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Coding & Billing
The Costs of Converting to APCs
Lolita Jones
Publish Date: October 10, 2007   |  Tags:   Financial Management

To go from the nine ASC payment groups you've grown to know and love - or loathe - to Medicare's Ambulatory Payment Classification (APC) system, you'll need to transform your business office, a process that could take weeks and easily cost $50,000 for the software, reference materials and training you'll need to make it happen. Here's a look at the tools you should have in place before the new payment system goes into effect, presumably, on Jan. 1.

APC grouper software. As you know, APCs are groups of codes that are both clinically related and use similar resources. Each group carries an assigned weight, which is then multiplied by a facility outpatient conversion factor to arrive at a payment level. Every procedure in each group is paid at the same rate. First thing you'll need is a software program called a grouper, which generally costs from $5,000 to $10,000. This software assigns the APC payment group(s) for the CPT and HCPCS Level II codes after you enter the information for a surgical case (see "Sample APC Grouper Data Sheet" on page 20).

With its built-in Medicare reimbursement logic, the grouper calculates the APC payment group reimbursement amount specifically for your geographic location by evaluating the procedure codes and modifiers, and grouping in accordance with OPPS regulations. The software will flag any procedure code that isn't reimbursable under Medicare's new payment system, and calculate the discounting for you according to CMS rules.

APC groupers also let you:

  • understand APC reimbursement by grouping claims in accordance with Medicare's final regulations for the new payment system;
  • clean up coding edits (such as the National Correct Coding Initiative edits) to improve coding accuracy, completeness and consistency;
  • estimate surgical case profitability by calculating the expected reimbursement; and
  • control costs by using the projected APC reimbursement data for budgetary and management purposes.

You can also use the APC grouper to analyze the data entered for numerous surgical cases. Most APC groupers can be interfaced with your billing system or other information system.

Coding books and guidelines. To facilitate optimal coding under APCs, your coder should have certain coding resources on her bookshelf. Budget $2,500 per year to renew subscriptions to the following:

  • ICD-9-CM Official Guidelines for Coding and Reporting (writeOutLink("www.cdc.gov/nchs/data/icd9/icdguide.pdf",1))
  • ICD-9-CM code book (Government Printing Office, Washington, D.C.)
  • CPT code book (American Medical Association/ AMA, Chicago, Ill.)
  • Level II code listings of the Healthcare Common Procedure Coding System, book or electronic file, (writeOutLink("www.cms.hhs.gov/HCPCSReleaseCodeSets/ANHCPCS/list.asp",1))
  • CPT Assistant newsletter (AMA, Chicago, Ill.)
  • Complete Global Service Data for Orthopaedic Surgery (American Academy of Orthopaedic Surgeons, Skokie, Ill.)
  • anatomy resources (books or software)
  • medical dictionary
  • drug/pharmaceutical reference

Staff training and education. Training your coders in all aspects of coding and reimbursement - including ICD-9-CM diagnosis coding, CPT coding, HCPCS Level II coding and modifiers, National Correct Coding Initiative edits, CMS-1500 claim forms, and the APC System - will enhance their ability to code under APCs. On-site training could cost from $10,000 to $20,000 depending on the number of specialties and physicians (the more of these, the more training sessions necessary). Don't wait too long before you begin training. It's already July; APCs will be here in five short months. Get going.

Coding and billing consulting. If you've read my columns or heard my lectures, you know that I'm a big proponent of coding and billing audits. It's never a bad time to do either.

  • Coding audit. Give the consultant a good sample of cases so she may validate the codes assigned and billed against the documentation in the record. Based on findings, your staff may need more training.
  • Billing audit. Give consultants access to all your billing contracts, samples of your bills and your contracts so that they may observe the method of how claims were billed. For example, they'll examine the EOB to compare how a claim was paid to the terms of a particular payer. At the very least, a billing audit will force you to have all your payer contracts in a central location.

Blessing in disguise?
You may discover that converting to APCs is an opportunity to improve your financial management practices, to become leaner and meaner, and to eliminate such poor practices as coding off the surgery schedule without bothering to approach surgeons about missing documentation.