CMS Issues Final 2003 OPPS Rule, Increases Payment Rates

“OPPS Advisor” is written by Jugna Shah, president of Nimitt Consulting Inc., in St. Paul, MN. To respond with comments, questions, or suggestions, contact Jugna by e-mail at jugna@nimitt.com, or by phone at 215/888-6037.

OPPS payments to hospitals are going up under the 2003 final rule released by CMS on November 1, 2002, but that doesn’t mean payments to your hospital will necessarily be higher—as always, this depends on your own mix of services.

Highlights from the final OPPS rule include:

• For the first time, CMS used actual OPPS claims dated between April 2001 and March 2002 to set APC payment rates. In addition, CMS converted many multiple procedure claims into useable single procedure claims, and used more than 80% of provider claims data used to set the relative weights. This means that your data clearly matter in setting the payment rates! Correct coding and billing practices matter more than ever, since it is clear that CMS will use what you send to them to set future payment rates.
  
  
• CMS listened to comments submitted by both the industry and Congress. It incorporated a measure to soften the impact of significant payment reductions for all APCs in cases where the 2003 payment rates were more than 15% lower than current 2002 rates. This was not part of the proposed rule, and underscores that CMS really listened to the comments it received. Any APC median cost falling by more than 15% was administratively modified to lessen the financial strain on hospitals. Essentially, CMS decreased the reduction in median cost by one-half of the difference between the value derived from the claims data, and 15%. These results were reviewed again against all comments received, and a few other targeted changes made for some APCs. For providers, this means that losses due to payment rate shifts for some APCs will be limited.
  
  
• CMS made no methodological changes between the proposed and final 2003 rule, with respect to packaging pass-through drugs that graduate from the pass-through list. Many of the drugs currently on the pass-through list for which you currently receive separate reimbursement will move off the list in 2003, and be packaged into other APCs. Some other drugs will have their own drug APC. With respect to the packaged drugs, this is bad news for providers—you will not receive separate payment for many of the drugs you currently provide. If you provided a high volume of pass-through drugs up to now, examine the reimbursement impact of the 2003 rule. This is especially important for those drugs being packaged into existing APCs (e.g. chemotherapy administration or infusion therapy), since the payment rates for these APCs do not increase to reflect the packaged drug charges. Other APCs with packaged drugs (like Level I and II injections) have higher APC payment rates. Nonetheless, it is unclear whether the latter rates will be high enough to offset providers not receiving separate payments in 2003.
  
  
• There is no grace period for reporting pass-through device category C-codes that graduate off the list as of January 1, 2003. Starting January 1st, providers should not bill devices using any of the HCPCS category C-codes that CMS eliminated. (You’ll find these codes in Table 10 on pages 66761-66763 of the Federal Register containing the final rule). Billing these C-codes will result in your FI returning the entire claim. CMS instructed FIs to do this because it wants providers to fix and resubmit the entire claim with the appropriate device revenue code, rather than the HCPCS C-code. This will allow CMS to collect better data about the devices billed and their associated charges, so that future payment rates for these procedure APCs will more adequately reflect the device charges.
  
  Providers need to report the devices—but ONLY with the appropriate revenue codes described in PM A-01-50, and not with the C-codes that disappear starting next year. Update your CDM and remove all graduated pass-through device C-codes before January 1, 2003. Then, test that these codes no longer flow to the final bill, but that the appropriate revenue code and charges do make it to the final bill when you perform a procedure with an associated device. CMS has not provided a mapping of the devices that occur with each procedure. It accepted all relevant line items reported with procedures when folding in the device costs into the procedure payment. In some cases, it is easy to know what device should be present with a procedure (e.g. report a pacemaker for a pacemaker insertion procedure). In other cases, it is less clear, particularly if your organization has not frequently reported devices to date. Review the list of APCs in Table 11 on page 66801 of the November 2nd Federal Register, and create a list of the pass-through devices that should be reported with these APCs. Then, set up a process to audit claims to ensure that you report these procedures with the appropriate revenue codes in the future.
  
  
• There will be no pro-rata reduction in 2003. Pass-through payment rates for the remaining devices (five) and drugs (24) on the pass-through list will not be reduced further.
  
  
• The outlier payment threshold is lowered to 2.5%. This reduction—combined with other lower payment rates—means that more line items will meet the outlier threshold. Providers may, therefore, receive higher outlier payments in 2003. The amount that CMS will give back from the difference between your costs and the payment rate (if the threshold is met) has been lowered from 50% to 45%. Simply put, the odds of beating the threshold are greater, but the amount of money you will get back could be lower.
  
  
• The final rule clarifies that providers will NOT have to begin using the newly proposed G-codes to report evaluation and management services as of January 1, 2003. Providers will be allowed to continue using the current E/M codes for ER and clinic visit reporting until CMS releases national E/M facility coding guidelines. These guidelines are not expected prior to 2004. CMS plans to name an independent panel to provide specific recommendations in order to create these national guidelines.
  
  
• CMS created two new HCPCS G-codes to account for situations where patients are directly admitted to observation status from a physician’s office. Report code G0263 for observation patients admitted for chest pain, congestive heart failure, or asthma. Report code G0264 for patients admitted to observation for all other conditions. G0263 will not generate any separate reimbursement. If all the separately payable observation criteria are met, then providers will receive payment for the observation APC and any other separately payable services reported. G0264 (used for all other conditions resulting in a direct admission to observation) generates separate reimbursement, along with all other separately payable services from the claim. In the final rule, CMS assigned G0264 code to APC 600 (low level clinic visit) with a national payment rate of $43.96. This new G-code allows providers to receive separate reimbursement for direct admissions to observation while simultaneously allowing CMS to collect data on these conditions. Providers need to use both G-codes when appropriate so that CMS will have the data it needs to set future payment rates.
  
  
• Mammography reimbursement has increased by approximately 10%.
  
  
• There are changes to the inpatient-only list: another 41 codes will be eligible for payment through APCs.
  
  
• CMS clarified a number of issues including: defining “waste” in terms of billing units of service for drugs that are not fully used; reporting infusions and injections for patients in observation; billing for blood transfusions and the blood product; and reporting procedures from the inpatient- only list for patients who die in the emergency department.
  
  
• There are other issues CMS did not clarify (perhaps because of the short period between the end of the comment period and publication of the rule). Hopefully, CMS will take the time to consider all of the comments received, and to clarify the gray points. For example, providers need clarification on the separately identifiable service/visit, so that they can understand when to report an E/M visit code with modifier -25 along with a procedure.
  
  
• Finally, it is hard to assess whether CMS’ changes are good or bad, from an operations point of view. We are pleased that CMS listened to the industry’s comments and made some of the suggested changes. At the same time, providers shoulder the burden to implement the changes. If CMS implements changes and makes them retroactive (such as allowing the diagnosis codes for the observation APC to be reported in the admit diagnosis field), providers have to decide whether to go back and submit adjustment bills for claims that were previously denied. The same goes for claims denied for exceeding the units of service limit. You can resubmit claims dating back to October 1, 2001. Should you spend time resubmitting such claims? It depends on your volume, the charges involved, and who will do the work.