Reader Question: Calculating Payment

Question: How will the Health Care Financing Administration (HCFA) calculate my hospitals ambulatory payment classification (APC) reimbursement?

Tennessee Subscriber

Answer: Thats a tricky question. Each hospital will receive unique APC reimbursement according to the following formula: [(APC Value x 0.6) x Local Wage Index] + (APC Value x 0.4) = APC Pay

For example, APC 0094 for cardiopulmonary resuscitation pays $218.68 and the HCFA wage index for San Antonio, Texas, is 0.77. So the APC reimbursement would be:

[($218.68 * 0.6) * 0.77] + ($218.68 * 0.4) = $188.50

If the hospital elects not to reduce the Medicare beneficiarys co-payment voluntarily (theres no good reason to do so because it only increases the hospitals losses under APCs), then the Medicare beneficiarys co-payment is 20 percent of the National Hospital Median Charge for the 0094 APC group, which is $105.29.

If the hospital voluntarily opts to reduce the beneficiarys co-payment to the minimum, then the beneficiary would have to pay only $43.74. Because the amount determined by the above equation is the aggregate APC payment (a combination of Medicare payment and beneficiary co-payment), any amount of beneficiary
co-payment that the hospital voluntarily elects to reduce would affect the hospitals bottom line directly. In the above case, a reduction to the minimum co-pay would cost the hospital $105.29 - $43.74 = $61.55. So the total payment under APC 0094 that the hospital could collect would then be: Beneficiary Co-pay ($43.74) + Medicare Payment ($218.68) - Medicare-determined co-pay ($105.29) = $157.13.

- Published on 2000-07-01