American Academy of Emergency Medicine

APCs: What They Mean for You and Me

by Kevin L. Wacasey, MD FAAEM

Although plagiarism is not a very subtle form of flattery, allow me to quote a brochure from the Texas College of Emergency Physicians' November 2000 leadership conference in Austin:

"Medicare's new hospital outpatient prospective payment system poses new challenges in physician-hospital cooperation, with the hospital's reimbursement success or failure inextricably linked to physician decision-making and clinical practices."

Never were truer words written. Like them or not, as of July 1, Ambulatory Patient Classes, or APCs, are here to stay. And although the potential ramifications for our specialty are sure to send some (namely contract-holders and corporate management groups) to the pharmacy for a six-month supply of antacids, I believe that there are certain distinct advantages for the pit docs in this new relationship.

With APCs, Medicare will condense the existing five CPT codes (99281 - 99285) used by hospitals to bill their ED charges into three levels of service. A basic level of reimbursement has been set for each Level, and although there are adjustments available for geographic differences in wage expenses, each Level represents a bundled dollar amount meant to cover all nursing charges, hospital supplies, and pharmaceuticals dispensed to the ED patient at the point of care. Radiology and lab study charges are not bundled into the APC, but are billed separately.

This "visit APC" is not tied to physician billing or documentation. However, since pharmaceutical reimbursement is tied in to the visit APC physicians who give IV fluoroquinolones for simple cystitis are likely to cost the hospital money, since reimbursement will be the same as for an oral sulfa antibiotic. Cynics may argue that this creates an incentive for the hospital to boot these physicians, but on the bright side the savvy career emergency physician who is aware of such intricacies could potentially use this to a marketing advantage.

The most significant change in the new reimbursement rules concerns hospital charges for procedures performed in the ED; these are directly tied to physician documentation. In the past nurses would check off the use of suture kits or splint materials and the corresponding procedure was billed by hospital coders; now every procedure must be documented thoroughly and accurately in the physician's notes in order for the hospital's procedure charges to be paid.

I believe that the implications of this for career emergency physicians are enormous. Documentation issues rarely have a significant economic impact on salaried physicians; hence they are unlikely to be motivated to take the time to properly chart their procedures. These physicians may even exhibit a degree of civil disobedience, especially when given stringent documentation requirements by the Corporate HQ. Hospitals who utilize these types of contract arrangements will become increasingly frustrated with the losses from their EDs, and will eventually come to recognize that the physicians either cannot or will not change to meet these new demands.

Efforts to combat poor documentation have already met with little success. One local CMG in the Dallas/Fort Worth area likes to profile its employed physicians by providing them with monthly "downcoding" data. This concept involves a retrospective algebraic formulation derived from the final diagnosis to arrive at a level of service the patient encounter should have been billed for. When the physician's documentation does not support this calculated E&M level that physician is then slapped with a "downcode," and the actual dollar amount difference between what was coded and what theoretically should have been coded is tallied in the physicians record. These amounts then serve as a basis to award quarterly "bonuses" to the physicians, the amounts of which average the equivalent of 1-2 shifts. This strong-armed method of economic credentialing based on these so-called performance criteria has done little in the way of improving physician documentation for this group however.

So, APCs are here to stay, and I believe we should use them to any possible advantage. Optimistic? Yes. Naïve? Possibly. But in my opinion these new reimbursement changes will level the field a bit and create more of a symbiotic relationship between hospitals and emergency physicians. Traditionally hospital administrators have been more than willing to shuffle off the staffing responsibilities onto third party groups, with none generally offering tangible benefits over another. The impact APCs will have on hospital reimbursement may help usher in a new era where administrators recognize the importance and utility of having stable, cooperative, and direct relationships with the "pit docs," and lead to better practice environments for our specialty.

Editor's Note: HCFA has recently placed in the Federal Register a lot of regulatory information regarding APCs, such as (1)hyperbaric medicine; (2) packaging of casts and splints; (3)payment strategies for emergency department visits and critical care; and (4) observation issues. AAEM members interested in obtaining copies of these entries should contact the AAEM office at (800) 884-2236 or info@aaem.org.