In every zero-sum game, there are winners and losers. Occasionally, someone gets thrown off the lifeboat. That is clearly the case with the proposed 2003 Outpatient Prospective Payment System (OPPS) payment and diagnostic mammography, a big loser last year and a token winner this year, with a meager $0.67 increase. One wonders, why bother?

But in this, as in every game, it is not simply who wins, but how you play because there is almost always another round. And that is the case with Medicare reimbursement. How well radiology fares in next year's version of the OPPS depends largely on how meticulous radiology is in the coming year with respect to coding its services and how accurate it is in reporting its true operational costs.

As for the dreaded, confusing, and much-misunderstood Ambulatory Payment Classifications (APCs), the proposed 2003 OPPS rates published in the August 9, 2002, Federal Register, reflect the use of updated hospital data in calculating payment rates as required by statute and regulations, according to consultant Jim Georgoulakis, PhD, MBA, CEO of APC Advisory Group, Inc, San Antonio, Tx, writing in the August 22 issue of Report on Medicare Compliance. "A recurring theme throughout the proposal rule for 2003 is that hospital submissions of data will become more and more critical in terms of establishing APC rates," wrote Georgoulakis. "It is imperative that hospitals ensure proper submission of claims data." He offers the very dramatic example of the proposed rate for APC 0108 (Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads), which decreased by $17,258.44 to $12,101.97 compared to the 2002 rate of $29,360.41. Georgeolakis questions whether hospitals submitted proper HCPCS codes for those services and devices. Data indicate that some hospitals billed only for procedures and not devices, and were confused by the change from device-specific to category codes, he said.

This theme was emphasized by Andrei Costantino, partner, ParenteRandolph, Harrisburg, Pa, in an APC update delivered at the American Healthcare Radiology Administrators meeting in New Orleans in August. He also told attendees that hospitals have left an estimated $1 billion on the table in pass-throughs since 2000. Hospitals have just a 2-3 year window to collect these extra payments on new drugs and technologies, after which their cost is folded into an associated APC code. That is what CMS plans to do with PET and breast biopsy devices, resulting in proposed 30% and 28% reductions respectively. One wonders if unbilled pass-through payments for PET and biopsy devices were among the $100 million?

According to Diane Millman, JD, health care attorney with Washington, DC-based Powers, Pyles, Sutter & Verville, and counsel for the National Coalition for Quality Diagnostic Imaging Services, sloppy hospital accounting definitely played a role in the proposed reduction for PET. "The proposed reduction is based on hospital charges for CY 2001, multiplied by the cost-to-charge ratio for the radiology department," she explains. "A review of the cost and charge data indicates that many hospitals have not established appropriate charges for FDG-PET, and that costs are reported very differently by different hospitals, resulting in misallocation of the PET-related costs to other departments. In addition, some hospitals may be allocating the equipment and maintenance costs to a general cost center. As a result of these factors (and probably others), the Medicare database reflects a relatively low cost-to-charge ratio for PET. Many hospitals also are not reporting the FDG in the appropriate revenue center. The Society of Nuclear Medicine is offering seminars to assist hospitals in coding correctly."

Clearly, the best investment hospitals and radiology providers could make in the future is to pay more careful attention to coding, billing, and actual costs. That includes an annual updating of the Charge Description Master (both Georgoulakis and Costantino say this is not happening). Watch future issues for guidance on this subject.

Cheryl Proval

cproval@medpubs.com