Oncology & Hematology Coding Alert

Hospital-based radiation oncologists dont have the same luxury of time their medical oncology counterparts have. Radiation oncology procedures were grouped into 13 ambulatory payment classifications (APC), 12 of which are assigned a payment rate. Oncology-related drugs used in the outpatient treatment of cancer patients have been given a two- to three-year exception to the Health Care Financing Administrations (HCFA) APC until HCFA can figure out a way to incorporate them into its newest payment system. But hospital-based radiation oncology procedures will be paid using APCs beginning this summer.

Rather than be subject to APC payment, all current drugs being used in cancer therapy, including supportive drugs, will be paid based on 95 percent of the average wholesale price for a two- to three-year period. After the transitional period, HCFA will propose a permanent payment method, says Laurie Lamar, RHIA, CCS, CTR, CCS-P, reimbursement specialist with the American Society of Clinical Oncology (ASCO) in Alexandria, Va.

Although HCFA has retained the basic structure for prospective payment for hospital-outpatient reimbursement, its final rules were published in the April 7 Federal Register, and implementation begins July 1 hospital-based oncology practices were spared potentially steep reductions in reimbursement for chemotherapy drugs and some cancer treatments.

While hospital-based radiation oncologists will be affected immediately, radiation oncologists in private practice will feel some effect as well, says Cindy Parman, CPC, CPC-H, principal of Coding Strategies, a coding consulting firm in Dallas, Ga. Theyre now going to be under the gun from hospitals, Parman says. Hospitals are going to tighten their belts and make physicians more accountable.

Under the original proposal, chemotherapy drugs would have been grouped into four APCs and Medicare would not have made a separate payment for other types of drugs, including supportive drugs, such as the anti-emetic Anzamet, J1260.

HCFA still adheres to the general principle that drugs should be paid as part of the APC payment for the procedure and should not be subject to a separate payment; the Balanced Budget Refinement Act (BBRA) allows three categories of drugs not to be subject to this approach. A large category of cancer therapy and orphan drugs that are paid on a 95 percent of the average wholesale price was created for a two- or three-year transitional period. A similar system for drugs introduced after July 1 was created, and high-cost drugs that are not covered by the BBRA will be paid separately.

The Balanced Budget Act of 1997 requires HCFA to establish a prospective payment system for hospital-outpatient department services. The law requires HCFA to establish a classification system for outpatient department services. It allows HCFA to group various services within a payment group if the services are comparable clinically and require similar use of resources. As a result, HCFA has established a system of 346 APCs. Under the proposal, the outpatient reimbursement schedule would resemble the physician fee schedule, except payment amounts would not be established for each CPT and HCPCS code. Instead, a number of codes would be assigned to each APC, and a single fee schedule amount would be established for the APC.

Except for chemotherapy drugs, drugs would not be treated like supplies and considered covered by the payment amount for the related services.

APC 369

ASCO took issue with the design and accuracy of specific APCs, specifically APC 369, which includes a number of oncology-related procedures. For example, HCFA based the classification of stem cell harvesting, 38231 (bone-derived peripheral stem cell harvesting for transplantation, per collection), on only 115 claims with a range of costs between $157 and $1,359. The median cost for 38231 was $669, illustrating the strong potential for inadequate reimbursement. In addition, HCFA data showed 38230 (bone marrow harvesting for transplantation) had a median cost of $26 despite the fact that the lengthy procedure involves general anesthesia. The assigned cost to APC 369 is $325, although many of the stem-cell harvesting procedures and therapeutic apheresis have median costs two or three times greater than the assigned cost.

Radiation Oncology APCs

The good news, says Parman, is that radiation treatment preparation and radiation therapy were divided into three separate levels, allowing for higher payments for higher levels of service. For example, 77401 (radiation treatment delivery, superficial and/or ortho voltage) is grouped into APC 0300, level-one radiation therapy, which has a payment rate of $96. Code 77470 (special treatment procedure e.g., total body irradiation, hemibody irradiation, per oral, vaginal cone irradiation]) is given its own APC to reflect the significantly higher amount of service required. Code 77470 is assigned to APC 0302, level-three radiation therapy, which is given a payment rate of $398.08.

Unlike radiation treatment preparation and radiation treatment, radioelement applications are lumped into one APC, 0312, which comes with a payment rate of $198.31. APC 0312 includes code 77761 (intracavity radioelement application; simple), 77762 (intermediate), 77763 (complex), 77776 (interstitial radioelement application; simple), 77777 (intermediate) and 77778 (complex). They are lumping them all together giving the same payment for a simple procedure as they would for a complex one, says Parman.

The same applies to APC 313, brachytherapy, which is assigned a payment rate of $382.56. By lumping 77781 (remote afterloading high intensity brachytherapy; 1-4 source positions or catheters), 77782 (5-8 source positions or catheters), 77783 (9-12 source positions or catheters), 77784 (over 12 source positions or catheters) and 77799 (unlisted procedure, clinical brachytherapy) payment is no longer based on the number of source positions or number of catheters used in the procedure.

Lamar and Parman say APCs represent a trend that started with diagnostic-related groups in the early 1980s. Prospective payment has since found its way to other segments of the healthcare industry, including home health and nursing homes. Services given to Medicare patients in physician offices may be the next frontier for prospective payment. Parman also points out that where Medicare goes, so do managed-care health plans, which means hospitals could soon expect APCs from managed-care plans.