A Quick Guide to Comprehensive APCs

Comprehensive APCs, aka C-APCs, are much like DRGs but on the Outpatient side. Comprehensive APCs expand CMS’s intentions of the Outpatient Prospective Payment System (OPPS) being a partially packaged system.  

The official definition is:

“A classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service.”

C-APCs are identified by HCPCS with assigned status indicator = J1 or J2.  All covered services on the claim are packaged with the primary J1,J2service.  CY 2020 includes 2,977 HCPCS codes assigned J1 or J2 status and therefore, triggering a single claim payment.  All those HCPCS are placed into C-APCs based on clinical family.

This is the history of C-APCs. They began in 2015 with 25 C-APCs involved. Today, there are 67 C-APCs that are part of the OPPS.

History of C-APCs 

Services typically additional to the primary service and provided during the delivery of 

the comprehensive service (and NOT paid separately) include:

• Diagnostic procedures
• Laboratory tests
• Other diagnostic tests & treatments that assist in the delivery of the primary procedure
• Visits & evaluations performed in association with the procedure
• Un-coded services and supplies used during the service
• DME, prosthetic/orthotic items and supplies, when provided as part of the outpatient service
• Any other HCPCS code representing services given during the complete comprehensive service

Some services are excluded from the packaging into a single payment. The following are NOT included in the C-APC payment and ARE paid separately:

• Corneal Tissue (status indicator = F)
• Pass-Through Drugs and Biologicals (status indicator = G)
• Pass-Through Devices (status indicator = H)
• Influenza & Pneumococcal Pneumonia Vaccines (status indicator = L)
• Brachytherapy Sources (status indicator = U)
• Ambulance 
• Mammography (diagnostic & screening)
• Rehabilitation Therapy
• New Technology
• Self-administered drugs
• All Preventative services

Based on CMS All US volumes, the most reported top 5 C-APCs (out of 67) Nationally over recent years include (listed in order of most frequently reported):

REMEMBER: OPPS is not a simple fee schedule – something to really think about when using as a guide for pricing strategy!

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Sometimes ComprehensiveAPCs may get confused with CompositeAPCs.  Stay tuned for our post coming soon, “What are Composite APCs?”

Managed care contract terms

Laura Jacobson RHIA – Data Quality and Reimbursement Consultant

Laura is an expert on data quality and compliance issues, making sure our clients receive accurate and immediately useful results. She works with managed care contracts, modeling reimbursement terms for pricing and payment work. Her work allows our consultants to give accurate advice to help our clients be financially stable and successful.

Part of my job each day is to read through managed care contracts and decipher how the language applies to payment. I’ve noticed a few key areas that are often generically included or unclear, which can lead to a misunderstanding of how a payer reimburses their claims. Make sure these items are fleshed out in your payer contracts to ensure a complete understanding of how your claims are paid.

1. Lesser of language– A lesser of clause indicates a payer will pay the lesser of either the payment rate or the amount charged. Most contracts with this language will include a brief sentence stating that this applies, however most don’t specify how it is applied. For example, if the contract includes line-level payment such as a fee schedule, how is the payer evaluating these claims? Are they looking at the claim in aggregate and summing the payments and charges, or are they looking at each line separately? The resulting payment will differ depending on the approach used so, it is important to understand exactly how the payer is evaluating these claims.
2. Service Definitions– Every contract lists the service and the corresponding rate, but make sure your contracts also include how the service is identified. For example, does the payer define a cardiac catheterization by revenue code or HCPCS code? Do they require both in order to be paid? What codes does the payer use? And make sure the definitions are updated when code changes occur. If it is unclear what codes the payer requires for payment, there may be claims going out the door that are not receiving the correct payment or any payment at all. 
3. Stoploss Methodology– Your contract may include a stoploss clause, for example, a clause that changes the payment methodology when charges reach a threshold, but does it specify what items of the contract are included? The payer may be excluding services, such as implants and drugs or items paid a percent of charge, which will decrease the number of claims reaching this stoploss status. If you are modeling contracts to project future payments or trying to validate your claim payments, this can lead to inaccurate results.
4. Payment Hierarchy– Some contracts are great at specifying the hierarchy of payment, but many omit this entirely. For example, take a claim where the patient came through the ER and moved to observation. If your contract includes claim-level payment for both services, which one would apply? Does the claim receive an observation payment or an ER payment? Try to negotiate a section that clearly states the hierarchy of claim-level services. Again, not understanding this hierarchy can cause projections or validations that inaccurately represent your claims’ payment. 

Payers may not be omitting these things on purpose but leaving them out can lead to confusion and misunderstanding of how a claim should be paid. Review your contracts and if any of these areas are missing, try to negotiate them into your next renewal. Doing so can ensure both you and the payer are on the same page which leads to more accurate projections of claim payments and decreases the time spent reconciling payer reimbursement. 

How To Use Contract Testing And Analysis

Two areas that affect the impact of contract changes include how payers define categories and services and hierarchies of payment.

A substantial provider-payer contract is nearing the renewal period. The payer initiates proposed changes to current payment terms, but the provider already has in mind specific outcomes desired for the upcoming contract year. The provider is faced with two choices; accept and move forward with the proposed changes or engage in the negotiation process. What should the provider choose?

To read the full article, click here!

Why Removing Percent-of-Charge Provisions in Managed Care Contracts Won’t Address Concerns About High Hospital Charges

Healthcare figures to be a primary issue in the 2020 elections, with much of the focus on costs — especially hospital costs. A common concern among users of hospital services is the apparent lack of correlation between hospital charges and payment. Although some hospital managed care executives have suggested replacing percent-of-charge (POC) contract provisions with fixed-fee payment as a solution, these proposals are based on three myths regarding the POC payment methodology relative to fixed-fee payment.

Read the whole article here.

How We Look at Big Data and Bundled Payments in Healthcare

“Big Data” is a buzz word in a lot of industries right now, so what do we mean when we talk about big data in healthcare? We know that big data is, well, big – usually very, very big. When we talk about big data in any context we’re usually discussing something that is more than a single person can analyze and parse. In fact, it might need a team or specialized equipment,and is assembled from multiple data sources.

Of course, those of us in healthcare, and especially healthcare finance, know that more and more, big data is being used to guide health policy decisions.  Our challenge is how to leverage big data as a tool to support decision making.  A very pertinent and timely example is measuring bundled payments as payment trends continue toward multiple variations of bundled payment approaches. 

Bundled payments, put simply, are a method of shifting payment risk between healthcare providers and healthcare consumers, usually third party payers.   Unless a hospital arranges for risk-sharing, it is responsible for controlling costs of care, even in settings over which they do not have any direct control.  Bundled payment methodologies range from individual service arrangements, where each specific service provided is paid separately, to episodic and capitation methodologies.  Service arrangements and encounter arrangements can often be measured within an organization, however assessing and defining costs associated with episodic payments clearly falls into the area of big data.  An episodic payment is made for all encounters associated with a defined episode of care across all providers.

Using big data analytics from Medicare data files we can measure the cost as the sum of all providers involved in providing care.   Once we understand the variation and driving factors of cost we can better understand how much individual providers have control over those costs and whether the reviewed product line or service is likely to be profitable, will require subsidization, or is in a space to consider limiting or exiting.

Clearly big data isn’t going anywhere, so it is imperative that we find ways to access and analyze big data to develop and support our strategies and decision making.  If you have questions, let us know at 888.779.5663. We discuss this issue (with examples) in our whitepaper here.