Coding accuracy and documentation will be the drivers of outpatient reimbursement for both healthcare facilities and physicians beginning Aug. 1 when HCFA implements the Outpatient Prospective Payment System.

While some health systems view the new payment system as a threat to their revenue stream, the change actually can result in an opportunity for both the systems and their medical staffs.

By teaming up with medical staff members to develop a Joint Charge Capture and Coding Improvement Program, medical facilities and physicians will be more likely to receive full and proper payment for all services they provide and will have reduced compliance exposure due to errors or overcoding.

In addition, both the facilities and doctors will have less professional liability exposure due to insufficient documentation and more accurate information for clinical decision-making.

Medicare and other payers are installing automated audit systems to check the consistency of charges and coding between facility and professional billing. Implementation of this program will reduce denied claims and compliance issues in this area.

Background of new payment system

The Outpatient Prospective Payment System (OPPS) consists of 659 Ambulatory Payment Classifications (APCs). Major services covered by OPPS include emergency services, surgery, radiology and cardiology. The common link between these services is that physician specialists provide them in a hospital.

Currently, for each occurrence of patient service, there are two separate billings for the same service: the health system bills a facility charge, while the physician bills a professional charge.

The facility is reimbursed based on costs or a fee schedule settled through the cost report at the end of the year. Physicians are paid based on the Resource Based Relative Value System (RBRVS). The physician practice bills the government using CPT-4 procedural code(s). Each CPT-4 code has an RBRVS payment rate for each service. There is no cost report filing or settlement for the physician.

To better understand the opportunity that exists with a Joint Charge Capture and Coding Improvement Program, it also helps to review the structure of codes. HCPCS codes have three levels:

CPT-4 codes are the common link to both the OPPS and RBRVS payment systems.

Medicare and other payers are installing automated audit systems to check the consistency of charges and coding between facility and professional billing. Thus, a cooperative program between physicians and hospitals will reduce denied claims and compliance issues in this area.

Implementation steps

The implementation steps for a Joint Charge Capture and Coding Improvement Program are:

1. A commitment by the health system and physicians to implement the improvement program
2. Assessment the benefits and identification of areas for improvement
3. Establishment of an improvement program in high impact areas
4. Establishment of systems to coordinate the charge and coding information Auditing of the effectiveness of the program

Today most health systems and physician organizations are each performing these functions separately. Therefore, many of the steps can be done once and coordinated.

Step One can be initiated through the health system medical staff structure or a joint task force. Many health systems already have a team in place to address APC implementation issues.

Step Two requires analysis of historical charges and coding data with a comparison to benchmark averages. The information will point out areas to focus improvement efforts and to establish milestones for measuring future progress. For health systems, a number of state hospital associations offer this service to members at very reasonable charges. Physicians practice assessment reports are also available at reasonable fees.

Step Three involves the most significant commitment for both parties. An “early win” can be important to making the changes sustainable, thus establish an improvement program in a high impact area (ER, OR, etc.). Time and expertise are required to redesign and implement identified improvements. Operations improvement and certified coding expertise are required to effectively complete this portion of the program. For a variety of reasons, it may make sense to outsource all or a part of this step. For example, if internal resources are limited, the amount of financial improvement identified in the assessment may well justify outsourcing.

Step Four is a function of the information systems for both organizations. In most situations, these systems are not designed to share charge and coding information. If that is the case, identify a limited area that has the highest benefit for both organizations. For example, another option is to undertake a concurrent comparison and lead the process of change with front-end education. This also has the effect of improving future performance and milestone achievement by simultaneously supplying critical information.

Step Five involves a combined periodic audit of the charging and coding systems. After initial implementation, measure progress against pre-established milestones so both physicians and hospitals can be sure that all parties know where problems or “roadblocks” have developed. The challenge is to cooperatively work to resolve these issues. All parties should increase the frequency of audits in high impact areas to ensure the improvements will continue to be sustainable. Outside audit services are available to provide objective audit reporting and reduce the potential for disagreements during implementation of changes.