Existing State Programs Give Clues for National APC Preparation

Although preparing for federal ambulatory payment classifications (APCs) poses challenges, facilities can look for ideas by examining some state Medicaid programs that have instituted similar reimbursement systems.

Both Iowa and Illinois use a form of grouping for Medicaid outpatient reimbursement, though neither state has adopted a system as intense and far-reaching as APCs will be. The states now reimburse healthcare providers according to procedure codes, but they place less of the coding burden on the facilities.

In both states, central computers at Medicaid assign the codes and any weighting factors. That makes facilities jobs much easier. Hospitals and clinics have lists of groupers and payments, so they can predict their reimbursement simply. Theres no reason the federal government couldnt do something like this, says Steve Bradley, bureau chief for comprehensive health services for the Illinois Department of Public Aid in Springfield. Theres a fixed number of ICD-9 procedure codes. Its hard to fudge these and theyre easy to find. We just havent had a whole lot of problems with [his states version of an APC system] except for the rate of reimbursement.

The Iowa Model: Using APGs

Iowa has used an ambulatory payment groupings (APG) system since 1994. According to Tracy Warner, vice president of healthcare finance policy for the Association of Iowa Hospitals and Health Systems in Des Moines, hospitals dont have many complaints about the system because they were included in its development. It pays pretty well. The hospital group was involved and got our concerns addressed.

One of the reasons Iowas system works so well is that the state didnt implement APGs as a way of cutting costs, Warner says. Although the Health Care Financing Administration (HCFA) will use the federal system of APCs to reduce Medicare expenditures, Iowa turned to APGs in an effort to develop a more predictable reimbursement system. Hospitals use their traditional codes on the HCFA UB-92, and the states fiscal agent has the grouper loaded in its mainframe computer for claims payments, says Patti Becker, executive assistant to the Iowa Medicaid director in Des Moines. The grouper basically does the work.

Iowas system starts with the CPT and ICD-9 diagnosis codes, which are later grouped into an APG according to resource usage. Once the hospital has billed a claim, then the computer assigns a weight, Warner says. Weights represent the intensity of resources needed to provide the care. The computer decides the weight by examining the claims and cost report data submitted by the facility.

One issue that proves thorny at many levels of reimbursement is bundling. Iowa has a somewhat bundled system, Warner says. Its not all-inclusive, but it also doesnt allow everything to be paid completely separately.

For example, a patient who came in with a [...]

- Published on 2000-04-01