Now serving: A heaping helping of alphabet soup
Now serving: A heaping helping of alphabet soup
Know your APGs, APCs, and ASCs
By Stephen W. Earnhart, MS
President and CEO
Earnhart and Associates, Dallas
You’re going to be kicking yourself for missing this one. At the recent Same-Day Surgery conference in Pasadena, CA, the attendees had the opportunity to gather just a little more information about the upcoming tidal wave called APGs (ambulatory patient groups), which probably will be called APCs or ambulatory patient categories shortly.
Kimberly Sheets, MSW, MPH, gave us all a deeper peek into the potential quagmire that will hit ambulatory surgery centers (ASCs) in July 1998 and hospitals the following January. Much of this information came from her talk. One more reason attending these conferences is such a sound business decision.
Although the pieces of the plan and the actual dollar amounts aren’t certain at this point, it will be enacted. The Health Care Financing Admini-stration (HCFA) is trying to accomplish the following goals:
o Provide a system that improves the predictability of expenditures.
o Allow for more control over growth of expenditures.
o Create incentives for provider to improve efficiency.
o Maintain access to quality care.
o Develop a system that is administratively feasible.
o Develop a system that can be used by all payers.
o Provide payment equity for all providers.
o Control outpatient volume.
That’s a monumental task! HCFA officials, however, believe they have accomplished those goals by changing the current payment system and expanding the current Medicare groupings from eight to 108 "significant procedure" APGs.
What’s a significant procedure?
The APGs are not just designed for surgical encounters. They cover the full range of amb-ulatory settings, including same-day surgery units, hospital emergency departments, and outpatient clinics. APGs are assigned to every procedure code for an outpatient visit. Billing still will be on UB-82 forms, however. How nice.
Significant procedures are defined as:
o ormally scheduled;
o constituting the reason for the visit;
o dominating the time and resources
expended during the visit.
Significant procedures will be subdivided based on the following body systems:
o integumentary;
o musculoskeletal;
o respiratory;
o cardiovascular;
o hematology, lymphatic, and endocrine;
o digestive;
o urinary;
o male genital;
o female genital;
o ervous;
o eye;
o facial, ear, nose, mouth, and throat.
After the significant procedure has been determined, procedures in each body system are further subdivided into clinically similar classes based on site, extent, purpose, type, method, device, medical specialty, and complexity. After that, well, it gets a little complicated.
The ultimate keys to reimbursement are what’s involved, how much effort it’s going to take, and how efficient your system is. For example, if you’re performing procedures in the hospital that will be reimbursed only a max-imum of $600, and your resources cost $800, guess what? You lose. If, however, you can keep your costs down and your efficiency factor high and can perform the same procedure for $300, you win.
The challenge for many hospital systems is to become as efficient as many of the corporate ASCs that have lived under a similar system for a number of years already. The advantage is to the freestanding ASCs.
As it stands now, we don’t know what the actual reimbursements will be for the groups. But already the commercial insurance and managed care plans are indicating they’ll follow suit with HCFA, and we’ll very quickly see a global, flat fee for surgical procedures across all payers.
The freestanding marketplace is not without its problems under this system. What makes me nervous is the potential impact on single-specialty, high-volume centers currently in place. Many of these facilities have become so efficient and cost-effective that it could be used against them with the payment for these procedures. My guess, based upon people we have talked to in the industry and our own research, is that we could see significant payment reductions for some single-specialty ASCs such as gastrointestinal and ophthalmic centers.
With the exception of the single-specialty centers, I think the greatest impact will fall on hospitals that haven’t had the opportunity to establish their own ASCs or mimic the efficiencies and cost reductions common to their freestanding ASC counterparts. Time will tell, and hospitals have about a year before this hits them in January 1999.
It is going to become interesting to see the final numbers. Very interesting. [Editor’s note: Stephen Earnhart can be contacted at Earnhart and Associates, 5905 Tree Shadow Place, Suite 1200, Dallas, TX 75252. His e-mail address is: [email protected]. World Wide Web: http:// rampages.onramp.net/~surgery.]
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