Calculating Pass-Through and Outlier Payments under APCs

Healthcare Financial Management, July, 2001 by Martin Gold, Susan Snodgrass

EXHIBIT 1: APC REIMBURSEMENT FOR IMPLANTABLE DEVICE ON PASS-THROUGH LIST

Financial Assumptions:

(1) Device markup: 330%

(2) Procedure markup: 125%

(3) CCR: 32%

(4) Surgical costs (excluding implantables):

Recovery room: $450

OR fees (2 hrs): $500

Anesthesia supplies: $300

Med/surg supplies: $150

C-arm: $50

OR supplies: $75

Pharmaceuticals: $100

Total Cost $1,625

(5) Implantable Device: $9,000

CPT/HCPCS                                  APC    Costs  Charges
           Procedure
(6) 99999  Incision and placement of a   99999   $1,625   $2,031
           implantable device
           Device
(7) C9999  Incision and placement of       n/a   $9,000  $29,700
           implantable device
(8)        Pass-Thru Payment for Device
           Implantable device                    $9,000  $29,700
             Hospital-specific CCR         32%
Total                                           $10,625  $31,731
CPT/HCPCS  Payment
(6) 99999   $1,235
(7) C9999   $9,504
(8)
            $9,504
Total      $10,739

EXHIBIT 2: APC REIMBURSEMENT FOR IMPLANTABLE DEVICE NOT ON THE PASS-THROUGH LIST-AN EXAMPLE OF AN OUTLIER CALCULATION

Financial Assumptions

(1) Device markup: 520%

(2) Procedure markup: 125%

(3) RCC: 32%

(4) Surgical costs (excluding implantables)

Recovery room: $450

OR fees (2 hrs): $500

Anesthesia supplies: $300

Med/surg supplies: $150

C-arm: $50

OR supplies: $75

Pharmaceuticals: $100

Total Cost: $1,625

(5) Implantable Device: $9,000

CPT/HCPCS                                          APC    Costs
            Procedure
(6) 99999   Incision and placement of             9999   $1,625
            implantable device
            Device
(7) C9999   Implantable device                     n/a   $9,000
(8)         Outlier Payment For
            Implantable Device
(9)         2.5 x APC & pass-through            $3,088
            payment threshold
            Implantable device cost & charges            $9,000
            Surgical costs & charges                     $1,625
            Total costs & charges                       $10,625
(10)        CCR adjusted costs (CCR x charges)          $15,626
            Balance of adjusted                         $12,539
            cost above threshold
            75% payment of balance of
            adjusted cost above threshold
(12) Total                                              $10,625
CPT/HCPCS   Charges  Payment
(6) 99999    $2,031   $1,235
(7) C9999   $46,800      n/a
(8)
(9)
            $46,800
             $2,031
            $48,831
(10)
                      $9,404
(12) Total  $48,831  $10,639

Additional Resources on APC Implementation

* HCFA's Web site for the hospital outpatient prospective payment system: www.hcfa.gov/medicare/hopsmain.htm

* 3M's Web site for APC information: www.apcsolutions.com

* HFMA's Web site: www.hfma.org