Hospital PPS: Go Figure

To the Editor:

The example of coinsurance calculation in your article "Hospitals Escape PPS Unscathed" was incorrect. The actual formula is far more complicated. Here is how a hospital in Akron, Ohio (wage index 1.2413) that has elected not to reduce co-insurance might do the calculation for cataract surgery (APC 246):

Calculate the Location Adjustment. Multiply the APC Payment rate ($1,287.33) by the labor percentage (60%). The result is $772.40. Adjust the labor portion for the location's wage index by multiplying $772.40x1.2413, yielding $958.78. Add this figure to the non-labor portion ($514.93) for a total location adjusted APC payment of $1,473.71.

Calculate the Program Payment Percentage. Subtract the APC unadjusted coinsurance ($623.85) from the APC Payment rate ($1,473.71). The difference is $663.48. Now divide the APC Payment rate by the difference. This yields a Program Payment Percentage of 51.45%.

Calculate the Payment and Coinsurance with the Unmet Deductible. To complete this final step, subtract the applicable deductible ($100) from the Adjusted APC Payment Rate ($1,473.71) to get $1,373.71. Multiply that number by the Program Payment Percentage (51.54%) to find what Medicare owes: $708.01. Subtracting Medicare's obligation from the total yields the co-insurance amount: $665.70.

Also, hospitals did not necessarily escape unscathed. The unadjusted APC rate is the median cost based on 1996 data. Costs are up in 2000 due to wages. Some hospitals, especially urban ones, tend to be below the median. They are bigger, slower, and handle lots of indigent cases. Kevin J. Corcoran, COE, CPC, President, Corcoran Consulting Group, San Bernardino, Calif.

Corrections

In our April 2000 issue, we errantly identified the photo at right as Accutome's 3-Blade LASIK Marker. In fact, the device is Rhein's Brems Astigmatism Marker with Level. Outpatient Surgery apologizes to both companies.

In our article "6 Ways to Preserve Diamond Knives" in the same issue, we failed to identify Bausch & Lomb Surgical as a source of information about and service for diamond knives. Call (800) 338-2020, x3794.

In our article "Pass Your Accreditation Inspection with Flying Colors," in the same issue, we stated that about 100 ASCs have earned Joint Commission on Accreditation of Healthcare Organizations certification. Although this is true, the organization has accredited about 1,200 ambulatory surgery facilities in total.