There are various reimbursement methodologies that involve medical codes. These medical codes include the Current Procedural Terminology (CPT)®, Healthcare Procedural Coding System (HCPCS), and International Classification of Diseases, 10th Revision (ICD-10-CM and ICD-10-PCS) codes.
The Inpatient Prospective Payment System (IPPS) uses ICD-10-CM and ICD-10-PCS. These codes are placed into a computerized grouper that assigns Medicare Severity Diagnosis Related Groups (MS-DRGs). This reimbursement methodology is utilized by Medicare fee-for-service (FFS).
Commercial payers may use this methodology, but it is dependent on the contract with the facility. Other acute-care payers, such as Medicaid, may utilize All Patient Refined Diagnosis Related Groups (APR-DRGs). This proprietary methodology was developed by 3M. The inpatient methodologies run from October through September.
Home health agency (HHA) visits are paid based on 30-day periods of care, which are adjusted for case mix and geographical differences. The Outcome and Assessment Information Set (OASIS) assessment form is utilized to determine the clinical groups. Payment is based on the Patient Driven Groupings Model (PDGM). The diagnosis codes are used in this model. Like DRGs, this methodology also runs from October through September.
The Outpatient Prospective Payment System (OPPS) runs from January to December (calendar year). This methodology predominantly uses CPT and HCPCS codes to determine the Ambulatory Payment Classification (APC). Each CPT/HCPCS code is assigned a status indicator, which provides information on how each line item will be paid. The status indicators are the following:
Multiple APCs can be created in a single hospital visit. The diagnosis codes are used for medical necessity, including the Reason for Visit fields.
Medical coding touches many areas of the hospital, from charging, reimbursement, cancer registry, and marketing to statistics. They are everywhere! It is important to understand how far-reaching medical codes can be.
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