Overview
Background
Since July of 1994, the Office of Health Care Financing has utilized an outpatient reimbursement model that reimburses outpatient surgeries based on Ambulatory Surgical Center (ASC) payment groups, lab and radiology services based on a flat rate for the Healthcare Common Procedure Coding System (HCPCS) code billed in conjunction with that service, and all other revenue codes based on a flat rate. Certain services, such as supplies and drugs, are paid on a flat fee per visit. Since that time, Medicare developed and implemented its Outpatient Prospective Payment System (OPPS), which uses APCs.
Purpose and Objectives
The purpose of this project is to develop a hospital outpatient reimbursement methodology for the Wyoming EqualityCare Program that promotes predictability of outpatient hospital payments and equity and consistency of those payments among provider types, while maintaining access to quality care.
Specific objectives of the project are aligned with the Department's overall strategic direction to improve the efficiency and effectiveness of operations relating to the provision of customer services such as health care to EqualityCare clients.
Affected providers
All outpatient services provided by hospitals, including critical access hospitals, are within the scope of the project. Provider taxonomies 282N00000X and 282NR1301X with a claim type O (outpatient) will be passed to the OPPS Pricing Program. Outpatient bone marrow/stem cell transplants and Medicare crossovers are excluded from the OPPS Pricing Program.
Out-of-State Hospitals
The new payment methodology applies to all out of state hospitals.
Covered Services
There are no changes being made to the list of services covered by EqualityCare although EqualityCare is making changes to be consistent with Medicare's policies regarding determining the most appropriate setting for the provision of services.
Office of Health Care Financing Policy Prevails
Although the new payment method is based on payment methods used by the Medicare program, differences will occur because of differences in policy, timing and other factors. The Office of Health Care Financing policy will prevail in case of disagreement between Medicare and EqualityCare.
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Ambulatory Payment Classification (APC)
APC Method
The main payment method for the OPPS project is the APC method which is used by Medicare. The Department has adopted the Outpatient Code Editor with Ambulatory Payment Classification.
Relative Weight
The Department is adopting Medicare's relative weights for each APC.
Conversion Factor
A conversion factor is a standard dollar amount that is used to translate relative weights into payment. The Department will use a State specific conversion factor to achieve the target budget for the project and to assure that the aggregate payments to not exceed Medicare Upper Payment Limits according to 42 CFR, Section 447.321. The conversion factor will be reviewed yearly.
Fee Calculation
In its simplest form, the calculation for an APC assigned procedure is:
(APC assigned relative weight) X (State specific conversion factor) = Payment
Pass-Through Payments
Pass-through payments are generally for new drugs, biologicals, radiopharmaceutical agents, and medical devices. Drugs and devices having a status indicator of G and H receive a pass-through payment. In some instances, the procedure code may have an APC code assigned. The fee is either the APC fee or a percentage of charges.
Packaged Services
Services having a status indicator of N are considered packaged or bundled into other services. The costs for these services are allocated to the APC but are not paid separately. Medicare developed the relative weights for surgical, medical and other types of visits to reflect the packaged services in the APC method.
Discounted Procedures
Discounted Procedures - UPDATED 3/29/07
Discount Formulas dates of service 01-01-2008 and after
Discount Formulas dates of service 10-31-2005 to 12-31-2007
Other Fee Schedules
Services having a status indicator of 3 are paid under other EqualityCare fee schedules rather than by an APC.
Return to top Coding, Billing and Edits
Billing Requirements
Hospitals will be informed of billing changes through provider bulletins and the provider manual. Provider Bulletin 04-014 was released August 16, 2004. While key changes are described below, please refer to the entire bulletin for billing instructions.
Bilateral Requirements
When billing bilateral procedures, bill the procedure code only once and bill with modifier 50.
Patient Status Code
Bill the appropriate patient status code. EqualityCare accepts patient status codes that are not reserved for national assignment.
Patient Status Code
01 |
02 |
03 |
04 |
05 |
06 |
07 |
20 |
30 |
43 |
50 |
51 |
61 |
62 |
63 |
64 |
65 |
66 |
70 |
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Services on Same Day
Effective October 1, 2004, all services provided to the EqualityCare client by the hospital on the same day must be billed on a single claim. See Provider Bulletin 04-014. This requirement does not apply to reference labs with type of bill 14X.
Line Item Date of Service
Effective October 1, 2004, all line items must show a valid date of service. See Provider Bulletin 04-014.
Span Bill
Hospitals will continue to be able to include services for more than one day on a single claim, so long as each service is listed on a separate line with the actual date of service. See Provider Bulletin 04-014.
Recording Detailed ICD-9 Diagnosis Codes
ICD-9 diagnosis codes should be recorded to the greatest level of specificity using the fourth or fifth digit when required. See Provider Bulletin 04-014. For example ICD-9 540, acute appendicitis, requires an additional digit (540.0, 540.1, 540.9). Under the new OPPS Pricing Program, the claim will deny if the principal diagnosis field is blank, there are no diagnoses entered on the claim, or the entered diagnosis code is not valid for the selected version of the program.
Recording Detailed CPT/HCPCS Codes
Under the new OPPS Pricing Program, payment calculations are dependent on CPT/HCPCS procedure codes at the line level. Line items that are packaged do not require a procedure code; however, hospitals are advised to use procedure codes (e.g., high cost drugs and supplies) as the presence of certain codes may affect payment. Hospitals are also advised to ensure the accuracy of procedure codes, accompanying units, and the appropriateness of the accompanying revenue codes.
Type of Bill
Type of Bill (TOB) acceptable on outpatient hospital claims are 12X, 13X, 14X, or 85X.
Modifiers
The significance of modifiers increases in coding under OPPS. Modifiers add clarification and specificity to
procedures. Failure to use modifiers or use of an incorrect modifier may adversely affect the payment for some outpatient services. The table indicated below are modifiers that EqualityCare will accept for outpatient hospital claims reimbursed by APC. Use of modifiers applies to services/procedures performed on the same calendar day.
Modifier Changes Effective January 1, 2008
Please note the changes to the modifiers listed in the table below. Specifically, providers must append modifier ‘FB’ to procedures that represent implantation of replacement devices that are obtained at no cost to the provider. Modifier ‘FC’ is appended if the replacement device is obtained at reduced cost. If there is an offset payment amount for the procedure, the OCE will reduce the APC rate by the full offset amount (for FB), or by 50% of the offset amount (for FC) before determining the highest rate for multiple or terminated procedure discounting. If the modifier is used inappropriately (appended to procedure with Status Indicator other than S, T, X, or V) the claim is returned to the provider. If both the FB and FC modifiers are appended to the same line, the FB modifier will take precedence and the full offset reduction will be applied.
Modifiers Used for OPPS-Reimbursed APC
Level I (CPT) Modifiers |
Level II (HCPCS) Modifiers |
-25 |
-50 |
-63 |
-73 |
-91 |
-BL |
-CA |
-EA |
-FA |
-GA |
-J1 |
-KG |
-LC |
-Q0 |
-P1 |
-RC |
-TA |
-27 |
-52 |
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-74 |
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-CR |
-EB |
-FB |
-GG |
-J2 |
-KK |
-LD |
-Q1 |
-P2 |
-RT |
-T1 |
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-58 |
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-76 |
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-EC |
-FC |
-GH |
-J3 |
-KL |
-LT |
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-P3 |
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-T2 |
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-59 |
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-77 |
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-E1 |
-F1 |
-GR |
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-KT |
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-P4 |
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-T3 |
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-78 |
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-E2 |
-F2 |
-GS |
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-KU |
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-P5 |
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-T4 |
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-79 |
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-E3 |
-F3 |
-GZ |
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-KV |
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-P6 |
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-T5 |
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-E4 |
-F4 |
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-KW |
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-T6 |
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-F5 |
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-KY |
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-T7 |
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-F6 |
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-T8 |
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-F7 |
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-T9 |
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-F8 |
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-F9 |
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Outpatient Code Editor with Ambulatory Payment Classification (OCE/APC)
The OCE software was developed for the implementation of the Medicare OPPS. Effective July 1, 2007 this software changed to Integrated Outpatient Code Editor (IOCE) to be inclusive of OPPS and Non-OPPS processing if so necessary.
Integrated Outpatient Code Editor (IOCE)
The two main functions of the IOCE are to identify errors and assign Ambulatory Payment Classifications. In addition, the software performs the following functions when processing a claim:
- Edits a claim for accuracy of the submitted data;
- Assigns payment indicators;
- Determines if packaging is applicable;
- Determines the disposition of a claim based on generated edits;
- Computes discounts, if applicable;
- Determines payment adjustment, if applicable.
The Department will use the IOCE and adopt some of the IOCE edits as it did with the previous software.
Line Item Denials and Claim Denials
The claim will not necessarily be denied if an edit causes a line item to deny. When a hospital can correct a line item that has denied, the hospital should submit an adjustment to ACS. The claims processing system will then reprice the entire claim and adjust payment to the hospital as appropriate. For a listing of OPPS denial reasons and how to correct them, refer to the OPPS Remittance Advice EOB Codes (updated 5/6/2008).
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Status Indicators
Status Indicators
The IOCE assigns a status indicator to each line item. The status indicator directs payment of the line item. The status indicators used by the Department are based on the indicators used by Medicare, with additional Department specific indicators:
Medicare Status Indicators Used by the Department
Status Code |
Description |
Comments |
A |
Services not Paid under OPPS; Paid under fee schedule or other payment system |
Not paid under OPPS. |
B |
Non-allowed item or service for OPPS |
Not paid under OPPS. |
C |
Inpatient procedure |
Not paid under OPPS. |
D |
Discontinued Codes |
Not Paid under any system |
F |
Corneal tissue
acquisition; certain CRNA services and hepatitis B vaccines
|
Not paid under OPPS. Paid at reasonable cost |
G |
Pass-through drugs and biologicals |
Paid under OPPS; Separate APC payment includes pass-through amount. |
H |
(1) Pass-through device categories
(2) Brachytherapy sources
(3) Radiopharmceutical agents |
Paid under OPPS; (1) separate cost-based pass-though payment; (2) separate cost-based non-pass-through payment (3) seperate cost-based non- pass-through payment |
K |
Non-pass-through drugs, and biologicals, therapeutic radiopharmaceuticals and brachytherapy sources |
Paid under OPPS; separate APC payment |
L |
Flu/PPV vaccines |
Not paid under OPPS. Paid at reasonable cost |
N |
Items and services packaged into APC rates |
Paid under OPPS; Payment is packaged into payment for other services. |
Q |
Packaged services subject to separate payment based on payment criteria |
Paid under OPPS; separate APC payment based on OPPS payment criteria |
S |
Significant procedure, not discounted when multiple |
Paid under OPPS; separate APC payment |
T |
Significant procedure, multiple reduction applies |
Paid under OPPS; separate APC payment |
V |
Clinic or emergency department visit |
Paid under OPPS; separate APC payment |
Y |
Non-implantable durable medical equipment (DME) |
Not paid under OPPS. |
X |
Ancillary services |
Paid under OPPS; separate APC payment |
Wyoming-Specific Status Indicators Used by the Department
Status Code |
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1 |
Not Covered |
Indicates a service that is not covered by EqualityCare (e.g.,_a service that cannot be provided in an outpatient hospital setting or that is not a covered EqualityCare benefit). |
2 |
Paid a percentage of charges |
Paid by multiplying billed charges by a hospital-specific cost-to-charge ratio. |
3 |
Other fee schedule |
Indicates a service that is excluded from the APC-based methodology, e.g., laboratory and screening mammographies. |
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Payment Calculations and Budget Impact
Charge Cap
The charge cap will be handled by line item as follows:
- State specific status indicator – allowed charge is the lower of the provider's usual and customary charge (billed amount) and the EqualityCare fee schedule;
- Status indicator representing a service with an APC code assignment:
- Billed amount is not zero – allowed charge is the APC amount,
- Billed amount is zero or blank – allowed charge is $0;
- Status indicator in which a revenue code is packaged – allowed charge is $0.
Transition Period
There will not be a transition period.
Outlier Payment
The Department will not implement outliers for the OPPS project.
Services Paid a Percentage of Charges
Services that are paid a percentage of charges are paid at a percentage of the participating hospital's charges for that service (e.g., pass-through payments). The percentage paid is the participating hospital specific cost-to-charge ratio. This cost-to-charge ratio is determined by the Department based on Medicare cost reports submitted by participating hospitals. For Non-participating hospitals, hospitals whose cost-to-charge ratio is greater than 1.0, and other hospitals in which the Department does not have a cost-to-charge ratio on file, the default percentage is the average cost-to-charge ratio for their provider type (CAH, Children's Hospitals, or General Hospitals). The cost-to-charge ratio will be reviewed annually.
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Remittance Advice (RA)
Allowed Charge Source Codes
There are two new allowed charge source codes:
- Allowed charge source 5 = APC-based Fee;
- Allowed charge source 6 = Packaged (paid zero).
New RA Fields
There are two new fields that will be on the RA:
- APC field = the APC code assigned to the line item;
- DIS FML field = the discount formula number applied to the line item.
Write Off Field
If the line was paid by APC and the “PAID BY MCAID” is greater than the “BILLED AMT”, then the “WRITE OFF” will be negative.
Sample RA
OPPS Remittance Advice EOB Codes-5/6/2008
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If you have any questions, contact us at wyopps@acs-inc.com.
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