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)

Coding systems are used in the inpatient and outpatient settings for the classification of patient morbidity and mortality information for statistical use. The World Health Organization (WHO) developed the Ninth Revision, International Classification of Diseases (ICD-9) in the 1970s to track mortality statistics across the world. The International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM), is the adaptation the U.S. health system uses as a standard list of six-character alphanumeric codes to describe diagnoses. Globally utilizing a standardized system improves consistency in recording symptoms and diagnoses for payer claims reimbursement, as well as clinical research, and tracking purposes.

Healthcare providers that elect to participate in and receive reimbursement from Medicare must be licensed through their state, as well as, obtain and maintain certification for compliance with the Center for Medicare and Medicaid Services (CMS) Conditions of Participation (COPs). CMS is an agency within the Department of Health and Human Services that drafted guidelines for healthcare providers to meet acceptable minimum standards to operate and be reimbursed for services. Once providers are able to meet the COPs, they become a Medicare-Certified Agency and are granted a provider number. Each state is responsible for the certification of healthcare providers and a state survey is conducted every three years and as needed to determine if the healthcare provider continues to meet the minimum standards set in the COPs.

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.

Additionally, CC exclusions were carried over to MS-DRGs. Some MCCs and CCs are excluded because they are too closely related to the principal diagnoses. This is called the CC Exclusion List and identifies conditions that will not be considered

| 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.

Quality physician documentation is not only essential to providing superior clinical communication, but also allows for the delivery of useful data that “supports quality metrics, acuity of care, billing, and accurate representation of medical conditions” (Rosenbaum et al., 2014). The Centers for Medicare and Medicaid Services (CMS) uses a system to classify Medicare patient’s hospital stays into various groups in order to facilitate payment of services called Medicare Severity-Diagnosis Related Group (MS-DRG). Some payers also use all patient refined (APR)-DRG reimbursement systems. MS-DRG groups are outlined by a specific collection of patient characteristics which include areas specific to the “principle diagnosis, specific secondary diagnoses,

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).

HIPAA requires two designate coding system to be used to report to private and public payers; this is HCPCS and ICD-10. This coding system is primarily used in the United States and it is used by healthcare providers, including physicians and hospitals. Icd-10 is useful for reporting inpatient and HCPCS is used for procedure reporting for outpatient service and they are both assigned to DRG group. Once the health service is performed, charge captures are slips that are posted to a patient’s account that is processed as a batch order system. The key to the ordering system and charge capture is the “charge code” which is then reflected each service, procedure, supply item or drugs in the chargemaster (CDM). Medical claims fall into one of two types: CMS

Patients are surveyed about their recent experience and are asked about the quality of care, communication and timeliness. For example, there are condition categories that the CMS focuses on, such as Emergency department care. The CMS survey will measure the average time that emergency patients had to wait before being seen or receiving pain medication. The CMS report also provides statistics related to how likely patients will experience complications, readmissions and death. For example, hip or knee patients often experience complications after surgery. In addition to this, the CMS survey also monitors the use of medical imaging, such as MRIs and CTs, and how the patient payments match patient

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).

In 1998, CMS implemented a prospective payment system (PPS) for Medicare SNFs, replacing the prior fee-for-service reimbursement system.Under PPS, the Medicare program pays SNFs per day rates, which cover all routine services, ancillary services, and capital-related costs for a beneficiary's Part A stay. The program pays different rates for residents according to case-mix adjustments, which are based on residents' assessments (looking at the severity of residents' medical conditions and skilled care needs). The payment categories are called Resource Utilization Groups, or RUGs. Medicare pays

By definition, a MS-DRG is “a system of classifying a Medicare patient’s hospital stay into various groups in order to facilitate payment of services.1” The DRG system was created through Yale University’s Schools of Management and Public Health1. The system organizes potential human disease diagnoses into more than 20 body systems1, and then further organizes the body systems into over 450 subgroups. This organization helps to “classify the care that hospitals provide.1” The way this system works specifies which body system and groups are affected with the amount of hospital resources required to treat each condition. The ending result is a fixed rate for patient services, call