The Intent For Outpatient Prospective Payment System

APC (Ambulatory Payment Classification) system is a government program. This is the program that is in charge of helping hospitals retain payments for outpatient services. This is one of the programs that helps medicare pay and maintain hospitals running. APC covers payments in different parts of the hospital. This applies to Outpatient Surgeries, Outpatient Clinic care, Emergency room services and lastly observational Services. APC payments might also cover any test an out patient needs. These can range from blood work to radiology.

A mixed payment system combined with physician monitoring, will provide physicians with incentives to consider costs and benefits of different treatment options, which will lead to an efficient level and quality of care. (1,2)

The patient also pays 20% of the Medicare-approved amount for most doctor services (including most doctor services while patient is hospital inpatient), outpatient therapy, and durable medical equipment. Under Medicare Part B, the patient would be responsible to pay: 40% of the Medicare-approved amount for most outpatient mental health care (Medicare Part B (Medical Insurance), 2012).

The reimbursement method used at St. Anthony’s hospital is quite distinct depending on the party doing the payments. Payments are received from Medicare, Medicaid, private insurers and also directly from patients. The party responsible for Medicare payment is the Federal government and it offers payment mainly for the elderly. With the Medicare payment, hospitals receive a flat fee depending on the case. According to Gee (2006), most hospital revenue has declined because of the revised payment set by the Diagnosis-Related Groupings. The fee for most cases varies according to the Diagnosis-Related Group (DRG) it can be classified under. For example, Medicare pays only a fixed amount for an elderly patient suffering from pneumonia regardless

Since 1984, Medicare patients have been serviced under the prospective payment system of the Medicare program. Under this system, primary care providers are reimbursed for their services using a fixed payment for each patient that is determined by the patient’s diagnosis-related group at the time of the admission. Therefore, under the prospective payment system a hospital’s reimbursement is unaffected by the actual expenditures that are required to care for a patient.

| Prospective Payment System (PPS) first began in 1980 with a small number of hospitals partitioned into three groups according to their budget positions---breakeven, surplus, and deficit--- prior to the imposition of DRG payment (Diagnosis- related group). The PPS as DRG’s had been designed to limit the share of hospital revenues derived from the Medicare program budget, and in spite of doubtful results in New Jersey, it was decided in 1983 to impose DRG’s on hospitals nationwide.

Enrolled patients use the global payment system. This means each member provides a fixed fee per month or year, irrespective of the amount of services

The Inpatient Prospective Payment System is based on CMS (Medicare) standards because it is the largest reimburser. It was created to control rising healthcare costs by determining reimbursement prospectively. The costs of inpatient acute hospitals stays under Medicare Part A are fixed so that each patient case aligns with a Diagnosis Related Group (DRG).

Medicare changed overtime and in 1983 adopted the Prospective Payment Plan. PPS was designed to pay a facility a lump some to provide services for a set amount of patients covered by Medicare. One of the reasons behind it was to encourage health care practitioners to proved services in a timely manner in order to shorten the rehabilitation time of an individual.

Revenue determination is an important tool for health care organizations because it allows for efficient management of payment systems. This paper will look at the different components that form the payment-determination bases of revenue determination. Moreover, the difference between specific and bundled service payments will be discussed. Lastly, the three ways health care providers control their revenue function will be highlighted.

In 1983, the Medicare prospective payment program was implemented which allowed hospitals to be reimbursed a set payment based on the patient’s diagnosis, or Diagnosis Related Groups (DRG), regardless of what treatment was provided or how long the patient was hospitalized (Jacob & Cherry, 2007). To keep the costs below the diagnosis related payment, hospitals had to manage efficiently the treatment provided to a client and reduce the client’s length of stay (Jacob & Cherry, 2007). Case management, or internal case management “within the walls” of the health care facilities was created to streamline costs while maintaining quality care (Jacob & Cherry, 2007).

The passing of the Deficit Reduction Act of 2005 made an additional incentive possible for acute care hospitals who take part in the HCAHPS survey. Since July 2007, hospitals who are subject to the Inpatient Prospective Payment System (IPPS) annual payment update provisions need to collect and submit HCAHPS data if they want to collect their full IPPS annual payment. Inpatient Prospective Payment System hospitals that ignore to report the required quality measures, which includes the HCAHPS survey, could get an annual payment update that has a reduction of 2%. Hospitals like Critical Access Hospitals, can also participate in HCAHPS if they want to.

OCE designed to processes claims for all outpatient institutional providers including hospitals that are subject to the Outpatient Prospective Payment System (OPPS) as well as hospitals that are NOT (Non-OPPS). Each OCE results in one of six different dispositions. The dispositions help to ensure that all fiscal intermediaries are following similar procedures. There are four claim-level dispositions: Rejection, Claim must be corrected and resubmitted; denial, claim cannot be resubmitted but can be appealed; return to provider, problems must be corrected and claim resubmitted; and suspension, claim requires further information before it can be processed. There are two line item–level dispositions: rejection, claim is processed but line item is rejected and can be resubmitted later; and denial, claim is processed but line item is rejected and cannot be resubmitted. (Essentials of Health Care Finance, 7th Edition. Jones & Bartlett Publishers p. 26).

Understanding the classification of healthcare services in terms of acute and long term care enable us to plan for services, to describe institutions, and to allocate funding and reimbursement. In the United States, healthcare services provided by health care providers (such as doctors and hospitals) are paid for by the following including, private insurance, Government insurance programs, people themselves (personal, out-of-pocket funds). Additionally, the government directly provides some health care in government hospitals and clinics staffed by government employees. Examples are the Veteran’s Health Administration and the Indian Health Service.

Medicare pays for ED services through three payment systems. Beneficiaries of Medicare who receive ED care generate a physician claim and a hospital outpatient ED claim. Physician claims are paid through the Medicare physician fee schedule (PFS) while hospital claims for ED, that don’t result in admission, are paid by the hospital OPPS. Hospital claims for ED that do result in admission are paid through the inpatient prospective payment system.