Hello all,
I have a colleague who is trying to get a better working knowledge of the Ambulatory Payment Classification System. I was wondering if anybody who holds a COC could share with me to some good resources to better understand APCs and perhaps the formula for calculating APC payments. Anything would be greatly appreciated!
Thank you,
Will CPC-A, CPB
Although COC isn't one of my credentials, I worked as a hospital contract reimbursement analyst for many years.
The brief high-level overview answer is that APC reimbursement is calculated by multiplying the Conversion Factor x APC relative weights. (Similar to how a DRG payment is Base Rate x the DRG relative weight.)
A claim will be run through an APC grouper to classify the CPT and HCPC codes on the claim into APC categories. The relative weights from the payable APC categories, the conversion factor, and the hospital-specific wage index and outpatient cost to charge ratio will be used to determine the claim payment.
If your colleague wants to understand how the APC grouper logic works, here are some links from the CMS website that will help:.
- Chapter 4 of the Medicare Claims Processing Manual covers OPPS methodology in full detail: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf
- OPPS Addendum A and Addendum B are updated quarterly. Those files tell you which codes map to which APC categories, the relative weights, the status indicators. You can find the quarterly updates here: https://www.cms.gov/Medicare/Medica...utpatientPPS/Addendum-A-and-Addendum-B-Update
- Addendum B: Lists all of the CPT/HCPC codes with the corresponding Status Indicator, APC Category, Relative Weight, and other information.
- Addendum A: Lists all of the APC Categories with Status Indicators, Relative Weights, and other information.
- OPPS Addendum D1 lists the definitions of all the Status Indicators. The Status Indicator (SI) tells how that APC category will be reimbursed (or not) under OPPS. The full list of applicable Status Indicators is found in each year's OPPS Final Rule as Addendum D1.
There are too many Status Indicators to go over in depth here, but I'll explain a few key indicators:
A: Service paid under a fee schedule or payment system other than OPPS. (Example - Labs are paid using the Clinical Lab Fee Schedule, not under APC methodology)
N: Packaged Service - payment is packaged into a payment for a separately paid service. No separate reimbursement for this packaged service.
S: Not subject to multiple procedure discounting. APC categories with Status Indicator S will be reimbursed at the full APC payment.
T: Subject to multiple procedure discounting. If 2 or more Status Indicator T services are billed on the same DOS, there will be a multiple procedure payment reduction. This would typically be multiple surgical procedures furnished during the same operative session. The highest weighted procedure would be paid at 100%, and additional procedures would be paid at 50%.
This is an overly simplistic calculation example: A claim has 2 CPT codes that mapped to Status Indicator S, 3 codes that mapped to Status Indicator T, and 5 codes that mapped to Status Indicator N. And let's say for the sake of easy math that all of those codes would have an APC rate of $100.
The facility would be reimbursed $400.
2 CPT codes with Status Indicator S (full payment, no discounting) codes. 2 *$100 = $200
3 CPT codes with Status Indicator T (multiple procedure discounting) codes would be paid $100 for the first, and $50 each of the remaining 2 procedures = $200
5 CPT codes with Status Indicator N - packaged services, no additional reimbursement
It's a complex methodology, so I know that my summary overview isn't going to help instantly understand how the whole thing works.
However, the links I posted have a wealth of information, so that is a good place to start. That's how I learned OPPS calculations many years ago when I was working in hospital reimbursement analysis - I just had to dive into the CMS data and start picking apart the components until I figured out how they worked.
If you or your colleague have any specific questions, please let me know.