Original Source ..
American College of Radiation
1891 Preston White Dr
Reston, VA 20191
(703) 648-8900
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Date Received: September 19, 2007
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Subject:
Instructions for Calculating Wage Adjusted APC Payment
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The APC payment rates are calculated on a national basis and then adjusted by
geographic area, depending on the area's wage level.
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The Centers for Medicare and Medicaid Services (CMS) uses the Inpatient
Prospective Payment System (IPPS) wage index as the source of a geographic
adjustment factor for Hospital Outpatient Prospective Payment System (HOPPS)
ambulatory payment classification (APC) payments.
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In order to calculate the wage adjusted APC payment you must know the
following:
The CPT code(s) for the procedure(s) you are determining payment for.
Core Based Statistical Area (CBSA) - The term "core based statistical
area" (CBSA) became effective in 2000 and refers collectively to
metropolitan and micropolitan statistical areas. For more information
go to:
.. http://www.census.gov/population/www/estimates/aboutmetro.html ..
APC - Ambulatory Payment Classification. All services paid
under HOPPS are classified into APC groups.
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Outpatient PPS payment is based on the ambulatory payment
classification (APC) system, which divides all outpatient services
included in the new payment schedule into almost 600 procedural
groups. The services within each group are clinically similar and
require comparable resources. Each APC is assigned a relative payment
weight based on the median cost of the services within the APC. The
APC payment rates are calculated on a national basis and then adjusted
by geographic area, depending on the area's wage level. To adjust for
wage differences across geographic areas, the labor-related portion of
the payment rate (60 percent) is wage adjusted, using each hospital's
wage index value.
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Performing the wage adjusted APC payment calculation:
Determine what CPT code(s) and CBSA(s) you are calculating the wage
adjusted APC payment amount for.
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To locate the wage index by CBSA go to Table 4c on the CMS Web
site. The link is:
To adjust for wage differences across geographic areas, the
labor-related portion of the payment rate (60 percent) is wage
adjusted by the wage index value. In order to calculate the wage
adjusted payment, you must first separate the APC payment amount into
60 percent and 40 percent. For example: for CPT Code 70553, MRI brain
w/o and w/dye, the APC payment amount is $506. Multiply the $506
amount by 60% = $304. Next, multiply the $506 amount by 40% = $202.
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The second step is to multiply the labor-related portion of the
payment rate (60 percent) by the wage index. This is the preliminary
adjustment. For example: the wage index for CBSA code 10420, Akron,
OH, is 0.8970. Multiply the 60 percent amount, which is $304, by
0.8970 = $273. The $273 is the preliminary adjustment amount.
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The final step is to add the preliminary adjustment amount to
the remaining 40 percent APC payment amount. For example: add $273
(preliminary adjustment amount) to $202 (remaining 40% APC amount) =
$475. The wage adjusted payment for CPT code 70553, and CBSA 10420,
is $475.
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This means that the nationally averaged hospital outpatient
payment rate for a MRI brain w/o and w/dye is $506 and the
geographically adjusted amount that the hospitals get from Medicare in
Akron, OH is $475.
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Please feel free to utilize the attached template in order to
calculate the wage adjusted APC payment. You will need to know the
CBSA code for your area, the CPT code(s) for the procedure(s) you're
interested in determining an adjusted payment for, the APC payment for
each procedure, and the wage index for your area.
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