Karen Northcutt, RN, CPCH

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Highlights of Changes to the Medicare Outpatient
Prospective Payment System 2006
Presented by Karen Northcutt, RN,
CPC-H January 26, 2006
Making Healthcare make sense
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AL 35209 205-941-1105 1-800-592-9639
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Highlights of Changes to the Medicare Outpatient
Prospective Payment System 2006 Conversion
factor is 59.511 Formula for cost outlier payment
(cost (1.75 X APC rate) / 2 plus fixed dollar
amount of 1250.00. Category III codes will be
updated twice per year. Releases in January will
be implemented in July. July updates are
implemented in January. A 7.1 adjustment is made
for sole rural hospitals but there will be no
more transitional corridor payments.
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Medicare will not discount multiple procedures
as they proposed in Radiology. Removal of 25
inpatient only procedures including cerebral
thrombolysis. Evaluation and management code
definitions for Emergency and clinic remain
undefined. CMS will allow 6 to 12 months prior
to implementation of definitions
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• Specific Departmental Revisions for January, 2006
• Catheter Insertion
• CPT-4 codes for urinary catheter insertions have
  been bundled (no separate payment) since the
  inception of APCs.
• Separate payment will be made for the following
• 51701 Insertion of non indwelling bladder
  catheter (straight cath for residual urine) -
• 51702 Insertion of temporary indwelling bladder
  catheter simple (Foley)
• 51703 - Insertion of temporary indwelling bladder
  catheter complicated (altered anatomy, fractured
  catheter balloon)
• Assure charge codes are created and available in
  the emergency room and outpatient treatment
  areas.
• If point system for evaluation and management
  assignment includes point for this service,
  remove these procedures from the point system.

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• Specific Departmental Revisions for January, 2006
• Vaccine Administration
• CPT-4 codes 90471 and 90472 have been bundled (no
  separate payment) since the inception of APCs
• Separate payment will be made for the following
• 90471 Immunization administration (includes
  percutaneous, intradermal, subcutaneous or
  intramuscular injections one vaccine (single or
  combination vaccine/toxoid)
• 90472 - Immunization administration (includes
  percutaneous, intradermal, subcutaneous or
  intramuscular injections each additional vaccine
  (single or combination vaccine/toxoid)
•         Assure charge codes are created and
  available in the emergency room and outpatient
  treatment areas.
•        If point system for evaluation and
  management assignment includes point for this
  service, remove these procedures from the point
  system.
• Note Most facilities are currently utilizing
  these codes.

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Specific Departmental Revisions for January,
2006 Vaccine Administration (cont.) Reminder In
fluenza vaccine administration will remain
G0008 Pneumococcal vaccine administration will
remain G0009 Hepatitis B vaccine administration
will change from G0010 to 90471. All three will
be paid on reasonable cost therefore there is not
payment rate listed in Addendum B.
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• Specific Departmental Revisions for January, 2006
  
• Stereotactic Radiosurgery
•  
• HCPCS codes G0242 and G0338 will be deleted. Use
  the appropriate CPT-4 code for planning.
• Assure appropriate planning codes are available
  in the charge master.

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Specific Departmental Revisions for January,
2006  Contrast Materials (LOCM, HOCM, MRI)
Currently LOCM is billed with A4644 A4646 (per
dose) and no separate payment is made. Separate
payment will now be made for all HCPCS
codes.         Set up new charge codes for the
contrast used in the facility specifically in
Radiology, Cardiology, Cardiac Cath Lab, Special
Procedures (interventional procedures) and
OR.         Set up the charges per 1 ml not per
dose, price the contrast on a per ml
basis.         Assure the department is able to
charge units greater than one in their specific
systems.
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• Specific Departmental Revisions for January, 2006
  
• Radiopharmaceuticals
• Separately payable radiopharmaceuticals will be
  assigned a status indicator H in Addendum B.
• Currently for separately payable
  radiopharmaceuticals are paid based on an APC
  payment rate. For 2006 they will be paid on
  cost.
• Review all radiopharmaceuticals specifically in
  nuclear medicine.
• Obtain cost per HCPCS dosage plus handling and
  overhead costs.
•  Divide the cost by the hospital specific cost to
  charge ratio (CCR) to determine the charge.
•  Compare the determined charge with current
  charge assignment.
• Report to the appropriate financial personnel if
  the charges vary significantly either much lower
  or much higher than currently assigned.

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Specific Departmental Revisions for January,
2006 Pharmacy Continues to use costs 50.00 or
greater per dose to determine if a drug is
separately payable except for oral anti-emetics
when given with chemotherapy. There was a
proposal to reimburse a handling fee for drug but
in the final rule this was not adopted due to
increased billing burdens this would create for
hospitals. Drugs payments that are reimbursed
are based on ASP (average sales price) plus 6 as
listed for ASP for the third quarter of 2005.
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Specific Departmental Revisions for January,
2006 Pharmacy (cont.) Discontinued the use of
C HCPCS codes for drugs that have permanent
HCPCS codes including those used to indicate
brand versus generic drugs.   Continue to use
C9399 for new drugs that have not been assigned a
HCPCS code. This code should be used rarely, it
is not for drugs that have been used but are not
assigned a HCPCS code.
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Specific Departmental Revisions for January,
2006 Pharmacy (cont.) Separate payment of 75.00
will be made in addition to the IVIG drug HCPCS
code and the administration CPT-4 code. This
will require an additional charge code assigned
HCPCS code G0332. It is important to note
whether this charge will be charged by the
pharmacy when dispensing the drug or by nursing
when the drug is administered.   Review with the
Pharmacy Table of drug revisions.   Revise the
charge codes to the appropriate J HCPCS
code.   Determine which department will charge
the add on charge for IVIG administration.
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• Specific Departmental Revisions for January, 2006
  
• Brachytherapy Sources (seeds)
• Continue to be paid reasonable cost per single
  source.
•   Assure that appropriate HCPCS codes are
  assigned for brachytherapy sources.
•  Divide the cost of a single source by the
  hospital specific cost to charge ratio (CCR) to
  determine the charge.
•  Compare the determined charge with current
  charge assignment.
• Report to the appropriate financial personnel
  if the charges vary significantly either much
  lower or much higher than currently assigned.

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Specific Departmental Revisions for January,
2006 Observation New G codes for observation,
the OCE logic will decide if payment is
appropriate. G0378 Hospital observation
services per hour (unadjusted flat fee payment
rate of 425.08) G0379 Direct admit of patient
for observation care (that does not qualify for
separate payment based on chest pain, CHF or
asthma). G0378 will be billed when observation
services are provided to any patient admitted to
observation status regardless of the patients
condition i.e. chest pain, CHF, Asthma.
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Specific Departmental Revisions for January,
2006 Observation (cont.) G0379 will be billed
when observation services are the result of a
direct admission. Very important When the
patient is admitted to observation for a
qualifying diagnosis of chest pain, CHF or asthma
the ICD-9 diagnosis code must be in form locator
76 reason for visit or form locator 67, principal
diagnosis or both in order to receive separate
payment.  Assign G0378 to the observation charge
codes in the CDM for Medicare, continue to use
observation CPT-4 codes for all other payers,
i.e. 99218.  Assure appropriate qualifying
diagnosis is assigned to the appropriate form
locator on the UB92.
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Specific Departmental Revisions for January,
2006 Recalled Devices Currently the hospital
bills the device HCPCS code with a token 1.00 to
bypass device and insertion procedure
edits. January 2006 a new modifier FB will be
used to indicate that a device used in a
procedure was furnished without cost to the
provider and therefore is not being charged to
Medicare or the beneficiary.
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Specific Departmental Revisions for January,
2006 Recalled Devices (cont.)   FB will be
assigned to the device or FB will be assigned to
the insertion procedure CPT-4 code if no device
is billed.         Determine how the FB
modifier will be assigned in the department or in
the Business Office. This will require
significant communication between the department
and billing.
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Specific Departmental Revisions for January,
2006 Wound Care (not provided by physical or
occupational rehabilitation) Wound care provided
as non therapy services in the hospital
outpatient setting, provided by non
therapists independent of a therapy plan of
care. Payments will be made for the following
CPT-4 codes  97597 97598 97602
97605 97606     Assure charge codes are
created in outpatient areas providing wound care
by qualified nursing personnel.   Do not charge
E/M code 99201 with 97602 as currently
directed.  Note Wound vac will be a payable
service.
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Specific Departmental Revisions for January,
2006 Cardiac Catheterization / EPS CPT-4 code
33225 for insertion of a left ventricular pacing
electrode at the time of insertion of an ICD will
no longer be paid at 100 of the payment rate but
will be paid at 50. Ablation codes 36475, 36476,
36478 and 36419 will be paid APC 0092 from
0091. ICD insertion procedures will be paid at
90 of the median cost for 2005
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Specific Departmental Revisions for January,
2006 Device codes   HCPCS C codes for devices
will remain in effect for 2006.   The edit
recognizing C1750 and C1752 device codes for
hemodialysis catheters will now be fixed to
process the claim when billed with CPT-4 codes
36557, 36558 and 36581 (central line insertions).
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Specific Departmental Revisions for January,
2006 Drug Administration New CPT-4 codes for drug
administration are available for January 2006.
Medicaid will adopt all the new codes while
Medicare will only adopt some of the codes and
utilize C HCPCS codes for IV infusion, IV and
Chemo Push and Chemotherapy infusion. Because of
the hardship for the hospitals to change the way
they charge for drug administration based on the
new codes, Medicare assigned temporary C codes.
This will put off the total revision of drug
administration coding until 2007.
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Specific Departmental Revisions for January,
2006 Drug Administration (cont.) This presents a
problem in setting up a new charge system. The
solution may be is to set up your charge system
based on your payer mix. If you provide drugs on
an outpatient basis to more Medicare than
Medicaid patients then you should consider
revising your charge system to apply to Medicare
and change Medicaid at the bill level.
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• Specific Departmental Revisions for January, 2006
• Drug Administration (cont.)
• Rules for drug administration
• 15 minutes or less an IV push
• 2 separate IV sites requires billing the first
  hour twice (Medicaid requires a 76 modifier)
• The infusion must run over 30 minutes into the
  next hour to charge the next hour.
• Infusions should be therapeutic to be charges (no
  KVO)
• Unlimited hours may be billed for Medicare
• If a patient presents with an infusion in
  process, it can be charged in the ER