ED Coding and Reimbursement Alert

In the last issue of ED Coding Alert we covered the initial preparations hospital information personnel should take to prepare for the shift to Medicares prospective payment system for outpatient services, which will take effect next year. We have also received several inquiries about the potential impact the new ambulatory payment classifications (APCs) will have on reporting ED professional services.

The good news for emergency group professional coders is that APCs will not affect their ED coding. They may, however, have a significant financial impact on the emergency medicine group, influencing how the group documents and reports its services, says Jeffrey Bettinger, MD, FACEP, chair of the American College of Emergency Physicians (ACEP) subcommittee on hospital prospective payment systems.

It is important to tell your readers that physician payments are not included in the APCs, he emphasizes.
However, he adds, ACEP is following the development of the APC system for several reasons. First, is the potential negative financial impact on the hospital, which could in turn affect the emergency groups contracts. Second, there will be increased scrutiny of the drugs and supplies ordered by the emergency physician because this also will affect the hospitals reimbursement. Third, there is a possibility that, in the future, Medicare may decide to pull physicians payments into this as well, says Bettinger.

Emergency physician groups need to be aware of the issues that may affect them. Here are some things to begin considering.

How are Components Bundled into
the APCs?

Impressively, there are almost 60 different APCs that cover ED visits and services, says Bettinger. They include for the hospital all of the nursing time, and they also include supplies that will be used. They do not include fees for diagnostic and lab studies which are covered under a separate fee schedule, and x-rays, which have their own APCs.

Basically, he contends, physicians will come under scrutiny if they prescribe expensive medications or supplies, where less expensive ones could possibly be substituted.

The hospital administrator is going to say, I am only getting x amount of dollars for this service. If you use the most expensive medicines or supplies, I am not getting anything for it.

Currently, all hospital charging is cost basedthe more expensive the medicine or supply the higher the hospital charge. All of that is changing.

It will be sort of like forcing HMO constraints on ED physicians in a respect, Bettinger notes. They are going to have the hospital looking over their shoulders more and more.

Increased Emphasis on Documentation

Because the level of E/M service delivered in the ED will largely determine the APC that is allocated for each visit, the hospital will begin depending more on physician documentation, predicts Bettinger.

Documentation will no longer just be important for the physicians bill; the hospital will, to a large extent, be interpreting the physician documentation to issue the appropriate APC. So, now the physician documentation will count in two areas: their own reimbursement and the hospitals.

What is the Potential Negative Impact Financially?

In general, hospitals are probably going to see less money for outpatient care under the new system, says Bettinger.
This will happen for a number of reasons, but the most significant will be the impact on patient co-pays.

Right now, under Part B, the patient is always responsible for a 20 percent co-pay to the doctor and Medicare picks up 80 percent of the allowable, he explains. The hospital outpatient services, which have also been covered under Part B, were never off the Medicare schedule; it was more often 20 percent of the hospitals charge [that the patient was responsible for). Even though the patient was responsible for 20 percent of the hospital charges, Medicare, of course, rarely reimbursed the hospital 100 percent of its charge. Now, under the new rule, Medicare is saying, the patient is only responsible for 20 percent of the APC payment. Right away, that co-payment is dropping from 20 percent of what the hospital charged, to 20 percent of the Medicare allowable.

Because this will be bad for the overall financial health of the hospital, it could be bad for emergency medicine groups when it comes time to negotiate its contract with the hospital.

For instance, hospitals could try to keep more of the payment from private third-party payers (which often reimburse professional ED services and facility charges together) to make up for losses from Medicare.

Other Concerns

Some other areas that ACEP is watching include the proposed medical screening APC and working to get APCs established for observation servicescurrently there are no APCs that cover this.

Medicare is considering establishing a separate APC for a medical screening exam, Bettinger states. We are watching that very closely. It could be good or it could be bad, depending on the level of exam that is considered screening. We are concerned that if APCs are ever extended to physician fees that many of our physician E/M visits will end up getting downcoded to screening exams.

If HCFA does not establish APCs for observation services and bundles them into some established APC, that is going to affect hospitals with observation unitsmany of which are located in the facilitys ED and staffed by the ED group.

That could really hurt hospitals with observation units, and ED physicians have been significantly involved in observation centers, Bettinger says.

In general, the shift to APCs will more likely affect the practice environment more than coding and reimbursement, he adds. There is financial liability possible with keeping the EDs open and the ability to keep the observation centers open, and co-payment issues that can hurt the hospitals and leave general financial deficits that will hurt the ED.