Ambulatory Payment Classifications (APC)
APCs are four digit numeric identified categories of procedures composed of services which are similar clinically and with respect to resource utilization and costs. Procedures and their associated CPT or HCPCS codes are assigned to an APC number that in turn corresponds to a specific national payment. Wage adjustments are applied to sixty percent of the APC payment rate. Within this system each APC is also assigned a status indicator (SI) with varying methods of payments such as packaged payments (N) or separately paid payments (S) to name only two.
Average Wholesale Price (AWP)
Redbook and First Databank publish manufacturer supplied pricing information. One of the widely available nationally published data is referred to as an AWP.
Centers for Medicare & Medicaid Services (CMS)
The federal agency that administers the Medicare and Medicaid programs, prior to June 14, 2001 this agency was known as the Healthcare Financing Administration (HCFA).
Current Procedural Terminology (CPT)
CPT is a listing of 5 digit numeric or combinations of alpha and numeric codes with narrative descriptions that are used to report medical services and procedures. Codes are updated annually or biannually and are generally effective January 1 each year, for category III codes twice yearly in January and July. The American Medical Association (AMA) manages these codes; however these codes are generally accepted with the majority of payers across the United States.
Deficit Reduction Act (DRA)
The DRA of 2005 reduces Medicare technical component payments for diagnostic imaging procedures performed under the Medicare physician fee schedule in imaging centers and physician offices. When the hospital technical component is lower than the Physician Fee Schedule payment, Medicare will pay offices and imaging centers the hospital technical payment rate. This is referred to as the DRA CAP or HOPPS (OPPS) CAP, as the payment for the office is capped at the Hospital Outpatient Payment rate.
Healthcare Common Procedural Coding System (HCPCS)
HCPCS Level II is a listing of 4 digit alphanumeric codes with narrative descriptions that are used to report products, supplies, drugs, radiopharmaceuticals, devices and in some cases medical services and procedures not included in the CPT codes such as new technologies. Codes are updated quarterly, January, April, July and October. The CMS manages these codes; however these codes are generally accepted with the majority of payers across the United States.
Hospital Outpatient Prospective Payment System (HOPPS) or (OPPS)
Medicare payment system which utilizes an Ambulatory Patient Classification (APC) grouping system that provides a fixed rate of payments for categories or groupings of hospital services.
Medicare Administrative Contractor (MAC)
The MACs are the contracted claims processing companies who administer the Medicare payment systems by implementing CMS’s national policies on a local state by state basis for Part A and B services. Part A services (institutional aka hospital) were previously administered by Fiscal Intermediaries and the Part B services (non institutional aka physician offices or independent diagnostic imaging centers) were administered by Carriers; these are now merged into a single contractor for consistency and efficiencies.
Physician Fee Schedule (PFS) also referred to as “The Fee Schedule”
Medicare payment system which establishes national and local payments for physicians and independent diagnostic imaging centers (IDTF) based on resource costs associated with three components of these costs; physician work, practice expense and professional liability insurance. Separate geographic adjustments are applied to each of the three components to produce a local payment rate. Imaging procedures paid in this system are broken into three payment components, the professional component (PC) the technical component (TC) or a global payment. The global payment is a combination of the PC added to the TC.
- The PROFESSIONAL (26) component is billed by the physician in the hospital or non-hospital setting.
- The TECHNICAL (TC) component is billed for the services of technologists, equipment and the cost of supplies in the hospital or Non-hospital setting.
- The GLOBAL (no modifier) amount would be billed by the freestanding non-hospital center or physician office and includes both of the above.
Resource Based Relative Value Scale (RBRVS)
A government mandated1 relative value system that is used for calculating national fee schedules for services provided to Medicare patients. Physicians are paid on Relative Value Units (RVUs) for procedures and medical services. The three components of each established value include; physician work RVU, practice expense RVU and malpractice expense RVU. These RVUs are used in the Medicare physician fee schedule as well as used by many other payers as a basis for payment for medical services.
(1) The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (Pub. L. 101–239), and OBRA 1990, (Pub. L. 101–508).