State Hospital Association in January 1999, creating a template that compared the coding, documentation and compliance requirements of Medicares original APC rules with those of Medicaid and Blue Cross, which already was using an APG system.

If a facility had to conform to APCs for Medicare and APGs for Medicaid, such simple issues as coding for bilateral epigastric hernia surgery (49570) could become terribly complicated, according to Jones. APCs may require a modifier, but APGs could want facilities to record the surgery twice. This type of dichotomy would be very difficult for everyone involved. For that reason, facilities should be better off with a standardized payment system.

Unfortunately, such standardization may not occur, even if every Medicaid adopts APCs, Willner says. That would be wonderful, but only if they adopt the same guidelines, definitions and regulations as Medicare. Then we wouldnt be fragmenting. But Medicaid isnt standardized. Each state does it own thing.

What does this mean to facilities? They must keep up with any changes Medicaid makes in their state, and not be afraid to lobby for treatment similar to that given by Medicare. If state Medicaids use the same methodology as Medicare, hospitals wont have to collect different kinds of data for different kinds of [...]

- Published on 2000-10-01