Reader Question: Discounting Rules

Question: How will the new APC discounting rules affect us? Should we discount co-pays? If we do, how should we determine which ones to discount?

Pennsylvania Subscriber

Answer: Although co-pay discounts are a feature of the outpatient prospective payment/ambulatory payment classifications (OPPS/APCs) payment methodology, there are still many details about APCs that, as yet, are unclear even to the intermediaries. Many hospitals, therefore, are delaying their election for co-pay discounts until they have more experience with the payment amounts under APCs. Once the decision is made regarding such discounts, it cannot be withdrawn until the next election period.
All services within each APC group would be subject to any co-pay reduction, as the reduction is made per APC group. For a hospital to calculate which APCs might be subject to reduction, it would be necessary to perform a volume and revenue projection on each of the services within the APC group. Because the HCPCS identification of procedures is a new methodology under APCs, many hospitals are unable to provide historical information on the usage of these services and would have to do so with a sample of records re-coded with the APC methodology.

The co-pay amounts under each APC group are not a percentage of the APC payment amount, but a predetermined dollar amount based on historical statistical data. Some of the APC groups have significant co-pay amounts as a percentage of the overall payment, and any election to reduce the patients responsibility would be a major benefit to the beneficiary.

For example, APC 090, Level II implantation/removal/revision of pacemaker or vascular device has a total payment of $1,016.29, with a national unadjusted co-pay of $573. That comes to 56 percent of the allowable rate, not the standard 20 percent under the pre-APC methodology.

Hospital billing departments can expect to provide a considerable amount of patient education about these changes as patient complaints mount. The Health Care Financing Administration (HCFA) has promised to provide educational materials to beneficiaries to help educate them about this new system, but hospitals will bear the major responsibility to help Medicare beneficiaries understand the implications of the changes.

- Published on 2000-08-01