The APC Integrity Program (sm)

Abbey & Abbey, Consultants, Inc.

The APC Integrity Program (sm) is a special set of services for hospitals and associated outpatient service entities to ensure that proper reimbursement is being gained through APCs and other APG payment systems.  Coordinated with ensuring proper reimbursement is maintaining a proper compliance stance in all aspects.  Thus the two primary goals of this program are:

·        Ensure Proper Reimbursement Under APCs, and

·        Maintain Proper Compliance In All Aspects Of APCs.

The specific areas within the program are outlined below.

    1. Overall Coding, Billing and Reimbursement Assessment
    2. Coding and Billing Validation
    3. Charge Master Reviews
    4. Documentation Systems
    5. Encounter/Registration Systems
    6. Claims Adjudication Tracking System
    7. Financial/Management Reporting
    8. Information System
    9. Organizational Structuring
    10. Specialized Training and Education Programs
    11. APC Compliance Development and Enforcement.
A custom program can be developed for your specific hospital situation.  The main attributes that separate the services of Abbey & Abbey, Consultants, Inc., are:

·        There is a heavy emphasis on training and education of personnel in order for them to better perform their job functions,

·        Infrastructure development for both effectiveness and efficiency is promoted,

·        Clients are given the tools and methodologies to operate independently so that ongoing consulting support is kept to a minimum.

Typical APC Integrity Program Engagement

The needs of hospitals and hospital systems in the assessment and implementation of changes for APCs varies widely so that a custom program is almost always required.  Below is delineated a set of tasks and activities that might be typical for a mid-sized hospital.  Programs for small, typically rural, hospitals and programs for large hospitals, including teaching hospitals, can be designed around these eleven program areas along with appropriate training and infrastructure development.

·        Review of current financial reimbursement status under APCs relative to projected reimbursement patterns.

·        Review current reimbursement patterns for cost outliers and the process of ensuring that corridor payments are being accurately made.

·        Review current status of operational flow of the overall coding, billing and reimbursement system relative to HCFA’s implementation of APCs,

·        Review and analysis of the hospital’s claims adjudication tracking system (CATS) and the feedback loops that are in place to resolve denial and/or under payment of APC claims.

·        Review and analysis of the use of the APC grouper software relative to generation of information for management and statistical reporting.

·        A brief coding and billing validation review of selected outpatient charts.

·        An assessment of the effectiveness in the use of modifiers for various types of claims.

·        An assessment of any problems associated with implementation of HCFA’s Correct Coding Initiative (CCI).

·        An assessment of areas in which charges are not being made and/or coding is not taking place that could enhance revenue generation under APCs.

·        A brief review is made of the charge master and the changes that were made to prepare for APC implementation.

·        Interviews are conducted with coding and billing personnel to determine any problems relative to APCs.

·        Meetings with APC Taskforces in order to determine the current strategies for resolving operational problems and addressing reimbursement shortfalls.

·        A review of the compliance activities including policy and procedure development and auditing activities development.

·        Meetings with selected department personnel to review status and project plans both pre-implementation and post-implementation,

·        Review the organizational structuring of various service areas under APCs for gaining proper reimbursement.

·        Review and assess provider-based status (PBS) for both inpatient and outpatient operations of all types.

·        Identify problems areas and make recommendations as to resolution,

·        Development of strategic initiatives that can be taken, both short-term and long-term, that can enhance revenue generation under APCs.

·        Education and training for various hospital personnel will be provided as necessary.

APC Integrity Program Elements

The following chart illustrates the eleven program areas.

Overall Coding, Billing And Reimbursement Assessment

This activity comprises an assessment of the overall system from the encounter and registration of the patient all the way through to the reconciliation of the bill/claims relative to the payment.  In the comprehensive assessment the following are considered:

§         Overall Flowchart of the Flows – Information, Patients, Manual and Computer-Based

§         Interfaces Between Departments and/or Computer Systems

§         Documentation Systems and Methodologies

§         Timing and Efficiencies of Flows

§         Accuracy, Correctness and Effectiveness of Flows

§         Potential Compliance Concerns

The basic idea is to use this overall assessment as a means of identifying where problems may exist within the overall system.  These particular problem areas can then be further investigated and addressed.

Coding And Billing Validation

Correct coding and use of modifiers is the ultimate key to successful reimbursement under APCs and it also a significant source of compliance concerns.  The audits and reviews that are performed by the consultants at Abbey & Abbey, Consultants, Inc., go beyond just the correctness of coding and address the documentation to coding to billing process since all three of these elements must be synchronized.  Special audits and routine auditing procedures are developed and auditing systems implemented.  The intent of these activities is to develop a systematic approach to making certain that the coding is correctly based on the documentation, that correct modifiers are in use, that coding done through the Charge Master is indeed coming out correctly and that quality UB-92s and associated HCFA-1500s are being generated.

Charge Master Reviews

The Charge Master is a critical element for correct coding and proper UB-92 generation.  Many decisions must be made concerning the architecture of the Charge Master or the way that it is organized.  Of particular concern under APCs is the placement of CPT/HCPCS and associated modifiers on the Charge Master itself (static coding) or to allow coding to be performed outside the Charge Master (dynamic coding).  In some cases there may be a default code place in the Charge Master that must then be overridden by coding staff.  The way in which the Charge master is set up and the way in which it is used thus become of paramount importance.  Additionally, the Charge Master itself is a target of compliance concerns especially in the outpatient areas.  Thus, an ongoing review process including both internal and external reviews must be established to make certain that there is integrity in coding and billing under APCs.

Documentation Systems

While there is a great concentration on making certain that coding is correctly performed, the simple fact is that the coding can be no better than the documentation that has been developed.  There are many different outpatient areas even at the smallest hospital and thus there are different documentation systems that are in place running the gamut from free-form handwritten documentation on through highly sophisticated systems that provide extensive templates to make certain that all of the necessary information is being developed.  A careful assessment must be made of these systems and strategies for improvement should be developed.

Encounter/Registration Systems

The encounter/registration system should be one of the simpler systems at a hospital, at least relative to consistency and uniformity of the data gathered and the processes performed.  This is generally true in hospitals where there are only a very few encounter locations.  In many hospitals, and particularly integrated systems, there may be dozens of encounter locations.  The ability to ensure consistent and accurate gather of information and proper classification of patients is a very real challenge.  Given the fact that for many hospitals the way a patient is classified can drive the specific flow that the patient’s associated information will take.  If mistakes are made at the very beginning they can ripple out across the coding, billing and reimbursement system and create havoc.  Thus

CATS – Claims Adjudication Tracking System

Reviewing each and every claim that is processed through APCs or some other APG type payment system is critical.  Not only is it needed to make certain that proper reimbursement is occurring; it is also necessary to identify any and all mistakes that are being made relative to the coding billing and reimbursement cycle.  Hospitals have typically allowed claims transaction personnel to make adjustments to claims without identifying or resolving the fundamental problem that is creating the problem.  For APCs it is of extreme importance to have a routine system whereby each claim is checked against the expected payment (via the hospital’s APC grouper/pricer) versus the adjudicated payment typically through the remittance advice (RA).

Even for small claims, this process needs to take place so that problems can be identified and resolved at any point in the overall CBR cycle all the way from the encounter/registration on through the filing of the claim.  Over time the number of problem areas should diminish.  However, as experience has shown of the years these payment systems are constantly changes so that a CATS will be necessary for the foreseeable future.

Financial Reporting

Keeping in mind that APCs represent the most significant financial impact to hospitals since DRGs (and possibly greater than the DRG impact!), it is vital that the various financial aspects of APCs be monitored with great care.  There are many complex aspects embedded in APCs including a financial transitional corridor to make certain that hospitals are not unduly affected.  Both long-term financial strategies and short cash-flow considerations must be made and plans implemented accordingly.  Careful monitoring of financial information in relation to clinic information such as severity and service mix indexes must be made.  Financial personnel must be heavily involved in both the claims transactions processing and the design of information system and associated databases.  The design of such APC financial systems is a critical element in meeting the APC challenge.

Information Systems/Data

The shift from inpatient services to outpatient services continues.  Additionally payment systems continue to change with the movement from cost based systems to prospective payment systems such as APCs and various forms of managed care contracting.  Some of the managed care contracts may in themselves use a form of APCs.  It is extremely difficult to proper manage outpatient services without good, comprehensive data and information about the patients and various outpatient services being provided. 

APCs and other prospective payment systems give us the opportunity to capture data at several different levels and in varying degrees of detail.  APCs and associated APG payment systems allow the development of longitudinal outpatient databases from which vital information can be gleaned.  The term ‘longitudinal’ simply means over time.  If you had a comprehensive database of all the outpatient services provided by patient type over a five year period, how much could that help you make better decisions about services, contracting and financial planning?  This is the area addressed in this module of the APC Integrity Program(sm).

Specialized Training and Education Programs

With a payment system as complex as APCs a full training program is an absolute necessity!  Some of the training can be done internally, some will need to be provided externally either on-site or off-site.  Setting up a program that meets the needs of various personnel in multiple technical areas is a real challenge.  This is particularly true with reimbursement levels coming down and training needs increasing.  All types of training including that available through the Internet and through audio programs must all be considered.

APC Compliance Development and Enforcement.

As we have learned with DRGs, compliance is a major issue whenever there are codes and choices to be made in the way in which a given claim is filed.  APCs has embedded a significant number of compliance issues ranging from modifier utilization on up to complex organizational situations.  Sorting out the various compliance or potential compliance issues is a major task.  This module in the APC Integrity Program(sm) provides a comprehensive checklist of the various types of problems that can occur, the rules and regulations that apply and prototype policies and procedures to address the many issues.

Organizational Structuring

A concern about the way in which to structure services and the organizational process involves questions that goes well beyond APCs.  Today hospitals merge, have joint ventures, open satellite operations and take other steps to better meet the health care needs of the communities they serve.  With the implementation of APCs a whole new set of rules and regulations affecting both outpatient and inpatient organizational structuring were set into motion.  Hospitals must take great care to proper address the way they are organized. 

The services in this module of the APC Integrity Program(sm) are both reactive and also proactive.  The reactive portion of the services involves making certain that current organizational structuring meets the various requirements and reporting mandates.  The proactive services involve planning for future changes so that structuring can meet the rules and regulations while providing enhanced healthcare services.  As such this module stands out from the others in that it is more comprehensive and addresses issues that go beyond just APCs.

© 2000-2001 Abbey & Abbey, Consultants, Inc. – Version 1.5 January, 2001